Creo Products Inc. Announces 2000 First Quarter; Revenue Growth of 48.1% and Net Earnings Increase of 55.1% -- In thousands of U.S. dollars --.Business Editors, Technology Writers 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)--Jan. 24, 2000 Creo Products Inc. (Nasdaq: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 ) reported net income for the three months ended Dec. 31, 1999 of $5.2 million or $0.15 per share (fully 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. -- US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) compared to $3.4 million or $0.12 per share for the three months ended Dec. 31, 1998. &uot;The first quarter of fiscal 2000 was the most profitable first quarter in the history of Creo,&uot; states Tom Kordyback, chief financial officer, &uot;Our sales increased dramatically and profits exceeded expectations. Given the accomplishments of our first quarter, we look forward to continued success in the coming fiscal year.&uot; Total revenue for the three months ended Dec. 31, 1999 increased 48.1% to $54.1 million from $36.5 million for the three months ended Dec. 31, 1998. Product revenue from our joint venture with Heidelberg Heidelberg (hī`dəlbĕrkh), city (1994 pop. 139,430), Baden-Württemberg, SW Germany, picturesquely situated on the Neckar River. Manufactures include machinery, precision instruments, leather goods, and tobacco and wood products. increased 80.8% to $22.3 million for the three months ended Dec. 31, 1999 from $12.3 million for the three months ended Dec. 31, 1998. This increase was primarily due to increased sales activity on the part of Heidelberg. Service revenue increased 68.7% to $9.3 million for the three months ended Dec. 31, 1999 from $5.5 million for the three months ended Dec. 31, 1998. This increase in service revenue was due to fees generated from additional customer support agreements entered into in connection with new product sales. Cost of sales increased 45.4% to $28.3 million for the three months ended Dec. 31, 1999 from $19.5 million for the three months ended Dec. 31, 1998. This increase was primarily due to the increase in our product sales and our installed customer base. Cost of sales decreased as a percentage of total revenue to 52.3% for the three months ended Dec. 31, 1999 from 53.3% for the three months ended Dec. 31, 1998. Gross research and development expenses increased 71.7% to $10.3 million for the three months ended Dec. 31, 1999 from $6.0 million for the three months ended Dec. 31, 1998. This increase was due to a 42.0% increase in the number of research and development personnel and the increase in the amount of materials used for prototyping (1) Creating a demo of a new system. Prototyping is essential for clarifying information requirements. The design of a system (functional specs) must be finalized before the system can be built. and developing new products. Outside funding of our research and product development activities increased 10.1% to $4.4 million for the three months ended December December: see month. 31, 1999 from $4.0 million for the three months ended Dec. 31, 1998. As a result of these factors affecting gross research and development expenses and research and development funding, net research and development expenses, which represent gross research and development expenses less outside funding, increased 192.0% to $5.9 million for the three months ended Dec. 31, 1999 from $2.0 million for the three months ended Dec. 31, 1998. Sales and marketing expenses increased 34.6% to $9.1 million, or 16.9% of total revenue, for the three months ended Dec. 31, 1999 from $6.8 million, or 18.6% of total revenue, for the three months ended Dec. 31, 1998. This increase was primarily due to the increase in sales activity. General and administration expenses increased 42.3% to $2.9 million, or 5.3% of total revenue, for the three months ended Dec. 31, 1999 from $2.0 million, or 5.6% of total revenue, for the three months ended Dec. 31, 1998. This increase was primarily due to the growth of our business. Income tax expense increased to $3.4 million, or 39.5% of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income, for the three months ended Dec. 31, 1999 from $2.5 million, or 42.8% of pre-tax income, for the three months ended Dec. 31, 1998. This increase was primarily due to the increase in our profitability. Creo is a leading developer, manufacturer and distributor of comprehensive digital solutions that automate To turn a set of manual steps into an operation that goes by itself. See automation. 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 phase of commercial printing, in which master printing plates are created prior to actual printing. Creo computer-to-plate See CTP. technology transfers digitized text, graphic images and line artwork from desktop publishing desktop publishing, system for producing printed materials that consists of a personal computer or computer workstation, a high-resolution printer (usually a laser printer), and a computer program that allows the user to select from a variety of type fonts and sizes, computer systems directly onto printing plates, eliminating labor-intensive la·bor-in·ten·sive adj. Requiring or having a large expenditure of labor in comparison to capital: "Intrigue and subversion are labor-intensive undertakings" George F. Kennan. , complex and costly preparatory pre·par·a·to·ry adj. 1. Serving to make ready or prepare; introductory. See Synonyms at preliminary. 