Scitex’s revenues for the first quarter 2002 were $60.7 million, a decrease of 5% from $64.1 million in the first quarter of 2001. But, managed to achieve a 3% increase in revenues from the previous quarter and more than $2 million of operating income.

Analyst conference call access is now available through www.scitex.com . The replay will be available until midnight on May 22, 2002.

Click here for the Scitex Q1, 2002 press release in PDF format: http://www.scitex.com/Press/Microsoft%20Word%20-%20Q1’02_release_final_15.5.02.pdf

Scitex spinoff Aprion Digital is aiming high and believes that its parent company stands to profit, no matter what. Aprion CEO the ExScite Miki Nagler says: “We don’t compete with any other Scitex companies. We’re friends with all of them. It’s unnatural for a country to protect local industry with high customs duties, because it will harm local industry in the long run. In the same way, we believe the development of a company with basic technology of value for its potential customers shouldn’t be stopped it because you think it might later conflict with someone else. I believe that Scitex looks at it this way, and the proof is that we’re here, with strong backing from Scitex.”

Bank Hapoalim economists estimated Aprion’s value had fallen to $46M from $100M in 2001.

Scitex’s next way to print money

Scitex spinoff Aprion Digital is aiming high, doesn’t think the group’s other companies will get in the way, and believes its parent company stands to profit, no matter what.

Globes, Israel, Gilad Nass 2 May 02 15:25

In answer to a question whether Scitex’s multiple progeny might cause collisions between their various technologies, Aprion Digital president and CEO Dr. Michael (Miki) Nagler includes a swipe at Israel’s trade policy. “We don’t compete with any other Scitex companies. We’re friends with all of them. It’s unnatural for a country to protect local industry with high customs duties, because it will harm local industry in the long run. In the same way, we believe the development of a company with basic technology of value for its potential customers shouldn’t be stopped it because you think it might later conflict with someone else. I believe that Scitex looks at it this way, and the proof is that we’re here, with strong backing from Scitex.”

Nagler’s confidence in the company he manages is also evident when he quotes the company value at which Aprion obtained its investment from Toyo Ink over a year ago – $100 million, before money. He of course prefers not to discuss the current value, although over $25 million has been injected into the company since. In late March this year, before the announcement of IBM (NYSE: IBM) and Hitachi Koki’s most recent investment in the company, Bank Hapoalim economists estimated Aprion’s value had fallen to $46 million, based on Scitex’s results for the fourth quarter of 2001.

Mutual recriminations aside, Aprion believes Scitex’s gamble will hit the jackpot. At the beginning of the 1990s, when the focus in the sector switched to inkjet printing, Scitex understood that its former growth engines could no longer lead it safely into the coming years and began to consider digital printing. Since the company’s expertise was in software and electro-optic systems, without any basis for further development in printing, Scitex decided to use acquisitions to achieve its goal.

The first acquisition was a small company from Boston called Iris Graphics in 1992, whose sales at the time were less than $10 million per year. Nagler, a physicist by training, who had worked at Scitex for 17 years, was appointed vice-president. During his term, connections were made that led in 1993 to the acquisition of an Eastman Kodak division that became Scitex Digital Printing (SDP). The last two acquisitions, Idanit in 1997 and Matan in 1998, were in Israel and provided the basis for Scitex Vision.

The brain behind Aprion was Prof. Amiram Carmon, who originated an idea that Nagler describes as “a fax machine that prints 60 high-resolution pages per minute and costs up to $1,000.” The futuristic (at the time) fax idea did not last long, but with the help of Haggai Karlinski, now Aprion manager for inkjet technology, the technology for the device was used to develop a printer head for Scitex’s future printer. Scitex invested $15 million developing the technology in 1992-1998.

In 1994, Nagler returned to Scitex and was appointed head of its output division, where he recruited Avi Huppert as VP development. In 1996, when Nagler became VP for Scitex’s division for the product, Huppert replaced him as head of the output division, which developed the Lotem product to compete with Creo. Creo later merged with Scitex.

