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Tuesday March 4, 9:44 am ET
Crystal Systems Solutions Reports Record Fourth Quarter Revenues and Positive Operating Income for Fiscal Year 2002
Consolidation with Liraz Expected to Create Enterprise IT Modernization Leader Offering a Full Range of Solutions
HERZLIYA, Israel--(BUSINESS WIRE)--March 4, 2003--Crystal Systems Solutions (Nasdaq:CRYS - news) a global provider of leading software products and support services for the modernization of existing information systems and cross platform rehosting, today announced its operating and financial results for the fourth quarter and the year ended December 31, 2002.
Total revenues for the fourth quarter ended December 31, 2002 were $13.8 million, compared with $8.1 million for the fourth quarter of 2001 and $7.3 million for the third quarter of 2002. The net loss for the fourth quarter of 2002 was $3.5 million (or $0.29 cents per share) compared with a net loss of $7 million (or $0.71 per share) for the fourth quarter of 2001.
Revenues for the year ended December 31, 2002 were $36.7 million, compared with $38.4 million in 2001. Crystal reported a net loss for 2002 of $3.6 million (or $0.35 per share), compared with a net loss of $15 million (or $1.52 per share) in 2001. Excluding restructuring costs, depreciation, amortization and other non-recurring expenses, the net loss for 2002 was $0.3 million, compared with $5.2 million in 2001.
The results of the fourth quarter of 2002 were materially impacted by the recent acquisition of Liraz. The company is implementing a reorganization plan that is designed to enhance the capabilities of each business entity, while increasing the overall efficiency of the company. As planned, in order to integrate the company's main business focus, all functions and assets in the organization were evaluated and their utilization was determined according to their expected contribution to the consolidated company. The expenses attributed to the implementation of this plan heavily influenced fourth quarter results, including restructuring, reorganization and impairments of asset related costs. The overall impact of this process at Crystal, its subsidiaries and its affiliated companies totaled $3.5 million in the fourth quarter.
The plan capitalizes on the strength of each company, combining their efforts to create a leader in the Enterprise IT Modernization market. To date, Crystal has strengthened its global presence and moved closer to its target markets with sales and support centers in the United States, Denmark, The Netherlands, Germany, Italy, the United Kingdom, Romania, Cyprus, and Israel. The Company employs over 500 professionals, approximately 200 in Israel, 175 in Europe, and 125 in the United States.
The restructuring process is predicted to create a unified business with a complete range of enhanced Enterprise IT Modernization offerings, from legacy reuse to platform rehosting. These products and solutions can increase corporate ROI by combining the reuse of legacy components with the advantages provided by newer technologies. The technological and operational synergies between the CRYSWARE solutions and Liraz's BluePhoenix AppBuilder product will thus give global enterprises the ability to efficiently adapt to changing business and IT demands without losing the value of their previous investments in applications and business rules.
Additionally, Crystal's subsidiary Mainsoft has recently announced that it will significantly broaden the availability of its flagship product, Visual MainWin 5, by adding seven new Unix operating systems to its list of supported platforms. By June 2003, Visual MainWin 5 will be available on twelve platforms and thus empower its customers to extend the reach of their Windows applications deeper into the multi-platform enterprise than ever before.
"The acquisition of Liraz increases the stability of Crystal by reducing the risk inherent to initiating marketing and sales activities in new territories. It provides the complete suite of CRYSWARE solutions with immediate exposure to a large number of customers worldwide. At present, Liraz is also acting as a reseller for Crystal and has received initial positive acceptance for the CRYSWARE solutions from the market. The visible synergies of this business combination are planned to materialize and generate increased revenues, in the range of $50 million to $55 million, resulting in operating profitability, thereby increasing shareholder value," said Mr. Gad Goldstein, Chairman of the Board.
Gad Goldstein, Chairman of the Board, and Iris Yahal, the company's Chief Financial Officer, will discuss the third quarter results and will be available to answer questions in a conference call on Tuesday, March 4, 2003 at 10 A.M. (EST) / 5 P.M. Israel time. Interested parties are welcome to call the telephone numbers listed below, five to ten minutes prior to the start of the conference call. Callers should reference "Crystal Systems Solutions Fourth Quarter Results" to the AT&T conference call operator.
