<PAGE> 1
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 January 1999
PARADIGM GEOPHYSICAL LTD.
(Translation of Registrant's Name into English)
Merkazim House 32 Maskit Street P.O.B. 2061 Herzlia B, Israel 46120
(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-.....................
<PAGE> 2
Attached to the Registrant's Form 6-K for the month of January 1999 and
incorporated by reference herein is the Registrant's news release dated January
28, 1999.
<PAGE> 3
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: January 29, 1999
<PAGE> 1
CONTACTS: BRIAN W. BERMAN
CFO, PARADIGM GEOPHYSICAL
+972-9-970-9339
[email protected]
<TABLE>
<S> <C>
ROBERT D. FERRIS STEVEN CURTIS
RUDER FINN RUDER FINN
1-212-715-1573 1-212-593-6319
[email protected] [email protected]
</TABLE>
PARADIGM GEOPHYSICAL ANNOUNCES RECORD 1998 RESULTS
REVENUES UP 82 PERCENT YEAR OVER YEAR;
SEQUENTIAL EARNINGS GROWTH OF 12 PERCENT IN Q4
Herzlia, Israel, January 28, 1999: Paradigm Geophysical Ltd. (NASDAQ:PGEOF)
today announced revenues for the year ended December 31, 1998 of $45.4 million,
an increase of 82 percent over the $24.9 million recorded for the year ended
December 31, 1997. Net income for the year ended December 31,1998 was $4.55
million ($0.49 per share), compared with a loss of $10.8 million ($4.66 loss per
share) for the year ended December 31,1997.
Revenues for the fourth quarter ended December 31, 1998 were $11.7 million, as
compared with $12.9 million in revenues in the fourth quarter ended December
31,1997, in which the acquisition of CogniSeis Development, Inc. ("CogniSeis")
occurred. Net income for the quarter was $1.57 million ($0.15 per share)
compared with a loss of $11.06 million ($4.75 loss per share) in the same period
last year, and 12 percent higher than third quarter levels of $1.4 million
($0.13 per share).
The results of the fourth quarter of 1997 and the full year 1997 are not
comparable with the results for the same periods of 1998 because of the
consolidation into Paradigm's accounts of the fourth quarter 1997 operations of
CogniSeis. Paradigm Geophysical Ltd. acquired CogniSeis in October 1997. In
addition, as a consequence of the acquisition, fourth quarter 1997 revenues
reflect a significant backlog of CogniSeis software sales
<PAGE> 2
that closed in that quarter and also reflect $2.3 million of hardware sales.
(Paradigm has discontinued the CogniSeis practice of actively marketing
hardware).
-More-
PARADIGM GEOPHYSICAL ANNOUNCES RECORD 1998 RESULTS.....
HIGHLIGHTS FOR THE YEAR
- - PRODUCT SALES INCREASE
- - GROSS MARGINS IMPROVE
- - RESEARCH AND DEVELOPMENT COMMITMENT INCREASES 160 PERCENT OVER 1997
Commenting on the results, Eldad Weiss, President and CEO, said, "We are pleased
to report 1998 as a record year in spite of industry wide cuts in exploration
and production spending. We are especially pleased that during this last quarter
we have maintained our market position and our sales levels. It is management's
belief that Paradigm's reputation as a best-of-class and first choice provider
has been greatly enhanced as the industry continues to recognize the increased
productivity, lower costs and reduced drilling risks our solutions provide."
Revenues from software products (excluding hardware sales) increased by 10
percent over third quarter levels, to $6.5 million. Maintenance and support
revenue remained at the third quarter level of $2.7 million, while Geophysical
Services revenue, at $2.0 million, grew by 15 percent over the third quarter.
(There was a significant reduction in hardware sales during this quarter,
reflecting the Company's continuing policy not to market hardware actively, but
to provide hardware only at our customers' request.)
Overall gross margins for the fourth quarter of 1998 were 68 percent, versus 66
percent in the third quarter of 1998. The improvement was due principally to the
reduction in the hardware cost component, and maintaining lower unit costs for
maintenance and support. Fourth quarter margins for Geophysical Services
remained flat at 40 percent, due to the under-utilization of our services
capacity, which was greatly expanded in the third quarter in anticipation of
increased demand for outsourced services in 1999.
Research and development expenses for the fourth quarter of 1998 were $2.0
million compared with $1.9 million in the third quarter, and $2.7 in the same
quarter of last year. For the total year R&D expenses were $8.0 million, an
increase of 57 percent over the $5.1 million of R&D expenditures in 1997. This
reflects the Company's continuing commitment to product enhancement and the
delivery of new technology and productivity solutions to the market.
<PAGE> 3
Other expenditures, for sales and marketing and general and administrative
expenses, totaled $4.2 million, a decrease of 21 percent from the $5.3 million
reported in the fourth quarter of 1997. Total 1998 expenditures for these
categories were $16.4 million, an increase of 60 percent over 1997 expenditures
of $10.3 million.
-More-
PARADIGM GEOPHYSICAL ANNOUNCES RECORD 1998 RESULTS.....
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.
Paradigm's web site is www.paradigmgeo.com.
"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.
