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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the Month of October 1998
PARADIGM GEOPHYSICAL LTD.
-------------------------
(Translation of Registrant's Name into English)
Merkazim House 32 Maskit Street P.O.B. 2061 Herzlia B, Israel 46120
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(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F....X.... Form 40-F........
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes........ No....X....
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-.....................
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Attached to the Registrant's Form 6-K for the month of October 1998 and
incorporated by reference herein is the Registrant's news release dated October
27, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PARADIGM GEOPHYSICAL LTD.
(Registrant)
By:/s/ Brian Berman
--------------------------
Brian Berman
Chief Financial Officer
Dated: October 28, 1998
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FOR IMMEDIATE RELEASE
CONTACTS: BRIAN W. BERMAN
CFO, PARADIGM GEOPHYSICAL
+972-9-970-9339
[email protected]
ROBERT D. FERRIS STEVEN CURTIS
RUDER FINN RUDER FINN
1-212-715-1573 1-212-593-6319
[email protected] [email protected]
PARADIGM GEOPHYSICAL ANNOUNCES RECORD THIRD QUARTER RESULTS
HERZLIA, ISRAEL, October 27, 1998 - Paradigm Geophysical Ltd. (NASDAQ - PGEOF)
today announced results for the third quarter and nine months ended September
30, 1998.
Total revenues and operating income for the third quarter improved substantially
and to record levels, with revenues of $11.7 million for the quarter ended
September 30, 1998 as compared with $4.4 million for the quarter ended September
30, 1997 and operating income of $1.5 million for the quarter ended September
30, 1998 as compared with $280,000 for the quarter ended September 30, 1997. Net
income for the quarter ended September 30, 1998 was $1.4 million ($0.13 EPS,
fully diluted) as compared with $138,000 ($0.02 EPS, fully diluted) for the
quarter ended September 30, 1997.
Total revenues for the nine months ended September 30, 1998 were $33.7 million
versus $12.0 million for the nine months ended September 30, 1997. Operating
income was $3.9 million for the nine months ended September 30, 1998 as compared
with $277,000 for the nine months ended September 30, 1997. Net income was $3.0
million ($0.33 EPS, fully diluted) for the nine months ended September 30, 1998
as compared with $215,000 ($0.03 EPS, fully diluted) for the nine months ended
September 30, 1997.
-MORE-
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PARADIGM GEOPHYSICAL ANNOUNCES RECORD THIRD QUARTER RESULTS...
Commenting on the results, Paradigm CEO Eldad Weiss stated, "We are greatly
encouraged by the third quarter results, which showed strong top line growth,
and increased acceptance of our technology and products. Software demand has
remained at expected levels, despite ongoing budget cuts at the major oil
companies. Overall, the industry is recognizing that our solutions contribute to
their overall goals of efficiency and increased productivity."
The increase in revenues and expenses in the quarter ended September 30, 1998
over the comparable quarter in 1997 primarily reflects the inclusion of the
operations of CogniSeis Development, Inc. Paradigm Geophysical Ltd. acquired
CogniSeis Development, Inc. in October 1997. Since the quarter ending December
31, 1997, Paradigm's Statement of Operations has reflected the combined
operations of the two companies. Therefore, third quarter earnings for 1998 and
1997 are not always directly comparable.
PRODUCT LINE SALES CONTINUE GROWTH
Revenues from the sales of software for the third quarter ended September 30,
1998 increased 10 percent, sequentially, to $7.3 million, as compared with the
second quarter of 1998, while maintenance and support for the third quarter of
1998 increased 7 percent, to $2.7 million. Geophysical services revenues for the
third quarter of 1998 declined slightly, to $1.74 million, as compared with
$1.84 million for the second quarter of 1998. The decline was due primarily to
the flattening of demand in the services business as a result of the overall
industry climate. Product line revenue contribution for the third quarter 1998
remained relatively similar to second quarter 1998 levels at 62 percent, 23
percent and 15 percent, respectively, for software, maintenance and support and
geophysical services.
GROSS MARGINS DECLINE SLIGHTLY
Overall gross margins for the third quarter of 1998 were 66 percent, versus 68
percent in the second quarter of 1998. The decline was due principally to
increased capital expenditures in expanding the Company's geophysical services
operation in Argentina and the expansion of information technology
infrastructure. Research and development expenses for the third quarter of 1998
were $1.9 million versus $900,000 in the third quarter of 1997, while G&A grew
to $1.8 million as compared with $700,000. At the same time, marketing expenses
increased to $2.5 million, as compared with $1.1 million for the same period
last year, largely because of new product launches in September 1998. Spending
levels in each of these respective areas were flat to slightly higher than the
second quarter of 1998.
SIGNIFICANT PRODUCT INTRODUCTIONS
In September, the Company announced the integration of its product offerings
into two comprehensive solution suites: Echos(TM) (a processing and inversion
solutions suite) and Ergos(TM)
-MORE-
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PARADIGM GEOPHYSICAL ANNOUNCES RECORD THIRD QUARTER RESULTS...
(an interpretation solutions suite). Both products were formally unveiled at The
Society for Exploration Geophysicists (SEG) - the oil and gas exploration
industry's major trade event.
Paradigm Geophysical Ltd. develops, markets and supports integrated computer
aided exploration ("CAEX") software systems and provides seismic data processing
and interpretation services to companies engaged in oil and natural gas
exploration and development. Paradigm Geophysical serves this industry with
offices and sales representatives in the United States, the United Kingdom,
Canada, China, Australia, Argentina, Singapore, Venezuela, and Russia.
"Paradigm Geophysical[R]" is the registered trademark of Paradigm Geophysical
Ltd.
