* Net income increased to $0.05 per diluted share compared to a net loss of $(0.43) in same period of 2003
Revenue for the third quarter of 2004 was $25.5 million, compared to $20.3 million for the third quarter of 2003, an increase of 26%. Operating income for the third quarter of 2004 was $0.7 million, compared to an operating loss of $(4.5) million for the third quarter of 2003 which included the special charges of $4.4 million associated with the USDATA acquisition. Net income for the third quarter of 2004 was $0.6 million or $0.05 per diluted share, compared to a net loss of $(4.7) million or $(0.43) per diluted share for the third quarter of 2003.
Revenue for the nine months ended September 30, 2004 were $73.5 million, compared to $61.1 million for the same period of 2003, an increase of 20%. Operating income for the first nine months of 2004 was $1.7 million, compared to an operating loss of $(6.3) million for the first nine months of 2003 which included special charges of $5.9 million associated with restructuring and the USDATA acquisition. Net income for the first nine months of 2004 was $1.3 million or $0.10 per diluted share, compared to a net loss of $(5.9) million or $(0.55) per diluted share for the same period of 2003.
As of September 30, 2004, the Company had a balance of $38.7 million in cash and cash equivalents, short-term investments and long-term investments, compared to $38.0 million as of June 30, 2004.
"We continue to make significant progress with our strategic and financial goals," said Jaron Lotan, president and chief executive officer of Tecnomatix Technologies. "For the third quarter of 2004, we achieved record revenue with growth of 26% year-over-year and we increased our operating and net profits. In addition, we continue to report positive cash flow from operating activities. These results are mainly attributable to the continued deployment of our MPM enterprise solutions across a range of vertical markets.
"During the quarter, we enjoyed year-over-year growth across all territories, which was mainly driven by our Mechanical division. Automotive OEMs like Audi, BMW, Ford, GM/Opel, PSA and Volkswagen further expanded their eMPower Enterprise deployments and Renault F1 placed an initial order for our eMPower solution.
"We are particularly pleased with our success in the Tier 1 automotive supplier industry. This $500 billion dollar industry, which manufacturers all the major components of a car, presents a major growth opportunity for Tecnomatix. This quarter, two U.S. companies, Visteon and Intier, placed initial orders for our MPM Enterprise solution, joining our impressive customer base of more than twenty of the world's top Tier-1 suppliers.
"Outside of the automotive industry, demand for our standalone engineering products is particularly strong. Among the companies placing orders in the third quarter were Fanuc, a leading robot manufacturer, Fiat Avio, an Italian aerospace company, Atomic Energy of Canada (AECL), John Deere and Westinghouse.
"We continue to gain traction in China and Taiwan, which is driving increased market penetration through new and repeat orders. This quarter, several automotive customers progressed with their implementation of eMPower Enterprise solutions including Shanghai Automotive Industry Corporation (SAIC), China's largest car producer, and Yulon Motor Company, a Taiwanese car manufacturer. We are also seeing increased adoption of MPM by the Chinese electronics industry, with companies like Inventec, Siemens Shanghai Mobile Communications and UMC placing orders for our eMPower for Electronics solution.
"Our partnership with UGS is progressing well; our technical teams are working together at several major customer sites and, this quarter, we delivered a new version of the Teamcenter and eMPower integrated product.
"In summary, this has been a productive quarter for Tecnomatix, exhibiting important gains in a range of vertical markets with initial and repeat orders for our eMPower Enterprise solution and for our standalone engineering products," continued Lotan. "Our customers continue to report significant productivity improvements and returns on their investments. We are on track with our ongoing objectives to deliver real value to our customers as well as continued financial growth and increased profitability."
Oren Steinberg, chief financial officer and executive vice president of Tecnomatix Technologies said, "We are maintaining our guidelines for 2004 of approximately 15%-20% growth over 2003 with improved profitability. In the fourth quarter of 2004, we expect to achieve sequential and year-over-year growth.
"Looking at 2005, based on our current performance and visibility, we expect to grow our business and strengthen our business model. Our initial guidance for 2005, is approximately 15% year-over-year growth, on an annual basis, with significant improvements in profitability."
Investor Conference Call / Webcast Details
Tecnomatix will review detailed third quarter 2004 results on October 27, 2004 at 8:30AM EDT. The conference call-in number is 1-973-935-2408. A replay will be available from 12:30PM EDT on October 27 through midnight EST, November 7. The replay number is 1-973-341-3080. The confirmation identification for both, the live call and replay is 5260237. The live call and replay will also be accessible over the web at http://investor.tecnomatix.com/.
