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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 April 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-.....................
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Attached to the Registrant's Form 6-K for the month of April 1999 and
incorporated by reference herein is the Registrant's news release dated April
28, 1999.
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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: April 29, 1999
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[PARADIGM GEOPHYSICAL LETTERHEAD]
PARADIGM GEOPHYSICAL REPORTS
FIRST QUARTER RESULTS
Herzlia, Israel, April 28, 1999 - Paradigm Geophysical Ltd. (NASDAQ: PGEOF)
today announced results for the first quarter ended March 31, 1999. As
previously announced on April 14, on an operating basis, the quarter was
break-even on revenues of $11.6 million. Including one-time charges for other
expenses related to the acquisition of the Petroleum Technology division of
Mincom (PTM) and related corporate restructuring, however, there was a net loss
for the quarter of $3.7 million, or ($0.35) per share.
MANAGEMENT COMMENTS
Paradigm's President and CEO, Eldad Weiss, noted: "We enter the second quarter
with a larger than ever book of potential software sales under discussion with
our customers. The prolonged oil price weakness has heightened our customers'
sensitivity to the near-term, which resulted in a hold on exploration and
production (E&P) programs since late 1998. The wave of industry consolidations
also contributed to softened demand for our software products in the first
quarter of 1999. The recent upturn in oil prices and rekindled interest in
energy exploration has given us good reason to have confidence in growth
opportunities for Paradigm during the balance of the year."
Mr. Weiss continued, "Looking forward to the remainder of the year, Paradigm is
rapidly moving to position itself as the leader in geoscience knowledge-based
solutions. The acquisition of PTM broadens our platform of geological
interpretation tools, and has contributed to our strategy to provide the oil and
gas industry with a full range of solutions from field tapes to reservoir
characterization by allowing us to target the growing reservoir management
market with the complete software suite the industry demands.
"Our recent expansion of computing capacity in Houston has strengthened our
position as a provider of high-end geophysical services. We also continued our
geographic expansion, opening new offices this quarter in Jakarta, Indonesia and
Aberdeen, Scotland (through PTM), bringing our services even closer to our
customers and prospective clients.
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"The two recent increases in our capital represent a vote of confidence by our
new investors, and provide us with the financial resources to complete the
acquisition of PTM, an important part of our growth strategy," Mr. Weiss
concluded.
Paradigm's CFO, Brian Berman, noted: "Oil and gas E&P spending is forecast to
decline 11 percent in 1999. This is only the second time in 38 years that a
spending decline of over 10 percent has been anticipated. E&P budgets were set
at oil price expectations of about $14.50/barrel, which were not met during this
quarter, thereby solidifying our clients "wait-and-see" position. This was
already felt across the industry during the last quarter of 1998, but was not
reflected in Paradigm's revenues or profits in that quarter.
"This quarter we have felt the impact on our software sales, particularly in the
U.S. market. Given the market situation, we are very pleased that we have been
able to maintain our operations at a break-even level. In anticipation of
lower-than-trend software revenues, we tightly controlled our operating
expenses. At the same time, we were pleased that operations outside of the U.S.
market made strong contributions to our software revenues. Even more encouraging
is that our Maintenance and Support revenues grew, while Geophysical Services
also provided a strong contribution to revenues. Moreover, we have a significant
backlog of projects in the Geophysical Services business segment.
"Our plans are to continue tight control over operating expenditures while
focusing on market share gains, even under a scenario of continued short-term
weakness in the energy market," Mr. Berman concluded.
SUMMARY OF RESULTS
Revenues for the first quarter were $11.6 million versus $10.9 million, an
increase of 6 percent from first quarter 1998 revenues. First quarter revenues
included $3.2 million from the $10 million project awarded by a major Asia
Pacific state-owned oil and gas company during this quarter. Under the terms of
the contract, Paradigm will provide a turnkey Data Processing center for Seismic
Data Processing and Interpretation, as well as post-installation services.
Product sales without the turnkey project reached $3.1 million. Maintenance and
Support revenues at $2.9 million increased from the first quarter 1998 level of
$2.7 million. Geophysical Services revenues were $1.9 million, an increase of 16
percent over the $1.7 million reported for the same period last year. In
addition, Paradigm was awarded a $2.3 million service contract during the first
quarter for the processing of 1,100 sq. miles of seismic data in the Gulf of
Mexico.
Gross profit for the quarter was $6.1 million, compared with $7.1 million in the
first quarter of 1998, a decline of 14 percent. The decline is a result of the
change in the cost mix due to the 40 percent gross profit for the turnkey
project. Gross profit this quarter was 53 percent of revenues, compared to 65
percent of revenues in the first quarter of 1998.
Operating expenses were $5.9 million before other expenses of $3.7 million. In
light of the market situation this quarter, operating expenses were tightly
controlled and declined 4 percent from first quarter 1998 expense levels of $6.2
million and, more significantly, 6 percent from fourth quarter 1998 operating
expenses of $6.3 million.
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Paradigm Geophysical Ltd. develops, markets and supports seismic data analysis
software solutions and provides seismic data processing and interpretation
services to companies engaged in oil and natural gas exploration and production.
