Filed by Elbit Medical Imaging Ltd.
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed filed
pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: Elscint Ltd.
Commission File No.: 001-08781
The following is a press release disseminated by Elbit Medical Imaging Ltd. on
September 12, 2005:
FOR IMMEDIATE RELEASE
ELBIT MEDICAL IMAGING LTD. ANNOUNCES
SECOND QUARTER 2005 RESULTS
Tel Aviv, Israel - September 12, 2005 - Elbit Medical Imaging Ltd. (NASDAQ:
EMITF) ("EMI" or the "Company") today announced its consolidated results for the
three and six-month periods ended June 30, 2005.
Net loss for the second quarter of 2005 totaled NIS 30.8 million (US $6.7
million), compared with a net loss of NIS 54.4 million in the corresponding
period of 2004.
Revenues for the second quarter of 2005 totaled NIS 143.9 million (US $31.5
million), compared with revenues of NIS 172.4 million in the corresponding
period of 2004.
Commentary for the Second Quarter:
Mr. Shimon Yitzhaki, President of Elbit Medical Imaging commented: "The results
of the second quarter of 2005 do not reflect EMI's current business position as
they include expenses incurred in respect of the sale of shopping and
entertainment centers to the Klepierre group, but do not record the capital
gains expected from such transaction.
"The results also include NIS 22.6 million (US $4.9 million) due to a provision
for a neither recurring nor cash flow entailing impairment loss expected on
EMI's investment in Vcon Telecommunication Ltd., and a provision for a loss that
may result from a decrease in EMI's shareholding in Elscint Ltd., a subsidiary
of the Company (NYSE: ELT) ("Elscint"), assuming realization of Elscint's
employees stock.
"In addition, EMI's research and development expenses increased in the second
quarter of 2005 due to an acceleration in R&D efforts by EMI's subsidiary,
InSightec Image Guided Treatment Ltd. ("InSightec"), for several potential
applications."
Finally, concluded Mr. Yitzhaki: "EMI's proposed merger with Elscint is intended
to enable the merging companies to exploit opportunities that were previously
unavailable to either company independently, and to reduce operational costs."
The Chairman of the Board Mr. Mordechay Zisser, commented: "The recent Klepierre
Agreement together with the previous sales agreements during the last year, in
total aggregate amount of US $1 billion further establish EMI's position as the
regional industry leader in development and construction of shopping and
entertainment centers, and demonstrate the success of our strategy of
co-operation with large European bodies in various areas of operations.
Moreover, the Klepierre transactions have enabled EMI to
accelerate its development and construction of additional shopping and
entertainment centers in Europe. The EMI results for the second quarter of 2005
do not reflect the substantial profit from the transactions with Klepierre that
the Company expects to record later this year and in 2006."
The breakdown of revenue by sector of activity is presented in the following
table (in NIS thousands):
For the 6-month
period ended June 30
2005 % 2004 %
Operating commercial centers 96,664 37 195,851 60
Hotels operation and management 121,232 45 109,279 33
Sale of medical systems 33,922 13 17,218 5
Sale of goods 4,787 2 - -
Lease of assets 6,609 3 6,606 2
Total revenues 263,214 100 328,954 100
For the 3-month
period ended June 30
2005 % 2004 %
Operating commercial centers 44,827 31 100,205 58
Hotels operation and management 66,689 47 57,192 33
Sale of medical systems 24,307 17 11,705 7
Sale of goods 4,787 3 - -
Lease of assets 3,304 2 3,326 2
Total revenues 143,914 100 172,428 100
For the twelve-month
period ended Dec 31
2004 %
Operating commercial centers 311,893 53
Hotels operation and management 218,365 37
Sale of medical systems 44,049 8
Sale of goods -
Lease of assets 13,238 2
Total revenues 587,545 100
The breakdown of gross profit by sector of activity is presented in the
following table (in NIS thousands):
For the 6-month
period ended June 30
2005 % 2004 %
Operating commercial centers 31,497 33 81,045 41
Hotels operation and management 12,310 10 12,475 11
Sale of medical systems 25,575 75 14,488 84
Goods sold 3,134 65 - -
Lease of assets 5,095 77 4,971 75
Total gross profit 77,611 29 112,979 34
For the 3-month
period ended June 30
2005 % 2004 %
Operating commercial centers 14,475 32 40,188 40
Hotels operation and management 8,782 13 8,607 15
Sale of medical systems 18,121 75 10,048 86
Goods sold 3,134 65 - -
Lease of assets 2,549 77 2,548 77
Total gross profit 47,061 33 61,391 36
For the twelve-month
period ended Dec 31
2004 %
Operating commercial centers 112,113 36
Hotels operation and management 17,271 8
Sale of medical systems 34,215 78
Goods sold - -
Lease of assets 10,063 76
Total gross profit 173,662 30
The percentages in the above table refer to gross margins (gross profit as a
percentage of the revenue in each respective sector).
