Final Results
Orad Hi-Tec Systems
29 March 2004
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the fiscal year 2003 and the quarter ended December 31 2003
Tel Aviv, March 29th, 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, announced today its results for the
fiscal year 2003 and the quarter ended December 31 2003.
Highlights :
• $15.4 million annual revenues in 2003 compared to $14.5 million in 2002
• Improved gross margins: 64% in 2003 compared to 58% in 2002
• Penetration growing into the Visual Simulation market: five new customers
added
• Important new US sports market sales of Forum video servers for live replay
• Significant decrease in 2003 net loss compared to previous year
Avi Sharir, Orad's President and Chief Executive Officer, commented: 'Despite
the fact that the fourth quarter revenues are lower than expected we are
encouraged by the rate of incoming orders at the end of 2003 and in the first
quarter of 2004. Furthermore, we expect to be able to recognize $3m of revenues
from the Hong Kong Jockey Club project, which will make a contribution to
operating results in 2004. We have a number of other exciting prospects for the
delivery of our products and, with the climate in the broadcasting sector
improving, look forward to reporting continued positive results in 2004.'.
For further information:
Orad (www.orad.tv)
Avi Sharir + 972 976 768 62
Shore Capital (London)
Graham Shore + 44 20 7408 4090
Jonathan Nelson
Haubrok IR GmbH (Frankfurt) + 49 211 301 260
Michael Kempkes
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the fiscal year 2003 and the quarter ended December 31 2003
Chief Executive's Statement
Revenues for the year 2003 were $15.4 million, compared to $14.5 million for the
year 2002. Gross margin improved and reached 64% in the year 2003 compared to
58% in 2002. The Company succeeded in decreasing further its operational
expenses, which amounted to $15.3 million in the year 2003 compared to $18.1
million in the year 2002 as a result of measures taken by the Company to
increase efficiency and cut expenses. Net loss for the year 2003 decreased
significantly to $5.2 million compared to a net loss of $8.7 million in the year
2002.
Operational Highlights of 2003:
• Sales of Orad's sports production systems continue to grow; 49% of 2003
revenues derived from sports products compared to 40% in 2002.
• Orad has secured orders for its On Air Graphic product (CyberGraphic) from
high profile customers worldwide such as: WDR of Germany, TV Globo of
Brazil, M6 and TF1 of France, TV3 of Spain, TVB of HK, ZEE TV of India
and KBS of Korea.
• Growing penetration into Visual Simulation market: Orad's DVG is considered
the world's most powerful and scalable visualization cluster and it is
being used in visual simulations and virtual reality applications.
Significant sales have been made to British Aerospace of the UK, Clarte of
France and to Northrop Grumann, Naval Research Lab and Old Dominion
University of the US.
• Orad has begun to penetrate the US Sports market with its Forum video
servers for Live Replay applications. In 2003 several important new
customers purchased Forum, including: the Philadelphia Phillies
(Philadelphia's Major League Baseball), the Chicago Bears and the Green Bay
Packers of the National Football League.
• 2003 revenues do not take account of a major project for the Hong Kong
Jockey Club which the Company had hoped to be able to recognize as revenues
in 2003. However, delays resulting from the SARS epidemic in final
implementation of the Jockey Club system mean that the acceptance testing
has slipped into 2004. To date the system has been used at several major
race meetings in Hong Kong and we hope to receive final acceptance during
the first half of 2004.
Avi Sharir, Orad's President and Chief Executive Officer, commented : 'Despite
the fact that the fourth quarter revenues are lower than expected we are
encouraged by the rate of incoming orders at the end of 2003 and in the first
quarter of 2004. Furthermore, we expect to be able to recognize $3m of revenues
from the Hong Kong Jockey Club project which will make a contribution to
operating results in 2004. We have a number of other exciting prospects for the
delivery of our products and, with the climate in the broadcasting sector
improving, look forward to reporting continued positive results in 2004.' .
Financial & Operational Highlights for the fiscal year of 2003 and the quarter
ended December 31, 2003 compared to the same periods in 2002:
Revenues
The revenues for the year 2003 were $15.4 million, compared to $14.5 million for
the year 2002, an increase of 6%. The revenues for the fourth quarter of 2003
were $3.1 million, compared to $4.2 million for the fourth quarter of 2002.
Gross Margin
Gross margin for the year 2003 was 64% compared to 58% in the year 2002. Gross
margin for the fourth quarter of 2003 was 67% compared to 64% in the fourth
quarter of 2002. In addition, in 2003 the company closed its manufacturing
operation in France and wrote-off inventory in the amount of $0.4 million. The
Company maintained this high margin due to expenses savings obtained by
centralizing all manufacturing activities in one location.
