Arel Communications and Software Ltd. First Quarter Results.Business & High Tech Editors YAVNE Yavne (Hebrew: יבנה, Arabic: يبنة Yibnah, Latin: Iamnia , Israel--(BUSINESS WIRE)--May 30, 2000 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 Strategic Business Unit's Revenues up 39.73% Over Q1 1999 Total Revenues Increase 13.7% Over Q1 1999 Arel Communications and Software Limited (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 NMS See NetWare Management System. : ARLCF) announced today the consolidated results for the first quarter ended March 31, 2000. First quarter 2000 consolidated revenues from sales and services rose 13.7% to $3,244,000, over first quarter 1999 total revenues of $2,853,000. The Interactive Distance Learning business unit contributed $2,040,000 to the revenues, an increase of 39.73% compared to $1,460,00 in the same quarter of 1999. First quarter 2000 net consolidated profit reached $67,000 (including a gain on dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. of interest in subsidiary of $413,000) compared to $68,000 in the first quarter of 1999. Arel's IDL Business Unit contributed a net profit of $236,000 in this quarter. First quarter 2000 consolidated gross profit was $1,748,000, an increase of 9.39% over first quarter 1999 gross profit of $1,598,000. During the first 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. $904,000 in R&D activities, an increase of 19.89% over expenses of $754,000 for the same period of 1999. This increase in R&D is primarely attributed to recently anounced new products; i-Tone Prime (the brand new IP/Telephony Carriar Grade Gateway) for Arelnet, and Spotlight Spotlight can refer to at least three types of lighting:
Both, Arel and ArelNet will continue to invest in R&D in order to maintain leading technology in the marketplace. Izhak Gross, Chairman and Chief Executive Officer of Arel, commented, "We are now fully involved in 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. of ArelNet as a totally independent company, which we expect will begin trading on the Tel Aviv Stock Exchange Tel Aviv Stock Exchange Israel's only stock exchange. shortly. The spin-off of ArelNet to Arel's shareholders at this time in consistent with the manner in which we have been operating our business since the beiginning of the year. "In order to allow ArelNet to fully develop into a viable independent company, we have been heavily investing in management and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , sales and marketing, and R & D, for ArelNet. Recently, ArelNet launched i-Tone Prime, its new IP/Telephony carrier grade gateway, exclusively geared for mid-size to large businesses. As it starts to ramp-up it sales, we expect it to play a major role in the carrier grade IP/Telephony gateways marketplace. "As noted, pure IDL revenue was over $2 million, with net profit reaching $236,000. During the period, we experienced significant R&D expenses as we launched Spotlight, our new e-training desktop product. Also during this period, we realized a capital gain of about $413,000 from the exercise of warrants in ArelNet by our partner, Keppel Keppel can refer to several different people, places and concepts: People
The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. from ArelNet. "We look forward to completing the spin-off of ArelNet, and having each company operate independently." About ArelNet ArelNet Ltd. is a leading provider of IP telephony The two-way transmission of voice over a packet-switched IP network, which is part of the TCP/IP protocol suite. The terms "IP telephony" and "voice over IP" (VoIP) are synonymous. solutions to carriers, next generation telecommunications companies See telecom company. , Internet service providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. and value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. . The Company's i-Tone product line offers 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. communications as well as enhanced fax and voice value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. using a single platform. New services are being added continuously to ensure that i-Tone customers maintain a leading edge in the IP market. ArelNet Ltd. is owned by Arel Communications and Software Ltd. (NASDAQ: ARLCF), Nortel Networks (Nortel Networks Limited, Brampton, Ontario, www.nortelnetworks.com) A world leader in telecommunications products, which includes switching, wireless and broadband systems for service providers and carriers, telephones and systems for residential and business users, computer telephony (NYSE NYSE See: New York Stock Exchange : NT), Elron (NASDAQ: ELRNF) and Keppel Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. & Transportation. About Arel Communications and Software Arel Communications and Software, Ltd., Yavne, Israel, and its Atlanta-based U.S. subsidiary, Arel Communications and Software, Inc., market the IDEAL family of interactive distance learning products including its new PC-based Spotlight application. The Company's ArelNet Ltd. subsidiary designs, develops, produces and markets value-added communication and IP telephony products for telephone carriers, Internet Service Providers (ISPs) and other network operators worldwide. Certain statements made herein that are not historical are forward-looking 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 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. This release, and prior releases, are available on the KCSA KCSA Krannert Center Student Association KCSA Kentucky Crushed Stone Association (Frankfort, KY) KCSA Kyiv City State Administration KCSA Kalamazoo Christian School Association KCSA Kentucky-Canadian Studies Association Public Relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most Worlwide website at www.kcsa.com.