The decrease in revenues for the three-month period ended on June 30, 2005,
compared to the corresponding period of the previous year, is due to: (i) the
exclusion of the activities of the 12 Hungarian shopping centers sold to
Klepierre Group at the beginning of the third quarter of 2004; and (ii) the
exclusion of the four additional shopping centers in Hungary sold to Dawnay Day
Group at the beginning of the second quarter of 2005.
The consolidated net financial expenses for the three-month period ended June
30, 2005 totaled NIS 31.8 million (US $7.0 million), compared with a net
financial expenses of NIS 74.5 million in the corresponding period of 2004. This
substantial decrease results from a combination of the following factors:
1. During the second quarter of 2005 the Company recorded financial
income of NIS 10.3 million (US$ 2.3 million) from derivative
financial instrument transactions, compared to expenses of NIS 41.6
million from in the corresponding period of the previous year.
2. Financial expenses in the three-month period ended June 30, 2005,
have increased by NIS 9.2 million (US $2.0 million), net, mainly as
a result of (i) a reduction in the amount of outstanding bank loans
in Plaza Centers due to the realization of the 16 shopping centers
in 2004 and 2005, on one hand; and on the other hand (ii) an
increase in volume of outstanding loans granted to operating
companies mainly in the hotel business, with the addition of the
negative effect of exchange rate differences, mainly NIS against the
US Dollar (4.8%).
Other net expenses for the three-month period ended June 30, 2005 was NIS 22.1
million (US $4.8 million), which resulted primarily from a provision for
impairment loss expected on EMI's investment in Vcon Telecommunication Ltd., and
a provision for a loss that may result from decrease in EMI's shareholding in
Elscint, assuming realization of Elsicnt's employees stock. The latter provision
was recorded according to Israeli GAAP, as in effect through the end of 2005
(non-US GAAP), notwithstanding that the loss covered therein may not
materialize, in the event EMI's proposed merger with Elscint is concluded.
In the second quarter of 2005, EMI recorded a deferred tax asset, in the amount
of NIS 14.1 million (US $3.1 million), in respect of temporary differences
arising from investments in its subsidiaries since following the 2005 Klepierre
transactions, as concluded in July 2005, the utilization of such temporary
differences against taxable profit in the foreseeable future, became initially
probable.
The basic net loss per share for the three-month period ending June 30, 2005,
was NIS 1.4 per share (US $0.3 per share).
EMI is a subsidiary of Europe Israel (M.M.S.) Ltd. EMI's activities are divided
into three principal fields: (i) ownership, operation, management, acquisition,
expansion and development of commercial and entertainment malls in Europe,
primarily in Eastern and Central Europe; (ii) ownership, operation, leasing,
management, acquisition, expansion and development of hotels in major European
cities and ownership, operation and management of a commercial and entertainment
mall in Israel through its subsidiary, Elscint Ltd.; and (iii) research and
development in the image guided focused ultrasound activities through its
subsidiary, InSightec - Image Guided Treatment Ltd.
This press release does not constitute an offer of any securities for sale.
Before making any voting or investment decision, investors are urged to read the
joint proxy statement/prospectus regarding the proposed merger between EMI and
Elscint and any other relevant documents carefully in their entirety when they
become available because they would contain important information about the
proposed transaction. Any final joint proxy statement/prospectus would be mailed
to EMI's and Elscint's shareholders. The registration statement containing the
joint proxy statement/prospectus and other documents are available free of
charge at the Securities and Exchange Commission's Internet site
(http://www.sec.gov).
