Notable Net Income of $106.1 Million in 2005 Following a Capital
Gain of $92.4 Million From the Sale of the Business of Scailex
Vision to HP TEL AVIV, Israel, March 19 /PRNewswire-FirstCall/ --
Scailex Corporation Ltd. (NASDAQ:SCIX)(TASE:SCIX) today announced
financial results for the fourth quarter and full year ended
December 31, 2005. Sale of Scailex Vision's Business to HP
Following the sale of the business of Scailex Vision Ltd.
(previously known as Scitex Vision Ltd.) (SV), Scailex's majority
owned subsidiary, to Hewlett-Packard Company (HP) in November 2005,
the results of operations of SV are reported as discontinued
operations and the consolidated results from continuing operations
no longer include revenues and expenses directly attributable to
SV. Similarly, on the balance sheet, assets and liabilities
relating to SV (except a portion of cash and cash-equivalents) are
presented separately as assets and liabilities of discontinued
operations. Information for prior periods has been reclassified to
reflect this change. As previously disclosed, under the terms of
the agreement, HP paid $230 million in cash to SV (subject to
certain adjustment under the agreement), of which $24 million is
being retained in escrow for 24 months to cover possible
indemnification claims and tax payments related to 2005.
Approximately $27 million of the proceeds was used for the
repayment of Scailex Vision's retained liabilities, mainly to
Israeli banks. As a result of the sale of SV's business, Scailex
recognized a capital gain in its financial statements of
approximately $92.4 million. Following the completion of the
transaction, it is probable that Scailex will be classified as a
passive foreign investment company for U.S. federal income tax
purposes in 2005 and/or in subsequent years. Results of Operations
As a result of the sale of the SV business, the results of
operations of Scailex, including Jemtex, for fiscal year 2005,
include no revenues. The operating loss in 2005 was $7.4 million
compared to an operating loss of $8.2 million in 2004. Scailex
reported net income in 2005 of $106.1 million, primarily
attributable to the capital gain resulting from the sale of SV's
business, compared to a net income of $47.3 million in 2004.
Scailex recognized income of $105.4 million from the discontinued
operations for 2005, including a Federal income tax receivable of
$7.8 million claimed for the years 1994, 1995 and 1997 (as a result
of the conclusion of the 1992-1996 IRS audits). Balance Sheet and
Cash Flow Cash, cash equivalents and investments in securities at
the end of 2005 at Scailex Corporation and its wholly-owned
subsidiaries amounted to $136.1 million (excluding a restricted
deposit of $5.2 million retained in a custodial account in
connection with the sale of the operations of Scailex Digital
Printing (formerly known as Scitex Digital Printing) to Kodak that
was released to Scailex in early January 2006). Cash and cash
equivalents at Scailex Vision at the end of 2005 amounted to $177.9
million (excluding the $24 million retained in escrow). In February
2006, Scailex Vision distributed a dividend in the amount of
approximately $135 million to its shareholders. The distribution
resulted in a payment of approximately $101 million to Scailex
Corporation. Scailex Corporation is expected to receive an
additional $12 to 16 million from Scailex Vision (excluding its
share of the funds in escrow, if and when such funds are released),
out of Scailex Vision's remaining funds, after the payment by
Scailex Vision of retained liabilities to third parties, taxes,
transaction - related and liquidation payments, and other fees and
expenses. Management Comments Raanan Cohen, President and CEO of
Scailex, commented: "The remarkable net income we reported for 2005
reflects the results of the sale of Scailex Vision's operations to
HP, which has created value for Scailex's shareholders. Scailex,
after the sale of Scailex Vision's operations, retains a
significant cash balance and continues to actively evaluate
alternative acquisitions and investment opportunities and other
strategic alternatives." Conference Call Scailex will be holding a
conference call to discuss its fourth quarter 2006 and full year
results on Monday, March 20, 2006 at 10:00 a.m. EST (7:00 a.m.
