By Ann Levine April 28, 2003 - Presstek, Inc. (NASDAQ:PRST), the Hudson, NH based provider of digital imaging technology announced first quarter earnings for the period ending March 29, 2003. As of the first quarter, Presstek reported net income of $1.8 million of $0.05 per diluted share, which compares to $183,000 or $0.01 per diluted share for the first quarter in 2002. Revenues for the first quarter 2003 were $22.4 million as compared to $20.8 million for the same period last year. Topics included in this summary: * First Quarter Overview * On-press Performance * Off-press Performance * Lasertel * 2003 changes * Q & A First Quarter Performance Presstek announced this was the third straight quarter of improved operating performance in a soft world economy for capital and graphic arts services. Because of the improved performance, Mr. Edward Marino, Chief Executive Officer, commented it is an indication of Presstek's ability to do business in an uncertain market. Although revenues compared to the previous quarter were flat, they were 8% higher than first quarter of 2002. Better management of operating expenses has contributed to improved performance, but other factors include more effective and focused marketing, better performance of products in the field and improved performance of Lasertel, the Tucson, AZ subsidiary. On-press Performance In North America, Presstek has partnered with KPG to distribute presses. This partnership allows the company to work towards the goal of increasing the installed base of presses. The company expects revenues from this partnership to start in the second quarter. In Europe, Presstek has stepped up their distribution efforts and has also appointed dealer, KBA. There are now six KBA dealers in place and there has been an improvement in sell-though in the past quarter. Also in Europe, Presstek has launched a new program for channel distributors to sell DI consumables. The company has invested in resources, added sales and support, and lowered end user pricing. The volume of business with Heidelberg did not meet expectations and sales have fallen off. As a result, there are no kit orders for the remainder of the year. With improved services, and the introduction of new marketing efforts, the hope is that kit sales will improve. Off-press Imaging There was an improved reliability of plate setters in the first quarter as evidenced by the shipment of 37 CTP systems this quarter compared to 35 in fourth quarter 2002.The expectation is that increased sales will continue in 2003. The Beta testing for the Applause product are positive and the commercial launch is expected early in the second half of 2003. Lasertel Lasertel showed $275K in revenue from sales in the first quarter of 2003 and an operating loss of $1.1 million. Lasertel has made progress in marketing and operations generating commercial customer revenue. Although the level of revenue is modest, the expectation is for continued positive performance. 2003 changes CEO Marino's concluding comments during the conference call included upcoming changes in the organization. Although Presstek has shown strong performance, additional changes are necessary to be prepared to continue to offer its customers outstanding performance in the future. Changes include: * Shifting additional resources to marketing efforts * Investing in strengthening the customer base - Presstek will reduce the ownership costs of DI products in order to stimulate sales * Streamlining and flattening the organization further - The company will reduce headcount by 20% in order to accommodate the increased resources in sales. Headcount reduction is expected at both the Hudson, NH facility and at Lasertel. Streamlining the organization is expected to produce $4.0 million in cost savings and will be completed by mid-May. Q & A 1. Although no mention was made of the business relationship with Heidelberg during the conference call, questions were raised. Presstek was quick to point out that there is not a relationship problem but one of sales. Both companies are working to solve the problem by lowering the cost of ownership and with the introduction of marketing programs to stimulate sales. 2. The business issue with Heidelberg does not surround the plate product, but the equipment product. Presstek has not seen a decline in plate sales. The imaging head kits are where Presstek is seeing a zero forecast for sales because of press sales. Although Heidelberg has developed their own 3rd party plate product which poses some risk, Presstek will rely on the strength of their patent position and remains confident in the quality and performance of their product. 3. Presstek could not share the details of the headcount reduction as far as the specific areas of the company that will be affected, as the plans have not been finalized. Instead the company stressed they are changing the way they do business not only to streamline the business but also for maximum effectiveness. Presstek does not see this as a ramp up or down situation. 4. The $4 million of expected savings in the restructuring is expected to come from the reduction in headcount. 5. The formal launch of the KPG product will be in the later part of the second quarter of 2003. Sales activity has already begun and sales training has already occurred at the end of March. KPG delivers to the market the whole product such front-end and back-end support as well as financing which is coming to bear on this product. 6. The Applause Beta testing announced during the last quarterly call is going well and testing has shown some positive signs. The company is making changes as a result of the testing and much of the changes are in the manufacturing area. The product will be manufactured in Hudson, NH. Now launch is expected early in the second half of the year. 7. Lasertel's $275K in revenue comes primarily from four customer sources. This amount is in line with internal expectation and Presstek expects continued performance increases. Operating loss of $1.1 million compared to $1.4 million in the previous quarter is primarily from better yields in productivity. 8. The benefits of the Applause plate were outlined as reducing process time, reducing complexity, and reducing errors. Some of the benefits to the customer are consistency, reliability, and that there is no chemistry involved in the process. 9. Presstek is targeting two platforms for Applause: Creo and the Presstek platform. Internal testing with Creo is complete. 10. When questioned on the compatibility of Applause, Presstek is confident that it will work across a wide range of press environments when launched. Presstek stressed that it went after the Creo platform first because of its high penetration in the market.