By Susan Kelly February 9, 2005 -- Today Creo, Inc. (NYSE: CREO) today announced its financial results for the first quarter ended December 31, 2004 Mark Dance started the call to announce the recent deal offer by Eastman Kodak. As it stands now, Kodak has offered Creo shareholders $16.50 a share; for a total sale amount of $980 million. The Creo Board has recommended acceptance by the shareholders to the offer. Creo has changed the annual shareholders date to accommodate the sale of the company. This earnings call was cut short and the audience was advised that no questions would be answered about the impending acquisition. Raine’s Radar It was Mark Dance, Chief Financial Officer and Chief Operation Officer who led the call and not Amos Michelson, Chief Executive Officer nor Judi Hess, President. He read a scripted announcement and then opened the call for questions. This call only lasted 15 minute with very few analysts present on the call. Even the Wall Street Journal reported on February 1 st, the “unhappiness” of Creo’s shareholders with Creo management. The paper speculated that “Creo dissidents have been seeking to replace its executive team with a turnaround specialist.” Well, turnaround they will get. With Kodak purchasing Creo it will take years for the strategic value of this acquisition to bear fruit. Kodak has widely publicized that they have been on an acquisition binge. It will take herculean efforts to integrate all their new assets to reap the future value of not only Creo but their other recent purchases including Heidelberg’s NexPress. Now that Creo is no longer digital press agnostic, we expect to see resistance of many customers, including their OEM’s to deal with Creo in the future; including possibly Xerox. Once again, it’s time to stay tuned. Topics of this summary: Financial Summary Segment Performance Guidance Q & A Financial Summary Revenue growth of 12.4% to $174.6 million was Creo’s highest quarterly revenue in Creo’s history. Earnings before taxes increased 64.0% to $7.3 million for the quarter. Gross margin in the first quarter of 2005 was 40.6%, slightly decreasing from the previous year. The cost of ramping up Creo's plate business to meet customer demand for digital plates, changes in product mix, and pricing pressures on CTP systems is putting pressure on gross margins. Creo expects the balance of the year to have gross margins in the range of 39% - 42%. Creo expects as plate revenues increase so will the gross margins. Operating expenses were reduced by $4.6 million in first quarter. Cash position as of December 31 st, 2004 was $86.5 million with net cash flow from operations at $9.7 million. Restructuring charges ended up being lower than forecasted to the amount of $400K for the quarter. Consolidation of the North American head quarters is almost complete. Segment Performance The Americas revenue was up 13.9% due to increase in consumable sales. EMEA revenues were up 18.1% primarily because of the Euro and consumable sales. The Pacific region was up 18.1% in revenues. OEM was down 3.8% in revenues due to the decrease in digital printing. The rising Canadian dollar has also impacted results. In total Creo had a negative impact of $2 million as a result of unfavorable exchange rates however, made up the difference through cost controls. Guidance Creo stated they will not provide guidance given the most recent transaction by Eastman Kodak... Q & A Pricing pressure in Europe is widespread not on any particular product or service. Full disclosure about the deal will posted on the website by Monday February 7th 2005 OEM business was down because of lower digital printing revenues. Normal is seasonal high is Q1 but not seeing the same draw as in previous years. Plate manufacturing facility planned for Germany is subject to demand which is difficult to forecast because of the Kodak deal. No investment has been made to date. Total shares outstanding are 56.8 million.