19/08/2002

MediVision presents management's report for the period ended on June 30, 2002

Yokneam Elit, Israel, MediVision Medical Imaging Ltd. (EURO.NM: MEDV) released today (August 19, 2002) information concerning its operations and the financial results for the six and three months period ended June 30th, 2002.

The company and its subsidiary increased the sales of the second quarter and the first half of 2002 by 33% for the quarter and 21% for semi-annual results, compared to the parallel periods of 2001 and reached a record-high semi-annual sales of U.S.$4,417. The Company maintained a high level of Gross profit - 59%. The EBITDA for the six and three months periods ended June 30, 2002 were U.S.$183 thousands and U.S.$100 thousands accordingly, an improvement of 162% and 165%, as compared with EBITDA of U.S.$(293) thousands and U.S.$(153) for the comparable periods ended June 30, 2001.

Highlights of the Period ended June 30, 2002:

AGFA-GEVAERT N.V. investment in MediVision - Further to the Investment agreement signed with AGFA GEVAERT N.V. ("Agfa"), the Company signed on April 4, 2002 an addendum according to which the Company received a second investment in the amount of $1 million in consideration of approximately 7.4% of the Company's issued share capital, representing a price of EURO 2.1 per share. An additional amount of $500 thousands shall be postponed to a later date to be mutually agreed upon.

Increase in sales volume - The Company's sales for the six and three months periods ended June 30, 2002 were U.S.$4,417 thousands and U.S.$2,264 thousands accordingly, compared to U.S.$3,639 thousands and U.S.$1,698 thousands sales for parallel periods in 2001, an increase of 21% and 33% respectively.

The on going increase in the sales volume further demonstrates the increased investment in the sales effort, to which end the company and its subsidiary have increased the sales and sales support teams by 4 persons and the continued confidence of the customers in Company's products and technology.

Decrease in operating expenses - During the first and second quarters of 2002, the Company and it's subsidiary have cut down operating expenses from $2,726 thousand and U.S.$1,341 thousands in the comparable periods of 2001, to $2,615 thousands and U.S.$1,322 thousands in the current periods a decrease of 4.1% and 1.4%. Examining operating expenses relative to the sales volume, in each of the six and three months periods accordingly, illustrate a significant expense cut from 75% and 79% in the comparable six and three months periods of 2001 down to 59% and 58% in the six and three months for the reported periods. This cut clearly illustrates the success of the management in implementing the streamlining plan which commenced in the second part of 2001.

Information with regard to the Financial Situation For the period ending June 30, 2002
 

CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. Dollars (in thousands - except per share amounts)

Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Company

Sales

The consolidated Sales for the six and three months periods ended June 30, 2002 aggregated approximately to U.S.$4,417 thousands and U.S.$2,264 thousands as compared to Sales of approximately U.S.$3,639 thousands and U.S.$1,698 thousands for the comparable periods in the year of 2001. During the period ended June 30, 2002 84% of the Company's Sales were in U.S.A., 13% were in Europe and 3% were to domestic and other markets. The company and its subsidiary have achieved an increase of approximately 21% over the previous period sales volume. The Company also achieved a significant increase in Service revenues during the six and three months period ended June 30, 2002 as compared to the parallel periods in 2001. The revenues from Service aggregated to approximately U.S.$377 thousands and U.S.$180 thousands in 2002 as compared with U.S.$234 thousands and U.S.$166 thousands in 2001 respectively, reflecting an increase of 61% for the six months period as compared with the parallel period last year.

Gross profit

Gross profit for the six and three months periods ended June 30, 2002 was approximately U.S.$2,625 thousands and U.S.$1,335 thousands, which are 59% of sales revenues, as compared with gross profit of approximately U.S.$2,239 thousands and U.S.$1,090 thousands, which were 62% and 64% for the comparable periods in the year of 2001.
During the year 2001, the company achieved a Gross profit of 60%. The deviation in the Gross profit percentage between the first two quarters of 2001 and the current reported quarters is a result of the exceptional high gross profit achieved in the first and second quarters of 2001, due to product mix, which was balanced in the second half of 2001.

Research and Development Expenses

In accordance with International Accounting Standards (IAS), the Company does not capitalize its research and development expenses. Accordingly, statements of operations include research and development expenses. The Company's total R&D expenses for the six and three months periods ended June 30, 2002 were approximately U.S.$561 thousands and U.S.$278 thousands, as compared to R&D expenses of approximately U.S.$514 thousands and U.S.$258 thousands for the comparable period of 2001. The Increase in R&D expenses for the period ended June 30, 2002 is attributed mainly to the R&D efforts made by the company in connection with the Computerized Guided Laser Treatment (C.G.L.T.) project, which is supported by the participation of the BIRD Foundation and the R&D efforts made in conjunction with integration between MediVision products and AGFA products. The R&D efforts with regards to the integration with AGFA products has resulted in the completion of the first phase of such integration. Both companies have placed two Beta-sites in luminary sites in order to check clients' satisfaction and to obtain inputs, which will guide the continuous R&D efforts.
The participation of the BIRD-F during the six months period ended June 30, 2002, which is included as a deduction of research and development expenses, amounted to approximately U.S.$170 thousands.

Selling and Marketing Expenses

Total Selling and Marketing expenses for the six and three months periods ended June 30, 2002 were approximately U.S.$1,314 thousands and U.S.$686 thousands, which are 30% of total sales revenues, as compared to U.S.$1,504 thousands and U.S.$691 thousands, which were 41% of total sales revenues during the parallel periods in previous year. The significant decrease in the relative portion of Selling and Marketing expenses from the Sales volume is attributed to the increase in sales and ongoing efforts made by the Company in order to reduce expenses and to achieve further efficiency. This dramatic increase in the effectiveness of the sales organization, demonstrates the success of the management to implement the streamlining plan, which started in the second part of 2001. Marketing expenses include expenses stemming from a worldwide marketing campaign, trade shows, advertising in professional publications travel, salaries and commissions.

General and Administrative Expenses

General and Administration expenses include mainly management salaries, professional services, rental, maintenance and various provisions. Total General and Administrative expenses for the six and three months periods ended June 30, 2002 were approximately U.S.$910 thousands and U.S.$398 thousands, which are 21% and 18% of the total sales, as compared to U.S.$959 thousands and U.S.$503 thousands, which were 26% and 30% of the total sales during parallel period in previous year. The decrease in General and administrative expenses further emphasizes the success of the management to implement the streamlining plan which started in the second part of 2001.

About MediVision

MediVision specializes in digital imaging devices for ophthalmic applications with an emphasis on diagnostics related to the eye retina. MediVision's products provide digital upgrades for a range of ophthalmic imaging systems, thus significantly enhancing imaging capability and providing its users with advanced diagnostic tools. The company's goals are to achieve significant market share and be a market leader in the ophthalmic digital imaging field.

The company owns a 73% interest in Ophthalmic Imaging Systems Inc. based in Sacramento, California, USA.

This Release contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Management of the Company as well as assumptions made by and information currently available to the Management of the Company. Such statements reflect the current views of the Company with respect to future events, the outcome of which is subject to certain risks and other factors, which may be outside of the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results of outcomes may vary materially from those described herein as projected, anticipated, believed, estimated, expected or intended.

For more information, please contact :
Ariel Shenhar
MediVision Medical Imaging Ltd.
Vice President, Chief Financial Officer
Tel. ++972-4-9894884
Fax ++972-4-9894883
cel. ++972-52-821728

P.O. Box 45, Yokneam Elit Industrial Park 20692, Israel

ariel@medivision-ois.com

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