Assante Reports Second Quarter Results.Business Editors NOTE TO EDITORS: Assante's earnings conference call with analysts will be Webcast on www.Assante.com and CNW CNW Chicago and North Western (Railroad) CNW Canada News Wire (media service) CNW Community Nutrition Worker CNW Commercial Nuclear Waste (www.newswire.ca) today at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . Please join us and log on five minutes before the call. WINNIPEG Winnipeg, city, Canada Winnipeg (wĭn`ĭpĕg), city (1991 pop. 616,790), provincial capital, SE Man., Canada, at the confluence of the Red and Assiniboine rivers. , Manitoba--(BUSINESS WIRE)--Aug. 14, 2002 Assante Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :LMS (Learning Management System) An information system that administers instructor-led and e-learning courses and keeps track of student progress. Used internally by large enterprises for their employees, an LMS can be used to monitor the effectiveness of the ) today released its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial results for the quarter ended June June: see month. 30, 2002. The highlights include strong net earnings driven largely by growing demand for the company's unique personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. portfolio management services. The company reported net earnings of $5.7 million or $0.07 per share in the second quarter of 2002, compared to a net loss of $3.1 million or $0.04 per share during the same period last year. The $8.8 million increase in net earnings over the corresponding quarter last year was due to several factors, including continuing strong net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight and the adoption of the new accounting standard relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc goodwill recommended by the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. . In the second quarter, assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. (AUM Aum (ä·ōōmˑ), n.pr 1. in Ayurveda, the subtle, noiseless cosmic vibration in which consciousness existed in the beginning, before the elements appeared. ) in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of reached $5.6 billion, up $1.2 billion over the same period last year and up $186 million over the previous quarter. The increase during the second quarter was comprised of net sales of $388 million, offset by a market decline of four per cent or $202 million. AUM in the U.S. was $1.3 billion, unchanged from the last quarter, and up $600 million over the second quarter last year. Overall, assets under administration (AUA AUA American Urological Association, see there ) decreased by $1.3 billion to $21.8 billion or six per cent during the quarter, due primarily to a general market decline. Collectively, these factors contributed to the growth in the second quarter of the company's other key measures of operating performance - revenue, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. cash flow. -- Revenue was $95.7 million, up $7.6 million from $88.1 million for the same period last year, due primarily to strong net sales generating significant growth in investment management revenue. -- Earnings before interest, income tax, depreciation and amortization (EBITDA) and restructuring costs were $22 million or $0.26 per share, an increase of $4.6 million or 18 per cent over the $0.22 per share reported in the second quarter of 2001. This includes $1.1 million from the disposition of investments. -- After-tax cash flow was $17.3 million or $0.20 per share, representing an increase of $5.9 million or 42 per cent over the $0.14 per share reported for the second quarter of 2001. "We are pleased with our results. They show we are continuing to do the right thing for our clients, especially considering the prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. period of uncertainty in the capital markets," said Assante Corporation President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Martin Weinberg. "We have consistently led the industry in net sales in Canada, averaging more than $100 million a month for the last 12 months. This illustrates the tremendous confidence clients and advisors are placing in our personalized approach to portfolio management. "Assante has continued to post significant net sales in a declining market because our offering is particularly attractive," said Weinberg. "Our core, value-based investment philosophy is combined with downside risk Downside Risk An estimation of a security's potential to suffer a decline in price if the market conditions turn bad. Notes: You can think of this as an estimate of the amount that you could lose on a stock or other investment. management and wrapped wrap v. wrapped or wrapt , wrap·ping, wraps v.tr. 1. To arrange or fold (something) about as cover or protection: She wrapped her fur coat closely about herself. together with wealth management advice delivered by trusted professional advisors. This is ideally suited to protecting portfolio values." During the second quarter the company announced the appointment of Dr. Harvey Harvey, city (1990 pop. 29,771), Cook co., NE Ill., a suburb S of Chicago; inc. 1895. Its manufactures include steel castings, metal products, chemicals, machinery, and electronic equipment. Harvey has an oil research center. The city was founded by Turlington W. W. Schiller as the president and CEO of Assante U.S. In this capacity, Dr. Schiller will be responsible for all of Assante's business interests in the U.S., including the company's sports representation, business management and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. businesses. One of the first initiatives of Dr. Schiller will be to establish a general management team and the infrastructure required to run all of the U.S. operations under a one company model. This process is now under way, with U.S. operations being headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The U.S. operation also plans to acquire other firms to complement its existing network of business management and sports representation firms, and will strengthen and expand its service offering to its U.S. clientele. Assante is a leading provider of integrated wealth and Life Management Solutions(TM). Headquartered in Winnipeg, Manitoba Manitoba (mănĭtō`bə), province (2001 pop. 1,119,583), 250,934 sq mi (650,930 sq km), including 39,215 sq mi (101,580 sq km) of water surface, W central Canada. , Assante takes a multidisciplinary approach multidisciplinary approach A term referring to the philosophy of converging multiple specialties and/or technologies to establish a diagnosis or effect a therapy to financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against , investment advice, wealth management, estate and succession planning Management Succession Planning In organizational development, succession planning is the process of identifying and preparing suitable employees through mentoring, training and job rotation, to replace key players — such as the chief executive officer (CEO) — , insurance and business and sports management services.
