VANCOUVER, British Columbia--Feb. 3, 2005-- Creo Inc. today announced its financial results for the fiscal first quarter ended December 31, 2004, reported in U.S. dollars. Revenue in the first quarter of 2005 was $174.6 million, an increase of 12.4 percent from $155.3 million in the first quarter of 2004. Net earnings were $5.9 million or 10 cents per diluted share for the first quarter compared to $12.3 million or 24 cents per diluted share in the first quarter a year ago. Net earnings in first quarter of 2005 include 3 cents per diluted share of restructuring and intangible asset amortization offset by a higher than usual financial gain from the impact of foreign currency on net monetary assets of 3 cents per share. Earnings before taxes and other items increased by 64.0 percent to $7.3 million in the first quarter of 2005 compared to $4.5 million in the first quarter of 2004. Consumables revenue reached $27.9 million this quarter, an increase of 109.1 percent compared to the first quarter of last year and a 16.3 percent increase compared to the fourth quarter of 2004. Gross margin in the first quarter of 2005 was 40.6 percent, compared to 43.0 percent in the first quarter of 2004. A shift in revenue mix with the increase in plate revenue, and to a lesser extent, lower equipment margins contributed to the decline in gross margin this quarter. Total operating expenses of $63.6 million for the first quarter of 2005 were stable compared to $62.4 million in the first quarter of 2004, despite approximately $2.0 million in currency impact, net of hedging activities, from the appreciation of the Canadian dollar, Japanese yen, euro and Israeli shekel compared to the U.S. dollar. As a percentage of revenue, total operating expenses declined by 380 basis points to 36.4 percent compared to 40.2 percent in the prior year's first quarter. Cash used by operations was $5.4 million, reflecting a significant increase in accounts receivable as a result of higher revenue, increased inventory levels due to the ramp-up of our plate business, and the timing of vendor and restructuring payments. Cash on hand at quarter end was $86.5 million compared to $82.6 million as at September 30, 2004. Weighted shares outstanding (diluted) were 57,905,830 for the first quarter of 2005. Subsequent to the quarter end, Creo entered into an arrangement agreement to be acquired by Eastman Kodak Company. The acquisition is to be completed by way of a statutory plan of arrangement under which Kodak will acquire all of the issued and outstanding common shares of Creo at a cash price of $16.50 per share or approximately $980 million. Creo shareholders will be entitled to consider and vote upon the proposed transaction at the rescheduled annual and special meeting of shareholders to be held on March 29, 2005. In light of the pending transaction with Kodak and the uncertainty of how it may impact operations, Creo will not be providing guidance for the second quarter of 2005.