Scitex Corporation Ltd. Reports Results For Second
Quarter 2000
Creo transaction generates pre-tax gain of $191 million
Strong progress in Digital Printing
Highlights:
-
New strategy off to strong start
-
Closing of Creo transaction and substantial capital gain
-
Record quarter for Scitex Wide Format
-
Launch of major inkjet-related products and technologies at
DRUPA
-
Karat Digital Press recording first-time revenues
-
Investments made in Objet Geometries and InfoBit
Herzlia, Israel, August 17, 2000 - Scitex Corporation Ltd.
(NASDAQ: SCIX) today reported its results for the quarter ended
June 30, 2000.
The transaction with Creo Products Inc., whereby Scitex merged
its preprint business with Creo, closed on April 4, 2000 and generated
a pre-tax gain of $191 million. The full impact of the transaction
(including the resulting capital gain and transaction expenses)
is included in the results for the second quarter of 2000. Details
of the financial treatment of the CreoScitex transaction are provided
later in this earnings release.
Quarter Highlights
The second quarter of 2000 was an extremely busy period for Scitex.
In addition to the transaction with Creo, Scitex announced its
new strategy, centered on building a network of leading and innovative
companies that are focused on combining digital imaging technologies
with the power of the Internet.
The second quarter marked substantial progress in Scitex's digital
printing activities in new product introductions and business
performance. At the DRUPA 2000 trade show in May, Scitex was a
major participant and through its network of companies exhibited
many innovative technologies and new products. In this context,
Scitex made new investments in Objet Geometries Ltd., a leading
developer of color three-dimensional inkjet printing applications,
and InfoBit Ltd., a start-up company which develops innovative
and unique visual navigation tools for the World Wide Web and
corporate Intranet environments.
Consolidated Results
In the second quarter, Scitex recorded revenue of $53.4 million
and operating income of $2.7 million before amortization of goodwill
($2.3 million) and reorganization-related costs ($3.3 million
included in operating expenses). Net income in the second quarter,
including the gain resulting from the Creo transaction, totaled
$115.0 million or $2.66 per share on a diluted basis.
Since Scitex's involvement in the preprint business has changed
from full ownership through Q1 2000 to an equity investment in
Creo Products Inc. beginning Q2 2000, direct comparison of the
company's results for the second quarter of 2000 with those for
the second quarter of 1999 is not meaningful.
Yoav Z. Chelouche, President and Chief Executive Officer of Scitex,
said, "We are pleased with our second quarter achievements.
We are on target with our business plan and are continuing to
maximize the synergetic opportunities created within our network
of companies, in order to generate value and growth from the convergence
of digital imaging technologies with the Internet."
DRUPA 2000
DRUPA 2000, held in Dusseldorf, is the premier show for the conventional
printing and graphic arts industry and takes place every four
years. Over 400,000 visitors attended this year's show in May,
with 2,000 exhibitors from 50 countries around the world. DRUPA
2000 was perceived as 'digital DRUPA'.
Recognizing that digital printing technologies complement conventional
printing, commercial printers are buying into the technology of
digital printing, bringing it into mainstream. Inkjet based technologies
were at the center of attention, with industrial printing being
the area of greatest innovation at the show. Scitex Digital Printing,
with its inkjet-based Scitex VersaMark Business Color Press™,
and Aprion Digital, with its MAGIC™ inkjet technology broadening
the market applications of inkjet technologies, drew great interest.
Scitex Network Companies
Creo Products Inc., in which Scitex has an equity interest of
approximately 28%, posted record revenues of $162.6 million in
its third quarter of 2000. The company had a strong DRUPA showing
and used this event to launch CreoScitex, its principal operating
division. Effective May 18, the joint venture between Heidelberg
and Creo was terminated, and the companies entered into an original
equipment manufacture (OEM) relationship on those products that
were formerly in the joint venture.
Scitex Digital Printing (SDP) - At DRUPA 2000, Scitex unveiled
the Scitex VersaMark Business Color Press (BCP), the world's highest
speed 100% variable data digital color press. With extremely low
operating costs per page, the BCP is set to redefine transactional
printing, offering effective one-to-one marketing on financial
statements, coupons and catalog pages. As SDP transitions into
these new markets and launches its new products, the company recorded
$35.5 million of revenue in the second quarter of 2000, a small
reduction compared to $36.9 million for the same period last year.
