Creo Reports Earnings, Revenue Reaches $172 Million
Press release from the issuing company
Toronto, Ontario, May 04, 2001Creo Products Inc. ('Creo') announced financial results for the quarter ended March 31, 2001 reported in U.S. dollars.
For the second fiscal quarter of 2001, Creo achieved revenues of $172.9 million, compared to $63.3 million in the second quarter of fiscal 2000. This increase was primarily the result of the Company's April 2000 acquisition of the prepress division of Scitex Corporation Ltd. Adjusted earnings for Creo were $12.8 million or $0.25 per share (diluted) excluding the effect of business integration costs of $5.2 million and goodwill and other intangible assets amortization of $18.0 million. This compares to the net income of $7.1 million or $0.20 per share (diluted) for the same period a year ago. The second fiscal quarter revenue and adjusted earnings reported this day were in line with the forecasted target given in the first fiscal quarter. Under Canadian GAAP, Creo reported a loss of $9.9 million or $0.20 per share (diluted) and under U.S. GAAP the Company recorded a loss of $8.9 million or $0.18 per share (diluted) for the second fiscal quarter.
In April 2001, Creo marked the first year since the creation of CreoScitex, its principal operating division. Now the largest independent prepress provider, CreoScitex is a world leader in digital imaging solutions for the digital prepress and printing industry.
"We are very proud of the achievements over the last year, as we revamped and integrated the largest product line in the business. Gross margins on our products have improved over the last two quarters. We have by far the strongest team in the industry, with a clear idea of where we want to go and how to get there. And we've brought to market some significant new products that show the best of the combined heritage." stated Amos Michelson, Chief Executive Officer of Creo, "In the coming quarters, we will continue our focus on providing systems that drive our customers' success and achieving operational excellence in all areas of the Company. In the last quarter we are particularly proud of the increase in gross margins in a very competitive environment."
For six months ended March 31, 2001, Creo achieved revenues of $343.3 million, compared to $117.4 million in the six months ended March 31, 2000. This increase was primarily the result of the Company's April 2000 acquisition of the prepress division of Scitex Corporation Ltd. Adjusted earnings for Creo were $22.8 million or $0.45 per share (diluted) for the six months ended March 31, 2001 excluding the effect of business integration costs of $11.9 million and goodwill and other intangible assets amortization of $37.2 million. This compares to net income of $12.4 million or $0.35 per share (diluted) for the same period a year ago. Under Canadian GAAP, Creo recorded a loss of $23.6 million or $0.49 per share (diluted) and under U.S. GAAP the Company reported a loss of $21.1 million or $0.44 per share (diluted) for the six months ended March 31, 2001.
Gross margins increased to 44 percent in the second fiscal quarter from 42 percent in the first fiscal quarter.
Accounts receivable reduced by $21.9 million or 12 percent in the last two quarters.
Days sales outstanding decreased by 12 percent to 81 days in the second fiscal quarter from 91 days in the first fiscal quarter.
Inventories decreased by $30.9 million or 22 percent in the last two quarters.
Cash position increased by almost $20 million or over 40 percent in the previous two quarters.
"This quarter, Creo showed improved financial performance in a challenging economic climate," stated Michael Graydon, Chief Financial Officer of Creo. "So far this fiscal year, we have made significant improvements, especially in accounts receivable and inventory levels. These enhanced operational efficiencies are the result of the successful cooperation of our entire worldwide team."
During the quarter, Creo continued to apply its key strengths in thermal imaging and software systems, targeting several new market areas, including the large and growing creative professional market.
CreoScitex celebrated 12 Months of Innovation at Seybold Boston 2001 in April 2001 by announcing new and exciting digital tools for graphic arts creative professionals:
InSite, an integrated suite of internet collaborative tools for printers and print buyers;
Synapse(TM), a tool that enables one-button creation of trustworthy PDF files within the creative desktop;
Pagelet(TM), a new plug-in for Adobe(R) Acrobat(R) that assembles PDF partial pages exported to PDF from a variety of sources; and
Leaf(TM) Digital Large Format, a fully integrated solution for large format cameras, offering photographers a highly flexible and cost-effective solution for leveraging their existing equipment.
Shipments of the Lotem(TM) 800 Quantum began on schedule this quarter and the product has been extremely well received by customers. This breakthrough 8-page computer-to-plate device combines the best of the two most accepted and advanced CTP product lines. It features the automation of the Lotem CTP systems and the speed and unsurpassed quality of the SQUAREspot(TM) thermal imaging of the Trendsetter(R).
CreoScitex's Digital Printing Group announced the release of the Spire(TM) CSX2000 at the On Demand Digital Printing and Publishing Exposition in February. These Spire servers drive the Xerox(R) DocuColor(R) 2045 and 2060 color digital printers at printer-rated speed. The Digital Printing Group also reported that its Variable Information Partner program, announced at Drupa 2000, is continuing to thrive and expand.
CreoScitex signed an OEM agreement to supply SQUAREspot(TM) thermal imaging heads to Think Laboratory of Tokyo, Japan for the production of cylinders used in prepress for gravure printing in the packaging industry. Think Laboratory produces Japan's most popular fully automated gravure cylinder preparation systems, adopted by 90 percent of the Japanese prepress packaging industry.
CreoScitex entered into a European partnership with Imation, a leading worldwide supplier of digital proofing systems, as a reseller of CreoScitex Proofsetter(TM) Spectrum proofing devices. Both parties have agreed to the European distribution agreement, which authorizes Imation to sell the market leading Proofsetter Spectrum with related workflow throughout most countries in Europe.
"We maintain our commitment to long-term technological leadership and innovation," continued Mr. Michelson, "and will continue the current level of research and development funding to ensure it into the future. We expect new and enhanced products to be launched into the commercial and publication printing, packaging, creative professional and newspaper markets over the next 12 months."
The following forward-looking statements are projections based on numerous assumptions, which Creo cannot control and which may not develop as Creo expects. Consequently actual results may differ materially from the projections made here. Please refer to the notice regarding forward-looking statements below.
For the third quarter ended June 30, 2001, Creo expects revenue between $170 and $173 million, adjusted earnings between $11.0 and $13.0 million and adjusted earnings per share between $0.22 and $0.26. For the fiscal year ended September 30, 2001, the Company is targeting revenue in the range of $675 to $700 million, adjusted earnings of $47.5 to $52.5 million and adjusted earnings per share of $0.94 to $1.04. The adjusted earnings exclude business integration costs and goodwill and other intangible asset amortization.
"We feel that this projection of a stable business underlines Creo's strength in an uncertain business climate." Mr. Michelson stated, "We are putting in place all the resources and tools to ensure significant growth for the Company as the overall market conditions improve."
Creo also announced that Charles Young joined Yoav Chelouche as Co-Chair of the Board of Creo. Mr. Young, who has been on Creo's Board since September 1999, replaced Raffi Amit as Co-Chair who left the Board in February 2001. In addition, Creo announced the appointment of Meir Shannie, CEO and President of Clal Industries and Investments Ltd, to the Creo Board of Directors. Mr. Shannie succeeded Rimon Ben-Shaoul, who stepped down from the Creo Board following his appointment as Co-Chairman and President of Koonras Technologies Ltd.
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