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Presstek Reports Solid Earnings in Third Quarter 2002

Friday, October 25, 2002

Press release from the issuing company

- Emphasis on Fundamentals Delivers Revenue and Earnings Growth Over Prior Quarter - HUDSON, N.H., Oct. 24 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the third quarter ended September 28, 2002. The company reported net income for the third quarter of 2002 of $621,000, or $0.02 per diluted share, compared to a net loss of $2.8 million, or $0.08 per diluted share, for the corresponding period in the prior year, and a net loss of $11.5 million or $0.34 per diluted share in the second quarter of fiscal 2002. Excluding inventory write downs due to discontinued programs and special charges the company's net loss would have been $825,000 or $0.02 per diluted share in the second quarter of 2002. Revenues for the third quarter ended September 28, 2002 were $21 million, compared to $26.3 million in the same period a year ago. Revenues for the current quarter were up 9% from the second quarter of fiscal 2002. Revenues for the nine months ended September 28, 2002 were $61.1 million, compared to $79.2 million in same period a year ago. Presstek reported a net loss of $10.7 million, or $0.31 per diluted share for the nine months ended September 28, 2002, compared to a net loss of $1.7 million, or $0.05 per diluted share, for the same period last year. Excluding inventory write downs due to discontinued programs and special charges the company would have achieved breakeven results, or $0.00 per diluted share, for the nine months ended September 28, 2002. Consumable revenues for the third quarter of 2002 were $13.8 million, up 26% from $10.9 million in the third quarter of 2001, and up 14% over the prior quarter. Equipment revenues for the third quarter were $5.9 million, down from $13.3 million in the same period a year ago, but up 7% from the previous quarter. The year over year decrease in equipment sales is the result of reductions in press shipments to Xerox and kit shipments to Heidelberg. Results for the third quarter of 2002 include an operating loss before inter-company charges of $2.0 million at the company's Lasertel subsidiary, down slightly from its operating loss before inter-company charges of $2.3 million in the corresponding quarter in the prior year. Net losses at Lasertel for the nine months ended September 28, 2002 before inter-company charges total $6.2 million. Lasertel recorded modest external revenues in the third quarter of 2002 for pre-production laser diodes shipped to commercial customers. Gross margins for the third quarter of 2002 were 37%, compared to 30% for the third quarter of 2001 and 42% in the prior quarter (excluding $4.7 million in inventory write-offs and other charges relating to discontinued programs). The decrease in gross margins from the previous quarter are primarily the result of expected costs related to improvements to the Dimension product, increased efforts at Lasertel relating to prototype activity, and competitive pricing in the company's computer-to-plate products. Operating expenses were $6.9 million in the third quarter of 2002, down 32% compared to $10.2 million in the same period last year, and down 21% from the prior quarter. This is the result of the company's previously announced steps to streamline operations and reduce headcount. The repositioning also included the consolidation of the company's Hampshire Drive facility, which was completed late in the third quarter of fiscal 2002. The company realized most of the expected savings from the consolidation in the current quarter, and is on track to realize most of the remaining savings in the next quarter. During the quarter, the company generated $3.0 million in cash from operations and working capital. Cash and cash equivalents at the end of the quarter were $14.0 million, up from $12.9 million at the end of the second quarter of 2002. For the nine months ended September 28, 2002 the company generated $13.7 million in cash from operations and working capital, excluding payments for severance and repositioning activities. President and Chief Executive Officer Edward J. Marino said, "We are very pleased with our third quarter results. We experienced growth in sales and net income over the previous quarter in the face of a worldwide slowdown in the printing industry and soft capital equipment market. We believe that the increased equipment sales are the result of improving sell-through of press products due, in part, to our enhanced marketing and sales efforts with our partners, and the initial results of our increased CTP sales and marketing initiatives. We attribute the rising consumable sales in the third quarter to the growing installed base of plate consuming equipment which, in turn, results in increased aggregate demand. Quite simply, we have improved our fundamentals and it's beginning to show." "We are pleased that our cash flows and balance sheet continue to be strong," said Chief Financial Officer Moosa E. Moosa. "Cash and cash equivalents increased $1.0 million in the third quarter, while at the same time we paid down debt by $800,000; spent $600,000 on capital expenditures; and disbursed over $750,000 for repositioning and consolidation activities." "Total debt at the end of the quarter was $17.4 million," said Moosa. "Debt, net of cash, at the end of the quarter was $3.45 million, compared with $5.2 million at the end of the second quarter, and $14.9 million at the beginning of the year. Receivables were up from the prior quarter by $2.0 million, mainly reflecting the increase in sales during the quarter. The company implemented a program to better manage inventory levels during the quarter, and as a result, reduced gross inventories by $2.5 million. We expect this effort will continue through the early part of 2003." "As for Lasertel, we are starting to see positive signs," said Marino. "Lasertel is attracting external commercial customers for its products. We believe this demonstrates our ability to produce commercially competitive laser diode products, particularly in the industrial and military sectors." Marino continued, "We are beginning to see the results of a combination of efforts: the repositioning and streamlining measures implemented during the year, and our work to expand market channels and improve relationships with our existing partners. Presstek's products offer very compelling benefits to users. Fast turnaround, high quality color, lowered total cost of operation and increased profitability provided by our DI products are more important than ever in a printing industry that is struggling to recover in a tough economic environment. Chemistry-free, more consistent operation in our computer-to-plate systems means improved workflows and profits for our customers. And, while we still see no significant signs of recovery in the marketplace, we believe that the initiatives we have implemented, and are continuing to implement, can contribute to further sales growth and profitability through the rest of this year. We will continue to work to make sure that our business is strong and that we are well prepared when better times come."

 

 

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