Arel Announces Third Quarter of 2002 Results; Operating Expenses Cut by 35% Compared to Q2; Cash Position Remains Stable At Approximately $11,000,000.Business Editors/High-Tech Writers YAVNE Yavne (Hebrew: יבנה, Arabic: يبنة Yibnah, Latin: Iamnia , Israel--(BUSINESS WIRE)--Nov. 28, 2002 Arel Communications and Software Limited (Nasdaq:ARLC ARLC Automatic Revolving Letter of Credit ) announces that it has substantially reduced its expense structure. The Company has cut its operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the third quarter by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $860,000, which represents a decrease of more than 35% compared to its Q2 level. This has resulted primarily from a decrease in headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. , as well as reductions in office space utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and lease terminations. The Company expects to operate at this reduced level of SG&A expenses in the fourth quarter of 2002 as well. Arel is also experiencing a stablization in its cash resources, which, as of November November: see month. 25, 2002, were approximately $11,000,000. The decrease in our cash position during the third quarter of 2002 was less than $180,000. Philippe Szwarc, the recently appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. Chief Executive Officer of Arel, comments: "We are pleased with the progress achieved in implementing our restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan, and encouraged that more than 80% of our quarterly losses are due to non-recurring events, which had extremely limited impact on our cash reserve. Furthermore, Arel is currently negotiating for the sale of its IDEAL e-learning (Electronic-LEARNING) An umbrella term for providing computer instruction (courseware) online over the public Internet, private distance learning networks or inhouse via an intranet. See CBT. solution to several Fortune 500 customers. If any of these transactions are completed, we expect that the revenues generated from these contracts will start showing clear improvement of our revenues in the coming quarters." Arel also announced today the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: results for the third quarter and nine months, ended September September: see month. 30, 2002. Arel reported that third quarter of 2002 revenues from sales and services were $829,000 a 23% decrease over the $1,071,000 reported in the second quarter of 2002, and a decrease of 64% compared to revenues of $2,274,000 reported in the third quarter of 2001. Net pro-forma loss in the third quarter of 2002 was $1,518,000, down 38% compared to net pro-forma loss of $2,465,000 reported in the second quarter of 2002, and up 32% compared to net pro-forma loss of $1,148,000 reported in the third quarter of 2001. In the third quarter of 2002 Arel recorded non-cash, one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges that include: a) the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and amortization of goodwill resulting from the acquisition of W2COM (1) (Computer Output Microfilm) Creating microfilm or microfiche from the computer. A COM machine receives print-image output from the computer either online or via tape or disk and creates a film image of each page. for a value of $4,575,000; b) an adjustment of $279,000 resulting from a decrease in value of Arel's investment in Arelnet. In addition Arel recorded a one-time restructuring expense of $1,671,000. The net loss for third quarter of 2002, including all the above-mentioned A`bove´-men`tioned a. 1. Mentioned or named before; aforesaid; mentioned or named earlier in the same text (in written documents). Adj. 1. charges, was $8,043,000, compared to a net loss of $18,735,000 reported in the third quarter of 2001. Pro-forma loss per share in the third quarter of 2002 was $0.12 basic and fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared to pro-forma loss per share of $0.09 in the third quarter of 2001. Loss per share in the third quarter of 2002 (including all the above-mentioned one-time charges) was $0.63 basic and fully diluted, compared to a $1.46 basic and fully diluted loss per share for the same period in 2001. Gross profit for the third quarter of 2002 was $105,000 a decrease of 78% compared to $476,000 in the second quarter of 2002, and a decrease of 90% compared to $1,089,000 for the third quarter of 2001. Revenues for the first nine months of 2002 were $4,646,000 a decrease of 32% compared to the nine-month 2001 revenues of $6,840,000. Net pro-forma loss for the first nine months of 2002 was $4,837,000 (excluding the non cash one time charges of: the impairment and amortization of goodwill from the