Scitex Announces First Quarter 2000 Results

Scitex Announces First Quarter 2000 Results

Herzlia, Israel, May 11, 2000
Scitex Corporation Ltd. (NASDAQ: SCIX) today reported its results for the three months ended March 31, 2000.

Creo Scitex Transaction

Following the closing of the transaction between Scitex and Creo Products Inc., reported last month, the following results represent the final publication of the consolidated financial statements of Scitex which include the business merged with Creo. Since the transaction closed after the end of the first quarter, the full impact of the transaction, including the resulting capital gains and all transaction expenses, will be included in the results of the second quarter of 2000.

Quarterly Highlights

Revenues for the first quarter of 2000 were $163 million, up 4% on the comparable quarter in 1999. Operating income was $7.3 million, down $700,000. As could be expected, the pendency and uncertainty of the Scitex/Creo transaction negatively impacted the performance of this business in the quarter. The digital printing businesses grew to $53.2 million, a 29% increase compared to the parallel quarter of 1999.

Net income for the quarter was $1.3 million or 3 cents per share. The weak euro and the strong shekel had a negative impact on the quarter’s results. Net income from continuing operations in the first quarter of 1999 was $2.6 million or 6 cents per share. In that quarter we also showed a gain of $5 million from discontinued operations resulting from a reduction in reserves associated with the Company’s sale of its digital video business.

The New Scitex

In a separate release issued today, Scitex’s management described the new positioning and strategic direction of the Company. It is based on the concept of Scitex building a network of pioneering companies which bring together digital imaging technology with the power and reach of the Internet to offer exciting solutions for the graphic arts and digital imaging markets. The remainder of this press release describes the recent performance and events for Scitex’s operations and investments in the digital preprint, digital printing and Internet markets.

Scitex’s digital preprint business, which was merged with the operations of Creo Products Inc., as of April 4, 2000, to create the CreoScitex organization, recorded revenues of $106 million in the first quarter of 2000 compared with $113 million in the first quarter of 1999. The performance of this part of the business was affected by the uncertainty regarding the transaction with Creo between the signing and the closing. Going forward, Scitex’s participation in the digital preprint business will be through its 27% equity investment in Creo. We believe that once the integration has been completed, CreoScitex should generate high levels of growth and profitability. The market value of this core holding was $424 million (approximately $10 per share) based on the closing price on May 10, 2000. Creo Products Inc. is a world leader in digital preprint and on-press imaging technologies.

Scitex Digital Printing (SDP) posted a modest growth in revenues in the first quarter of 2000 with sales of $35.9 million compared to $34.0 million for the same period last year. Sales of the Scitex VersaMark� , introduced in the first quarter of 1999, expanded during the period as the new technology base gained greater acceptance and appreciation amongst existing and potential customers. Sales of the new Scitex VersaMark products already account for more than 60% of equipment sales in the quarter. The company shipped a multiple system to British Telecommunications plc that included eight Scitex VersaMark digital printing systems. Earlier this month Scitex announced the launch of the VersaMark Business Color Press� , the first ultra high speed digital color press, and its installation at Be’eri Printers, one of Israel’s premier commercial printers.

Scitex Wide Format Printing revenues for the first quarter of 2000 rose 139% to $17.3 million, compared to the parallel quarter last year. All products of this subsidiary experienced healthy growth in the period with super wide format sales being particularly good. Scitex is now a leader in this rapidly growing area of the printing market. Towards the end of the quarter, Scitex and 3M entered into a strategic alliance that includes joint development, distribution and support. At the same time, Scitex Wide Format announced the launch of the Scitex Pressjet� 3M digital press integrating Scitex equipment with 3M inks, graphic films and software. Sales of the Scitex 3M Pressjet digital press are expected to commence in the second quarter of this year.

Karat Digital Press’s beta program for the 74 Karat™ short-run, color, digital offset press was expanded, bringing the total number of units installed at customer sites to ten. It is anticipated that commercial shipments will commence after the end of DRUPA. During the first quarter of this year Karat Digital Press, North America, Inc. was established to facilitate the sales and marketing, and customer support operations in the USA.

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 the JV further expand its services while growing its customer base. The new Internet-based technology is gaining broader acceptance and Scitex continues to invest in this exciting, value creating venture.

Yoav Z. Chelouche, President and Chief Executive Officer of Scitex, said, “Now that the CreoScitex deal is completed we are continuing our pursuit of new technologies and applications in digital imaging, graphic arts and the media. Under Scitex’s new strategy unveiled today, we are actively building a network of leading, innovative companies focused on combining digital imaging technologies with the power of the Internet which offers tremendous opportunities in business communication. Only through our commitment to add value within our network of companies will we be able to reap the benefits of their specialized knowledge and leverage our management strengths.”

Rimon Ben-Shaoul, Chairman of the Board of Scitex Corporation Ltd. added: “The Board of Scitex is determined to unlock the hidden value of the Company by implementing an active and dynamic strategy.”

Chelouche concluded: “We bid farewell today to Eyal Desheh, Corporate Vice President and Chief Financial Officer. On behalf of the Scitex Board of Directors, senior management and its employees, I would like to thank Eyal for his tireless efforts over the past three and a half years that he has worked with us at Scitex. I wish him success in his future endeavors. We are currently seeking a replacement for Eyal. In the meantime, Itai Halevy, Corporate Vice President Business Development & Strategic Planning, will assume overall responsibility for the finance function at Scitex.”

SCITEX CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(U.S. Dollars in thousands, except per share data)

SCITEX CORPORATION LTD. (AN ISRAELI CORPORATION) AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)