Baran (BRANF) 6-K Current report (foreign)

Press Release

FOR IMMEDIATE RELEASE

Contacts: Sasson Shilo
The Baran Group
972-8-6200200
sasson.shilo@barangroup.com Paul Holm/Leon Zalmanov
PortfolioPR
212-736-9224
pholm@portfoliopr.com lzalmanov@portfoliopr.com

BARAN GROUP ANNOUNCES THIRD QUARTER AND NINE MONTH RESULTS

Baran Maintains its Record of 20+ Years of Profitability, Despite Lower Sales;
Merger With o2wireless Completed; Baran Group Listed on Nasdaq as “BRAN”;
Baran Thailand Established and Generating Revenues

Omer, Israel—December 12, 2002—Baran Group, Ltd. (NASDAQ, TASE: BRAN) a global provider of engineering, technology and construction solutions to a broad range of industries, today announced its consolidated financial results for the third quarter and nine months ended September 30, 2002.

Revenues for the third quarter of 2002 were $45.1 million compared to $48.5 million during the third quarter of 2001. Net profit for the third quarter of 2002 was $1.1 million, or $0.14 per share, as compared to a net profit of $3.7 million, or $0.48 per share, during the third quarter of 2001.

Gross profit for the third quarter was $6.6 million compared to $8.5 million in the third quarter of 2001. Operating income for the third quarter was approximately $2.6 million, compared to an operating income of $5.3 million in the third quarter last year.

Revenues for the first nine months of 2002 were $140.2 million compared to $153.6 million in the first nine months of 2001. Net profit for the nine-month period was $3.9 million or $0.50 per share, compared to a net profit of $11.58 million for the first nine months of 2001 or $1.52 per share.

Gross profit for the first nine months of 2002 was $21.1 million, compared to a gross profit of $28.4 million for the first nine months of 2001. Operating income for the first nine months of 2002 was $9.3 million, as compared to an operating income of $18.6 million for the first nine months of 2001.

As of September 30, 2002, the Company had total assets of $158 million, compared to $146.47 million as of September 30, 2001, cash, cash equivalents and short-term investment of $46.96 million, compared to $33.8 million at September 30, 2001. Total current assets of $110.6 million, current liabilities of $71.8 million (versus $100 million at the end of 2001), and shareholders equity of $46.4 million (29% of balance sheet total).

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Baran Group Third Quarter 2002 Results

Commenting on the results, Meir Dor, Chairman and CEO of the Baran Group stated, “Despite the current economic slowdown, the Group continued its 20+ year track record of maintaining profitability and adequate gross margins through cost-saving initiatives and other adjustments. Affecting our numbers were the impact of delays and cutbacks in the types of business and industrial projects in which the Baran Group is most active.”

At the start of the second quarter, Baran Thailand was established and is currently in the midst of some large projects, to erect cellular sites throughout Thailand for Motorola and local operators.

In July, Baran’s Industrial Division signed an agreement to buy fifty percent of ELCO Thailand Ltd., an energy related business, thereby expanding its Far East presence.

As a diversified global solutions provider, Baran’s six professional divisions were impacted differently by the global economic contraction.

• The Industrial Division, whose companies serve such process-oriented industries as chemicals, energy, petrochemicals, food processing and biotechnology, was affected by the global recession and saw reductions in profitability, human and other resources. Baran expects existing projects and those in discussion to contribute to 2003 results.

• The Civil Engineering Division is engaged in the design, construction and management of projects in civil infrastructure such as railways, prisons, ports and police stations. Due to its focus on long-term budgeted projects, it has been less affected by the recession. With the profits from such projects as a $125 million military base project impacting 2003, the outlook appears very positive.

• The Communication Division designs, builds, and manages services infrastructure for telecom networks. During the second quarter, communication projects in the Far East were launched, and the results to date have been very positive. While there was sudden stoppage in work for Nokia in Germany on a large project for Mobilcom Multimedia, Baran expects this project to be reactivated in the future and appear in 2003/4 results.