Operating income for the second quarter, before amortization of
goodwill, was $1.7 million.
Scitex Wide Format Printing continued to experience fast
growth, with record revenues for the second quarter of 2000 of
$17.8 million, a rise of 91% compared to the second quarter last
year. Operating income excluding amortization of goodwill was
$2.6 million. During the quarter, Scitex Wide Format established
its independent distribution activities in Europe and North America,
building management teams and setting up business and logistics
infrastructure. Sales of the Scitex Pressjet™ digital press,
on which Scitex cooperates with 3M, began in this quarter.
Aprion Digital, appearing for the first time at a major
trade show, had an excellent DRUPA demonstrating its MAGIC inkjet
technology running on prototype printing systems. Reaching its
DRUPA milestone, the company received $8 million, representing
the second installment of its financing package. Initial beta
placements are planned towards the end of 2000. Aprion signed
a strategic distribution agreement with Scitex Wide Format Printing,
an additional value added distribution partner, to bring to market
its MAGIC technology.
Karat Digital Press initiated commercial shipments of the
74 Karat™ digital offset press and recorded first time revenue
in the quarter on sales of five units.
Following a strong DRUPA, Karat received ten orders. The company
handles distribution in Europe through KBA and has established
its own distribution and support operation in North America.
Vio Worldwide Limited, an applications service provider
(ASP) for the graphic arts industry, is Scitex's 50/50 joint venture
with British Telecommunications plc. The latest quarter saw Vio
expand activities in North America and add several software applications
to its online suite of applications. As the company transitions
from a network provider to an ASP, 20% of the latest quarter's
revenue was generated from applications.
CreoScitex Transaction
In April, Scitex closed the sale of the assets of its digital
preprint business to Creo Products Inc. in consideration for 13.25
million shares of Creo. The impact of this transaction on the
second quarter results is as follows:
(1) A pre-tax gain of $191 million from the sale of the preprint
business is included in 'Other income';
(2) A loss of $35 million, of which $24 million is a one-time
write-off of Creo in-process R&D, is included in 'Share
in losses of equity investments'; and
(3) At June 30, 2000, the book value of the equity investment
in Creo is $386 million.
Yoav Z. Chelouche continued, "In early April, Scitex announced
its new corporate strategy to dedicate itself to building a network
of leading and innovative companies that are focused on combining
digital imaging technologies with the power of the Internet. This
strategy is based on the following business objectives:
-
Enhance and highlight the value of its existing activities
and investment portfolio;
-
Invest in specialized technology companies that are revolutionizing
their industries;
-
Leverage the complementary strengths of the existing network
of companies that Scitex Corporation either owns or has an
interest in; and
-
Add managerial depth and market knowledge to this network
of companies.
"Our close adherence to this strategy is already beginning
to bear fruit, and this has been reflected in the good progress
achieved during the second quarter. We've expanded our network
of companies, and strengthened our management team with the addition
of Yossy Zylberberg as Chief Financial Officer. Our business model
involves enhancing the value of companies within Scitex's portfolio.
As each of our network companies grows its operations, we expect
to approach capital markets for either private equity investment
or public equity offerings."
About Scitex Corporation Ltd.
Scitex Corporation Ltd., a world leader in digital imaging solutions,
is building a network of leading, innovative companies focused
on combining digital imaging technologies with the power of the
Internet to create a world of visually rich business communications.
Scitex shares trade on NASDAQ under the symbol SCIX. For more
information, please visit our Web site at www.scitex.com.
