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| Yom-Tov Samia, President and COO of the Baran Group Ltd., Announced That He Ends His Term of Office
Yom-Tov Samia, President and COO of the Baran Group Ltd., Announced That He Ends His Term of Office; Baran Group Ltd. Reports Second Quarter 2003 Financial Results NEW YORK--(BUSINESS WIRE)--Aug. 29, 2003--Mr. Yom-Tov Samia, the President and COO of the Baran Group, Ltd. (NASDAQ, TASE: BRAN), announced on Monday, 8.25.2003, to the Company's Board of Directors that he ends his term of office with the Company, following coordination with the Company's Chairman of the Board. BizVantage – Serious & personalized business, investment and technology intelligence for a serious advantage. 1. The due date of Mr. Yom-Tov Samia's end of assignment shall be at the end of the year of 2003, following three years of major contribution to the Company. Until the abovementioned due date, the re-organization process of the divisions and subsidiaries within the Company, which has been initiated and led by Mr. Yom-Tov Samia, will be completed, as well as, the assimilation process of the Company's penetration into new fields, such as water desalination, natural gas transportation and transportation infrastructure. It has been concluded, that until the abovementioned due date, Mr. Yom-Tov Samia will transfer his responsibilities to Senior Executive Managers and to the Company's CEO. 2. The Baran Group Ltd. announced its results of operations for the second quarter ended June 30, 2003. The Board of Directors of Baran Group Ltd. has confirmed the financial statements of the three months ended June 30, 2003. The financial statements reflect decrease in the overall results of Baran Group due to the accomplishment of few large-scale projects. (see "Subsequent Events") The full Financial Statements for the quarter may be reviewed at: http://www.sec.gov/Archives/edgar/data/1177328/000117891303000528/ d30254.htm (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.) BARAN GROUP LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
Convenience translation from adjusted NIS into
thousands of U.S. dollars
Dec. 31, June 30,
2002 2003
Audited Unaudited
------- ----------
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents 21,229 15,972
Short-term investments 20,606 16,880
Accounts receivable:
Trade and income receivable 60,452 41,551
Other 10,957 14,659
Inventories 2,160 2,994
-------- -------
T o t a l current assets 115,404 92,056
-------- -------
INVESTMENTS LOANS AND LONG-TERM RECEIVABLES:
Investments in associated companies 6,307 5,902
Other investments loans and long-term receivable 6,552 5,913
Deferred income taxes 367 372
-------- -------
13,226 12,187
-------- -------
LAND AND BUILDINGS FOR LEASE:
Cost 16,249 16,393
L e s s - accumulated depreciation and
amortization 1,735 1,945
-------- -------
14,514 14,448
-------- -------
FIXED ASSETS:
Cost 34,589 35,365
L e s s - accumulated depreciation 17,612 18,814
-------- -------
16,977 16,551
-------- -------
GOODWILL, net of accumulated amortization 22,872 21,694
OTHER INTANGIBLE ASSETS,
net of accumulated amortization 1,411 1,060
-------- --------
184,404 157,996
======== ========
BARAN GROUP LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
Convenience translation from adjusted NIS into
thousands of U.S. dollars
Dec. 31, June 30,
2002 2003
Audited Unaudited
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Liabilities and shareholders' equity
CURRENT LIABILITIES:
Short-term bank credit and bank loans 23,315 23,341
Accounts payable and accruals:
Trade 22,843 13,766
Other 36,611 23,661
-------- --------
T o t a l current liabilities 82,769 60,768
-------- --------
LONG-TERM LIABILITIES:
Liability for employee rights upon retirement,
net of amount funded 1,348 1,085
Bank loans net of current maturities 38,504 33,163
Capital notes issued to minority shareholders of a
Subsidiary, net 2,575 2,690
Deferred income taxes 12 8
-------- --------
T o t a l long-term liabilities 42,439 36,946
-------- --------
T o t a l liabilities 125,208 97,714
-------- --------
MINORITY INTERESTS 2,106 2,204
-------- --------
SHAREHOLDERS' EQUITY
Share capital - ordinary shares of adjusted
NIS 1 par value 3,516 3,516
Capital surplus 16,657 16,657
Differences from translation of foreign currency
financial statements of subsidiaries (33) 74
Retained earnings 38,278 39,159
Cost of Company shares held by the Company and
its subsidiaries (1,328) (1,328)
-------- --------
T o t a l shareholders' equity 57,090 58,078
-------- --------
T o t a l liabilities and shareholders' equity 184,404 157,996
======== ========
BARAN GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
FOR THE 6 AND 3 MONTH PERIOD ENDED JUNE 30, 2003
(Unaudited)
Convenience
translation from
adjusted NIS into
thousands U.S.