Nagler and Huppert then decided to return to the inkjet idea, which was still floating around in Scitex. They gathered up all the fragments into one venture. Nagler: “In mid-1997, we decided that we had the technology for a real market breakthrough, not just for a 20-30% improvement in the current inkjet technology, in which a great many companies were investing hundreds of millions of dollars.” In late 1998, the team persuaded Scitex management to spin off the venture from the parent company in order to raise external capital for further development. The spinoff was named Aprion Digital, after the month of April, in which the initial decision on independent activity was taken.

Aprion develops industrial inkjet printing technology, and plans to offer drop on demand. The company asserts that the technology will facilitate printing on a variety of materials, from ordinary paper to corrugated cardboard and vinyl sheets. The printed pictures have long-term resistance to environmental damage, as required for billboards.

Aprion originally planned to develop printer heads only, but later discovered that combining the heads with special ink yields even better results. 60 printing head and ink patents to date have either been approved or are in the pipeline. Profits from ink development and sales are more substantial than from printer heads; as everyone with a home printer knows, the ink is the biggest cost in the long run. Aprion plans to sell the printers at $350,000-700,000 each, while revenue from the ink will amount to hundreds of thousands of dollars per machine, per year.

At the heart of Aprion’s technology is a sort of absorbent material in which the holes are randomly distributed, that the company manufactures. The material, contained within the printer head, is responsible for two results. The moment the ink is pressed out of the dropper, the material’s absorbent structure expedites more rapid reloading of the printer head from several directions simultaneously, for producing the next drop. In addition, when the tail end of the drop is about to be separated by gravity from the rest of the drop, it is sucked back into the ink container, and the structure of the material prevents it from re-entering the chamber. According to Aprion, the greater speed of the ink in entering and exiting makes possible higher printing speeds in practice – currently 160 sq.m. per hour, at a resolution of 600 DPI (drops per inch)

Using its own applications, Aprion has now achieved a drop size of 20-30 picoliters (a millionth of a millionth of a liter). Nagler explains, however, that the basic technology is capable of producing either larger or smaller drops, as required. According to Huppert, currently general manager and executive VP, the fact that Aprion’s ink is based on water, not the industry’s usual oil base (used by NUR Macroprinters (Nasdaq: NURM) and Scitex Vision) enables to company to benefit from environmental chic. This is particularly true of many regions in Japan and Germany, where there is a trend towards more environmentally friendly products.

On the face of it, the link Aprion has created between the printer head and the ink itself should make customers wary of a long-term commitment. Aprion is a young company liable to get into financial hot water more quickly than an established firm. In addition, it might be assumed that such a connection between the machine and the proprietary ink it uses would lead customers to seek an alternative more tolerant of other types of ink.

Nagler admits this is a problem that the company has discussed. He believes, however, that if the price of the ink enables the customer to guarantee reasonable profit margins in his business, while the ink’s advantages justify that price, “The customer will think 17 times before seeking out alternatives.” Even the possibility that the alternative ink industry, which is gaining momentum in the home printer sector, could muscle in on his market does not disturb Nagler. He responds, “I have a home printer, and every time I go to buy a printer head, I feel ill over having to pay, relatively speaking, $1,000 per liter. I know how much ink costs them in my business, and it’s certainly nowhere near that price. Nevertheless, I prefer to buy the original ink. I’m not going to take a risk for a 20% saving. Furthermore, I don’t think a customer buying a printer for hundreds of thousands of dollars will take even the smallest risk that a different kind of ink could cause damage, just in order to save money.”

Aprion’s business model resembles that of Indigo, which Nagler is careful to praise (perhaps hinting at a future exit of a nature similar to that of Indigo’s). The model is based on developing printer head and ink technology, building technology-based components, and selling the components to its customers. Nagler says he would have chosen this model, which requires a lot of investment in development and manufacturing, even without backing from Scitex. “Scitex has had organic development for seven years, but there are examples of companies that began independently and were successful with this kind of business model: Indigo, Optrotech, Orbot, and Elscint (NYSE: ELT).”

Aprion has 150 employees in its three-storey building in Netanya. The building contains its printer head manufacturing facility, which produces 20,000 printer heads a year, and its assembly plant, which is designed to produce up to 100 printers a year in the future. An ink factory has also been set up in Beer Tuvia with a payroll of five, which is capable of manufacturing 3,000 tons of ink yearly.