Except for the historical information herein, the matters discussed
in this news release include forward-looking statements within
the meaning of the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking
statements that are based on various assumptions (some of which
are beyond the Company's control) may be identified by the use
of forward-looking terminology, such as "may", "can
be", "will", "expects", "anticipates",
"intends", "believes", "projects",
"potential", and similar words and phrases. Actual results
could differ materially from those set forth in forward-looking
statements due to a variety of factors, including, but not limited
to, (1) risks in product and technology development, (2) market
acceptance of new products and continuing product demand, (3)
the impact of competitive products and pricing, (4) changes in
domestic and foreign economic and market conditions, (5) timely
development and release of new products by strategic suppliers,
(6) the impact of the Company's accounting policies, and (7) the
other risk factors detailed in the Company's most recent annual
report and other filings with the US Securities and Exchange Commission.
Except as may be required by law, the Company does not undertake,
and specifically disclaims, any obligation to publicly release
the results of any revisions which may be made to any forward-looking
statements to reflect the occurrence of anticipated or unanticipated
events or circumstances after the date of such forward-looking
statements.
Scitex and the Scitex logo are registered trademarks and service
marks of Scitex Corporation Ltd. Creo and CreoScitex are trademarks
or registered trademarks of Creo Products Inc. Scitex Pressjet
is a trademark of Scitex Wide Format Printing Ltd. Scitex VersaMark
and VersaMark Business Color Press are trademarks of Scitex Digital
Printing, Inc. Karat and 74 Karat are trademarks of Karat Digital
Press B.V., and may be registered in certain jurisdictions. Vio
is a registered trademark and service mark of Vio Worldwide Limited.
Aprion and MAGIC are trademarks of Aprion Digital Ltd.
Note to Investors: Scitex will provide a live simulcast and rebroadcast
of its second quarter Fiscal 2000 earnings release conference
call online. You can connect online through www.streetfusion.com
and/or www.scitex.com commencing
on August 17, 2000 at 10:30am ET and continue through August 23,
2000. Scitex Corporation, Ltd. invites those who cannot listen
to the 10:30pm EST conference call to listen to a replay of the
call by dialing (800) 475-6701 or for those calling from
abroad by dialing (320) 365-3844 and entering reservation
number #531700, beginning today at 3:30pm EST. The replay
will be available until midnight on Friday August 25, 2000.
SCITEX CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(U.S. Dollars in thousands, except per share data)
|
|
Quarter ended
June 30,
|
Six months ended
June 30,
|
|
(Unaudited)
|
1999 (*)
(Unaudited)
|
2000 (*)
(Unaudited)
|
1999 (*)
(Unaudited)
|
|
Revenues
|
Sales
|
$ 35,674
|
$ 116,258
|
$ 144,779
|
$ 222,762
|
Service
|
11,092
|
37,490
|
47,180
|
72,969
|
Supplies
|
6,618
|
16,422
|
24,363
|
31,848
|
|
Total revenues
|
53,384
|
170,170
|
216,322
|
327,579
|
|
|
|
Cost of revenues
|
Cost of sales
|
15,286
|
57,771
|
74,092
|
110,592
|
Cost of service
|
11,974
|
30,483
|
39,156
|
60,478
|
Cost of supplies
|
3,060
|
8,840
|
12,456
|
16,786
|
|
Total cost of revenues
|
30,320
|
97,094
|
125,704
|
187,856
|
|
|
|
Gross profit
|
23,064
|
73,076
|
90,618
|
139,723
|
|
|
|
Expenses
|
|
|
|
|
Sales and marketing
|
11,082
|
23,783
|
36,352
|
46,993
|
General & administrative
|