2. Relating to or engaged in study or training that serves as preparation for advanced education: steps required by the conventional prepress process. Creo offers a comprehensive line of precision imaging equipment, including scanners, proofing devices, and output devices, as well as workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. management software. Investors will have the opportunity to listen to the analyst conference call scheduled for Jan. 24, 2000 at 4:30pm ET live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through Investor Broadcast Networks' Vcall website, located at http://www.vcall.com or Streetfusion, located at http://www.streetfusion.com. To listen to the call, please go to the web site at least fifteen minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , and install any necessary audio software. For those who cannot listen to the live broadcast, a web and phone replay will be available shortly after the call. Web replay will be available at http://www.vcall.com or http://www.streetfusion.com. To access phone replay, available until Jan. 27, 2000 at 6:00pm EST EST electroshock therapy. EST abbr. electroshock therapy , investors (except 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 area) should dial 800/408-3053, access No. 395105. In the Toronto area, please dial 416/695-5800 to avoid long distance charges. This press release contains both historical information and 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. Numerous important factors affect our operating results and could cause the actual results to differ materially from the results indicated in this press release or in any other forward looking statements made by us or on our behalf. There can be no assurance that future results will meet expectations. Among the factors which could affect our future results are: (1) the failure of our computer-to-plate solutions to gain broad market acceptance among small and mid-size printers; (2) our ability to re-channel our resources fast enough if our joint venture with Heidelberg were to be terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: ; (3) our ability to establish necessary relationships with plate suppliers and press manufacturers, and to maintain our existing relationships; and (4) our ability to overcome significant and increasing competition in the digital prepress market and to adapt to new technologies and changing demands of our customers. Information about these and other factors that could affect our financial results is included in the Creo prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. dated July July: see month. 28, 1999 filed with the SEC, which can be accessed via our website at www.creo.com. We do not assume any obligation to update the forward-looking information contained in this press release.
Creo Products Inc.
Consolidated Statements of Operations and Retained Earnings
(In thousands of U.S. dollars except earnings per share)
Three months ended
Dec. 31
1999 1998
(unaudited) (unaudited)
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Revenue
Product revenue $ 44,869 $ 31,065
Service revenue 9,252 5,484
--------- ---------
54,121 36,549
Cost of sales 28,317 19,471
--------- ---------
25,804 17,078
--------- ---------
Research and development, gross 10,312 6,007
Research and development, funding (4,375) (3,974)
--------- ---------
Research and development, net 5,937 2,033
Sales and marketing 9,134 6,785
General and administration 2,895 2,035
--------- ---------
17,966 10,853
--------- ---------
Earnings from operations 7,838 6,225
Other income (expenses) and foreign exchange
gain (loss) 795 (332)
--------- ---------
Earnings before income taxes 8,633 5,893
Income tax expense 3,407 2,523
--------- ---------
Net earnings for period $ 5,226 $ 3,370
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Earnings per common share
- basic $ 0.16 $ 0.13
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- fully diluted (CDN GAAP) $ 0.15 $ 0.12
========= ==========
- fully diluted (US GAAP) $ 0.15 $ 0.12
========= ==========
Retained earnings, beginning of the period $ 21,754 $ 3,194
Net earnings for period 5,226 3,370
--------- ---------
Retained earnings, end of the period $ 26,980 $ 6,564
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Creo Products Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
Dec. 31
1999 1998
(unaudited) (unaudited)
---------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 89,209 $ 33,733
Accounts receivable 44,853 28,576
Inventories 36,682 26,524
Prepaid expenses 3,943 1,885
--------- ---------
174,687 90,718
Capital assets 43,521 35,862
Future income taxes 2,082 60
--------- ---------
$ 220,290 $ 126,640
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Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 30,936 $ 17,159
Income taxes payable 3,101 1,376
Future income taxes 639 394
Deferred revenue and deposits 20,110 15,323
Current portion of long-term debt - 389
--------- ---------
54,786 34,641
Long-term debt - 6,586
--------- ---------
54,786 41,227
Shareholders' Equity
Share capital 138,524 78,849
Retained earnings 26,980 6,564
--------- ---------
Total shareholders' equity 165,504 85,413
--------- ---------
$ 220,290 $ 126,640
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