ISG INTERNATIONAL SOFTWARE GROUP LTD. ANNOUNCES YEAR END AND FOURTH QUARTER RESULTS -Company Projects Small Profit For The First Quarter of 1995-.HAIFA Haifa (hī`fä), city (1994 pop. 246,700), NW Israel, a port on the Mediterranean Sea, at the foot of Mt. Carmel. Haifa is the chief city of N Israel and the country's principal oil refining center. , ISRAEL--(BUSINESS WIRE)--June 30, 1995--ISG INTERNATIONAL SOFTWARE GROUP LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability . (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. : SISGF) today reported its operating results for the year end and three month period ended December 31, 1994. Revenues for the year ended December 31, 1994 were $14,103,000 compared with $15,323,000 for the 1993 year end. The decrease in revenues is mainly attributable to lower sales of CorVision and Mancal 2000 licenses that were marketed exclusively to buyers of Digital's VAX/VMS VAX/VMS - VMS computer systems. As buyers moved their purchasing preferences to personal computers and UNIX based Refers to a Unix operating system. The operating system may comply with the UNIX specifications governed by The Open Group, such as Sun's Solaris, or it may be an operating system based on the architecture and principles of Unix, such as Linux. systems, new license revenues declined. The Company's gross profit decreased to $7,393,000 from $9,349,000 in 1993. This decrease is mainly attributed to the high cost of the provision of a large scale project for the Hungarian postal authorities A postal authority organises collection and delivery of domestic mail (US), or post (UK), within its area of control, or in the case of foreign mail, delivery to or receipt of mail from other postal authorities. Payment for the service has been performed in many ways. performed by ISG's recently acquired Meyad Computers Company and to the decline in revenues generated in Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. during the second half of 1994, due to changes in our customer's management teams in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. and China. Towards the end of 1993 and the first quarter of 1994, the Company acquired Meyad Computers Company (1991) Ltd. ("Meyad") and Cortex Corporation ("Cortex"). These acquisitions added marketing channels and products that the Company required after the unsuccessful efforts for the distribution of its products by Digital. The Company incurred merger and reorganization expenses of $1,658,000 in 1994. Net loss increased to $6,091,000 in 1994 compared with $3,796,000 in 1993. The results were mainly caused by the following: (i) increased research and development expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc upgrades of CorVision and APTuser and $850,000 in development costs for the Company's new middleware Software that functions as a conversion or translation layer. It is also a consolidator and integrator. Custom-programmed middleware solutions have been developed for decades to enable one application to communicate with another that either runs on a different platform or comes from a product - Navigator See Netscape Navigator, Netscape and Norton Navigator. Navigator - Netscape Navigator ; (ii) merger and reorganization expenses of $1,658,000; and (iii) operating losses operating loss 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. in Meyad and the Company's Southeast Asia operations. The loss per share in 1994 increased to $1.23 from $0.81 in 1993. Revenues in the fourth quarter of 1994 declined to $3,066,000 from $3,258,000 in 1993. The Company incurred a net loss in the fourth quarter of 1994 of $1,224,000 compared to $2,199,000 in the 1993 period. These results were due to the same operating trends which affected the Company's results during the entire year. Arie Gonen, President and Chief Executive Officer of ISG ISG Iraq Study Group ISG Iraq Survey Group ISG International Steel Group ISG Integrated Security Gateway ISG Information Systems Group ISG Information Systems Group (IBM) ISG Integrated Starter/Generator , explained, "The Company changed substantially in 1994 as a result of the acquisitions of Meyad and Cortex. We took upon ourselves the difficult task of turning around two historically money losing operations and, at the same time, invested in the development of our products and adjusted them to the changing requirements of the market. We identified the problems of the acquired companies and started the process of consolidating the operations of ISG and Cortex. We reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. the management of Cortex and reduced its expenses. We reduced the number of Meyad employees by 40%, reorganized its management and made operational changes. The changes made at both Meyad and Cortex did not achieve the desired results in 1994 as quickly as expected. However, our actions, initiated in 1994, should favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact results in 1995 and 1996 and have already begun to bear fruit in the first quarter of 1995 which was marginally profitable. We expect to release actual first quarter results in the first week of July. "We have focused on the provision of CorVision as an integrated solution for Computer Associates' (CA) CA-MANMAN and CA-MAXCIM markets and for the MUMPS mumps (epidemic parotitis), acute contagious viral disease, manifesting itself chiefly in pain and swelling of the salivary glands, especially those at the angle of the jaw. Other symptoms are fever, a general feeling of illness, and pain on chewing or swallowing. market. U.S. operating results began to improve in the fourth quarter of 1994 and as a result of planned cooperation with CA, the second largest software company in the world, and MUMPS vendors, it is anticipated that U.S. operating results will improve further in 1995 and 1996. During 1994, we developed an interface between CorVision and ISG's APTuser production report generator Same as report writer. , as part of our effort to introduce APTuser into the acquired Cortex distribution channels. We have already started to generate revenues from APTuser, mainly in the U.S., and intend to market it to the majority of the CorVision customer base. APTuser is our second product translated to Southeast Asian languages Southeast Asian languages, family of languages, sometimes also called Austroasiatic, spoken in SE Asia by about 80 million people. According to one school of thought, it has three subfamilies: the Mon-Khmer languages, the Munda languages, and the Annamese-Muong , after CorVision, and this will enhance its marketing potential, especially in China." Mr. Gonen added, "One of the most