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Imagistics Trims 2005 Earnings Forecast; Acquires Canadian Dealership

12 Apr, 2005

Imagistics Trims 2005 Earnings Forecast; Acquires Canadian Dealership

Imagistics International Inc. has cut its 2005 earnings forecast and will close a manufacturing center and terminate some jobs due to a greater than anticipated decline in facsimile revenues in the first quarter 2005, which is expected to continue through the year, and slow copier/MFP revenue growth.

Cost reduction actions include closing its national remanufacturing center. Imagistics is discontinuing its remanufactured product line and will cease operations at its remanufacturing center in Milford, Connecticut. The company’s analysis of the marketplace continues to confirm that customer demand for unconnected and analog remanufactured copiers is in a steady state of decline. The company expects to continue to market used equipment.

In addition to the closing of the NRC, the company reduced staff by 100 employees in the first quarter of 2005. The company anticipates some further reductions in staff in 2005.

The company now expects 2005 earnings per share to range between $1.61 and $1.66 per share, down from its prior target of $1.85 to $1.90. The company said the earlier forecast did not include the effects of restructuring, severance charges or expensing of stock options, which taken together reduced earnings by 24 cents per share.

Imagistics President and Chief Operating Officer, Joseph Skrzypczak, stated, “We continue to focus on our strategy to transition the company from a facsimile to a predominantly copier/MFP based business and create a more performance driven organization. We are proactively managing the business, taking aggressive actions in light of the changed dynamics of the marketplace. The cost reduction actions we announced are a major step in achieving our goal of reducing selling, service and administrative expenses in 2005 as we move forward with realizing the benefits from the implementation of the ERP system.”

The company expects that revenue from its copier/MFP products will grow in the mid-single digit percent range for full year 2005, which is less than previously estimated.

Additionally, facsimile revenue experienced a decline in the first quarter 2005 greater than the 20 percent decline originally anticipated.

Acquisition of Western Canadian Dealership

Despite the disappointing earnings news, Imagistics announced that it has acquired Lakeside Office Systems Ltd., a digital copier dealership of Konica Minolta products in Kelowna, British Columbia.

"This acquisition continues our strategy of selective expansion of our sales, distribution and service capabilities. The acquisition of Lakeside expands the footprint of Imagistics into the Western Canada market, and also improves support of our national accounts in this region,” said Skrzypczak.

Lakeside was established in 1996 and has annual revenues of approximately CDN $2.5 million. It serves the Kelowna, BC market. Financial terms of the acquisition were not disclosed.

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