CORRECTING and REPLACING X-Rite Reports Record Revenue Growth and Substantial Improvement in Profitabilty.Business Editors CORRECTION...by X-Rite X-Rite, Inc. is a manufacture of color matching products located in Kentwood, Michigan, United States. Their products include those used for matching paint colors (Totalizing Fluid Meter and Counting Device Manufacturing). , Incorporated GRANDVILLE Grandville, city, United States Grandville, city (1990 pop. 15,624), Kent co., W Mich., on the Grand River, in a farm area; settled 1833, inc. as a city 1933. , Mich.--(BUSINESS WIRE)--Feb. 5, 2004 In BW5182 issued Feb. 5, 2004: In the second table, the fourth column under the header (1) In a disk or tape file, a set of data that resides permanently at the beginning. It may be used for identification only (type of file, date of last update, etc.), or it may describe the structural layout of the contents, as is common with many document and database formats. "Year Ended, Dec. 28, 2002" was incorrect. The corrected release reads: X-RITE REPORTS RECORD REVENUE GROWTH AND SUBSTANTIAL IMPROVEMENT IN PROFITABILTY X-Rite, Incorporated (Nasdaq:XRIT) today announced its financial results for the fourth quarter and fiscal year-ended Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. January January: see month. 3, 2004. Fourth Quarter and Fiscal 2003 Highlights: -- Record net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for fourth quarter and full-year, increasing 24.7 percent and 19.0 percent, respectively. -- Gross margins improved over one percent, to 65.2 percent in the fourth quarter and 63.8 percent for the full year. -- Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 35.7 percent for the full year, while the Company continued to invest in R&D, engineering, sales and marketing. -- Grew customer base, product offering and end-to-end solution (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. capabilities through three acquisitions, which contributed $7.7 million to net sales for the full year. The Company reported record fourth quarter 2003 net sales of $38.5 million, an increase of 24.7 percent from the fourth quarter of 2002. For the year ended January 3, 2004, net sales were $117.1 million, up 19.0 percent from the prior year. Gross margins for the fourth quarter and full-year 2003 were 65.2 percent and 63.8 percent, respectively. These margins compare favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. versus the prior year, up over 100 basis points for both the quarter and full year. "This is a very important year for X-Rite - a turning point," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. C. Ferrara, Chief Executive Officer of X-Rite. "We have refocused the business on our core color markets, and they have delivered double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" operating income. We posted the highest level of annual sales in our history, and we have now experienced six successive quarters of year-over year revenue growth. We have a customer driven strategy in place and a culture focused on accountability." Ferrara continued, "We are adapting our organization and its structure to enable us to deliver innovative technologies driven by our global partners. We have made three successful acquisitions this year. With Mary Chowning on-board On board usually means to be traveling on some vehicle. For example, Baby On Board. Compare with overboard. Metaphorically, the term on-board is often used to refer to some piece of technology that is integrated in a moving vehicle, for example: Operating income was $4.0 million for the quarter or 10.3 percent of sales. Included in operating income during the fourth quarter of 2003 were the following items affecting comparability: -- $2.6 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of assets including a goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge related to the Coherix shape mapping technology. The Company will explore alternatives for this business, which could include a sale. -- $1.0 million of costs related to severance agreements Noun 1. severance agreement - an agreement on the terms on which an employee will leave agreement, understanding - the statement (oral or written) of an exchange of promises; "they had an agreement that they would not interfere in each other's business"; "there was with the Company's former chief executive officer and chief financial officer; the full year impact for these severance agreements was $1.4 million. For the fiscal year ending January 3, 2004, operating income was $8.7 million or 7.5% of sales, an increase of 35.7 percent over the prior year. X-Rite's underlying fundamentals improved over 2002 in both the fourth quarter and the full year 2003. The Company attributed its strong year-over-year performance to better-than-plan results throughout the X-Rite organization. Ferrara added, "Revenue growth was driven by all major business units and all geographic markets. Innovation and attention to the customer throughout X-Rite resulted in our success in 2003. Thanks to our substantial efforts and our leading market positions, we expect to deliver double-digit