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Cimatron Reports Q3 Revenues

Revenue Increase of 67% and Net Income Increase of 60% on a Non-GAAP Basis in the First Nine Months of 2008

GIVAT SHMUEL, Israel, November 17 /PRNewswire-FirstCall/ -- Cimatron Limited (NASDAQ: CIMT), a leading provider of integrated CAD/CAM solutions for the toolmaking and manufacturing industries, today announced financial results for the third quarter and first nine months of 2008.

Third quarter 2008 Financial Highlights, compared to the third quarter of 2007:

    - Revenues on a non-GAAP Basis: 27.8% increase to $10.1 million
    - Net Income on a non- GAAP Basis: 23.5% increase to $0.65 million
    - Revenues on GAAP Basis: 24.6% increase to $9.9 million
    - Net Income on GAAP Basis: 77.2% decrease to $0.11 million

Revenue on a non-GAAP basis in 2008 excludes the effect of business combination accounting rules on the acquired deferred maintenance revenue balance of Gibbs. Expenses on a non-GAAP basis exclude the non-cash amortization of acquired intangible assets of Microsystem and Gibbs, and the deferred taxes related to these acquisition- related items. Cimatron has consolidated Microsystems' results since Q3 2007 and Gibbs' results starting Q1 2008.

The following provides further details on Cimatron's GAAP and non-GAAP figures in the third quarter and the first nine months of 2008:

GAAP:

Revenues on a GAAP basis for the third quarter of 2008 increased 24.6% to $9.9 million, as compared to $7.9 million in the third quarter of 2007. For the first nine months of 2008, revenue increased by 63.0% to $30.6 million, compared to $18.8 million in the same period of 2007.

Gross Income on a GAAP basis for the third quarter of 2008 was $8.2 million as compared to $6.4 million in the same period in 2007. Gross margin in the third quarter was 82.7%, compared to 80.6% in Q3 2007. For the first nine months of 2008, gross income was $24.9 million, compared to $15.5 million in the same period of 2007. Gross margin for the nine months ended on September 30th, 2008 was 81.6% of revenues as compared to 82.9% of revenues in the same period of 2007.

Operating Income on a GAAP basis in the third quarter of 2008 was $19 thousand, compared to operating income of $450 thousand in the third quarter of 2007. In the first nine months of 2008, Cimatron had an operating loss of $(126) thousand, compared to operating income of $845 thousand in the first nine months of 2007.

Net Income on a GAAP basis for the quarter was $111 thousand, or $0.01 per diluted share, compared to net income of $486 thousand, or $0.06 per diluted share recorded in the same quarter of 2007. In the first nine months of 2008 net income was $18 thousand, or $0.0 per diluted share, compared to net income of $958 thousand, or $0.12 per diluted share, in the first nine months of 2007.

Non-GAAP:

Revenues on a non-GAAP basis for the third quarter of 2008 increased 27.8% to $10.1 million, as compared to $7.9 million in the third quarter of 2007. For the first nine months of 2008, revenue increased by 66.9% to $31.3 million, compared to $18.8 million in the same period of 2007.

Gross Income on a non-GAAP basis for the third quarter of 2008 was $8.5 million as compared to $6.4 million in the same period in 2007. Gross margin in the third quarter of 2008 was 84.5%, compared to 80.6% in Q3 2007. In the first nine months of 2008, gross income increased 68.0% to $26.1 million, compared to $15.5 million in the first nine months of 2007. Gross margin for the nine months ended on September 30th, 2008 was 83.4% of revenues as compared to 82.9% of revenues in the same period of 2007.

Operating Income on a non-GAAP basis in the third quarter of 2008 was $514 thousand, as compared to operating income of $487 thousand in the third quarter of 2007. In the first nine months of 2008, Cimatron reports operating income increase to $1.36 million, compared to operating income of $902 thousand in the first nine months of 2007.

Net Income on a non-GAAP basis in the third quarter of 2008 increased 23.5% to $646 thousand or $0.07 per diluted share, as compared to net income of $523 thousand, or $0.07 per diluted share in the third quarter of 2007. In the first nine months of 2008, net profit increased by 59.6% to $1.6 million, or $0.17 per diluted share, compared to a net profit of $1.0 million, or $0.13 per diluted share, in the first nine months of 2007.

