HUDSON, N.H., Oct. 25 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the third quarter ended September 29, 2001. Third Quarter and Nine Month Results Presstek's revenues for the third quarter of 2001 increased 20% to $26.3 million from $22.0 million in the same period a year ago. The company reported a net loss for the third quarter of 2001 of $2.8 million, or $.08 per basic and diluted share, compared to net income of $1.7 million, or $.05 per basic and diluted share, for the third quarter of 2000. Revenues for the nine months ended September 29, 2001 were $79.2 million, up 27% from $62.3 million for the same period a year ago. Presstek reported a net loss of $1.7 million for the nine months ended September 29, 2001, or $.05 per basic and diluted share, compared to net income of $2.6 million, or $.08 per basic and diluted share, for the same period last year. Revenues for the third quarter of 2001 consisted of product sales of $24.3 million and $2.0 million of royalties and fees from licensees, compared with product sales of $19.6 million and $2.4 million of royalties and fees from licensees in the third quarter of 2000. Plate media revenues for third quarter 2001 were $10.9 million, compared to $11.6 million in the third quarter of 2000. Revenues from equipment sales to Heidelberg, including royalties, for the third quarter of 2001 were $4.6 million, compared to $8.3 million for the same period in 2000. Total Heidelberg revenues for third quarter 2001 were $9.3 million, compared to $13.5 million for the third quarter of 2000. Results for the third quarter of 2001 at Presstek's Lasertel subsidiary included a net expense reduction of $0.6 million from the second quarter to $2.3 million in the third quarter, $1.5 million of which was recorded as cost of sales and $0.8 million as operating expenses. Net losses at Lasertel for the nine months ended September 29, 2001 total $7.9 million. Lasertel did not record any material revenues in the third quarter of 2001. Comments on the Third Quarter "While the slowing economy and unfavorable currency conditions affected Presstek's consumables business, the market for DI press products continued to grow. We shipped 110 units of our DI imaging kits and presses in the third quarter,'' said President and Chief Executive Officer Robert Hallman. "We shipped 32 Dimension units-less than expected-as we continued to resolve the previously reported product performance issues. Plate sales decreased in the third quarter, reflecting the slowing economy and the impact of a strong dollar in Europe. This reduction, together with elevated warranty expenditures resulted in unusually low gross margins of 30% for the third quarter of 2001.'' "As previously reported, the loss for the third quarter was primarily the result of higher than expected legal and warranty expenses,'' said Chief Financial Officer Neil Rossen. "Operating expenses were $10.2 million in the third quarter, including $1.4 million of legal expenses. Also recorded in the quarter were $2.1 million in warranty expenses, included in cost of goods sold. We expect that our operating expenses will be reduced to between $8.0 to $8.5 million in the fourth quarter of 2001, as we have concluded the trial phase of the company's patent litigation and implemented company wide cost reductions.'' Rossen continued, "Liquidity improved slightly in the third quarter. Cash and equivalents were $2.7 million, approximately the same level as at June 30, 2001; however, the net use of our credit lines decreased at the end of the third quarter. Capital expenditures decreased to $1.6 million in the third quarter, from $1.8 million in the prior quarter, and $5.5 million in the first quarter of 2001. We expect a further decrease to around $1.3 million in the fourth quarter of this year, and further reductions thereafter. We believe that the stabilization of our production processes, the reduction in capital requirements, together with the continued close management of our working capital will lead to further improvement in our liquidity.'' Revenue and Earnings Outlook Commenting on the company's revenue and earnings outlook, Hallman said, "In the short term, we expect imaging kit/press shipments to be reduced by 10 to 15 units in the fourth quarter as UL certification for our Xerox products is not expected to be complete until December. Looking into 2002, we expect DI press and imaging kit revenues to resume their growth based on the completed UL certification of the DocuColor DI presses, the Print '01 activity and as our other new partnerships gather momentum.'' Hallman continued, "We believe the improvements made in our Dimension production processes will eliminate shipping delays beginning in 2002. The residual effects from the problems experienced earlier this year, however, will likely restrict Dimension shipments in the fourth quarter to the same level as in the third quarter. This is likely to contribute to total revenues being limited to the $24 to $25 million range in the fourth quarter. With our continuing work on improving manufacturing efficiencies at Lasertel, and the improvements we are making to minimize warranty expenses here at Presstek, we expect gross margins to improve by 5% to 10% next quarter. These improvements, together with the ongoing cost reductions, are expected to contribute to our goal of breaking even in the fourth quarter.'' Hallman continued, "We believe our strategy to increase the market population of Presstek-enabled imaging devices that consume our proprietary plate products remains sound, and that the long-term result will be a steadily increasing annuity from sales of our plate products and future growth.''