acquisition of W2COM of $4,858,000, the adjustment of $279,000 for the decline in value of investment in Arelnet, as well as the one-time restructuring expense of $1,671,000), compared to a pro-forma net loss of $4,535,000 (excluding the non cash one time charges of: impairment and amortization of goodwill from the acquisition of W2COM of $16,229,000, the adjustment of $1,941,000 for the decline in value of investment in Arelnet, as well as the one time restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $961,000), reported for the first nine months of 2001. The net loss for the first nine months of 2002 was $11,645,000 compared to a net loss of $23,666,000 reported for the first nine months of 2001. Pro-forma loss per share for the first nine months of 2002 was $0.38 basic and fully diluted (excluding all the above-mentioned non-cash one-time charges), compared to a pro-forma loss per share of $0.35 basic and fully diluted, for the comparable 2001 period. Loss per share for the first nine months of 2002 was $0.90 basic and fully diluted (including all the above-mentioned non-cash one-time charges), compared to $1.84 basic and fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the comparable 2001 period (including loss from discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. and including goodwill amortization). Gross profit for the first nine months of 2002 was $1,681,000, a decrease of 52% compared to $3,488,000 for the first nine months of 2001. During the first nine months of 2002, the net expenses in R&D activities were $1,691,000, an increase of 12% compared to $1,507,000 for the comparable 2001 period. Arel continues the development of Arel's product line which seamlessly integrates real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. streaming video A one-way video transmission over a data network. It is widely used on the Web as well as company networks to play video clips and video broadcasts. Computers in home networks stream video to digital media hubs connected to a home theater. , high-resolution high-res·o·lu·tion adj. 1. Relating to an image that has fine detail. 2. a. Of or relating to an output device that produces images that contain a large number of dots per unit of area and are therefore sharp and graphics, full-duplex Capable of transmitting and receiving over the same channel simultaneously. In pure digital networks, this is achieved with two pairs of wires. In analog networks or in digital networks using carriers, it is achieved by dividing the bandwidth of the line into two frequencies, one for audio, two-way data interaction, and application sharing A data conferencing capability that lets two or more users interactively work on the same application at the same time. The application is loaded and running in only one machine; however, keystrokes are transmitted from and screen changes are transmitted to the other participants. capabilities providing the most advanced and powerful Interactive Distance Learning and Enterprise Communications solutions available. About Arel Communications and Software Arel Communications and Software, Ltd., Yavne, Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. and its U.S. subsidiaries, Arel Communications and Software, Inc., and Arel Learning Solutions Inc., (www.arel.net) market the IDEAL family of products, including its innovative Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Protocol-based Spotlight Spotlight can refer to at least three types of lighting:
(jargon) off-line - (Or "offline") 1. Not directly connected to the computer (e.g., an off-line tape drive), or with connection suspended ("take the printer off-line"). Contrast background, on-line. 2. Not now or not here. (asynchronous Refers to events that are not synchronized, or coordinated, in time. The following are considered asynchronous operations. The interval between transmitting A and B is not the same as between B and C. The ability to initiate a transmission at either end. ) content on a single platform. Powered by Arel's IDEAL engine, Spotlight integrates authoring and management tools, interactive delivery, evaluation, analysis, tracking and reporting. Arel IDEAL(TM) and Arel Spotlight(TM) are trademarks of Arel Communications and Software. All other trade names are the properties of their respective owners. Certain statements made herein that are not historical are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The words "estimate", "project", "intend", "expect", "believe", "hopeful" and similar expressions are intended to identify forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These forward-looking statements involve known unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to the Company's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for the Company's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with the Company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and its location in Israel. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission. (Tables to follow)
