STARLIMS Announces Second Quarter 2009 Financial Results


HOLLYWOOD, Fla., Aug. 18, 2009 (GLOBE NEWSWIRE) -- STARLIMS Technologies Ltd. (Nasdaq:LIMS), a leading provider of laboratory information management systems (LIMS), today announced financial results for the second quarter of fiscal 2009 ended June 30, 2009.

Total revenue for the second quarter of 2009 was $6.9 million, an increase of 11.7% from the $6.1 million reported in the second quarter of 2008. Product revenue for the second quarter of 2009 was $3.8 million, an increase of 3.6% from $3.7 million reported in the same period a year ago. Services revenue for the second quarter of 2009 was $3.0 million, up 24.0% from the $2.4 million reported in the same period a year ago.

Revenue for the first six months of 2009 was $14.3 million, an increase of 8.9% compared to $13.1 million for the first six months of 2008. Product revenues for the first six months of 2009 were $8.4 million, flat compared to $8.4 million in the first six months of 2008. Services revenue for the first six months of 2009 was $5.9 million, an increase of 24.9% compared to $4.7 million for the first six months of 2008.

"We are pleased with our financial results for the second quarter. During the quarter, we began to see business conditions stabilize and we remain confident that our efforts to expand our product offering and geographic presence will enable us to capture market share and growth for the long term," said Itschak Friedman, CEO of STARLIMS.

GAAP operating income for the second quarter of 2009 was $1.1 million, or 15.5% of revenue, an increase compared to GAAP operating income $0.6 million, or 10.6% of revenue, for the second quarter of 2008. GAAP net income for the second quarter of 2009 was $1.6 million, or $0.19 per diluted share, an increase compared to $0.8 million and $0.09, respectively, in the second quarter of 2008. GAAP operating income for the first six months of 2009 was $2.7 million or 18.7% of revenues, compared to $1.7 million or 13.3% of revenues for the first half of 2008. GAAP net income for the first six months of 2009 was $3.0 million, or $0.35 per diluted share, compared to GAAP net income of $2.2 million, or $0.25 per diluted share, for the first six months of 2008.

Non-GAAP operating income for the second quarter of 2009 was $1.2 million, or 17.9% of revenue, compared to $0.8 million, or 12.6% of revenue, for the second quarter of 2008. Non-GAAP net income for the second quarter of 2009 was $1.7 million, or $0.20 per diluted share, an increase from $0.9 million and $0.10, respectively, in the second quarter of 2008. Non-GAAP operating income for the first six months of 2009 was $3.0 million or 21.0% of revenues, compared to $2.0 million or 15.3% of revenues for the first six months of 2008. Non-GAAP net income for the first six months of 2009 was $3.2 million, or $0.37 per diluted share, compared to non-GAAP net income of $2.3 million, or $0.27 per diluted share, for the first six months of 2008.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP income from operations and net income for the second quarter and first six months of fiscal years 2009 and 2008.

Cash, cash equivalents, deposits and marketable securities amounted to $30.8 million on June 30, 2009, compared to $31.5 million on March 31, 2009. On April 21, 2009, the Company paid a cash dividend in the amount of approximately $2.7 million. The Company generated $1.3 million in cash flow from operations for the second quarter of 2009.

"Our ongoing focus on cost containment and services margin improvement were again evident this quarter, and we believe we can expand Non-GAAP operating margins for the full year to the mid to high teens as a percentage of revenue," said Chaim Friedman, chief financial officer of STARLIMS. "Given the strength of our first half 2009 financial results, we have increased confidence that for the full year we can achieve ongoing growth."

Note on Use of Non-GAAP Financial Information

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, STARLIMS uses non-GAAP measures of gross margin, net income and earnings per share, which are adjustments from results based on GAAP to exclude non recurring expenses, non-cash equity based compensation in accordance with SFAS 123(R) and amortization of intangibles related to acquisitions. Our management believes that the non-GAAP financial information provided in this release can assist investors in understanding and assessing the Company's on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Our management also uses both GAAP and non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors. Reconciliation between GAAP to non-GAAP statement of income is provided in the table below.