5,325
|
18,684
|
19,025
|
35,879
|
Research and development, net
|
7,239
|
15,710
|
25,547
|
31,674
|
Amortization of goodwill and other intangibles
|
2,342
|
2,273
|
5,321
|
4,569
|
|
|
|
Operating income (loss)
|
(2,924)
|
12,626
|
4,373
|
20,608
|
Financial income - net
|
406
|
621
|
1,376
|
1,120
|
Other income (expenses) - net
|
191,047
|
(102)
|
192,246
|
93
|
|
Income before taxes on income
|
188,529
|
13,145
|
197,995
|
21,821
|
Taxes on income
|
32,555
|
2,028
|
34,036
|
3,330
|
|
|
155,974
|
11,117
|
163,959
|
18,491
|
|
|
Share in losses of equity investments
|
(40,991)
|
(6,122)
|
(47,688)
|
(10,885)
|
|
Income from continuing operations
|
114,983
|
4,995
|
116,271
|
7,606
|
|
Income from discontinued operations - disposal
|
|
|
|
5,001
|
|
Net income
|
$ 114,983
|
$ 4,995
|
$ 116,271
|
$ 12,607
|
|
|
|
Earnings per share - basic:
|
Continuing operations
|
$ 2.68
|
$ 0.12
|
$ 2.72
|
$ 0.17
|
Discontinued operations
|
|
|
|
$ 0.12
|
|
|
$ 2.68
|
$ 0.12
|
$ 2.72
|
$ 0.29
|
|
Earnings per share - diluted:
|
|
Continuing operations
|
$ 2.66
|
$ 0.12
|
$ 2.67
|
$ 0.17
|
|
Discontinued operations
|
|
|
|
$ 0.12
|
|
|
$ 2.66
|
$ 0.12
|
$ 2.67
|
$ 0.29
|
|
Weighted average number of shares outstanding (in
thousands)
|
|
- basic
|
42,825
|
42,637
|
42,732
|
42,826
|
|
- diluted
|
43,246
|
42,731
|
43,518
|
43,009
|
(*) The results for the quarter ended June 30, 1999 and the six
months ended June 30, 2000 and 1999 include, through March 31,
2000, the results of operations of the preprint business that
was transferred to Creo Products Inc.
SCITEX CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
|
|
June 30, 2000
(Unaudited)
|
Dec. 31, 1999 (*)
(Audited)
|
|
Assets
|
|
|
|
Current assets:
|
Cash and cash equivalents
|
$ 37,979
|
$ 49,259
|
Short-term investments
|
21,829
|
32,992
|
|
Total cash and short-term investments
|
59,808
|
82,251
|
|
|
Trade receivables - net
|
53,003
|
173,858
|
Other receivables
|
6,806
|
32,582
|
|
Inventories:
|
Systems and components
|
30,237
|
78,950
|
Spare parts and supplies
|
11,958
|
47,532
|
Deferred income taxes
|
22,224
|
44,975
|
|
|
184,036
|
460,148
|
|
Investments and other non-current assets
|
403,650
|
10,501
|
|
Property and equipment - net
|
42,684
|
90,577
|
|
Goodwill and other intangible assets - net
|
54,064
|
54,578
|
|
|
$ 684,434
|
$ 615,804
|
|
Liabilities and Shareholders' Equity
|
|
Current liabilities:
|
Short term debt and current maturities
|
$ 7,022
|
$ 6
|
Trade payables
|
12,363
|
65,281
|
Accrued and other liabilities
|
91,444
|
119,939
|
|
|
110,829
|
185,226
|
|
Deferred income taxes
|
5,274
|
948
|
|
Other non-current liabilities
|
22,089
|
1,743
|
|
Shareholders' equity:
|
Share capital
|
6,204
|
6,196
|
Capital surplus
|
364,219
|
361,519
|
Currency translation adjustments
|
909
|
1,533
|
Retained earnings
|
180,434
|
64,163
|
Treasury stock at cost
|
(5,524)
|
(5,524)
|
|
|
546,242
|
427,887
|
|
|
$ 684,434
|
$ 615,804
|
(*) The balance sheet at December 31, 1999 includes the assets
and liabilities of the preprint business that was transferred
to Creo Products Inc.
Contacts:
Scitex Corporation Ltd.
Itai Halevy
Corporate Vice President Business Development
Tel: +972 9 9597306
E-mail: itai_halevy@scitex.com
Mickey Sahar
Director of Corporate Communications
Tel: +972 9 9597843
E-mail: mickey_sahar@scitex.com
Thomson Financial Investor Relations
Angus I H Prentice
Managing Director, International Investor Relations
Tel: +44 20 7395 7100
Fax: +4420 7395 7110
E-mail: angus.prentice@thomsonir.com
Andre Brands
Senior Manager, Consulting
Tel: +1 212 701 1829
Fax: +1 212 363 3971
E-mail: andre.brands@thomsonir.com |