Arel Communications and Software Ltd Announces 57.3% Revenue Increase for Second Quarter 2000.Business Editors YAVNE Yavne (Hebrew: יבנה, Arabic: يبنة Yibnah, Latin: Iamnia , Israel--August 15, 2000-- Arel's Most Successful Quarter Ever and a Six Months Revenue Increase of 50.0% Arel Communications and Software Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ARLCF), today announced 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 second quarter, ended June June: see month. 30, 2000. The world's leading provider of end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. Interactive Distance Learning (IDL (1) (Interface Definition Language) A language used to describe the interface to a routine or function. For example, objects in the CORBA distributed object environment are defined by an IDL, which describes the services performed by the object and how the data ) systems reported a 57.3% increase in revenues for the second quarter and a 50.0% increase in revenues for the first six months of fiscal 2000. Second quarter revenues from sales and services reached $3,229,000, compared to $2,053,000 in the second quarter of 1999, an increase of 57.3%. Gross profit for the quarter was $2,008,000, an increase of 72.2% versus gross profit of $1,167,000, for the same period last year. Net profit for the second quarter of 2000 increased to $628,000 compared to $478,000 during the same period of 1999, an increase of 31.4%. Revenues for the first six months of 2000 were $5,269,000, compared to $3,514,000 during the same period of 1999, an increase of 49.9%. Gross profit for the first half of 2000 increased 43.2% to $3,217,000 versus $2,245,000 in the first half of 1999. During the second quarter of 2000, the company expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. $816,000 in Research and Development (R&D), not including a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of $260,000 from the Chief Scientist Officer (CSO (Chief Security Officer) The person in charge of all staff members who are responsible for promulgating, enforcing and administering security policies for all systems within an enterprise or division. ). R&D expenses increased by 155% compared to $320,000 in the second quarter of 1999, (not including CSO refunds to the amount of $295,000). R&D expenses during the first six months of 2000 increased 59.4% to $984,000 from $617,000, in the same period of 1999. During the second quarter of 2000, Selling, General and Administration expenses were $1,053,000 compared to $650,000 in the second quarter of 1999. The SG&A expenses in the second quarter of 2000 bear the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. costs of ArelNet Ltd. SG&A expenses for the first six months of 2000 were $1,958,000, compared to $1,324,000 during the same period of 1999, an increase of 47.9%. Commenting on the second quarter results, Izhak Gross, Chairman and Chief Executive Officer of Arel commented, "This second quarter has been our strongest to date, showing growth and success in implementing our strategy to become the leader in the 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. market." Mr. Gross further remarked, "This quarter has also been an important milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. for Arel, marking both the final spin-off of ArelNet, and 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. . By carrying out this transaction we have further strengthened our management team and significantly expanded our presence in the US. We have now strategically extended our product offering and access to new market segments, by introducing new services and content delivery, in addition to our best-of-breed The best product of its type. Organizations often purchase software from different vendors in order to obtain the best-of-breed for each application area; for example, a human resources package from one vendor and an accounting package from another. interactive e-learning technologies. We anticipate that the next few quarters will be challenging in our efforts to successfully merge See mail merge and concatenate. the two companies and embark on Verb 1. embark on - get off the ground; "Who started this company?"; "We embarked on an exciting enterprise"; "I start my day with a good breakfast"; "We began the new semester"; "The afternoon session begins at 4 PM"; "The blood shed started when the partisans our enhanced business strategy." In concluding, Mr. Gross stated, "Arel currently holds 17% of ArelNet, which is now traded on the Tel Aviv stock exchange Tel Aviv Stock Exchange Israel's only stock exchange. (TASE TASE Tel Aviv Stock Exchange TASE The All Seeing Eye TASE Tactical Air Support Element TASE Thrust Assessment Support Environment TASE Telecontrol Application Service Elements (IEC communications protocol) : ARNT). As of third quarter 2000, ArelNet's results will no longer be included in Arel's reports. As we reported on August 10, 2000, we completed and closed the acquisition of W2COM's assets. From mid-third quarter, the revenues and earnings of W2COM will be integrated into Arel's financial reports." 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 Atlanta-based U.S. subsidiary, Arel Communications and Software, Inc., (www.arel.net) market the IDEAL family of interactive distance learning and e-Training products, including its innovative PC-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. ) learning on a single platform. Powered by Arel's IDEAL engine, the Spotlight is the ultimate end-to-end e-learning system, integrating authoring and management tools, interactive delivery, evaluation, analysis, tracking and reporting. Arel IDEAL(TM) and Arel SpotlightTM 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 JUNE 30, 2000