Pacific time, 3:00 p.m. GMT, 5:00 p.m. Israel time). All interested
parties will have the opportunity to listen to a live simultaneous
Webcast of the conference call by connecting online through
http://www.scailex.com/. A replay of the conference call will be
available shortly after the call during the seven days following
the conference call (until midnight March 27, 2006) at the
following numbers: US: 1-800-475-6701 Intl: +1-320-365-3844 Access
code: 818476 Scailex Corporation Ltd. Scailex Corporation shares
trade on Nasdaq and The Tel Aviv Stock Exchange under the symbol
"SCIX". For more information, please visit our Web site at
http://www.scailex.com/. Forward Looking Statements Except for the
historical information herein, the matters discussed in this news
release include forward-looking statements within the meaning of
the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements that are
based on various assumptions (some of which are beyond the
Company's control) may be identified by the use of forward-looking
terminology, such as "may", "can be", "will", "expects",
"anticipates", "intends", "believes", "projects", "potential", "are
optimistic", "view" and similar words and phrases. Actual results
could differ materially from those set forth in forward-looking
statements due to a variety of factors, including, but not limited
to, (1) our absence of significant operations following the sale of
the business of Scailex Vision and uncertainty as to our future
business model and our ability to identify and evaluate suitable
business opportunities, (2) the fact that our U.S. shareholders may
suffer adverse tax consequences if we are classified as a passive
foreign investment company or PFIC, (3) changes in domestic and
foreign economic and market conditions, (4) the impact of the
Company's accounting policies, (5) risks relating to pursuing
strategic alternatives, (6) risks and uncertainties associated with
the tax and accounting consequences of the sale of the business of
Scailex Vision, (7) risks and uncertainties relating to the
Company's plans for its financial assets following the sale of
Scailex Vision, (8) the fact that we may be deemed an "investment
company" under the Investment Company Act of 1940 under certain
circumstances (including as a result of the investments of assets
following the sale of the operations of Scitex Vision), and/or the
risk that we may be required to take certain actions with respect
to the investment of our assets or the distribution of cash to
shareholders in order to avoid being deemed an "investment
company",and (9) the other risk factors detailed in the Company's
most recent annual report and other filings with the US Securities
and Exchange Commission, including without limitation, those set
forth under such headings as "Risk Factors" and "Trend Information"
in the Company's Annual Report on Form 20-F. Except as may be
required by law, the Company does not undertake, and specifically
disclaims, any obligation to publicly release the results of any
revisions which may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such forward-looking statements.
Contact Scailex Corporation Ltd. Yahel Shachar Chief Financial
Officer Tel: +972-3-607-5855 Fax: +972-3-607-5884 E-mail:
CONSOLIDATED BALANCE SHEETS (U.S. Dollars in thousands) December 31
December 31 2005 2004 (Audited) (Audited) Assets Current assets:
Cash and cash equivalents 200,350 85,892 Short-term investments
30,405 56,693 Restricted deposit 5,165 5,000 Other receivables 583
962 Deferred income taxes 1,260 709 Current Assets of discontinued
operations 80,754 89,767 Total current assets 318,517 239,023
Investments and other non-current assets Restricted deposit 5,000
Securities held-to-maturity 29,707 Other investments and prepaid
expenses 1,540 1,574 Funds in respect of employee rights upon
retirement 613 596 31,860 7,170 Property and Equipment, net of
accumulated depreciation and amortization 82 101 Intangible Assets,
net of accumulated amortization 559 1,774 Non-current assets of
discontinued operations 26,085 351,018 274,153 Liabilities and
Shareholders' Equity Current liabilities: Trade payables 329 312
Income taxes payable 13,660 13,872 Accrued and other liabilities
1,507 1,046 Current liabilities related to discontinued operations
30,822 83,352 Total current liabilities 46,318 98,582 Long-term
liabilities: Liability for employee rights upon retirement 715 648
Long-term liabilities related to discontinued operation 1,192
16,423 Total long-term liabilities 1,907 17,071 Total liabilities
48,225 115,653 Minority interest of discontinued operation 41,190
4,226 Shareholders' equity: Total shareholders' equity 261,603
154,274 351,018 274,153 SCAILEX CORPORATION LTD. (AN ISRAELI
COMPANY) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (U.S.
Dollars in thousands, except per share data) Quarter ended Dec. 31,
Year ended Dec. 31, 2005 2004 2005 2004 (Unaudited) (Unaudited)
(Audited) (Audited) Expenses Research and development, net 498 589
2,549 2,168 Marketing, General and administrative 1,194 1,388 3,679
4,859 Amortization of other intangible assets 200 303 1,215 1,215
Operating loss (1,892) (2,280) (7,443) (8,242) Financial Income -
net 1,355 932 4,293 2,723 Other income (expenses) - net (21) 0 917
648 Loss before taxes on income (558) (1,348) (2,233) (4,871) Taxes
on income 744 1,161 94 1,121 186 (187) (2,139) (3,750) Share in
results of associated company 0 (651) 2,876 (1,418) Net income
(loss) from continuing operations 186 (838) 737 (5,168) Net Income
(loss) from discontinued operations 98,043 (2,061) 105,401 52,421
Net income (loss) 98,229 (2,899) 106,138 47,253 Earning (loss) per
share - basic Continuing operations $0.00 ($0.02) $0.02 ($0.13)
Discontinued operations $2.58 ($0.05) $2.77 $1.30 $2.58 ($0.07)
$2.79 $1.17 Earning (loss) per share- diluted Continuing operations
(0.00) ($0.02) $0.02 ($0.13) Discontinued operations $2.48 ($0.05)
$2.67 $1.30 $2.48 ($0.07) $2.69 $1.17 Weighted average number of
shares used in computation of EPS (in thousands) - basic 38,066
40,336 38,066 40,336 computation of EPS (in thousands) - diluted
38,134 40,336 38,134 40,336 DATASOURCE: Scailex Corporation Ltd
CONTACT: Contact: Scailex Corporation Ltd., Yahel Shachar, Chief
Financial Officer, Tel: +972-3-607-5855, Fax: +972-3-607-5884,
E-mail:
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