Creo Inc. ("Creo") was incorporated under the Canada Business Corporations Act on May 30, 1985. Our registered head office and principal place of business is located at 3700 Gilmore Way, Burnaby, British Columbia, Canada, V5G 4M1.

Our Articles were amended (i) on May 7, 1999 to subdivide all the then issued and outstanding common shares on a 2 for 1 basis; (ii) on April 28, 1998 to authorize an unlimited number of preferred shares, issuable in series; (iii) on January 27, 1989 to subdivide the 46,100 issued common shares into 4,610,000 common shares effective April 17, 1989; and (iv) on February 19, 1996 to restrict the transfer of our shares without the approval of the board of directors until such time as our securities are part of a distribution to the public, to increase the number of our directors from 7 to 9, and to remove the restriction on the number of our shareholders. On February 20, 2002 we changed our corporate name from Creo Products Inc. to Creo Inc.

In August 1999 we conducted our initial public offering. Following this our shares were listed in Canada on the Toronto Stock Exchange under the symbol "CRE" and in the United States on the NASDAQ National Market under the symbol "CREO". On September 30, 2002 there were 49,747,978 common shares issued and outstanding. No preferred shares have been issued to date. All dollar amounts are expressed in United States dollars unless otherwise indicated.

The following is a list of our principal operating subsidiaries as at December 31, 2002 and, for each such subsidiary, its jurisdiction of incorporation or organization and our percentage ownership, direct or indirect, and voting interest in each of them:

1. Ownership indirect through Creo Seattle, Inc. (99%) and Creo Products ULC (1%).

2. Ownership indirect through Creo Capital Netherlands B.V.

3. Ownership indirect through Creo Investments Netherlands B.V.

4. Ownership direct of 8%, indirect through Creo Capital Netherlands B.V. (86.8%), Creo Investments Netherlands B.V. (4.8%) Creo Products N.V. (0.1%) and Creo Nederlands B.V. (0.3%).

5. Ownership indirect through Creo Investments Netherlands B.V., as of October 1, 2003, Creo Japan, Inc. became a direct wholly owned subsidiary of Creo Inc.

6. Ownership indirect through Creo Asia Pacific Limited.

7. Ownership indirect through Creo Nederlands B.V.

8. Ownership indirect through Creo Europe S.A.

9. Ownership indirect through Creo Americas, Inc.

We also have a number of wholly-owned direct and indirect non-operating subsidiaries, established for financing and investment purposes. These subsidiaries are: (i) Creo Products ULC, a wholly-owned subsidiary which is an unlimited liability company incorporated under the laws of Nova Scotia, Canada; (ii) Creo SRL, an indirect wholly-owned subsidiary which is a Society with Restricted Liability organized under the laws of Barbados which is owned by Creo (99%) and Creo Products ULC (1%); (iii) Creo Hungary Prepress Limited Liability Company which is a wholly-owned subsidiary organized under the laws of Hungary; (iv) Creo Capital Netherlands B.V., a wholly-owned subsidiary and (v) Creo Investments Netherlands B.V. wholly owned by Creo Capital Netherlands B.V., both organized under the laws of the Netherlands; (vi) Creo Products N.V. a wholly-owned subsidiary of Creo Investments Netherlands B.V., organized under the laws of Belgium, and (vii) Creo Ireland Ltd., a wholly owned subsidiary of Creo Investments Netherlands B.V., organized under the laws of Ireland.

Creo is a leading developer, manufacturer and distributor of comprehensive digital solutions that automate the prepress phase of commercial printing. We manufacture more than 300 products, including professional digital camera backs, inkjet proofers, thermal imaging devices for films, plates and proofs, color and copy dot scanning systems, and prepress workflow management software. Our computer-to-plate ("CTP") technology transfers digitized text, graphic images and line artwork from desktop publishing computer systems directly onto printing plates, eliminating intensive, complex and costly preparatory steps required by the conventional prepress process. Creo is also an Original Equipment Manufacturer ("OEM") of color servers for xerographic digital printers and on-press imaging technology and components for digital offset presses.

The graphic arts industry encompasses not just printing, but all the steps needed to get to the printing press including creative design, document production and preparation for printing. Creo is in the business of creating the tools, systems and processes to streamline the stages prior to reaching the press. Our systems have been selected by most of the largest commercial, catalogue and publication printers in North America for the production of high-circulation glossy magazines. Packaging printers or converters use our equipment to produce printed material for consumer goods and other packaging applications. Small and mid-size commercial printers typically use the equipment to create annual reports, direct mail, catalogues and other business material.

