Summary of Presstek's Q2 Earnings Call By Ann Levine July 28, 2003 - Presstek, Inc. (NASDAQ: PRST) announced income of $1.8 million or $0.05 per diluted share for the second quarter of 2003. Income for the same period last year, Presstek reported a net loss of $11.5 million and ($.34) per diluted share. Net income for the second quarter would have been $2.4 million or $0.07 per diluted share but for a $500,000 charge related to workforce reductions. Topics of this summary: * Operational Elements * Heidelberg OEM Agreement * Q & A Operational Elements Presstek reported that opportunities outweighed challenges for the second quarter. In the DI lines, Presstek overcame lack of kit sales and met the challenge by increasing sales to KBA and initiating sales with KPG. The CTP line turned in strong results with revenue results doubling on Anthem plates over the prior year. On the earnings side, field performance has improved and contributed to higher margin contributions, reduced warranty costs, increased consumption of printing plates, and improved customer satisfaction. Lasertel, though showing an operating loss of $400,000 in the second quarter, has growing customer prospects and an improving reputation. Operationally, there is continuing improvement in yields and productivity. The Applause product is still in field-testing and continues to gain encouraging results in a variety of commercial environments. The target commercial release date is scheduled for the third quarter 2003. The company's operational strategy has followed three main phases; 1) Put in place a solid management team and improve efficiencies; 2) Establish a market focus and apply to distribution channels; 3) Build a strategic framework to position for growth early in 2004. Presstek Chairman and CEO, Mr. Edward Marino, stated the company is well into phase 2 and it is entering phase 3. Heidelberg OEM Agreement The day before the earnings call, Presstek announced an agreement with Heidelberg that provides for a worldwide, private label OEM agreement on the DI QuickMaster printing plates. The objective of the agreement is to increase sales of the QuickMaster DI press and drive increased consumption of QuickMaster DI plates. It will be marketed under the strength of the Heidelberg brand. Heidelberg will receive a better price for the Quick Plate, which will result in reduced revenues in the near term, but more stability and predictability for Presstek in the long-term. Sales are expected to improve under the agreement. The effective date of the agreement was 7/1/2003. Q & A 1. Presstek has no indication that Heidelberg will pursue another third party plate with the announcement of the Heidelberg OEM agreement with Presstek. With the agreement, the company has effectively marginalized the competitive product and has now established two viable channels for the QuickMaster DI plate which was a key objective in the agreement. The agreement preserves Presstek's right to their own intellectual property. 2. Current discussions are underway with Heidelberg regarding upgrading their DI product line, however Presstek is not in a position to share product development plans. 3. Presstek is comfortable with current inventory levels. A possibility exists to reduce levels, but not to the same extent as in previous years. 4. Capital expenditures for the first half-year have been less than $500,000 and the company does not see any additional significant expenditures in the near future. 5. Discussions are underway with banks to refinance Presstek's current debt. The company is pleased at its favorable standing in order to enter discussions. 6. The outlook on process-free plates is difficult to call at this point in time. Early indications from customers are that the process-free plates are the next logical advance in technology. The company believes the market place is ready for the product given the success of the Anthem product. The revenue impact of moving to a process-free plate is not known at this time. 7. Presstek has made progress in qualifying manufacturers to image the Anthem plate, but it has directed more energy into the Applause product. 8. Presstek acknowledges that the equipment sales mix has changed and has a goal to get consumable engines into the field. With digital imaging, there has been more control through OEM partners so additional resources were added to build partnerships with KBA and KPG. Within the CTP line, Presstek has more ability to exercise performance. This is where a fundamental shift in sales and marketing efforts are starting to show results. 9. Even the cash loss at Lasertel of $400,000 this past quarter, and $600,000 in Q1, Presstek has no plans to divest this business. Particularly since it secures a key component - a laser diode. There are a number of customers in Lasertel's pipeline and the company is expected to have zero cash burn by the end of the year. 10. Presstek operates under a rolling three-year strategic plan that cannot be discussed with the outside world. The company is entering into what it considers to be a growth phase that includes Applause, new press developments and new CTP platform developments. Product releases are expected within the next 12-18 months. 11. Analysts asked whether there was additional room for growth in the market when the Applause product is already considered the "Holy Grail." Presstek stated that with a $4 billion plate business opportunity, there are many markets untouched, particularly at the lower end.