February 8, 2011
Conference Coordinator:
Ladies and gentlemen, thank you for standing by.
Welcome to Cimatron's 4th Quarter 2010 Results Conference Call.
All participants are at present in a listen-only mode.
Following management’s formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press * 0.
If you have not received a copy of today’s earnings release and would like to do so, please download it from the company website at the investors' pages: www.cimatron.com
As a reminder this conference is being recorded, February 8 th
, 2011.
With us on the line today are: Mr. Danny Haran, Cimatron's president and CEO and Mr.
Ilan Erez, Cimatron's CFO.
Before I turn the call over to Mr. Danny Haran I would like to remind everyone that statements contained in this conference call which are not historical facts contain forwardlooking information with respect to plans, projections, or future performance of the
Company, the occurrence of which involve certain risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include dependence on economic and political conditions globally and in
Israel, the impact of competition, supply constraints, as well as certain other risks and uncertainties which are detailed in the Company's filings with the various securities authorities.
I would like to turn over the call to Mr. Danny Haran, Cimatron's president and CEO.
Mr. Haran , would you like to begin?

Good morning and welcome to Cimatron’s fourth quarter 2010 results Conference Call.
Well, as the cliché goes, “it was a very good year”. As the economic recovery took hold and gained strength throughout the year, so did our results. The fourth quarter was the best ever recorded by Cimatron, with revenues at $11M and a non-GAAP operating profit of $1.7M.
Obviously, we are very pleased with the Q4 results, but we are also pleased with the way they were achieved and with the momentum we see in our business worldwide. One notable success worth mentioning here is the Ju-Teng project, which we announced several weeks ago. The fruit of intensive work and collaboration between Cimatron HQ and Cimatron China, we believe this project can become a major stepping stone towards a whole new level of business in China. We were able to reach higher productivity and process integration, which, we believe, are the key factors for future success in large scale
Mold Design.
In addition to the momentum in China, we have successfully expanded our distribution network in Brazil, another key emerging market. We are developing new distribution channels in India as well. We expect our business in both markets to grow significantly in the coming years.
Looking forward to 2011, we have two exciting product releases, one for CimatronE and one for GibbsCAM. Both are major versions, with major improvements planned throughout the products. These versions are expected to boost our competitive position and bring high value to our maintenance customers. I would also like to mention our innovative NC
SuperBox, scheduled to be shipped alongside CimatronE version 10. It is a distributed networked NC calculation appliance, designed to offload heavy calculations from the users’ computers, improving overall productivity and user experience. We demonstrated the SuperBox in two major shows, IMTS and EuroMold, with very positive response. It is now going through beta testing with customers, and we expect that we will start shipping around mid-2011.
In early April 2011, we will conduct our first joint Cimatron-Gibbs reseller meeting, in
Orlando Florida. This is the first time we bring all our subsidiaries, distributors and resellers, selling both CimatronE and GibbsCAM to a joint conference. It is yet another important step in the successful integration of Gibbs into the Cimatron group.

During 2010, we were involved in some serious M&A discussions with potential targets, which eventually did not mature into any deal. Nevertheless, we remain committed to the idea of growth through consolidation. Our cash reserves are comfortably high at around
$10M, and we will keep looking for the right opportunities to further expand our business through such transactions.
To summarize, we had a good year in 2010, and as long as the world economy holds, and the recovery continues, we remain optimistic about the prospects of Cimatron in the coming years.
Ilan Erez, our CFO, will now review the financial statements. Ilan, please:

Thank you Danny. Hello everybody and thank you for joining us.
The results we will present on this call are on a non-GAAP basis, as we believe they better represent the actual state of our business, and make comparisons to previous periods easier. We have also published our results on a GAAP basis, as well as a reconciliation between results on a GAAP and Non-GAAP basis, and those can be found in our press release issued earlier today.
Revenues for the fourth quarter of 2010 were 11.0 million Dollars, compared to 9.8 million
Dollars in the fourth quarter of 2009, an increase of 17% on a constant currency basis.
In 2010, revenues were 36.1 million Dollars, compared to 33.0 million Dollars in the corresponding period of 2009, an increase of 12% on a constant currency basis.
Moreover, new licenses revenues increased 30% on a constant currency basis in 2010, representing the significant recovery in our target markets, and allowing us to maintain and even increase the revenues from maintenance contracts, that increased in 2010 by 5% on a constant currency basis.
The revenue breakdown in 2010 was as follows
–
License revenues: 41%, Maintenance revenues: 49%, other professional services revenues: 7%, and hardware revenues: 3%.
The geographical revenue breakdown for the quarter was as follows: Europe: 49%, North
America: 30%, Asia Pacific: 16%, and Rest of the World: 5%.
Along with the increases in revenues, we also show increases in profit margins relative to the corresponding periods of 2009.
Gross Margin for the quarter was 86% of revenues, compared to 84% in the fourth quarter of 2009.
In 2010, Gross margin was 85% of revenues, as compared to 83% of revenues in 2009.
Operating expenses in the quarter amounted to 7.9 million dollars, compared to 7.2 million Dollars in the fourth quarter of last year.
In 2010, operating expenses were 27.7 million dollars, compared to 27.3 million Dollars in the corresponding period of 2009. Obviously, this increase in operating expenses is reasonable in light of the revenue increase.

