Creo Announces 2001 Fourth Quarter and Fiscal Year-End Results; Revenue Increase of 45% in Fiscal 2001; Company Unifies Identity under Creo Brand.Business Editors VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , B.C.--(BUSINESS WIRE)--Nov. 19, 2001 Creo Products Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CREO)(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CRE CRE Commercial Real Estate CRE Corporate Real Estate CRE Commission for Racial Equality (Scotland) CRE CCD (Charge Coupled Device) and Readout Electronics CRE Camp Response Element .) ('Creo') today announced financial results for the three months and fiscal year ended September September: see month. 30, 2001, reported in U.S. dollars. For the fourth fiscal quarter of 2001, Creo achieved revenues of $143.2 million compared to $173.3 million in the fourth quarter of 2000. Adjusted loss for the fourth quarter was $5.7 million or $0.12 per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ). This compares to adjusted earnings of $16.0 million or $0.32 per share (diluted) for the same period a year ago. For the fiscal year ending September 30, 2001, Creo achieved revenues of $656.5 million, an increase of 45 percent, compared to $453.3 million in the fiscal year ending September 30, 2000. This increase was primarily the result of the company's April 2000 acquisition of the prepress In typography and printing, the preparation of camera-ready materials up to the actual printing stage, which includes typesetting, page makeup and plate processing. By the turn of the century, the creation of digital content by authors and designers, digital printers, computer-to-plate division of Scitex Corporation Ltd. Adjusted earnings for Creo were $27.1 million or $0.54 per share (diluted) for the fiscal year ending September 30, 2001 compared to adjusted earnings of $41.9 million or $0.97 per share (diluted) for the same period a year ago. Adjusted results exclude the effects of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, business integration costs, the amortization of goodwill and intangibles, and one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. write-downs. "This year we achieved the largest sales in our history," stated Amos Michelson Mi·chel·son , Albert Abraham 1852-1931. German-born American physicist who with Edward Morley disproved the existence of ether, the hypothetical medium of electromagnetic waves. He won a 1907 Nobel Prize in physics. Noun 1. , chief executive officer of Creo. "We also aligned our worldwide product and regional leadership team, released the Lotem(TM) Quantum into full production and launched new initiatives in the packaging and newspaper markets. However, we are not immune to the challenging economic environment, and as a result we are continuing to take actions not only to reduce expenses, but also to build our leadership position." Mr. Michelson continued, "Recognizing that an economic recovery is not likely anytime before the second half of calendar 2002, Creo has expanded its cost-savings program. When combined with the cost savings measures implemented in August, these new measures will allow us to continue to invest in direct sales and service capability and sustain our new product initiatives. New cost cutting measures include a worldwide reduction in salary and benefits, which will be offset by stock options to be issued and priced in July July: see month. 2002. In addition, we will be consolidating certain manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). some operational management roles as we implement our ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. system this year." Creo will be restructuring its employee stock option incentive plan by allowing employees to voluntarily cancel (character) Cancel - (CAN, Control-X) ASCII character 24. their unvested options and to surrender their vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) options in exchange for new options to be issued and priced in July 2002 at ratios between approximately 1.5:1 to 3:1. Senior management will be reducing their salary and benefits for offsetting stock options as part of the cost reduction, however along with directors will not be able to exchange their existing options under the stock option incentive plan. The proposed option allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as together with the restructuring of the option plan will not increase the number of issued and outstanding options. "On the product front, we are continuing to pursue our growth strategy of driving the digitization dig·i·tize tr.v. dig·i·tized, dig·i·tiz·ing, dig·i·tiz·es To put (data, for example) into digital form. dig of the graphic arts graphic arts: see aquatint; drawing; drypoint; engraving; etching; illustration; linoleum block printing; lithography; mezzotint; niello; pastel; poster; silk-screen printing; silhouette; silverpoint; sketch; stencil; woodcut and wood engraving. business," stated Mr. Michelson. "Our consumables partnerships, entry-level en·try-lev·el adj. Appropriate for or accessible to one who is inexperienced in a field or new to a market: an entry-level job in advertising; an entry-level computer. CTP CTP (cytidine triphosphate): see cytosine. (1) (Computer-To-Plate) The production of printing plates directly from the computer without requiring film as an intermediate step. solutions and the Networked Graphic Production initiative are being rolled out as planned, and we look forward to significant new developments on these fronts throughout the coming year. In addition, we intend to consolidate our corporate image and product marketing under the Creo brand. This single strong brand will span all our business activity - from our current activities in the graphic arts, to developments in new markets - and is linked with our corporate performance via our stock ticker Stock ticker A letter designation assigned to securities and mutual funds that trade on US financial exchanges. symbol. In January January: see month. 2002, in conjunction with an important new product announcement at Macworld This article is about a technology publication. For the tradeshow, see Macworld Conference & Expo.