In the US call: 800/230-1059
Outside the US call: 612/332-0418
An automated replay of the conference call will be available from March 4th at 02:00 P.M. until March 6th at 11:59 P.M. (EST). To access the replay please call (USA) 800/475-6701 (International) 320/365-3844 and enter Crystal's access code of 676920.
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.
About Liraz
Liraz provides software and services for enterprise application development and management through its wholly owned subsidiary BluePhoenix Solutions. In addition to some of the world's largest financial institutions, BluePhoenix provides large-scale solutions for leading enterprises around the world. The BluePhoenix group is headquartered in the Netherlands with wholly owned BluePhoenix subsidiaries in Cyprus, Denmark, Germany, Italy, the United Kingdom, and the United States.
SAFE HARBOR: 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.
This press release is also available at www.crystal-sys.com
All names and trademarks are their owners' property.
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2002 2001
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,306 $9,374
Marketable securities 640 574
Accounts receivable:
Trade 14,723 12,171
Other 2,924 2,253
------------ ------------
Total current assets 33,593 24,372
------------ ------------
INVESTMENTS 3,475 8,053
------------ ------------
FIXED ASSETS
Cost 11,173 9,799
Less - accumulated depreciation 7,601 6,449
------------ ------------
Total fixed assets 3,572 3,350
------------ ------------
OTHER ASSETS, NET 50,753 18,892
------------ ------------
Total assets $91,393 $54,667
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $7,473 $2,280
Accounts payable and accruals:
Trade 3,738 5,261
Deffered revenue 7,006 ---
Other 14,066 6,930
------------ ------------
Total current liabilities 32,283 14,471
------------ ------------
LONG-TERM LIABILITIES:
Accrued severance pay, net 931 702
Provision for losses in formerly-consolidated
subsidiary 2,512 ---
Loans from banks and others 2,652 281
------------ ------------
Total long-term liabilities 6,095 983
------------ ------------
MINORITY INTEREST 6,294 3,956
------------ ------------
SHAREHOLDERS' EQUITY
(net of cost of 1,870,565 shares held by
subsidiaries) 46,721 35,257
------------ ------------
Total liabilities and shareholders' equity $91,393 $54,667
============ ============
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three months
Year ended ended
December 31, December 31,
--------- ---------- -------- --------
2002 2001 2002 2001
--------- ---------- -------- --------
Revenues $36,668 $38,438 $13,800 $8,097
Cost of revenues 15,220 17,722 6,370 3,481
--------- ---------- -------- --------
Gross profit 21,448 20,716 7,430 4,616
Software development costs, net 7,387 8,868 2,001 1,912
Selling, general and
administrative expenses 11,994 16,474 5,125 3,349
--------- ---------- -------- --------
2,067 (4,626) 304 (645)
Depreciation and Amortization
of goodwill 1,251 3,320 405 799
Restructuring costs & non-
recurring expenses 472 4,467 472 2,356
--------- ---------- -------- --------
Operating income (loss) 344 (12,413) (573) (3,800)
Financial expenses, net (195) (62) (253) (13)
Other expenses, net (1,581) (1,956) (1,684) (2,485)
--------- ---------- -------- --------
Income (loss) before taxes (1,432) (14,431) (2,510) (6,298)
Taxes on income (160) (115) (104) (37)
--------- ---------- -------- --------
(1,592) (14,546) (2,614) (6,335)
Minority interest (702) 863 (285) (122)
Equity in losses of affiliated
companies (1,336) (1,304) (551) (526)
--------- ---------- -------- --------
Net income (loss) (3,630) (14,987) (3,450) (6,983)
========= ========== ======== ========
Basic earnings (loss) per share (0.35) (1.52) (0.29) (0.71)
========= ========== ======== ========
Diluted earnings (loss) per
share (0.35) (1.52) (0.29) (0.71)
========= ========== ======== ========
Common shares outstanding 10,517 9,872 11,869 9,842
========= ========== ======== ========
Common shares assuming dilution 10,517 9,872 11,869 9,842
========= ========== ======== ========
Contact:
Iris Yahal
Crystal System Solutions
972-9-952-6110
 
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