dollars
----------------------
Three month Six
period ended month
June 30 period
ended
June 30
----------------------
2002 2003 2003
----------------------
REVENUES:
Construction projects and services 39,879 25,469 52,899
Sale of products 9,795 8,878 20,929
Lease of buildings 436 579 1,039
Management fees from proportionately
consolidated companies 986 75 323
------ ------ ------
T o t a l revenues 51,096 35,001 75,190
------ ------ ------
COST OF REVENUES:
Construction projects and services 34,316 20,874 43,291
Sale of products 9,356 8,727 19,994
Lease of buildings 83 210 366
------ ------ ------
Total cost of revenues 43,755 29,811 63,651
------ ------ ------
GROSS PROFIT 7,341 5,190 11,539
RESEARCH AND DEVELOPMENT
EXPENSES 179 130 313
SELLING, MARKETING, GENERAL
AND ADMINISTRATIVE EXPENSES, net:
Selling and marketing, net 1,081 1,018 2,339
General and administrative 2,707 3,200 7,074
------ ------ ------
OPERATING INCOME 3,374 842 1,813
FINANCIAL EXPENSES, net 2,118 522 690
OTHER INCOME (EXPENSES), net (197) (46) 285
------ ------ ------
INCOME BEFORE TAXES ON INCOME 1,059 274 1,408
TAXES ON INCOME 618 163 867
------ ------ ------
INCOME AFTER TAXES ON INCOME 441 111 541
SHARE IN PROFITS (LOSS) OF
ASSOCIATED COMPANIES, net 24 (233) (31)
MINORITY INTERESTS IN LOSSES OF
SUBSIDIARIES, net 232 287 371
------ ------ ------
NET INCOME FOR THE PERIOD 697 165 881
====== ====== ======
EARNINGS PER SHARE - basic and diluted 0.09 0.02 0.11
====== ====== ======
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - in thousands 7,726 8,143 8,143
====== ====== ======
BARAN GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 6 AND 3 MONTH PERIOD ENDED JUNE 30, 2003
(Unaudited)
Convenience
translation from
adjusted NIS into
thousands U.S.
dollars
----------------------
Three month Six
period ended month
June 30 period
ended
June 30
----------------------
2002 2003 2003
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the period 697 165 881
------ ------ ------
Adjustments to reconcile net income to net cash
provided by operating activities: (9,462) 8,135 (3,738)
------ ------ ------
Net cash provided by (used in) operating
activities (8,765) 8,300 (2,857)
------ ------ ------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of fixed assets (1,711) (849)(1,685)
Repayment of long-term loans 6,288 31 31
Proceeds from purchase of investments in
companies consolidated in previous years 85
Acquisition of shares of an associated company (120)
Proceeds from sale of fixed assets 175 214 403
Decrease (increase) in short-term deposits, net (1,903)(1,291)(1,249)
Sale (purchase) of short-term marketable
securities, net - - 5,660
Group of long-term loan (5,789) 2 (264)
------ ------ ------
Net cash provided by (used in) investing
activities (3,070)(1,893) 2,981
------ ------ ------
BARAN GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 6 AND 3 MONTH PERIOD ENDED JUNE 30, 2003
(Unaudited)
Convenience
translation from
adjusted NIS into
thousands U.S.
dollars
----------------------
Three month Six
period ended month
June 30 period
ended
June 30
----------------------
2002 2003 2003
----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term bank loans received 1,293 28 114
Repayment of long-term bank loans (429) (718) (5,366)
Dividend paid (3,079) (49) (50)
Short-term bank credit - net (2,853)(2,545) (2,710)
Issuance of capital notes to minority 544 544
Short-term bank loans - net 1,388 (1,151) 2,660
------ ------ ------
Net cash provided by (used in) financing
activities (3,680)(3,891) (4,808)
------ ------ ------
TRANSLATION DIFFERENCES ON CASH BALANCES OF A
SUBSIDIARY
OPERATING INDEPENDENTLY 19 (508) (573)
------ ------ ------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (15,496) 2,008 (5,257)
BALANCE OF CASH AND CASH
EQUIVALENTS AT BEGINNING
OF PERIOD 51,283 13,964 21,229
------ ------ ------
BALANCE OF CASH AND CASH
EQUIVALENTS AT END OF PERIOD 35,787 15,972 15,972
Financial information by divisional classification
Baran in 2003 operates in a structure of five divisions. Each
division's relative contribution to the aggregate revenues of Baran
during the year 2003, the six months ended June 30, 2002 and 2003 was
as follows:
Division 6.2002 2002 6.2003
Communications Division 28% 31% 32%
Civil Engineering Division 6% 12% 15%
Industry Division 25% 20% 20%
Semiconductors Division 20% 14% 2%
Technologies and Services Division 21% 23% 31%
Total 100% 100% 100%
Financial information by geographical areas
Geographical breakdown of Baran's revenues.
Division 6.2002 2002 6.2003
Israel 73% 71% 74%
Europe 26% 21% 9%
USA 1% 4% 15%
The rest of the world * 4% 2%
Total 100% 100% 100%
(*) Less than 1%.
