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Scitex Announces Q1 Results: Revenue Up 25%

Tuesday, May 10, 2005

Press release from the issuing company

TEL AVIV, Israel, May 9 -- Scitex Corporation Ltd. today announced financial results for the first quarter ended March 31, 2005. Results of Operations For the first quarter of 2005, revenues were $36.6 million, an increase of 25% from $29.2 million in the first quarter of 2004. The Company had operating income for the quarter of $2.4 million, compared to an operating loss of $0.5 million for the first quarter of 2004. The net income reported by Scitex for the first quarter of 2005 amounted to $1.8 million compared to net income of $50.3 million in the first quarter of 2004 (composed of a net loss from continuing operations of $1.4 million and net income from discontinued operation of $51.7 million, derived from the sale of the operations of Scitex Digital Printing (SDP) to Eastman Kodak Company). Balance Sheet and Cash Flow On a consolidated basis, cash, cash equivalents and short-term investments at the end of the first quarter of 2005 were $141.5 million. This excludes restricted deposits of $13.0 million at Scitex Vision and $5 million retained in a custodial account in connection with the sale of SDP's operations by Scitex Corporation, compared to $142.6 million at the end of 2004. Cash, cash equivalents and short-term investments at the end of the first quarter of 2005 at Scitex Corporation and its wholly-owned subsidiaries amounted to $135.6 million (excluding the above-described $5.0 million retained in a custodial account). During the first quarter, receivables remain stable with $32.8 million at the end of the quarter. However, inventory increased to $40.4 million from $36.7 million as of the end of the previous quarter, due to increased business activities. Scitex Vision Scitex Vision reported record revenues for the ninth consecutive quarter. The first quarter of 2005 was a notable beginning of the year for Scitex Vision, with sustained strong performance of the TURBOjet, as well as the super wide format digital printers worldwide. Additionally, the increased sales of the flatbed product series and the accelerated ink revenues of $12 million strongly enhanced Scitex Vision's quarter-over-quarter growth. Towards the end of the quarter, Scitex Vision began showcasing the Scitex Vision VEEjet+ at ISA tradeshow for the first time in North America and presented the Scitex Vision CORjet Premium at ImpreExpo tradeshow in Mexico, collecting orders, indicating an increased demand for Scitex Vision's innovative inkjet systems and consumables. As previously reported, Scitex was involved in several disputes with C.D.I. Technologies (1999) Ltd (CDI), a minority shareholder of Scitex Vision, including claims against Scitex, Scitex Vision and several other parties. In early April, Scitex and its two largest shareholders, Clal Industries and Investments and Discount Investment Corporation, came to an agreement with CDI whereby they agreed to purchase all of CDI interest in Scitex Vision, constituting 1.89% of Scitex Vision's issued share capital (1.35% on a fully diluted basis) for $1.6 million, plus additional contingent consideration to be paid if Scitex Vision undergoes an "exit event" within the next two years at a higher valuation than implied in the agreement. In the framework of the agreement, all of the claims will be dismissed. Revenues for the first quarter of 2005 were $36.6 million, an increase of 25% from $29.2 million in the corresponding quarter of 2004 and an increase of 3% from $35.5 million in the fourth quarter of 2004. Scitex Vision's operating income in the first quarter of 2005 was $4.0 million, compared to operating income of $2.6 million in the first quarter of 2004, and operating income of $0.8 million in the fourth quarter of 2004. Scitex Vision's net income was $3.7 million in the first quarter of 2005, compared to net income of $2.1 million in the first quarter of 2004, and a net loss of $0.8 million in the fourth quarter of 2004. Geographically this quarter, Europe and the Americas each contributed 35% of revenues and the rest of the world accounted for 30% of revenues. Cash, cash equivalents and short-term investments at Scitex Vision at the end of the first quarter of 2005 amounted to $18.6 million (including the $13.0 million of restricted deposits), bringing the net debt of Scitex Vision to third parties, primarily bank borrowings, to approximately $24.5 million. RealTimeImage Ltd. In late April, IDX Systems Corporation signed a purchase agreement with RealTimeImage Ltd. (RTI), a 14.9% minority-owned affiliate of Scitex Corporation, to acquire the assets of RTI for an estimated purchase price of $15.5 million. RTI is recorded on Scitex's balance sheet at $1.2 million as of March 31, 2005, and is accounted under the cost method. The closing of the acquisition is subject to certain customary terms and conditions. Also, the distribution of funds to the shareholders of RTI is subject to certain time and other limitations and processes, including under the purchase agreement. Management Comments Raanan Cohen, President and CEO of Scitex, commented: "I am pleased with the performance of our principal operating subsidiary, Scitex Vision, a proven leader in the wide and super-wide format graphic arts markets, achieving a ninth consecutive quarter of revenue growth, with record revenue of $36.6 million and net income of 10% of revenues. As for the sale of assets by RTI, our minority-owned affiliate, it is consistent with our previously announced plan of exploring and implementing strategic alternatives relating to our holdings, when and to the extent feasible, including dispositions, acquisitions and the like."

 

 

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