Scitex Corporation Q3 Results: Profit on 24% Increase in Sales
Press release from the issuing company
TEL AVIV, Israel, Nov. 3 -- Scitex Corporation Ltd., a world leader in industrial inkjet digital printing solutions, today announced its unaudited financial results for the third quarter ended September 30, 2003.
Scitex's revenues for the third quarter of 2003 were $71.5 million, an increase of 24% from $57.7 million in the third quarter of 2002. Operating income was $6.2 million (before amortization of intangibles of $1.5 million), compared to operating income of $2.1 million in the third quarter of 2002 (before amortization of intangibles of $0.8 million). Other income includes a gain of $3.7 million from the sale of Scitex's remaining shares in Creo Inc. Net profit for the quarter was $5 million, compared to a net loss of $0.8 million in the corresponding quarter of 2002.
Geographically, Europe contributed 45% of the revenues in the third quarter of 2003, followed by the Americas with 36% of revenues, and the Far East with 17% of revenues.
"I am exited about Scitex's return to profitability" commented Nachum "Homi" Shamir, President and CEO of Scitex. "These results validate our strategic direction for renewed focus on the core inkjet technology business. I am very pleased with the continued revenue growth and improved operating profitability of both Scitex Digital Printing and Scitex Vision."
Scitex Digital Printing, Inc.
Revenues of Scitex Digital Printing, a wholly owned subsidiary based in Dayton, Ohio, for the third quarter of 2003 were $44.9 million, an increase of 29% from $34.8 million in the third quarter of 2002 and an increase of 2% from $43.9 million in the second quarter of 2003. Operating income was $5.4 million (12.1% of revenues), compared to $0.5 million in the third quarter of 2002 and $3.9 million in the second quarter of 2003 (figures are before amortization of intangibles).
Scitex Digital Printing used Xplor International, a major trade show for transactional printers, to introduce new products in its Scitex VersaMark family of printing systems targeted for this market. VersaMark JetBlack, a black-and-white printing system offers customers an affordable entry point to the Scitex VersaMark technology and is upgradeable in terms of speed, layout and color. New models of VersaMark Vantage continue to expand the availability of Scitex Digital Printing's award-winning Business Color technology.
"Providing a full range of product capability is significant to the success of our transactional and commercial printers customers," said Mr. Shamir. "The introduction of new products in our Scitex VersaMark family is in direct response to the high level of interest in digital color printing coupled with the need for capital preservation. With the hallmark, modular architecture of our printing systems, a user can now start with a monochrome digital printing solution and select a color solution from a wide range of digital color printing systems as business needs grow and change. This announcement of a complete upgrade path in our system family is exciting for us and the industry."
Scitex Vision Ltd.
Revenues of Scitex Vision, a majority owned subsidiary based in Netanya, Israel, for the third quarter of 2003 were $26.7 million, an increase of 16.6% from $22.9 million in the corresponding quarter of 2002 and an increase of 8.5% from $24.6 million in the second quarter of 2003. Scitex Vision had an operating income of $1.5 million, compared to operating income of $2.3 million in the third quarter of 2002 and operating loss of $0.1 million in the second quarter of 2003 (figures are before amortization of intangibles).
Scitex Vision reported a record quarter driven by the strong sales level in the graphic arts market, and renewed sales activity in the packaging market. Scitex Vision completed the integration of all of its manufacturing locations (following the combination of Scitex Vision and Aprion Digital) and is now operating from a centralized, state of the art, ISO 9001 certified facility, in Netnaya, Israel. Major product introductions also highlighted the quarter that saw the launch of the Scitex Vision TURBOjet, currently, the industry's fastest high-quality, wide format digital press.
"I am particularly pleased with the continuation of revenue growth at Scitex Vision and its return to operating profitability," concluded Shamir. "With the successful launch of groundbreaking products like TURBOjet, Scitex Vision is clearly positioned to be the leader in the industrial graphic arts inkjet market."
Balance Sheet and Cash Flow
Cash and short-term investments on hand (not including restricted deposit funds) increased to $70.7 million due to the sale of the Creo shares. Accounts receivable increased to $107.5 million as a result of the increased activity, and inventories also increased to $60.4 million.
Effective January 1, 2003, Scitex consummated a transaction to combine the business of its wholly-owned subsidiary, Scitex Vision Ltd., with that of venture-backed Aprion Digital Ltd. Scitex held approximately 42.5% of Aprion's share capital and certain major shareholders of Scitex held approximately 28.5% of Aprion's share capital prior to the closing of the transaction. Consequently, commencing on January 1, 2003, Scitex consolidates in its financial statements a majority owned company - the combined Aprion Digital/Scitex Vision entity, in which it holds approximately 75.5%. It previously incorporated the results of Scitex Vision's as a wholly-owned subsidiary. As a result, all assets and liabilities of the combined entity are included in Scitex's balance sheet, with a deduction of the relative minority interest in the combined entities equity. Scitex fully consolidates the combined entities Statement of Income, with a deduction of the relative minority interest in the combined entities Statement of Income. Similarly, Scitex's financial results for 2002 did not include figures for Aprion Digital Ltd. (on a consolidated basis, as Scitex then held only a minority interest in Aprion), and Scitex Vision's financial results for 2002 did not include figures for Aprion Digital Ltd. (as the Aprion Digital/Scitex Vision combination transaction occurred on January 1, 2003).
In October 2003, a NIS 14 million (approximately $3.1 million) lawsuit was filed against Scitex, Scitex Vision and others, including other shareholders of Scitex Vision (among them, Scitex's two largest shareholders, Clal Industries and Investments Ltd. and Discount Investments Corporation Ltd.) and the directors of Aprion Digital in the period relevant for the lawsuit (three of whom are present or former office holders of Scitex). The lawsuit was brought by C.D.I. Technologies (1999) Ltd, a shareholder of Scitex Vision, in connection with the transaction to combine Scitex Vision and Aprion that was completed in January 2003. In particular, the lawsuit alleges that the terms of the transaction and the manner in which it was effected prejudiced the rights of CDI as a minority shareholder of Scitex Vision. While Scitex and Scitex Vision intend to vigorously defend the lawsuit, the outcome of the claim cannot be predicted at this time.
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