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X-Rite Reports 20M loss for Q4

Wednesday, March 05, 2008

Press release from the issuing company

GRAND RAPIDS, Mich. March 4 2008 - X-Rite, Incorporated today announced its financial results for the fourth quarter and year ended December 29, 2007.

The Company reported fourth quarter 2007 net sales from continuing operations of $74.7 million, including $8.5 million from Pantone, compared with $60.4 million in the year-earlier period. Gross margins were 56.7 percent excluding the Pantone acquisition, down from 58.1 percent in the fourth quarter of 2006 as a result of costs related to the Amazys and Pantone acquisitions. Operating income, including approximately 2 months of Pantone's operations, totaled $4.5 million and included $8.3 million in acquisition and restructuring related charges related to the Amazys and Pantone acquisitions ("acquisition and restructuring expenses"). The Company reported a net loss from continuing operations of $20.3 million or $0.70 per basic share, versus net income of $0.5 million or $0.02 per basic share for the same period in 2006.

Adjusted operating income, which excludes acquisition and restructuring expenses, was $12.8 million, and reflects a gross margin of 60.9 percent for the fourth quarter of 2007, versus $11.9 million and 59.4 percent for the same period in 2006. The 2007 number includes Pantone's adjusted operating income, totaling $2.5 million with a gross margin of 62.5 percent. A reconciliation of GAAP earnings from continuing operations to adjusted earnings is included in this release.

"Overall sales in the X-Rite and Pantone core markets were strong in the fourth quarter as we continue to successfully leverage our product lines, stabilize the organization and improve our customer experience," stated Thomas J. Vacchiano, Jr., Chief Executive Officer of X-Rite. "The integration of the sales, engineering and general & administrative functions for the Amazys transaction remains on track and we are excited about the impact that the Pantone acquisition will have on our combined product portfolio and cost synergies."

"Our gross margins returned to more expected levels after we addressed many of the integration and operational issues experienced in the third quarter of 2007," stated Mary E. Chowning, Chief Financial Officer. "Gross margins for the X-Rite stand alone business, adjusted for acquisition and restructuring costs, were 60.7 percent in the fourth quarter of 2007 versus 59.5 percent in the prior period. Gross margins for the Pantone business were 62.5 percent for the approximate two month period since the acquisition."

"Operating expenses in the fourth quarter included several unusual items including $0.7 million for an employment related matter which is under appeal, and $0.5 million of non-cash charges related to our insurance portfolio," continued Chowning. "Additionally, we continued to make significant investments in product development and marketing to enhance our market penetration and support future growth."

Year-to-Date Results

For the full year 2007, net sales from continuing operations were $248.7 million, versus $167.6 million for the same period of 2006 on a stand-alone basis, or $230.0 million after combining 2006 Amazys results with X-Rite on a pro forma basis. Operating income for the full year totaled $16.6 million and included $21.2 million in acquisition and restructuring related charges. The Company reported a net loss of $12.6 million, or $0.44 per basic share. The net loss from continuing operations was $20.8 million, or $0.72 per basic share.

Adjusted operating income, which excludes acquisition and restructuring expenses, was $37.8 million and reflects a gross margin of 59.9 percent for 2007 versus $20.9 million and a gross margin percent of 59.9 on a pro forma basis for 2006. The 2007 number includes Pantone's adjusted operating income of $2.5 million with a gross margin of 62.5 percent.

The fourth quarter and year-to-date results included the following charges related to the Amazys and Pantone acquisitions and restructuring expenses

 

 

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