Cimatron reports record revenues and improved profits in the third quarter of 2007

Cimatron Limited (www.cimatron.com), a provider of integrated CAD/CAM solutions for the tool making and manufacturing industries, announced a 58 percent increase in revenues and a 53 percent increase in profits for the third quarter of 2007.

Cimatron attributes both increases to organic growth, as well as to the acquisition of a majority stake in Microsystem. This is the first quarter in which Microsystem’s results are consolidated into Cimatron’s financial statements. Most of the organic revenue growth came from new software license sales. However, growth was also registered in maintenance and service revenues.

Revenues for the third quarter of 2007 increased by 58 percent to $7.9 million compared to $5.0 million in the third quarter of 2006. In the first nine months of 2007, revenue increased by 22 percent to $18.8 million compared to $15.4 million in the same period in 2006.

Gross profit for the third quarter of 2007 was $6.38 million, as compared to $4.18 million in the same period in 2006, a 53 percent increase. Gross margin in the third quarter was 81 percent of revenues, compared to 83 percent of revenues in the third quarter of 2006. In the first nine months of 2007, gross profit increased 22 percent to $15.55 million compared to $12.73 million in the first nine months of 2006.

Gross margin for the nine months ended on September 30th, 2007 was 83 percent of revenues as compared to 82 percent of revenues in the same period of 2006. As expected, the consolidation of Microsystem resulted in a slight decrease to Cimatron's gross margin, due to Microsystem’s third-party hardware sales.

Operating profit in the third quarter of 2007 was $450 thousand, compared to an operating loss of $(403) thousand in the third quarter of 2006. In the first nine months of 2007, operating profit increased to $845 thousand, compared to an operating loss of $(317) thousand in the first nine months of 2006.

Net profit for the third quarter of 2007 was $486 thousand, or $0.06 per diluted share, compared to a net loss of $(281) thousand, or $(0.04) per diluted share in the same quarter of 2006. In the first nine months of 2007, net profit increased to $958 thousand, or $0.12 per diluted share, compared to a net loss of $(43) thousand, or $(0.01) per diluted share, in the first nine months of 2006.

"The global execution of our business strategy and the successful acquisition of a majority stake in Microsystem have resulted in strong third quarter financial results," said Rimon Ben-Shaoul, chairman of the Board of Directors of Cimatron. We are pleased to see improvement in all important parameters, even before consolidating Microsystem's results. As previously disclosed, Cimatron will continue to consider M&A opportunities, as part of its strategy to further increase its product offering and global presence," Ben-Shaoul concluded.

Cimatron has previously disclosed that following the exercise of its option to increase its holdings in MicroSystem to 51 percent in July 2007, it will fully consolidate the results of Microsystem, subject to the exclusion of a 49 percent minority interest. However, upon further review, the Company has decided to consolidate 100 percent of Microsystems’ results as of the third quarter of 2007, with no exclusion of minority interest, due to the 49 percent minority shares in Microsystem having become subject to a put and call option in favor of Microsystems shareholders and Cimatron, respectively, upon the acquisition of 51 percent of Microsystems. To reflect the foregoing, in Q3 2007 Cimatron booked in its balance sheet an additional investment of $1.25M and a liability to pay to the remaining Microsystem shareholders the same amount which they are expected to receive in July 2008, as per the call/put options.

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