June 30 December 31,
2000 (a)1999 (a)1999
(Unaudited) (Audited)
U.S. dollars
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents 18,071,878 2,212,654 2,934,306
Short term investments 3,630,084 458,375 5,343,793
Accounts receivable:
Trade 4,575,071 1,532,825 2,982,023
Other 1,961,331 2,286,838 2,944,032
Inventories 1,088,971 1,326,892 925,885
---------- ---------- ----------
T o t a l current assets 29,327,335 7,817,584 15,130,039
---------- ---------- ----------
INVESTMENTS AND LONG-TERM RECEIVABLE:
Bank deposits 3,000,000
Investment in Arel Net Ltd. 2,382,859 2,877,236 3,760,816
Loan to an employee,
net of current maturity 54,104 64,046 56,078
---------- ---------- ----------
2,436,963 5,941,282 3,816,894
---------- ---------- ----------
PLANT AND EQUIPMENT:
Cost 1,697,899 1,457,746 1,601,119
L e s s - accumulated
depreciation 971,034 800,242 834,446
---------- ---------- ----------
726,865 657,504 766,673
---------- ---------- ----------
32,491,163 14,416,370 19,713,606
========== ========== ==========
June 30 December 31,
2000 (a)1999 (a)1999
(Unaudited) (Audited)
U.S. dollars
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term bank credit 27,383 73,690 6,048
Accounts payable and accruals:
Trade 709,660 371,113 464,506
Other 4,469,338 1,252,226 1,182,650
--------- --------- ---------
liabilities 5,206,381 1,697,029 1,653,204
---------- ---------- ----------
LONG-TERM LIABILITIES:
Liability for employee
rights upon retirement,
net of amount funded 276,499 175,565 212,870
Bank loan, net of current
maturities 5,544
---------- ---------- ----------
liabilities 276,499 175,565 218,414
---------- ---------- ----------
T o t a l liabilities 5,482,880 1,872,594 1,871,618
---------- ---------- ----------
SHAREHOLDERS' EQUITY:
Share capital 2,781 2,207 2,400
Capital surplus 32,269,858 14,359,610 17,361,760
Warrant 825,000 292,348 1,100,000
Accumulated deficit (6,089,356) (2,110,389) (622,172)
---------- ---------- ----------
27,008,283 12,543,776 17,841,988
---------- ---------- ----------
32,491,163 14,416,370 19,713,606
========== ========== ==========
(a) Reclassified.
The accompanying note is an integral part of these condensed
financial statements.
AREL COMMUNICATIONS AND SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX AND THREE MONTH PERIODS ENDED JUNE 30, 2000
Six months ended Three months ended
June 30 June 30
2000 (a)1999 2000 (a)1999
(Unaudited) (Unaudited)
U.S. dollars
REVENUES FROM
SALES AND SERVICES 5,269,441 3,513,614 3,229,392 2,053,378
COST OF SALES AND
SERVICES 2,052,631 1,268,819 1,221,081 886,966
--------- --------- --------- ---------
GROSS PROFIT 3,216,810 2,244,795 2,008,311 1,166,412
RESEARCH AND
DEVELOPMENT EXPENSES
- net 724,050 322,080 556,708 92,149
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 1,958,280 1,324,198 1,052,916 650,095
--------- --------- --------- ---------
OPERATING INCOME 534,480 598,517 398,687 424,168
FINANCIAL INCOME - net 333,875 255,054 229,049 53,912
--------- --------- --------- ---------
INCOME BEFORE TAXES
ON INCOME 868,355 853,571 627,736 478,080
TAXES ON INCOME 9,140
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS AFTER TAXES
ON INCOME 859,215 853,571 627,736 478,080
--------- --------- --------- ---------
DISCONTINUED OPERATIONS:
Loss from operations (802,704) (572,148) (225,005) (264,322)
---------------------
Gain on dilution of
interest in a Arel
Net Ltd. 413,071
--------------------- --------- --------- --------- ---------
T o t a l (389,633) (572,148) (225,005) (264,322)
---------------------
income (loss) from
discontinued operations
--------- --------- --------- ---------
NET INCOME 469,582 281,423 402,731 213,758
---------- ========= ========= ========= =========
BASIC AND DILUTED
EARNINGS (LOSS) PER
SHARE:
Continuing operations 0.09 0.12 0.06 0.07
Discontinued operations (0.04) (0.08) (0.02) (0.04)
--------- --------- --------- ---------
Net income 0.05 0.04 0.04 0.03
========= ========= ========= =========
(a) Reclassified.
Year ended
December 31,
(a)1999
(Audited)
REVENUES FROM
SALES AND SERVICES 8,812,100
COST OF SALES AND
SERVICES 3,679,634
---------
GROSS PROFIT 5,132,466
RESEARCH AND
DEVELOPMENT EXPENSES
- net 1,054,557
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 2,493,985
---------
OPERATING INCOME 1,583,924
FINANCIAL INCOME - net 412,067
---------
INCOME BEFORE TAXES
ON INCOME 1,995,991
TAXES ON INCOME 51,288
---------
INCOME FROM CONTINUING
OPERATIONS AFTER TAXES
ON INCOME 1,944,703
---------
DISCONTINUED OPERATIONS:
Loss from operations (706,333)
-----------------------
Gain on dilution of
interest in a Arel
Net Ltd. 531,270
----------------------- ---------
T o t a l (175,063)
-----------------------
income (loss) from
discontinued operations ---------
NET INCOME 1,769,640
---------- =========
BASIC AND DILUTED
EARNINGS (LOSS) PER
SHARE:
Continuing operations 0.29
Discontinued operations (0.03)
---------
Net income 0.26
=========
(a) Reclassified.
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