Second Quarter Financial Highlights (Unaudited)(a)
June 2002 June 2001 Percentage
Change
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Assets under administration $ 21,799 $ 23,824 -8%
Assets under management $ 6,944 $ 5,080 37%
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Shares outstanding
Basic 83,414 72,911 14%
Fully diluted 85,739 80,306 7%
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Revenue $ 95,679 $ 88,088 9%
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EBITDA before restructuring
charges $ 21,958 $ 17,435 26%
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EBITDA before restructuring
charges per share
Basic $ 0.26 $ 0.24 10%
Fully diluted $ 0.26 $ 0.22 18%
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After-tax cash flow $ 17,319 $ 11,420 52%
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After-tax cash flow per
share
Basic $ 0.21 $ 0.16 32%
Fully diluted $ 0.20 $ 0.14 42%
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Net earnings (loss) $ 5,667 $ (3,120) n/a
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Earnings (loss) per share
Basic $ 0.07 $ (0.04) n/a
Fully diluted $ 0.07 $ (0.04) n/a
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(a) Asset data in millions; other financial data in thousands
except per share amounts
Attached are complete, unaudited financial statements. For additional information, including a copy of the report to shareholders, please visit www.assante.com. You can also obtain a copy of the quarterly conference call presentation in the investor relations Investor relations The process by which the corporation communicates with its investors. section of our Web site. Operating results for the second quarter are more fully discussed in the attached Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (QUARTER ENDED JUNE 30, 2002 COMPARED TO QUARTER ENDED JUNE 30, 2001) Significant Accounting Matters In first quarter of 2002, the company introduced two changes to the reporting of its financial results. As a result of a change in management structure, the company began reporting its results by geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. segment, and the company adopted the recommendations of the Canadian Institute of Chartered Accountants on accounting for goodwill and other intangible assets 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. . There have been no new changes since, and this quarter's results were prepared in a manner consistent with the first quarter. For more detail on these changes please refer to the Management Discussion and Analysis of Financial Condition and Results of Operations for the first quarter of 2002. Goodwill - Update As noted in the first quarter, goodwill is no longer amortized but is subject to impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. testing based on fair values. The tests are performed on initial adoption of the new standard and at least annually thereafter. The company completed its initial impairment test during the second quarter and concluded no adjustment was required. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the new accounting standard, the company segregated from goodwill the unamortized carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain player representation agreements (the "Player Agreements"). These Player Agreements are those that were in place at the time of acquisition of each sport representation business and were still in effect at January January: see month. 1, 2002. The unamortized carrying value of the Player Agreements at June 30, 2002 was $8.5 million, which is included in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. on the balance sheet and is being amortized over the life of the related contracts. Amortization of these contracts in the second quarter was $1.7 million and year to date was $3 million. Assuming the Player Agreements are not 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: early, the amortization to be charged against earnings will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $5.5 million in 2002, $3.3 million in 2003 and $2.7 million thereafter. Results of Operations The following table highlights the comparative segmented financial information for the second quarter.
