X-Rite Announces Second Quarter Results
GRANDVILLE, Mich.--July 18, 2002--X-Rite, Incorporated , a leading global provider of precision devices, systems and processes that measure color, light and shape, today reported its financial results for the second quarter ended June 29, 2002.Second Quarter Highlights:
| -- | Sales increase 16.4 percent over first quarter. |
| -- | Operating income of $1.6 million, or 8 cents per share, compared to first quarter loss of $0.3 million, or 2 cents per share. |
| -- | Write down of $6.6 million, or 33 cents per share, of XR Ventures' investments. |
| -- | Company opens China Headquarters in Shanghai. |
The Company reported second quarter sales of $24.4 million, compared to first quarter's sales of $21.0 million, and $24.4 million for the second quarter last year. Operating income was $1.6 million, compared to first quarter's loss of $0.3 million, and operating income of $1.9 million for the second quarter last year. After a $6.6 million write down of technology investments made by XR Ventures, the company reported a net loss of $5.5 million, or 27 cents per share for the second quarter, compared to net income of $1.8 million, or 8 cents per share for the same period last year.
For the six months ended June 29, 2002, net sales were $45.4 million, compared to $49.8 million in the comparable period one year ago. Operating income for the same six month period was $1.3 million, compared with operating income of $4.8 million one year ago. Net loss for the same six month period was $5.7 million, or 28 cents per share, compared with net income of $4.2 million, or 19 cents per share for the comparable period last year.
"As anticipated, sales for the quarter were equal to last year's level," said Rich Cook, chief executive officer of X-Rite, Incorporated. "I am pleased to report growth in sales of 16 percent over our first quarter performance, and most important, a return to operating profit. This sequential improvement demonstrates that our sales and marketing efforts are beginning to generate results despite the continued weakness in the North American capital goods markets. Amidst this lackluster marketplace we are finding some bright spots as demonstrated by our point-of-sale paint matching products which have grown an impressive 34 percent from quarter one levels."
Cook continued, "Our strategic emphasis on export markets continues, and I am excited to report that we have expanded our operation in China by opening a new headquarters in Shanghai, X-Rite (Shanghai) International Trading Co., Limited. This location will be equipped with the first full service center of its kind in Asia serving color measurement and management solutions. We anticipate a growing business in this emerging economy, and we look forward to winning new customers in China, the fourth largest trade partner to the U.S."
Based on the continued erosion of the venture capital markets, the network middleware and tele/data communications sectors of the economy during the quarter, the Company performed a comprehensive assessment of the continuing value of each XR Venture investment and concluded that the value of certain of them has been permanently impaired, and any related tax benefit on the write downs may not be realizable at this time. Therefore, it recorded a charge of $6.6 million writing the investments down against second quarter earnings.
"While operations generated profits, net income was adversely effected by the write down of several XR Venture investments," Cook added. "Venture investing is high risk, and the loss of a portion of this seed money was anticipated. At this time, the Company believes that remaining XR Ventures' investments are solid, and should eventually become viable and valuable operations, and follow-on funding could be directed into them. New venture investment opportunities are not being considered at this time."
In other news, the Company announced that its partner, IMI International Medical Innovations Inc. (http://www.imimedical.com/), has announced that it has received notice from the U.S. Food and Drug Administration that its Cholesterol 1,2,3(TM) product, the world's first non-invasive cholesterol test system, is cleared for sale in the U.S. Although this is a major move forward on the sale and distribution of this product, the Company is unable to comment on its impact on future revenue until marketing and distribution channels are developed and announced by IMI.
Conference Call
The Company will conduct a live audio webcast of its second quarter conference call today, Thursday, July 18, 2002, at 11:00 a.m. Eastern time. The call will be co-hosted by Rich Cook, the company's chief executive officer, Mike Ferrara, the company's president and Duane Kluting, its chief financial officer. To access this webcast, as well as all future conference call webcasts, use the X-Rite corporate website. Log on to http://www.x-rite.com, click on the Investor Relations link, then the conference call link for the webcast. An archived version of the webcast conference call will be available on X-Rite's website shortly after the live broadcast.
About X-Rite
X-Rite, Incorporated is a world-leader in producing precision measurement devices, systems, and processes that enhance the measurement of color, light and shape. Many large, multi-national firms use X-Rite's products and services for a variety of applications in areas as diverse as digital imaging, printing, coatings, biomedical diagnostics, telecom and electronics. Sales and service offices throughout Europe, Asia and the Americas support the Company's North American and European manufacturing, research & development facilities.
For more information, contact X-Rite, Incorporated: 3100 44th Street, S.W., Grandville, Mich., 49418, USA; Telephone (616) 534-7663; Fax (616) 534-1466; Website: http://www.x-rite.com.
