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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 July 1999
PARADIGM GEOPHYSICAL LTD.
-------------------------
(Translation of Registrant's Name into English)
Shenkar Street 9, Gav Yam Center No.3, 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 July 1999 and
incorporated by reference herein is the Registrant's news release dated July 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: July 29, 1999
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[PARADIGM GRAPHIC]
CONTACTS:
BRIAN W. BERMAN, CFO STEVEN CURTIS
PARADIGM GEOPHYSICAL LTD. RUDER FINN, INC.
Phone: +972-9-970-9339 Phone: +1-212-593-6319
Fax: +972-9-970-9319 Fax: +1-212-715-1660
Email: [email protected] Email: [email protected]
PARADIGM GEOPHYSICAL ANNOUNCES
SECOND QUARTER AND FIRST HALF RESULTS
COMPANY ACHIEVES HIGHEST QUARTERLY REVENUES TO DATE
Herzlia, Israel, July 28, 1999 - Paradigm Geophysical (NASDAQ: PGEO) today
announced operating results for the second quarter and six months ended June 30,
1999. Net revenues for the second quarter were $13.5 million, a 22 percent
increase over the $11.0 million in net revenues recorded in the second quarter
ended June 30, 1998, and a 16 percent increase over net revenues of $11.6
million in the first quarter ended March 31,1999. Net income for the second
quarter was $113,000, compared with breakeven results (before other expenses) in
the first quarter of 1999. Fully diluted earnings per share for the second
quarter were $0.01, compared with $0.12 for the second quarter of 1998, and a
net loss per share of ($0.35) for the first quarter of 1999.
For the six months ended June 30, 1999, the Company reported net revenues of
$25.1 million, a 15 percent increase compared with net revenues of $21.9 million
in the same period last year. The Company reported a net loss for the period of
($3.6) million as compared with net income of $1.6 million for the six months
ended June 30, 1998. Loss per share for the first half of 1999 was ($0.31)
compared with fully diluted earnings per share of $0.20 in the first half of
1998. The half-year loss was due principally to one-time charges for other
expenses pertaining to the acquisition of the Petroleum Technology division of
Mincom (PTM) and related corporate restructuring during the first quarter ended
March 31, 1999.
MANAGEMENT COMMENTS
Eldad Weiss, Paradigm's President and CEO, noted: "Paradigm achieved its
highest-ever quarterly revenues during the second quarter, despite a market
recovery that began only in the last weeks of the quarter. We recorded a 32
percent increase in product sales (excluding revenues from the large turnkey
project) and a 27 percent increase in service revenues over first quarter 1999
levels."
He continued: "Paradigm is today recognized as a key player in oil field
software and data management, a $1.2 billion market in 1998, according to recent
industry estimates. We believe this market is driven by the need to lower total
field-life costs and improve reservoir recovery rates. In order to capitalize on
this opportunity, we plan to continue our investment program in new products and
infrastructure over the intermediate term. Our goal is to expand our
infrastructure to serve the market with a broad spectrum of products in 2000 and
beyond."
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"In the next 12 to 18 months, Paradigm plans to release innovative geological
interpretation and reservoir management tools leveraged on our existing software
suites. All of our products share a common theme - lowering costs and increasing
efficiency in oil and gas exploration and production using a common geoscience
model base."
"As a complete solutions provider, Paradigm continues to leverage its software
with high-end data processing services. In response to increased demand this
quarter, we have further expanded our super-computing capacity in Houston,
giving Paradigm new levels of productivity and shorter delivery times for its
high-end computer intensive applications. This expanded facility already is
working to full capacity."
SUMMARY OF RESULTS
Product sales, excluding revenues from the turnkey project (announced in March
1999), reached $5.2 million, an increase of 67 percent compared with product
sales revenues of $3.1 million in the first quarter ended March 31,1999.
Maintenance and support revenues during the second quarter totaled $3.8 million,
an increase of 31 percent compared with first quarter ended March 31, 1999
maintenance and sales revenues of $2.9 million, and 52 percent higher than the
$2.5 million level reached in the second quarter ended June 30, 1998. The
Company attributes this improvement to the depth and stability of its installed
base. Data processing and interpretation services revenues increased 25 percent,
to $2.5 million, compared with $2.0 million for the first quarter of 1999, and
38 percent over second quarter 1998 levels of $1.8 million. The increase in data
processing and interpretation services revenues is due primarily to the
Company's strong performance in the Houston data processing services market.
Gross profit at $7.4 million was the same as in the second quarter of 1998, and
21 percent higher than in the first quarter of 1999, when gross profit was $6.1
million. Gross profit in the second quarter of 1999 was 55 percent of revenues,
compared with 53 percent of revenues in the first quarter of 1999 and 68 percent
of revenues in the second quarter of 1998. The decline in gross profit in the
second quarter of 1999, as compared with the same period in 1998, was due
largely to the change in the cost of goods mix resulting from the lower gross
margin for the large turnkey project.
Operating expenses for the second quarter were $7.2 million, 22 percent higher
than first quarter 1999 operating expense levels of $5.9 million (before other
expenses) and 20 percent higher than second quarter 1998 operating expenses of
$6.0 million. The increase reflects the impact of the Company's recent
acquisitions and its decision to continue prudent investment levels in research
and development and market infrastructure.
