Scitex Reports 3Q Results, 14% Rise in Revenue
Wednesday, November 07, 2001
HERZLIA, Israel, Nov. 6 - Scitex Corporation Ltd. a world leader in inkjet technologies and digital imaging solutions, today announced results for the third quarter ended September 30, 2001, in line with its October 17, 2001 announcement. Revenues for the third quarter of 2001 increased by 14% to $66.6 million, compared with $58.4 million in the third quarter of 2000. Operating income for the third quarter of 2001 before amortization of intangibles was $3.0 million compared to $4.1 million in the third quarter of 2000. Pro forma net income was $2.4 million ($0.06 per share), compared to a pro forma net loss of $0.5 million ($0.01 per share) for the third quarter of 2000. Third quarter 2001 net income was substantially impacted by the write-downs reported by Creo Products Inc. (Nasdaq: CREO, TSE: CRE), in which Scitex owns a 27% stake. On October 11, 2001, Creo announced one-time write downs of $266 million of goodwill and other intangibles; $70 million of investments, $16 million of future tax assets and $10 million after tax of accounts receivable, obsolete inventory and other assets. Consequently, Scitex recorded a $35 million equity loss representing its share in Creo's write-downs. Under U.S. GAAP, the net loss for the third quarter 2001 was $40.8 million or $0.95 per share including the above mentioned equity loss. Scitex's net loss under U.S. GAAP for the third quarter 2000 was $16.7 million ($0.39 per share). The geographic distribution of revenues for the third quarter 2001 continues to be balanced with the Americas constituting 34%, Europe 34% and the Far East, Pacific and rest of the world at 32%. Mr. Y. Agassi, Scitex's Chief Executive Officer commented, "Throughout these challenging times, Scitex Digital Printing and Scitex Vision continued to show year-on-year revenue growth. Scitex focuses on developing its digital printing businesses and enhancing their value.'' Mr. Agassi added, "During the quarter, we experienced lengthened sales cycles. As a result, we remain conservative in our estimates over the coming months. We do expect continued revenue growth and improving margins for the long-term, but the full impact and duration of the current economic situation remains unclear.'' Scitex Digital Printing, Inc. (SDP) Scitex Digital Printing continued to deliver double-digit revenue growth. Revenues in the third quarter 2001 increased by 11% to $41.8 million (third quarter 2000: $37.8 million). It was the fifth consecutive quarter in which SDP demonstrated revenue growth. Sales were driven by increasing demand for the Scitex VersaMark 9" product line, indicating expanding market acceptance of the technology. Gross profit was $15.5 million (37% of revenue) for the third quarter of 2001, compared to $16.7 million (44% of revenue) for the third quarter of 2000. The decline in gross margin compared to a year ago is a result of a change in the product mix, with higher revenues generated from service and consumables compared to component sales. Operating income for the third quarter 2001 before amortization of intangibles was $1.7 million. This compares to a third quarter 2000 operating income of $3.6 million, a decrease of 54%. This decrease is primarily the result of the lower gross margin and increase in the reserve for doubtful debts reflecting the current economic conditions. During the quarter, SDP introduced its new Business Color(TM) marketing initiative at the PRINT 01 Industry Show. This initiative defines and promotes SDP's unique value proposition to the printing market. Scitex Vision Ltd. Scitex Vision continued to report improved performance in both revenue and profitability compared to the same quarter last year. Revenues grew in the third quarter by 21% to $24.8 million (third quarter 2000: $20.5 million). Service and consumables revenues increased by 47% to $8.8 million for the third quarter of 2001, (third quarter 2000: $6.0 million). Equipment sales rose by 10% to $16.1 million (third quarter 2000: $14.6 million). For the third quarter of 2001, operating income before amortization of intangibles grew to $3.1 million, an increase of 38% (third quarter 2000: $2.2 million). During the quarter, Scitex Vision announced the official launch of the Scitex XLjet(TM), the company's first six-color high speed, super-wide printing system. This represents a new generation printing machine combining versatility and efficiency and allowing customers to easily switch between four and six colors. In the beginning of the fourth quarter, Scitex Vision introduced the Scitex VeeJet(TM), a 4-color wide format flatbed digital printer, based on drop-on-demand, piezoelectric technology, printing with UV curable ink technology. This compact and flexible system allows the customer to print on a variety of rigid substrates digitally at a high quality. * Creo Products Inc. * (Results reported with 3-months lag) * For the third fiscal quarter ended June 30, 2001, Creo reported revenues of $170.0 million or an increase of 4.6%, compared to $162.6 million in the third quarter of fiscal 2000. Adjusted earnings for Creo were $10.0 million or $0.20 per share (diluted) excluding the effect of business integration costs of $1.3 million and goodwill and other intangible assets amortization of $18.3 million. This compares to adjusted earnings of $13.7 million or $0.28 per share (diluted) for the same period a year ago. Under U.S. GAAP, Creo recorded a loss of $8.4 million or $0.17 per share (diluted) for the third fiscal quarter. These results are reflected in Scitex's third quarter results. Although Scitex generally reports its share of Creo's results with a 3-month lag, more recent information that may have a significant impact on Scitex's financial results has to be taken into consideration. In light of Creo's October 11, 2001 announcement, Scitex recorded a $35.0 million equity loss from its investment in Creo, reflecting its share in Creo's write-downs. Aprion Digital Ltd. During the quarter, Aprion installed four additional Beta units at customer sites in the packaging and graphic arts markets. RealTimeImage Ltd. During the quarter, RealTimeImage announced a joint development and distribution partnership with Heidelberg, one of the world's largest print solutions providers. The partnership is branded HDPROOF, and will result in Heidelberg's delivery of RealTimeImage's on-line proofing technologies to its partners, distributors and customers worldwide. Cash Flow Operating cash flow was negatively affected in the third quarter by the September 11 events. Typically, September experiences strong cash collections following the slower summer months. Scitex also continued to invest in its portfolio companies. This resulted in a decrease of $3 million in cash and short-term investments and an increase of $11.3 million in bank debt. Balance Sheet During the third quarter of 2001, accounts receivable increased by $17.7 million, largely as a result of the difficult September economic environment. Inventory balances remained relatively stable increasing by 2% from the previous quarter.