Scailex Corporation Reports Net Income of $6.1 Million TEL AVIV, Israel, May 11 /PRNewswire-FirstCall/ -- Scailex Corporation Ltd. (NASDAQ:SCIXNASDAQ:&)(TASE:SCIX) today announced its unaudited financial results for the first quarter ended March 31, 2006. Sale of Scailex Vision's Business to HP In connection with the sale by Scailex Vision (Tel-Aviv) Ltd. (previously known as Scitex Vision Ltd.) (SV) of its business to Hewlett-Packard Company (HP) in November 2005, Scailex Corporation recognized a capital gain on its financial statements for the first quarter of 2006 in the amount of approximately $2.9 million. This was as a result of additional consideration of approximately $6.6 million paid to SV by HP in April 2006, to account for a net working capital adjustment pursuant to the sale agreement. HP also transferred to SV funds in an aggregate amount of $1.1 million that were retained by SV's subsidiaries following the closing of the sale. As previously reported, HP had acquired SV's business for $230 million in cash paid at closing, of which $24 million is being retained in escrow for 24 months to cover possible indemnification claims and tax payments related to 2005. As a consequence of the sale of SV's business, it is probable that Scailex Corporation will be classified as a passive foreign investment company for U.S. federal income tax purposes in 2006. Results of Operations In light of the sale of the SV's business to HP, the results of operations of Scailex Corporation for the first quarter of 2006, including Jemtex, a development stage majority owned subsidiary, include no revenues. The operating loss in the first quarter of 2006 was $1.5 million compared to an operating loss of $1.6 million in the first quarter of 2005. Scailex Corporation reported net income in the first quarter of 2006 of $6.1 million compared to net income of $1.8 million in the first quarter of 2005. The net income this quarter is primarily attributable to gain recorded from the additional consideration received from HP (classified as Income from discontinued operations), and from a $2.6 million dividend received from RealTimeImage Ltd. (RTI) (classified as Other Income - net), following the sale of RTI's business to IDX Systems Corporation in mid 2005, as well as financial income of $2.6 million. Said income was off-set by operating expenses and taxes on income of $1.9 million. Balance Sheet and Cash Flow As previously reported, in February 2006, SV distributed a net dividend of approximately $135 million to its shareholders, of which approximately $101 million was paid to Scailex Corporation. Scailex Corporation is expected to receive an additional $15 million to $20 million from SV, out of Scailex Vision's remaining funds (excluding its share of the funds in escrow, if and when such funds are released). Cash, cash equivalents and investments in securities at the end of the first quarter of 2006 at Scailex Corporation and its wholly-owned subsidiaries amounted to $245.7 million. Cash and cash equivalents at SV at the end of the first quarter of 2006 amounted to $45.6 million (excluding the $24 million retained in escrow and the funds received from HP in mid-April). Conference Call Scailex will be holding a conference call to discuss its first quarter of 2006 on Monday, May 15, 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 May 22, 2006) at the following numbers: US: 1-800-475-6701 Intl: +1-320-365-3844 Access code: 828995 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: SCAILEX CORPORATION LTD. (AN ISRAELI COMPANY) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (U.S. Dollars in thousands, except per share data) Quarter ended March 31, 2006 2005 (Unaudited) (Unaudited) Expenses Research and development, net 578 484 Marketing, General and administrative 817 810 Amortization of intangible assets 74 304 Operating loss (1,469) (1,598) Financial Income - net 2,618 875 Other income (expenses) - net 2,466 (32) Income (loss) before taxes on income 3,615 (755) Taxes on income (421) (226) 3,194 (981) Share in results of associated company 0 (105) Minority interest in a subsidiary (145) 0 Net income (loss) from continuing operations 3,049 (1,086) Net Income from discontinued operations 3,009 2,867 Net income 6,058 1,781 Earnings (loss) per share - basic Continuing operations $0.08 ($0.03) Discontinued operations $0.08 $0.08 $0.16 $0.05 Earnings (loss) per share - diluted Continuing operations $0.08 ($0.04) Discontinued operations $0.08 $0.08 $0.16 $0.04 Weighted average number of shares used in computation of EPS (in thousands) - basic 38,066 38,066 computation of EPS (in thousands) - diluted 38,138 38,138 CONSOLIDATED BALANCE SHEETS (U.S. Dollars in thousands) March 31, December 31 2006 2005 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents 212,192 200,350 Short-term investments 32,523 30,405 Restricted deposit 0 5,165 Other receivables 511 583 Deferred income taxes 1,097 1,260 Current Assets of discontinued operations 50,457 80,754 Total current assets 296,780 318,517 Investments and other non-current assets Securities held-to-maturity 27,713 29,707 Other investments and prepaid expenses 819 1,540 Funds in respect of employee rights upon Retirement 607 613 29,139 31,860 Property and Equipment, net of accumulated depreciation and amortization 82 82 Intangible Assets, net of accumulated amortization 485 559 326,486 351,018 Liabilities and Shareholders' Equity Current liabilities: Trade payables 498 329 Income taxes payable 14,037 13,660 Accrued and other liabilities 987 1,507 Current liabilities related to discontinued Operations 30,985 30,822 Total current liabilities 46,507 46,318 Long-term liabilities: Liability for employee rights upon retirement 733 715 Long-term liabilities related to discontinued Operation 1,192 1,192 Total long-term liabilities 1,925 1,907 Total liabilities 48,432 48,225 Minority interest of discontinued operation 10,297 41,190 Shareholders' equity 267,757 261,603 326,486 351,018 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:

Copyright