"Safe Harbor" statement under the Private Securities Litigation Reform
Act of 1995: Statements in this release which are not historical facts
are forward-looking and involve risks and uncertainties, including, but
not limited to, the impact of competitive products and pricing,
increased investment to support product introductions, market
acceptance of products, product transitions by the company and its
competitors, currency fluctuations, changes in product sales mix, and
other risks described in the company's registration statement and other
Securities and Exchange Commission filings.
-tables follow-
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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- - --------------------------------------------------------------------------------
U.S. dollars in thousands (except for per share data)
<TABLE>
<CAPTION>
Year ended Three months Nine months ended
December 31, ended September 30, September 30,
-------- ------------------------ -----------------------
1997 1997 1998 1997 1998
-------- -------- -------- -------- --------
Audited Audited Unaudited Audited Unaudited
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses $ 15,243 $ 2,685 $ 7,291 $ 6,192 $ 20,437
Maintenance and support 4,736 665 2,685 1,848 7,917
Seismic data processing and
interpretation services 4,886 1,072 1,737 3,953 5,298
-------- -------- -------- -------- --------
24,865 4,422 11,713 11,993 33,652
-------- -------- -------- -------- --------
Cost of revenues:
Software licenses 4,139 298 1,493 1,030 4,376
Maintenance and support 2,492 474 1,494 1,431 4,191
Seismic data processing and
interpretation services 2,533 612 1,012 1,842 2,810
-------- -------- -------- -------- --------
9,164 1,384 3,999 4,303 11,377
-------- -------- -------- -------- --------
Gross profit 15,701 3,038 7,714 7,690 22,275
-------- -------- -------- -------- --------
Operating expenses:
Research and development, net 5,095 928 1,905 2,373 5,895
Selling and marketing, net 6,102 1,109 2,475 3,006 7,000
General and administrative 4,227 721 1,782 2,034 5,455
Other expenses 10,676 -- -- -- --
-------- -------- -------- -------- --------
Total operating expenses 26,100 2,758 6,162 7,413 18,350
-------- -------- -------- -------- --------
Operating income (loss) (10,399) 280 1,552 277 3,925
-------- -------- -------- -------- --------
Financial income (expenses), net (446) (46) (26) 34 (735)
-------- -------- -------- -------- --------
Income (loss) before taxes on income (10,845) 234 1,526 311 3,190
Taxes on income -- 96 120 96 210
-------- -------- -------- -------- --------
Net income (loss) for the period $(10,845) $ 138 $ 1,406 $ 215 $ 2,980
======== ======== ======== ======== ========
Basic income (loss) per share $ (4.66) $ 0.06 $ 0.13 $ 0.09 $ 0.53
======== ======== ======== ======== ========
Number of shares used in computing
basic income (loss) per share 2,328 2,328 10,500 2,328 5,612
======== ======== ======== ======== ========
Diluted income (loss)per share $ (4.66) $ 0.02 $ 0.13 $ 0.03 $ 0.33
======== ======== ======== ======== ========
Number of shares used in
computing diluted income (loss) per share 2,328 7,248 10,744 7,248 8,943
======== ======== ======== ======== ========
</TABLE>
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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
- - --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------- -------
Audited Unaudited
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,229 $ 4,735
Trade receivables (net of allowance for doubtful accounts -
$568 and $1,301 in 1997 and 1998, respectively) 17,984 18,377
Other receivables and prepaid expenses 5,409 2,390
------- -------
Total current assets 31,622 25,502
------- -------
LONG-TERM TRADE RECEIVABLES 446 349
------- -------
SEVERANCE PAY FUNDS 500 588
------- -------
FIXED ASSETS:
Cost 9,537 13,013
Less - accumulated depreciation 3,471 5,034
------- -------
6,066 7,979
------- -------
OTHER ASSETS:
Computer software development costs (net of accumulated
amortization of $538 and $971 in 1997 and
1998, respectively 1,182 1,851
Acquired developed technology (net of accumulated
amortization of $350 and $1,367 in 1997 and 1998, 6,662 5,688
respectively)
Other assets, net 2,797 2,047
------- -------
10,641 9,586
------- -------
$49,275 $44,004
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</TABLE>
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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
- - --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
-------- --------
Audited Unaudited
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 711 $ --
Current maturities of long-term bank loans 577 513
Trade payables 1,967 2,336
Other payables and accrued expenses 12,564 7,978
Deferred revenues 6,995 5,259
Note payable 9,500 --
-------- --------
Total current liabilities 32,314 16,086
-------- --------
LONG-TERM BANK LOANS 483 448
-------- --------
BRIDGE LOAN PAYABLE 12,000 --
-------- --------
ACCRUED SEVERANCE PAY 1,031 1,173
-------- --------
DEFERRED TAX LIABILITY 807 807
-------- --------
SHAREHOLDERS' EQUITY:
Preferred shares:
Authorized - 4,735,802 shares of NIS 0.5 par value;
Issued and outstanding - 4,735,802 shares and 0 shares
at December 31, 1997 and at September 30, 1998, respectively 765 --
Ordinary shares:
Authorized - 18,000,000 shares of NIS 0.5 par value;
Issued and outstanding - 2,328,682 shares and 10,514,484 at
December 31, 1997 and September 30, 1998, respectively 521 1,758
Additional paid-in capital 19,707 39,237
Foreign currency translation adjustment (246) (378)
Accumulated deficit (18,107) (15,127)
-------- --------
Total shareholders' equity 2,640 25,490
-------- --------
$ 49,275 $ 44,004
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</TABLE>
