MAASTRICHT, The Netherlands- Aug. 6, 2001--Indigo N.V., a leader in digital color printing systems, today reported second quarter revenues of $48.1 million, up 18 percent from the $40.8 million reported for the second quarter of 2000. Revenues grew 21 percent before the negative impact of currency conversion. Revenues were the highest ever reported by the Company for a second quarter. Second quarter unit shipments were at an all-time high, increasing 29 percent over the second quarter of 2000, with robust demand reported across the Company's broad product range. Revenue from equipment sales increased 21 percent to $28.8 million, compared with $23.9 million in the second quarter of last year. Equipment gross margins in the second quarter were 35 percent compared with 42 percent in the same quarter last year, due primarily to the increased contribution of lower-margin sales to distributors and OEMs in the sales mix. Post-sales revenues, including consumables and service, were $19.2 million in the second quarter of 2001, a 14 percent increase compared with the second quarter of 2000. A 20 percent increase in the number of pages printed by Indigo customers worldwide was offset by lower service and consumables pricing and a negative impact from currency conversion. Post-sales gross margin was $10.6 million, or 55 percent of post-sales revenues. "We're encouraged by Indigo's performance during the second quarter and the continued achievements across our business,'' said Benny Landa, Indigo's Chairman and Chief Executive Officer. "We continue to see growing interest in Digital Offset Color printing - the technology that was invented by Indigo and is now in the forefront of the digital printing transformation taking place in our market. Evidence mounts of the printing industry's shift to digital printing, despite weak economic conditions in many sectors, and customer demand continues across our product line. We're especially pleased with the monthly print volume of the UltraStream 2000 press, our highest performance offering. Also well received is our newest product offering - the Platinum - which includes Indigo's Image Tracking Technology (ITT), which delivers very high- image quality at a best- in-class price. Platinum will be showcased at the Print'01 exhibition next month in Chicago. In addition, we continue to see strong customer interest in our Publisher and Photo-e-Print product families that will be going into beta sites during the second half of 2001.'' Indigo's net loss for the quarter was $2.0 million, compared with a net loss of $6.0 million for the second quarter of 2000. Loss per common share was $0.02, compared with $0.08 ($0.11 loss after dividends on preferred shares) in the second quarter of 2000. "We have once again been able to hit our financial targets and achieve both top and bottom line results consistent with our guidance,'' noted Landa. "The economic slowdown had a minor and anticipated impact on Indigo's post-sales business during the second quarter and we will continue to closely monitor all market indicators for additional signs of any possible slowdown in business.'' "We remain, like many companies with solid business opportunities, cautiously optimistic about the rest of 2001,'' Mr. Landa said. "We are staying the course of our past guidance for the full year, including revenue growth of around 20 percent and an objective of achie ving sustainable profitability by the end of this year.'' Second quarter net research and development (R&D) expenses were $4.9 million, a 10 percent increase compared with the second quarter of last year. Gross R&D expenses of $7.4 million were up 40 percent compared to the second quarter of 2000. Sales, general and administrative (SG&A) expenses decreased 12 percent to $18.5 million from $21.1 million in the second quarter of 2000. General and administrative expenses were flat compared to the comparable quarter last year, as a result of our ongoing cost controls. Sales expenses increased due to the growth of our direct sales force, and marketing expenses were down significantly as there were no major shows this quarter, while last year's second quarter marketing expenses included the DRUPA exhibition in May 2000. Indigo's Chief Financial Officer, Alon Bar-Shany, commented, "This is the 16th quarter in a row that our operating revenues have grown compared to the same quarter in the previous year. Our indirect sales channels had a strong quarter, including revenues from our OEM relationship with HP. We continue to drive improvement in sales productivity of our direct sales force. We believe that our new Platinum product and the Print'01 show will both have a positive impact on the growth of equipment sales.'' Mr. Bar-Shany added, "We ended the quarter with a strong balance sheet, including $85.9 million in cash and investments, and $14.7 million in short-term utilization of our credit lines. We have reduced our inventories and improved the aging of our accounts receivable, as part of our ongoing efforts to maintain our strong cash position.''