CREO PRODUCTS INC
6-K, 2000-11-15
PRINTING TRADES MACHINERY & EQUIPMENT
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

FORM 6-K
_______________

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a(16) OR 15d(16) OF THE
SECURITIES EXCHANGE ACT OF 1934


November 10, 2000


CREO PRODUCTS INC.
(Exact name of Registrant as specified in its charter)


3700 Gilmore Way
Burnaby, B.C. Canada V5G 4M1
(Address of principal executive offices)


     (Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.)


Form 20-F    [ X ]             Form 40-F     [    ]


     (Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby
       furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)


Yes    [    ]             No     [ X ]




















Creo Products Inc.
3700 Gilmore Way
Burnaby, BC
CANADA V5G 4M1
Tel. +1-604-451-2700
Fax. +1-604-437-9891
www.Creo.com

FOR IMMEDIATE RELEASE

CREO PRODUCTS INC. ANNOUNCES RECORD ADJUSTED EARNINGS OF
$41.9 MILLION FOR FISCAL YEAR 2000
(In thousands of U.S. dollars)



Vancouver, BC, CANADA (November 10, 2000) - Creo Products Inc. (NASDAQ: CREO; TSE: CRE) reported
$41.9 million in adjusted earnings* or $1.00 per share (fully diluted - Canadian GAAP; $0.97 diluted - U.S.
GAAP) for the fiscal year ended September 30, 2000. Adjusted earnings for the fourth quarter 2000 was $16.0
million or $0.32 per share (fully diluted - Canadian and U.S. GAAP).

* The adjusted earnings excludes the effect of goodwill and other intangible
asset amortization, business integration costs and stock compensation charges.
The adjusted earnings is not prepared in accordance with generally accepted
accounting principles (GAAP) because it excludes these costs.

"This year has been a remarkable year of growth for Creo," said Amos Michelson, CEO. "We have grown the
company through acquisitions, expanded our product offering and extended our global reach. The steps we
have taken over the past year have strengthened our position as a leader in the graphic arts industry.

"The $508 million acquisition of the prepress division of Scitex Corporation Ltd. has created a tremendous
opportunity for Creo and CreoScitex, our principal operating division. With our global organization of about
4,000 employees, we now have representation in all major worldwide markets. We have increased our
product offering by hundreds, providing a comprehensive line of prepress equipment to our customers.


"During the four-day-long Graph Expo tradeshow, the largest Graphic Arts tradeshow in North America,
we had outstanding sales success with $30 million in orders and letters of intent for the sale of products
and services. Through investments, acquisitions and new and enhanced product offerings, we now
address new sectors of the graphic arts market. In the past year, Creo has dramatically improved its
ability to provide innovative end-to-end solutions.

"With the close of our fiscal year 2000, we believe Creo is positioned to take full advantage of
operational efficiencies and capitalize on opportunities around the world. Our global infrastructure,
broad intellectual capital combined with our ability to provide innovative end-to-end solutions position
Creo for long-term growth."

The financial results for Creo include the prepress division of Scitex Corporation Ltd. acquired on April
4, 2000. The following comparison is based on the results for the three months ended September 30,
2000 (Q4) compared to the three months ended June 30, 2000 (Q3). The Statement of Operations this
quarter includes business integration costs of $2.7 million, goodwill and other intangible asset
amortization of $17.1 million. The following is a pro forma summary of adjusted operations and earnings
excluding these items (in millions of U.S. dollars):


[/TABLE]

Fourth Quarter Discussion

Revenues.  Total revenue increased 6.6% from $162.6 million for Q3 to $173.3 million for Q4. Product
and consumables revenue increased 6.3% from $126.5 million for Q3 to $134.5 million for Q4. Service
revenue increased 7.8% from $36.0 million for Q3 to $38.8 million for Q4.

Gross Profit.  The gross profit increased 7.7% from $71.5 million for Q3 to $77.0 million for Q4. The
gross margin increased slightly from 44.0% in Q3 to 44.4% in Q4.

Research and development.  Gross research and development expenses have remained constant at
$22.2 million from Q3 to Q4. Outside funding of our research and product development activities


decreased $1.8 million from $8.0 million in Q3 to $6.2 million in Q4. This decrease in funding resulted
from the termination of the Joint Venture with Heidelberg in Q3. Under the Joint Venture, Heidelberg
funded one half of the research and development costs on joint venture products.

Sales and marketing.  Sales and marketing expenses decreased $1.1 million from $24.7 million in
Q3 to $23.6 in Q4. These expenses represent 13.6% of total revenue in Q4, compared to 15.2% of
total revenue in Q3.

General and administration.  General and administration expenses decreased 3% to $16.7 million,
or 9.6% of total revenue for Q4 from $17.2 million, or 10.6% of total revenue for Q3. The decrease was
due to a decrease in legal costs.

Income tax.  Income tax expense increased to $5.3 million for Q4 from $3.8 million in Q3. This increase
was primarily due to the increase in our profitability.

