EX-99 2 y51766ex99.txt PRESS RELEASE 1 [PARADIGM GEOPHYSICAL LOGO] PARADIGM GEOPHYSICAL ANNOUNCES SECOND QUARTER AND SIX MONTH 2001 RESULTS 31% REVENUE GROWTH AND 200% EPS GROWTH OVER SECOND QUARTER OF 2000 NEW YORK, JULY 23, 2001: Paradigm Geophysical (NASDAQ: PGEO) today announced its operating results for the second quarter and six months ended June 30, 2001. HIGHLIGHTS: - EPS for the quarter were above analysts' estimates of $0.06, a 200% increase over the $0.02 EPS reported for the same period last year. Before amortization of goodwill, EPS for the quarter were $0.07, compared to $0.03 for the second quarter of 2000. - EPS for the half-year were $0.11, a 175% increase over the $0.04 EPS reported for the same period last year. - TOTAL REVENUES for the quarter was $18.5 million, a 31% increase over the same period last year. - EBITDA for the quarter was $3.5 million, a 45% increase over the same period last year. - CASH FLOW PER SHARE for the quarter was $0.21, an increase of 25% over the same period last year. (more) 2 SUMMARY KEY RESULTS AND COMPARISONS
Second Quarter ------------------------------------------------------ % Change % Change 2001 2000 Q2'01 over Q1'01 Q2'01 over Q2'00 Q1'01 -------------------------------------------------------------------------------------------------- (US$ per share) EPS $0.06 $0.02 200% $0.05 20% EPS before goodwill $0.07 $0.03 133% $0.06 17% CFPS $0.21 $0.17 24% $0.21 0% ------------------------------------------------------------------------------------------------------------------------------------ (US$ millions) Revenues $18.5 $14.1 31% $17.5 5% Operating Income $ 1.3 $ 0.4 241% $ 1.0 34% Net Income $ 0.9 $ 0.2 280% $ 0.8 25% --------------------------------------------------------------------------------------------------
Six Months Ended June 30, 2001 ------------------------------------------------------ % Change 2001 2000 H1'01 over H1'00 ------------------------------------------------------ (US$ per share) EPS $0.11 $0.04 175% EPS before goodwill $0.13 $0.06 117% CFPS $0.42 $0.34 24% ---------------------------------------------------------------------------------------- (US$ millions) Revenues $36.0 $28.1 28% Operating Income $ 2.4 $ 0.8 183% Net Income $ 1.7 $ 0.5 219% ------------------------------------------------------
MANAGEMENT'S COMMENTS Eldad Weiss, Chairman and Chief Executive Officer of Paradigm Geophysical, commented, "Our quarterly growth continues for both revenues and earnings, on a quarter-over-same-quarter basis. Our revenue growth of 31% over the same period last year, and of 28% for the first six months ended June 30, 2001, places us on track to meet our earnings expectations for 2001." (more) 3 In the third quarter of 2001 the Company will issue its latest software release "PG2.0" - an integrated release of Paradigm's reservoir analysis system. This latest release represents the outcome of two years of research and development, which provides the market with the unifying base for the Paradigm Reservoir Analysis System. PG2.0 delivers the next generation of advanced geosciences and integration for reservoir visualization and interpretation, seismic data processing and reservoir imaging, and reservoir characterization and formation evaluation. DETAILED RESULTS
Second Quarter ---------------------------------------------- % Change % Change 2001 2000 Q2'01 over Q1'01 Q2'01 over Q2'00 Q1'01 ---------------------------------------------------------------------------- (US$ millions) Product revenues $13.4 $ 9.9 36% $12.4 8% Service revenues $5.1 $ 4.2 21% $ 5.2 -2% Operating expenses $17.1 $13.7 25% $16.5 4% Cash Flow $3.1 $ 2.3 37% $ 3.2 -3% EBITDA $3.5 $ 2.4 45% $ 3.5 0% -----------------------------------------------------------------------------
Six Months Ended June 30, 2001 ----------------------------------------------------------------- % Change 2001 2000 H1'01 over H1'00 ----------------------------------------------------------------- (US$ millions) Product revenues $25.7 $20.1 28% Service revenues $10.2 $ 8.1 27% Operating expenses $33.6 $27.3 23% Cash Flow $ 6.3 $ 4.6 38% EBITDA $ 7.0 $ 4.9 43% -----------------------------------------------------------------
