HUDSON, N.H., Oct. 23 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the third quarter ended September 27, 2003. The company reported net income of $2.4 million for the third quarter of 2003, or $0.07 per basic and diluted share, compared to net income of $621,000, or $0.02 per basic and diluted share, for the corresponding period in the prior year, and net income of $1.8 million or $0.05 per basic and diluted share in the second quarter of fiscal 2003. Income from continuing operations for the third quarter of 2003 was $1.0 million, or $0.03 per basic and diluted share. Income from discontinued operations for the third quarter of 2003 was $1.4 million, or $0.04 per basic and diluted share. Revenue for the third quarter ended September 27, 2003 was $19.8 million, compared to $21.0 million in the same period a year ago, and $22.5 million in the second quarter of 2003. Revenue for the nine months ended September 27, 2003 was $64.7 million, compared to $61.1 million in the same period a year ago. Presstek reported net income of $6.1 million, or $0.18 per basic share and $0.17 per diluted share, for the nine months ended September 27, 2003, compared to a net loss of $10.7 million, or $0.31 per basic and diluted share, for the same period last year. Income from continuing operations for the nine months ended September 27, 2003 was $4.6 million, or $0.14 per basic share and $0.13 per diluted share. Income from discontinued operations for the nine months ended September 27, 2003 was $1.4 million, or $0.04 per basic and diluted share. The net losses for the nine months ended September 28, 2002 included charges of $4.7 million for inventory write-downs and discontinued programs, and $6.0 million in charges related to workforce reductions. During the third quarter of 2003, the company favorably settled a previously disclosed lawsuit that had been pending against Delta V, a business Presstek had discontinued in 1999. Net income from discontinued operations of $1.4 million for the third quarter of 2003 represents the reversal of substantially all the remaining reserve set aside for the discontinued operation. Consumable revenue for the third quarter of 2003 was $12.2 million, compared to $13.8 million in the third quarter of 2002, and $13.6 million in the prior quarter. The decrease in consumable revenue is primarily the result of inventory level realignment at Heidelberg as it transitions from Presstek's branded consumable product to the new OEM plate manufactured by Presstek, which was announced in July of 2003. The decrease in consumable sales to Heidelberg was somewhat offset by increased sales of Presstek's Anthem and PearlDry consumables. Equipment revenue for the third quarter of 2003 was $6.6 million, compared to $5.9 million in the same period a year ago, and $8.0 million in the previous quarter. The increase in equipment revenue from the same period last year is primarily the result of increased press and CTP sales, offset by anticipated lower kit revenue. The decrease in sales from the previous quarter primarily reflects the seasonality common to the capital equipment market. Results for the third quarter of 2003 include a net loss of $1.2 million, which includes inter-company charges of $505,000 at the company's Lasertel subsidiary, down 49% from its net loss of $2.5 million, which includes inter- company charges of $475,000 in the corresponding quarter in the prior year, and down 20% from the second quarter of 2003. Net losses at Lasertel for the nine months ended September 27, 2003 total $4.4 million, including inter- company charges of $1.5 million. Lasertel recorded $410,000 in revenue from sales to external commercial customers in the third quarter of 2003, up from $328,000 in the second quarter of 2003. Lasertel's revenue from sales to external commercial customers in the third quarter of 2002 was not material. Gross margins for the third quarter of 2003 were 39%, compared to 37% for the third quarter of 2002 and 43% in the prior quarter. The increase in gross margin percentage from the same period last year is primarily the result of external revenue at Lasertel, offset by an unfavorable product mix at Presstek. The decrease in gross margin percentage from the prior quarter is primarily due to a less favorable product mix and the price reductions on the new Heidelberg OEM plate. Operating expenses (being the sum of research & development and sales, general & administrative) were $6.6 million in the third quarter of 2003, down from $6.9 million in the same period last year, and down from $7.2 million in the prior quarter. President and Chief Executive Officer Edward J. Marino said, "Presstek's business fundamentals continue to strengthen. To get a true picture of this, we have to look beyond the inventory adjustments in Heidelberg's imaging kits and plates. Revenue from consumable sales in all other lines grew nearly 50% in the third quarter of 2003 compared to the same quarter last year. Additionally, in the third quarter of 2003 we shipped over 25% more DI presses and CTP systems than in the corresponding quarter last year." Marino continued, "A number of important pieces came together in this quarter. On the new product front, we introduced two exciting new plate products which we believe give Presstek a leading position in the chemistry free and process free plate category. Last month at the Graph Expo exhibit in Chicago, we saw evidence of KPG building momentum behind their direct imaging press program, where there was a high amount of customer interest. Our OEM deal with A.B. Dick for both a platesetter and a new technology plate opens up a whole new channel to an important new market segment for Presstek. We believe these developments along with many others are positioning Presstek for future growth." "Our balance sheet continues to improve," said Chief Financial Officer Moosa E. Moosa. "During the quarter, the company generated $4.5 million in cash from operations. Cash and cash equivalents at the end of the quarter were $26.7 million, up from $23.1 million at the end of the second quarter of 2003. Total debt at the end of the quarter was down $796,000 from the previous quarter. We believe that our strong financial position, together with the increased credit available under the new bank loans, positions us well for growth." "We believe that the successful completion of a broad and expanded credit facility in October, in combination with new product introductions and new distribution channel initiatives, signals that confidence is building in Presstek's business," said Marino.