http://www.businesswire.com/news/home/20091112005765/en
* Net Income in the Third Quarter of 2009 Amounted to $0.9 Million, Compared
with a Net Loss of $19.6 Million in Third Quarter of 2008.
* G&A Costs Reduced by 33% in the Third Quarter of 2009 Compared with the Third
Quarter of 2008.
* Investments Made by Elron and RDC During the First Nine Months of 2009
Amounted to $24.6 Million.
* Completion of Sale of Holdings in NetVision to IDB Group Companies for Total
Consideration of NIS 228.7 Million ($60.7 Million); an Approximately $30 Million
Gain to Be Recorded in Fourth Quarter of 2009.
* Receipt of Non-Binding Indication of Interest to Acquire Medingo for Total
Consideration Ranging from $150 Million to $213 Million.
TEL AVIV, Israel--(Business Wire)--
Elron Electronic Industries Ltd. (NASDAQ:ELRN)(TASE:ELRN) ("Elron" or the
"Company") today reported its financial results for the third quarter and first
nine months of 2009.
Elron's net income attributable to shareholders in the third quarter of 2009
amounted to $0.9 million, as compared to $19.6 million net loss in the third
quarter of 2008.
Third quarter results included a gain in the amount of $11.4 million resulting
from the deconsolidation of Elron's former subsidiary, Impliant Inc.
("Impliant"). This gain was offset by $6.9 million of losses recorded with
respect to Elron's group companies, as compared with $16.5 million of losses in
the third quarter of 2008.
Elron's non-consolidated G&A costs in the third quarter of 2009 amounted to $1.4
million, compared with $2.1 million in the third quarter of 2008. The decrease
was mainly due to the implementation of the Services Agreement with Discount
Investment Corporation Ltd. ("DIC"), which was approved by the shareholders of
the Company on April 22, 2009.
Elron's net loss attributable to shareholders in the first nine months of 2009
amounted to $13.0 million, compared to a $49.5 million net loss in the
comparable period last year. Results for the first nine months of 2009 include
the gain resulting from the deconsolidation of Impliant in the third quarter and
the gain resulting from 3DV's sale of assets recorded in the second quarter of
2009, offset by net losses recorded with respect to Elron's group companies in
the amount of $21.9 million, compared with a $42.1 million loss in the first
nine months of 2008.
Elron's non-consolidated G&A costs in the first nine months of 2009 amounted to
$4.8 million, compared with $7.4 million in the first nine months of 2008.
The decrease in losses recorded with respect to Elron's group companies resulted
mainly from the adoption of ASC 810-10, "Consolidation" (originally issued as
FAS 160, "Accounting and Reporting of Noncontrolling Interests in Consolidated
Financial Statements") as reported in the first quarter of 2009, which affected
Elron's accounting for allocation of losses to noncontrolling shareholders in
its subsidiaries, reducing Elron's share in losses of its consolidated
companies.
NOTABLE DEVELOPMENTS SUBSEQUENT TO THE THIRD QUARTER OF 2009
SALE OF ELRON'S HOLDINGS IN NETVISION:
On October 29, 2009, Elron announced the completion of the sale of its holding
in NetVision Ltd. ("NetVision"), a leading Israeli internet service and
international long distance provider, to DIC and Clal Industries and Investments
Ltd. ("CII"), following approval of the sale by the shareholders of each of
Elron, DIC and Clal. As a result of the sale, Elron received proceeds of NIS
228.7 million (equal to $60.7 million) and will record in the fourth quarter of
2009, a gain of approximately $30 million.
NON-BINDING INDICATION OF INTEREST FOR ACQUISITION OF MEDINGO
On October 26, 2009, Elron announced the receipt of a non-binding indication of
interest of a third party regarding a potential acquisition of Medingo Ltd.
("Medingo") (92% held by Elron, including 83% held by RDC - Rafael Development
Corporation ("RDC"), Elron's 50.1% subsidiary). Medingo is engaged in the
development and commercialization of a miniature insulin dispensing patch pump
for the needs of insulin-dependent diabetic patients. The indication of interest
relates to an acquisition of Medingo's entire share capital for a cash
consideration ranging from $150 million to $170 million and a contingent
additional cash consideration conditional upon one or more milestone(s) to be
mutually agreed, which may bring the total consideration up to between $185
million and $213 million. The transaction would be subject mainly to (i) the
parties entering into a mutually agreed definitive agreement; (ii) satisfactory
completion of a full due diligence by the third party; and (iii) the parties
obtaining applicable corporate and regulatory approvals. In the event of
consummation of such transaction, Elron would be expected to record a net gain
initially estimated at this stage to be between approximately $54 million and
approximately $80 million, including Elron's share in the net gain expected to
be recorded by RDC. There is no assurance of the occurrence, timing or terms of
any such transaction.
