Elron Electronic Industries Ltd. (Nasdaq: ELRN) (TASE: ELRN)
("Elron" or the "Company") today reported financial results for the
first quarter of 2008.
Net loss in the first quarter of 2008 amounted to $12.1 million, or
$0.41 per share, resulting mainly from $10.1 million losses recorded
with respect to Elron's group of companies, which included a $4.5
million write off of in process research and development ("IPR&D") upon
the initial consolidation of Impliant Inc. in the first quarter of 2008.
Net income in the first quarter of 2007 amounted to $2.6 million, or
$0.09 per share, resulting mainly from a $9.1 million gain (net of tax)
from the merger between NetVision Ltd., Barak I.T.C (1998) International
Telecommunications Services Corp Ltd. and GlobCall Communications Ltd.,
which was completed in January 2007. This gain was offset mainly by
losses recorded with respect to Elron's group of companies in the amount
of $7.4 million.
On March 13, 2008, Elron announced that it adopted FAS 159 "The Fair
Value Option for Financial Assets and Financial Liabilities" as of
January 1, 2008, according to which it would apply the fair value
measurement option for its non-consolidated private companies.
Subsequently, Elron determined that the adoption was not substantive as
it did not meet the objectives outlined in FAS 159, and therefore the
adoption is not effective. The Company will continue to account for its
investments in its group companies under the same accounting policies
applied through December 31, 2007. The Company will promptly submit a
Form 6-K/A with the Securities and Exchange Commission covering its
amended 2007 consolidated financial statements and management report.
These amendments had no effect on Elron’s
reported financial results.
MAJOR DEVELOPMENTS DURING, AND SUBSEQUENT, TO THE FIRST QUARTER 2008:
During the first quarter, and subsequently, Elron invested $28.6
million mainly in its group companies namely BrainsGate Ltd.,
AqWise - Wise Water Solutions Ltd., BPT (Bio-Pure
Technology) Ltd., Safend Ltd., Impliant
Inc., Pocared Diagnostics Ltd., Wavion Inc., Atlantium
Inc. and ChipX, Inc. In addition, $4 million was
invested in RDC – Rafael Development
Corporation Ltd. ("RDC"), Elron's 50.1% held subsidiary, in connection
with the agreement executed between Elron and Rafael Advanced Defense
Systems Ltd.
During the first quarter Elron invested in two new companies: PLYmedia
Inc., which develops and deploys an interactive video
platform, offering web video sites and broadcasters a wide range of
layered applications to enhance, personalize and monetize their video
assets, and Kyma Medical Technologies Ltd. which
develops a novel non-invasive in-stent restenosis diagnostic and
monitoring devices.
In addition RDC established two new companies, namely, Sync-Rx
Ltd. and PaperLnx Ltd. Sync-Rx
develops medical devices for improving trans-catheter cardiovascular
interventions. PaperLnx develops a visual search engine
for connecting printed media via the camera phone to the internet.
Recent notable developments in several of Elron's private group
companies:
--
Medingo Ltd. - a developer of a miniature insulin
patch pump, completed the second stage of the financing round
initiated in the second half of 2007. The company continues its
development progress.
--
Impliant - a developer of novel posterior motion
preservation system for spine surgery, has made significant
progress since the adverse clinical trial events in the third
quarter of 2007. The Company now anticipates continuing the
clinical trial process in the near future. During the first
quarter, Elron became the major shareholder in the company,
consolidating its financial results, and, as such, recorded a $4.5
million charge relating to IPR&D.
--
Jordan Valley Semiconductors Ltd. - acquired in
April 2008 the business of BEDE-X RAY metrology, a company with
revenues in excess of $11 million in 2007.
--
Teledata Networks Ltd. won a $12.5 million project
in Costa Rica and was chosen to enhance Israel's national
operator, Bezeq's access network.
--
Safend completed a $9 million private placement led
by a premier European-based asset management fund.
Tender offer to purchase 5% of Given Imaging shares. On May 16,
2008 Elron announced that it is commencing a tender offer to purchase
5% (1,462,640 shares) of Given Imaging Ltd. (Nasdaq & TASE: GIVN) for
$16.54 per share. If the tender offer is successfully completed, Elron
will pay a total amount of $24.2 million, and together with RDC, will
hold approximately 32.4% of the issued and outstanding share capital
of Given Imaging. There can be no assurance that the tender offer will
be completed.
As of March 31, 2008, Elron's cash, debentures and deposits amounted to
approximately $24.5 million compared with $55.2 million at December 31,
2007. Following the balance sheet date, Elron secured a $30 million bank
credit facility.
Shareholders' equity at March 31, 2008, was approximately $254.9
million, which represented approximately 83% of Elron's total assets,
compared to approximately $265.8 million, representing approximately 89%
of Elron's total assets at December 31, 2007.
Commenting on Elron's first quarter results, Elron President and CEO,
Doron Birger, said "The first quarter of 2008 continued to be an
active period for Elron of growing and building its group companies. During
the quarter many of our group companies continued to mature, showing
positive progress in developing their products, while driving revenues.
