Scitex Announces Fourth Quarter
and Full Year 1998 ResultsFourth Quarter 1998 Revenues and
Net Income Rise
Herzlia, Israel -- February 3, 1999 --
Scitex Corporation Ltd. (Nasdaq:SCIXF) announced today that for the fourth quarter
of 1998 the Company earned $6.4 million or $0.15 per share (diluted) compared
to $5.7 million or $0.13 per share (diluted) for the same period a year ago. For
the fourth quarter of 1997, net income from continuing operations (which excludes
the discontinued digital video activities) was $12.2 million or $0.28 per share
(diluted).
Revenues for the fourth quarter of 1998 were
$177 million, up 7% from the $166 million recorded in the fourth quarter of 1997.
Gross
profit for the fourth quarter of 1998 was $77 million (44% of sales), compared
with $70 million in the same period last year (42% of sales). Operating profit
for the fourth quarter of 1998 was $14.1 million versus $12.6 million for the
same period a year ago. For the fourth quarter of 1998, the Company recorded an
equity loss of $6.3 million, reflecting primarily the investment in the Vio and
Karat joint ventures, compared to an equity loss of $1 million for the same period
last year.
For the full year of 1998 net income from continuing
operations before the cost of acquired in-process R&D, was $10 million or
$0.23 per share (diluted) compared to $17 million or $0.40 per share (diluted)
in 1997. Total loss for 1998 was $111 million or ($2.58) per share compared to
$1 million or $0.01 per share for the full year 1997. The loss for 1998 included
$44.3 million of in-process R&D writeoff associated with the acquisition of
Idanit, recorded in the first quarter of 1998, and $76.5 million related to the
exit from the digital video business, recorded in the third quarter of 1998. Revenues
for the full year were $640 million, an increase of 4% from the $618 million achieved
in 1997.
In the fourth quarter of 1998, revenues from the
Americas were $81 million compared to $73 million last year. Revenues from Europe
were $70 million compared to $62 million for the fourth quarter last year. Japan
recorded revenues of $15 million compared to $16 million last year, while Asia
Pacific and other regions recorded $11 million in revenues compared to $14 million
for the fourth quarter of 1997.
As part of the Company's
strategy to focus on its core businesses, during the fourth quarter, Scitex exited
the video business by selling Scitex Digital Video for approximately $10 million.
Digital
PrePrint revenues for the fourth quarter of 1998 were $119 million compared
with $128 million in the fourth quarter of 1997. For the full year 1998, Digital
PrePrint revenues were $436 million compared to $438 million last year. Although
sales of Digital PrePrint in 1998 were essentially flat with 1997, profitability
improved as a result of, among other things, sales of the computer-to-plate
Lotem 800V™ platesetter. The Company shipped over
100 Lotem™ units in the first two quarters of availability. The
Dolev® family of imagesetters also continues to contribute
to the performance of the PrePrint line of business.
Revenues
from Digital Printing in the fourth quarter of 1998 were $58 million, compared
to $38 million for the same period last year. Full year 1998 Digital Printing
revenues were $204 million compared to $179 million in 1997. Scitex Digital Printing
had a good fourth quarter, and began deliveries of high speed digital printing
systems to Caisse Nationale d’Assurance Maladie des Travailleurs Salariés
(CNAMTS), the health branch of the French social security system. The total order
is expected to exceed $20 million, the majority of which will be delivered in
1999 and the year 2000.
During 1998, Scitex significantly
broadened its activities in Digital Printing through the acquisitions of Idanit
and Matan to become a leader
in the market for professional wide-format digital printing.
Commenting
on the results, Yoav Z. Chelouche, President and Chief Executive Officer of Scitex
said, "Our fourth quarter 1998 results are encouraging and we are pleased
with the progress we have made in the quarter and the year. In 1998 we made important
changes that sharpened our focus and broadened our core businesses. We also planted
the seeds of our future growth.
"During 1998, we reasserted
our position as a leading equipment supplier to the printing industry. We invested
heavily in the 74 Karat™ high speed, four-color
direct imaging digital offset press, a joint effort with KBA. During the fourth
quarter, we delivered the first system to a major European commercial printer
for testing, and Karat opened its new production facility in Radebeul, Germany.
"We
are also very excited about Vio, our joint
venture with British Telecom which creates a global, high speed wide band telecom
network to serve the graphic arts and printing industries. Several major companies
within the Graphic Arts industry in the US, Europe and Japan have chosen Vio®.
Quebecor Printing Inc., one of the world’s largest commercial printers has
chosen Vio to provide an international data communications service to its worldwide
customers. Vio is an example of the kind of value-added solutions that we provide
our customers to help them compete more effectively in the digital world.
"Although
we are not satisfied with our financial performance in 1998, we are pleased with
our progress. We focused on our core businesses, entered promising new markets
in digital printing, eliminated non-synergetic businesses and made substantial
investments in the future growth engines of the Company. With these actions behind
us, we look ahead to an exciting and challenging 1999."
