Elron Electronic Industries Announces Third Quarter 2001 Results.Business Editors TEL AVIV Tel Aviv (tĕl əvēv`), city (1994 pop. 355,200), W central Israel, on the Mediterranean Sea. Oficially named Tel Aviv–Jaffa, it is Israel's commercial, financial, communications, and cultural center and the core of its largest , Israel--(BUSINESS WIRE)--Nov. 7, 2001 Elron Electronic Industries 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 :ELRN) a leading multinational multinational Of, relating to, or being a company with subsidiaries or other operations in a number of countries. The diversity of operations of such companies subjects them to unique risks (for example, exchange rate changes or government nationalization) high technology holding company, today reported a net loss of $10.6 million, or $0.5 per share, for the third quarter of 2001 and $30.3 million, or $1.43 per share, for the nine-month period ended September September: see month. 30, 2001. Net income in the three and nine month periods ended September 30, 2000 was $19.9 million, or $0.94 per share, and $40.1 million, or $1.9 per share, respectively. The general slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in spending for technology products due to current economic conditions is affecting the results of operations of companies in our group and has limited our ability to perform successful exits and record capital gains. Factors contributing to our result in the third quarter and operational highlights:
-- Elron Software Inc's. and Elron Telesoft Inc's. operating loss in the third
quarter of 2001 (excluding amortization of intangible assets, deferred
compensation and restructuring charges) decreased by 36% to $3.7 million, from
$5.8 million in the third quarter of 2000. The decrease is a result of
comprehensive restructuring and cost reduction programs at both companies.
-- Equity in net losses of Elbit Ltd. ("Elbit") in the third quarter of 2001
amounted to $2.6 million, compared to our equity in its net earnings of $16.3
million in the third quarter of 2000 which reflected the gain from the sale of
Hynex to Cisco.
-- Decrease in the market value of Kana's share (NASDAQ:KANA) led to a loss of
approximately $1.8 million. The market value of Kana's shares held by us at the
end of the third quarter amounted to approximately $0.4 million.
-- Despite still difficult market conditions, Netvision reached breakeven at
the operating level in the third quarter of 2001 and reported a $1.5 million
positive EBITDA compared to an operating loss of $4.8 million and an EBITDA
loss of $3.7 million in the third quarter of 2000, respectively.
In addition, on October October: see month. 4, 2001, Given Imaging completed its initial public offering, raising $60 million. Its shares were listed on the Nasdaq National Market under the symbol "GIVN". As a result of the offering, Elron's direct and indirect holding in Given Imaging Ltd. reduced from 15% to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 12%. Liquidity and Shareholders Equity As of September 30, 2001 Elron had a strong balance sheet with cash and other liquid instruments of approximately $110.2 (excluding loans in subsidiaries of $67.5 million). Our financial strength enables us to continue our investment activity and to secure the necessary cash for future growth of companies in our group. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. as of September 30, 2001 amounted to $238 million representing 74% of the total balance sheet. Reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. in Elron Group During the third quarter, we made significant progress toward completion of the merger with Elbit Ltd. and on October 31, 2001 the Companies announced the signing of the merger agreement. Elron also announced on October 31, 2001, that it is in negotiation with Discount Investment Corporation Ltd (which holds 42% of Elron shares) to acquire its 67% interest in DEP DEP Deposit DEP Deputy DEP Department of Environmental Protection DEP Dependent DEP Departure DEP Depot DEP Deposition DEP deployed (US DoD) DEP Data Execution Prevention (computer security) Technology Holdings Ltd. ("DEP"), in which Elron currently holds the remaining 33% shares. Through the active reorganization of the Elron group, management seeks to optimize optimize - optimisation Elron's corporate structure in an effort to combine resources and save expenses, thereby contributing to the growth in shareholder value. Commenting on the results, Doron Doron, or Dorio, as it is said to be written in some manuscripts, is a city mentioned only by Pliny and located in Cilicia Tracheia,[1] Some scholars have equted the city to Darieium or Dorieium in Phrygia mentioned by Stephanus of Byzantium. Birger Birger may refer to
