Vancouver, BC, Canada(October 6, 2004) ? Creo Inc. (NASDAQ: CREO; TSX: CRE) today announced a program designed to streamline operations, strengthen the company’s competitive cost position and provide a strong platform for earnings growth. The program will eliminate over 200 positions globally, or 5 percent of the total workforce, including 60 positions which were previously announced in August. The program will reduce expenses by an annualized rate of approximately $24 million by the start of the fiscal third quarter of 2005 and is expected to reduce operating expenses and cost of goods sold equally.
The company will host a conference call today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss today?s announcement. Details on how to participate in the call are included later in this news release.
The company estimates total pre-tax charges of approximately $6 million will result from the program, including $3 million in charges for the preliminary actions announced in August, all to be taken in the fiscal fourth quarter ended September 30, 2004. The impact of these charges will be approximately 9 cents per diluted share after tax. Of the total charges:
- Restructuring expenses of approximately $4 million result from reorganization in the Americas and Europe, Middle East and Africa (EMEA) operations; and
- Severance expenses of approximately $2 million are associated with the global workforce reduction.
Amos Michelson, Creo chief executive officer, stated, ?We are committed to building shareholder value and profitability from our core business and through the execution of the digital media strategy announced a year ago. We have systematically examined all parts of the business for both cost and contribution. The result is a set of initiatives that will deliver increasing earnings through fiscal 2005.?
Mr. Michelson continued, ?In fiscal 2004, we demonstrated the ability to drive consumables demand and to deliver high quality thermal plates. We have grown to become the fourth largest digital plate vendor in the world. However, we have not generated the bottom line performance we forecast this year. In fiscal 2005 we expect to continue similar top line growth while again increasing consumables revenue by more than 50 percent. More importantly, we are committed to do what is necessary to deliver on the bottom line. The measures announced today will allow us to achieve quarterly earnings before tax of at least eight percent of revenue by the fiscal fourth quarter of 2005.?
Outlook
Creo updates the following outlook for the fiscal fourth quarter ended September 30, 2004:
- Revenue between $164 million and $166 million;
- Restructuring charges of approximately 9 cents per diluted share, an increase of 4 cents per diluted share for additional activities undertaken since the estimate of 5 cents per diluted share announced on August 4. The company continues to expect 1 cent per share of intangible asset amortization.
Creo offers the following outlook for the fiscal first quarter ending December 31, 2004:
- Revenue between $164 million and $171 million.
The guidance is based on foreign exchange rates on September 29th, 2004. All amounts are quoted in U.S. dollars using Canadian GAAP unless otherwise indicated.
Today?s Conference Call
Creo will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), October 6, 2004 to discuss today?s announcement. The conference call may be accessed at http://www.creo.com/investors. To listen to the conference call live by telephone, dial 1-877-825-5811 for participants in North America and 1-973-582-2767 for international participants ten minutes before the start time. A telephone playback will be available after the completion of the call until October 9, 2004 at 8:00 p.m. Eastern Time (5:00 p.m. Pacific Time) and can be accessed at 1-877-519-4471 for participants in North America and 1-973-341-3080 for international participants using the access code 5224933.
2004 Fiscal Fourth-Quarter Financial Results
Creo will announce its 2004 fiscal fourth-quarter financial results on November 17, 2004 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The company will present the 2004 fourth-quarter financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), the same day.
This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
These risks and uncertainties include the following: (1) new markets and product introductions do not proceed as planned and may adversely affect future revenues; (2) technological changes or changes in the competitive environment may adversely affect the products, market share, revenues or margins of the business; and (3) changes in general economic, financial or business conditions may adversely affect the business or the markets in which it operates. These risks and uncertainties as well as other important risks and uncertainties are described under the caption “Certain Factors That May Affect Future Results” and elsewhere in our Annual Report for the fiscal year ended September 30, 2003, as filed with the U.S. Securities and Exchange Commission and other documents filed with the U.S. Securities and Exchange Commission, and which are incorporated herein by reference. We do not assume any obligation to update the forward-looking information contained in this news release.
? 2004 Creo Inc. The Creo product names mentioned in this document are trademarks or service marks of Creo Inc. and may be registered in certain jurisdictions. Other company and brand, product and service names are for identification purposes only and may be trademarks or registered trademarks of their respective holders. Data is subject to change without notice. | 
