1st Quarter Results
Orad Hi-Tec Systems
25 May 2004
Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')
Results for the Quarter ended March 31 2004
Tel Aviv, May 25th, 2004 - Orad Hi-Tec Systems Ltd. (Frankfurt - Prime Standard;
London - AIM. Symbol: OHT), a leading developer, marketer and distributor of
state-of-the-art, 3D graphical solutions for the broadcasting, advertising and
visual simulation markets, today announced its results for the quarter ended
March 31, 2004.
Highlights
• Revenues of $3.3 million with strong backlog of more than $8.5 million for
2004
• NBC chooses Orad's solution for Virtual Graphic Enhancement tools for
the 2004 Olympic Games
• QVC, the leading home shopping retailer, selects Orad's virtual studio
system
• Continuing efforts to reduce operational expenses
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'First
quarter is traditionally weak but during the quarter the rate of incoming orders
remained high and we received orders from important customers such as NBC, QVC
and others. Our backlog amounts to more than $8.5 million for the remaining of
the year including the revenues from the Hong Kong Jockey Club Project. The
system has been used in several major race meetings but is still under
acceptance tests and we expect to recognize the project in H2 2004.'
For further information:
Orad (www.orad.tv)
Avi Sharir 00 972 976 768 62
Shore Capital (London)
Graham Shore 00 44 20 7408 4090
Haubrok IR GmbH (Frankfurt) 00 49 211 301 260
Michael Kempkes
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the quarter ended March 31 2004
Chief Executive's Statement
Revenues for the first quarter of 2004 were $3.3 million, compared to $3.1
million in the fourth quarter of 2003 and $4.2 million in the first quarter of
2003. Revenues for the quarter were lower than expected due to delays of certain
installations of customers' orders. The company has a strong backlog for the
remaining of the year, which exceeds $8.5 million. The backlog includes revenues
from the Hong Kong Jockey Club project, which is expected to be recognized in
the second half of 2004. Gross margin in the first quarter of 2004 was 58% and
net loss amounted to $1.5 million.
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'First
quarter is traditionally weak but during the quarter the rate of incoming orders
remained high and we received orders from important customers such as NBC, QVC
and others. Our backlog amounts to more than $8.5 million for the remaining of
the year including the revenues from the Hong Kong Jockey Club Project. The
system has been used in several major race meetings but is still under
acceptance tests and we expect to recognize the project in H2 2004.'
Financial & Operational Highlights for the quarter ended March 31, 2004 compared
to the same periods in 2003:
Revenues
The revenues for the first quarter of 2004 were $3.3 million, compared to $4.2
million for the first quarter of 2003, due to delays of certain installations of
customers' orders, which are included in the backlog for 2004.
Gross Margin
Gross margin for the first quarter of 2004 was 58% compared to 64% in the first
quarter of 2003. Gross margin decreased in current quarter mainly due to lower
sales volume, a different sales mix and higher write off of inventory in the
quarter.
Research & Development
Research and development ('R&D') expenses were $0.8 million in the first quarter
of 2004, compared to $1.0 million in the first quarter of 2003. The decrease is
mainly due to measures taken by the Company towards consolidation of R&D efforts
of subsidiaries having complementary technologies.
Selling & Marketing
Selling and Marketing ('S&M') expenses were $2.1 million in the first quarter of
2004 compared to $1.5 million in the first quarter of 2003, an increase of $0.6
million mainly due to increase in selling expenses and due to one time expenses
included in the first quarter of 2004 related to changes in organization.
General & Administrative
General & Administrative ('G&A') expenses were $0.6 million in the first quarter
of 2004, compared to $0.7 million in the first quarter of 2003, a decrease of
$0.1 million mainly due to a decrease in the bad debts allowance.
Financial income (expenses)
Financial income (expenses) consists primarily of exchange rate differences
related to non-US dollar balances and interest income earned on cash and cash
equivalents offset by bank charges. Financial expenses for the first quarter of
2004 were $0.03 million, compared to financial income of $0.04 million in the
first quarter of 2003. The financial expenses in the first quarter of 2004
derived mainly from exchange rate differences resulting from strengthening of
the Dollar compared to the Euro during the quarter.