AREL COMMUNICATIONS AND SOFTWARE LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 2002
September December
30, 31,
-------------------------
2002 2001 2001
-------------------------
(Unaudited) (Audited)
-------------------------
U.S. dollars in thousands
-------------------------
Assets
CURRENT ASSETS:
Cash and cash equivalents 6,107 6,341 5,382
Short-term investments 4,606 8,247 8,340
Accounts receivable:
Trade 1,902 3,486 3,505
Other 439 695 716
Inventories 1,142 2,388 2,265
-------------------------
Total current assets 14,196 21,157 20,208
-------------------------
INVESTMENTS AND LONG-TERM RECEIVABLE:
Investment in Arelnet Ltd. 125 1,353 404
Loans to employees, net of current maturity 32 63 41
-------------------------
157 1,416 445
-------------------------
PROPERTY, PLANT AND EQUIPMENT:
Cost 2,333 3,338 3,906
Less - accumulated amortization 1,530 1,180 1,862
-------------------------
803 2,158 2,044
-------------------------
GOODWILL, net of provision for impairment
and accumulated amortization - 5,000 4,858
-------------------------
15,156 29,731 27,555
=========================
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term bank credit 13 56 16
Accounts payable and accruals:
Trade 884 1,025 890
Accrued restructuring costs 607
Other 3,353 4,692 4,594
-------------------------
Total current liabilities 4,857 5,773 5,500
-------------------------
LONG-TERM LIABILITIES:
Liability for employee rights upon
retirement, net of amount funded 261 342 311
Other 8 93 69
-------------------------
Total long-term liabilities 269 435 380
-------------------------
Total liabilities 5,126 6,208 5,880
-------------------------
SHAREHOLDERS' EQUITY:
Share capital 4 4 4
Capital surplus 52,740 52,740 52,740
Warrants 1,395 1,395 1,395
Accumulated deficit (44,109)(30,616) (32,464)
-------------------------
10,030 23,523 21,675
-------------------------
15,156 29,731 27,555
=========================
AREL COMMUNICATIONS AND SOFTWARE LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2002
Nine months Three months Year ended
ended ended December
September 30 September 30 31,
----------------------------------------
2002 2001 2002 2001 2001
----------------------------------------
(Unaudited) (Unaudited) (Audited)
----------------------------------------
U.S. dollars in thousands
(except per share data)
----------------------------------------
REVENUES FROM SALES AND
SERVICES 4,646 6,840 829 2,274 9,412
COST OF SALES AND SERVICES 2,965 3,352 724 1,185 4,321
----------------------------------------
GROSS PROFIT 1,681 3,488 105 1,089 5,091
RESEARCH AND DEVELOPMENT
EXPENSES - net 1,691 1,507 492 584 1,943
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 5,069 7,222 1,161 1,891 9,323
AMORTIZATION OF GOODWILL 283 1,653 557 1,795
IMPAIRMENT OF GOODWILL 4,575 14,576 4,575 14,576 14,576
RESTRUCTURING EXPENSES AND
IMPAIRMENT OF PROPERTY, PLANT
AND EQUIPMENT 1,671 961 1,671 513 961
----------------------------------------
OPERATING INCOME (LOSS) (11,608)(22,431)(7,794)(17,032) (23,507)
FINANCIAL INCOME (EXPENSES) -
net 246 706 34 238 883
IMPAIRMENT OF INVESTMENT IN
ARELNET LTD. (279) (1,941) (279) (1,941) (2,890)
----------------------------------------
LOSS BEFORE TAXES ON INCOME (11,641)(23,666)(8,039)(18,735) (25,514)
TAXES ON INCOME 4 4
----------------------------------------
NET LOSS FOR THE PERIOD (11,645)(23,666)(8,043)(18,735) (25,514)
========================================
BASIC AND DILUTED LOSS PER
SHARE (0.90) (1.84) (0.63) (1.46) (1.98)
========================================
Net loss for the period
as reported (11,645)(23,666)(8,043)(18,735) (25,514)
------------------------------
Adjustments to reconcile net
loss for the period to net
loss excluding unusual items:
Amortization of goodwill 283 1,653 557 1,795
------------------------------
Impairment of goodwill 4,575 14,576 4,575 14,576 14,576
------------------------------
Restructuring expenses and
impairment of property,
plant and equipment 1,671 961 1,671 513 961
------------------------------
Impairment of investment
in Arel Net Ltd. (279) (1,941) (279) (1,941) (2,890)
----------------------------------------------------------------------
Net loss excluding unusual
items: (4,837) (4,535)(1,518) (1,148) (5,292)
========================================
Basic and diluted loss per
share excluding unusual items (0.38) (0.35) (0.12) (0.09) (0.42)
========================================
AREL COMMUNICATIONS AND SOFTWARE LTD.