The company is confident that digital printing will eventually replace conventional printing, even though fulfillment of this vision may take decades. They are encouraged by the industry belief that a substantial share of the market will go digital as early as the next few years. Nagler believes Aprion’s big market breakthrough will be achieved through deals like the recent ones with IBM and Hitachi Koki, which also investment in Aprion. The company declines to discuss details of the two giants’ contribution to “cooperation”, but describes them as “non-financial investors.” Aprion predicts the technologies will later be included in the future products of IBM and Hitachi Koki, as well as others that have signed as yet unannounced transactions. According to Nagler, these agreements grant the partners certain rights, but there are no significant limitations on Aprion’s future business and no exclusive cooperation agreements with those partners.

Scitex’s three largest competitors are not only large in comparison, but also in absolute terms. German company Heidelberg (HBGRF.PK) is making noises about moving to inkjet printing; Xerox (NYSE: XRX) was rumored to be considering the acquisition of Scitex; Hewlett-Packard’s (NYSE: HWP) inkjet operations are well known. There are also other companies, such as Barco, known mainly for its projectors, Elcorsy of Canada, which has Aprion investors Toyo Ink as one of its shareholders, and British company Xaar (LSE: XAR).

Aprion is now entering package printing, and recently signed a distribution agreement for its printers with Chicago-based company Belcom North America. Scitex Vision is also serving as a distributor for wide-format printing products. Aprion will soon consider whether the time is right to enter the wallpaper printing industry, and is also taking a look at entering textiles by constructing machines for Italian cloth printing equipment manufacturer Reggiani and Swiss ink manufacturer Ciba. For the more distant future, Aprion is talking about products for digital inkjet printing with the speed and quality of offset. The company hopes to reach $100 million in sales within three years.

Nagler calls the reports in the past year of a possible merger between Scitex Vision and NUR Macroprinters, as well as between Scitex Vision and Aprion “press rumors. We discuss various plans with all sorts of concerns every day. Although we have the same parent company as all of Scitex’s’ printing ventures, our agreements with them are do not take into account the link between these concerns. I can’t comment on these rumors, either positively or negatively.

”Where Scitex is concerned, and I also said this at the shareholders meeting, the fact that it is involved with two technologies simultaneously enables it to reach the same point or customer in the future in two different ways. I think it will be to their benefit, no matter what happens.”

Aprion Digital

Spun off from Scitex in 1998.

Location: The Poleg Industrial Zone in Netanya, with an ink factory in Beer Tuvia.

Technology: Digital inkjet technology.

New operations: Developing printer heads and ink for the packing, industry, textiles, and signs.

Financing rounds: $70 million, including $15 million by Scitex before the spinoff, $25 million I the first financing round in 1999, $27 million in 2001, and an undisclosed sum invested by IBM and Hitachi Koki at the beginning of April.

Shareholders: Scitex (43%), Clal Electronics Industries, Discount Investment Corporation, Toyo Ink, IBM, Hitachi Koki, Bank Hapoalim, Israel Infinity Venture Capital Funds, Templeton, and two undisclosed strategic investors.

Creo (formerly Scitex) may call off the planned deal to rent anew location in Petah Tikva, Israel. Instead of moving, the company will stay and expand them.

Creo’s management apparently decided to stay in its present buildings on HaMada St. in Herzliya Pituah. Creo will repair the buildings, pull down a one-story building and put up a 7,000-9,000 sq. m. building in its place.

Creo’s lease is due to expire in May 2003. The company now pays a rent of $13 per sq.m. After the repairs are completed and a new building is put up, Creo will probably pay close to $15 per sq.m. per month.

Creo to remain in Herzliya Pituah

Elazar Levin

08.04.2002 18:55

Leading high-tech company Creo Products (Nasdaq: CREO) (formerly Scitex) may call off the planned deal to rent 23,000 sq.m. in Petah Tikva from SGS-Shemen Industries. Instead of moving, the company will stay on in its present buildings in Herzliya Pituah and expand them. One of the reasons for the change is Creo managers’ decision to refrain from new high-risk investments in the present economic situation.

