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Monday August 13, 9:46 am Eastern Time
Crystal Systems Solutions Ltd. Announces Results to Second Quarter
HERZELIYA, Israel--(BUSINESS WIRE)--Aug. 13, 2001-Crystal Systems Solutions (Nasdaq:CRYS - news) a leading provider of software modernization tools, today announced financial results for second quarter ended June 30, 2001.
Revenues for the second quarter of 2001 were $10.1 million and the pro forma EBITDA loss excluding amortization of goodwill and restructuring expenses, was $1.35 million. In the comparable second quarter of 2000, revenues were $12 million and the pro forma EBITDA was $1.1 million.
The company's net loss for the quarter, which included amortization of goodwill, and restructuring charges, was $2.85 million or $0.30 loss per share. In the comparable second quarter of 2000, the net income was $609,000 or $0.06 per share.
As a result of the implementation of its cost containment and workforce realization plan, Crystal managed to reduce the pro-forma EBITDA loss to $1.3 million in the second quarter of 2001, as compared to an EBITDA loss of $1.7 million in the first quarter of 2001. The pro-forma net loss for the second quarter was $1.5 million as compared to $2.2 in the first quarter.
Pursuant to its previously announced comprehensive restructuring plan, Crystal is consolidating business lines and increasing its share in subsidiaries and affiliated companies. These measures are taken in order to eliminate overhead, while focusing on the enhancement of its core business technology and increasing the efficiency of its production force.
In order to adjust its expense level to the revenue model, Crystal is assuming a cost reduction plan, which in the second quarter already resulted in a decrease of over $1 million in expenses. The company believes that the complete impact of this cost containment and workforce rationalization will enable it to achieve its goal of returning to positive EBITDA by the fourth quarter.
Sales cycles around the world are being extended due to a longer decision making process. As a result, potential customers prefer to have multiple license orders as opposed to committing to large annual purchases, even though this risk reducing policy prevents them from gaining the quantity discounts offered. This change in the customers' behavior pattern mainly affected the results of our subsidiary, Mainsoft.
Referring to Mainsoft, said Mr. Goldstein, Chairman of the board: "The current purchase orders are smaller in the number of licenses than they were typically in the past. However, based on reassurance received from our existing Visual MainWin user base, as well as from market research, I am cautiously optimistic, and believe that by the fourth quarter this year, Mainsoft will return to its growing curve in revenues, while combined with its cost-cutting program, it will demonstrate operating profit."
Commenting on Crystal's core business, added Mr. Goldstein: "Crystal's technologically proven suite of tools enable a variety of implementations in the modernization of legacy systems, data base, and software applications, and therefore is a key factor in the potential future growth of the company.
"The second quarter results, though not satisfactory yet in the overall performance, create an increased confidence that Crystal's unique technology, combined with its global presence is creating a competitive sustainable advantage for the Company. I believe this tool-based superiority, together with the successful implementation of the cost-cut plan will turn into positive EBITDA towards the end of this year." -adjourned Mr. Gad Goldstein, Chairman of the Board.
Conference Call Details:
Gad Goldstein, Chairman of the Board, and Iris Yahal, Chief Financial Officer will discuss the first quarter results and will be available to answer questions. The conference call will be held on
Monday, August 13th, 2001 at 10:30 A.M. (EST).
Interested parties are welcome to call the telephone numbers listed below, five to ten minutes prior to the start of the conference call.
In the US call 800/230-1092
Outside the US call 612/332-0226
Callers should reference "Crystal Systems Solutions Second Quarter Results" to the AT&T conference call operator.
An automated replay of the conference call will be available from August 13th 02:00 P.M. until August 15th at midnight. To access the replay please call (USA) 800/475-6701 (International) 320/365-3844 and enter Crystal's access code of 598987.
About Crystal Systems Solutions
Crystal Systems Solutions Ltd. (Nasdaq:CRYS - news) develops and markets software tools and provides end-to-end transformation projects for e-Business enabling of legacy systems, cross-platform migration, and consolidation of information systems. Crystal provides comprehensive enterprise products spanning mainframe, midrange, and client/server computing platforms. Crystal has enhanced its expertise through the successful completion of projects for Fortune 1000 prestigious organizations, establishing solid credibility, and achieving global recognition and presence. Crystal is totally committed to supporting its customers, both directly and via its partners, offering end-to-end solutions through consultancy, assistance, and service in conjunction with its wide variety of proprietary software tools. For more information, please visit our web site at http://www.crystal-sys.com.
Crystal Systems Solutions is a member of the Formula Group (NASDAQ:FORTY - news). The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services developing proprietary software products, and providing computer-based solutions.
Certain statements contained in this release may be deemed forward-looking statements, with respect to plans, projections, or future performance of the Company, the occurrence of which involves certain risks and uncertainties that could cause actual plans to differ materially from these statements. These risks and uncertainties include but are not limited to: market demand for the Company's tools, successful implementation of the Company's tools, competitive factors, the ability to manage the Company's growth, the ability to recruit and retrain additional software personnel, and the ability to develop new business lines.
All names and trademarks are their owner's property.
