VANCOUVER, British Columbia--July 30, 2003-- Creo Inc., the world leader in digital prepress solutions for the graphic arts industry, today announced its financial results for the third fiscal quarter ended June 30, 2003, reported in U.S. dollars.
For the 2003 third quarter, revenue was $143.5 million, up 9 percent from $131.8 million in the same quarter last year and compared to $141.5 million in the prior quarter. For the nine months ended June 30, 2003, revenue was $427.8 million, an increase of 7 percent from $401.4 million for the same period in 2002.
Creo recorded GAAP net earnings of $2.8 million or 5 cents per diluted share compared to a loss of $2.8 million or 6 cents per share in the 2002 third quarter and a loss of $1.2 million or 2 cents per share in the prior quarter. For the nine-month period ended June 30, 2003, GAAP earnings were $3.1 million or 6 cent per diluted share compared to a loss of $24.9 million or 50 cents per share for the same period in 2002.
Adjusted earnings were $3.6 million or 7 cents per diluted share compared to $0.6 million or 1 cent per diluted share in the 2002 third quarter. Adjusted earnings increased 25 percent from $2.9 million or 6 cents per diluted share in the prior quarter. Adjusted earnings were $8.9 million or 18 cents per diluted share for the nine-month period ended June 30, 2003 compared to an adjusted loss of $2.7 million or 6 cents per share for the same period in 2002.
Adjusted earnings is a non-GAAP measure that excludes equity loss on investment, restructuring and business integration costs, intangible assets amortization and their tax effects. Further information and a full reconciliation are provided in the Statement of Adjusted Earnings and in a note later in this news release.
"Creo delivered sequential and year-over-year improvements in total revenue, gross margins and profitability. Revenues in Europe continue to track well above last year's level, benefiting from both improved sales execution and the increased strength of the Euro," said Amos Michelson, chief executive officer of Creo. "Our Asia-Pacific region also continues to perform well, especially in China. Although revenue in the Americas remained flat year-over-year, we saw strong results in both newspapers and packaging, which are targeted growth segments for Creo. Over the next few quarters, Creo will continue to broaden its partnerships and the scope of the solutions we offer to the market. We anticipate a very exciting year ahead, with significant product announcements beginning with the IGAS and Graph Expo tradeshows in late September and continuing through the drupa exhibition in May 2004."
"We are proud of our progress so far this year," commented Mark Dance, chief financial officer and chief operating officer of Creo. "We have remained focused, executed well and have stabilized net operating expenses despite the rising exchange rates of the Canadian dollar, Israeli shekel and Euro compared to the U.S. dollar. We estimate that changes in exchange rates increased our net operating expenses by approximately $5.0 million compared to the 2002 third quarter and approximately $2.5 million compared to the prior quarter. Our cost reduction activities have substantially offset these foreign exchange effects."
2003 Third-Quarter Financial Highlights
Gross margin was 45.2 percent this quarter, up 70 basis points from the 2002 third quarter and up 20 basis points from the prior quarter.
Net operating expenses were $62.9 million, compared to $59.2 million in the 2002 third quarter and $62.4 million in the prior quarter. A reconciliation of net operating expenses to GAAP operating expenses is provided on page 6 of this news release.
Cash and cash equivalents at June 30, 2003 were $77.2 million, up $14.3 million over the prior year's quarter and $14.9 million over the prior quarter. Subsequent to quarter-end, Creo repaid the balance of short-term debt or approximately $15.1 million owed by Creo Japan Inc.
Weighted shares outstanding (diluted) under GAAP were 50,632,185 for the three months ended June 30, 2003.
"Revenue in the fourth quarter is expected to continue to trend upwards based on the seasonal strength of our OEM business and new product offerings," commented Mr. Dance. "We will continue to manage prudently in order to capture new savings and improve our business fundamentals while not sacrificing our growth."
For the fiscal fourth quarter ending September 30, 2003, Creo expects revenue between $144 million and $149 million. The company is forecasting adjusted earnings per diluted share between 4 and 9 cents and GAAP earnings per diluted share between 3 and 8 cents for the fourth fiscal quarter.
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