Creo Products Inc. Announces Third Quarter 1999 Results; Revenue Growth of 31% and Net Earnings Increase of 34%.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. , BC--(BUSINESS WIRE)--Aug. 10, 1999-- Creo Products Inc. (Nasdaq:CREO)(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CEC (Central Electronic Complex) The set of hardware that defines a mainframe, which includes the CPU(s), memory, channels, controllers and power supplies included in the box. Some CECs, such as IBM's Multiprise 2000 and 3000, include data storage devices as well. ) reported net income for the three months ended June June: see month. 30, 1999 of $4.7 million or $0.16 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). ). This compares to $3.5 million or $0.10 per share for the three months ended June 30, 1998. Total revenue for the three months ended June 30, 1999 increased 30.8% to $44.3 million from $33.9 million for the three months ended June 30, 1998. Total revenue for the nine months ended June 30, 1999 increased 31.4% to $122.4 million from $93.1 million for the nine months ended June 30, 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 79.0% to $14.5 million for the three months ended June 30, 1999 from $8.1 million for the three months ended June 30, 1998. This increase was primarily due to increased sales activity on the part of Heidelberg. Product revenue from our joint venture with Heidelberg increased 70.0% to $41.6 million for the nine months ended June 30, 1999 from $24.4 million for the nine months ended June 30, 1998. Cost of sales decreased as a percentage of total revenue to 53.4% for the three months ended June 30, 1999 from 54.1% for the three months ended June 30, 1998. This increase was primarily due to the increase in product sales and installed customer base. Gross research and development expenses increased 72.0% to $8.8 million for the three months ended June 30, 1999 from $5.1 million for the three months ended June 30, 1998. This increase was due to a 50.9% 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. Net research and development expenses, which represent gross research and development expenses less outside funding, increased 154.5% to $4.1 million for the three months ended June 30, 1999 from $1.6 million for the three months ended June 30, 1998. Sales and marketing expenses increased 33.2% to $7.6 million, or 17.2% of total revenue, for the three months ended June 30, 1999 from $5.7 million, or 16.9% of total revenue, for the three months ended June 30, 1998. This increase was primarily due to the increase in sales activity. General and administration expenses increased 18.4% to $2.6 million, or 5.8% of total revenue, for the three months ended June 30, 1999 from $2.2 million, or 6.5% of total revenue, for the three months ended June 30, 1998. This increase was primarily due to the growth of business. Income tax expense increased to $2.9 million, or 38.4% 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 June 30, 1999 from $2.2 million, or 38.6% of pre-tax income, for the three months ended June 30, 1998. This increase was primarily due to the increase in our profitability. "This was a milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. quarter for the company," states Tom Kordyback, Chief Financial Officer. "In June 1999, we installed our 1000th computer-to-plate See CTP. system, effectively bringing our install base to more than twice that of our nearest competitor. We also recorded record sales and profits this past quarter," says Kordyback. "At the same time, we continued our ongoing educational outreach Outreach is an effort by an organization or group to connect its ideas or practices to the efforts of other organizations, groups, specific audiences or the general public. initiative by donating a Heidelberg/Creo Trendsetter trend·set·ter n. One that initiates or popularizes a trend: "The Golden State, ever the trendsetter, reformed its property tax" New York. (R) 3244 thermal plate-imaging system to the Graphic Arts Technical Foundation See GATF. (GATF (Graphic Arts Technical Foundation, Sewickley, PA, www.gain.net) A membership organization for the printing and graphics arts industries. Founded in 1924 as the Lithographic Technical Foundation, GATF supports offset lithography and other mechanical press technologies as well as the )." Creo is a leading developer, manufacturer and distributor of comprehensive computer-to-plate (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. ) 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's computer-to-plate 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. 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. -0-
Creo Products Inc.
Consolidated Statements of Operations and Retained Earnings (Deficit)
(In thousands of U.S. dollars except earnings per share)
Three months ended Nine months ended
June 30 June 30
1999 1998 1999 1998
(unaudited)(unaudited) (unaudited)(unaudited)
----------------------------------------------------------------------
Revenue
Product revenue $ 36,796 $ 30,835 $ 101,690 $ 84,055
Service revenue 7,524 3,037 20,687 9,066
--------- --------- --------- ---------
44,320 33,872 122,377 93,121
Cost of sales 23,669 18,325 64,357 51,514
--------- --------- --------- ---------
20,651 15,547 58,020 41,607
--------- --------- --------- ---------
Research and
development, gross 8,771 5,098 22,027 14,060
Research and development
funding (4,671) (3,487) (12,652) (9,216)
--------- --------- --------- ---------
Research and
development, net 4,100 1,611 9,375 4,844
Sales and marketing 7,625 5,723 22,021 15,824
General and administration 2,591 2,189 6,574 6,068
--------- --------- --------- ---------
14,316 9,523 37,970 26,736
--------- --------- --------- ---------
Earnings from
operations 6,335 6,024 20,050 14,871
Other income
(expenses) and
foreign exchange
gain (loss) 1,320 (278) 727 (1,077)
--------- --------- --------- ---------
Earnings before
income taxes 7,655 5,746 20,777 13,794
Income tax expense 2,943 2,219 8,434 5,141
--------- --------- --------- ---------
Net earnings for
period $ 4,712 $ 3,527 $ 12,343 $ 8,653
========= ========= ========= =========
Earnings per
common share
- basic $ 0.17 $ 0.14 $ 0.45 $ 0.35
========= ========= ========= =========
- fully diluted
(CDN GAAP) $ 0.15 $ 0.13 $ 0.41 $ 0.32
========= ========= ========= =========
- fully diluted
(US GAAP) $ 0.16 $ 0.10 $ 0.43 $ 0.29
========= ========= ========= =========
Retained earnings
(deficit),
beginning of
the period $ 10,825 $ (2,770) $ 3,194 $ (7,896)
Net earnings
for period 4,712 3,527 12,343 8,653
--------- --------- --------- ---------
Retained earnings
(deficit),
end of the period $ 15,537 $ 757 $ 15,537 $ 757
========= ========= ========= =========
Creo Products Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
June 30 September
1999 1998
(unaudited) (audited)
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 42,621 $ 16,224
Accounts receivable 31,987 24,385
Inventories, at the lower
of cost and net
realizable value 30,232 25,151
Prepaid expenses 3,420 2,212
----------- -----------
108,260 67,972
Capital assets 38,209 34,146
----------- -----------
$ 146,469 $ 102,118
=========== ===========
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $ 21,040 $ 17,878
Income taxes payable 2,731 825
Future income taxes 61 87
Deferred revenue and
deposits 21,321 13,677
Current portion of
long-term debt 296 943
----------- -----------
45,449 33,410
Long-term debt 6,438 6,660
----------- -----------
51,887 40,070
Shareholders' Equity
Share capital
Authorized
Unlimited voting common
shares without par
value and an unlimited
number of preferred
shares issuable in series
Issued
28,072,182
(1998 - 25,052,098) shares 79,045 58,854
Retained earnings 15,537 3,194
----------- -----------
94,582 62,048
----------- -----------
$ 146,469 $ 102,118
=========== ===========
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