As reported by “Globes”, Creo has long been negotiating to rent 23,000 sq.m. in Petah Tikva, or, alternatively, rent a similar space from Delek Real Estate in Kfar Neter. The rent was supposed to be $15 per sq.m., index-linked, in a long-term lease. The contract’s financial value over this period was $40 million, making it into one of the biggest deals in the high-tech real estate market.

However, Creo’s management apparently decided recently to stay in its present buildings on HaMada St. in Herzliya Pituah, where it rents 16,000 sq.m. from Bayside. Creo will repair the buildings, pull down a one-story building and put up a 7,000-9,000 sq. m. building in its place.

Creo’s lease is due to expire in May 2003. The company now pays a rend of $13 per sq.m. After the repairs are completed and a new building is put up, Creo will probably pay close to $15 per sq.m. per month.

As far as is known, Creo’s main consideration is that in the current period of economic uncertainty, and continuing terror liable to cause problems in manufacture and marketing of its products, it ought not to undertake the large investment involved in moving from Herzliya to Petah Tikva.

Creo’s spokesperson said in response that the company’s management was looking into the option of staying on in Herzliya, rather than moving to Petah Tikva or elsewhere. She said the option had already existed in the past, and that no decision had been taken yet. The spokesperson added: “The Herzliya location is superb, and the municipality promised to help.” She said that the decision would be guided only by economic considerations bearing on the company’s activity.

Sources familiar with the deal and with the negotiations today confirmed the report to “Globes”.

Published by Israel’s Business Arena on 8 April, 2002

Creo (Ah..well, Ex-Scitex) and Amot Investments are negotiating a $45 million deal in which Amot will buy a 23,000 sq.m. building in Petah Tikva, Israel and grant Creo a long-term lease. According to the proposed deal, Amot will acquire a building, which will be constructed according to Creo’s specifications. Amot will lease the building to Creo under a 10-year contract, with a 10-year option. Creo will pay $15 per sq.m. per month. At the same time, Amot is also examining a deal in Hod Hasharon or Netanya area projects.

A Creo spokesman said in response that the company, currently located in Herzliya Pituah, is negotiating to rent 23,000 sq.m., but declined to provide further details.

Globes, Israel by Elazar Levin 26.03.2002 18:10

Amot Investments, Creo Products (Nasdaq: CREO), and Petah Tikva real estate developers are negotiating a $45 million deal.

Under the emerging deal, Amot will buy a 23,000 sq.m. building in Petah Tikva and grant Creo a long-term lease.

Negotiations are mostly with two groups: SGS-Shemen Industries and Feuchtwanger Investments. Each of the groups has a compound for the construction of tens of thousands of square meters in Kiryat Arie in Petah Tikva.

According to the proposed deal, Amot will acquire a building, which will be constructed according to Creo’s specifications. Amot will pay $45 million at $1,800-1,900 per sq.m.

Amot will then lease the building to Creo under a 10-year contract, with a 10-year option. Creo will pay $15 per sq.m. per month, index-linked. Amot will receive a 10% yield, considered very good under the current market conditions. Amot is very liquid at the moment, and is looking for such investments.

At the same time, Amot is also examining a deal in Hod Hasharon or Netanya area projects. If this deal goes through, it will the first of its kind in several years, as well as one of the largest in the field in Israel. A Creo spokesman said in response that the company, currently located in Herzliya Pituah, is negotiating to rent 23,000 sq.m., but declined to provide further details. Amot confirmed the details of the report.

Amot is owned by Histadrut labor federation pension funds and Gmul, which jointly hold 80%, while Bank Hapoalim owns 20%.

Published by Israel’s Business Arena on March 26, 2002

The US Internal Revenue Service (IRS) is demanding that Scitex pay $30-40 million in taxes owed for 1992-96. Scitex is negotiating to conclude the matter, and anticipate a response from the IRS in the coming months.

Internal Revenue Service The Digital Daily

Sources inform the Israeli business newspaper, the ”Globes”, that the US Internal Revenue Service (IRS) is demanding Scitex (Nasdaq: SCIX) pay $30-40 million in taxes owed for 1992-96.