Pro Forma Consolidated Statements Of Operations (Unaudited)
(in thousands, except per share data)
Excluding Amortization of goodwill, Intangibles
And Non-Recurring Expenses
Six months ended Three months ended Year ended
June 30, June 30, December 31
2001 2000 2001 2000 2000
unaudited unaudited
Revenues $21,165 $24,041 $10,151 $12,037 49,245
Cost of revenues 10,201 9,910 4,868 4,757 20,065
------- ------- ------- ------- -------
Gross profit 10,964 14,131 5,283 7,280 29,180
Software
development
costs 4,675 5,025 2,300 2,688 9,487
Selling, general
and administrative
expenses 9,293 7,312 4,330 3,486 14,650
------- ------- ------- ------- -------
EBITDA (3,004) 1,794 (1,347) 1,106 5,043
Depreciation 857 634 447 370 1,427
------- ------- ------- ------- -------
Operating income (3,861) 1,160 (1,794) 736 3,616
Financial income
(expenses), net (275) 1,009 (125) 461 1,370
Other income
(loss), net (136) 1,595 (129) 610 2,510
------- ------- ------- ------- -------
Income before
taxes (4,272) 3,764 (2,048) 1,807 7,496
Taxes on income 78 71 - 71 184
------- ------- ------- ------- -------
(4,350) 3,693 (2,048) 1,736 7,312
Minority interest 1,158 (881) 704 (607) (1,700)
Equity in losses
of affiliated
companies (527) (380) (187) (159) (1,114)
------- ------- ------- ------- -------
Net income (3,719) 2,432 (1,531) 970 4,498
======= ======= ======= ======= =======
Basic earnings
per share -0.38 0.24 -0.16 0.09 0.44
======= ======= ======= ======= =======
Diluted earnings
per share -0.37 0.23 -0.16 0.09 0.43
======= ======= ======= ======= =======
Common shares
outstanding 9,909 10,135 9,860 10,296 10,149
======= ======= ======= ======= =======
Common shares
assuming
dilution 9,950 10,471 9,860 10,424 10,363
======= ======= ======= ======= =======
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2001 2000
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $7,404 $12,086
Marketable securities 503 5,074
Accounts receivable:
Trade 18,367 21,085
Other current assets 5,107 4,706
------- -------
Total current assets 31,381 42,951
------- -------
INVESTMENTS 8,937 7,898
------- -------
FIXED ASSETS
Cost 9,960 10,155
Less -- accumulated depreciation 5,984 5,952
------- -------
Total fixed assets 3,976 4,203
------- -------
OTHER ASSETS, NET 19,735 14,085
------- -------
Total assets $64,029 $69,137
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $935 $1,015
Accounts payable and accruals:
Trade 4,608 3,841
Other 9,406 8,134
Restructuring accrual 627
------- -------
Total current liabilities 15,576 12,990
------- -------
LONG-TERM LIABILITIES:
Accrued severance pay, net 702 818
Loans from banks and others 432 34
------- -------
Total long-term liabilities 1,134 852
------- -------
MINORITY INTEREST 3,251 3,886
----- -----
Share capital 23 23
Capital surplus 40,785 40,632
Retained earnings 17,642 23,906
------- -------
58,450 64,561
Cost of Company shares held by
subsidiaries (1,745,500 shares) (14,382) (13,152)
-------- --------
44,068 51,409
-------- --------
Total liabilities and
shareholders' equity $64,029 $69,137
======== ========
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Six months ended Three months ended Year ended
June 30, June 30, December 31
2001 2000 2001 2000 2000
unaudited unaudited
Revenues $21,165 $24,041 $10,151 $12,037 $49,245
Cost of revenues 10,201 9,910 4,868 4,757 20,065
------- ------- ------- ------- -------
Gross profit 10,964 14,131 5,283 7,280 29,180
Software
development
costs 4,675 5,025 2,300 2,688 9,487
Selling, general
and administrative
expenses 9,293 7,312 4,330 3,486 14,650
------- ------- ------- ------- -------
(3,004) 1,794 (1,347) 1,106 5,043
Depreciation 857 634 447 370 1,427
Amortization
of goodwill 821 652 465 361 1,384
Restructuring costs
& Non-recurring
expenses 1,724 - 854 - -
------- ------- ------- ------- -------
Operating income (6,406) 508 (3,113) 375 2,232
Financial income
(expenses), net (275) 1,009 (125) 461 1,370
Other income
(loss), net (136) 1,595 (129) 610 2,510
------- ------- ------- ------- -------
Income before
taxes (6,817) 3,112 (3,367) 1,446 6,112
Taxes on income 78 71 - 71 184
------- ------- ------- ------- -------
(6,895) 3,041 (3,367) 1,375 5,928
Minority interest 1,158 (881) 704 (607) (1,700)
Equity in losses
of affiliated
companies (527) (380) (187) (159) (1,114)
------- ------- ------- ------- -------
Net income (6,264) 1,780 (2,850) 609 3,114
======= ======= ======= ======= =======
Basic earnings
per share -0.63 0.18 -0.30 0.06 0.31
======= ======= ======= ======= =======
Diluted earnings
per share -0.63 0.17 -0.30 0.06 0.30
======= ======= ======= ======= =======
Common shares
outstanding 9,909 10,135 9,860 10,296 10,149
======= ======= ======= ======= =======
Common shares
assuming dilution 9,950 10,471 9,860 10,424 10,363
======= ======= ======= ======= =======
Contact:
Crystal Systems Solutions, Tel Aviv
Iris Yahal, +972-9-9526110
 
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