Commenting on the results, Danny Haran, President and Chief Executive Officer of Cimatron, said, "We are pleased to present an increase in revenues and profits on a non-GAAP basis, following the merger transaction with Gibbs and Associates. Cimatron, being an active player in the automotive, consumer, and production markets, may very well be affected by a prolonged global economic slowdown. However, we believe that our strong balance sheet and cash reserves are important assets in the current worldwide financial turmoil. While exercising tight budget control, we continue to invest in both the CimatronE and GibbsCAM product lines. In particular, we accelerated the process of selling GibbsCAM for high-end multi-axis machines, a lucrative market segment believed to be more recession resilient than other segments of the manufacturing market. With over $6M in cash, broad product offerings, and strong distribution channels, we believe that Cimatron is well positioned to meet the challenges and take advantage of the opportunities that lie ahead", concluded Mr. Haran.

Conference Call

Cimatron's management will host a conference call on Tuesday, November 18th, at 9:00 EST, 16:00 Israel time. On the call, management will review and discuss the results, and will answer questions by investors.

To participate, please call one of the following teleconferencing numbers. Please begin placing your call at least 5 minutes before the conference call commences.

                              USA: +1-866-3455-855
                               Israel: 03-9180609
                          International: +972-3-9180609

For those unable to listen to the live call, a replay of the call will be available from the day after the call under the investor relations section of Cimatron's website, at: http://www.cimatron.com

Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Consolidated Statements of Operation (Non-GAAP basis). Non-GAAP financial measures consist of GAAP financial measures adjusted to include recognition of deferred revenues of acquired companies and to exclude amortization of acquired intangible assets and deferred income tax, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges and other items that are considered by management to be outside our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. We believe that these non- GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our two most recent acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

About Cimatron

With over 25 years of experience and more than 40,000 installations worldwide, Cimatron is a leading provider of integrated, CAD/CAM solutions for mold, tool and die makers as well as manufacturers of discrete parts. Cimatron is committed to providing comprehensive, cost-effective solutions that streamline manufacturing cycles, enable collaboration with outside vendors, and ultimately shorten product delivery time.

The Cimatron product line includes the CimatronE and GibbsCAM brands with solutions for mold design, die design, electrodes design, 2.5 to 5 axes milling, wire EDM, turn, Mill-turn, rotary milling, multi-task machining, and tombstone machining. Cimatron's subsidiaries and extensive distribution network serve and support customers in the automotive, aerospace, medical, consumer plastics, electronics, and other industries in over 40 countries worldwide.

Cimatron is publicly traded on the NASDAQ exchange under the symbol CIMT. For more information, please visit the company web site at: http://www.cimatron.com.

Safe Harbor Statement

This press release includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act Of 1995, which are subject to risk and uncertainties that could cause actual results to differ materially from those anticipated. Such statements may relate to the company's plans, objectives and expected financial and operating results. The words "may," "could," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions or variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. The risks and uncertainties that may affect forward looking statements include, but are not limited to: currency fluctuations, global economic and political conditions, marketing demand for Cimatron products and services, long sales cycle, new product development, assimilating future acquisitions, maintaining relationships with customers and partners, and increased competition. For more details about the risks and uncertainties of the business, refer to the Company's filings with the Securities and Exchanges Commission. The company cannot assess the impact of or the extent to which any single factor or risk, or combination of them, may cause. Cimatron undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

                                 CIMATRON LIMITED
                        CONSOLIDATED STATEMENTS OF INCOME
               (US Dollars in thousands, except for per share data)


                            Three months ended          Nine months ended
                               September 30,              September 30,
                           2008           2007       2008            2007

    Total revenue          9,864         7,915      30,571          18,759

    Total cost of
    revenue                1,711         1,533       5,627           3,210

    Gross profit           8,153         6,382      24,944          15,549

    Research and
    development expenses,
    net                    1,683         1,037       5,273           3,144

    Selling, general and
    administrative
    expenses               6,451         4,895      19,797          11,560

    Operating income
    (loss)                    19           450       (126)             845

    Financial Income, net.    92           117         127             262

    Taxes on Income         (33)          (69)        (26)            (73)

    Other                     33          (12)          43            (76)

    Net income             $ 111         $ 486        $ 18           $ 958
    Net income per
    share - basic and
    diluted               $ 0.01        $ 0.06      $ 0.00          $ 0.12

    Weighted average
    number of shares
    outstanding

    Basic EPS (in
    thousands)             9,329         7,902       9,357           7,860

    Diluted EPS (in
    thousands)             9,385         7,919       9,362           7,900




                                 CIMATRON LIMITED
               RECONCILIATION BETWEEN GAAP AND NON-GAAP INFORMATION
               (US Dollars in thousands, except for per share data)


                                         Three months ended
                                           September 30,
                               2008                           2007
                         GAAP      Adj.   NON-GAAP    GAAP    Adj.   NON-GAAP

    Total revenue (1)   9,864      248     10,112    7,915     -       7,915

    Total cost of
    revenue (2)         1,711    (147)      1,564    1,533     -       1,533

