14/03/2003

MediVision presents management's report for the year ended on December 31, 2002

Yokneam Elit, Israel, MediVision Medical Imaging Ltd. (EURO.NM: MEDV) released today (March 14, 2003) information concerning its operations and the financial results for the year ended December 31st, 2002.
The company and its subsidiary increased the sales of the last quarter and the entire year of 2002 by 11% and 25% respectively, compared to the parallel periods of 2001 and reached record-high yearly sales of U.S. $9,465 thousands.
The Company maintained a high level of Gross profit - 61%.
The EBITDA for the year ended Decembar 31, 2002 was U.S.$577 thousands, as compared with EBITDA of U.S.$(355) thousands for the comparable year ended December 31, 2001.

Highlights of the Year ended December 31, 2002:

AGFA-GEVAERT N.V. investment in MediVision - Further to the Investment agreement signed with AGFA GEVAERT N.V. (“Agfa”), on October 31, 2002 the Company and Agfa have signed a second addendum according to which the Company received an additional amount of U.S. $500 thousands in cosideration for approximately 3.3% of the Company’s issued share capital, representing the price of Euro 2.1 per share. According to the agreement and its two addendums, the Company will receive an additional amount of U.S. $500 thousands when it achieves certain milestones and certain terms and conditions are met. 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 year ended December 31, 2002 were U.S. $9,465 thousands, compared to U.S. $7,575 thousands sales for parallel year in 2001, an increase of 25%.

The ongoing increase in the sales volume is a direct result of the increased investment in the sales operations, to which end the company and its subsidiary have increased the number of sales people and sales support team by 5 persons.
The significant increase in sales demonstrates the continued confidence of the customers in Company’s products and technology.

Decrease in operating expenses - From the beginning of FY2002, the Company and its subsidiary have managed to keep the increase in operating expenses at 4%, which stand on approximately U.S. $5,536 thousands for the year of 2002, as compared with approximately U.S. $5,333 thousands for the comparable period of 2001.
Examining operating expenses relative to the sales volume, in each of the years accordingly, illustrate a significant expense cut from 70% in the comparable year of 2001 down to 58% in the current year. This cut clearly illustrates the success of the management in implementing the streamlining plan which commenced in the second half of 2001.
 

Information with regard to the Financial Situation For the year ending December 31, 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 year ended December 31, 2002 aggregated approximately to U.S. $9,465 thousands as compared to Sales of approximately U.S. $7,575 thousands for the comparable year of 2001. During the year ended December 31, 2002 87% of the Company’s Sales were in the U.S.A., 10% were in Europe and 3% were to domestic and other markets. The company and its subsidiary have achieved an increase of approximately 25% over the previous year period sales volume. The Company also achieved a significant increase in Service revenues during the year ended December 31, 2002 as compared to the parallel period in 2001. The revenues from Service aggregated to approximately U.S. $735 thousands in 2002 as compared with U.S. $533 thousands in 2001, reflecting an increase of 38%.

Gross profit

Gross profit for the year ended December 31, 2002 was approximately U.S. $5,766 thousands which are 61% of sales revenues, as compared with gross profit of approximately U.S. $4,586 thousands, which were 61% of sales revenue for the comparable year 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 year ended December 31, 2002 were approximately U.S. $775, as compared to R&D expenses of approximately U.S. $722 thousands for the comparable year. The Increase in R&D expenses for the year ended December 31, 2002 is attributed mainly to 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 have resulted in the completion of the first phase of that integration. The companies have jointly placed two Beta-installations in luminary sites in order to test clients’ satisfaction and to obtain inputs, which will guide the remaining R&D efforts.
The participation of the BIRD-F during the year ended December 31, 2002, which is included as a deduction of research and development expenses, amounted to approximately U.S. $341 thousands, therefore total R&D expenses amounted in 2002 to U.S. $1,116 thousands or 11.8% of sales revenue.

Selling and Marketing Expenses

Total Selling and Marketing expenses for the year ended December 31, 2002 were approximately U.S. $2,841 thousands, which are 30% of total sales revenues, as compared to U.S. $2,591 thousands, which were 34% of total sales revenues during the previous year. The 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 further increase the efficiency of its sales activity. This 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 marketing campaigns, trade shows, advertising in professional publications, travels, 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 year ended December 31, 2002 were approximately U.S. $1,920 thousands, which are 20% of the total sales, as compared to U.S. $2,020 thousands, which were 27% of the total sales during parallel year. The substantial decrease in General and Administrative expenses further illustrates the success of the company in the implementation of a company wide streamlining plan.

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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