Scitex is currently traded at a market value of $150 million (remember the days when it was ten time [x10] that?). Scitex paid $20 million in taxes in the fourth quarter of 2001, when it posted a loss of $35.8 million. Scitex CFO Yahel Shachar estimates the company has reserves to cover future tax payments. “We have an additional $22 million allowance that should cover all tax matters, said Shachar. “We are negotiating to conclude the disagreement with the IRS. At issue are Scitex’s activities in the US a few years ago, when those activities were quite extensive. We are negotiating to conclude the matter, and anticipate a response from the IRS in the coming months.”

Capital market sources believe the matter raises some disturbing questions. Such high liabilities for previous years raises questions about the legitimacy of Scitex’s tax planning and the accuracy of the company’s financial reports for the relevant years. “We are not conducting investigations or witch-hunts,” said Shachar. “I am not taking the matter lightly. We are taking it very seriously. There is a very serious team in the US dealing with it. We are checking every figure and number in order to calculate the subsidiary’s liability. It should be remembered that there were substantial profits in those years, which created high tax differences.”

Source: Avishai Ovadya, The Globes, 12.03.2002 16:54

Princeton Video Image to acquire SciDel Technologies

Yanay Alfassy Globes-Arena 03.03.2002 15:46

Princeton Video Image, Inc. (NASDAQ: PVII) announced last week the signing of a definitive agreement to acquire the assets of SciDel Technologies. Scitex subsidiary SciDel inserts electronic virtual advertisements into live and taped televised sporting events.

PVI said the acquisition “increases its industry depth, as well as its share in the European soccer market.” SciDel has extensive experience with European soccer broadcasts and inserts ads virtually for the international broadcasts of the English Premier League, Italian Series A and the Spanish Football league. PVI and SciDel specialize in downstream ad insertion.

SciDel was founded 1995 by Israeli sports marketing professional Kobi Bendel, together with Scitex. The company is headquartered in Tel Aviv. Its products, electronically inserted signage (EIS) and advanced graphic enhancements (AGE), are tools to create new advertising inventory that increases revenues for broadcasters and event organizers.

Other equity holders include Clal Electronics, Star Venture Capital, Gemini Israel Funds, Invision and Infinity (a division of Metro International), and a group of private investors include Ron Lauder. The company closed a $5.5. million fund-raising round in August 2001. In 1998, the company raised $5 million.

PVI said that upon completion of the transaction, it will “take advantage of globalization by decentralizing its research and development center and incorporating SciDel’s marketing and sales division into its existing European operations.”

PVI is headquartered in New York City and Lawrenceville, New Jersey, with offices in Canada, Brussels and Mexico City, as well as a licensee office in Seoul

Princeton Video Image pays $3.8M for SciDel Technologies

31.3.2002 | 12:27 by: Boaz Babai

Princeton Video Image (Nasdaq PVII) paid $3.77 million in stock and options for Scitex (Nasdaq:SCIX) digitial advertising subsidiary SciDel Technologies. PVI specializes in virtual advertising and imaging solutions.

U.S.-based PVI announced completion of the acquisition last week. PVI closed Thursday’s tradin g with the same $34 million market cap as the date of the preliminary sale agreement, meaning there is no change in the value of the deal.

Scitex had invested $3.33 million in its 29% stake in SciDel. Scitex is now expected to hold $1.1 million in PVI shares.

Revenue for the year was $256 million. In the fourth quarter, the loss widened to $35.8 million, and revenue declined to $59.1 million. CEO Yeoshua Agassi: “We would like to see moderate revenue growth in 2002”. (we bet that the shareholders would also like it…)

During the fourth quarter of 2001, Scitex conducted extensive negotiations with the Internal Revenue Service with regard to the conclusion of audits of US subsidiaries for the years 1992-1996 and made an advance payment of $20 million. Scitex is expecting the final IRS position to be received in the coming few months. (more…)

Click to hear =>the Scitex 2001 year end conference call (until Mar 14, 2002).