PRODUCTS: Revenues from products continue to increase, particularly internationally. Product revenues increased 36% on a second quarter-over-second-quarter basis, and increased 8% over the first quarter of 2001. SERVICES: Revenue from services in the second quarter of 2001 increased 21% over the same period last year. In the second quarter the Company made investments to further expand capacity. These investments are expected to have a positive impact on services revenues beginning in the third quarter of 2001. 4 OPERATING EXPENSES: Operating expenses increased 4% over the first quarter 2001 and increased 25% over the second quarter of last year. The latter increase primarily reflects the expansion of staff in Latin America and acquisitions. BALANCE SHEET: Long-term debt (net of current maturities) at the end of the quarter was $3.8 million, an increase of 198% over the end of 2000. This change reflects primarily the financing of capital expenditures during the first half of 2001.This long-term debt position is 7.8% leverage on shareholders' equity, compared with 2.7% leverage at the end of 2000. EARNINGS CONFERENCE CALL: The Company's management will host a conference call with the investment community on Tuesday, July 24 at 9:30 EST, to discuss these results. The conference call will be accessible to all interested parties through a real-time web cast, and will also be available for playback after the call. Details are available on the Company's website www.paradigmgeo.com. ABOUT PARADIGM Paradigm Geophysical provides information solutions to the leaders of the oil and gas industry worldwide. The Company delivers technical software solutions and product-driven services to companies involved in the exploration & production of oil and gas and to oilfield service companies. The Company has over 500 professionals focused on the needs of the oil and gas industry, with a global network of sales, user support and services, through 20 offices in 16 countries, serving all major oil and gas producing provinces in the world. "Paradigm Geophysical(R)" is a registered trademark of Paradigm Geophysical Ltd. Recent press announcements are available on Paradigm's web site: www.paradigmgeo.com CAUTIONARY STATEMENT FOR THE PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Certain statements contained in this press release are forward-looking in nature. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or comparable terminology, or by discussions of strategy. The Company's business and operations are subject to a variety of risks, and uncertainties and other factors. Consequently, actual results may materially differ from those 5 projected stated by any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) future capital expenditures by oil and gas companies, (2) fluctuations and absolute levels of international oil prices, (3) the need for increased Company investment to support product and new services introductions, and to successfully integrate acquisitions with the Company operations, (4) the Company's ability to raise needed additional capital, (5) rapid technological changes that could make the Company's products less desirable or obsolete, (6) market acceptance of the Company's products and services, (7) changes in product sales mix (8) product transitions by the Company and its competitors, (9) the impact of competitive products and pricing, and (10) currency fluctuations. These as well as other risks and uncertainties, are discussed in greater detail in the Company's filings with the Securities and Exchange Commission, including its most recent 20-F filed on June 29, 2001 and its 1999 Annual Report. The Company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made. FOR MORE INFORMATION PLEASE CONTACT: PARADIGM GEOPHYSICAL LTD. Rama Levy Investor Relations Phone: +972-9-970-9306 Fax: +972-9-970-9319 Email: ir@paradigmgeo.com THE RUTH GROUP Denise Roche Phone: +1-646-536-7008 Fax: +1-646-536-7100 Email: droche@theruthgroup.com MORGEN WALKE ISRAEL Maya Huli-Lustig Phone: +972-3-561-1877 Fax: +972-3-561-1875 Email: maya_h@koteret-pr.co.il 6 PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS -------------------------------------------------------------------------------- U.S. DOLLARS IN THOUSANDS
DECEMBER 31, JUNE 30, 2000 2001 ------- --------- AUDITED UNAUDITED ------- --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,647 $ 7,433 Trade receivables (net of allowance for doubtful accounts - $ 2,950 in 2000 and $ 3,050 in 2001) 22,707 24,168 Accrued income 4,077 7,793 Other receivables and prepaid expenses 4,110 5,708 ------- ------- Total current assets 39,541 45,102 ------- ------- LONG-TERM TRADE RECEIVABLES 221 -- ------- ------- SEVERANCE PAY FUNDS 1,076 1,138 ------- ------- PROPERTY AND EQUIPMENT, NET 13,318 14,280 ------- ------- OTHER ASSETS, NET 25,605 30,584 ------- ------- $79,761 $91,104 ======= =======
7 PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS U.S. DOLLARS IN THOUSANDS