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 CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(U.S. Dollars in thousands, except per share data)
| |
Quarter ended
December 31, |
Year ended
December 31, | |
| 1998 |
1997 | 1998
| 1997 |
| |
(Unaudited) | (Audited)
| | (U.S.
Dollars in thousands, except per share data) | |
Revenues | | Sales
| $123,219 |
$113,200 | $441,399
| $426,591 | |
Service | 37,062
| 37,672 |
137,823 | 134,183
| | Supplies |
16,979 | 14,700
| 61,089 |
56,885 | |
Total revenues |
177,260 |
165,572 |
640,311 |
617,659 | |
| | Cost
of revenues | | Cost
of sales | 59,954 |
59,754 | 227,564
| 234,220 | |
Cost of service | 30,157
| 28,444 |
108,274 | 110,771
| | Cost of supplies
| 9,748 |
7,518 | 33,198
| 28,535 | |
Total cost of revenues |
99,859 | 95,716
| 369,036
| 373,526
| | |
| Gross profit
| 77,401 |
69,856 | 271,275
| 244,133
| | |
| Expenses
| | Research and development
expenses | 18,257 |
18,001 | 77,368
| 68,110 | |
Less participations | (2,097)
| (3,000) |
(10,870) | (10,500)
| | Net
| 16,160 |
15,001 | 66,498
| 57,610 |
| | | Acquired
in-process R&D | |
| 44,264 |
| | Selling |
26,051 | 24,121
| 100,855 |
91,327 | | General
& administrative | 18,613
| 16,640 |
74,142 | 72,584
| | Amortization of
goodwill and other intangibles | 2,461
| 1,542 |
9,285 | 6,215
| | |
| Operating
income (loss) | 14,116
| 12,552 |
(23,769) |
16,397 | | Financial
income - net | 600 |
956 | 4,971
| 5,941 | |
Other income (expenses) - net |
159 | (412)
| 1,634 |
(1000) | |
Income (loss) before taxes on income |
14,875 | 13,096
| (17,164)
| 21,338 |
| Taxes on income |
2,231 |
| 2,231 |
1,500 | |
| 12,644 |
13,096 | 19,395
| 19,838 |
| Share in income (losses) of
equity investments | (6,254)
| (872) |
(14,897) | (2,742)
| | Income (loss) from
continuing operations | $6,390 | $12,224 | ($34,292) | $17,096 |
| | | Discontinued
operations: | | Loss from operations |
| (6,536) | (13,831) | (16,514) |
| Loss from disposal |
|
| (62,704) |
| | Loss
from discontinued operations |
| (6,536) | (76,535) | (16,514) |
|
Net income (loss) |
$6,390 |
$5,688 |
($110,827) |
$582 | |
| | Income
(loss) per share - basic and diluted | | Continuing
operations | $0.15 | $0.28 | ($0.80) | $0.40 |
| Discontinued operations | $0.00 | ($0.15) | ($1.78) | ($0.39) |
| | $0.15 | $0.13 | ($2.58) | $0.01 |
| | |
Weighted average number of shares outstanding (in thousands) |
| -
basic |
43,036 |
42,809 |
42,929 |
42,809 | | -
diluted |
43,136 |
43,583 |
43,457 |
43,154 | SCITEX CORPORATION
LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS(U.S. Dollars in thousands)
| | December
31, 1998 | December 31, 1997 |
| | (Audited)
| | Assets
| | | |
Current assets: | |
Cash and cash equivalents | $49,920 |
$72,300 | |
Short-term investments | 33,447 |
87,057 | |
| | Total
cash and short-term investments | 83,367
| 159,357 |
| | | Trade
receivables - net | 141,393 |
140,540 | | Other
receivables | 25,764 |
30,707 | | Inventories:
| | Systems and components
| 77,557 | 87,998
| | Spare parts and supplies
| 45,385 | 51,453
| | Deferred income taxes |
31,632 | 18,937 |
| |
405,098 | 488,992
| | | |
Investments and other non-current assets |
9,372 | 15,365 |
| Property and equipment - net |
90,902 | 89,605 |
| Goodwill and other intangible assets - net
| 60,136 | 74,765
| | |
$565,508 |
$668,727 | |
| | Liabilities
and Shareholders' Equity | | Current
liabilities: | | Short term
debt and current maturities | $2,034 |
$618 | |
Trade payables | 48,180 |
46,600 | |
Accrued liabilities and other | 109,588 |
120,493 | |
| 159,802 |
167,711 | | |
| | | Non-current
liabilities | 4,483 |
907 | |
| | Shareholders' equity:
| | Ordinary shares |
6,194 | 6,187 |
| Capital surplus |
360,316 | 358,278 |
| Currency translation adjustments
| 1,064 | 1,457
| | Unrealized loss on marketable
securities
available for sale |
| (10,289) | |
Retained earnings | 33,649
| 144,476 | |
| 401,223 |
500,109 | | |
| | |
| $565,508
| $668,727
| |