Research & Development
Research and development ('R&D') expenses were $3.5 million in the year 2003,
compared to $4.5 million in the year 2002. R&D expenses in the fourth quarter of
2003 were $0.8 compared to $1.1 million in the fourth quarter of 2002. 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 $8.3 million in the year of 2003
compared to $7.6 million in the year of 2002, an increase of $0.7 million mainly
due to higher volume of revenues and strengthening of the Euro compared to the
Dollar.
S&M expenses in the fourth quarter of 2003 were $2.2 million compared to $1.8
million in the fourth quarter of 2002, increase of $0.4 million also mainly due
to strengthening of the Euro compared to the Dollar.
General & Administrative
General & Administrative ('G&A') expenses were $2.7 million in the year of 2003,
compared to $3.6 million in the year of 2002, a decrease of $0.9 million mainly
due to a decrease in bad debts allowance expenses.
G&A expenses in the fourth quarter of 2003 were $0.7 million compared to $1
million in the fourth quarter of 2002.
Other Expenses
Other expenses in the year of 2003 were $0.3 million and are attributed to
Orad's admission to trading on AIM.
Financial income (expenses)
Financial income consists primarily of exchange rate differences related to
non-US dollar balances and interest income earned on short-term deposits offset
by bank charges. Financial income for the year of 2003 was $0.4 million,
compared to financial income of $1 million in the year of 2002. The decrease in
financial income is due to exchange rate differences resulting from
strengthening of the Euro compared to the Dollar in 2003 to a lesser degree than
in 2002 and the decrease in interest from short-term bank deposits. Financial
income for the fourth quarter of 2003 was $0.3 million compared to financial
income of $0.09 million in the fourth quarter of 2002.
Net Loss
Net loss for the year 2003 was $5.2 million compared to $8.7 million for the
year 2002. The decrease in losses is due to increase in revenues, improved gross
margin and the continued implementation of cutting expenses and increasing
efficiency.
Net loss for the fourth quarter of 2003 was $1.4 million compared to $1.6
million for the fourth quarter of 2002.
Net loss per share
Net loss per share for the year of 2003 was $0.49, compared to a net loss per
share of $0.84 for the year of 2002.
Net loss per share for the fourth quarter of 2003 was $0.13, compared to a net
loss per share of $0.15 for the fourth quarter of 2002.
Cash Position
As of December 31, 2003, cash and short-term bank deposits amounted $7.3 million
compared to $7.9 million at the end of the third quarter of 2003, a decrease of
$0.6 million mainly in order to finance operations.
Financial & Operational Highlights for the fourth quarter of 2003 compared to
third quarter of 2003:
Revenues
Revenues for the fourth quarter of 2003 amounted to $3.1 million compared to
$3.7 million in the third quarter of 2003.
Gross Margin
Gross margin in the fourth quarter of 2003 is 67% compared to 62% in the third
quarter of 2003. The Company maintained this high margin due to expenses savings
obtained by centralizing all manufacturing activities in one location.
Research & Development
R&D expenses in the fourth quarter of 2003 were $0.8 million, the same as in the
third quarter of 2003.
Selling & Marketing
S&M expenses in the fourth quarter of 2003 were similar to level in the third
quarter of 2003 and amounted $2.2 million.
General & Administrative
G&A expenses were $0.7 million in the fourth quarter of 2003, the same as in the
third quarter of 2003.
Financial income (expenses)
Financial income consists primarily of exchange rate differences related to
non-US dollar balances and interest income earned on short-term deposits offset
by bank charges. Financial income for the fourth quarter of 2003 was $0.3
million, compared to financial expenses of $0.02 million in the third quarter of
2003. The change is explained by, exchange rate differences resulting from
devaluation of the Dollar versus the Euro (in Q4/03 the Euro strengthened by
8.2% compared to the Dollar while in Q3/03 it strengthened compared to the
Dollar by 2.2%) offset by the weakening of the NIS compared to the Dollar.
Net Loss
Net loss for the fourth quarter of 2003 amounted to $1.4 million, compared to
$1.5 million in the third quarter of 2003.