LIQUIDITY, INVESTMENTS & SHAREHOLDERS' EQUITY:
As of September 30, 2009, Elron's non-consolidated cash balance amounted to $7.5
million compared with $4.0 million at December 31, 2008. As of September 30,
2009, Elron's long-term loans, not including loans of its subsidiaries, amounted
to $46.6 million. This includes $9.0 million of loans received during the first
nine months of 2009 from DIC.
During the first nine months of 2009 Elron and RDC invested an amount of $24.6
million in their group companies.
During the first nine months of 2009 Elron received dividends from Given Imaging
Ltd. and NetVision in the aggregate amount of $8.1 million.
Following the sale of Elron's holdings in NetVision, Elron's non-consolidated
cash balance amounted, as of October 30, 2009, to $66.2 million.
Shareholders' equity attributable to shareholders at September 30, 2009, was
$161.6 million, which represented approximately 65% of Elron's total assets,
compared with $173.8 million, which represented approximately 68% of Elron's
total assets, at December 31, 2008.
MANAGEMENT CHANGES
Elron's Vice President & Chief Financial Officer, Ms. Rinat Remler, has
announced her intention to resign from her position effective December 31, 2009.
Mr. Yaron Elad, the Company's current controller of the past 2 years, has been
appointed Chief Financial Officer effective January 1, 2010.
Arie Mientkavich, the Company's Chairman, today thanked Rinat Remler for her
ongoing dedication and contribution to Elron and its group companies. "Rinat has
been a most valuable member of the Elron team over the past decade, first as the
Company's Director of Finance, and then as its Chief Financial Officer. During
this time, Rinat has accompanied all of Elron's major undertakings, and was a
party to various Elron's successes." Wishing Yaron Elad success in his new
position, Mr. Mientkavich added. "Yaron's experience as Elron's Controller
paired with his familiarity with Elron and its group companies will enable a
smooth transition all round."
ABOUT ELRON ELECTRONIC INDUSTRIES:
Elron Electronic Industries Ltd. (TASE & NASDAQ: ELRN), a member of the IDB
Holding group, is a technology holding company traded on the Nasdaq Global
Select Market and on the Tel-Aviv Stock Exchange. Elron`s group companies
currently comprise public and privately held companies engaged in a diverse
range of technological activities. These companies, at various levels of
maturity and progress, are primarily in the fields of medical devices,
information & communications technology and clean technology, and have the
potential to be technology leaders, each in their respective fields. Elron
focuses on identifying and developing unique technology companies. Current group
companies include Given Imaging, Medingo, BrainsGate, NuLens, Aqwise and
Starling, and in the past included Elbit Systems, NetVision and Partner
Communications. For further information, please visit www.elron.com.
Any statements in this press release that may be considered forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially. These risks aredetailed from time to timein the
Company's Annual Report on Form 20-F and other periodic reports filed by the
Company with the Securities and Exchange Commission, which the Company urges
investors to consider.Elron assumes no obligation to update the information in
this press release and disclaims any obligation to publicly update or revise any
such forward-looking statements to reflect any change in its expectations or in
events, conditions, or circumstances on which any such statements may be based,
or that may affect the likelihood that actual results will differ from those set
forth in the forward-looking statements. Reference to Elron's website above does
not constitute incorporation of any of the information thereon into this press
release.
**** FINANCIAL TABLES FOLLOW ****
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
September 30, December 31,
2009 2008
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,808 $ 17,364
Restricted cash 67 143
Trade receivables 1,556 1,150
Other receivables and prepaid expenses 3,818 5,772
Inventories 4,344 1,999
Total current assets 23,593 26,428
INVESTMENTS AND LONG-TERM RECEIVABLES:
Investments in affiliated companies 145,459 *151,539
Investments in other companies and long-term receivables 67,726 *64,088
Severance pay deposits 1,869 2,942
Other receivables 585 -
Total investments and long-term receivables 215,639 218,569
PROPERTY AND EQUIPMENT, NET 3,426 4,582
INTANGIBLE ASSETS 7,135 7,457
Total assets $ 249,793 $ 257,036
* Adjusted retroactively based on ASC 323-10 - Equity method and joint ventures
(originally issued as APB 18), as if the equity method had been in effect with
respect to the investment in Atlantium during all previous reported periods.