(An Israeli Corporation)
CONDENDSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2002
Share capital
-----------------
Number of Capital Accumulated
shares Amount surplus Warrants Deficit Total
----------------------------------------------------
U. S. dollars in thousands
----------------------------------------------------
BALANCE AT JANUARY
1, 2002 (audited) 12,853,739 4 52,740 1,395 (32,464) 21,675
CHANGES DURING THE
9 MONTHS ENDED
SEPTEMBER 30,
2002 (unaudited):
Loss (11,645)(11,645)
Exercise of
warrants and
options
----------------------------------------------------
BALANCE AT
SEPTEMBER 30,
2002 (unaudited) 12,853,739 4 52,740 1,395 (44,109) 10,030
====================================================
BALANCE AT JANUARY
1, 2001 (audited) 12,853,739 $4 $52,738 $1,395 $(6,950) $47,187
CHANGES DURING THE
9 MONTHS ENDED
SEPTEMBER 30,
2001 (unaudited):
Loss (23,666) (23,666)
Exercise of
warrants and
options 2,000 (a) 2 2
----------------------------------------------------
BALANCE AT
SEPTEMBER 30,
2001 (unaudited) 12,855,739 4 52,740 1,395 (30,616) 23,523
====================================================
BALANCE AT JULY 1,
2002 (unaudited) 12,855,739 $4 $52,740 $1,395 $(36,066) $18,073
CHANGES DURING THE
3 MONTHS ENDED
SEPTEMBER
30, 2002
(unaudited):
Loss (8,043) (8,043)
----------------------------------------------------
BALANCE AT
SEPTEMBER 30,
2002 (unaudited) 12,855,739 $4 $52,740 $1,395 $(44,109) $10,030
====================================================
BALANCE AT JULY 1,
2001 (unaudited) 12,855,739 $4 $52,740 $1,395 $(11,881) $42,258
CHANGES DURING THE
3 MONTHS ENDED
SEPTEMBER
30, 2001
(unaudited):
Loss (18,735) (18,735)
----------------------------------------------------
BALANCE AT
SEPTEMBER 30,
2001 (unaudited) 12,855,739 $4 $52,740 $1,395 $(30,616) $23,523
====================================================
(a) Represents an amount less than $ 1,000
AREL COMMUNICATIONS AND SOFTWARE LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months
ended
September 30
----------------
2002 2001
----------------
U.S. dollars in
thousands
----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period (11,645)(23,666)
Adjustments required to reconcile net income to net
cash used in operating activities:
Depreciation 500 607
Impairment of property, plant and equipment 750
Amortization of goodwill 283 1,653
Impairment of goodwill 4,575 14,576
Decline in value of investment in Arel Net Ltd. 279 1,941
Allowance for doubtful accounts 101 65
Accrued employee rights upon retirement - net (50) (14)
Capital loss on disposal of plant and equipment 45 61
Loss on realization and decrease in value of
marketable securities 17 7
Erosion of long-term loan to an employee 4 2
Changes in operating asset and liability items:
Decrease in accounts receivable 1779 5,217
Decrease in accounts payable and accruals (701) (1,041)
Decrease (Increase) in inventories 1,123 (107)
----------------
Net cash used in operating activities (2,940) (699)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (138) (155)
Proceeds from disposal of property, plant and
equipment 84 114
Collection of long-term loan from an employee 5 7
Short-term bank deposits - net 3,696 (6,432)
Investment In Arelnet Ltd. (911)
Acquisition of marketable securities (4)
Proceeds from sale of marketable securities 25 303
----------------
Net cash provided by (used in) operating
activities 3,668 (7,074)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term bank credit - net (3) 34
Exercise of warrants and options 2
----------------
Net cash provided by (used in) financing activities (3) 36
----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 725 (7,737)
BALANCE OF CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,382 14,078
----------------
BALANCE OF CASH AND CASH EQUIVALENTS AT
END OF PERIOD 6,107 6,341
================
Note to Editors: In the name, W2COM, the 2 should be superscript Any letter, digit or symbol that appears above the line. For example, 10 to the 9th power is written with the 9 in superscript (109). Contrast with subscript. . |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion