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Creo Warns It Will Swing to a Q3 Loss, Revenue to be $156 Million

Press release from the issuing company

VANCOUVER, British Columbia--July 15, 2004-- Creo Inc. today announced preliminary financial results for the 2004 fiscal third quarter ended June 30, 2004, reported in U.S. dollars. Third quarter revenue is expected to be approximately $156 million, in line with the company's previous guidance. Creo expects to incur unanticipated non-cash financial and other expenses of approximately $1.9 million after tax. The largest component of the financial and other expense is a foreign exchange loss resulting from the revaluation of Canadian dollar net assets on the balance sheet due to a significant drop in the value of the Canadian dollar during the quarter. Additionally, in conjunction with consolidation of some U.S. operations, the company expects to incur a restructuring expense of $0.6 million resulting from lease exit costs. The net impact of these two charges will be a reduction in earnings per share (EPS) of approximately $0.05. As a result, the company's GAAP EPS for the third quarter is expected to be in the range of $(0.01) to (0.03), which is below the previously anticipated EPS range of $0.01 to 0.05 provided by the company in May 2004. "Our business is solid and has met our expectations for this quarter," said Mark Dance, chief financial officer and chief operating officer of Creo. "However, we have experienced some unanticipated non-cash expenses in the quarter. Aside from these expenses, we expect both third quarter revenue and earnings to be in the range established by our prior guidance. Due to growth in our consumables business and strong demand for our products this quarter, we remain confident in our ability to reach our target of 10 percent revenue growth for this fiscal year."