Net Loss
Net loss for the first quarter of 2004 was $1.5 million compared to $1.0 million
for the first quarter of 2003. The increase in losses is due to lower level of
revenues in the first quarter of 2004 and one time expenses related to changes
in organization.
Net loss per share
Net loss per share for the first quarter of 2004 was $0.14, compared to a net
loss per share of $0.09 for the first quarter of 2003.
Cash Position
As of March 31, 2004, cash and cash equivalents and restricted cash amounted
$5.9 million compared to $7.3 million at the end of 2003.
Financial & Operational Highlights for the first quarter of 2004 compared to
fourth quarter of 2003:
Revenues
Revenues for the first quarter of 2004 amounted to $3.3 million compared to $3.1
million in the fourth quarter of 2003.
Gross Margin
Gross margin in the first quarter of 2004 is 58% compared to 67% in the fourth
quarter of 2003. Gross margin decreased in current quarter mainly due to a
different sales mix and higher write off of inventory in the quarter.
Research & Development
R&D expenses in the first quarter of 2004 were $0.8 million, the same as in the
fourth quarter of 2003.
Selling & Marketing
S&M expenses in the first quarter of 2004 were $2.1 million compared to $2.2
million in the fourth quarter of 2003, decrease of $0.1 million mainly due to
decrease in trade shows costs and other expenses which offset the one time
expenses included in the first quarter of 2004.
General & Administrative
G&A expenses were $0.6 million in the first quarter of 2004 compared to $0.7
million in the fourth quarter of 2003, a decrease of $0.1 million mainly due to
a decrease in the bad debts allowance.
Financial income (expenses)
Financial income consists primarily of exchange rate differences related to
non-US dollar balances and interest income earned on cash and cash equivalents
offset by bank charges. Financial expenses for the first quarter of 2004 were
$0.03 million, compared to financial income of $0.3 million in the fourth
quarter of 2003. The change is explained by, exchange rate differences resulting
from devaluation of the Euro versus the Dollar (in Q1/04 the Euro weakened by
3.4% against the Dollar compared to Q4/03 in which the Euro strengthened by 8.2%
compared to the Dollar) offset by the weakening of the NIS compared to the
Dollar.
Net Loss
Net loss for the first quarter of 2004 amounted to $1.5 million, compared to
$1.4 million in the fourth quarter of 2003.
Net loss per share
Net loss per share for the first quarter of 2004 was $0.14, compared to a net
loss per share of $0.13 for the fourth quarter of 2003.
Contact:
Orad Hi-Tec Systems Ltd.
Sarit Sagiv
Chief Financial Officer
PO Box 2177
Kfar Saba 44425, Israel
Tel: +972-9-767-6862
Fax: +972-9-767-6861
E-Mail: sarit@orad.tv
www.orad.tv
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, March 31,
2003 2004
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,801 $ 5,407
Restricted cash 523 500
Trade receivables, net 4,649 4,586
Other receivables and prepaid expenses 1,018 964
Inventories 4,115 3,730
Work in process net of advances from customers 1,340 1,337
Total current assets 18,446 16,524
SEVERANCE PAY FUNDS 848 850
PROPERTY AND EQUIPMENT, NET 2,869 2,729
$ 22,163 $ 20,103
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturity of long-term bank loan $ 16 $ 6
Trade payables 2,025 1,437
Deferred revenues 524 601
Other payables and accrued expenses 3,657 3,636
Total current liabilities 6,222 5,680
ACCRUED SEVERANCE PAY 1,129 1,137
MINORITY INTEREST (287) (287)
SHAREHOLDERS' EQUITY:
Share capital 28 28
Additional paid-in capital 75,107 75,107
Accumulated other comprehensive loss (547) (547)
Accumulated deficit (59,489) (61,015)
Total shareholders' equity 15,099 13,573
$ 22,163 $ 20,103
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Year ended Three months ended
December 31, March 31,
2003 2003 2004
Unaudited
Revenues $ 15,439 $ 4,203 $ 3,343
Cost of revenues 5,608 1,533 1,401
Gross profit 9,831 2,670 1,942