Forward-Looking Statements
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in the forward-looking statements, due to a variety of factors, some of which may be beyond the control of the Company. Factors that could cause such differences include the Company's ability to improve operations and realize cost savings, competitive and general economic conditions, ability to access into new markets, and other risks described in the Company's filings with the Securities & Exchange Commission.
Consolidated Financial Highlights
(Unaudited - in thousands except EPS)
Q2 Q1 Q4 Q3 Q2
2002 2002 2001 2001 2001
-------- -------- -------- -------- --------
Net Sales $ 24,401 $ 20,956 $ 20,130 $ 21,739 $ 24,429
Gross Profit 15,537 12,284 11,781 13,579 15,448
Gross Profit Percent 63.7% 58.6% 58.5% 62.5% 63.2%
Selling and Marketing 7,089 5,734 5,628 5,871 5,818
General and
Administrative 3,594 3,663 4,022 4,218 3,690
R&D and Engineering 3,253 3,211 3,604 3,827 4,013
Restructuring Charge - - - 862 -
Operating Income (Loss) 1,601 (324) (1,473) (1,199) 1,927
Write Down of
Other Investments (6,566) - (1,125) - -
Other Income (Expense) (131) (8) (57) 245 398
Pre-tax Income (Loss) (5,096) (332) (2,655) (954) 2,325
Net Income (Loss) $ (5,488) $ (259) $ (2,655) $ 404 $ 1,755
Earnings (Loss)
Per Share
Basic $ (0.27) $ (0.01) $ (0.12) $ 0.02 $ 0.08
Diluted $ (0.27) $ (0.01) $ (0.12) $ 0.02 $ 0.08
Average Shares
Outstanding
Basic 20,208 20,198 21,336 21,478 21,403
Diluted 20,208 20,198 21,336 21,909 21,740
Cash and Investments $ 13,536 $ 8,245 $ 24,831 $ 26,192 $ 24,583
Accounts Receivable 15,992 13,563 12,048 13,640 17,489
Inventory 14,360 14,425 15,235 15,721 15,805
Other Current Assets 4,263 8,043 7,240 10,083 9,218
Non-Current Assets 57,672 63,528 59,598 58,392 56,822
-------- -------- -------- -------- --------
Total Assets 105,823 107,804 118,952 124,028 123,917
Liabilities 10,544 8,013 7,223 7,300 7,611
Long-Term Debt - - - - -
-------- -------- -------- -------- --------
Total Liabilities 10,544 8,013 7,223 7,300 7,611
Permanent and
Temporary
Shareholders'
Equity $ 95,279 $ 99,791 $111,729 $116,728 $116,306
Capital Expenditures $ 483 $ 822 $ 972 $ 1,199 $ 1,895
Depreciation and
Amortization $ 1,428 $ 1,447 $ 1,548 $ 1,573 $ 1,544
International Sales 40.3% 43.2% 47.8% 42.7% 39.3%
Sales By Market
Served (% of Total)
Coatings 41.1% 38.6% 37.2% 33.1% 32.6%
Graphic Arts 41.1% 41.0% 40.4% 45.3% 45.5%
Bio-diagnostics 7.7% 6.4% 6.6% 5.1% 4.8%
Laboratory 10.1% 14.0% 15.8% 16.5% 17.1%
Consolidated Financial Highlights, continued
(Unaudited - in thousands except EPS)
Quarter Ended Six Months Ended
------------------ ------------------
June 29 June 30 June 29 June 30
2002 2001 2002 2001
--------- -------- --------- --------
Net Sales $ 24,401 $ 24,429 $ 45,357 $ 49,789
Gross Profit 15,537 15,448 27,821 31,711
Gross Profit Percent 63.7% 63.2% 61.3% 63.7%
Selling and Marketing 7,089 5,818 12,823 11,732
General and Administrative 3,594 3,690 7,257 7,140
R&D and Engineering 3,253 4,013 6,464 8,068
Restructuring - - - -
Operating Income 1,601 1,927 1,277 4,771
Write Down of Other Investments (6,566) - (6,566) -
Other Income (Expense) (131) 398 (139) 771
Pre-Tax Income (Loss) (5,096) 2,325 (5,428) 5,542
Net Income (Loss) $(5,488) $ 1,755 $(5,747) $ 4,184
Earnings (Loss) Per Share
Basic $ (0.27) $ 0.08 $ (0.28) $ 0.20
Diluted $ (0.27) $ 0.08 $ (0.28) $ 0.19
Average Shares Outstanding
Basic 20,208 21,403 20,203 21,383
Diluted 20,208 21,740 20,203 21,717