EMI, Elscint and their respective directors and executive officers and other
members of management and employees may be deemed to be participants in the
solicitation of proxies in respect of a proposed transaction. Information
regarding EMI's directors and executive officers is available in EMI's Annual
Report for the Fiscal Year Ended December 31, 2004, which was filed with the
Securities and Exchange Commission on June 30, 2005. Information regarding
Elscint's directors and executive officers is available in Elscint's Annual
Report for the Fiscal Year Ended December 31, 2004, which was filed with the
Securities and Exchange Commission on June 30, 2005 and as amended and filed
with the Securities and Exchange Commission on July 14, 2005. Information
regarding persons who may, under the rules of the Securities and Exchange
Commission, be considered participants in a solicitation of EMI and Elscint
shareholders in connection with a proposed transaction is set forth in the joint
proxy statement/prospectus filed with the Securities and Exchange Commission.
Any forward looking statements with respect to EMI's business, financial
condition and results of operations included in this release are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward looking statements, including, but not
limited to, product demand, pricing, market acceptance, changing economic
conditions, risks in product and technology development and the effect of EMI's
accounting policies, the risk that the Klepierre transactions are not
consummated, risks related to the proposed merger of EMI and Elscint such as a
failure to successfully integrate the two companies or realize the expected
benefits from the proposed merger, as well as certain other risk factors which
are detailed from time to time in EMI's filings with the Securities and Exchange
Commission including, without limitation, EMI's Form F-4 Registration Statement
filed with the Securities and Exchange Commission on September 1, 2005 and Form
20-F Annual Report for the fiscal year ended December 31, 2004, filed with the
Securities and Exchange Commission on June 30, 2005.
Company Contact: Investor Contact:
---------------- -----------------
Marc Lavine, Adv. Kathy Price
Elbit Medical Imaging Ltd. The Anne McBride Company
011-972-3-608-6011 1-212-983-1702 x212
mlavine@europe-israel.com kprice@annemcbride.com
------------------------- ----------------------
ELBIT MEDICAL IMAGING LTD.
CONSOLIDATED BALANCE SHEETS
June 30 Dec 31 June 30
------------------------ --------- -------------
2005 2004 2004 2005
------------------------ --------- ------------
Convenience
translation
NIS in thousands US$'000
-------------------------------------------- ------------
Current Assets
Cash and cash equivalents 213,774 128,343 345,745 46,737
Short-term deposits and investments 271,104 315,460 278,021 59,271
Trade accounts receivable 50,807 46,648 39,102 11,108
Receivables and other debit balances 101,689 79,298 66,140 22,232
Inventories 16,299 6,894 7,331 3,563
-------- -------- -------- -------
653,673 576,643 736,339 142,911
-------- -------- -------- -------
Long-Term Investments and Receivables
Long-term deposits,
debentures, loans and receivables 102,135 106,527 113,785 22,329
Investments in investees
and other companies 56,777 123,806 71,608 12,413
--------- -------- -------- -------
158,912 230,333 185,393 34,742
--------- -------- -------- -------
Fixed Assets 3,483,196 4,807,211 3,527,988 761,521
--------- -------- -------- -------
Other Assets and Deferred Expenses 54,759 77,034 55,859 11,972
--------- -------- -------- -------
Assets Related to Discontinuing Operations 13,110 14,760 14,700 2,866
--------- -------- -------- -------
4,363,650 5,705,981 4,520,279 954,012
========= ======== ======== =======
Current Liabilities
Short-term credits 633,744 1,052,344 536,937 138,554
Suppliers and service providers 83,355 97,307 74,358 18,224
Payables and other credit balances 153,786 143,977 183,446 33,622
--------- -------- -------- -------
870,885 1,293,628 794,741 190,399
--------- -------- -------- -------
Long-Term Liabilities 2,365,790 2,899,056 2,418,897 517,226
--------- -------- -------- -------
Liabilities Related to Discontinuing Operations 71,168 79,544 71,986 15,559