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Segmented Financial Information Quarter ended June 30, 2002
(Unaudited) ($Cdn)
(In thousands except as noted) Canada U.S. Total
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AUM ($millions) $ 5,628 $ 1,316 $ 6,944
AUA ($millions) 17,786 4,013 21,799
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Revenue 70,424 25,255 95,679
Advisor compensation 34,687 13,013 47,700
Selling, general &
administration 18,080 7,941 26,021
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EBITDA before restructuring 17,657 4,301 21,958
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Earnings before goodwill
charges 5,790 (123)(1) 5,667
Goodwill charges - - -
----------------------------------
Net earnings (loss) 5,790 (123)(1) 5,667
----------------------------------
After-tax cash flow 15,634 1,685 17,319
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Segmented Financial Information Quarter ended June 30, 2001
(Unaudited) ($Cdn)
(In thousands except as noted) Canada U.S. Total
-------------------------------------------------------------------
AUM ($millions) $ 4,382 $ 698 $ 5,080
AUA ($millions) 19,286 4,538 23,824
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Revenue 63,418 24,670 88,088
Advisor compensation 32,046 10,813 42,859
Selling, general &
administration 18,636 9,158 27,794
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EBITDA before restructuring 12,736 4,699 17,435
----------------------------------
Earnings before goodwill
charges 3,383 1,279 4,662
Goodwill charges 3,152 4,630 7,782
----------------------------------
Net earnings (loss) 231 (3,351) (3,120)
----------------------------------
After-tax cash flow 8,824 2,596 11,420
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(1) net of amortization of $1.7 million relating to Player
Agreements carrying value segregated from goodwill as of January
1,2002.
Consolidated Results The company achieved solid growth in each of its key measures of operating performance. This was due primarily to strong net sales generating significant increases in investment management revenue - a common factor underscoring all the results noted below. Revenue for the quarter was $95.7 million, up $7.6 million over the $88.1 million reported a year ago. Also included in revenue in the quarter is $1.1 million relating to the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of investments, primarily the Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the operations.
EBITDA before 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). was $22 million in the quarter, a 25.9 per cent increase from the $17.4 million reported in June, 2001. Partially offsetting the contribution from the strong net sales momentum was the increase in the advisor compensation ratio from 48.7 per cent a year ago to 49.8 per cent of sales in the quarter. The change in the ratio reflects a more accurate allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of costs between advisor compensation and selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. in our operations in the U.S. Net earnings for the quarter were $5.7 million, a $8.8 million increase from a year ago. The increase is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to several factors, including strong net sales, net change in amortization of goodwill and Player Agreements of $6 million and a $1.1 million gain on disposition of investments. After-tax cash flow was $17.3 million versus $11.4 million in the second quarter of 2001. The $5.9 million improvement was due to the higher EBITDA before restructuring, $1.7 million lower current taxes and $0.7 million lower interest costs offset by the $1.1 million gain on sale of investments noted above. On a fully-diluted basis, EBITDA before restructuring, after-tax cash flow and net earnings per share were $0.26, $0.20 and $0.07 respectively, versus $0.22, $0.14 and a loss of $0.04 respectively in the second quarter of 2001. A more complete discussion of the results of operations on a segmented basis follows. Canada Assets Under Management AUM grew by $186 million or 3.4 per cent in the second quarter of 2002, comprised of net sales of $388 million, offset by negative market performance of four per cent or $202 million. The growth in the second quarter of 2001 in Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. AUM was 3.9 per cent, comprised of net sales of $158 million and market growth of $6 million. The company's positive net sales performance in Canada reflects the company's strong fund performance, wide distribution network, adherence adherence /ad·her·ence/ (ad-her´ens) the act or condition of sticking to something. immune adherence to a core value-based investment philosophy and personalized approach to portfolio and wealth mangement services. In these uncertain times, people are increasingly turning to portfolio management solutions combined with solid professional investment counsel from advisors. Assets Under Administration AUA decreased by 7.8 per cent from $19.3 billion at June 30, 2001 to $17.8 billion at June 30, 2002. The decline was due to a combination of uncertain markets in the last 12 months and advisor attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: that occurred in 2001 due to the second phase of integration in Canada. Revenue -------------------------------------------------------------------- Canadian Revenue June 30, % of June 30, % of for the Quarter 2002 Total 2001 Total ($000s Cdn) - ( Unaudited) -------------------------------------------------------------------- Investment management, excluding redemption fees $ 34,312 48.7% $ 26,149 41.2% Redemption fees 1,201 1.7__ 991 1.6% Distribution 34,911 49.6__ 36,278 57.2% -------------------------------------------------------------------- Total revenue $ 70,424 100.0% $ 63,418 100.0% -------------------------------------------------------------------- Revenue was up $7 million or 11 per cent versus a year ago. The 