Xeikon Reports 3Q Results: Revenue Falls 27%, Net Loss of $18 Million
Press release from the issuing company
MORTSEL, Belgium--Nov. 13, 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- and nine-month periods ended September 30, 2001.
The results for the three- and nine-month periods reflect the Company as a going concern. As previously disclosed, on November 9, 2001, Xeikon N.V. filed a request for creditor protection under applicable Belgian legislation. On the same date, Xeikon France S.A., the Company's subsidiary in France, entered into a receivership proceeding under applicable French legislation. No adjustments have been made to reflect the impact, if any, of these proceedings on the Company's financial results.
Total revenues for the third quarter of 2001 were $27 million, including $14.9 million from the color and $12.1 million from the black & white activities, compared with total revenues of $41.0 million for the same quarter last year, which included $27.9 million from the color and $13.1 million from the black & white activities.
Revenues from equipment sales for the quarter were $9.6 million, including $4.6 million for color equipment and $5.0 million for black & white equipment. Color equipment revenues were negatively affected due to an accounting adjustment of $2.7 million related to the unwinding of Canopy, our joint venture with PrimeSource.
Non-equipment revenues for the quarter were $17.4 million, or $10.3 million from the color business and $7.1 million from the black & white business.
This compares with equipment sales of $20.1 million for the third quarter of last year, $14.2 million of which was contributed by sales of color equipment and $5.9 million of which was contributed by sales of black & white equipment.
Non-equipment revenues for the third quarter of 2000 accounted for $20.9 million, including $13.7 million in color sales, and $7.2 million in black & white sales. Non-equipment sales include consumables, spare parts and service contracts.
On a like-for-like basis, total revenues for the quarter decreased 27 percent compared to the same quarter of last year.
For the third quarter, gross profit was $6.7 million, compared with $10.1 million for the same quarter of 2000. Gross margin for the quarter was 25 percent, and 24.7 percent for the comparable quarter last year.
Operating loss for the period was $15.8 million, compared with an operating loss of $14.8 million for the same period last year.
The operating loss included a non-recurring charge of $6.5 million related to the restructuring program of the black and white activities in France; the impact of the unwinding of the joint venture with PrimeSource; and a one time charge for the settlement of a claim towards Bull, the French company from which Nipson was acquired in 1999.
Results for the quarter were also adversely affected by the two percent year-over-year appreciation of the U.S. dollar against the Euro, the Company's functional currency.
The Company posted a net loss for the quarter of $18 million, or a loss of $0.59 per basic and diluted share, compared with net loss of $12.2 million, or negative $0.40 per basic and diluted share, for the third quarter of 2000.
For the nine-month period, revenues were $95.2 million, including $56.8 million from the color and $38.4 million from the black & white activities. This compares with revenues of $130.4 million for the nine months of 2000, including $88.8 million from the color and $41.6 million from the black & white activities.
Revenues from equipment sales for the nine-month period were $37.7 million, which included $21.9 million for color equipment and $15.8 million for black & white equipment. Non-equipment sales for the period were $57.6 million, or $35.0 million in the color business, and $22.6 million in the black & white activities.
This compares with equipment sales of $66.9 million for the same period last year, $48.1 million of which was contributed by sales of color equipment and $18.8 million of which was contributed by sales of black & white equipment.
Non-equipment sales in the nine-month period of 2000 accounted for $63.5 million, including $40.7 million in color sales and $22.8 million in black & white sales.
At constant exchange rates, total revenues for the nine months decreased year-over-year 24 percent.
Gross profit for the first nine months was $20.7 million, down from $37.5 million in last year's equivalent period. Gross margin for the nine-month period declined to 21.8 percent, from 28.8 percent for the nine months of 2000.
Operating results for the nine-month period showed a loss of $37.4 million, compared with a loss of $20.4 million in the same period last year.
Results for the first nine-month period were adversely affected by a 3 percent year-over-year appreciation of the U.S. dollar against the Euro.
For the nine-month period, Xeikon posted a net loss after taxes of $39.3 million, or negative $1.28 per basic and diluted share. This compares with net loss of $18.0 million, or negative $0.61 per basic and diluted share for last year's equivalent period.
Gino Despeghel, Xeikon's Executive Chairman, commented: "The results for the third quarter were negatively impacted by the overall weak economic environment and slow progress of discussions with interested parties to raise additional capital through a previously announced private placement.''
Mr. Despeghel added: "The actions put in place to reduce working capital and to lower operating expenses are starting to show results. On a comparable basis (excluding the Canopy unwinding adjustment), by the end of September inventory levels had declined by $8.3 million from those at the end of March. At the same time, operating expenses for the third quarter declined quarter-over-quarter by 11 percent.''
"It is our goal to restore confidence in us by our customers and stakeholders in the coming quarters. We expect to achieve this through a re-financing plan in conjunction with the recently announced request for creditor protection and ongoing restructuring measures; increased efficiencies in our distribution model in the U.S., where the Canopy sales and service organization has been taken over by Xeikon America; and, a continued reduction of working capital and operating expenses.''
Xeikon N.V. develops, products 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.
Xeikon is also a major manufacturer of digital black and white printers, which use a proprietary "magnetography'' technology most suited for use in heavy-duty printing applications. Additional information on the Company can be found at http://www.xeikon.com. A live and on demand webcast of the third quarter 2001 earnings conference call will be available through midnight November 30 at www.xeikon.com (Investor Relations), at www.streetevents.com for institutional investors and at www.companyboardroom.com for individual investors.
American depositary receipts evidencing Xeikon's ordinary shares are listed for trading on the Nasdaq National Market under the symbol XEIK. On November 9, 2001, Nasdaq issued a trading halt in the Company's securities. The Company is working closely with Nasdaq in order to address any concerns raised by Nasdaq.
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