    Gross profit        8,153      395      8,548    6,382     -       6,382

    Research and
    development
    expenses, net       1,683        -      1,683    1,037     -       1,037

    Selling, general
    and administrative
    expenses(2)         6,451    (100)      6,351    4,895   (37)      4,858
    Operating income
    (loss)                 19      495        514      450     37        487

    Financial Income,
    net.                   92        -         92      117     -         117

    Taxes on Income (3)  (33)       40          7     (69)     -        (69)

    Other                  33        -         33     (12)     -        (12)

    Net income          $ 111    $ 535      $ 646    $ 486  $ 37       $ 523
    Net income per
    share - basic and
    diluted            $ 0.01              $ 0.07   $ 0.06            $ 0.07

    Weighted average
    number of shares
    outstanding

    Basic EPS (in
    thousands)          9,329               9,329    7,902             7,902

    Diluted EPS (in
    thousands)          9,385               9,385    7,919             7,919

    (1) Non-GAAP adjustment related to Gibbs' assumed support contracts
        that will not be recognized on a GAAP basis in fiscal 2008 or
        thereafter due to business combination accounting rules.
    (2) Non-GAAP adjustment to exclude non-cash amortization of acquired
        intangible assets.
    (3) Non-GAAP adjustment to exclude deferred taxes related to business
        combination accounting rules.



                                CIMATRON LIMITED
          RECONCILIATION BETWEEN GAAP AND NON-GAAP INFORMATION (Cont.)
              (US Dollars in thousands, except for per share data)


                                       Nine months ended
                                         September 30,
                                  2008                        2007
                         GAAP    Adj.    NON-GAAP     GAAP   Adj.  NON-GAAP

    Total revenue (1)   30,571    743      31,314    18,759        18,759

    Total cost of
    revenue (2)          5,627  (441)       5,186     3,210         3,210

    Gross profit        24,944  1,184      26,128    15,549        15,549

    Research and
    development
    expenses, net        5,273              5,273     3,144         3,144

    Selling, general
    and administrative
    expenses (2)        19,797  (300)      19,497    11,560   (57) 11,503
    Operating income
    (loss)               (126)  1,484       1,358       845    57     902

    Financial Income,
    net.                   127                127       262           262

    Taxes on Income (3)   (26)    118          92      (73)          (73)

    Other                   43                 43      (76)          (76)


    Net income            $ 18  $ 1,602     1,620       958   $ 57  1,015

    Net income per
    share - basic and
    diluted             $ 0.00             $ 0.17     $ 0.12       $ 0.13

    Weighted average
    number of shares
    outstanding

    Basic EPS (in
    thousands)           9,357              9,357      7,860        7,860

    Diluted EPS (in
    thousands)           9,362              9,362      7,900        7,900

    (1) Non-GAAP adjustment related to Gibbs' assumed support contracts
        that will not be recognized on a GAAP basis in fiscal 2008 or
        thereafter due to business combination accounting rules.
    (2) Non-GAAP adjustment to exclude non-cash amortization of acquired
        intangible assets.
    (3) Non-GAAP adjustment to exclude deferred taxes related to business
        combination accounting rules.



                             CIMATRON LIMITED
                        CONSOLIDATED BALANCE SHEETS
                         (US Dollars in thousands)

                                            September 30,    December 31,
                                                2008             2007

           ASSETS
    CURRENT ASSETS:
      Total cash, cash equivalents and
      short-term investments                  $ 6,623          $ 9,026
      Trade receivables                         6,984            7,308
      Other current assets                      2,780            1,467
        Total current assets                   16,387           17,801

        Deposits with insurance companies
        and severance pay fund                  3,121            2,703

    LONG-TERM INVESTMENTS:
      Marketable investments                        -            1,158

        Net property and equipment              1,427            1,337

        Total other assets                     14,156            4,328

          Total assets                       $ 35,091         $ 27,327

              LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
      Short-term bank credit                    $ 118            $ 791
      Trade payables                            1,547            2,258
      Accrued expenses and other liabilities    7,605            7,889
      Deferred revenues                         4,010              742
         Total current liabilities             13,280           11,680

    LONG-TERM LIABILITIES:
      Accrued severance pay                     4,399            3,929
      Long-term loan                              352              403
      Deferred tax liability                    1,820              282
      Total long-term liabilities               6,571            4,614

      Minority interest                            16               63

      Total shareholders' equity               15,224           10,970
         Total liabilities and
         shareholders' equity                $ 35,091         $ 27,327