revenue growth and higher operating income in 2004." Mary E. Chowning, X-Rite's Vice President and Chief Financial Officer said, "2003 brought a new level of financial excellence to X-Rite. It was also a year of reviewing our portfolio. Our venture investments and our Coherix technology both required write-downs due to developments and decisions in the fourth quarter. X-Rite is now able to better focus its resources and capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the wealth of growth opportunities we have in front of us in our core color related businesses." The Company reported net income in the fourth quarter of 2003 of $2.2 million or 11 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Full year 2003 net income was $5.5 million or 27 cents per diluted share. The Company's fourth quarter results include a write-down of $3.4 million or 16 cents per diluted share related to XR Ventures' investments. Although the Company continues to hold positions in several XR Ventures' portfolio companies, no future investments in the remaining portfolio companies will be made, except where necessary to protect any existing investments. The Company's fourth quarter results include a charge recorded as interest expense for $0.7 million related to Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which requires that the value of certain long-term liabilities Long-Term Liabilities Recorded on the balance sheet, a company's liabilities for leases, bond repayments and other items due in more than one year. Notes: A company's long-term liabilities are accounted for by its debt obligations to other parties which last longer than be adjusted quarterly based on the Company's current stock price. These liabilities relate to the repurchase agreements Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. with the Company's founders, the value of which was previously reflected as temporary equity prior to the implementation of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 150. In addition, fourth quarter results include an income tax benefit of $2.8 million, or 14 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , resulting from the recognition of tax benefits associated with the 2002 and 2001 write-downs of XR Ventures' investments previously reserved. The ultimate realization of benefits related to the portfolio write-downs is dependent upon the execution of certain qualified income tax strategies. Conference Call The Company will conduct a live audio webcast discussing its fourth quarter and 2003 year-end results on Thursday, February 5, 2004 at 11:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The call will be co-hosted by Michael C. Ferrara, the Company's Chief Executive Officer and Mary E. Chowning, its Chief Financial Officer. To access this webcast, as well as all future webcasts, use the X-Rite corporate website at www.x-rite.com. Select the Investor Relations Investor relations The process by which the corporation communicates with its investors. page and click on the conference call link for the webcast. In addition, 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 is a leading provider of color not of the white race; - commonly meaning, esp. in the United States, of negro blood, pure or mixed. See also: Color measurement solutions comprised of hardware, software and services for the verification and communication of color data. The Company serves a broad range of industries, including photo, digital imaging, graphic arts graphic arts: see aquatint; drawing; drypoint; engraving; etching; illustration; linoleum block printing; lithography; mezzotint; niello; pastel; poster; silk-screen printing; silhouette; silverpoint; sketch; stencil; woodcut and wood engraving. , industrial and retail color matching, medical, and dental. X-Rite serves markets in over 80 countries with offices throughout Europe, Asia and the Americas. We welcome you to visit us at www.xrite.com. Forward-Looking Statements/Use of Non-GAAP Financial Information This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 including, but not limited to capital gross spending, the strength and expansion of our customer base, the ability to serve new customers and industry acceptance of our products. 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, acceptance of the Company's products and other risks described in the Company's filings with the Securities & Exchange Commission. In addition to the results reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) within this press release, X-Rite has provided certain information, which are considered non-GAAP financial measures. Management believes that these non-GAAP financial measures are useful to both management and its investors in their analysis of the company's underlying business and operating performance. Management also uses this information for operational planning and decision-making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from purposes. Non-GAAP financial measures should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by X-Rite may not be comparable to similarly titled measures reported by other companies.