- Acquired ScenicSoft, Inc., a privately held company near Seattle, U.S., who develops and markets software for the publishing and printing industries.

- Consolidated North American manufacturing and sales administration functions at our head office in Vancouver, Canada.

- Signed an agreement with Key Equipment Finance, an affiliate of KeyCorp, to offer third-party leasing for Creo customers around the world.

- Printcafe Software, Inc. ("Printcafe") Initial Public Offering completed on the Nasdaq National Market under symbol 'PCAF'. Creo received approximately $16.9 million in debt repayment with $11.8 million of remaining secured long-term debt owed in January 2004. Equity investment by Creo in Printcafe of $3.7 million or 30% of outstanding common stock.

- Subsequent to the date of the annual information form, On January 22, 2003, Creo announced that it had entered into agreements to acquire 2.6 million shares of Printcafe common stock at an average per share price of $1.30. Creo further announced that after closing of the two transactions, Creo would hold approximately 55% of the Printcafe common shares.

- Corporate name change to Creo Inc. from Creo Products Inc.

- Entered into an agreement for the fixed repayment of research and development royalties totaling approximately $21.1 million over five years to Israel's Office of the Chief Scientist.

- Increased ownership to 100% in Creo Japan Inc. ("Creo Japan").

- Signed an agreement with Fleet Business Credit to offer third-party leasing for Creo customers in North America.

- Signed agency agreements with several media manufacturers allowing Creo to offer bundled solutions that combine thermal plates, digital halftone proofing media, and recording film together with Creo systems and services in North America.

- Made an additional investment of $30.5 million in Printcafe.

- Increased ownership to 81% in Creo Japan.

- Increased ownership to 51% in Creo Japan.

- Acquired Intense Software Inc. of Vancouver, Canada who developed and marketed software for graphic designers, business users, and printing professionals.

- Acquired distributor MediaTech Pty Ltd. in Australia.

- Acquired Carmel Graphics Systems Inc. of Toronto, Canada who supplied the business-to-business marketplace with customizable hardware and software that integrated portals into users' corporate websites.

- Terminated joint venture with Heidelberg Druckmaschinen A.G., of Heidelberg, Germany, originally formed in October 1997 to develop, manufacture, market and distribute our CTP solutions worldwide.

- Acquired the prepress and print-on-demand businesses of Scitex Corporation Ltd. ("Scitex") of Herzlia, Israel in exchange for 13.25 million Creo common shares.

- Invested $35.0 million in Printcafe, a provider of software solutions for the printing industry supply chain.

Our objective is to maintain and strengthen our position as a leading developer and supplier of innovative digital prepress products and technologies. We also plan to increase our market share within the Graphic Arts Market, especially in Europe and Japan, through greater penetration of the growing market of small to mid-size printers and through expansion in the newspaper and packaging markets. In order to increase our growth rate, we intend to diversify into new markets where we can apply our technology and expertise. We continue to strengthen our Creo brand image, which we believe is synonymous with market-leading digital workflow and CTP technology. Our business strategy consists of the following key elements:

We intend to continue to make significant investments in research and the development of innovative, next-generation technologies, as well as to apply our existing technologies to new markets such as packaging and newspaper printing. We intend to continue to broaden the range of our product offerings as well as enhance the features, connectivity, reliability and price/performance of our existing digital workflow and CTP products. We will build upon our digital prepress solutions by providing solutions for each market segment with the following initiatives.

We intend to expand our market penetration, with a focus on small to mid-size commercial printers and to expand our presence in the international market for CTP systems by augmenting our sales force and entering into partnership arrangements with leading vendors of thermal plates. We also intend to expand our market penetration in all geographic locations, in particular in Europe, Japan and Asia-Pacific.

We have also introduced a new entry-level line of CTP imaging systems and workflow solutions that will allow smaller printers shops to benefit from our products' quality and productivity enhancements. Entry-level products will establish new competitive points in the market, bringing our reliability and reputation to a new range of customers. Our entry-level products can grow with the customers' needs and are upgradeable to our full-featured line of products. In September 2001 we signed agency agreements with several North American media manufacturers that allow us to execute media contracts on their behalf and offer bundled solutions that combine thermal plates, digital halftone proofing media, and recording film together with Creo systems and services. The bundled solutions can be combined with third-party leasing.

