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ImageX Reports 2002 Loss of $62.6 million on Sales of $34.9 million

Friday, February 14, 2003

Press release from the issuing company

KIRKLAND, Wash., Feb. 13-- ImageX today announced revenues of $9.1 million for the fourth quarter ended December 31, 2002, compared with revenues of $7.9 million for the third quarter of 2002 and revenues of $10.6 million for the fourth quarter of 2001. Including impairment charges, net loss was $14.6 million for the quarter ended December 31, 2002, compared to a net loss of $6.5 million for the third quarter of 2002 and a net loss of $6.5 million for the fourth quarter of 2001. The impairment charge to write down goodwill, fixed assets and other assets was $10.7 million for the quarter ended December 31, 2002 and $5.6 million for the September quarter. As of December 31, 2002, the company had cash and cash equivalents of $12.4 million or $0.40 per share with no debt. For the fourth quarter ended December 31, 2002, the Company reported a cash operating loss of $2.8 million or $0.09 per basic and diluted share, compared with a cash operating loss of $3.0 million or $0.10 per share for the third quarter of 2002 and a loss of $3.4 million or $0.11 per basic and diluted share for the fourth quarter of 2001. Cash operating results excludes depreciation, amortization, loss on disposal of assets and impairment charges. ImageX CEO Rich Begert said, "We are pleased with our 16% revenue growth over the immediately preceding quarter, exceeding our 10% growth target and continued progress at reducing our operating losses. It appears our efforts to focus on our core strength, being the low cost provider of branded print materials, paid off for us last quarter. We are concentrating on attaining a revenue level that will begin to leverage the patented web-to-plate print ordering process. We recently signed a major Fortune 500 customer with over 110,000 employees and our efforts to broaden our channel distribution efforts is gaining momentum. Margins have improved and our cash usage was as expected. The incremental contribution from the higher revenue level was spent on areas to save money in the long run and we will continue to do so if the opportunity arises and if revenues allow us to," Begert added. For the calendar year ended December 31, 2002, revenues were $34.9 million, compared with $44.4 million for the prior year. Including impairment charges, net loss for the calendar year ended December 31, 2002 was $62.6 million compared with a net loss of $39.9 million for the prior year. The impairment charges to write down goodwill, fixed assets and other assets were $46.6 million for fiscal year 2002. For the calendar year ended December 31, 2002, the Company reported a cash operating loss of $13.0 million or $0.42 per basic and diluted share, compared with a cash operating loss of $21.4 million or $0.75 per basic and diluted share for the prior year. As a result of the sale of our wholly owned subsidiary Extensis, Inc. on September 15, 2002, and in accordance with generally accepted accounting principles, operating results for prior periods have been retroactively reclassified to reflect the sale of the subsidiary as discontinued operations. Impairment Charges (including cumulative effect of change in accounting principle) The Company's impairment charges to write down goodwill, fixed assets and other assets on its balance sheet totaling $46.6 million for the year, are as a result of lower values in the stock market and the accounting rules on valuation of goodwill, fixed assets and other long-lived assets. Goodwill isthe amount by which the purchase price of an acquisition exceeds the fair value of the assets. Patents During the quarter ended December 31, 2002 the Company was granted two patents on its printing technology and received three Notices of Allowance from the U.S. Patent and Trademark Office. To date, the company holds eight patents and more than 40 additional patents pending on it technology. During the fourth quarter, the Company entered into a third royalty bearing licensing agreement on its growing patent portfolio. This licensing agreement, covering three of ImageX's patents, is with Printcafe for use in an automated print product offering sold by them, and supported by Creo, Inc. Financial Outlook The Company is increasing its previous quarter's revenue guidance. "Instead of the 9-11% increase we originally expected for 2003, we now expect a 10-13% increase over 2002. We continue to expect cash flow break-even by the end of the third quarter of 2003. Last quarter's ten percent staff reduction and other operating expense cuts should reduce our burn rate 35-45% to between $1.5-1.8 million for the March quarter." Begert added.

 

 

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