Consolidated Financial Highlights
(Unaudited - in thousands except EPS)
Q4 Q3 Q2 Q1 Q4
2003 2003 2003 2003 2002
-------- -------- -------- -------- --------
Net Sales $38,504 $26,818 $28,197 $23,625 $30,865
Gross Profit 25,100 16,767 17,646 15,221 19,768
Gross Profit Percent 65.2% 62.5% 62.6% 64.4% 64.0%
Selling and Marketing 9,039 8,124 7,145 7,211 8,037
General and
Administrative 5,478 3,943 4,466 3,352 3,843
R&D and Engineering 3,972 4,063 3,472 3,098 3,049
Impairment of Coherix
Assets 2,642 - - - -
Operating Income 3,969 637 2,563 1,560 4,839
Write Down of Other
Investments (3,416) - (106) (140) (671)
Other Income (Expense) (917) (219) 308 40 138
Pre-tax Income (364) 418 2,765 1,460 4,306
Net Income $2,207 $301 $1,961 $1,012 $3,701
Earnings Per Share
Basic $0.11 $0.01 $0.10 $0.05 $0.18
Diluted $0.11 $0.01 $0.10 $0.05 $0.18
Average Shares
Outstanding
Basic 20,548 20,533 20,250 20,231 20,224
Diluted 20,739 20,711 20,382 20,619 20,667
Cash and Investments $14,102 $8,719 $13,643 $12,407 $17,538
Accounts Receivable 22,815 18,251 19,093 18,796 19,773
Inventory 16,014 16,051 15,050 14,054 14,080
Other Current Assets 3,182 3,060 3,316 4,291 2,743
Non-Current Assets 63,570 63,033 54,843 52,804 48,750
-------- -------- -------- -------- --------
Total Assets 119,683 109,114 105,945 102,352 102,884
Current Liabilities 18,214 11,607 11,017 9,991 11,536
Noncurrent Liabilities 34,857 34,200 - - -
-------- -------- -------- -------- --------
Total Liabilities 53,071 45,807 11,017 9,991 11,536
Shareholders'
Equity $66,612 $63,307 $94,928 $92,361 $91,348
Capital Expenditures $1,095 $652 $448 $1,163 $382
Depreciation and
Amortization $1,826 $1,389 $1,495 $1,307 $1,447
International Sales 43.5% 41.5% 44.9% 43.2% 42.3%
Consolidated Financial Highlights, continued
(in thousands except EPS)
Quarter Ended Year Ended
----------------- -----------------------
Jan. 3, Dec. 28, Jan. 3, Dec. 28,
2004 2002 2004 2002
-------- -------- ---------- ------------
Net Sales $38,504 $30,865 $117,144 $98,468
Gross Profit 25,100 19,768 74,734 61,569
Gross Profit Percent 65.2% 64.0% 63.8% 62.5%
Selling and Marketing 9,039 8,037 31,519 27,769
General and Administrative 5,478 3,843 17,239 14,993
R&D and Engineering 3,972 3,049 14,605 12,376
Impairment of Coherix Assets 2,642 - 2,642 -
Operating Income 3,969 4,839 8,729 6,431
Write Down of Other
Investments (3,416) (671) (3,662) (7,237)
Other Income (Expense) (917) 138 (788) 33
Pre-Tax Income (Loss) (364) 4,306 4,279 (773)
Income (Loss) Before
Cumulative Effect of
Change in Accounting
Principle 2,207 3,701 5,481 (1,794)
Cumulative Effect of Change
in Accounting Principle - - - (7,615)
Net Income (Loss) $2,207 $3,701 $5,481 $(9,409)
Earnings (Loss) Per Share -
Basic & Diluted:
Before Cumulative Effect
of Change in Accounting
Principle $0.11 $0.18 $0.27 $(0.09)
Cumulative Effect of
Change in Accounting
Principle - - - (0.38)
Total Basic & Diluted EPS $0.11 $0.18 $0.27 $(0.47)
Average Shares Outstanding
Basic 20,548 20,224 20,391 20,211
Diluted 20,739 20,667 20,613 20,211
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