Conference Call and Webcast Information

STARLIMS will host a live webcast of its second quarter fiscal year 2009 financial results conference call on Tuesday, August 18, 2009 at 8:30 a.m. Eastern Time (15:30 Israeli Time). The listen-only webcast can be accessed from the Investor Relations page of the company's website at http://www.starlims.com. Those interested in participating in the call and the question and answer session should dial 480-629-9692, or if calling from Israel should dial 1-809-21-4368.

The webcast will be archived for a limited time on the STARLIMS Technologies Investor Relations page of the company's website at http://www.starlims.com starting at 11:00 a.m. Eastern Time (18:00 Israeli Time) on Tuesday, August 18, 2009.

About STARLIMS

STARLIMS Technologies Ltd. (Nasdaq:LIMS) is a leading provider of laboratory information management systems (LIMS), with over 20 years of LIMS experience. The Company's flagship product, STARLIMS(r), improves the reliability of laboratory sampling processes, supports compliance with domestic and international regulations and industry standards, and provides comprehensive reporting, monitoring and analysis capabilities. STARLIMS software is used for quality assurance and control, testing and monitoring, and research and development in government, manufacturing and life sciences organizations. With operations in the United States, Canada, the United Kingdom, Israel and Hong Kong, the Company serves over 500 organizations in 40 countries. For more information, please see http://www.starlims.com.

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which could cause the actual results, performance or achievements of the Company to be materially different from those which may be expressed or implied by such statements, including, among others, changes in general economic and business conditions, changes in demand for products and services, the timing and amount or cancellation of orders, loss of market share and other risks detailed in STARLIMS's filings from time to time with the Securities and Exchange Commission. Such filings contain and identify these and other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today.



                      STARLIMS TECHNOLOGIES LTD.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
   (U.S. dollars in thousands, except share data and per share data)

                                           December 31,     June 30,
                                           ---------------------------
                                               2008           2009
                                           ------------   ------------
                  ASSETS                      Audited       Unaudited
 Current Assets
 Cash and cash equivalents                      21,942         15,679
 Short-term deposits                             1,191          1,219
 Restricted short-term deposits                    338             39
 Marketable securities                           5,686         12,131
 Accounts receivable (net of allowance                      
  for doubtful accounts of $238 and                         
  $228, respectively)                           10,341         10,649
 Other current assets                            2,891          3,345
                                           ------------   ------------
 Total current assets                           42,389         43,062
                                           ------------   ------------

 Long-Term Assets
 Marketable securities - held-to-maturity        1,608          1,713
 Other long-term assets                            949            663
 Fixed assets, net                               1,416          1,286
 Goodwill                                        2,227          2,287
 Other intangible assets, net                      213            164
                                           ------------   ------------
   Total long-term assets                        6,413          6,113
                                           ------------   ------------

                                           ------------   ------------
 Total assets                                   48,802         49,175
                                           ------------   ------------

  LIABILITIES AND SHAREHOLDERS' EQUITY

 Current Liabilities
 Trade accounts payable                            934            406
 Deferred revenues                               2,876          3,464
 Other current liabilities and accrued 
  expenses                                       2,228          2,432
                                           ------------   ------------
 Total current liabilities                       6,038          6,302
                                           ------------   ------------

 Long-Term Liabilities
 Long-term deferred revenues                       251            101
 Accrued severance pay                              19             32
 Deferred taxes                                    483            256
                                           ------------   ------------
 Total long-term liabilities                       753            389
                                           ------------   ------------

 Shareholders' Equity
 Ordinary shares, NIS 1.00 par value;
  authorized 15,000,000 shares; issued
  9,997,919 and 10,019,169 shares,
  respectively; outstanding 8,407,742 
  and 8,434,992 shares, respectively             3,152          3,157
 Additional paid-in capital                     31,355         31,656
 Accumulated other comprehensive 
  income                                           (27)          (111)
 Retained earnings                              12,198         12,415
 Treasury stock, at cost - 1,590,177 
  and 1,584,177 ordinary shares,
  respectively                                  (4,667)        (4,633)
                                           ------------   ------------
 Total shareholders' equity                     42,011         42,484
                                           ------------   ------------

