Tecnomatix Announces Second Quarter 1999 Results;Revenues Up 34%; Adjusted Operating Profits Up...

HERZLIYA, Israel--(BUSINESS WIRE)--July 21, 1999--

Tecnomatix Technologies Ltd. (NASDAQ-NM Symbol: TCNO), pioneer and leader of Computer-Aided Production Engineering (`CAPE') and Digital Factory software, today announced unaudited financial results for the second quarter and six months

Revenues for the second quarter of 1999 increased by 34% to $22,853,000 from $17,067,000 for the same period in 1998. Adjusted net income, excluding acquisition-related charges was $3,345,000 or $0.33 per diluted share compared with adjusted net income of $2,927,000 or $0.28 per diluted share for the second quarter of 1998. For detailed adjusted results see attached tables.

Revenues for the first six months of 1999 increased by 34% to $41,532,000 from $30,987,000 for the same period in 1998. Adjusted net income for the first half of 1999 was $5,955,000 or $0.59 per diluted share, compared with adjusted net income of $4,619,000 or $0.43 per diluted share in the first half of 1998.

"We are very pleased to report a successful quarter with record revenues," commented Harel Beit-On, President and Chief Executive Officer of Tecnomatix. "Sales were up in all geographic territories, especially in the U.S. and Japan. During the quarter, Greig Patton joined our Detroit-based North American operations as Vice President of Americas. Greig was previously Vice President of Channel Sales and Marketing - Americas at Silicon Graphics, Inc. We also hired several new sales people and support personnel. With this team in place, and our expanded presence in the U.S. electronics industry, we are positioned for continued growth in this important market.

"In Japan," continued Beit-On, "we expanded our presence and increased our deployment capacity by appointing two major new distributors.

"We continued to demonstrate our leadership in core markets with repeat sales to major automotive companies including Audi, Renault, Honda, Nissan, Fiat, Ford, and Volkswagen. Especially notable were sales to Ford and Volkswagen which continue to expand their use of CAPE tools as part of their digital factory implementations.

"We continue to enjoy growth in our new markets, especially the electronics and heavy equipment industries which now constitute a significant portion of our total revenue.

"We are pleased to report that during the quarter we finalized the integration of the recently acquired Unicam with our Exaline organization. As previously announced, we received a $2.1 million order for Unicam software from SCI, one of the world's leading electronics contract manufacturers, through our partnership Fuji Machine Manufacturing.

"Finally, we are pleased to welcome Shmuel Arvatz as Executive Vice President and Chief Financial Officer. Shmuel brings a vast amount of financial experience to Tecnomatix having previously served in a similar position at ADC Teledata Communications Ltd. Shmuel replaces Tali Idan who has been Vice President and Chief Financial Officer of Tecnomatix since its IPO in 1993. I would personally like to thank Tali for his dedication and contribution to the Company, and wish him every success in his future endeavors."

TECNOMATIX TECHNOLOGIES LTD. is a pioneer and world leader of computer-aided Production Engineering (CAPE) and Digital Factory software. The Digital Factory enables manufacturing planners and engineers to plan, design, simulate and optimize a complete factory, its production lines and manufacturing processes, from the early conception stage to implementation on the shop floor.

Certain statements made herein that use the words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These 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 and specifically, changes in the level of activity in the automotive industry, decline in demand to the Company's products, inability to timely develop and introduce new technologies, products and applications and loss of market share and pressure on prices resulting from competition. For additional information regarding

these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission.

Note: All brand, product and company names are trademarks of their respective owners

TECNOMATIX TECHNOLOGIES
------------------------------------------------------

Condensed Balance Sheets
U.S $ in thousands
                                           6/30/99       12/31/98
                                      -------------  -------------

Current Assets:
  Cash and cash equivalents                 19,178         14,767
  Short-term investments                    53,689         61,643
Receivables:
    Trade                                   28,406         24,887
    Related parties                            334            442
    Other and prepaid expenses              10,232          7,270
                                      -------------  -------------

Total current Assets                       111,839        109,009
                                      -------------  -------------

Non-Current receivables                        644            677
                                      -------------  -------------

Long-term investments                       33,000         33,000
                                      -------------  -------------

Property and Equipment, net                  9,341          7,846
                                      -------------  -------------

Acquired intangibles, net                   22,582          7,883
                                      -------------  -------------

Other Assets, net                           10,891         10,336
                                      -------------  -------------

Total assets                               188,297        168,751
                                      =============  =============

Current Liabilities:
  Short-term credits                        25,442         11,484

  Payables:
     Trade                                   2,189          2,144
     Other and accrued expenses             23,234         17,020
                                      -------------  -------------

Total current liabilities                   50,865         30,648
                                      -------------  -------------

Long-term liabilities                        1,597          1,409
                                      -------------  -------------

Long-term Loans                             10,000              -
                                      -------------  -------------

5.25% Convertible subordinated notes        49,250         55,250
                                      -------------  -------------

