X-Rite Announces Q2 Results: Sales Up 16.4% Over First Quarter
Press release from the issuing company
GRANDVILLE, Mich.--July 18, 2002--X-Rite, Incorporated, a leading global provider of precision devices, systems and processes that measure color, light and shape, today reported its financial results for the second quarter ended June 29, 2002.
Second Quarter Highlights:
* Sales increase 16.4 percent over first quarter.
* Operating income of $1.6 million, or 8 cents per share, compared to first quarter loss of $0.3 million, or 2 cents per share.
* Write down of $6.6 million, or 33 cents per share, of XR Ventures' investments.
* Company opens China Headquarters in Shanghai.
The Company reported second quarter sales of $24.4 million, compared to first quarter's sales of $21.0 million, and $24.4 million for the second quarter last year. Operating income was $1.6 million, compared to first quarter's loss of $0.3 million, and operating income of $1.9 million for the second quarter last year. After a $6.6 million write down of technology investments made by XR Ventures, the company reported a net loss of $5.5 million, or 27 cents per share for the second quarter, compared to net income of $1.8 million, or 8 cents per share for the same period last year.
For the six months ended June 29, 2002, net sales were $45.4 million, compared to $49.8 million in the comparable period one year ago. Operating income for the same six month period was $1.3 million, compared with operating income of $4.8 million one year ago. Net loss for the same six month period was $5.7 million, or 28 cents per share,compared with net income of $4.2 million, or 19 cents per share for the comparable period last year.
"As anticipated, sales for the quarter were equal to last year's level," said Rich Cook, chief executive officer of X-Rite, Incorporated. "I am pleased to report growth in sales of 16 percent over our first quarter performance, and most important, a return to operating profit. This sequential improvement demonstrates that our sales and marketing efforts are beginning to generate results despite the continued weakness in the North American capital goods markets. Amidst this lackluster marketplace we are finding some bright spots as demonstrated by our point-of-sale paint matching products which have grown an impressive 34 percent from quarter one levels."
Cook continued, "Our strategic emphasis on export markets continues, and I am excited to report that we have expanded our operation in China by opening a new headquarters in Shanghai, X-Rite (Shanghai) International Trading Co., Limited. This location will be equipped with the first full service center of its kind in Asia serving color measurement and management solutions. We anticipate a growing business in this emerging economy, and we look forward to winning new customers in China, the fourth largest trade partner to the U.S."
Based on the continued erosion of the venture capital markets, the network middleware and tele/data communications sectors of the economy during the quarter, the Company performed a comprehensive assessment of the continuing value of each XR Venture investment and concluded that the value of certain of them has been permanently impaired, and any related tax benefit on the write downs may not be realizable at this time. Therefore, it recorded a charge of $6.6 million writing the investments down against second quarter earnings.
"While operations generated profits, net income was adversely effected by the write down of several XR Venture investments," Cook added. "Venture investing is high risk, and the loss of a portion of this seed money was anticipated. At this time, the Company believes that remaining XR Ventures' investments are solid, and should eventually become viable and valuable operations, and follow-on funding could be directed into them. New venture investment opportunities are not being considered at this time."
In other news, the Company announced that its partner, IMI International Medical Innovations Inc. (http://www.imimedical.com/), has announced that it has received notice from the U.S. Food and Drug Administration that its Cholesterol 1,2,3 product, the world's first non-invasive cholesterol test system, is cleared for sale in the U.S. Although this is a major move forward on the sale and distribution of this product, the Company is unable to comment on its impact on future revenue until marketing and distribution channels are developed and announced by IMI.
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