--------- -------- -------- -------
Convertible debentures 61,839 -- -- 13,520
--------- -------- -------- -------
Minority Interest 404,939 460,651 430,687 88,531
--------- -------- -------- -------
Shareholders' Equity 589,029 973,102 803,968 128,778
--------- -------- -------- -------
4,363,650 5,705,981 4,520,279 954,012
========= ======== ======== =======
ELBIT MEDICAL IMAGING LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
Six
Six months Three months Year months
ended ended ended ended
June 30 June 30 Dec 31 June 30
-------------------- ------------------- --------- -----------
2005 2004 2005 2004 2004 2005
------------------- ------------------- --------- -----------
Convenience
translation
NIS in thousands US$'000
---------------------------------------------------------------- -----------
Revenues
Commercial center operations 96,664 195,851 44,827 100,205 311,893 21,133
Hotels operations and
management 121,232 109,279 66,689 57,192 218,365 26,505
Sale of medical systems 33,922 17,218 24,307 11,705 44,049 7,416
Sales of goods 4,787 -- 4,787 -- -- 1,047
Lease of assets 6,609 6,606 3,304 3,326 13,238 1,445
------- ------- ------- ------- ------- ------
263,214 328,954 143,914 172,428 587,545 57,546
------- ------- ------- ------- ------- ------
Costs of revenues
Commercial center operations 65,167 114,806 30,352 60,017 199,780 14,247
Hotels operations and
management 108,922 96,804 57,907 48,585 201,094 23,813
Sale of medical systems 8,347 2,730 6,186 1,657 9,834 1,825
Cost of goods sold 1,653 -- 1,653 -- -- 361
Lease of assets 1,514 1,635 755 778 3,175 331
------- ------- ------- ------- ------- ------
185,603 215,975 96,853 111,037 413,883 40,578
------- ------- ------- ------- ------- ------
Gross profit 77,611 112,979 47,061 61,391 173,662 16,968
Project initiation expenses 8,948 359 3,319 182 2,371 1,956
Research and development
expenses, net 26,657 21,095 15,098 9,108 38,158 5,828
Marketing and selling expenses 17,641 23,673 11,678 13,352 43,075 3,857
General and administrative
expenses 49,404 39,665 23,436 20,056 92,536 10,801
------- ------- ------- ------- ------- ------
102,650 84,792 53,531 42,698 176,140 22,442
------- ------- ------- ------- ------- ------
Operating profit(loss) before
financial expenses, net (25,039) 28,187 (6,470) 18,693 (2,478) (5,474)
Financial expenses, net (64,560) (27,097) (31,788) (74,488) (53,569) (14,115)
------- ------- ------- ------- ------- ------
Operating profit(loss) after
financial expenses, net (89,599) 1,090 (38,258) (55,795) (56,047) (19,589)
Other income (expenses), net 5,222 (15,396) (22,113) (282) 96,908 1,142
------- ------- ------- ------- ------- ------
Profit (loss) before income
taxes (84,377) (14,306) (60,371) (56,077) 40,861) (18,447)
Income taxes (tax benefits) (15,774) 17,089 (16,567) 1,814 15,804 (3,449)
------- ------- ------- ------- ------- ------
Profit (loss) after income
taxes (68,603) (31,395) (43,804) (57,891) 25,057 (14,998)
Share in results of
associated companies, net (5,241) (8,276) (3,096) (4,930) (15,968) (1,146)
Minority interest in results of
subsidiaries, net 34,539 14,661 17,418 6,794 27,448 7,551
------- ------- ------- ------- ------- ------
Profit (loss) from continuing
operation (39,305) (25,010) (29,482) (56,027) 36,537 (8,593)
Profit (loss) from
discontinuing operation, net (1,877) 848 (1,334) 1,580 6,810 (410)
Cumulative effect of accounting
change at the beginning of
the year (605) -- -- -- -- (132)
------- ------- ------- ------- ------- ------
Net income (loss) (41,787) (24,162) (30,816) (54,447) 43,347 (9,136)
======= ======= ======= ======= ======= ======
Earnings (loss) per share -
(in NIS)
Basic earnings (loss) per share:
From continuing operation (1.78) (1.12) (1.34) (2.51) 1.59 (0.39)
From discontinuing operation (0.09) 0.04 (0.06) 0.07 0.30 (0.02)
Cumulative effect
of accounting change at the
beginning of the year (0.03) -- -- -- -- (0.01)
------- ------- ------- ------- ------- ------
Basic earnings (loss) per share (1.90) (1.08) (1.40) (2.44) 1.89 (0.42)
======= ======= ======= ======= ======= ======
Diluted earnings (loss) per share (1.90) (1.08) (1.40) (2.44) 1.84 (0.42)
------- ------- ------- ------- ------- ------