Below is a more detailed account of significant acquisitions and events mentioned in Section 2.2:

During fiscal 2002, Creo made a secured loan of $23.6 million to Printcafe. The loan is secured by the assets, including the intellectual property assets, of Printcafe. In June 2002 Printcafe repaid $11.8 million of the loan together with $1.8 million in interest and $3.7 million in prepayment fees. Creo in turn invested the prepayment fees in Printcafe common stock resulting in an aggregate equity interest of 30%.

Subsequent to the date of this annual information form, on January 17, 2003, Creo entered into three contracts to purchase a total of 1,078,060 Printcafe shares from three funds advised by J. & W. Seligman & Co., Incorporated, scheduled to close on February 24, 2003. On January 21, 2003, Creo agreed to purchase 1,532,052 shares of common stock, par value $.0001 per share of Printcafe from HarbourVest Partners VI - Direct Fund, LLP for an aggregate purchase price of $1,838,462.40.

Printcafe is a supplier of industry specific business management systems, used by printers in North America and Europe. As well, Printcafe has developed a set of internet-enabled tools that allow corporate print buyers to specify and manage print projects. Together, these tools can automate the printing and publishing business cycle and the production process, integrating print management systems with an e-commerce engine that allows users to specify print projects, obtain estimates, manage business-to-business ("B2B") transactions, monitor enterprise resource planning ("ERP") information, set up all stages of the production process, track the status of a project in real time, manage invoicing, and report on a broad range of performance summaries and analyses.

In April 2000 we acquired the assets of the prepress and print-on-demand businesses of Scitex (the "Scitex Acquisition"), of Herzlia, Israel, at a cost of approximately $506 million, which we paid by issuing 13.25 million of our common shares. As a result of the Scitex Acquisition we gained, among other things, a substantial worldwide distribution network for prepress products, a large customer base of printers and prepress providers, and an increased portfolio of products and intellectual property.

Creo is committed to solid management philosophies and a high standard for ethical behavior. The innovative technology of Creo is supported by the company's unique business philosophy. Several simple principles guide Creo employees around the world:

These principles are a key element of our success because they promote effective and decentralized decision-making; very little loss of efficiency due to politics and bureaucracy; and a corporate culture that helps attract and retain excellent people.

Commercial printing is the largest segment of the printing industry and commercial printers are the largest purchasers of prepress capital equipment. According to an industry study prepared in 2002 for TrendWatch Graphics Art, the global printing industry is estimated to be $421 billion in shipments from over 226,000 printing establishments. Printers use high-speed lithographic offset printing presses, which require a set of master printing plates, to produce multiple copies of high-quality color materials such as magazines, catalogs and corporate annual reports. In lithographic offset printing, the images to be printed are formed on printing plates and the plates are then mounted onto the printing press cylinders. On the press, only the imaged areas of the plates accept ink. The inked images are then transferred onto the rubber-covered surface of another cylinder, and from that surface onto roll or sheet-fed paper. Lithographic offset printing produces large volumes of high-quality copies at high speed and low variable cost.

We segment our financial results into the following economic regions: the Americas; EMEA or Europe, the Middle East and Africa; Asia-Pacific; and OEM and Other. The Americas region includes sales, distribution, and regional support for Canada, the U.S., Mexico, and Central and South America. This region is operated out of Boston, Massachusetts and employs approximately 750 people. The EMEA operation is headquartered in Waterloo, Belgium, and employs a team of approximately 600. There are 11 Creo subsidiaries in the EMEA region, as well as a network of dealers and distributors. The Asia-Pacific segment is based in Hong Kong and Tokyo, where 350 employees distribute Creo products and provide customer support through 19 offices serving over 20 countries in Asia-Pacific, including Japan. The OEM and Other segment includes royalties, products and services from our OEM businesses in Canada and Israel, other sales and corporate operations.

The following table sets forth information by segments for the year ended September 30, 2002:

*At September 30, 2002, the OEM and Other segment included revenue and segment contribution from the Middle East and Africa region. Subsequent to year-end, revenue and contribution for Middle East and Africa region has been reported in EMEA.