Macworld , we will retire the CreoScitex brand and introduce the new Creo." Strategic Initiatives -- Consumables partnerships build vendor and customer relationships by bundling equipment with competitively priced consumables including thermal plates, films and proofing media. -- Entry-level CTP solutions expand Creo's available market by targeting a new range of mid-size and smaller printers with a range of entry-level products that combine Creo's reputation for quality and reliability with lower inherent cost and economies of scale. -- The Networked Graphic Production initiative leverages existing Creo prepress solutions to link production and business systems from the creative desktop to the delivery of the finished product. Financial Highlights -- Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and other receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed were reduced by $44.0 million or 21 percent in fiscal 2001, including a reduction of $15.7 million this quarter. -- Inventory decreased by $41.6 million or 29 percent in fiscal 2001, including a reduction of $4.7 million this quarter. "We made significant reductions in the receivable and inventory balances this fiscal year resulting in an increase of $15 million in our cash position. Creo achieved real operational reductions of accounts receivable by 15 percent and inventories by 17 percent this year," stated Mike Graydon, Creo's chief financial officer. "Creo remains in a strong financial position with a cash balance of over $60 million." "We are clearly the leader in digital prepress," commented Mr. Michelson. "We continue to be in a good position to weather this downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. with the strongest product offering, recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue from service and consumables, and a proven capability to deliver value by making our customers more successful." 2002 Outlook "Although the economic climate continues to be challenging and uncertainty persists," commented Mr. Graydon, "Creo expects results for our first quarter 2002 to be in line with or somewhat better than the previous quarter." Fourth Quarter Charges As announced on August 2, Creo reduced its workforce by approximately 200 positions, affecting about 5 percent of its total workforce. Creo took a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $4.1 million or $2.7 million after tax in the fourth quarter of this fiscal year, covering all of the planned headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reduction. As announced on October October: see month. 11, one-time charges in the fourth quarter include $9.6 million (after tax) of accounts receivable, obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. ; $265.7 million of goodwill and other intangibles; $70.5 million of investments; and $9.0 million of future tax assets. Under U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , Creo recorded a loss of $351.4 million or $7.17 per share (diluted) for the fourth fiscal quarter, and under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. GAAP, the company reported a loss of $381.9 million or $7.79 per share (diluted). For the fiscal year ending September 30, 2001, Creo reported a loss of $380.9 million or $7.86 per share (diluted) under U.S. GAAP, or a loss of $414.8 million or $8.56 per share (diluted) under Canadian GAAP. During the fourth quarter Creo made reporting changes for all periods presented, including a reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of cost of sales, research and development, general and administration, and sales and marketing expenses, to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. accounting treatment across the company. Conference Call Creo will hold a conference call today, November November: see month. 19, 2001, at 5:00 p.m. Eastern Time to review 2001 fourth quarter and fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. results and discuss the outlook for the following quarter. To participate, tune in to the web cast at www.creo.com. An audio replay will be available; one hour after the call until November 21, 2001 at 7 p.m. Eastern Time. For replay dial 1-800-558-5253, access code 19875128 except in Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing dial 1-416-626-4100, access code 19874966. A Web replay will also be available at www.creo.com. ABOUT CREO Based in Vancouver, Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Creo Products Inc. is a publicly held high-technology company focused on the application of imaging and information technology. Through CreoScitex - its principal operating division - Creo is leading the digital transformation of the graphic arts industry. Creo Products Inc. trades under the symbols CREO on NASDAQ and CRE on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. . www.creo.com (C)2001 Creo Products Inc. CreoScitex is a division of Creo Products Inc. The CreoScitex product names mentioned in this document are trademarks or service marks of Creo Products Inc. and may be registered in certain jurisdictions. Other company and brand, product and service names are for identification purposes only and may be trademarks or registered trademarks of their respective holders. Data is subject to change without notice. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the following: (1) technological changes or changes in the competitive environment may adversely affect the products, market share, revenues or margins of the business; (2) changes in general economic, financial or business conditions may adversely affect the business or the markets in which it operates; and (3) new regions and new products do not proceed as planned and may adversely affect future revenues. These risks and uncertainties as well as other important risks and uncertainties are described under the caption "Information Regarding Forward-looking Statements" and elsewhere in our Annual Report and also in our Annual Information Form (40-F), both for the fiscal year ended September 30, 2000, as filed with the U.S. Securities and Exchange Commission and which are incorporated herein by reference. We do not assume any obligation to update the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information contained in this press release.
Creo Products Inc.
Statement of Adjusted Earnings
(In millions of U.S. dollars except per share amounts) (unaudited)
Three months ended Year ended
Sept 30 June 30 March 31 Dec 31 Sept 30
2001 2001 2001 2000 2001
---------------------------------------------
Revenue $ 143.2 $ 170.0 $ 172.9 $ 170.4 $ 656.5
Cost of sales 84.7 94.2 98.0 101.3 378.2
--------- -------- -------- -------- --------
Gross profit 58.5 75.8 74.9 69.1 278.3
Research and
development, net 21.5 20.5 18.7 16.2 76.9
Sales and marketing 27.0 26.2 25.3 22.1 100.6
General and administration 18.2 17.7 17.5 16.5 69.9
Other expense (income) (0.4) (0.1) (2.0) 2.8 0.3
--------- -------- -------- -------- --------
Adjusted operating income (7.8) 11.5 15.4 11.5 30.6
Income tax expense
(recovery) (2.1) 3.2 4.3 3.2 8.6
--------- -------- -------- -------- --------
Adjusted net operating
income (loss) (5.7) 8.3 11.1 8.3 22.0
--------- -------- -------- -------- --------
Cash tax recovery from
the amortization of
intellectual property - 1.7 1.7 1.7 5.1
--------- -------- -------- -------- --------
Adjusted earnings (loss) $ (5.7) $ 10.0 $ 12.8 $ 10.0 $ 27.1
Adjusted earnings (loss)
per share - basic $ (0.12) $ 0.21 $ 0.26 $ 0.21 $ 0.56
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Adjusted earnings (loss)
per share - diluted $ (0.12) $ 0.20 $ 0.25 $ 0.20 $ 0.54
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Reconciliation to
Canadian GAAP earnings
Adjusted earnings (5.7) 10.0 12.8 10.0 27.1
Adjustment to research
& development for
one-time write-down of
inventory and capital
assets (2.2) - - - (2.2)
Adjustment to sales &
marketing for one-time
write-down of capital
assets (1.0) - - - (1.0)
Adjustment to general &
admin. for one-time
write-down of accounts
receivable and capital
assets (12.1) - - - (12.1)
Tax recovery on
adjustments above 5.7 - - - 5.7
--------- -------- -------- -------- --------
One-time charges,
net of tax (9.6) (9.6)
Severance (4.1) - - - (4.1)
Tax recovery on
severance 1.5 1.5
--------- -------- -------- -------- --------
Severance, net of tax (2.6) (2.6)
Business integration
costs - (1.3) (5.2) (6.7) (13.2)
Goodwill and other
intangible assets
amortization (18.8) (18.3) (18.0) (19.2) (74.3)
Write-down of intangible
assets and goodwill (265.7) - - - (265.7)
Write-down of
investments (70.5) - - - (70.5)
Write-down of future
tax assets (9.0) 0.3 0.5 2.2 (6.0)
--------- -------- -------- -------- --------
Loss under Canadian GAAP $(381.9) $ (9.3) $ (9.9) $ (13.7) $(414.8)
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Loss per share - Basic,
Canadian GAAP $ (7.79) $ (0.19) $ (0.20) $ (0.29) $ (8.56)
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Loss per share - Basic,
U.S. GAAP $ (7.17) $ (0.17) $ (0.18) $ (0.25) $ (7.86)
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Loss per share - Diluted,
Canadian GAAP $ (7.79) $ (0.19) $ (0.20) $ (0.29) $ (8.56)
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Loss per share - Diluted,
U.S. GAAP $ (7.17) $ (0.17) $ (0.18) $ (0.25) $ (7.86)
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Note: The adjusted earnings excludes business integration costs, goodwill and other intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. amortization, one-time write downs and for U.S. GAAP purposes, stock compensation expense. The adjusted earnings is not prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) since it exclude these costs. During the fourth quarter Creo made reporting changes for all periods presented, including a reclassification of cost of sales, research and development, general and administration, and sales and marketing expenses, to standardize accounting treatment across the company.
