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Date: Fri, 21 Nov 1997 11:18:43 GMT
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Dear Shareholder,
I am particularly pleased to send you this third quarter
report. It contains not only Tadiran’s hard earned, record
breaking past performance, but also tells of exciting new
developments leading to future growth. You will read of
recently acquired orders that are propelling us into the
fourth quarter with a one billion dollar backlog. And as
you peruse the following figures - results that I know
will please you as much as they do me - I ask that you
also read between the lines. For what is contained in this
third quarter report, though not described here, is
Tadiran’s indefatigable spirit, the genius of our research
and development team, the stamina and persistence of
our sales and marketing corps, and the vision and
leadership of our executive and management team.
This winning combination has resulted in gross margins
of 30.7% and significant profitability by each and every
Tadiran segment.
Gross margins of
30.7% and significant
profitability by each and
every Tadiran segment.
Operating income for the quarter increased by 54.3% to
$24.0 million as compared to $15.6 million last year.
Net income for the quarter increased by 75.1% to $20.2
million, or $1.03 per share, as compared to $11.5
million, or $0.59 per share, for the third quarter of 1996.
Sales for the third quarter of 1997 were $278.9 million,
an increase of 4.2% as compared to $267.5 million for
the same quarter of 1996.
Gross profit for the quarter increased by 23.4% to $85.6
million, (resulting in the gross margin of 30.7%),
compared to $69.4 million for the third quarter last year.
As I mentioned, all operating segments were profitable.
Most notable was the Communications segment, whose
export sales in the third quarter increased significantly
contributing to an increase in its sales of 32% and a
whopping 129% increase in operating income.
Export sales for the quarter increased by 26.0% to
$154.4 million. Commercial export sales increased by
34.7% to $87.4 million, due principally to sales of
internally developed commercial telecommunications
products.
For the nine months, total export sales increased by
26.8% to $483.5 million. Exports now make up 56.5%
of total sales and demonstrates a most desirable shift
away from domestic dependency. Commercial export
sales increased by 40.4% to $271.8 million, up from
$193.6 million in the first nine months of 1996.
These results reflect revenue growth and strong
operating income increases in both the Communications
and Electronic Systems segments.
The true measure of these achievements are only fully
appreciated when seen in light of the substantial decline
of approximately 50% in domestic sales to Bezeq.
Increased export sales, one of our primary goals, has
significantly offset this prior domestic dependence and is
leading us to an even stronger, more profitable future
with ever expanding international markets.
For example, during this quarter the Communications
segment received a number of sizable orders in the area
of military communications: a multi-year, $64 million
order from the Navy and Marines of two Latin American
countries for advanced HF and VHF communications
equipment; a similar order, worth $17 million, from
Thailand's armed forces; and an order for portable
computers from the U.S. Marines which could reach
$52 million in the coming years.
After the end of this quarter, we announced a joint
venture with American entrepreneurs to develop a
system for physically locating a cellular phone user who
dials the emergency service number (911). This new
product is being developed in response to new U.S.
federal regulations requiring all mobile phone operators
to provide such a service by the year 2001.
And this week we finalized a contract for Command and
Control Systems with the Swiss Army Artillery Division
worth $119 million.
These new and exhilarating orders point the way to
Tadiran’s future and are milestones along our path to
success. This path leads to expanded export markets
eager to receive our cutting-edge technology - technology
so advanced that it not only meets current need, but
predicts and stimulates future demand. Tadiran’s R&D
component is creating product which our marketing and
sales team carries to the international market place with
enthusiasm, confidence and pride. Our feet are now well
planted on the road to ever greater success and we thank
you, dear shareholder, for joining us on this most
profitable journey.
Sincerely,
Israel Zamir
President and Chief Executive Officer
HOLON, ISRAEL, November 20, 1997