important assets added to ISG with the acquisition of Cortex, was the Asia-Pacific operation with offices in Hong Kong, China and Australia, distributors in Korea, Taiwan, Thailand and Malaysia and a broad customer base. We believe that with the introduction of the UNIX UNIX Operating system for digital computers, developed by Ken Thompson of Bell Laboratories in 1969. It was initially designed for a single user (the name was a pun on the earlier operating system Multics). version of CorVision and the Chinese version of APTuser, both scheduled for release in the second quarter of 1995, Southeast Asia will be a major contributor to the Company's revenues and gross profit in the future. We believe that the Chinese market carries a great potential for our products and we are expanding our operations in China. It is expected that this will result in increased revenues in 1996." Dr. Ike Sagie, ISG's Vice President of Research and Development, said, "The Company is investing intensively in developing and integrating our products into a family of enterprise- wide development and integration tools. CorVision has been upgraded from VAX/VMS to UNIX platforms and APTuser has been integrated into CorVision as its report generator. Both products are positioned to support data integration of CA-MANMAN, CA-MAXCIM and MUMPS to desktop applications." Dr. Sagie added, "A very exciting R&D activity is the development of our new object-oriented database See object database. (database) object-oriented database - (OODB) A system offering DBMS facilities in an object-oriented programming environment. Data is stored as objects and can be interpreted only using the methods specified by its class. middleware (code name Navigator). Middleware is a widely accepted new concept of software products that simplify and standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. the interaction between application programs and complex systems such as database systems, communication systems and graphical presentation systems. The GartnerGroup, in their April 19, 1995 "Strategic Analysts Report", say "Navigator is being developed by a team of top professionals headed by Prof. Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. Reiter, formerly a senior manager at Microsoft's database development group. Navigator is based on Microsoft's new OLE-DB standard and applies the most modern state- of-the-art technologies. The Company intends to sell Navigator as a stand-alone middleware product to large software and hardware companies and it will also be embedded Inserted into. See embedded system. in APTuser and CorVision. We have presented Navigator to leading software and hardware companies in the U.S. and have received enthusiastic responses. It is our belief that Navigator will become the core product of our future activities. We plan to release the first version of Navigator in early 1996." ISG develops, markets and supports computer software applications development tools that revitalize re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. and integrate legacy systems with desktop applications. The Company's principal products are: CorVision, a rapid application development/customization tool that delivers client/server functionality and modernize mod·ern·ize v. mo·dern·ized, mo·dern·iz·ing, mo·dern·iz·es v.tr. To make modern in appearance, style, or character; update. v.intr. To accept or adopt modern ways, ideas, or style. legacy systems; APTuser, a production report generator that provides concurrent access The ability to gain admittance to a system or component by more than one user or process. For example, concurrent access to a computer means multiple users are interacting with the system simultaneously. to multiple relational and non-relational databases; and Navigator, a new object-oriented database middleware products to be released in early 1996. A portion of ISG's revenues is derived from the provision of consulting, maintenance and training services to its customers. -0-
ISG International Software Group Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Year Ended December 31, Three Months Ended December 31,
1994 1993 1994(a) 1993(a)
(unaudited)
Revenues $14,103 $15,323 $3,066 $3,258 Cost of revenues 6,710 5,974 1,310 691 Gross profit 7,393 9,349 1,756 2,567
Operating expenses
Research and
development (net) 2,764 2,723 991 776
Selling expenses,
General &
administration
expenses 9,175 9,635 2,397 2,631
Merger & Reorganization
expenses 1,658 -- (165) --
Write-off and amortization relating to
shares issued to
Digital Israel -- 1,175 -- 1,175
------ ------ ------- ------
13,597 13,533 3,223 4,582
Operating loss (6,204) (4,184) (1,467) (2,015) Financial income (expenses) - net (477) 465 (98) 140 Loss before income taxes, minority interests, and extraordinary item (6,681) (3,719) (1,565) (2,155) Income taxes (benefit) (18) 98 (139) (37) Loss before minority interest and extraordinary item (6,663) (3,817) (1,426) (2,118) Minority interest in income (loss) 11 (68) 58 (81) Loss before extraordinary item (6,652) (3,885) (1,368) (2,199) Extraordinary item - gain from early extinguishment of debt 561 89 144 -- Net loss $(6,091) $(3,796) $(1,224) $(2,199) Loss per share before extraordinary item $(1.34) $(0.82) $(0.28) $(0.46) Extraordinary item, gain from early extinguishment of debt 0.11 0.02 0.03 -- Loss per share $(1.23) $(0.80) $(0.25) $(0.46) Weighted average number of shares outstanding 4,954 4,751 4,954 4,751 (a) Reclassified -0-
ISG International Software Group Ltd.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
1994 1993
Current assets:
Cash and cash equivalents $1,481 $4,120
Restricted cash 1,165 199
Marketable securities 181 4,327
Accounts receivable
- net of allowances
(1994 - $297, 1993 - $211) 3,911 5,471
Inventories and work
in progress 258 496
Other receivables
and prepaid expenses 682 227
Total current assets 7,678 14,840
Fixed assets:
Cost 3,859 3,619
Less accumulated depreciation 1,937 1,977
----- -----
1,922 1,642
Other assets
Computer software costs - net of
accumulated amortization and write
downs
(1994 - $3,114, 1993 - $2,925) 1,722 860
Goodwill - net of accumulated
amortization
(1994 - $295, 1993 - $72) 494 678
Other 45 55
------ ------
2,261 1,593
------- ------
$11,861 $18,075
-0- CONTACT: Arie Gonen, President ISG INTERNATIONAL SOFTWARE GROUP 011-972-4-324-536 or Gordon H. Wolfe Irma L. Wolfe Barbara Yu (Media) WOLFE AXELROD Ax·el·rod , Julius 1912-2004. American biochemist and pharmacologist. He shared a 1970 Nobel Prize for studies of the ways in which different substances affect neural impulses. ASSOCIATES 212-370-4500 |
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