Furthermore, this quarter we continued to build our group, investing in
existing and new companies, while establishing two new companies under
RDC," concluded Mr. Birger.
CONFERENCE CALL DETAILS:
Elron will be hosting a conference on Monday, May 19, 2008 at 10:00 am
ET (7:00am PT, 3:00pm UK time, 5:00 pm Israel time) to discuss its first
quarter 2008 results. To participate, please call one of the following
teleconferencing numbers. Please begin placing your calls at least 10
minutes before the conference call commences.
US: 1 888 668 9141, UK: 0 800 051 8913; Israel: 03 918 0691;
International: +972 3 918 0691.
For your convenience, a replay of the call will be available through May
21, 2008. The replay numbers are:
1 888 295 2634 (US), 0 800 917 1246 (UK) and +972 3 925 5941
(International).
Elron Electronic Industries Ltd. (TASE & NASDAQ: ELRN), a member
of the IDB Holding group, is a leading Israel-based technology holding
company directly involved in the long-term performance of its group
companies. Elron identifies potential technologies, creates strategic
partnerships, secures financing, and recruits highly qualified
management teams. Elron's group companies currently comprise a diverse
range of publicly-traded and privately held companies primarily in the
fields of medical devices, information & communications technology,
clean technology and semiconductors. 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. Actual results may
differ from such forward-looking statements due to the risk factors
discussed in 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.
Important Information: This is not an offer to buy or the
solicitation of an offer to sell any ordinary shares of Given Imaging.
The tender offer that is described in this press release will only be
made through the Offer to Purchase, Letter of Transmittal and related
tender offer documents. All shareholders of Given Imaging should read
the tender offer materials, which filed by Elron with the
Securities and Exchange Commission, and the Tender Offer
Solicitation/Recommendation Statement with respect to the tender offer
which will be filed in due course by Given Imaging, with the SEC and the
Israel Securities Authority (“ISA”).
Shareholders of Given Imaging should read the tender offer materials and
the Solicitation/Recommendation Statement because they contain important
information about the tender offer. The tender offer materials, the
Solicitation/Recommendation Statement and other filed documents will be
available at no charge on the SEC’s website
at http://www.sec.gov and on the ISA’s
website at http://www.magna.isa.gov.il,
and will also be made available without charge to all shareholders by
contacting MacKenzie Partners, Inc., the information agent for the
tender offer, at (212) 929-5500 or toll free (800) 322-2885.
Shareholders are urged to read these materials carefully before making
any decision with respect to the tender offer.
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands of U.S. Dollars
March 31,
December 31,
2008
2007
ASSETS
Total current assets
$
69,762
$
82,406
INVESTMENTS AND LONG-TERM RECEIVABLES
Investments in affiliated companies
132,388
131,351
Investments in other companies and long-term receivables
86,369
73,718
Deferred taxes
1,591
2,204
Severance pay deposits
3,370
1,808
Total long-term assets
223,718
209,081
PROPERTY AND EQUIPMENT, NET
4,229
1,936
INTANGIBLE ASSETS
9,542
5,524
Total assets
$
307,251
$
298,947
LIABILITIES AND SHAREHOLDERS’ EQUITY
Total current liabilities
$
32,293
$
21,448
LONG-TERM LIABILITIES
Long-term loans from banks and others
2,279
2,244
Accrued severance pay and retirement obligations
4,312
2,451
Deferred taxes
216
373
Total long-term liabilities
6,807
5,068
MINORITY INTEREST
13,225
6,614
Total Shareholders' Equity
254,926
265,817
Total liabilities and shareholders' equity
$
307,251
$
298,947
ELRON ELECTRONIC INDUSTRIES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
In thousands of U.S. Dollars, except share and per share data
Three months
ended March 31,
Year ended December 31,
2008
2007
2007
INCOME
Revenues
$
1,032
$
981
$
4,371
Equity in losses of affiliated companies
(6,385
)
(5,308
)
(20,416
)
Gain from disposal of businesses and affiliated companies and
changes in holdings in affiliated companies, net
101
11,714
14,854
Other income (expenses), net
724
473
(3,214
)
Financial income (expenses), net
(311
)
1,406
3,945
(4,839
)
9,266
(460
)
COSTS AND EXPENSES
16,572
6,811
34,341
Income (loss) before taxes on income
(21,411
)
2,455
(34,801
)
Taxes on income
(132
)
(1,522
)
(7,544
)
Income (loss) after taxes on income
(21,543
)
933
(42,345
)
Minority interest in losses of subsidiaries
9,420
1,635
5,250
Net income (loss)
$
(12,123
)
$
2,568
$
(37,095
)
Income (loss) per share:
Basic:
Net income (loss)
$
(0.41
)
$
0.09
$
(1.25
)
Diluted:
Net income (loss)
$
(0.41
)
$
0.09
$
(1.27
)
Weighted average number of ordinary shares used in computing basic
net income (loss) per share (thousands)
29,650
29,601
29,619
Weighted average number of ordinary shares used in computing diluted
net income (loss) per share (thousands)
29,650
29,696
29,619
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