Scitex Reports Q4 Loss; Sees 25% Revenue Increase Year Over Year
Press release from the issuing company
TEL AVIV, Israel, March 2 -- Scitex Corporation Ltd. today announced financial results for the fourth quarter and full year ended December 31, 2004.
Ami Erel, Chairman of Scitex, commented: "I am delighted with the performance of Scitex during 2004. Our principal operating subsidiary, Scitex Vision, achieved an eighth consecutive quarter of revenue growth, with record quarterly revenues, operating profitability and positive cash flow. Scitex Vision took advantage of the renewed capital investment flow and increased ink demand with its wide product portfolio, loyal customers, and strong distribution and customer support infrastructure."
Raanan Cohen, President and CEO of Scitex, commented: "2004 was an excellent year for Scitex. In 2004, Scitex made several significant strides commencing with the closing of the sale of SDP's business to Kodak at the beginning of 2004 and continuing with distribution of nearly $120 million of the sale proceeds to our shareholders by way of a self tender offer and a cash distribution made in mid-year. Our primary subsidiary Scitex Vision achieved record revenues of over $128 million in 2004, representing 25% year-over-year revenue growth, and net income of $4.7 million (after a technology write-down of $2.3 million). Scitex Vision's continued growth and record performance in 2004 substantiate its position as a leading player in its markets."
Results of Operations
For fiscal year 2004, revenues were $128.2 million, an increase of 25% from $102.9 million in 2003. The operating loss in 2004 was $3.3 million compared to an operating loss of $12.3 million in 2003. The Company reported net income in 2004 of $47.3 million, primarily attributable to the capital gain derived from the sale of the operations of Scitex Digital Printing (SDP) to Eastman Kodak Company for $250 million (with an additional $12 million in cash retained by SDP after the sale), compared to net income of $1.4 million in 2003. Operating loss and net income for 2004 were impacted by a charge for impairment of technology of $5.6 million at Scitex Vision, $2.5 million of which was attributed to the minority shareholders of Scitex Vision under accounting principles; consequently, only $3.1 million of this impairment is reflected in Scitex Corporation's net income and shareholders' equity.
Geographically, Europe contributed 41% of 2004 revenues for Scitex Vision, followed by the Americas with 36% of revenues, and the Far East and rest of the world with 23% of revenues.
For the fourth quarter of 2004, revenues were $35.5 million, an increase of 25% from $28.5 million in the fourth quarter of 2003. The Company had an operating loss for the quarter of $4.6 million, compared to an operating loss of $3.5 million for the fourth quarter of 2003. The net loss reported by Scitex for the fourth quarter of 2004 amounted to $2.9 million compared to net income of $8 million in the fourth quarter of 2003. Operating loss and net loss for 2004 were impacted impairment of technology described above.
Balance Sheet and Cash Flow
On a consolidated basis, cash, cash equivalents and short-term investments at the end of 2004 were $142.6 million. This excludes restricted deposits of $13.0 million at Scitex Vision and of $10 million retained in a custodial account in connection with the sale of SDP's operations ($5 million of which was released to Scitex in early January 2005), and represents a significant increase from $65.0 million at the end of 2003. The 2004 figure reflects the closing of the Kodak-SDP transaction, the approximate $28.1 million repurchase of shares by Scitex in the self tender offer completed in June 2004, and the approximate $89.8 million cash distribution made in the third quarter of 2004. Cash, cash equivalents and short-term investments at the end of 2004 at Scitex Corporation and its wholly-owned subsidiaries amounted to $132.4 million (excluding the above-described $10.0 million retained in a custodial account). Cash, cash equivalents and short-term investments at Scitex Vision at the end of 2004 amounted to $22.8 million (including the $13.0 million of restricted deposits), bringing the net debt of Scitex Vision to third parties, primarily bank borrowings, to approximately $23 million.
During the year, receivables increased to $33.6 million from $31.3 million, mainly due to increased revenue level and extended payments terms. Inventory in the year significantly increased to $36.7 million from $22.6 million due to increased business activities.
The fourth quarter of 2004, with record quarterly revenues of $35.5 million, highlights a remarkable year for Scitex Vision with continued revenue growth and strong operating and cash flow performance. Scitex Vision's consistent quarter-over-quarter growth throughout the year was fueled by continued strong sales of its market leading super wide format product offerings, acceptance of the Scitex Vision TURBOjet (the industry's most productive wide format digital press) and growth of ink sales.
During the year, Scitex Vision has substantially strengthened its manufacturing and customer support base to meet the growing demand and has considerably enhanced its technology base as a foundation for future products. It also completed ISO 9001/2000 certification at all of its global facilities and operations.
For the fiscal year 2004, Scitex Vision's revenues were $128.2 million, compared to $102.9 million in 2003, reflecting a 25% increase. Operating income was $9 million in 2004, compared to an operating loss of $8.3 million in 2003. Scitex Vision had net income of $4.7 million in 2004, compared to a net loss of $13.6 million in 2003. Operating income and net income for 2004 were impacted by impairment of technology of $2.3 million compared to a $3.0 million technology write-down in 2003.
Scitex Vision reported record revenues for the eighth consecutive quarter and for the year. Revenues for the fourth quarter of 2004 were $35.5 million, an increase of 25% from $28.5 million in the corresponding quarter of 2003 and an increase of 9% from $32.7 million in the third quarter of 2004. Scitex Vision's operating income in the fourth quarter of 2004 was $0.8 million, compared to an operating loss of $2.4 million in the fourth quarter of 2003, and operating income of $3.7 million in the third quarter of 2004. Scitex Vision's net loss was $0.8 million in the fourth quarter of 2004, compared to a net loss of $1.7 million in the fourth quarter of 2003, and net income of $2.3 million in the third quarter of 2004. Operating income and net income for the fourth quarter of 2004 were impacted by impairment of technology described above.
Jemtex Ink Jet Printing Ltd.
Jemtex is a majority owned subsidiary of Scitex, based in Lod, Israel. During 2004, Jemtex continued developing and commenced commercialization of its digital printing engines for the ceramics and textile markets. During 2004, Scitex invested approximately $3 million in Jemtex in consideration for convertible debentures of Jemtex. Following this investment, Scitex holds approximately 74% of Jemtex's issued share capital (84% assuming conversion of the debentures).
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