<PAGE> 4
<TABLE>
<CAPTION>
PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
December 31,
--------------------------------------------
1997 1998
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,229 $ 3,463
Trade receivables ( net of allowance for doubtful accounts -
$568 in 1997 and $ 1,222 in 1998) 16,592 19,958
Other receivables and prepaid expenses 5,409 2,470
---------------- ----------------
Total current assets 30,230 25,891
---------------- ----------------
LONG-TERM TRADE RECEIVABLES 446 275
---------------- ----------------
SEVERANCE PAY FUNDS 500 605
---------------- ----------------
FIXED ASSETS
Cost 9,537 14,997
Less - accumulated depreciation 3,471 (5,738)
---------------- ----------------
6,066 9,259
---------------- ----------------
OTHER ASSETS:
Computer software development costs (net of accumulated
amortization - $ 538 in 1997 and $ 1,041 in 1998) 1,182 679
Acquired developed technology (net of accumulated
amortization of $ 350 in 1997 and $ 1,768 in 1998)
6,662 6,329
Other acquired technology (net of accumulated
amortization in the amount of $ 110) - 993
Other assets, net 2,797 2,104
---------------- ----------------
10,641 10,105
---------------- ----------------
$ 47,883 $ 46,135
================ ================
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
December 31,
--------------------------------------------
1997 1998
---------------- ----------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 711 $ 1,778
Current maturities of long-term bank loans 577 450
Trade payables 1,967 3,024
Other payables and accrued expenses 12,564 8,770
Deferred revenues 5,603 3,674
Note payable 9,500 -
---------------- ----------------
Total current liabilities 30,922 17,696
---------------- ----------------
LONG-TERM BANK LOANS 483 39
---------------- ----------------
BRIDGE LOAN PAYABLE 12,000 -
---------------- ----------------
ACCRUED SEVERANCE PAY 1,031 1,151
---------------- ----------------
DEFERRED TAX LIABILITY 807 552
---------------- ----------------
SHAREHOLDERS' EQUITY
Preferred shares:
Authorized - 4,735,806 shares of NIS 0.5 par value at December 31, 1997 and
0 shares at December 31, 1998;
Issued and outstanding - 4,735,806 shares at
December 31, 1997 and 0 shares at
December 31, 1998 765 -
Ordinary shares:
Authorized - 20,000,000 shares of NIS 0.5 par value at
December 31, 1998;
Issued and outstanding - 2,328,682 shares at
December 31, 1997 and 10,514,484 shares at
December 31, 1998 521 1,758
Additional paid-in capital 19,707 39,236
Accumulated other comprehensive income (246) (742)
Accumulated deficit (18,107) (13,555)
---------------- ----------------
Total shareholders' equity 2,640 26,697
---------------- ----------------
$ 47,883 $ 46,135
================ ================
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------
U.S. dollars in thousands (except for per share data)
Year ended December 31,
--------------------------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Products $ 5,981 $ 15,243 $ 27,491
Maintenance and support 1,737 4,736 10,583
Seismic data processing and interpretation
Services 3,884 4,886 7,288
-------- -------- --------
11,602 24,865 45,362
-------- -------- --------
Cost of revenues:
Products 2,438 4,139 5,479
Maintenance and support 1,302 2,492 5,783
Seismic data processing and interpretation
Services 1,910 2,533 4,108
5,650 9,164 15,370
-------- -------- --------
Gross profit 5,952 15,701 29,992
-------- -------- --------
Operating expenses:
Research and development, net 1,840 5,095 8,061
Selling and marketing, net 5,466 6,102 9,642
General and administrative 4,072 4,227 6,720
Other expenses -- 10,676 --
-------- -------- --------
Total operating expenses 11,378 26,100 24,423
-------- -------- --------
Operating income (loss) (5,426) (10,399) 5,569
Financial income (expenses), net 57 (446) (661)
-------- -------- --------
Income (loss) before income taxes $ (5,369) $(10,845) $ 4,908
Income taxes -- -- (356)
-------- -------- --------
Net income (loss) (5,369) (10,845) 4,552
======== ======== ========
Basic income (loss) per share $ (2.33) $ (4.66) $ 0.66
======== ======== ========
Number of shares used in computing
basic income (loss) per share 2,300 2,328 6,850
======== ======== ========
Diluted income (loss) per share $ (2.33) $ (4.66) $ 0.49
======== ======== ========
Number of shares used in computing
diluted income (loss) per share 2,300 2,328 9,306
======== ======== ========
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands (except for per share data)
Three months ended December 31,
------------------------------------------
1997 1998
---------------- -----------------
<S> <C> <C>
Revenues:
Products $ 9,051 $ 7,055
Maintenance and support 2,888 2,670
Seismic data processing and interpretation
Services 933 1,990
---------------- -----------------
12,872 11,715
---------------- -----------------
Cost of revenues:
Products 3,109 1,103
Maintenance and support 1,061 1,495
Seismic data processing and interpretation
services 691 1,201
---------------- -----------------
4,861 3,799
---------------- -----------------
Gross profit 8,011 7,916
---------------- -----------------
Operating expenses:
Research and development, net 2,722 2,047
Selling and marketing, net 3,096 2,653
General and administrative 2,193 1,573
Other expenses 10,676 -
---------------- -----------------
Total operating expenses 18,687 6,273
---------------- -----------------
Operating income (loss) (10,676) 1,643
Financial income (expenses), net (480) 64
---------------- -----------------
Income (loss) before income taxes $ (11,156) $ 1,707
Income taxes (expense) 96 (136)
---------------- -----------------
Net income (loss) (11,060) 1,571
================ =================
Basic income (loss) per share $ (4.75) $ 0.15
================ =================
Number of shares used in computing
basic income (loss) per share 2,328 10,514
================ =================
Diluted income (loss) per share $ (4.75) $ 0.15
================ =================
Number of shares used in computing
diluted income (loss) per share 2,328 10,607
================ =================
</TABLE>
