Financial Highlights for the Full Year ended December 31, 2000:
* Net revenues grew by 53% to $22.1 million in 2000 from $14.5 million in 1999 – record revenues for the company
* Strong average gross margin of 60% maintained throughout the year
* For the full year 2000, the company wrote off $6.7 million of in-process R&D and extraordinary expenses. Net loss for the full year 2000 was $17.8 million
* Loss per common share for the year ended December 31st, 2000 was $1.75
Operational Highlights for Full Year 2000:
* Orad concluded 5 successful acquisitions of ELSET, Getris, Numeric Video, Xync and ARTS Computer Technologies
* Orad received the Emmy Award for the implementation of real time virtual imaging for live events on television using IMadGINE and CyberSport
* Orad saw a great success of its technology in the broadcasts of the Sydney 2000 Olympics including those by USA’s NBC, China’s CCTV, Germany’s ARD, Australia’s Seven Network, France2 and Japan’s NHK among many others
* Orad continued its global expansion with opening of new offices in the US, France, Spain and R&D centers in France, Germany, Poland and Austria
* An array of new and innovative Orad products including Clickable Video and CyberSet NT
* Successfully tested HorseTrack at the Hong Kong Jockey Club – a novel tracking and identification system for horse race broadcast and webcasting. Ideal system for on-line gaming and betting
* Orad established OradNet Inc., a wholly-owned subsidiary dedicated to sports webcasting technologies
* New high profile clients, including CBS, NBC, RTL, Canal Plus, BBC, KBS, RTBF, and NHK
* Germany’s RTL started using 10 PSY on-air graphics systems to produce the regional news programmes for RTL North
* Increase of R&D efforts in preparation of the forthcoming World Cup of 2002
Avi Sharir, President and Chief Executive Officer of Orad, noted: ‘I am pleased with the results. Our annual results together with the various acquisitions we have made throughout the year, help distinguish Orad from its competitors, keep and even increase our market share, and further solidify our position as the leader in the TV graphics and virtual advertising industries, offering the widest range of products which is constantly expanding, from entry level to high end applications.’
Mr. Sharir continued, ‘We are very encouraged with the fact that we have managed this growth without compromising our gross margin levels. An encouraging result of the expansion of the sales force and opening of new offices was the increase in market reach we experienced. Repeat sales have also increased attesting to the top quality products and technologies of our expanded product range. The Emmy Award we won attests to our technological excellence. The Emmy recognizes Orad for the ‘Implementation of Real Time Virtual Imaging for Live Events on Television’ for its IMadGINE and CyberSport products.’
Sharir concluded, ‘The fast integration of the companies acquired will lead to further cost synergies which will result in reduced operating costs. These synergies will be realized from the second half of 2001. With our increased product portfolio, our strong R&D and sales teams and our global presence, we are set to maintain and solidify our position as the world leaders in our respective fields. Orad will be presenting many new products at NAB 2001 in April, the largest trade show of this industry, showing once again its market leading cutting-edge technologies.
These products are the fruit of increased R&D activity and will help us leverage our technological leadership to increase our market share, increased basket of products and penetration of the broadcasting, sports and virtual advertising markets.
These strong measures that we are currently taking in expansion of the sales and R&D efforts will result in increasing revenues further while keeping the cost base at minimum. Orad’s current technologies and systems combined with its revolutionary new line of products will ensure that it will remain at the forefront of the industry.’
