Scitex (SCIX)

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Scailex (Formerly: Scitex) Announces Fourth Quarter and Full Year 2005 Results

Sunday March 19, 5:03 pm ET

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 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: [phone]

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 www.Scailex.com.

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