Operating expenses:
Research and development 3,502 976 789
Sales and marketing 8,296 1,503 2,063
General and administrative 2,700 650 579
Amortization of deferred share compensation 784 600 -
Total operating expenses 15,282 3,729 3,431
Operating loss 5,451 1,059 1,489
Financial income (expenses), net 433 37 (32)
Other expenses, net 333 - 5
Loss before minority interest in losses of a subsidiary 5,351 1,022 1,526
Minority interest in losses of a subsidiary 199 40 -
Net loss $ 5,152 $ 982 $ 1,526
Basic and diluted net loss per share $ 0.49 $ 0.09 $ 0.14
Weighted average number of shares used in computing basic 10,582 10,562 10,679
and diluted net loss per share (in thousands)
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Additional Warrants Deferred Accumulated
Share paid-in share other Accumulated Total
capital capital compensation comprehensive deficit
income (loss)
Balance as of January 1, 2003 $ 28 $ 74,682 $ 425 $ (784) $ (547) $ (54,337) $ 19,467
Comprehensive loss:
Net loss - - - - - (5,152) (5,152)
Total comprehensive loss (5,152)
Amortization of deferred share - - - 784 - - 784
compensation
Forfeiture of warrants - 425 (425) - - - -
Balance as of December 31, 2003 28 75,107 - - (547) (59,489) 15,099
Comprehensive loss:
Net loss for the period - - - - - (1,526) (1,526)
Total comprehensive loss (1,526)
Balance as of March 31, 2004 $ 28 $ 75,107 $ - $ - $ (547) $ (61,015) $ 13,573
(unaudited)
Balance as of January 1, 2003 $ 28 $ 74,682 $ 425 $ (784) $ (547) $ (54,337) $ 19,467
Comprehensive loss:
Net loss for the period - - - - - (982) (982)
Total comprehensive loss (982)
Amortization of deferred share - - - 600 - - 600
compensation
Balance as of March 31, 2003 $ 28 $ 74,682 $ 425 $ (184) $ (547) $ (55,319) $ 19,085
(unaudited)
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Three months ended
December 31, March 31,
2003 2003 2004
Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,152) $ (982) $ (1,526)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 1,534 456 332
Amortization of deferred share compensation 784 600 -
Minority interest in losses of a subsidiary (199) (40) -
Decrease (increase) in trade receivables, other receivables 709 (189) 117
and prepaid expenses
Decrease in inventories 262 171 217
Decrease (increase) in work in process net of advances from (825) (379) 3
customers
Decrease in trade payables, other payables and accrued (88) (740) (603)
expenses and accrued severance pay, net
Increase (decrease) in deferred revenues 34 (100) 77
Other 1 - 5
Net cash used in operating activities (2,940) (1,203) (1,378)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (156) (20) (34)
Proceeds from sale of property and equipment 32 3 5
Restricted cash (23) - 23
Net cash used in investing activities (147) (17) (6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term bank credit, net (30) (29) -
Payment of long-term bank loan (116) (41) (10)
Net cash used in financing activities (146) (70) (10)
Decrease in cash and cash equivalents (3,233) (1,290) (1,394)
Cash and cash equivalents at the beginning of the year 10,034 10,034 6,801
Cash and cash equivalents at the end of the period $ 6,801 $ 8,744 $ 5,407
ORAD HI TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
SUPPLEMENTARY INFORMATION
a. Company's shares and share options held by members of the board of
directors and officers of the Company:
Number of Number of
Ordinary shares share options *)
Avi Sharir 1,214,982 184,932
Michael Tamir (**) 1,198,154 184,932
Moshe Nissim - 56,428
Sarit Sagiv - 15,000
Orna Nehustan - 20,000
Yehuda Bronicki - 10,000
Amos Horev - 10,000
Dan Falk - 10,000
Anat Segal - 10,000
*) Each share option is convertible into one Ordinary share.
**) On February 27, 2004 Michael Tamir resigned from the Board of Directors.
b. As of March 31, 2004, the Company employs 106 employees.
This information is provided by RNS
The company news service from the London Stock Exchange
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