Investments.
In August 2000, Creo invested an additional $5 million in printCafe, Inc. maintaining its 17.24% of
printCafe's voting rights with the ability to increase our ownership. Subsequent to year-end Creo invested
an additional $27 million in a combination of cash and stock, as part of a $62.5 million private placement.
The net proceeds from the offering will be used by printCafe to repay outstanding debt, for working capital,
and for general corporate purposes.


In July 2000, Creo invested $3.0 million to acquire 674,157 shares in Creo Ltd. of Israel, a manufacturer of
direct imaging equipment for the printed circuit board industry, representing approximately 14% of Creo
Ltd.'s total outstanding shares.


Creo acquired an additional 1% of Nihon CreoScitex in July 2000 resulting in the consolidation of this
entity in Q4. In conjunction with this increase, local management is executing a reorganization of this
subsidiary.

Share Capital.  As at September 30, 2000, Creo had 47,338,701 common shares outstanding and
10,152,456 options outstanding. The share capital used for the September 30, 2000 adjusted earnings
per share calculations are as follows:

 
  Three Months Ended Twelve Months Ended  
    September 30
2000		   June 30
2000		   September 30
2000		  
   
 
 
 
   Revenue   $ 173.3   $ 162.6   $ 453.2
   Cost of sales     96.3   91.1   249.4  
   
 
 
 
   Gross profit     77.0   71.5   203.8  
   Research and development, net     16.0   14.2   42.6  
   Sales and marketing     23.6   24.7   66.5  
   General and administrative     16.7   17.2   40.3  
   Other (income) expense     1.7   0.1   (0.3 )  
   
 
 
 
   Adjusted operating income     19.0   15.3   54.7  
   Income tax expense     (5.3 )   (3.8 )   (17.3 )  
   
 
 
 
   Adjusted net operating income     13.7   11.5   37.4  
   Cash tax recovery from the amortization of       intellectual property     1.7   2.2   3.9  
   Minority interest     0.6   --   0.6  
   
 
 
 
   Adjusted earnings   $ 16.0 $ 13.7 $ 41.9  
   
 
 
 
   Adjusted earnings per share - basic under Canadian       and U.S. GAAP   $ 0.34 $ 0.30 $ 1.07  
   
 
 
 
   Adjusted earnings per share - fully diluted under       Canadian GAAP   $ 0.32 $ 0.28 $ 1.00  
   
 
 
 
   Adjust earnings per shares - diluted under U.S.       GAAP   $ 0.32 $ 0.28 $ 0.97  
   
 
 
 
[/TABLE]


Conference Call.  Investors will have the opportunity to listen to the analyst conference call
scheduled for November 10, 2000 at 8:30 am ET live at http://www.creo.com. To listen to the call,
please go to the web site at least fifteen minutes early to register, download, 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.creo.com. To access phone replay, available until November 17
2000 at 6:00pm ET, Canadian (except the Toronto area) and United States investors should dial
1-800-408-3053 and International investors should dial 1-416-695-5806. The access code for both numbers
is 599578. In the Toronto area, please dial 416-695-5800 to avoid long distance charges.

About Creo

Based in Vancouver, Canada, 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. www.creo.com


This release containts forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act 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) The expected advantages for Creo of the transition to an OEM arrangement
with Heidelberger Druckmaschinen AG may be less that expected and may adversely affect Creo's operating results and financial
performance; (2) the expected cost-savings and synergies from the combination of Creo's business with the Scitex Business cannot
be fully realized or take significantly longer to realize than expected; (3) revenues from the Scitex Business are lower than expected
or customer attrition and business disruption following the acquisition are greater than expected; (4) the integration of the Scitex
Business into Creo's operations is more difficult, time-consuming or expensive than anticipated, or the attrition rate of key employees
of the combined business is greater than exptected; (5) technological changes or changes in the competitive environment adversely
affect the products, market share, revenues or margins of the combined business; or (6) changes in general economic, financial or
business conditions adversely affect the combined business or the markets in which it operates. These risks and uncertainties as well
as other important matters are described under the caption "Information Regarding Forward-looking Statements" and elsewhere in
our Annual Report on Form 20-F for the fiscal year ended September 30, 1999 as filed with the U.S. Securities and Exchange
Commission. 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 per share amounts)

  Three Months Ended Twelve Months Ended  
  September 30 September 30  
    2000   1999   2000   1999  
   
 
 
 
 
Basic shares outstanding     47,082,928     30,854,353     39,428,764     28,369,402  
                     
Fully diluted - Canadian GAAP                  
   Net earnings / Adjusted earnings   $ 15,994,000   $ 6,217,000   $ 41,995,000   $ 28,369,402  
   Plus: income from operations     2,050,000     185,000     5,033,000     673,000  
   
 
 
 
 
  $ 18,044,000   $ 6,402,000   $ 47,028,000   $ 19,233,000  
   
 
 
 
 