                               CIMATRON LIMITED
                 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                             Share    Additional   Accumulated      Retained
                            capital    paid-in        other         earnings
                                       capital    comprehensive  (accumulated
                                                   income (loss)    deficit)



    Balance at
    December 31, 2007        $ 265     $ 13,530      $ (34)        $ (2,632)

    Changes during the nine
    months ended September
    30, 2008:

    Net income                                                            18
    Issuance of shares          39        4,248
    Exercise of share options                14

    Unrealized gain on available
    for-sale securities                                  88

    Vesting of employee stock
    options                                              92
    Investment in treasury stock
    Foreign currency
    translation adjustment       -            -        (92)                -

    Total
    comprehensive loss

    Balance at
    September 30, 2008       $ 304     $ 17,792        $ 54        $ (2,614)
                          (US Dollars in thousands)


    (continued)

                                 CIMATRON LIMITED
                   STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                                  Total
                                Treasury     Comprehensive    shareholders'
                                 stock       income (loss)       equity
    Balance at December
    31, 2007                    $ (159)                         $ 10,970
    Changes during the
    nine months ended
    September 30, 2008:
    Net income                                      18                18
    Issuance of shares                                             4,287
    Exercise of share options                                         14
    Unrealized gain on
    available for-sale securities                   88                88
    Vesting of employee
    stock options                                                     92
    Investment in treasury stock  (153)          (153)             (153)
    Foreign currency
    translation adjustment            -           (92)              (92)
    Total comprehensive loss                     (139)
    Balance at September
    30, 2008                    $ (312)                         $ 15,224

                                (US Dollars in thousands)



                                CIMATRON LIMITED
                            STATEMENTS OF CASH FLOWS
                           (US Dollars in thousands)

                                                        Nine months ended
                                                         September 30,
                                                       2008              2007

    Cash flows from operating activities:
    Net income                                         $ 18             $ 958

    Adjustments to reconcile net income
    to net cash provided by operating activities:
    Depreciation and amortization                     1,105               561
    Increase (decrease) in accrued severance pay        470             (183)
    Vesting of employee stock options                    92                88
    Equity in losses (earnings) of affiliates            88                51
    Minority interest in earnings (losses) of
    consolidated subsidiaries                          (47)                37
    Deferred taxes, net                                  46                 -

    Changes in assets and liabilities:
    Decrease (increase) in accounts receivable
    and prepaid expenses                              2,626               649
    Decrease (increase) in inventory                     24                32
    Decrease (increase) in deposits with insurance
    companies and severance pay fund                  (418)               (2)
    Increase (decrease) in debts to related parties      23                25
    Increase (decrease) in trade payables, accrued
    expenses and other liabilities                    (501)               794
    Net cash provided by operating activities         3,526             3,010

    Cash flows from investing activities:
    Proceeds from sale of property and equipment          2                 -
    Proceeds from sale and redemption of bonds        1,245               250
    Purchase of property and equipment                (359)             (437)
    Additional payment for acquisition of
    subsidiary                                      (1,250)                 -
    Acquisition of newly-consolidated subsidiaries
    (Appendix A)                                    (4,765)               301
    Net cash provied by (used in) investing
    activities                                      (5,127)               114

    Cash flows from financing activities:
    Short-term bank credit                            (674)                 4
    Long-term bank credit                              (39)                32
    Proceeds from issuance of shares upon exercise
    of options                                           14                88
    Investment in treasury stock                      (153)                 -
    Net cash provided by (used in) financing
    activities                                        (852)               124

    Net increase (decrease) in cash and cash
    equivalents                                     (2,453)             3,248
    Effect of exchange rate changes on cash              50                39
    Cash and cash equivalents at beginning of
    period                                            9,026             5,597

    Cash and cash equivalents at end of period      $ 6,623           $ 8,884



                                CIMATRON LIMITED
                            STATEMENTS OF CASH FLOWS
                           (US Dollars in thousands)

                                                  Nine months ended
                                                    September 30,
                                                2008           2007

    Appendix A - Acquisition of subsidiary,
    net of cash acquired
        Working capital - excluding cash       (714)
        Goodwill                               3,647
        Other intangible assets                5,432
        Property and equipment                   158
        Tax Asset                                529
                                               9,052

        Issuance of shares                   (4,287)

                                             $ 4,765
    Appendix B - Non-cash transactions
        Purchase of property on credit          $ 43           $ 35




    Contact:

    Ilan Erez, Chief Financial Officer
    Cimatron Ltd.
    Tel.: +972-3-531-2121
    E-mail: yael@commitment-IR.com

    Yael Nevat,
    Commitment-IR.com
    Tel: +972-9-714 8866, +972-50-762-6215
    E-mail: ilane@cimatron.com