Scitex Announces Third Quarter and First Nine Months 1998 Results

Company to Exit Digital Video Business

Herzlia, Israel -- November 4, 1998

Scitex Corporation Ltd. (NASDAQ:SCIXF) announced today results for the third quarter of 1998. The loss from continuing operations for the quarter ending September 30, 1998 totaled $9.8 million or $0.23 per share compared with a profit of $6.5 million or $0.15 per share in the third quarter of 1997. Including the $6.2 million loss incurred by Scitex Digital Video (SDV) in the third quarter of 1998, losses from operations were $16.0 million or $0.37 per share, consistent with the anticipated loss previously indicated by the Company.

In addition, the results for the quarter ending September 30, 1998 include an estimated loss resulting from the Company's exit from the digital video business in the amount of $62.7 million. This amount is comprised of a $49.7 million provision for the writeoff of Scitex Digital Video (SDV), and a $13.0 million write down of the investment in Truevision Inc. to market price. Therefore, the total net loss reported for the quarter is $78.7 million or $1.83 per share, compared to net income of $2.2 million or $0.05 per share for the corresponding period last year.

As previously reported and in line with the Company's strategy of focusing on its core Digital PrePrint and Digital Printing businesses, the Company is in discussions with certain parties for the sale of Scitex Digital Video. There can be no assurance that any such transaction will materialize. However, if successful, the transaction is expected to close by year-end. The digital video business is presented in the third quarter and nine month results as "discontinued operations". Therefore, the results from continuing operations presented for the current period and for the corresponding periods last year, exclude SDV.

Revenues (excluding $6.5 million of SDV) for the third quarter of 1998 were $150 million compared to revenues of $156 million (excluding SDV) in the third quarter of 1997. Gross profit was $62 million (41% of sales) compared to $64 million (41% of sales) for the third quarter of 1997. The operating loss from continuing operations was $5.2 million compared to an operating profit of $7.3 million in the third quarter of 1997. Operating expenses for the quarter were $67 million, up 18% from a year ago, due primarily to the Company's intensive new product development activities and an aggressive marketing plan to introduce new products, as well as participation in major trade shows. The Company also recorded expenses associated with headcount reduction.

For the third quarter of 1998, revenues in the Americas represented 46% of the total, compared to 47% recorded for the third quarter of 1997. European revenues in the quarter were 37% of the total, compared to 34% last year.Japan accounted for 11% of total revenues, similar to last year, while Asia Pacific was 4% compared to 6% last year. Revenues from other areas were constant at 2% of the total.

For the first nine months of 1998, the Company reported a net loss of $117 million, including the $62.7 million estimated costs associated with exiting the digital video business described above and the $44 million one-time charge for in-process R&D associated with the acquisition of Idanit Technologies Ltd. This is compared to a net loss of $5.1 million for the first nine months of 1997.

Revenues for the nine months ended September 30, 1998 were $463 million, up 2% from $452 million recorded for the same period in 1997.

The Company's Digital PrePrint business reported revenues of $107 million in the third quarter of 1998, up 2% from the $105 million recorded in the same period last year. Strong sales of PrePrint products in the U.S. and Europe were largely offset by a significant decline of sales in the Far East. The slow down in Japan drove a restructuring program in our Japanese joint venture - Nihon Scitex, designed to bring the company back to profitability. Our share in the losses of Nihon Scitex for this quarter was $4 million, most of which resulted from the restructuring program.

The Digital Printing business recorded revenues of $43 million in the third quarter of 1998 compared to $51 million in the same period last year.

Commenting on the results, Yoav Z. Chelouche, President and Chief Executive Officer said, "During the third quarter, we continued to concentrate on implementing our new products release plan for Digital PrePrint with the successful launch of the new computer-to-plate Lotem 800V™ platesetter. We also had a very successful showing at IPEX, a major industry trade show in the UK, where we received very enthusiastic reviews and trade press coverage. The 74 Karat™ digital offset press was particularly well received at the show and we are currently preparing for our first beta site. The Digital PrePrint Output division had a strong quarter driven by the success of both the Lotem™ and the Dolev™ products.

"As previously announced, Scitex Digital Printing experienced a shortfall in revenues and profits derived from delays in closing a number of large purchase orders. We still expect those sales to be consummated in the fourth quarter, although obviously there can be no assurance that they will occur. At the same time, we completed the integration of our wide format printing activities which caused revenues to deviate from plan. We expect our wide-format activities to be back on track in the fourth quarter."

Mr. Chelouche concluded, "With the anticipated sale of our digital video activities, Scitex becomes a far more focused company. We continue to develop and deploy our extensive pipeline of new products. We are delighted with the strong vote of confidence from our customers and from the industry. We are also excited about the prospects for Vio™ - the global digital graphic arts network launched together with British Telecom. This endeavor has the potential to revolutionize the way the printing and publishing industries communicate. We continue to intensify our efforts so that all of these activities will result in a better financial performance."

Scitex Corporation Ltd., a world leader in digital imaging solutions for graphics communication, designs, develops, manufactures, markets and supports products, systems and devices for the digital preprint and digital printing markets. Scitex shares trade on NASDAQ under the symbol SCIXF. For more information visit the Company's internet site: http://www.scitex.com.

Except for the historical information herein, the matters discussed in the news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based on a number of factors, including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product demand, the impact of competitive products and pricing, changing economic conditions both here and abroad, timely development and release of new products by strategic suppliers and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission, as well as the effect of the Company's accounting policies.

Scitex, the Scitex logo, Dolev, Idanit, Lotem and Lotem 800V are trademarks of Scitex Corporation Ltd. and/or its subsidiaries and may be registered in certain jurisdictions. Karat and 74 Karat are trademarks of Scitex Corporation Ltd. and KBA - Planeta AG, jointly, and may be registered in certain jurisdictions. Vio is a trademark of Vio Worldwide Limited and may be registered in certain jurisdictions.