Elron Electronic Industries Reports First Quarter 2006 Results.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 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. -- 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 & 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) : ELRN) today reported a net loss of $3.5 million, or $0.12 per share, for the first quarter of 2006, compared to a net loss of $5.1 million, or $0.17 per share, in the first quarter of 2005. Elron's net loss in the first quarter of each of 2006 and 2005 resulted from Elron's share in the net losses of its group companies, amounting to $5.0 million and to $4.8 million, respectively, and from the absence of gains from sales of shares of group companies in both periods. NEW INVESTMENTS DURING THE FIRST QUARTER OF 2006 On January January: see month. 2, 2006, Elron completed an investment of approximately $3.7 million, as part of an aggregate investment of approximately $7.4 million in Safend Ltd., an Israeli company which develops comprehensive desktop and laptop Same as laptop computer. laptop - portable computer endpoint security solutions, in consideration for approximately 22% of Safend's equity on a 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. basis. On March 9, 2006, Elron made an additional investment of approximately $2.6 million in NuLens Ltd., an Israeli medical device company operating in the field of intra-ocular lenses, mainly for cataract cataract, in medicine, opacity of the lens of the eye, which impairs vision. In the young, cataracts are generally congenital or hereditary; later they are usually the result of degenerative changes brought on by aging or systemic disease (diabetes). and presbyopia Presbyopia Definition The term presbyopia means "old eye" and is a vision condition involving the loss of the eye's ability to focus on close objects. procedures, of which $1.5 million was part of an aggregate new investment of approximately $6.0 million, led by Warburg Pincus Warburg Pincus is a private equity firm with offices in the United States, Europe and Asia. It has been a leading private equity investor since 1971. The firm currently has approximately $14 billion under management, and invests in a range of industries including information and , a leading global private equity fund. The balance of $1.1 million was the second installment of Elron's initial investment in NuLens in April 2005. Following the above investment, Elron holds 25% of NuLens' equity, on a fully diluted and on an as converted basis. EVENTS SUBSEQUENT TO THE FIRST QUARTER OF 2006: On May 1, 2006, NetVision, Elron's 39% held affiliate, announced that it will be entering into merger discussions with Barak Barak (bā`răk), in the Bible, leader from N Canaan who fought, with Deborah, against Jabin and Sisera. I.T.C. (1995) International Telecommunications Services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. Corp. Ltd ("Barak"). NetVision is a provider of 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 services and solutions in Israel and commencing the fourth quarter of 2004 international telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. services. Barak engages mainly in the provision of international telecommunication services. The transaction, if it takes place, will be subject to the signing of a definitive agreement as well as corporate and regulatory approvals. There is no assurance that the transaction will take place. Liquidity and Shareholders Equity As of March 31, 2006, Elron's cash, debentures and deposits amounted to approximately $121.3 million compared with $133.8 million at December December: see month. 31, 2005. During the first quarter of 2006, Elron invested approximately $12.0 million in new and existing group companies (including $5.3 million in Partner Communications Company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. Ltd.). 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. at March 31, 2006, was approximately $297.6 million, representing approximately 86% of Elron's total assets, compared with $302.1 million representing approximately 85% of total assets at December 31, 2005. "In the first quarter of 2006, we continued investing in new companies as well as building our group companies to create value in the future", said 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, Elron's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . Investors may access Elron's first quarter financial report and a detailed management report on the company's web site: www.elron.com Conference call details: Tuesday, May 16, 2006 09:30 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ); 16:30 p.m. Israel Dial in numbers in numbered parts; as, a book published in numbers. See also: Number : In the US: 1-866 229 7198 In the UK: 0 800 917 5108 In Israel: 03 918 0610 International Participants: +972 3 918 2700 For your convenience, a replay of the call will be available starting two hours after the call ends until Thursday, May 18, 2006. To access the replay please dial 1-866-276-1002 (US), 972-3-925-5942 (Israel) and 0-800-917-4256 (UK). Elron Electronic Industries Ltd. is a high technology holding company based in Israel. 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 medical devices, information and communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry , semiconductors and advanced materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, . 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.
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of U.S. Dollars
March 31, December 31,
2006 2005
--------- ------------
Unaudited
---------
ASSETS
Total current assets $139,647 $155,201
--------- ---------
INVESTMENTS AND LONG-TERM RECEIVABLES
Investments in affiliated companies 99,432 102,780
Investments in other companies and long-term
receivables 83,703 73,931
Deferred taxes 6,007 6,521
Severance pay deposits 2,008 1,971
--------- ---------
Total long-term assets 191,150 185,203
--------- ---------
PROPERTY AND EQUIPMENT, NET 7,972 7,809
--------- ---------
INTANGIBLE ASSETS 5,555 5,560
--------- ---------
Total assets $344,324 $353,773
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $16,424 $19,044
--------- ---------
LONG-TERM LIABILITIES
Long-term loans from banks and others 1,485 1,477
Accrued severance pay and retirement obligations 2,823 2,635
Deferred taxes 8,467 9,494
--------- ---------
Total long-term liabilities 12,775 13,606
--------- ---------
MINORITY INTEREST 17,499 19,007
--------- ---------
Total Shareholders' Equity 297,626 302,116
--------- ---------
Total liabilities and shareholders' equity $344,324 $353,773
========= =========
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands of U.S. Dollars, except share and per share data
Three months Year ended
ended March 31, December 31,
--------------- ------------
2006 2005 2005
-------- ------ ---------
Unaudited
-----------------
INCOME
Net revenues $3,322 $2,985 $12,646
Equity in losses of affiliated companies (3,495) (3,588) (17,522)
Gain (loss) from disposal of businesses
and affiliated
companies and changes in holdings in
affiliated companies, net 16 (10) 23,328
Other income, net 2,629 278 58,648
Financial income, net 1,084 901 5,483
-------- -------- ---------
3,556 566 82,583
-------- -------- ---------
COSTS AND EXPENSES
Cost of revenues 1,845 1,873 7,907
Research and development costs, net 2,908 1,234 6,163
Marketing and selling expenses, net 875 470 2,386
General and administrative expenses 2,881 1,952 9,249
Amortization of intangible assets 5 35 392
-------- -------- ---------
8,514 5,564 26,097
-------- -------- ---------
Income (loss) before taxes on income (4,958) (4,998) 56,486
Tax benefit (taxes on income) (282) 167 (10,461)
-------- -------- ---------
Income (loss) after taxes on income (5,240) (4,831) 46,025
Minority interest in losses of
subsidiaries 1,727 194 5,160
-------- -------- ---------
Income (loss) from continuing operations (3,513) (4,637) 51,185
Loss from discontinued operations - (476) (3,850)
-------- -------- ---------
Net income (loss) $(3,513) $(5,113) $47,335
======== ======== =========
Income (loss) per share:
Basic:
Income (loss) from continuing operations $(0.12) $(0.16) $1.74
Loss from discontinued operations - (0.01) (0.13)
-------- -------- ---------
Net income (loss) $(0.12) $(0.17) $1.61
======== ======== =========
Diluted:
Income (loss) from continuing operations $(0.12) $(0.17) $1.74
Loss from discontinued operations - (0.01) (0.13)
-------- -------- ---------
Net income (loss) $(0.12) $(0.18) $1.60
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Weighted average number of ordinary shares
used in computing basic net income (loss)
per share (thousands) 29,514 29,414 29,437
======== ======== =========
Weighted average number of ordinary shares
used in computing diluted net income
(loss) per share (thousands) 29,514 29,414 29,550
======== ======== =========
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