                                           ------------   ------------
 Total liabilities and shareholders' 
  equity                                        48,802         49,175
                                           ------------   ------------


                     STARLIMS TECHNOLOGIES LTD.
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
   (U.S. dollars in thousands, except share data and per share data)
                            (Unaudited)

                             Six Months Ended     Three Months Ended
                           --------------------  --------------------
                                  June 30,              June 30,
                           --------------------  --------------------
                              2008       2009       2008       2009
                           ---------  ---------  ---------  ---------

 Revenues
  Software licensing        $  6,048   $  5,313   $  2,393   $  2,262
  Maintenance                  2,323      3,041      1,318      1,582
                           ---------  ---------  ---------  ---------
   Total product revenues      8,371      8,354      3,711      3,844
  Services                     4,744      5,926      2,435      3,019
                           ---------  ---------  ---------  ---------
   Total revenues             13,115     14,280      6,146      6,863
                           ---------  ---------  ---------  ---------

 Cost of revenues
  Cost of products               212         98         66         83
  Cost of services             4,452      4,769      2,145      2,396
                           ---------  ---------  ---------  ---------
   Total cost of revenues      4,664      4,867      2,211      2,479
                           ---------  ---------  ---------  ---------

 Gross profit                  8,451      9,413      3,935      4,384
                           ---------  ---------  ---------  ---------

 Operating expenses
  Research and development     1,689      1,815        856        918
  Selling and marketing        3,279      3,088      1,598      1,489
  General and 
   administrative              1,736      1,836        832        910
                           ---------  ---------  ---------  ---------
   Total operating 
    expenses                   6,704      6,739      3,286      3,317
                           ---------  ---------  ---------  ---------

 Operating income              1,747      2,674        649      1,067
 
  Financial income, net          866        983        316        899
                           ---------  ---------  ---------  ---------

 Income before income 
  taxes                        2,613      3,657        965      1,966

  Income tax expense             448        662        170        334
                           ---------  ---------  ---------  ---------

                           ---------  ---------  ---------  ---------
 Net income                 $  2,165   $  2,995   $    795   $  1,632
                           =========  =========  =========  =========

                           ---------  ---------  ---------  ---------
 Basic earnings per share   $   0.25   $   0.36   $   0.09   $   0.19
                           =========  =========  =========  =========
 Weighted average number 
  of ordinary shares used 
  in computing basic       ---------  ---------  ---------  ---------
  earnings per share       8,617,385  8,418,685  8,644,414  8,429,628
                           =========  =========  =========  =========

                           ---------  ---------  ---------  ---------
 Diluted earnings per 
  share                     $   0.25   $   0.35   $   0.09   $   0.19
                           =========  =========  =========  =========
 Weighted average number 
  of ordinary shares used 
  in computing diluted     ---------  ---------  ---------  ---------
  earnings per share       8,775,866  8,584,072  8,721,000  8,600,481
                           =========  =========  =========  =========


                      STARLIMS TECHNOLOGIES LTD.
         NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  (U.S. dollars in thousands, except share data and per share data)
                            (Unaudited)

                             Six Months Ended     Three Months Ended
                           --------------------  --------------------
                                  June 30,              June 30,
                           --------------------  --------------------
                              2008       2009       2008       2009
                           ---------  ---------  ---------  ---------

 Revenues
  Software licensing        $  6,048   $  5,313   $  2,393   $  2,262
  Maintenance                  2,323      3,041      1,318      1,582
                           ---------  ---------  ---------  ---------
   Total product revenues      8,371      8,354      3,711      3,844
  Services                     4,744      5,926      2,435      3,019
                           ---------  ---------  ---------  ---------
   Total revenues             13,115     14,280      6,146      6,863
                           ---------  ---------  ---------  ---------

 Cost of revenues
  Cost of products               212         98         66         83
  Cost of services             4,381      4,696      2,110      2,359
                           ---------  ---------  ---------  ---------
   Total cost of revenues      4,593      4,794      2,176      2,442
                           ---------  ---------  ---------  ---------

 Gross profit                  8,522      9,486      3,970      4,421
                           ---------  ---------  ---------  ---------

