Scitex Announces First Quarter Results, Americas #1 Market, Europe 2nd
Wednesday, May 09, 2001
Tuesday, May 08, 2001 HERZLIA, Israel, May 8 - Scitex Corporation Ltd. (Nasdaq: SCIX)(TASE: SCIX), a world leader in inkjet and digital imaging solutions, today announced results for the first quarter 2001 ended March 31, 2001. Revenues for the first quarter were $64.1 million. Operating profits, before amortization of goodwill of $2.8 million, were $5.4 million. Pro forma net income was $3.3 million ($0.08 per share). Under US GAAP, the net loss for the quarter was $12.1 million ($0.28 per share). (See accompanying reconciliation of US GAAP figures to pro forma figures. The pro forma net income includes Scitex's share in the adjusted earnings of Creo Products Inc. and excludes amortization of intangibles.) The geographic distribution of revenues for the first quarter of 2001 was as follows: Americas 38%, Europe 36%, Far East 23% and rest of the world 3%. Yoav Z. Chelouche, President and Chief Executive Officer said, "I am pleased to report a quarter with strong performance in our digital printing activities. Both Scitex Digital Printing and Scitex Vision saw double-digit growth and increased profitability, in line with our forecast. "Our strategy is bearing fruit. The focus on the high-growth digital printing markets, together with our unique inkjet technologies, should give us sustainable growth opportunities. The industry recognizes the value of these technologies as evidenced by recent landmark deals at our operating companies. The younger digital printing companies within our network, Aprion, Jemtex and Objet, which are now entering beta phases, provide the opportunities to create similar successes in other markets." Scitex's involvement in the digital preprint business changed in the second quarter of 2000 from full ownership to an equity investment in Creo Products Inc. Starting in the second quarter of 2001, Scitex will provide meaningful quarter over quarter consolidated comparative figures. Wholly-owned Subsidiaries Scitex Digital Printing, Inc. (SDP) Revenues in the first quarter of 2001 increased by 15% to $41.3 million, compared to $36.0 million in the first quarter of 2000. Operating income for the quarter before amortization of goodwill was $4.4 million, representing 10.6% of revenue. During the quarter, SDP and Xerox Corporation Inc. announced a reseller agreement to market the Scitex VersaMark(R) Business Color Press(TM). The agreement targets selected accounts worldwide combining SDP's innovative high- speed variable color printing technology with Xerox's strong distribution and marketing capabilities. The partnership with Xerox recently generated another sale (approximately $4 million) to a major European financial institution, in addition to the earlier announced sale to the Swedish Post. SDP also recently won a repeat order awarded by Caisse Nationale d'Assurance Maladie des Travailleurs Salaries (CNAMTS), the health branch of the French social security system, for the 9" Scitex VersaMark printer. These represent important milestones for Scitex demonstrating the market's endorsement of SDP's innovative, unique and market-leading technology. Scitex Vision Ltd. Scitex Vision had a good quarter with revenues growing by 33% to $22.8 million, compared to $17.1 million in the first quarter of 2000. Equipment revenue grew by an impressive 39% from $11.7 million to $16.3 million. The operating income before amortization of intangibles was $2.5 million, or 11.1% of revenue. Scitex Vision received an order from a major European screen printer for three Scitex Pressjet(TM) printers featuring Scitex's wide format digital inkjet technology. These three printers will replace a screen-printing line and will be supplied during the second quarter of 2001. This is clear validation of digital inkjet technology's ability to successfully replace current analog screen printing technology in the marketplace. Investments (see accompanying schedule for a full list of Scitex's investments) Creo Products Inc. (results are included with a three month lag) Creo reported improved results for its fiscal first quarter ended December 31, 2000 with revenues reaching $170 million and adjusted earnings of $10 million (Scitex's share was 28%). Under US GAAP, Scitex recorded a $9.6 million equity loss from its investment in Creo. An additional $1.0 million loss, resulting from dilution of Scitex's holding by the exercise of options for Creo shares at lower prices than Scitex's cost, was recorded as Other Expenses. For its fiscal second quarter ended March 31, 2001, Creo reported revenues of $173 million and adjusted earnings of $12.8 million (under US GAAP, Creo recorded a loss of $8.9 million). Those results will be included in Scitex's second quarter results. Aprion Digital Ltd. During the first quarter, Aprion secured $10.7 million of additional funding, following the $5 million secured in the previous quarter from strategic partners as well as current shareholders. Aprion develops inkjet technologies and printing systems for a variety of applications. Scitex owns 10.3% of the company and holds a convertible note which would, upon conversion, increase its stake to over 40%. Jemtex Ink Jet Printing Ltd. Jemtex develops digital textile printing systems, based on a novel continuous inkjet technology. During the quarter the company shipped its first beta unit. Scitex owns 35.9% of the company and has an option to purchase additional shares to increase its stake to 51%. RealTimeImage Ltd. RealTimeImage develops technology for real-time imaging and online viewing of large graphic and medical files. During the first quarter RealTimeImage announced that it had reached a partnership with Imation Corp. to jointly develop the virtual proofing technology for color-critical markets. The company sold its first remote diagnostic system for the medical market through its partner Kodak. Scitex owns 15.9% of the company PrintLife.com Ltd. A liquidator was appointed to the company by its major creditor, Bank Hapoalim, as the company was unable to raise the necessary additional financing to fund its operations. Scitex has written off its investment in the company. XMPie Inc. XMPie is an innovative developer of cross-media personalized marketing solutions. On January 29, 2001, XMPie announced that it received an investment of $3.5 million from Jerusalem Venture Partners (a leading venture capital fund operating primarily in Israel) at a post-money valuation of $8 million. Scitex owns 19.4% of the company. Vio Worldwide Limited Vio, an applications service provider (ASP) for the graphic arts industry, is a 50:50 joint venture with British Telecommunications plc. The agreement in principle for a management buy-out, reported in the previous quarter, did not materialize. Vio announced to its employees, customers and vendors that it plans to shut down its operations in an orderly manner within a few months. Write-downs and provisions for anticipated liabilities were included in the accounts for the year ended December 31, 2000. Balance Sheet During the first quarter accounts receivable increased by $11.0 million due to extended payment terms being provided to customers primarily to facilitate the penetration of new markets. Inventory balances increased by $8.8 million due to build up of higher levels of finished goods. In addition, Scitex Vision further increased its investment in its core digital printing operations. Together, this has resulted in the balance sheet at March 31, 2001 showing an $18.3 million decrease in cash and short-term investments to $29.8 million. Outlook In considering Scitex's prospects, Yoav Z. Chelouche concluded: "While the economic and business environments in which we operate are undoubtedly more demanding compared to a year ago, we maintain our forecasts for the current quarter and remain optimistic for the remainder of the year."