Creo to Cut 5% of Workforce, Targeting Annualized Savings of $24 Million
Press release from the issuing company
VANCOUVER, Brittsh Columbia--Oct. 6, 2004-- Creo Inc. today announced a program designed to streamline operations, strengthen the company's competitive cost position and provide a strong platform for earnings growth. The program will eliminate over 200 positions globally, or 5 percent of the total workforce, including 60 positions which were previously announced in August. The program will reduce expenses by an annualized rate of approximately $24 million by the start of the fiscal third quarter of 2005 and is expected to reduce operating expenses and cost of goods sold equally.
The company will host a conference call today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss today's announcement. Details on how to participate in the call are included later in this news release.
The company estimates total pre-tax charges of approximately $6 million will result from the program, including $3 million in charges for the preliminary actions announced in August, all to be taken in the fiscal fourth quarter ended September 30, 2004. The impact of these charges will be approximately 9 cents per diluted share after tax. Of the total charges:
Restructuring expenses of approximately $4 million result from reorganization in the Americas and Europe, Middle East and Africa (EMEA) operations; and
Severance expenses of approximately $2 million are associated with the global workforce reduction.
Amos Michelson, Creo chief executive officer, stated, "We are committed to building shareholder value and profitability from our core business and through the execution of the digital media strategy announced a year ago. We have systematically examined all parts of the business for both cost and contribution. The result is a set of initiatives that will deliver increasing earnings through fiscal 2005."
Mr. Michelson continued, "In fiscal 2004, we demonstrated the ability to drive consumables demand and to deliver high quality thermal plates. We have grown to become the fourth largest digital plate vendor in the world. However, we have not generated the bottom line performance we forecast this year. In fiscal 2005 we expect to continue similar top line growth while again increasing consumables revenue by more than 50 percent. More importantly, we are committed to do what is necessary to deliver on the bottom line. The measures announced today will allow us to achieve quarterly earnings before tax of at least eight percent of revenue by the fiscal fourth quarter of 2005."
Creo updates the following outlook for the fiscal fourth quarter ended September 30, 2004:
Revenue between $164 million and $166 million;
Restructuring charges of approximately 9 cents per diluted share, an increase of 4 cents per diluted share for additional activities undertaken since the estimate of 5 cents per diluted share announced on August 4. The company continues to expect 1 cent per share of intangible asset amortization.
Creo offers the following outlook for the fiscal first quarter ending December 31, 2004:
Revenue between $164 million and $171 million.
The guidance is based on foreign exchange rates on September 29th, 2004. All amounts are quoted in U.S. dollars using Canadian GAAP unless otherwise indicated.
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