About Tecnomatix Technologies and eMPower
Tecnomatix Technologies Ltd. is the driving force in Manufacturing Process Management (MPM). Today's leading global manufacturers are adopting MPM solutions to expand revenue potential and reduce costs by accelerating product introductions, shortening time to volume, and optimizing production execution. eMPower enables our customers to succeed with its collaborative, open platform and applications for defining, simulating, managing, and executing manufacturing processes across the extended enterprise. For more information on eMPower products and solutions for MPM, please visit http://www.tecnomatix.com/.
This press release includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks 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 risks and uncertainties that may affect forward-looking statements include, but are not limited to: currency fluctuations, global economic and political conditions, market demand for Tecnomatix products and services, long sales cycles, new product developments, 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 Exchange Commission. Tecnomatix undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
TECNOMATIX TECHNOLOGIES LTD. Condensed Consolidated Statements of Operations U.S. $ in thousands, except per share data Nine months ended Three months ended 9/30/2004 9/30/2003 9/30/2004 9/30/2003 Revenues Software license fees 29,694 24,139 10,944 7,925 Services 43,833 36,918 14,540 12,378 Total revenues 73,527 61,057 25,484 20,303 Costs and expenses Software license fees 5,898 6,254 2,331 1,983 Services 14,879 10,910 5,277 3,562 Amortization of acquired intangibles 438 23 143 23 Research and development, net 12,025 10,671 4,015 3,249 Selling and marketing 35,092 29,977 11,795 10,515 General and administrative 3,539 3,623 1,222 1,055 Restructuring costs and asset impairment - 1,487 In-process R&D and acquisition related costs - 4,410 - 4,410 Total costs and expenses 71,871 67,355 24,783 24,797 Operating income (loss) 1,656 (6,298) 701 (4,494) Financial income (expenses), net (91) 476 (19) (122) Income (loss) before taxes on income 1,565 (5,822) 682 (4,616) Provision for income taxes (246) (41) (99) (40) Income (loss) after taxes on income 1,319 (5,863) 583 (4,656) Equity share in net income (loss) of affiliate company (53) (74) 2 (25) Net income (loss) 1,266 (5,937) 585 (4,681) Basic earnings (loss) per share: Net income (loss) 0.10 (0.55) 0.05 (0.43) Diluted earnings (loss) per share: Net income (loss) 0.10 (0.55) 0.05 (0.43) Weighted average number of shares outstanding: Basic 12,062,771 10,761,537 11,988,125 10,929,256 Diluted 12,913,129 10,761,537 12,816,934 10,929,256 TECNOMATIX TECHNOLOGIES LTD. Condensed Consolidated Balance Sheets U.S. $ in thousands 9/30/2004 12/31/2003 Current Assets: Cash and cash equivalents 11,942 9,232 Short-term investments 23 70 Accounts receivable: Trade 26,186 29,190 Related parties 400 - Other and prepaid expenses 5,160 5,747 Total current assets 43,711 44,239 Non-current receivables 1,241 1,108 Long-term investments: Bonds 26,624 24,267 Zuken Tecnomatix 208 289 Total long-term investments 26,832 24,556 Property and equipment, net 4,444 5,628 Goodwill, net 25,496 25,829 Acquired intangibles, net 2,006 2,444 Other assets, net 13,296 13,296 Total assets 117,026 117,100 Current Liabilities: Current maturities of long-term loans 3,333 833 Accounts payable: Trade 2,546 4,644 Deferred revenue 8,470 7,130 Other and accrued expenses 16,895 19,163 Total current liabilities 31,244 31,770 Long-term liabilities: Accrued restructuring expense 2,829 1,716 Long-term loan from bank 21,667 24,167 Accrued severance pay, net 969 1,095 Total long-term liabilities 25,465 26,978 Shareholders' equity 60,317 58,352 Total liabilities and shareholders' equity 117,026 117,100 Company Contact: Company Investor Contact: Tecnomatix Technologies Ltd. Tecnomatix Technologies Ltd. Oren Steinberg Marsha Shalvi +972-9-9594891 +972-9-9594733 Email Contact +972-544-942180 Email Contact Investor Contact: The Ruth Group David Pasquale/Denise Roche +646-536-7006/7008 Email Contact