Financial Highlights for Q4 2000:
* Excluding the one-time impact associated with the bankruptcy of one of its customers, Q4 was a record quarter with revenues of $7.1 million, showing growth of 35% from Q4 1999
* Net revenues grew by 11% to $5.8 million in Q4 2000 from $5.2 million in Q4 1999
* Operating loss excluding acquisitions and in-process R&D write-off was $4.6 million, compared with operating income of $391 thousand for Q4 1999
* Loss per common share for the quarter was $1.12
Operational Highlights for Q4 2000:
* Orad launched a beta version of CyberGraphics – a revolutionary user-friendly, on-air 3D graphics tool addressing the huge emerging TV on-air graphics market
* New and high-profile clients, including US’s Golf Channel, Germany’s Top Vision and RTL
* New trend of regional stations using virtual studios. RTL North for example, covers three different broadcast regions all with their own studios following the purchase of 10 PSY systems. All four programmes go on air simultaneously using Orad’s virtual sets
Financial Highlights
Revenues
Revenues for the full year 2000 increased by 53% to a record of $22.1 million from $14.5 million in 1999. Excluding the one-time impact associated with the bankruptcy of one of its customers, full-year 2000 was a record year with revenues of $23.3 million, showing growth of 61% from 1999. Revenues for the fourth quarter 2000 increased by 11% to $5.8 million from $5.2 million in fourth quarter 1999. Excluding the one-time impact, Q4 was a record quarter with revenues of $7.1 million, showing growth of 35% from Q4 1999.
In line with global market slowdown, the Company has seen some evidence of lengthening sales cycles for its products. It is too early to estimate the effects of these lengthening sales cycles on the Company’s performance in 2001. In addition, the first quarter is traditionally slow as customers wait for the unveiling of new products and technologies at the April NAB2001 trade show. However, due to the launch of several new products, the Company believes that its potential for growth will remain strong in the long term.
Other Investments
Company has written off investments totaling approximately $4.0 million related to the bankruptcy of one of its customers and made a provision for the impairment of other investments due to the market devaluation of such companies.
Profit/Loss
Net loss for 2000 was $17.8 million compared with a net loss of $3.4 million in 1999. Loss per common share was $1.75 compared with a loss of $0.47 per common share for 1999. Orad’s net loss for the fourth quarter was $11.6 million compared with a net income of $623 thousands in the fourth quarter of 1999. Net loss per common share for the fourth quarter of 2000 was $1.12 compared with income of $0.07 per common share for the fourth quarter of 1999.
Gross Margin
Gross margin remained high and stable at a level around 60% throughout the year, mainly due to the fact that Orad’s products are based on technologies which are developed in-house, an exceptional advantage which Orad will continue to leverage upon. Gross margin during 2000 was 60% compared with 62% in 1999.
Research & Development
Research and development (R&D) expenses increased in the fourth quarter of 2000 to $2.1 million compared to $538 thousand in the fourth quarter of 1999. Fourth quarter R&D expenses include the expenses of Xync GmbH and ARTS Computer Technologies which were acquired in Q4 2000. R&D expenses increased in 2000 to $4.9 million compared to $2.4 million in 1999.
The increase is due to heavy investment in several R&D projects, the integration of the newly acquired companies and core technology amortization of these companies, and preparations in view of the forthcoming World Cup of 2002. Orad will be launching few of these new products at NAB2001. The heavy investment in R&D will continue in 2001. For full year 2000, the Company wrote off $6.7 million of in-progress R&D and additional extraordinary expenses related to the various acquisitions made throughout the year.
According to US GAAP, the conditioned shares given to Xync GmbH shareholders, valued at $6 million, are treated as compensation for work and will be amortized over the 30-months employment period of Xync shareholders. In 2000, $400 thousand were recorded for this purpose.
Sales & Marketing
Selling and marketing expenses increased in 2000 to $15.2 million compared with $9.9 million in 1999. Sales and marketing expenses (including general and administrative expenses) increased in the fourth quarter of 2000 to $5.8 million compared with $2.6 million in the fourth quarter of 1999.
The increase was primarily attributed to the increase in direct sales personnel, opening of new offices in France, the US and Spain, the UK, the hiring of additional sales desk managers, increased commissions for third-party distributors due to an increase in sales, increased marketing activities, participation in trade shows and demonstration activities. Additionally the integration of the sales operations of the acquired companies has also led increased costs.
Financial Income
Financial income in 2000 was $2.1 million compared to financial income of $54 thousand in 1999. Financial income in the fourth quarter of 2000 was $555 thousands compared with a financial income of $320 thousands in the fourth quarter of 1999.
For further information please contact:
Mr. Ariel Kor
Orad Hi – Tec Systems
Tel: +972-9-764-2100 ext. 592
Fax: +972-9-767-7861
Email: ariel.kor@orad.co.il