                         
   Basic shares outstanding     47,082,929     30,854,353     39,428,764     28,369,402  
   Plus: dilutive options     10,152,456     4,231,124     7,415,652     4,006,818  
   
 
 
 
 
   Fully diluted shares outstanding     57,235,384     35,085,477     46,844,416     32,376,220  
                     
Fully diluted EPS   $ 0.32   $ 0.18   $ 1.00   $ 0.59  
   
 
 
 
 
         
Diluted - US GAAP                  
   Net earnings / adjusted earnings   $ 15,994,000   $ 6,217,000   $ 41,995,000   $ 18,560,000  
             
   Basic shares outstanding     47,082,928   30,854,353   39,428,764   28,369,402
   Plus: dilutive options     2,669,754     2,394,046     3,703,679     1,452,232
   
 
 
 
 
   Diluted shares outstanding   49,752,682 33,248,399 43,132,443 29,821,634
 
   Diluted EPS
   $ 0.32   $ 0.19   $ 0.97   $ 0.62  
   
 
 
 
 
[/TABLE]

Creo Products Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)

  Three Months Ended Twelve Months Ended  
  September 30 September 30  
    2000   1999   2000   1999  
   
 
 
 
 
Revenue          
   Product revenue   $ 122,626   $ 46,743   $ 335,535   $ 148,433  
   Service revenue   38,777   9,203   94,654   29,890  
   Consumables revenue     11,902     --     23,095     --  
   
 
 
 
 
    173,305     55,946     453,284     178,323  
Cost of sales     96,312     30,108     249,427     94,465  
   
 
 
 
 
        76,993     25,838     203,857     83,858  
   
 
 
 
 
           
Research and development, net     16,004     4,430     42,605     13,805  
Sales and marketing     23,547     8,352     66,529     30,373  
General and administration     16,687     3,570     40,269     10,144  
Other (income) expense     1,735     (631 )   (341 )   (1,358 )
   
 
 
 
 
Operating income before undernoted items     19,020     10,117     54,795     30,894  
Business integration costs     2,673   --   10,845   --
Goodwill and other intangible assets amortization     17,124   --   35,248   --
   
 
 
 
 
Earnings (loss) before income taxes and equity loss and minority interest     (777 )   10,117     8,702     30,894  
Income tax expense     3,444     3,900     9,811     12,334  
Equity loss     --   --   967   --
Minority interest (income) expense     (646 )   --   (646 )   --
   
 
 
 
 
Net earnings (loss)   $ (3,575 ) $ 6,217 $ (1,430 ) $ 18,560
   
 
 
 
 
Earnings (loss) per common share  
- Basic, Canadian GAAP   $ (0.08 ) $ 0.20 $ (0.04 ) $ 0.65
   
 
 
 
- Basic, U.S. GAAP   $ (0.19 ) $ 0.20 $ (1.14 ) $ 0.65
   
 
 
 
- Fully diluted, Canadian GAAP   $ (0.08 ) $ 0.18 $ (0.04 ) $ 0.59
   
 
 
 
- Diluted, U.S. GAAP   $ (0.19 ) $ 0.19 $ (1.14 ) $ 0.62
   
 
 
 
         
Retained earnings, beginning of period   $ 23,899 $ 15,537 $ 21,754 $ 3,194
Net earnings (loss)   (3,575 ) 6,217 (1,430 ) 18,560
   
 
 
 
Retained earnings, end of period   $ 20,324   $ 21,754   $ 20,324   $ 21,754  
   
 
 
 
 
[/TABLE]
Contact

Investor Relations
Creo Products Inc.
Tel: 604-451-2700
Email: [email protected]

www.creo.com


  September 30  
        2000   1999  
        (unaudited)   (unaudited)  
       
 
 
Assets          
Current assets          
   Cash and cash equivalents       $ 45,359   $ 103,075  
   Accounts receivable       178,349   33,900  
   Other receivables             58,586     8,396  
   Inventories       141,021   32,247  
   Income taxes receivable       --   --  
   Future income taxes       2,731   2,067  
       
 
 
            426,046     179,685  
Investments and other assets             45,000     --  
Capital assets             107,280     40,718  
Goodwill and other intangible assets             338,055     --  
Other assets             6,051     --  
Future income taxes           21,588   --
       
 
 
      $ 944,020   $ 220,403  
       
 
 
Liabilities          
Current liabilities          
   Short-term debt       $ 19,216   $ --  
   Accounts payable       95,311   13,182  
   Accrued liabilities             61,503     17,209  
   Income taxes payable       7,048   3,486  
   Deferred revenue and deposits       61,677   19,048  
   Current portion of long-term debt       --   296  
   Future income taxes       12,655   862  
       
 
 
            257,410     54,083  
Long-term debt             --     6,364  
       
 
 
            257,410     60,477  
Shareholders' Equity                  
Share capital             664,160     138,202  
Contributed surplus             2,126     --  
Retained earnings           20,324   21,754
       
 
 
          686,610   159,956
       
 
 
      $ 944,020   $ 220,403  
       
 
 

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