Regarding the recent successes of Given Imaging and Netvision, Doron continued, "We believe that the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. of Given Imaging and the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. of Netvision validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data Elron's strategy of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. commitment and support to our Group companies even during their difficult periods. I want to congratulate the management team of both companies for their significant achievements despite the volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. market conditions and business environment." Investors can access Elron's third quarter financial report and Management Report on the company's web site: www.elron.com Conference call details: Thursday, November 8, 2001 10:00a.m. (EST); 05:00 p.m. Israel In the US call: 1-1-866-500-4967 or 1-866-500-4966 In the UK call: 0-800-169-9043 Other International Participants call: (972) 3 -9292810 Participants in Israel call: (03) 9292810 Replay: Beginning two hours after the call ends for a period of 24 hours In the US call: 1- 866-500-4964 In Israel call: (03) 9255937 International: (972) 3-9255937 Elron Electronic Industries Ltd. is a multinational high technology holding company based in 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. . Through affiliates, Elron is engaged with a group of high technology operating companies operating company A business that engages in transactions with outsiders. in the fields of advanced defense, communication, software, information technology and medical devices. For further information, visit http://www.elron.com Any statements in this press release that may be considered 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. are subject to risks and uncertainties that could cause actual results to differ materially. Actual results may differ from such forward-looking statements due to the risk factors discussed in periodic reports filed by the Company with the Securities and Exchange Commission, which the Company urges investors to consider.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars)
September 30, December 31,
2001 2000
---- ----
(Unaudited) (Audited)
ASSETS
Current Assets: 117,887 133,144
Long-term investments:
Investments in
affiliated companies 149,533 175,399
Other investments 16,350 16,186
Long-term deposits
and debentures 8,080 8,268
Deferred taxes 1,205 909
Severance pay fund 1,948 2,744
Total long -
term investments 177,116 203,506
Property and equipment, net 5,727 7,479
Other assets, net 20,687 26,216
Total assets 321,417 370,345
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities 48,761 41,478
Long-term liabilities 33,712 47,363
Minority interest 980 1,461
Shareholders' equity
Ordinary shares 9,567 9,567
Capital surplus 158,318 158,916
Accumulated other
comprehensive income 25,312 36,459
Retained earnings 44,767 75,101
Total shareholders'
equity 237,964 280,043
Total liabilities and
shareholders' equity 321,417 370,345
CONSOLIDATED STATEMENTS OF OPERATIONS
(US Dollars in thousands except share and per share data)
Nine Months Three Months Year
Ended Ended Ended
September 30, September 30, December 31,
2001 2000 2001 2000 2000
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Audited)
Income
Net revenues 26,420 29,345 6,568 9,875 39,162
Net earnings
(losses)
from equity
investments (11,344) 2,840 (4,472) 907 (7,218)
Gain (loss)
from
disposal
of and
changes
in holdings
in related
companies,
net (156) 26,937 15 26,133 26,400
Other income
(expenses),
net (4,620) 32,108 (1,895) 360 43,458
Finance income 4,328 5,778 1,608 2,227 7,009
14,628 97,008 1,824 39,502 108,811
Costs and
Expenses 48,873 51,064 13,672 19,920 70,541
Income (loss)
before
income taxes
(tax benefit) (34,245) 45,944 (11,848) 19,582 38,270
Income taxes
(tax benefit) (3,583) 5,812 (1,136) (290) 8,079
Income (Loss)
after
income taxes
(tax benefit) (30,662) 40,132 (10,712) 19,872 30,191
Minority
interest 328 16 118 16 171
Net income
(loss) (30,334) 40,148 (10,594) 19,888 30,362
Income (loss)
per share:
Basic per
share data
Basic net
income
(loss) per
share (1.43) 1.90 (0.5) 0.94 1.43
Number
of shares
used in
computation
(thousands) 21,189 21,167 21,189 21,180 21,172
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