1st Quarter Results

RNS Number : 4372V

Orad Hi-Tec Systems

29 May 2008

 



Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')

Results for the first quarter of 2008

Revenues up by 62%, net profits up by 714%

Orad Hi-Tec Systems Ltd.(Frankfurt - Prime Standard; London - AIM. Symbol: OHT), a leading developer, marketer and distributor of state-of-the-art, 3D real-time graphic solutions for the broadcasting markets, today announces its recorded results for the first quarter of 2008.

• Record revenues and profits with continued positive cash flow.  

• Revenues increased by 62% to US$7.7 million compared to US$ 4.7million in Q1/07 and by 12% compared to Q4/07. 

• Net profits increased by 714% to US$ 952 thousand compared to US$117 thousand in Q1/07 and by 35% compared to Q4/07.

• Cash, cash equivalents and restricted cash increased to US$14.5million

• Gross margin remained constant at 65%, in line with the average of 2007. 

Significant improvement of sales in the Americas and continues successful penetration to the On-Air graphics market. 

'We are proud to present the results for the first quarter of 2008', said Avi Sharir President and CEO of Orad and continued: 'We continue to see the benefits of the company's change in strategy, to secure growth in sales and booking of the On-Air graphics systems and improvement in North American market. Since the beginning of 2008 the company has signed some high profile and high volume projects, such as the graphics systems for the Olympic Games with China's CCTV, and projects with Czech national TV, MTV3 from Finland and others. 

The transition from standard definition to high definition and the pressure to reduce production costs is creating a demand for new virtual studios solutions. Since the beginning of 2008, Orad has signed a unique virtual studios contract with Canada's Global TV, with TV Globo from Brazil, the European Parliament and others. Part of the above mentioned projects were realised during Q1 of 2008'.

For further information:

Orad (www.orad.tv) Ehud Ben-Yair, CFO	+ 972 976 768 62
Edicto Investor Relations Dr. Sonke Knop, Frankfurt Germany	+  49 608494859-1
Shore Capital (London) Graham Shore	+ 44 20 7408 4090

  Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')

Results for the first quarter of 2008

Financial and Operational highlights for the first quarter of 2008 compared to the first quarter of 2008 and fourth quarter of 2007:

Revenues, net profit and cash status:

Revenues in Q1\08 increased by 62% to US$7.7 million compared to US$4.7million on Q1\2007 and by 12% compared Q4/07. This is mainly due to the strong back-log, the on-going penetration to the On- Air graphics market and the winning of several large contracts. 

Net profit increased dramatically by 714% to US$952 thousand compared to Q1/07 and by 35% compared to Q4/07.

In the first quarter   of 2008 cash, cash equivalents and restricted cash increased to US$14.5 million.

The table below reflects the trend in the last five quarters:

(in thousand USD)	Q1\07	Q2/07	Q3/07	Q4/07	Q1/08
Revenue	4,743	5,193	6,128	6,876	7,668
Gross Profit	3,221	3,602	3,917	4,354	5,005
Net profit	117	332	621	706	952
Cash status	10,629	11,443	13,306	14,050	14,543

Gross Margin

Gross margin for the first quarter of 2008 remained constant at 65% compared to the average gross margin in 2007. 

Operational expenses:

Operational expenses in Q1/08 increased to US$4.1 million compared to US$3.1 million in Q1/07. This is mainly due to the increase in the sales and marketing efforts resulting from increasing territory coverage and the continued R&D effort deployed to release new applications to the market. The decline in the USD in all markets also put some pressure on the cost structure of the Company. However, the company also benefits from the fact that most of its sales are in Europe.

(in thousand USD)	Q1/07	Q4/07	Q1/08
Research and Development	776	961	964
Sales and Marketing	1,904	2,195	2,471
General and Administrative	491	663	745
Total Operating Expenses:	3,171	3,819	4,180

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

		March 31,		December 31,
		2008		2007
		Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$13,454		$12,981
Restricted cash		1,089		1,069
Trade receivables, net		2,585		1,869
Other accounts receivable and prepaid expenses		1,582		1,163
Inventories		2,963		2,920
Work in process, net of advances from customers		-		78
Total current assets		21,673		20,080
SEVERANCE PAY FUND		1,428		1,343
PROPERTY AND EQUIPMENT, NET		1,771		1,753
Total assets		$24,872		$23,176
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$2,447		$2,115
Deferred revenues		1,964		2,280
Other accounts payable and accrued expenses		6,276		5,718
Total current liabilities		10,687		10,113
ACCRUED SEVERANCE PAY		2,065		1,950
Total liabilities		12,752		12,063
SHAREHOLDERS' EQUITY:
Share Capital		29		29
Additional paid-in capital		75,530		75,475
Foreign currency translation adjustments		(547)		(547)
Accumulated deficit		(62,892)		(63,844)
Total shareholders' equity		12,120		11,113
Total liabilities and shareholders' equity		$24,872		$23,176

  CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except share and per share data

		Three months ended March 31,				Year ended December 31,
		2008		2007		2007
		Unaudited
Revenues:
Sales		$7,668		$4,743		$22,940
Cost of sales		2,663		1,522		7,846
Gross profit		5,005		3,221		15,094
Operating expenses:
Research and development, net		964		776		3,207
Sales and marketing		2,471		1,904		8,474
General and administrative		745		491		2,207
Total operating expenses		4,180		3,171		13,888
Operating income		825		50		1,206
Financial income, net		127		70		573
Other expenses, net		-		3		(4)
Net income		$952		$117		$1,775
Basic net earnings per share		$0.086		$0.01		$0.16
Weighted average number of shares used in computing basic net earnings per share (in thousands)		10,821		10,802		10,821
Diluted net earnings per share		$0.086		$0.01		$0.16
Weighted average number of shares used in computing diluted net earnings per share (in thousands)		11,084		10,971		10,982

 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

U.S. dollars in thousands, except share data

		Number of outstanding ordinary shares		Share  capital		Additional paid-in capital		Foreign currency translation adjustments		Accumulated deficit		Total
Balance as of January 1, 2007		10,800,621		$28		$75,357		$(547)		$(65,619)		$9,219
Comprehensive income:
Net income		-		-		-		-		1,775		1,775
Issuance of shares upon exercise of   employee share options		19,929		1		22		-		-		23
Share based compensation		-		-		96		-		-		96
Balance as of December 31, 2007		10,820,550		29		75,475		(547)		(63,844)		11,113
Comprehensive income:
Net income										952		952
Issuance of shares upon exercise of employee share options
Share-based compensation		-		-		55		-		-		55
Balance as of March 31, 2008 (unaudited)		10,820,550		29		75,530		(547)		(62,892)		12,120
Balance as of January 1, 2007		10,800,621		28		75,357		(547)		(65,619)		9,219
Comprehensive income:
Net income		-		-		-		-		117		117
Issuance of shares upon exercise of employee share options		1,500		*)   -		3		-		-		3
Share-based compensation		-		-		20		-		-		20
Balance as of March 31, 2007 (unaudited)		10,802,121		28		75,380		(547)		(65,502)		9,359

*)    Represent an amount lower than $ 1.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

				Three months ended March 31,								Year ended December 31,
				2008				2007				2007
				Unaudited
Cash flows from operating activities:
Net income				$952				$117				$1,775
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation				158				142				545
Share-based compensation				55				20				96
Increase (decrease) in trade receivables, net				(716)				435				553
Decrease in other accounts receivable and prepaid expenses				(419)				(122)				(326)
Increase in inventories				(43)				(21)				(384)
Decrease in work in process, net of advances from customers				15				290				442
Increase (decrease) in trade payables				332				(334)				761
Increase in other accounts payable and accrued expenses				621				395				951
Increase in accrued severance pay, net				30				29				121
Increase (decrease) in deferred revenues				(316)				81				439
Other				-				3				-
Net cash provided by in operating activities				669				1,035				4,973
Cash flows from investing activities:
Purchase of property and equipment				(176)				(80)				(656)
Proceeds from sale of property and equipment				-				9				48
Decrease (increase) in restricted cash				(20)				(511)				498
Net cash provided by (used) investing activities				(196)				(582)				1,106
Cash flows from financing activities:
Issuance of shares upon exercise of employees share options				-				3				23
Net cash provided by financing activities				-				3				23
Increase in cash and cash equivalents				473				456				3,890
Cash and cash equivalents at the beginning of the period				12,981				9,091				9,091
Cash and cash equivalents at the end of the period				$13,454				$9,547				$12,981
Non-cash transactions:
Classification between property and equipment, and inventories, net				-				-				160

a.    The Company's shares and options held by members of the Board of Directors and officers of the Company:

		Number of		Number of
		Ordinary  shares		share  options *)
Avi Sharir		2,143,238		269,253
Moshe Nissim		-		40,000
Ehud Ben-Yair		-		60,000
Orna Nehustan		-		45,000
Dan Falk		-		20,000
Shimon Ravid		-		10,000
Uzi Peled		-		10,000
Daniel Furman		753,300		10,000
Anat Segal		-		20,000

*)    Each share option is convertible into one Ordinary share.

b.    As of March 31, 2008, the Company employs 159 employees.

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