Creo Announces Program Targeting Annualized Savings of US$24 Million; Management Confirms Company's Strategic Direction.VANCOUVER, Brittsh Columbia -- Creo 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)(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :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 )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 annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of approximately $24 million by the start of the fiscal third quarter of 2005 and is expected to reduce operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. 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 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. share after tax. Of the total charges: - 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). expenses of approximately $4 million result from reorganization in the Americas and Europe, Middle East and Africa (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ) operations; and - 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 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." Outlook Creo updates the following outlook for the fiscal fourth quarter ended September 30, 2004: - Revenue between $164 million and $166 million; - Restructuring charges 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 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 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. 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). unless otherwise indicated. Today's Conference Call Creo will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), October 6, 2004 to discuss today's announcement. The conference call may be accessed at www.creo.com/investors. To listen to the conference call live by telephone, dial 1-877-825-5811 for participants in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and 1-973-582-2767 for international participants ten minutes before the start time. A telephone playback will be available after the completion of the call until October 9, 2004 at 8:00 p.m. Eastern Time (5:00 p.m. Pacific Time) and can be accessed at 1-877-519-4471 for participants in North America and 1-973-341-3080 for international participants using the access code 5224933. 2004 Fiscal Fourth-Quarter Financial Results Creo will announce its 2004 fiscal fourth-quarter financial results on November 17, 2004 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The company will present the 2004 fourth-quarter financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), the same day. This news 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) new markets and product introductions do not proceed as planned and may adversely affect future revenues; (2) technological changes or changes in the competitive environment may adversely affect the products, market share, revenues or margins of the business; and (3) changes in general economic, financial or business conditions may adversely affect the business or the markets in which it operates. These risks and uncertainties as well as other important risks and uncertainties are described under the caption "Certain Factors That May Affect Future Results" and elsewhere in our Annual Report for the fiscal year ended September 30, 2003, as filed with the U.S. Securities and Exchange Commission and other documents 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 information contained in this news release. (C) 2004 Creo Inc. The Creo product names mentioned in this document are trademarks or service marks of Creo 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. About Creo Creo Inc. is a global company with key strengths in imaging and software technology. The leading provider of prepress systems, Creo helps over 25,000 customers worldwide adopt completely digital production methods which reduce costs, increase print quality and allow them to serve their customers more efficiently. Based on a solid foundation of intellectual property, Creo has an unmatched range of technology solutions that address the needs of commercial, publication, on demand, packaging, and newspaper printers, and creative professionals. Creo product lines include software and hardware for computer-to-plate imaging, systems for digital photography, scanning, and proofing, as well as printing plates and proofing media. Creo also supplies on-press imaging technology, components for digital presses, and color servers for high-speed digital printers. Based in Vancouver, Canada, Creo trades on NASDAQ (CREO) and the TSX (CRE). |
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