Minority interest in
 consolidated subsidiary company                15             27
                                      -------------  -------------

Shareholders' Equity                        76,570         81,417
                                      -------------  -------------

Total liabilities and
 shareholders' equity                      188,297        168,751



TECNOMATIX TECHNOLOGIES
------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS
U.S $ in thousands, except per share data

                                  Six months ended  Three months ended
                                 6/30/99   6/30/98   6/30/99   6/30/98
                                 -------   -------   -------   -------
Revenues
Software and systems sales        27,091    19,902    15,493    11,518

Maintenance and
 engineering services             14,441    11,085     7,360     5,549
                                --------  --------  --------  --------

Total revenues                    41,532    30,987    22,853    17,067
                                --------  --------  --------  --------

Costs and expenses

Software and systems               2,306     2,156     1,169     1,291

Maintenance and
 engineering services              4,146     2,559     2,259     1,272

Amortization of acquired
 intangibles                       1,835       390     1,257       196

Research & development
 costs, net                        8,606     5,317     4,816     2,649

Sales and marketing, net          18,761    15,546    10,116     8,279

General and
 administrative expenses           2,400     2,159     1,273     1,244

In-Process R&D and
 acquisition related charges       9,944         -         -         -
                                --------  --------  --------  --------

Total costs and expenses          47,998    28,127    20,890    14,931
                                --------  --------  --------  --------

Operating profit                  (6,466)    2,860     1,963     2,136

Financial income, net                945     1,801       318       805
                                --------  --------  --------  --------

Income before taxes on income     (5,521)    4,661     2,281     2,941

Provision for income taxes          (315)     (372)     (195)     (177)
                                --------  --------  --------  --------

Income after taxes on income      (5,836)    4,289     2,086     2,764

Minority interest in net income
 of consolidated subsidiaries         12       (60)        2       (33)
                                --------  --------  --------  --------

Income before Extraordinary Item  (5,824)    4,229     2,088     2,731

Extraordinary Item                 1,650
                                --------  --------  --------  --------

Net Income                        (4,174)    4,229     2,088     2,731
                                ========  ========  ========  ========

Basic earnings per share:
Income before Extraordinary Item   (0.61)     0.42      0.22      0.27
Extraordinary Item                  0.17         -         -         -
                                --------  --------  --------  --------
Net Income                         (0.44)     0.42      0.22      0.27
                                ========  ========  ========  ========
Diluted earnings per share:
Income before Extraordinary Item   (0.58)     0.40      0.20      0.26
Extraordinary Item                  0.16         -         -         -
                                --------  --------  --------  --------
Net Income                         (0.42)     0.40      0.20      0.26
                                ========  ========  ========  ========

Weighted average number
 of shares outstanding:
Basic                         9,591,833 10,028,155  9,613,075 10,046,592
                              ========= ==========  ========= ==========
Diluted                      10,097,011 10,675,155 10,193,963 10,530,720
                             ========== ========== ========== ==========

Ratio of earnings to fixed charges    (1)        3         3         3
TECNOMATIX TECHNOLOGIES

------------------------------------------------------

ADJUSTED RESULTS(1)
U.S $ in thousands, except per share data
                                  Six months ended  Three months ended
                                 6/30/99   6/30/98   6/30/99   6/30/98
                                 -------   -------   -------   -------

Revenues
Software and systems sales        27,091    19,902    15,493    11,518

Maintenance and
 engineering services             14,441    11,085     7,360     5,549
                                --------  --------  --------  --------

Total revenues                    41,532    30,987    22,853    17,067
                                --------  --------  --------  --------

Costs and expenses

Software and systems               2,306     2,156     1,169     1,291

Maintenance and
 engineering services              4,146     2,559     2,259     1,272

Research & development costs, net  8,606     5,317     4,816     2,649

Sales and marketing, net          18,761    15,546    10,116     8,279

General and
 administrative expenses           2,400     2,159     1,273     1,244
                                --------  --------  --------  --------

Total costs and expenses          36,219    27,737    19,633    14,735
                                --------  --------  --------  --------

Operating profit                   5,313     3,250     3,220     2,332

Financial income, net                945     1,801       318       805
                                --------  --------  --------  --------

Income before taxes on income      6,258     5,051     3,538     3,137

Provision for income taxes          (315)     (372)     (195)     (177)
                                --------  --------  --------  --------

Income after taxes on income       5,943     4,679     3,343     2,960

Minority interest in net income
 of consolidated subsidiaries         12       (60)        2       (33)
                                --------  --------  --------  --------

Net Income                         5,955     4,619     3,345     2,927
                                ========  ========  ========  ========

Diluted earnings per share:
Net Income                          0.59      0.43      0.33      0.28
                                ========  ========  ========  ========

Weighted average number
 of shares outstanding:
Diluted                      10,097,011 10,675,155 10,193,963 10,530,720
                             ========== ========== ========== ==========

(1)  Excluding a non-recurring in-process research and development
     charge, amortization of acquired intangibles and an extraordinary
     gain.