Brian Berman, Paradigm's CFO, noted: "During the second quarter we continued our
policy of tight cost controls, mindful of the increased expenses from our recent
acquisitions, and our investment program to expand our product offerings and our
infrastructure to serve the market in 2000 and beyond."
Unaudited results as of June 30, 1999 are on the pages following.
Paradigm files electronically with the Securities and Exchange Commission (SEC)
on EDGAR. The Company's current form 20-F was filed with the SEC on June 30,
1999.
Paradigm has recently published its 1998 Annual Report, which is being mailed to
shareholders and the investment community. Copies are available on request to
[email protected] or fax (212) 715-1660.
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"Paradigm Geophysical[R]" is the registered trademark, and Geolog[TM] is a
trademark of Paradigm Geophysical Ltd.
Recent press announcements, and previous quarters' financial results are
available on Paradigm's web site: www.paradigmgeo.com.
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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PARADIGM GEOPHYSICAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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U.S. dollars in thousands
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
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Audited Unaudited
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ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,463 $ 9,316
Trade receivables (net of allowance for doubtful accounts
- -- $ 1,301 and $ 874 in 1998 and 1999, respectively,
including unbilled amounts of $ 3,273 in 1998 and $ 8,474
in 1999) 20,233 25,505
Other receivables and prepaid expenses 2,470 3,853
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Total current assets 26,166 38,674
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SEVERANCE PAY FUNDS 605 1,031
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FIXED ASSETS:
Cost 14,997 18,475
Less - accumulated depreciation (5,738) (7,590)
-------- --------
9,259 10,885
-------- --------
OTHER ASSETS , NET 10,105 16,230
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$ 46,135 $ 66,820
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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, June 30,
1998 1999
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Audited Unaudited
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LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Short-term bank credit $ 1,778 $ 10
Current maturities of long-term bank loans 450 1,298
Trade payables and other payables 11,794 14,524
Deferred revenues 3,674 6,951
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Total current liabilities 17,696 22,783
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LONG-TERM BANK LOANS 39 5,445
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ACCRUED SEVERANCE PAY 1,151 2,207
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DEFERRED TAX LIABILITY 552 495
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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 June 30, 1999. Issued
and outstanding: 10,514,484 and 13,026,336 Ordinary Shares of
NIS 0.5 par value at December 31, 1998 and at June 30, 1999
respectively 1,758 2,064
Additional paid-in capital 39,236 51,956
Accumulated other comprehensive (loss) (742) (1,016)
Accumulated deficit (13,555) (17,114)
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Total shareholders' equity 26,697 35,890
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$ 46,135 $ 66,820
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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>
Three months Six months ended
Year ended ------------------ ------------------
1998 1998 1999 1998 1999
---- ---- ---- ---- ----
Audited Unaudited
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<S> <C> <C> <C> <C> <C>
Revenues:
Product sales $ 27,491 $ 6,657 $ 7,155 $ 13,146 $ 13,906
Maintenance and support 10,583 2,514 3,835 5,232 6,716
Data processing and interpretation services 7,288 1,849 2,523 3,561 4,502
-------- -------- -------- -------- --------
45,362 11,020 13,513 21,939 25,124
-------- -------- -------- -------- --------
Cost of revenues:
Product sales 5,479 1,297 2,911 2,883 5,648
Maintenance and support 5,783 1,344 1,574 2,697 3,094
Data processing and interpretation services 4,108 937 1,623 1,798 2,879
-------- -------- -------- -------- --------
15,370 3,578 6,108 7,378 11,621
-------- -------- -------- -------- --------
Gross profit 29,992 7,442 7,405 14,561 13,503
-------- -------- -------- -------- --------
Operating expenses:
Research and development, net 8,061 1,941 2,538 3,990 4,704
Selling and marketing, net 9,642 2,297 2,876 4,525 5,157
General and administrative 6,720 1,776 1,788 3,673 3,251
Other expenses -- -- -- -- 3,705
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Total operating expenses 24,423 6,014 7,202 12,188 16,817
-------- -------- -------- -------- --------
Operating income (loss) 5,569 1,428 203 2,373 (3,314)
-------- -------- -------- -------- --------
Financial expenses, net (661) (295) (90) (709) (245)
-------- -------- -------- -------- --------
Income (loss) before taxes on income 4,908 1,133 113 1,664 (3,559)
Taxes on income (356) (90) -- (90) --
-------- -------- -------- -------- --------
Net income (loss) for the period $ 4,552 $ 1,043 $ 113 $ 1,574 $ (3,559)
======== ======== ======== ======== ========
Basic income (loss) per share $ 0.66 $ 0.26 $ 0.01 $ 0.50 $ (0.31)
======== ======== ======== ======== ========
Number of shares used in computing basic
income (loss) per share 6,850 3,945 12,215 3,137 11,369
======== ======== ======== ======== ========
Diluted income (loss)per share $ 0.49 $ 0.12 $ 0.01 $ 0.20 $ (0.31)
======== ======== ======== ======== ========
Number of shares used in computing diluted
income (loss) per share 9,306 8,357 12,533 8,019 11,369
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