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NUR Reports Q2 Loss, Secures $4 Million Private Placement

Friday, August 01, 2003

Press release from the issuing company

LOD, Israel, July 31 -- NUR Macroprinters Ltd., a leading manufacturer of wide-format and superwide digital printing systems and consumables for the out-of-home advertising market, today announced its consolidated financial results for the six months and second quarter ended June 30, 2003. It also announced that it has secured a convertible loan commitment of up to $4 Million to draw upon as well as bank debt restructuring. Financial Results Revenues for the second quarter of 2003 were $13.1 million, compared to $23.4 million during the second quarter of 2002. Net loss for the second quarter was $(1.7) million, or $(0.10) per share, excluding one-time inventory costs and write-offs of $5.5 million, one-time doubtful accounts receivable expense of $6.7 million, and restructuring costs of $2.1 million, and $(16.0) million including such charges, as compared to a net loss of $(1.0) million, or $(0.06) per share, in the comparable quarter last year, excluding restructuring charges of $0.8 million, and a net loss of $(1.9) million, or $(0.11) per share including such charges. Gross profit for the second quarter, excluding one-time inventory costs and write-offs of $5.5 million, was $5.3 million, compared to $7.2 million in the second quarter of 2002. Gross margin for the second quarter of 2003 excluding one-time inventory costs and write-offs was 40.1%, compared to 30.7% for the second quarter of 2002. Operating expenses for the second quarter were $6.4 million, excluding one-time doubtful debt accounts receivable expenses of $6.7 million, and restructuring costs of $2.1 million, (and $15.2 million including such charges), down 22% from $8.1 million in the comparable quarter last year. Operating loss for the second quarter of 2003 was approximately $(1.1) million, excluding one-time charges and restructuring costs, and $(15.4) million including such charges, versus $(1.0) million in the same quarter last year. Revenues for the first six months of 2003 were $30.2 million, compared to $44.8 million during the first six months of 2002. Net loss for the first six months of 2003, excluding one-time inventory costs and write-offs of $5.5 million, one-time doubtful debts expense of $6.7 million, and restructuring costs of $2.1 million, was $(3.1) million, or $(0.18) per share, and $(17.4) million, or $(1.01) per share including such charges, as compared to a net loss of $(4.9) million, or $(0.29) per share excluding restructuring charges of $(0.9) million, or $(0.34) including such charges, in the comparable period last year. Gross profit for the first half of 2003, excluding one-time inventory costs and write-offs of $5.5 million, was $11.0 million, and $5.4 million including such charges, compared to $13.1 million in the first half of 2002. Gross margin for the first half of 2003, excluding the one-time inventory costs and write-offs, was 36.3%, compared to 29.2% for the first half of 2002. Operating expenses for the first six months were $13.2 million, excluding a one-time doubtful accounts receivable expenses of $6.7 million, and restructuring costs of $2.1 million, (and $21.9 million including such charges), down 24% from $17.3 million in the comparable period last year. Operating loss for the first half of 2003 was approximately $(2.2) million, excluding the one-time doubtful accounts receivable expenses and the restructuring costs, (and $(16.5) million including such charges), versus $(4.2) million in the same period last year. Operational Review David Amir, who was appointed CEO and President of NUR in April 2003, commented on the midyear operating results, "During the first half of 2003, we focused on improving our operational strength, and running our operations in an even more cost-effective manner. We reduced employee headcount from about 350 in the beginning of the year to under 250 by the end of August. We focused on improving cash flow, and we successfully achieved our goal of breakeven cash balance this quarter. In the second half of 2003, our goal is to achieve profitability by year-end." "Turning to operations, as reported previously, we signed an agreement to acquire the remaining 50% of NUR Pro-Engineering, making us the sole owners of our assembly facility. At the same time, we are in the final stages of moving our production from San Antonio, Texas to our Israeli production facility. With these moves, we will have one production facility for all product lines and, we believe, a leaner more efficient organization able to meet future challenges. " "We have decided to exit the substrate business. Today, as digital wide format printers have become widespread, substrates have become a low margin commodity that is no longer profitable for NUR to resell. Terminating this business reduced revenues this quarter by about $2 million compared to Q1 2003, and $3.4 million compared to Q2 last year. We are more strongly focusing on our proprietary specialty inks, sales of which increased during the second quarter after a long period of decline. A new vice president of inks was recently appointed to help us improve market share. We believe that we are now positioned to regain market share and increase our sales in this potentially lucrative market." Convertible Loan & Agreements With Banks NUR also announced it has secured a convertible loan commitment from several investors according to which the investors have undertaken to provide NUR with a convertible loan in the aggregate amount of up to $4.0 million. NUR's chairman and largest shareholder will provide up to $2.0 million of the loan. Under the terms of the loan agreement, the loan is convertible at any time into ordinary shares of NUR at a conversion rate of $0.62 per share, which is 20% above the market price at the time the terms were agreed upon. In consideration for the loan undertaking, the Company agreed to pay a cash commitment fee and issue to the investors warrants to purchase ordinary shares of the Company equal to 15% of the loan at an exercise price of $0.52 per share exercisable over a five-year period. In the event of a draw down of the loan, the Company will issue to the investors additional warrants to purchase ordinary shares in the amount equal to $15% of the draw down amount, at an exercise price of $0.52 per share, and exercisable for a period of five years from the date of the draw down. The equity conversion factor of the loan and the participation of Mr. Dan Purjes in the loan transaction are subject to the requisite approval of NUR's shareholders. Our major Banks have agreed to modify certain covenants and reschedule NUR's long-term debt. They also agreed that no principal will be repaid in the next 12 months and thereafter NUR will repay the loans in smaller installments through the end of 2005. Commenting on these NUR's financial transactions, Mr. Amir stated, "We are now in a stronger financial position. We've achieved a breakeven cash balance, we've reached an agreement with our banks to reduce the payments we will be paying them in the near future, and we've secured a private placement to draw upon in the aggregate of up to $4 Million. We believe these actions by NUR's banks and shareholders are strong votes of confidence in our company's future." Mr. Amir concluded, "We recognize that there are still major challenges ahead of us. Nonetheless, we are confident that the new management team we have put in place at our corporate and subsidiary headquarters, the introduction of new machine models now in final beta tests, and the renewed focus on inks, will bring NUR back to industry leadership, profitability and growth."

 

 

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