 Operating expenses
  Research and development     1,663      1,775        843        898
  Selling and marketing        3,154      2,937      1,539      1,416
  General and 
   administrative              1,701      1,775        812        879
                           ---------  ---------  ---------  ---------
   Total operating 
    expenses                   6,518      6,487      3,194      3,193
                           ---------  ---------  ---------  ---------

 Operating income              2,004      2,999        776      1,228

  Financial income, net          866        983        316        899
                           ---------  ---------  ---------  ---------

 Income before income 
  taxes                        2,870      3,982      1,092      2,127

 Income tax expense              535        770        236        387
                           ---------  ---------  ---------  ---------

                           ---------  ---------  ---------  ---------
 Net income                 $  2,335   $  3,212   $    856   $  1,740
                           =========  =========  =========  =========

                           ---------  ---------  ---------  ---------
 Basic earnings per share   $   0.27   $   0.38   $   0.10   $   0.21
                           =========  =========  =========  =========
 Weighted average number 
  of ordinary shares used
  in computing basic
  earnings per share       8,617,385  8,418,685  8,644,414  8,429,628
                           =========  =========  =========  =========


                           ---------  ---------  ---------  ---------
 Diluted earnings per 
  share                     $   0.27   $   0.37   $   0.10   $   0.20
                           =========  =========  =========  =========
 Weighted average number 
  of ordinary shares used 
  in computing diluted
  earnings per share       8,775,866  8,584,072  8,721,000  8,600,481
                           =========  =========  =========  =========


                       STARLIMS TECHNOLOGIES LTD.
           RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED
                         STATEMENTS OF INCOME
                              (Unaudited)


                             Six Months Ended     Three Months Ended
                           --------------------  --------------------
                                  June 30,              June 30,
                           --------------------  --------------------
                              2008       2009       2008       2009
                           ---------  ---------  ---------  ---------


 GAAP total cost of 
  revenues                     4,664      4,867      2,211      2,479
  Stock based compensation 
   expenses                      (71)       (73)       (35)       (37)
                           ---------  ---------  ---------  ---------
 NON-GAAP total cost of 
  revenues                     4,593      4,794      2,176      2,442
                           =========  =========  =========  =========


 GAAP Research and 
  Development expenses         1,689      1,815        856        918
  Stock based compensation
   expenses                      (26)       (40)       (13)       (20)
                           ---------  ---------  ---------  ---------
 NON-GAAP Research and 
  Development expenses         1,663      1,775        843        898
                           =========  =========  =========  =========


 GAAP Selling and 
  marketing expenses           3,279      3,088      1,598      1,489
  Stock based compensation
   expenses                     (125)      (151)       (59)       (73)
                           ---------  ---------  ---------  ---------
 NON-GAAP Selling and 
  marketing expenses           3,154      2,937      1,539      1,416
                           =========  =========  =========  =========


 GAAP General and 
  administrative expenses      1,736      1,836        832        910
  Stock based compensation
   expenses                      (13)       (12)        (7)        (6)
  Issuance related 
   expenses                       --         --         --         --
  Amortization of 
   purchased intangible 
   assets                        (22)       (49)       (13)       (25)
                           ---------  ---------  ---------  ---------
 NON-GAAP General and 
  administrative expenses      1,701      1,775        812        879
                           =========  =========  =========  =========


 GAAP total tax expenses         448        662        170        334
  Stock based compensation
   expenses                       87        108         66         53
                           ---------  ---------  ---------  ---------
 NON-GAAP total tax 
  expenses                       535        770        236        387
                           =========  =========  =========  =========


                        STARLIMS TECHNOLOGIES LTD.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (U.S. dollars in thousands)

                             Six Months Ended     Three Months Ended
                           --------------------  --------------------
                                  June 30,              June 30,
                           --------------------  --------------------
                              2008       2009       2008       2009
                           ---------  ---------  ---------  ---------


 CASH FLOWS - OPERATING 
  ACTIVITIES
 Net income                 $  2,165   $  2,995   $    795   $  1,632

