MORTSEL, Belgium--July 26, 2001--Xeikon N.V., the world's leading supplier of production digital printing systems for a wide range of commercial and industrial printing applications, today reported results for the three-month period ended June 30, 2001. Total revenues for the second quarter of 2001 were $34.7 million, including $14.7 million from the black & white activities, compared with total revenues of $48.8 million for the same quarter last year, which included $16.1 million from the black & white activities. Revenues from equipment sales for the quarter were $15.4 million, including $8.5 million for color equipment and $6.9 million for black & white equipment. Non-equipment revenues for the quarter were $19.3 million, or $11.5 million from the color business and $7.8 million from the black & white business. This compares with equipment revenues of $27.8 million for the second quarter of last year, $19.6 million of which were contributed by sales of color equipment and $8.2 million by sales of black & white equipment. Non-equipment revenues for the second quarter of 2000 accounted for $21.0 million, including $13.1 million in color sales and $7.9 million in black & white sales. At constant exchange rates, color equipment sales to OEM partners for the quarter decreased 70% when compared to the same quarter of last year, which still included sales to Agfa and Xerox. For the second quarter, gross profit was $7.5 million, compared with $16.5 million for the same quarter of 2000. Gross margin for the quarter declined to 21.5%, from 33.8% for the comparable quarter last year. As in the first quarter, this decline continued to be attributable to the increased weighting of manufacturing overhead costs on lower sales, an unfavorable product mix and commercial accommodations to customers related to the delay in full-scale CSP shipments. Operating loss for the quarter was $10.1 million, compared with an operating loss of $0.3 million for the same period last year. The Company posted a net loss for the quarter of $10.4 million, or a loss of $0.34 per basic and diluted share, compared with net loss of $0.4 million, or a loss of $0.01 per basic and diluted share, for the second quarter of 2000. Results for the quarter were also adversely affected by a year-over-year appreciation of 7 percent of the U.S. dollar against the Euro, the Company's functional currency. For the six-month period, revenues were $68.3 million, including $26.3 million from the black & white activities. This compares with revenues of $89.3 million for the first half of 2000, which included $28.5 million from the black & white activities. Non-equipment sales for the first half of the year were $40.2 million, compared with $42.6 million for the same period last year. Gross margin for the period declined to 20.5%, from 30.7% for the first half of 2000. Results for the first six-month period were adversely affected by a 7 percent year-over-year appreciation of the U.S. dollar against the Euro. Operating results for the six-month period showed a loss of $21.6 million. This compares with an operating loss of $5.5 million for last year's equivalent period. Gino Despeghel, Xeikon's Executive Chairman, commented: "Obviously, our results for the second quarter were a substantial disappointment, in particular those of our North-American color systems operations. So far, we have not been able to compensate for the shortfall in sales generated by our OEM partners Xerox and Agfa, which until last year represented a significant part of our color systems sales. We have, however, made progress in reducing costs and in bringing down our working capital needs. We expect this trend to continue into the next quarter.'' "Finally,'' continued Mr. Despeghel, "during the quarter, we allocated resources, to the maximum extent possible, in the continued tuning program of the CSP, our cut sheet color press. Commercial shipments of the CSP are expected to resume in September.'' The Company also announced that it is introducing a solution for decentralized newspaper printing. The typical benefits of on-demand printing are very valuable in newspaper printing: same-day availability and the elimination of transportation costs to foreign cities are key benefits in the competitive newspaper publishing landscape. Xeikon's NewSprint solution consists of one or two duplex Xeikon 7000 high-speed printing systems and a complete finishing line. Besides a true newspaper look-and-feel, NewSprint offers the largest digitally printed format available and excellent cost dynamics. A first complete NewSprint installation is scheduled to be operational in Athens, Greece, during August. Mr. Despeghel added: "We expect our sales to benefit from sales of CSP and NewSprint and anticipate an improvement in revenues in the coming quarter. In addition, we expect to generate new momentum in the North American market through a range of initiatives to be developed around Print'01, the most important printing exhibition and trade show this year. The timing of this exhibition, from September 6 until 13, coincides very well with the expected full-scale commercialization of our CSP press. Also, Print'01 will feature the first showing and demonstration of our presses by MAN Roland in the U.S.'' Xeikon N.V. develops, produces and markets commercial digital color printing systems and related consumables specifically designed to meet the quality, speed, reliability, cost, variable content and on-demand requirements of the global digital color printing market. Xeikon supplies both original equipment manufacturers, as well as a global network of over 30 value-added distributors (VADs) operating in more than 40 countries.