31.2 per cent growth in investment management revenue was the result of $1.2 billion of net sales of our personalized portfolio management services over the last year. Offsetting this increase was a decline in overall distribution revenue of $1.4 million, due primarily to uncertain equity market and lower AUA levels. Expenses Advisor compensation was $34.7 million, an increase of $2.7 million or 8.2 per cent over the $32 million reported a year ago. As a per cent of revenue, however, advisor compensation was 49.3 per cent versus 50.5 per cent. This decrease corresponds directly with investment management revenue comprising a higher percentage of overall revenue this quarter, at 48.7 per cent, as compared to last year, at 41.2 per cent. Selling, general and administration expenses were $18.1 million for the quarter, three per cent lower than the $18.6 million recorded a year ago. EBITDA, After-Tax Cash Flow and Net Earnings EBITDA before restructuring was $17.7 million, an increase of $5.6 million from the $12.1 million in the second quarter of 2001. As noted above, this is due principally to the strong net sales in Canada. After-tax cash flow was $15.6 million in the quarter, a 77.2 per cent increase from last year's $8.8 million due to the EBITDA improvement, lower interest costs of approximately $0.4 million and lower current taxes this year. Net earnings were $5.8 million in the quarter, an increase of $5.6 million from a year ago. The increase was due to the EBITDA improvement, $0.4 million lower interest costs and the elimination of goodwill amortization of $3.2 million, partially offset by higher amortization of deferred sales commissions and capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) of $1.5 million and a $2.1 million increase in income taxes in the quarter. United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Assets Under Management AUM increased by 81.9 per cent or $0.6 billion to $1.3 billion in June 2002 versus $0.7 billion a year ago. This increase is attributable to several factors, including increasing net new sales, greater demand for our portfolio management services within our U.S. client base and assets previously under administration shifting to managed assets. Assets Under Administration AUA including directed assets decreased by 11.6 per cent or $0.5 billion to $4 billion versus $4.5 billion in June 2001. Directed assets decreased by $0.2 billion to $2.7 billion versus $2.9 billion a year ago, while reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. of assets under administration into managed assets reduced AUA by a further $0.2 billion. Revenue
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U.S. Revenue for June 30, % of June 30, % of
the Quarter 2002 Total 2001 Total
($000s Cdn) -
(Unaudited)
--------------------------------------------------------------------
Business
management $ 10,650 42.2% $ 10,011 40.6%
Sports
representation 5,180 20.5__ 5,929 24.0%
Financial and
other services (1) 9,425 37.3__ 8,730 35.4%
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Total revenue $ 25,255 100.0% $ 24,670 100.0%
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(1) includes investment management, distribution, mortgage,
insurance and marketing services
Revenue in the second quarter was $25.3 million, compared to $24.7 million in the second quarter of 2001, an increase of $0.6 million or 2.4 per cent. Revenue from business management services increased $0.6 million or 6.4 per cent. Revenue from sports representation services declined by $0.7 million or 12.6 per cent from the same period last year, due to reduced revenue from the football practice of Steinberg Noun 1. Steinberg - United States cartoonist (born in Romania) noted for his caricatures of famous people (1914-1999) Saul Steinberg , Moorad and Dunn Dunn may refer to: Places
Revenue from financial and other services was $9.4 million, up $0.7 million or eight per cent from the second quarter of 2001. The increase was due to a $1.1 million gain on disposition of investments, offset by lower revenue from the Bermuda operations of $0.9 million. The Bermuda operations are included in these results consistent with our past practice of reporting Bermuda's results under the Assante U.S. segment. Revenue in our remaining investment management, mortgage and insurance operations was up $0.5 million in the quarter versus a year ago. Expenses Advisor compensation was $2.2 million higher at $13 million compared to $10.8 million in the second quarter of 2001. This increase relates primarily to an allocation to advisor compensation of direct costs from selling, general and administration costs in the business management and sports representation services versus 2001. Selling, general and administration expenses were $7.9 million for the quarter, $1.3 million lower than the $9.2 million recorded a year ago. The decrease was due to a shift to direct costs from selling, general and administration costs in the business management and sports representation services versus 2001. In addition, during the quarter the company began incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. costs relating to the formation of the Assante U.S. general management team under the direction of Dr. Harvey Schiller Dr. Harvey Schiller, formerly President of TBS Sports, Southeastern Conference commissioner, and CEO of YankeeNets is currently a member of the All American Football League and both the CEO and Chairman of GlobalOptions Group, an integrated risk mitigation firm. , its new president and CEO. EBITDA, After-Tax Cash Flow and Net Earnings EBITDA before restructuring was $4.3 million, a decrease of $0.4 million or 8.5 per cent from $4.7 million a year ago. The principal reasons for the decrease in results over the prior year were an increase in infrastructure costs of $0.6 million and a $1.2 million revenue decline due to terminated player contracts (see discussion above under Revenue), offset by the $1.1 million gain on the