• The Semiconductor Division, which specializes in large-scale semiconductor projects, been involved primarily in Tower Semiconductor’s new plant, which should be finished in 2003, and as a result in 2002 expenses increased while revenues and profits decreased. Baran is seeking new projects in Israel and Europe and expects to see good results in 2003.

• The Consulting Division, whose companies provide management consulting, engineering software and other consulting services, has been maintaining its profitability and expects growth during 2003.

• The Technology and Services Division which is actively engaged in partnerships and other forms of participation in the developing plants and facilities, especially in Central and Eastern Europe, and expects to realize results in 2003.

On November 13th, Baran completed its merger of o2wireless Solutions into Baran’s subsidiary “Baran Telecom, Inc.” and soon thereafter began trading on the Nasdaq under its symbol “BRAN.”

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“We recently achieved a significant milestone by completing our acquisition of o2wireless Solutions and listing our shares on Nasdaq,” concluded Mr. Dor. “From an organizational standpoint, this provides Baran with a platform from which to grow its presence in the U.S., where we see many business opportunities. From a financial perspective, the increased access to U.S. and global investors will enable us to continue building the Baran Group into a recognized global leader of engineering, technology and construction solutions, serving clients in Europe, the U.S. and Asia. As a result, our outlook for 2003 is for slow-but-steadily returning growth as the economy begins recovery.”

About Baran Group, Ltd.
Baran Group, Ltd., is a global provider of engineering, technology and construction solutions. The Company serves a broad range of industries through six professional divisions: communications, semiconductors, civil engineering, process industries, consulting, and technology and services. Baran specializes in handling complex and challenging projects, offering creative and unconventional solutions, and customizing projects to clients’ real needs.

With over 1,500 employees worldwide, and revenues of over $200 million in 2001, Baran has offices in Israel, the U.S., England, Germany, The Netherlands and Thailand.

Founded in Israel in 1979, the Company has been profitable and has paid a dividend to its stockholders every year since its founding. In 1992, the Company listed its shares on the Tel-Aviv Stock Exchange (TASE) and in 1997 was included in the Tel Aviv 100 index. The company’s leadership in engineering solutions and financial management has been acknowledged by several organizations. Forbes chose Baran as one its Best 300 world’s Small Companies in 1999, 2001 and, again, in 2002. Yediot Achronot ranked Baran as one of the top 50 companies listed on the TASE based on profits and dividends for the last five years (2002); The Marker rated Baran as one of the best companies on the TASE (2001); and Ma’ariv Business Magazine chose Baran as one of the 35 “hottest shares on the market” (2000).

This press release is available on www.barangroup.com and www.portfoliopr.com.

This document may contain “forward looking statements.” Such statements involve a number of risks and
uncertainties that could cause actual results to differ materially from those stated or implied by the forward
looking statements, including the failure to recognize expected synergies and revenue growth, project
completions and negotiations, industry trends, new technologies, changes in law, acquisition integration
risks, continued availability of products and supplies, personnel and control, and others that are described
in the Risk Factors section contained in Baran’s Registration Statement on Form F-4, as filed on October
23, 2002 with the SEC, and as may be updated from time to time in the Company’s periodic SEC filings.
The Company disclaims an intent or obligation to update forward looking statements, and otherwise claims
the “safe harbor” protections for forward looking statements afforded under The Private Securities
Litigation Reform Act of 1995.
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Baran Group LTD.
Condensed Consolidated Balance Sheet
In US$ Adjusted to the Exchange Rate of September 30, 2002*

