AVT Acquires GMI, Enters Commercial Printing and Newspaper Markets

HOD HASHARON, Israel—Advanced Vision Technology (AVT), a leader in automatic inspection solutions for printing applications, has entered the commercial and newspaper printing markets through its acquisition of Graphic Microsystems, Inc. (GMI), a leading manufacturer of pressroom automation equipment. The deal, in which AVT paid $33 million cash to Dover Diversified, Inc., a subsidiary of Dover Corporation, for 100 percent of GMI stock and certain intellectual property assets, closed successfully on Oct.1, 2007.

GMI, which holds a major share of the CLC market, sells to commercial, semi-commercial, newspaper and specialty printers in the heat-set and cold-set web printing markets as well as printing press OEMs worldwide. GMI’s blue-chip customer base includes market leading companies serving the printing and press manufacturing industry, highlighted by its strong relationship with the world’s top printers such as RR Donnelly & Sons Co., Quebecor World Inc., and Transcontinental Inc. Additionally, the company has relationships with leading press manufacturers such as Goss International, MAN Roland Druckmaschinen AG, Koenig & Bauer AG (KBA), Komori Corp., Nilpeter, Dauphin Graphic Machines Inc. (a subsidiary of Manugraph India Ltd.), Timsons Printing Machinery, and Muller-Martini AG.

Shlomo Amir, president and CEO of Advanced Vision Technology, said, “Our healthy cash reserves, coupled with a positive 2-3 year outlook for the print market, meant now is the moment for us to take this strategic step. GMI’s technology complements that of AVT, and its strong market presence in the web-offset commercial printing segment opens new markets to AVT’s machine vision technology.”

Amir noted that Dover Corporation, parent company of GMI, decided on the divestiture due to a shift in focus to larger businesses. GMI’s financials will be stated in AVT’s quarterly report, to be released Nov.12, 2007. The company’s sales for the first six months of 2007 were $18.8 million, a 13 percent growth over the same period in 2006, with gross profit as a percentage of sales growing to 52.4 percent in the first six months of 2007 from 46.4 percent in 2006. EBITDA grew to $3.109 million in 2007 from $1.086 million in 2006, or 16.5 percent of sales in the first six months of 2007 from 6.5 percent of sales in 2006. Throughout 2006, GMI reduced non-engineering overhead, resulting in an annualized savings of over $2 million, and improved product cost. In 2007, GMI also returned its field service division to profit.

Amir further noted that international sales comprise a significant part of GMI’s sales, and are expected to account for 40 percent of revenue in 2007, with near-term expansion expected for Eastern Europe and long-term sights set for China and the Far East, once implementation of closed loop color control reaches a critical mass in those markets. “We expect that demand for machine vision, color automation, and other of our merged product lines will grow concurrently,” he said.