AREL COMMUNICATIONS AND SOFTWARE LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE 3 MONTH PERIOD ENDED MARCH 31, 2000
Three months ended Year ended
March 31 December 31,
2000 1999 1999
(Unaudited) (Audited)
U.S. dollars
REVENUES FROM SALES AND SERVICES 3,243,917 2,853,229 14,002,166
COST OF SALES AND SERVICES 1,495,752 1,254,648 5,880,561
--------- --------- ----------
--------- --------- ---------
GROSS PROFIT 1,748,165 1,598,581 8,121,605
RESEARCH AND DEVELOPMENT
EXPENSES 903,645 754,504 2,813,770
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,685,643 1,122,048 5,015,761
--------- --------- ----------
OPERATING INCOME (LOSS) (841,123) (277,971) 292,074
FINANCIAL INCOME 90,155 172,486 599,761
GAIN ON DILUTION OF INTEREST IN
A SUBSIDIARY 413,071 531,270
--------- --------- ----------
INCOME (LOSS) BEFORE TAXES ON
INCOME (337,897) (105,485) 1,423,105
TAXES ON INCOME 9,140 62,074
--------- --------- ----------
INCOME (LOSS) AFTER TAXES ON
INCOME (347,037) (105,485) 1,361,031
MINORITY INTEREST IN LOSSES OF
SUBSIDIARY 413,888 173,150 408,609
--------- --------- ----------
NET INCOME 66,851 67,665 1,769,640
========= ========= ==========
NET INCOME PER SHARE - primary
and fully diluted 0.02 0.01 0.26
========= ========= ==========
SHARES OUTSTANDING 8,170,359 6,107,155 7,869,392
========= ========= ==========
AREL COMMUNICATIONS AND SOFTWARE LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2000
March 31 December 31,
2000 1999 1999
(Unaudited) (Audited)
U.S. dollars
Assets
CURRENT ASSETS:
Cash and cash equivalents 10,600,340 2,932,550 3,015,714
Short term investments 3,135,910 2,735,114 10,016,739
Accounts receivable:
Trade 4,827,788 3,351,804 5,437,593
Other 4,897,523 1,448,102 2,719,827
Inventories 1,277,039 1,432,098 1,296,200
---------- ---------- ----------
--------- --------- ---------
Total current assets 24,738,600 11,899,668 22,486,073
---------- ---------- ----------
LONG-TERM LOAN TO AN EMPLOYEE,
net of current maturity 55,813 63,549 56,078
---------- ---------- ----------
PLANT AND EQUIPMENT:
Cost 3,101,714 2,721,653 2,963,408
Less - accumulated depreciation 1,657,299 1,301,581 1,550,197
---------- ---------- ----------
1,444,415 1,420,072 1,413,211
---------- ---------- ----------
Total assets 26,238,828 13,383,289 23,955,362
========== ========== ==========
Liabilities and shareholders'
equity
CURRENT LIABILITIES:
Short-term bank credit 79,631 148,241 142,094
Accounts payable and accruals:
Trade 979,543 987,722 952,174
Other 1,731,942 2,159,751 1,956,198
---------- ---------- ----------
Total current liabilities 2,791,116 3,295,714 3,050,466
LONG-TERM LIABILITIES:
Accrued employee rights upon
retirement, net of amount
funded 487,085 256,702 362,951
Bank loan, net of current
maturities 4,158 5,544
---------- ---------- ----------
Total long-term
liabilities 491,243 256,702 368,495
---------- ---------- ----------
Total liabilities 3,282,359 3,552,416 3,418,961
MINORITY INTEREST 3,719,657 1,767,128 2,694,413
---------- ---------- ----------
7,002,016 5,319,544 6,113,374
---------- ---------- ----------
SHAREHOLDERS' EQUITY:
Share capital 2,474 1,993 2,400
Capital surplus 18,689,659 10,093,551 17,361,760
Warrants and options 1,100,000 292,348 1,100,000
Accumulated deficit (555,321) (2,324,147) (622,172)
---------- ---------- ----------
Total shareholders'equity 19,236,812 8,063,745 17,841,988
---------- ---------- ----------
Total liabilities and
shareholders' equity 26,238,828 13,383,289 23,955,362
========== ========== ==========
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