Paradigm Geophysical serves this industry with offices and geophysical data
analysis service centers in the United States, the United Kingdom, Canada,
China, Australia, Argentina, Jakarta, Venezuela, and Russia.
"Paradigm Geophysical(R)" is the registered trademark of Paradigm Geophysical
Ltd. Recent press announcements are available on Paradigm's web site:
www.paradigmgeo.com.
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Safe Harbor statement: This news release may contain certain forward-looking
statements relating to the future performance of Paradigm Geophysical Ltd. Such
statements are subject to certain factors which may cause Paradigm's plans to
differ or results to vary from those expected including the risks associated
with 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 a variety of risks described in the company's filings
with the U.S. Securities and Exchange Commission. Paradigm undertakes no
obligation to publicize or release results of any of these forward-looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unexpected results.
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-tables follow-
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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
U.S. dollars in thousands
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ ---------
Audited Unaudited
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,463 $ 8,872
Trade receivables ( net of allowance for doubtful accounts -
$ 1,301 and $ 1,011 in 1998 and 1999, respectively, including
unbilled amounts of $ 3,273 in 1998 and $ 5,390 in 1999) 20,230 21,589
Other receivables and prepaid expenses 2,470 2,403
-------- --------
Total current assets 26,163 32,864
-------- --------
SEVERANCE PAY FUNDS 605 858
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FIXED ASSETS:
Cost 14,997 16,748
Less - accumulated depreciation (5,738) (6,599)
-------- --------
9,259 10,149
-------- --------
OTHER ASSETS:
Computer software development costs (net of accumulated
amortization of $ 1,041 and $ 1,168 in 1998 and 1999,
respectively) 679 552
Acquired developed technology (net of accumulated
amortization of $ 1,878 and $ 2,492 in 1998 and 1999,
respectively) 7,322 5,262
Other assets, net 2,104 2,003
Other assets (including goodwill upon the acquisition of "PTM") -- 9,000
-------- --------
10,105 16,817
-------- --------
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$ 46,135 $ 60,688
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</TABLE>
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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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U.S. dollars in thousands
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ ---------
Audited Unaudited
------------ ---------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 1,778 $ 1,060
Current maturities of long-term bank loans 450 389
Trade payables and other payables 11,794 12,591
Deferred revenues 3,674 5,020
-------- --------
Total current liabilities 17,696 19,060
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Other current liability (Note payable on acquisition of "PTM") -- 9,000
-------- --------
LONG-TERM BANK LOANS 39 7,461
-------- --------
ACCRUED SEVERANCE PAY 1,151 1,445
-------- --------
DEFERRED TAX LIABILITY 552 512
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SHAREHOLDERS' EQUITY:
Share capital -
Authorized: 18,000,000 ordinary shares of NIS 0.5 par value; at
December 31, 1998 and 20,000,000 at March 31, 1999
Issued and outstanding: 10,514,484 and 10,528,884 ordinary shares
of NIS 0.5 par value at December 31, 1998 and at March
31, 1999 respectively 1,758 1,759
Additional paid-in capital 39,236 39,306
Accumulated other comprehensive income (loss) (742) (628)
Accumulated deficit (13,555) (17,227)
-------- --------
Total shareholders' equity 26,697 23,210
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$ 46,135 $ 60,688
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</TABLE>
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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
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U.S. dollars in thousands (except for per share data)
<TABLE>
<CAPTION>
Year ended Three months
December 31, ended March 31,
------------ -------------------------
1998 1998 1999
-------- -------- --------
Audited Unaudited
------------ -------------------------
<S> <C> <C> <C>
REVENUES:
Product sales $ 27,491 $ 6,489 $ 6,751
Maintenance and support 10,583 2,718 2,881
Seismic data processing and interpretation services 7,288 1,712 1,979
-------- -------- --------
45,362 10,919 11,611
-------- -------- --------
COST OF REVENUES:
Product sales 5,479 1,586 2,737
Maintenance and support 5,783 1,353 1,520
Seismic data processing and interpretation services 4,108 861 1,256
-------- -------- --------
15,370 3,800 5,513
-------- -------- --------
GROSS PROFIT 29,992 7,119 6,098
-------- -------- --------
OPERATING EXPENSES:
Research and development, net 8,061 2,049 2,166
Selling and marketing, net 9,642 2,228 2,281
General and administrative 6,720 1,897 1,463
Other expenses -- -- 3,705
-------- -------- --------
Total operating expenses 24,423 6,174 9,615
-------- -------- --------
OPERATING INCOME (LOSS) 5,569 945 (3,517)
-------- -------- --------
Financial expenses, net (661) (414) (155)
-------- -------- --------
Income (loss) before taxes on income 4,908 531 (3,672)
Taxes on income 356 -- --
-------- -------- --------
NET INCOME (LOSS) FOR THE PERIOD $ 4,552 $ 531 $ (3,672)
======== ======== ========
Basic income (loss) per share $ 0.66 $ 0.23 $ (0.35)
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Number of shares used in computing
basic income (loss) per share 6,850 2,328 10,515
======== ======== ========
Diluted income per share $ 0.49 $ 0.07 $ --
======== ======== ========
Number of shares used in computing
diluted income per share 9,306 8,140 --
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</TABLE>
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