Scitex lost $250m in 2001

Globes correspondent

07.03.2002 17:15

Scitex (Nasdaq: SCIX), a supplier of inkjet technologies and digital imaging solutions, today reported a net loss of $35.8 million, or $0.83 per share in the fourth quarter of 2001. The net loss compares with a $15.9 million loss in the corresponding period of 2000 and a $40.8 million loss in the preceding quarter.

Revenue for the fourth quarter was $59.1 million, a decrease of 9% from revenue of $64.5 million that was posted in the fourth quarter of 2000. Revenue fell 11% compared with the preceding quarter, when revenue was $66.6 million.

Operating loss before amortization of intangibles (of $18.1 million) and restructuring costs (of $1.7 million) was $0.5 million in the fourth quarter of 2001.

Revenue for 2001 totaled $256.2 million, and was 13% higher than the combined revenue of Scitex Digital Printing and Scitex Vision in 2000. Operating profit for 2001 was $11.9 million (before restructuring costs and amortization of intangibles). Net loss was $250.3 million, of which $219 million was associated with Scitex’s holding in Creo and $27 million associated with amortization of intangibles.

The company recorded a profit of $75 million in 2000. Scitex said a year over year comparison of 2001 to 2000 was not meaningful because starting the second quarter of 2000, the company’s involvement in Creo Products changed from full ownership to an equity investment.

Agasi

Scitex CEO and president Yeoshua Agassi said, `Year 2001 is the first full year in which Scitex was mainly focused on its industrial ink jet digital printing business activities. During the year, we primarily demonstrated this focus by continuous investments by Scitex Digital Printing and Scitex Vision in new products and markets and by the increase in our share in Aprion Digital to a total of 43%. In addition, during the final quarter of the year, we sold a major portion of the shares held in Creo Products, bringing our holding in that company from 27% down to approximately 13%, and significantly improving our cash position. As for the financial results and the economic slowdown, especially in the second half of the year, both Scitex Digital Printing and Scitex Vision took measures to reduce their expenses by reducing their workforce and cutting various expenses.”

Agassi concluded, “The considerable revenue growth of our subsidiaries during the first three quarters of 2001 was affected in the last quarter by adverse market conditions. As for 2002, while global economic conditions remain uncertain, we would like to see moderate revenue growth, as well as some improvements in gross margin and profitability.”

During the fourth quarter of 2001, Scitex conducted extensive negotiations with the Internal Revenue Service with regard to the conclusion of audits of US subsidiaries for the years 1992-1996 and made an advance payment of $20 million. Scitex is expecting the final IRS position to be received in the coming few months.

Scitex shares closed on Nasdaq at $3.52 on Wednesday.

Published by Israel’s Business Arena on 7 March, 2002

Scitex Corp has announced that Yossy Zylberberg, Corporate VP & CFO is moving to Scitex Digital Printing Inc. (SDP) and joining their management team as COO. He will report to Nachum “Homi” Shamir, President and CEO. SDP develops, manufactures and distributes ultra high- speed digital color printing systems, and is a wholly owned subsidiary of Scitex Corporation.

Yossy has served as Scitex Corporation’s CFO for 2 years, and prior to that as VP Operations and CFO of Scitex America Corp. Before coming to Scitex, Yossy served as CFO of several public and private Israeli companies with significant international operations.

Yahel Shachar was named CFO & Corporate Secretary of Scitex Corporation Ltd In Israel. Yahel who recently joined Scitex, served as COO at BVR Technologies Ltd. for 3 years, and prior to that was an attorney with Goldfarb, Levy, Eran & Co.

Scitex Vision Ltd., a Scitex Corp wholly-owned subsidiary www.scitexvision.com that produces wide and super-wide format printers, has named Dov Ofer, Dov_Ofer@scitexvision.com Scitex Vision’s ExecutiveVP of Sales, Marketing and Business Development, to succeed David Reis as President and Chief Executive Officer of Scitex Vision.

Dov has been with Scitex Vision for the past three years as Executive VP of Sales, Marketing and Business Development.

After completing six successful years as President and CEO of Scitex Vision, David Reis has decided to leave the company and join ImageID Ltd., as President and CEO.