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
September 30, December 31,
2009 2008
Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term loans from banks and others $ 1,325 $ 1,142
Current maturities of long-term loans from banks and others - 2,349
Trade payables 4,098 3,829
Current maturities of Convertible Debentures 1,120 -
Other payables and accrued expenses 10,756 11,846
Total current liabilities 17,299 19,166
LONG-TERM LIABILITIES:
Long-term loans from banks and others 44,630 35,062
Long-term loans from shareholders 16,593 6,176
Convertible Debentures 1,824 2,161
Accrued severance pay and retirement obligations 2,126 4,137
Other long-term liabilities 340 -
Total long-term liabilities 65,513 47,536
CONTINGENT LIABILITIES, PLEDGES AND COMMITMENTS
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.003 par value - Authorized: - 9,573 9,573
35,000,000 shares as of September 30, 2009 and
December 31, 2008; Issued and outstanding: 29,650,017
shares as of September 30, 2009 and December 31, 2008, respectively;
Additional paid-in capital 276,629 276,286
Accumulated other comprehensive income 1,632 1,104
Accumulative deficit (126,280) **(113,159)
Total Elron shareholders' equity 161,554 173,804
Noncontrolling interest 5,427 *16,530
Total equity 166,981 190,334
Total liabilities and equity $ 249,793 $ 257,036
* Reclassified according to ASC 810-10, "Consolidation" (originallyissued as FAS
160).
** Adjusted retroactively based on ASC 323-10 - Equity method and joint ventures
(originally issued as APB 18), as if the equity method had been in effect with
respect to the investment in Atlantium during all previous reported periods.
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Nine months Three months Year ended
ended September 30, ended September 30, December 31,
2009 2008 2009 2008 2008
Unaudited Unaudited
INCOME
Net revenues $ 7,416 $ 3,539 $ 1,850 $ 1,266 $ 6,237
Equity in losses of affiliated companies, net* (4,428) *(14,747) (1,003) *(2,970) *(19,866)
Gain (loss) from disposal of businesses and affiliated companies and changes in holdings in affiliated companies and a subsidiary, net 18,053 (31) 11,362 (184) (44)
Other income (expenses), net (2,601) *(5,905) (123) *(4,063) *(21,042)
Financial income (expenses), net (3,447) 2,460 (2,245) 1,220 1,678
14,993 *(14,684) 9,841 *(4,731) *(33,037)
COSTS AND EXPENSES
Cost of revenues 3,793 1,941 985 827 3,646
Research and development costs, net 16,706 21,211 5,510 7,470 29,194
Selling and Marketing expenses 6,941 5,408 2,845 2,367 7,525
General and administrative expenses 11,646 14,696 4,611 4,720 18,832
Amortization of intangible assets and acquired in- process research and development write-off 321 4,695 107 114 4,801
39,407 47,951 14,058 15,498 63,998
Loss before taxes on income (24,414) *(62,635) (4,217) *(20,229) *(97,035)
Taxes on income - (1,257) - (1,159) (1,269)
Net loss $ (24,414) $ *(63,892) $ (4,217) ( $ *(21,388) $ *(98,304)
Less: Net loss attributable to the noncontrolling interest** 11,386 **14,419 5,150 $ **1,782 **15,167
Net income (loss) attributable to Elron's shareholders $ (13,028) $ **(49,473) $ 933 $ *(19,606) $ *(83,137)
Net income (loss) per share attributable to Elron's shareholders:
Basic:
Net income (loss) per share attributable to Elron's shareholders $ (0.44) $ *(1.67) $ 0.03 $ *(0.66) $ *(2.80)
Diluted:
Net income (loss) per share attributable to Elron's shareholders $ (0.44) $ *(1.67) $ 0.03 $ *(0.66) $ *(2.84)
Weighted average number of Ordinary shares used in computing basic net income (loss) per share (thousands) 29,650 29,650 29,650 29,650 29,650
Weighted average number of Ordinary shares used in computing diluted net income (loss) per share (thousands) 29,650 29,650 29,650 29,650 29,650
* Adjusted retroactively based on ASC 323-10 - Equity method and jointventures
(originally issued as APB 18), as if the equity method had been in effect with
respect to the investment in Atlantium during all previous reported periods.
**Reclassified according to ASC 810-10, "Consolidation" (originallyissued as FAS
160).
Elron Electronic Industries Ltd.
Rinat Remler, Vice President & CFO
Tel. 972-3-6075555
elron@elron.com
Copyright Business Wire 2009