Operating profit in the quarter was 1.7 million dollars, compared to an operating profit of
1.0 million dollars in the corresponding period of 2009.
In 2010 operating profit was 3.1 million dollars, compared to an operating profit of 31 thousand dollars in 2009.
Net profit for the quarter increased 63% to 1.6 million Dollars, or 17 Cents per diluted share, compared to a net profit of 1.0 million Dollars, or 10 Cents per diluted share recorded in the corresponding quarter of 2009.
In 2010, Net profit was 2.9 million Dollars, or 32 Cents per diluted share, compared to a net profit of 46 thousand Dollars, or 1 Cent per diluted share recorded in the corresponding period of 2009.
Our cash and cash equivalents balance at the end of December 2010 increased to 10.0 million Dollars, compared to a balance of 6.7 million Dollars at the end of 2009, with positive cash flow from operating activities of 4.8 million Dollars in 2010, as compared to
1.3 million Dollars of positive cash flow from operating activities in 2009, an increase of
275% year over year. This increase primarily reflects the improvement in our overall profitability.
In another press release from earlier today, we announced our intention to register
Cimatron’s shares for dual listing on the Tel Aviv Stock Exchange. Dual listing on the Tel
Aviv Stock Exchange is allowed under Israeli law without any additional regulatory requirements for companies whose shares are listed on certain exchanges outside of
Israel, including the NASDAQ Capital Market.
We believe that such dual listing, that will go into effect if and once we meet certain minimum requirements as described in the press release and complete the registration process, will be to the benefit of our shareholders, and will increase our exposure to more
Israeli and European investors.
In the event that Cimatron’s ordinary shares are registered for dual listing on the Tel Aviv
Stock Exchange, such shares will continue to be listed on the NASDAQ Capital Market in the United States, and Cimatron will remain subject to the rules and regulations of
NASDAQ and of the U.S. Securities and Exchange Commission.

We will now open the call for Questions and Answers. Operator, please.
Operator : Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press *1. If you wish to cancel your request, please press *2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. I repeat, if you have a question, please press *1. The first question is from David Cohen of Athena Capital Management. Please go ahead, sir.
David Cohen : Good afternoon, guys. Could you talk a little about the string of Brazil distribution announcements that you've made over the last month or two and how much of an impact you think that could have in terms of the revenue mix as we look forward to 2011 and beyond? I assume that's now in the restof-the-world category which is very small right now.
Danny Haran : Yes. In Brazil, let me take you back a couple of years. We had a distributor in Brazil until about two or three years ago. And the relations had to be terminated, because we were not getting the payments we expected.
And from that time, we were looking to rebuild our network in Brazil. And the world economy crisis kind of delayed that. And now we finally have recruited a new country manager and have recruited several distributors who work under his guidance and cooperation with training. And his main task is to recruit additional resellers. And our main task, the first task, anyway, is to get back those customers from previous days, back in maintenance, get them the newest versions and so on, custom the database once again and regain our traction in that market. I think it will take time before we actually see significant revenues. As you mentioned quite correctly, the rest of the world right now is very small, and it will take time. But I think it's an investment for the long-term. So in 2011, probably not a significant impact. Later on, we'll see how it goes. Overall Brazil is enjoying strong growth and it’s a

very industrial market. We're focusing our efforts in the Sao Paulo area and some of the adjoining states where the majority of the industry and manufacturing is. And we'll see how it goes. Overall it is one of the markets which are very important for us, as manufacturing-oriented software.
David Cohen : So in terms of 2011, if, do you think that the geographic mix is likely to look pretty much the same, or are there markets that you would expect to grow relatively versus 2010?
Danny Haran : Well, I think the mix itself could stay pretty much the same, because we have some growth engines and some things we believe will allow us to grow revenues almost in all markets. But for instance, the NC Superbox which I expect to start bringing revenues toward the second half of the year, and it probably will be sold mostly in Western Europe, the USA, a little bit in Japan, actually, mostly in Europe probably. On the other hand, we also have momentum in Gibbs selling through the subsidiaries. Once again, this is biased towards Europe. On the other hand, we hope to continue the momentum in China, and that should give a boost to Asia-Pacific. And the
USA is enjoying right now a strong economy. We see a lot of orders coming from the automotive industry, not just the automotive industry, by the way, pretty much all the sectors. So right now, I'm guessing the mix may not change so much. I'm just hoping for strong results.
David Cohen : Great. Thank you.
Operator : If there are any additional questions, please press *1. If you wish to cancel your request, please press *2. Please stand by while we poll for more questions. There are no further questions at this time. A replay of the call will be available on Cimatron's website: www.cimatron.com, starting tomorrow. Mr. Haran, would you like to make your concluding statements?
Danny Haran : Thank you. Well, I would like to thank the participants and we look forward to see you here or talk to you here again on the next conference call in Q1, and hopefully we'll have more good news. Thank you very much.

Operator : Thank you. This concludes the Cimatron fourth quarter 2010 results conference call. Thank you for your participation. You may go ahead and disconnect.
(End of conference call)