Creo Reports Low 3Q Results, Will Decrease Expenses, Cuts 200 Jobs
Press release from the issuing company
VANCOUVER, Aug. 2 Creo Products Inc. today announced financial results for the three and nine months ended June 30, 2001, reported in U.S. dollars.
For the third fiscal quarter of 2001, Creo achieved revenues of $170.0 million or an increase of 4.6 percent, compared to $162.6 million in the third quarter of fiscal 2000. Adjusted earnings for Creo were $10.0 million or $0.20 per share (diluted) excluding the effect of business integration costs of $1.3 million and goodwill and other intangible assets amortization of $18.3 million. This compares to adjusted earnings of $13.7 million or $0.28 per share (diluted) for the same period a year ago. Under U.S. GAAP, Creo recorded a loss of $8.4 million or $0.17 per share (diluted) for the third fiscal quarter, and under Canadian GAAP, the company reported a loss of $9.3 million or $0.19 per share (diluted).
"Our performance was reasonably stable this quarter,'' stated Amos Michelson, chief executive officer of Creo. "However, we are seeing more customers delaying purchases due to the economic climate. Given the continued weakness in the North American and European markets, we are focused on those elements of our performance that we can control - bringing strong products to market quickly and ensuring that our sales force is optimally effective. We are also implementing a worldwide initiative to reduce costs and increase operating efficiencies while continuing to manage the company for the long- term.''
"We are strengthening our commitment to the success of our customers. Our systems provide a distinct advantage in these challenging times, and we will help our customers to further optimize their business,'' continued Mr. Michelson. "In addition, we recognize that the market is broadening to include more sizes and types of printing and prepress companies. To meet this demand, we are rolling out a new line of entry-level products that will allow an even broader range of printers and prepress providers to take advantage of the reliability and quality of our equipment.''
For the nine months ending June 30, 2001, Creo achieved revenues of $513.3 million, compared to $280.0 million in the nine months ending June 30, 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 $32.8 million or $0.65 per share (diluted) for the nine months ending June 30, 2001 excluding the effect of business integration costs of $13.2 million and goodwill and other intangible assets amortization of $55.5 million. This compares to adjusted earnings of $26.1 million or $0.65 per share (diluted) for the same period a year ago. For the nine months ending June 30, 2000, Creo reported a loss of $29.5 million or $0.61 per share (diluted) under U.S. GAAP, or a loss of $32.8 million or $0.68 per share (diluted) under Canadian GAAP.
- Gross margins increased to 45 percent this quarter from 44 percent last
- Accounts receivable were reduced by $25.0 million or 14 percent in the
last three quarters, including a reduction of $1.5 million this
- Inventories decreased by $36.9 million or 26 percent in the last three
quarters, including a reduction of $6.0 million this quarter.
- The cash position increased to $65.5 million this quarter.
"We have seen significant improvements in the balance sheet this year,'' stated Michael Graydon, chief financial officer of Creo. "We will continue to strive to make additional gains in this area. This quarter we remained cash positive with minimal debt.''
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 fourth quarter ending September 30, 2001, Creo expects revenue between $145 and $150 million, and the company expects to be close to breakeven in adjusted earnings without severance costs. We expect severance costs to be about $4 million resulting in an adjusted loss of approximately $4 million. For the fiscal year ending September 30, 2001, the company is targeting revenue in the range of $658 to $663 million. Excluding severance costs, adjusted earnings will be approximately $33 million and adjusted earnings per share of approximately $0.66. With severance costs, adjusted earnings are expected to be $29 million and adjusted earnings per share approximately $0.58. The adjusted earnings exclude business integration cost, goodwill and other intangible asset amortization.
"We are reducing our outlook for the fourth quarter to reflect the overall state of the global economy,'' stated Mr. Michelson. "Creo will continue to build its strengths in R&D, sales and customer support, while implementing efficiency measures wherever possible. We are focused on ways to cut costs and save money without negatively impacting revenue growth or our customer focused activities. The areas of cost containment include travel, senior management compensation, capital expenditures, facilities and purchasing practices. In addition, we have eliminated approximately 200 positions around the world, affecting about 5% of our workforce. When combined these efficiency measures are expected to result in total savings of approximately $6 million per quarter with most of the benefit becoming apparent in the first quarter of fiscal 2002.''
"Of all the difficult decisions we had to make, the toughest has been the reduction in people,'' commented Mr. Michelson. "However, we are committed to make the right economic decisions and build the foundation for strong growth.''
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