 Adjustments to reconcile 
  net income to cash 
  provided by (used in)
  operating activities:
   Depreciation and 
    amortization                 282        272        138        134
   Stock-based compensation      236        276        114        136
  Gains related to 
   marketable securities        (234)      (686)       (97)      (648)
   Increase (decrease) in
    accrued severance pay         10         13         13         (2)
   Deferred income taxes        (198)       (27)      (127)       198
   The effect of exchange 
    rate changes                (172)      (122)       (27)      (143)
 Changes in assets and 
  liabilities:             
   Decrease (increase) in
    trade receivables         (1,396)      (307)       220        809
   Increase (decrease) in
    allowance for doubtful 
    accounts                      43        (22)        20        (12)
   Decrease (increase) in 
    other current assets         (20)      (261)         3       (490)
   Increase (decrease) in 
    trade accounts payable       440       (179)        31       (267)
   Increase (decrease) in 
    deferred revenues            821        438        298        (64)
   Increase (decrease) in 
    other current 
    liabilities               (1,981)      (140)      (784)        30
                           ---------  ---------  ---------  ---------
   Net cash provided by 
    (used in) operating 
    activities                    (4)     2,250        597      1,313
                           ---------  ---------  ---------  ---------

 CASH FLOWS - INVESTING 
  ACTIVITIES
 Investments in marketable
  securities                    (173)    (7,996)       (40)    (1,646)
 Proceeds from sale of 
  marketable securities          592      2,132        463      1,337
 Investment in held-to-
  maturity marketable 
  securities                    (428)        --        (43)        --
 Proceeds from redemption
  of held-to-maturity 
  securities                      --         --         --         --
 Investments in 
  deposits, net                   44        271         11     (1,060)
 Loans to employees, net         (70)       132        (81)         4
 Purchase of fixed assets       (243)       (93)      (121)       (66)
 Acquisition of 
  subsidiaries, net of 
  cash acquired, and 
  business operation            (918)      (251)      (918)        --
 Purchase of other 
  intangible assets              (25)       (25)       (25)        --
                           ---------  ---------  ---------  ---------
   Net cash used in 
    investing activities      (1,221)    (5,830)      (754)    (1,431)
                           ---------  ---------  ---------  ---------

 CASH FLOWS - FINANCING 
  ACTIVITIES
 Purchase of treasury 
  stocks by the Company       (1,308)        --       (627)        --
 Proceeds from issuing of 
  shares against exercise 
  of options                      --         30         --         30
 Proceeds from sale of 
  treasury stock against 
  exercise of options              8         34          8         34
 Dividends paid               (2,918)    (2,681)    (2,918)    (2,681)
                           ---------  ---------  ---------  ---------
   Net cash provided by 
    (used in) financing 
    activities                (4,218)    (2,617)    (3,537)    (2,617)
                           ---------  ---------  ---------  ---------

 THE EFFECT OF EXCHANGE 
  RATE CHANGES ON CASH AND
  CASH EQUIVALENTS               (48)       (66)       (58)        43
                           ---------  ---------  ---------  ---------
  Increase (decrease) in 
   cash and cash 
   equivalents                (5,491)    (6,263)    (3,752)    (2,692)
                           ---------  ---------  ---------  ---------
 Cash and cash equivalents
  at the beginning of the 
  period                      31,704     21,942     29,965     18,371
                           ---------  ---------  ---------  ---------
 Cash and cash equivalents
  at the end of the period  $ 26,213   $ 15,679   $ 26,213   $ 15,679
                           =========  =========  =========  =========



 NOTE 1 - SEGMENTAL DISCLOSURE

  Revenues by geographical areas


                             Six Months Ended     Three Months Ended
                           --------------------  --------------------
                                  June 30,              June 30,
                           --------------------  --------------------
                              2008       2009       2008       2009
                           ---------  ---------  ---------  ---------
                          (Unaudited)(Unaudited)(Unaudited)(Unaudited)

 North America              $  9,592   $  9,974   $  4,310   $  4,779
 Latin America                   521        328        313        153
 Europe                        1,632      2,690        923      1,231
 Asia                          1,270      1,204        530        641
 Israel                          100         84         70         59
                           ---------  ---------  ---------  ---------
                            $ 13,115   $ 14,280   $  6,146   $  6,863
                           =========  =========  =========  =========

            

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