Creo has the following product groups:

- Output devices, which include Trendsetter and Lotem platesetters and Dolev imagesetters. The Lotem 800 Quantum platesetter, released in 2001, integrates squarespot thermal imaging with the automation and throughput of the Lotem platesetter;

- Printing Workflow Solutions, develops software products, including the Brisque digital front end ("DFE"), the Prinergy workflow management system, and the PS/M DFE for the Macintosh platform; the software products including Preps, Upfront and Pandora from the production planning software group acquired from ScenicSoft; and also the creative software group which develops the Six Degrees desktop software;

- Input Devices, producing products that capture images by scanning from original film to create digital files that can be integrated into digital workflow. Products include the iQsmart and EverSmart color scanners, and the Renaissance Copydot Scanning Systems;

- Leaf Systems, producing Leaf Cantere, Volare, C-Most and Valeo digital camera backs that allow professional photographers to directly capture high quality digital images using existing medium format cameras and lenses;

- Proofing Solutions including the Proofsetter Spectrum, a dedicated digital halftone proofing system, the Spectrum digital halftone proofing option for the Trendsetter and Lotem CTP devices, the new Integris imposition proofers, and the new Veris contract inkjet proofing system. As well, this group develops professional color calibration and management tools and optimized ink and media;

- Thermal Imaging, which researches and develops imaging technologies such as the squarespot imaging system, manages our media qualification programs, and develops our squarespot DOP (digital offset printing) imaging system and SP plateless digital offset printing technology;

- Thermal Consumables, managing relationships with our media bundling partners;

- Print On-demand Systems ("POS"): creating hardware and software for the digital printing market, including the Darwin Variable Information authoring tool and Variable Print Specification software, and the Spire color print servers which drive Xerox's DocuColor 2045, 2060 and 6060 printers as well as the new Xerox iGen3 printers; and the

- Customer Solutions and Support group providing 24/7 service to Creo customers and developing consulting, service and support products, including our Value in Print consulting services.

In 2002, Creo made a series of product introductions, including:

- Six Degrees software introduced January 2002 at Macworld

- Synapse Link software introduced April 2002 at IPEX

- iQsmart scanners introduced April 2002 at IPEX

- Veris proofer introduced April 2002 at IPEX

- Lotem 400 Quantum platesetter introduced April 2002 at IPEX

- Leaf oXYgen application introduced April 2002 at IPEX

- Prinergy Newsrun software introduced June 2002 at NEXPO

- Spire CXP6000 Server introduced July 2002

- Prinergy Publish system introduced September 2002 at Seybold San Francisco

- Leaf Valeo portable digital camera backs introduced September 2002 at Photokina

At our three production facilities in British Columbia, we produce and assemble Very Large-Format ("VLF") Platesetters and VLF Trendsetter output devices, 4-page and 8-page Trendsetter CTP output devices, Proofsetter Spectrum and Spectrum proofing kits, ThermoFlex CTP devices for flexographic printing, Renaissance scanners, and all squarespot thermal imaging heads. We also manufacture the Prinergy, iMPAct, Synapse, Six Degrees, Preps, Upfront and Pandora software products as well as thermal imaging heads and other components that are supplied on an OEM basis for incorporation into the Heidelberg Speedmaster 74 DI, MAN Roland DICOweb and Komori Project D presses. We now produce and assemble the Veris inkjet proofing products at our manufacturing facility in British Columbia.

At our facilities in Herzlia, Israel, we manufacture the Leaf family of digital camera back products, the iQsmart and EverSmart line of scanners, the Dolev family of CTF imagesetters, the Lotem family of CTP output devices, the Spire digital front end, and the Brisque and PS/M workflow solutions. The Lotem Quantum platesetter is manufactured in Israel and incorporates thermal imaging heads manufactured in our British Columbia facilities.

In our British Columbia and Israeli manufacturing facilities, we perform complex electro-optical and electro-mechanical assemblies, as well as final testing and system integration at these facilities. In our British Columbia we subcontract most of the electro-mechanical assemblies and buy most components, including optical components, boards, cables, machines parts, and sheet metal. In British Columbia we also produce accurate machined parts. In our Israeli manufacturing facilities we also have the capacity of high end manufacturing of electronic boards and sub-assemblies and accurate machined parts, some of which are supplied as components and sub-assemblies to our British Columbia manufacturing facilities. We manufacture products on orders and purchase components on forecast.

Our research and product development activities are performed in-house by a group of more than 900 engineers and scientists with expertise in a variety of fields, including software, electronics, mechanics, optics, physics and chemistry. Research and development work takes place in Vancouver, Herzlia and Boston, and we also conduct software development work in Seattle, Denver, and Brussels. Product development is organized around core teams with representatives from all areas of our company. Each core team has the authority to manage all aspects of its products and projects, including product architecture, core technology, functionality, and testing.

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