Net loss per share
Net loss per share for the fourth quarter of 2003 was $0.13, compared to a net
loss per share of $0.14 for the third 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 ext. 578
Fax: +972-9-767-6861
E-Mail: mailto:michal@orad.tv
http://www.orad.tv/
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2003 2002
ASSETS US$000 US$000
CURRENT ASSETS:
Cash and cash equivalents $ 6,801 $ 10,034
Restricted cash 523 500
Trade receivables, net 4,649 5,062
Other receivables and prepaid expenses 1,018 1,314
Inventories and work in process 5,455 4,984
Total current assets 18,446 21,894
SEVERANCE PAY FUNDS 848 482
EQUIPMENT LEASED TO CUSTOMERS, NET 172 354
PROPERTY AND EQUIPMENT, NET 2,697 3,834
$ 22,163 $ 26,564
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturity of long-term bank loan $ 16 $ 149
Trade payables 2,025 2,242
Deferred revenues 524 490
Other payables and accrued expenses 3,657 3,194
Total current liabilities 6,222 6,075
LONG-TERM BANK LOAN, NET OF CURRENT MATURITY - 13
ACCRUED SEVERANCE PAY 1,129 1,097
MINORITY INTEREST (287) (88)
SHAREHOLDERS' EQUITY:
Share capital 28 28
Additional paid-in capital 75,107 74,682
Warrants - 425
Deferred share compensation - (784)
Accumulated other comprehensive loss (547) (547)
Accumulated deficit (59,489) (54,337)
Total shareholders' equity 15,099 19,467
$ 22,163 $ 26,564
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Year ended Three months ended
December 31, December 31,
2003 2002 2003 2002
US$000 US$000 US$000 US$000
Revenues $ 15,439 $ 14,506 $ 3,096 $ 4,180
Cost of revenues 5,608 6,091 1,032 1,485
Gross profit 9,831 8,415 2,064 2,695
Operating expenses:
Research and development, net 3,502 4,527 792 1,076
Sales and marketing, net 8,296 7,639 2,239 1,757
General and administrative 2,700 3,573 719 966
Amortization of deferred share compensation 784 2,400 - 600
Total operating expenses 15,282 18,139 3,750 4,399
Operating loss 5,451 9,724 1,686 1,704
Financial income, net 433 962 285 91
Other expenses, net 333 8 98 -
Loss before minority interest in losses of a 5,351 8,770 1,499 1,613
subsidiary
Minority interest in losses of a subsidiary 199 28 116 25
Net loss $ 5,152 $ 8,742 $ 1,383 $ 1,588
Basic and diluted net loss per share $ 0.49 $ 0.84 $ 0.13 $ 0.15
Weighted average number of shares used in 10,582 10,461 10,582 10,474
computing basic 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
Share Additional Warrants Deferred Accumulated Accumulated Total
capital paid-in share other deficit
capital compensation comprehensive
loss
Balance as of $ 28 $ 74,518 $ 535 $ (3,184) $ (154) $ (45,595) $ 26,148
January 1, 2002
Comprehensive
loss:
Net loss - - - - - (8,742) (8,742)
Other - - - - (393) - (393)
comprehensive
loss - foreign
currency
translation
adjustments
Total (9,135)
comprehensive
loss
Amortization of - - - 2,400 - - 2,400
deferred share
compensation
Issuance of *) - 54 - - - - 54
contingent
shares
Forfeiture of - 110 (110) - - - -
warrants
Balance as of 28 74,682 425 (784) (547) (54,337) 19,467
December 31,
2002
Comprehensive
loss:
Net loss - - - - - (5,152) (5,152)
Total (5,152)
comprehensive
loss
Amortization of - - - 784 - - 784
deferred share
compensation
Forfeiture of - 425 (425) - - - -
warrants
Balance as of $ 28 $ 75,107 $ - $ - $ (547) $ (59,489) $ 15,099
December 31,
2003
*) Represent an amount lower than $ 1.
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
2003 2002
US$000 US$000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,152) $ (8,742)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 1,534 1,880
Amortization of deferred share compensation 784 2,400
Minority interest in losses of a subsidiary (199) (28)
Accrued interest on short-term bank deposits - (49)
Decrease in trade receivables, other receivables and prepaid expenses 709 1,439
Increase in inventories and work in process (563) (511)
Decrease in trade payables, other payables, accrued expenses and accrued (88) (1,048)
severance pay, net
Increase in deferred revenues 34 24
Other 1 8
Net cash used in operating activities (2,940) (4,627)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment and equipment leased to customers (156) (248)
Proceeds from sale of property and equipment and equipment leased to 32 78
customers
Proceeds from short-term bank deposits - 10,131
Restricted cash (23) (500)
Net cash provided by (used in) investing activities (147) 9,461
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term bank credit, net (30) (53)
Payment of long-term bank loan (116) (175)
Payment of long-term loans from shareholders - (125)
Net cash used in financing activities (146) (353)
Increase (decrease) in cash and cash equivalents (3,233) 4,481
Cash and cash equivalents at the beginning of the year 10,034 5,553
Cash and cash equivalents at the end of the year $ 6,801 $ 10,034
ORAD HI-TEC SYSTEMS LTD. AND ITS SUBSIDIARIES
SUPPLEMENTARY INFORMATION
a. 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 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 is convertible into one Ordinary share.
**) On November 27, 2003, the Company granted 10,000 options to each of the
aforementioned directors.
b. As of December 31, 2003, the Company employs 115 employees.
c. Further copies of the results for the fiscal year 2003 are available at the
Company's website, www.orad.tv
This information is provided by RNS
The company news service from the London Stock Exchange
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