DECEMBER 31, JUNE 30, 2000 2001 ------- --------- AUDITED UNAUDITED ------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank loans $ 4,528 $ 3,028 Current maturities of long-term bank loans 3,112 3,333 Current maturities of capital lease obligations 546 507 Trade payables 6,045 3,743 Other payables and accrued expenses 9,931 11,718 Note payable -- 6,152 Deferred revenues 4,519 7,263 ------- ------- Total current liabilities 28,681 35,745 ------- ------- LONG TERM LIABILITIES: Long-term bank loans, net of current maturities 1,277 3,800 Capital lease obligations, net of current maturities 206 -- Other lease obligations 517 424 Accrued severance pay 2,338 2,380 Deferred income tax liability 273 271 ------- ------- Total long-term liabilities 4,611 6,875 ------- ------- SHAREHOLDERS' EQUITY 46,469 48,484 ------- ------- $79,761 $91,104 ======= =======
8 PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS
THREE MONTHS ENDED SIX MONTHS ENDED YEAR ENDED JUNE 30, JUNE 30, DECEMBER 31, ------------------------- ------------------------ 2000 2000 2001 2000 2001 -------- -------- -------- -------- -------- AUDITED UNAUDITED -------- -------------------------------------------------------- Revenues: Products $ 46,390 $ 9,853 $ 13,386 $ 20,063 $ 25,741 Services 16,908 4,197 5,079 8,072 10,246 -------- -------- -------- -------- -------- 63,298 14,050 18,465 28,135 35,987 -------- -------- -------- -------- -------- Operating expenses: Cost of products 10,816 2,247 2,879 4,999 5,561 Cost of services 6,352 1,459 2,257 2,695 4,194 Research and development 11,215 2,517 3,291 5,069 6,655 Sales and marketing, general and administrative 23,518 5,412 6,527 10,504 12,601 Depreciation 4,746 1,205 1,492 2,329 2,993 Amortization of intangible assets 3,360 816 676 1,710 1,633 -------- -------- -------- -------- -------- Total operating expenses 60,007 13,656 17,122 27,306 33,637 -------- -------- -------- -------- -------- Operating income 3,291 394 1,343 829 2,350 Financial expenses, net (552) (121) (167) (223) (315) -------- -------- -------- -------- -------- Income before taxes on income 2,739 273 1,176 606 2,035 Taxes on income 380 27 242 78 350 -------- -------- -------- -------- -------- Net income $ 2,359 $ 246 $ 934 $ 528 $ 1,685 ======== ======== ======== ======== ======== Basic net earnings per share $ 0.17 $ 0.02 $ 0.06 $ 0.04 $ 0.11 ======== ======== ======== ======== ======== Number of shares used in computing basic net earnings per share 13,504 13,151 14,791 13,057 14,741 ======== ======== ======== ======== ======== Diluted net earnings per share $ 0.17 $ 0.02 $ 0.06 $ 0.04 $ 0.11 ======== ======== ======== ======== ======== Number of shares used in computing diluted net earnings per share 13,789 13,421 14,981 13,388 14,911 ======== ======== ======== ======== ========
9 PARADIGM GEOPHYSICAL LTD. AND ITS SUBSIDIARIES -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. DOLLARS IN THOUSANDS
YEAR ENDED PERIOD DECEMBER 31, ENDED JUNE 30, 2000 2001 -------- -------- AUDITED UNAUDITED -------- -------- Cash flows from operating activities: Net income $ 2,359 $ 1,685 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 8,106 3,462 Decrease (increase) in trade receivables, accrued income and long-term trade receivables 10,081 (5,812) Decrease (increase) in other receivables and prepaid expenses 441 (1,414) Decrease (increase) in deferred tax assets and liabilities, net (171) 1 Decrease in trade and other payables and accrued expenses (4,561) (1,194) Increase (decrease) in deferred revenues (2,522) 3,019 Increase in accrued severance pay, net (1,083) 3 Other (22) -- -------- -------- Net cash provided by (used in) operating activities 12,628 (250) -------- -------- Cash flows from investing activities: Purchase of property and equipment (5,331) (2,989) Proceeds from sale of property and equipment 39 -- Purchase of developed technology (170) (423) Payment for acquisition of a consolidated subsidiary, Flagship (3,980) -- Acquisition of a consolidated subsidiary, Sysdrill -- 1,230 -------- -------- Net cash used in investing activities (9,442) (2,182) -------- -------- Cash flows from financing activities: Proceeds from exercise of warrants and stock options 185 -- Proceeds from long-term loans -- 3,300 Proceeds from short-term bank loans 7,506 -- Principal payment of long-term loans (2,173) (1,556) Principal payment of short-term bank loans (4,978) -- Short-term bank credit, net -- (500) Principal payment of capital lease obligations (424) (245) Principal payment of other capital lease obligations (242) (93) -------- -------- Net cash provided by (used in) financing activities (126) 906 -------- -------- Effect of exchange rate changes on cash and cash equivalents 130 312 -------- -------- Increase (decrease) in cash and cash equivalents 3,190 (1,214) Cash and cash equivalents at the beginning of the year 5,457 8,647 -------- -------- Cash and cash equivalents at the end of the year $ 8,647 $ 7,433 ======== ========