Creo Products Inc.
Consolidated Statements of Operations and Retained Earnings (Deficit)
(In thousands of U.S. dollars except per share amounts)
Three months ended Twelve months ended
September 30 September 30
2001 2000 2001 2000
---------------------------------------------------------------------
Revenue
Product $ 91,122 $ 122,626 $ 447,241 $ 335,535
Service 41,407 38,777 161,753 94,654
Consumables 10,657 11,902 47,533 23,095
--------------------------------------------
143,186 173,305 656,527 453,284
Cost of sales 84,679 98,130 378,176 252,765
--------------------------------------------
58,507 75,175 278,351 200,519
--------------------------------------------
Research and development,
net 23,688 15,864 79,048 42,376
Sales and marketing 27,960 24,493 101,632 68,055
General and administration 30,320 14,063 82,134 35,634
Other expense (income) (431) 1,735 258 (341)
Restructuring 4,081 - 4,081 -
--------------------------------------------
Operating income (loss)
before undernoted items (27,111) 19,020 11,198 54,795
Business integration costs - 2,673 13,150 10,845
Goodwill and other
intangible assets
amortization 18,840 17,124 74,314 35,248
Write-off of goodwill and
other intangible assets 265,700 - 265,700 -
Write-off of investments 70,470 - 70,470 -
--------------------------------------------
Earnings (loss) before
income taxes (382,121) (777) (412,436) 8,702
Income tax expense
(recovery) (196) 3,444 2,319 9,811
Equity loss - - - 967
Minority interest income - (646) - (646)
--------------------------------------------
Net loss $(381,925) $ (3,575) $(414,755) $ (1,430)
--------------------------------------------
--------------------------------------------
Loss per common share
- Basic, Canadian GAAP $ (7.79) $ (0.08) $ (8.56) $ (0.04)
--------------------------------------------
--------------------------------------------
- Basic, U.S. GAAP $ (7.17) $ (0.19) $ (7.86) $ (1.14)
--------------------------------------------
--------------------------------------------
- Diluted, Canadian GAAP $ (7.79) $ (0.08) $ (8.56) $ (0.04)
--------------------------------------------
--------------------------------------------
- Diluted, U.S. GAAP $ (7.17) $ (0.19) $ (7.86) $ (1.14)
--------------------------------------------
--------------------------------------------
Retained earnings
(deficit), beginning of
period $ (12,506) $ 23,899 $ 20,324 $ 21,754
Net loss (381,925) (3,575) (414,755) (1,430)
--------------------------------------------
Retained earnings
(deficit), end of period $(394,431) $ 20,324 $(394,431) $ 20,324
--------------------------------------------
--------------------------------------------
Certain comparative figures have been reclassified to conform with the basis of presentation adopted in the current period.
Creo Products Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
September 30 September 30
2001 2000
(unaudited) (audited)
---------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 60,241 $ 45,359
Accounts receivable 140,551 174,094
Other receivables 27,041 37,451
Inventories 99,438 141,021
Future income taxes 11,840 23,492
------------- ------------
339,111 421,417
Investments - 45,000
Capital assets, net 111,768 107,280
Goodwill and other intangible assets, net - 338,055
Other assets 24,005 22,284
Future income taxes 13,629 10,534
------------- ------------
$ 488,513 $ 944,570
------------- ------------
------------- ------------
Liabilities
Current liabilities
Short-term debt $ 19,298 $ 19,216
Accounts payable 60,707 94,784
Accrued and other liabilities 54,928 61,503
Income taxes payable 3,092 6,424
Deferred revenue and credits 48,067 53,047
Future income taxes 1,200 -
------------- ------------
187,292 234,974
Future income taxes 2,556 22,986
------------- ------------
189,848 257,960
Shareholders' Equity
Share capital 691,955 664,160
Contributed surplus 2,060 2,126
Cumulative translation adjustment (919) -
Retained earnings (deficit) (394,431) 20,324
------------- ------------
Total shareholders' equity 298,665 686,610
------------- ------------
$ 488,513 $ 944,570
------------- ------------
------------- ------------
Certain comparative figures have been reclassified to conform with the basis of presentation adopted in the current period. |
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