					September 30,				December 31,
					2002		2001		2001
					(Unaudited)				(Audited)
					In Thousands
Assets
CURRENT ASSETS:
		Cash and cash equivalents				27,219		32,729		45,949
		Short-term investments				19,742		1,088		1,047
		Accounts receivable:
				Trade and income receivable		49,674		**66,527		**56,702
				Other		11,246		**6,407		**8,236
		Inventories				2,681		3,858		**3,599
				Total current assets		110,562		110,609		115,533
INVESTMENTS AND LONG-TERM RECEIVABLES:
		Investments in investee companies				5,435		5,521		5,640
		Other investments and long-term accounts receivable				12,962		**3,117		**9,059
		Deferred income taxes				379		265		345
						18,776		8,903		15,044
LAND AND BUILDINGS FOR LEASE:
		Cost				17,284		13,812		15,213
		Less-accumulated depreciation and amortization				1,481		1,054		1,190
						15,803		12,758		14,023
FIXED ASSETS:
		Cost				25,309		23,956		24,119
		Less-accumulated depreciation and amortization				13,751		11,150		11,874
						11,558		12,806		12,245
OTHER ASSETS,net of accumulated amortization						1,402		**1,391		**1,031
		Total assets				158,101		146,467		157,876
Liabilities and shareholders’ equity
CURRENT LIABILITIES:
	Short-term bank credit and bank loans					20,663		13,641		14,680
	Accounts payable and accruals:
			Trade			21,276		49,022		52,735
			Other			29,884		28,785		**32,617
		Proposed dividend						3,313
			Total current liabilities			71,823		94,761		100,032
LONG-TERM LIABILITIES:
		Liability for employee rights upon retirement, net of amount funded				1,087		764		987
		Bank loans, net of current maturities				34,735		4,692		7,146
		Long-term liabilities to minority shareholders, net of receivables due from minority shareholders				2,589		**2,987		**2,887
		Deferred income taxes				13		12		23
				Total long-term liabilities		38,424		8,455		11,043
				Total liabilities		110,247		103,216		111,075
MINORITY INTERESTS						1,477		**416		**1,458
SHAREHOLDERS’ EQUITY						46,377		42,835		45,345
		Total liabilities and shareholders’ equity				158,101		146,467		157,876

*	On the basis of changes in the Consumer Price Index
**	Reclassified

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Baran Group LTD.
Condensed Consolidated Statement of Income
In US$ Adjusted to the Exchange Rate of September 30, 2002*

				For the nine months						For the three months						For the year ended
				ended September 30,						ended September 30,						December 31
				2002			2001			2002			2001			2001
REVENUES:
	Construction projects and services				109,801			141,599			33,420			43,973			191,615
	Sales of products				28,025			10,716			11,175			4,153			19,093
	Lease of buildings				1,116			956			425			336			1,321
	Management fees from proportionately consolidated companies				1,262			320			116			69			484
		Total revenues			140,204			153,591			45,136			48,531			212,513
COST OF REVENUES:
	Construction projects and services				93,185			114,892			28,571			36,315			155,876
	Sale of products				25,465			10,081			9,737			3,675			18,801
	Lease of buildings				391			248			228			35			328
			Total cost of revenues		119,041			125,221			38,536			40,025			175,005
GROSS PROFIT					21,163			28,370			6,600			8,506			37,508
RESEARCH AND DEVELOPMENT,net					870			389			140			125			770
SELLING, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSE:
	Selling and marketing, net				2,775			1,120			1,148			378			1,994
	General and administrative				8,229			8,217			2,698			2,753			12,415
OPERATING INCOME					9,289			18,644			2,614			5,250			22,329
FINANCIAL INCOME (EXPENSES),net					(3,452	)		1,151			(1,107	)		1,338			1,643
OTHER INCOME (EXPENSES),net					43			(1,394	)		(22	)		(485	)		(830	)
INCOME BEFORE TAXES ON INCOME					5,880			18,401			1,485			6,103			23,142
TAXES ON INCOME					2,592			7,232			625			2,496			9,353
INCOME AFTER TAXES ON INCOME					3,288			11,169			860			3,607			13,789
SHARE IN PROFITS (LOSSES) OF ASSOCIATED COMPANIES,net					103			128			46			(18	)		249
MINORITY INTERESTS IN LOSSES OF SUBSIDIARIES,net					494			285			152			105			121
NET INCOME FOR THE PERIOD					3,885			11,582			1,058			3,694			14,159
										In adjusted $
EARNINGS PER SHARE—basic and diluted					0.50			1.52			0.14			0.48			1.85

*	On the basis of changes in the Consumer Price Index
**	Reclassified

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