Baran's management adopted a strategic policy to expand the Group's global activities. This policy has been implemented, among other things, through the merger completed on November 2002, between Baran's subsidiary and o2wireless Solutions Inc., the acquisition in September 2001 of Westmontage Kable und Netzwerk GmbH, the establishment in March 2002 of Baran Raviv Telecom (Thailand) Ltd. and the establishment in April 2003 of BRJ Projects (Proprietary) Limited. This worldwide expansion has occurred within Communications division's field of operation. Baran believes there is a substantial potential for growth of its business outside of Israel. In the recent years Baran has taken steps to expend its activities outside of Israel. Today, Baran is a worldwide company, which renders services in Asia, Europe, Africa and North America. Baran intends to continue in expanding its operations and revenues outside of Israel. Revenues and Cost of Revenues Decreased by 32% For the second quarter 2003, revenues decreased by 32% to $ 35 million from $ 51.1 million in the second quarter of 2002. The decrease in the Company's revenues is directly influenced by the local and worldwide recession and economic slow down. A considerable decrease in revenues occurred in the Semiconductors and Industry divisions, in which a large-scaled semiconductors project entered the final stages of completion, which is characterized by a decrease in revenues as opposed to increase in expenses and allowances for the completion of the project. Also contributing to the drop in revenue was the completion of the Beit-Dagan project and other large-scaled projects within the Industry division. Cost of revenues decreased by 32%, exactly the same decrease as in the revenues, to $29.8 million in the three months ended June 30, 2003 from $ 43.8 million in the three months ended June 30, 2002. This decrease was primarily due to the large turnkey projects performed by the group, which had come to the final stages, as was mentioned in the Revenues paragraph. Gross profit remained stable at 15%, similar to the 14% during the comparable period in 2002 and the same for the annual gross profit in 2002. Income before taxes for the second quarter decreased to $0.274 million from $1.059 million in the second quarter of 2002. Second quarter 2003 operating income decreased by 75% to $0.84 million and reached $1.8 million in the six months ended June 2003. This decrease in the operating income is primarily attributable to a significant increase in the abovementioned expenses, which resulted from the reduction of o2wireless's goodwill, consequent to the merger between Baran Telecom Inc. and o2Wireless on November, 2002. Moreover, since the completion of the merger and the registration of Baran's shares on the Nasdaq, Baran incurred the general and administrative expenses of o2Wireless as well as additional expenses relate to the conformity with Securities and Exchange Commission requirements. Additional increase occurred in the selling and marketing expenses, due to the Company's endeavors to expand its international activities to additional states, including but not limited to Romania, South Africa etc. Nevertheless, the management administrative expanses decreased in the three months ended June 30, 2003 comparable to the three months ended June 30, 2002, due to economizing and efficiency measures taken by the Company's management. Positive Cash Flow Baran's cash flow from current operations improved from negative $8.8 million in the three months ended June 30, 2002 to positive $ 8.3 million in the three mounts ended June 30, 2003. Subsequent Events On August 8, 2003 Carmel Desalination Ltd., which is equally held (33.33%) by the Company, Dor Chemicals Ltd. and Ionics Inc,. has executed an agreement according to which Dor Chemicals Ltd. transferred its rights in Carmel Desalination Ltd. to Baran Group Ltd.- 50% and to Ionics Inc.- 50%. Following the transfer of the rights by Dor Chemicals, Baran Group' Ltd. share in Carmel Desalination Ltd. shall be - 50%, as well as Ionics' Inc. share in Carmel Desalination Ltd. shall be - 50%. The cost of the desalination facility's construction is approximately 100 million dollars. On July 30, 2003 the Company announced that as part of a settlement, which will be submitted to court, a consortium, which is composed of the Company (50%) and Ionics Inc. (50%), will be announced by Mekorot The Water Company Ltd. (the Israeli National Water Company), as an exclusive winner of a tender to the construction of a water desalination facility in Ashdod, Israel. The Project will be erected on a "Turn Key" basis and its construction estimated cost is approximately 95 million dollars. The construction of the Project shall be completed within approximately two years. On July 4, 2003 BMD Partnership (of which 1/3rd is held by the Company) was awarded the exclusive right to negotiate the performance of a bid for the construction and operation in Romania of a 12 km, four lanes and four bridges highway. The construction of the project in Romania shall be accomplished within approximately two years and BMD will be granted the right to operate the project in Romania for ten years. The estimated cost of the project in Romania is approximately 25 million Euro and the expected income is approximately 46 million Euro, during 10 years. The income from the above mentioned subsequent events will not be reflected in the financial statement of the year 2003. About the Baran Group The Baran Group, Ltd. is a global provider of engineering, technology and construction solutions. The Company provides full-service, turnkey engineering and constructing services to a broad range of industries through five professional divisions: communications, industry, civil engineering, semiconductors, and technology and services. Baran specializes in handling complex and challenging projects, offering creative and unconventional solutions, and customizing projects to clients' real needs. Baran's services include feasibility & planning, detailed engineering, procurement, project management, facility management, and construction management. For more information about the Baran Group, visit www.barangroup.com. The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors, including general economic conditions, consumer spending levels, adverse weather conditions and other factors could cause actual results to differ materially from the Company's expectations.
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