disposition of investments. After-tax cash flow decreased to $1.7 million, representing a decrease of $0.9 million versus the second quarter of 2001. The decrease was the result of the reduced EBITDA, after removing the gain on disposition of investments, offset by $0.3 million reduced interest costs and a $0.4 million decrease in current income taxes in the quarter. Net loss for the second quarter of 2002 was $0.1 million, compared to a net loss of $3.4 million for the second quarter of 2001. This improvement was primarily due to the elimination of the amortization of acquired goodwill, net of recording $1.7 million of amortization of Player Agreements. Financial Condition Liquidity, Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. and Capital Resources The company has arranged credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities of $132 million and US$57.5 million from a syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism of lenders. The credit facilities provide the company with $120 million for the purpose of funding deferred sales charges deferred sales charge A fee levied by some open-end investment companies on shareholder redemptions and by many insurance companies on annuities. The charge of up to 5% of the value of the shares being redeemed frequently varies inversely with the period of (DSCs), $12 million for general corporate purposes and US$57.5 million for acquisition financing. At June 30, 2002, the company had total long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $133 million with an overall weighted-average interest rate of six per cent. The long-term debt is comprised of $128 million of bank loans and approximately $5 million of other debt. In terms of currency, the long-term debt is denominated in loans of $45.8 million and US$57.5 million. The company regularly monitors and minimizes its interest rate risks by using derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. contracts to hedge its risk exposure. The company has entered into interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. contracts, which expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. between September September: see month. 2004 and May 2005 and convert the floating interest rates paid by the company on $40.7 million of outstanding bank debt into fixed interest rates of 6.28 per cent to 7.27 per cent per annum Per annum Yearly. . In addition, the company entered into an interest rate cap for $12.5 million that expires in May 2005, which entitles the company to pay the lower of the floating bankers acceptance rate or a fixed rate of six per cent. Accordingly, the company has converted $53.2 million of its outstanding floating interest rate debt into fixed interest rates. The company believes that the cash flow from operating activities, together with its borrowing capacity under the credit facilities, will be sufficient to meet its ongoing working capital, DSCs, planned capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and debt service requirements. The company expects to finance any acquisitions through a combination of cash flow from existing operations, additional debt and the issuance of equity or a combination thereof. Other Matters Steinberg, Moorad and Dunn, Inc., a subsidiary of the company, continued its legal actions against certain former employees of Steinberg, Moorad and Dunn Inc., relating to its football operations. Assante Corporation and its subsidiary are seeking damages from various parties as a result of the actions of these employees. Management expects the claims will be successful and at this time the recoveries will be sufficient to require no reduction in the carrying value of the investment in that subsidiary. The company will record the amount of damages recovered in the period in which the matter is resolved.
ASSANTE CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
--------------------------------------------------------------------
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June 30 December 31
(in thousands) 2002 2001
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ASSETS
Current assets:
Cash and short-term investments $ 21,175 $ 24,087
Cash in escrow - 24,619
Clients' cash in trust 99,271 104,172
Accounts receivable and prepaid
expenses 63,475 72,516
Due from shareholders 6,303 5,834
----------- ----------
190,224 231,228
Due from shareholders 12,231 12,507
Deferred charges and sales
commissions 95,972 84,288
Goodwill 252,299 261,892
Capital assets 30,081 28,860
Other assets 17,434 5,516
----------- ----------
$ 598,241 $ 624,291
----------- ----------
----------- ----------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 43,586 $ 48,115
Trust funds payable 99,271 104,172
Income taxes payable 341 375
Current portion of deferred revenue 3,913 7,042
Current portion of long-term debt
and capital leases 6,435 29,613
----------- ----------
153,546 189,317
Long-term debt and capital leases 133,315 138,862
Deferred revenue 4,998 7,333
Future income taxes 17,407 13,903
SHAREHOLDERS' EQUITY
Contributed surplus 183 183
Capital stock 301,797 301,793
Due to vendors 8,164 7,702
Deficit (18,903) (29,843)
Cumulative translation account (2,266) (4,959)
----------- ----------
288,975 274,876
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$ 598,241 $ 624,291
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ASSANTE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (Unaudited)
--------------------------------------------------------------------
--------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
(in thousands) 2002 2001 2002 2001
--------------------------------------------------------------------
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Revenue $ 95,679 $ 88,088 $ 194,407 $ 187,232
Expenses:
Advisor compensation 47,700 42,859 99,769 96,327
Selling, general and
administration 26,021 27,794 52,467 54,901
-------- -------- --------- ---------
73,721 70,653 152,236 151,228
-------- -------- --------- ---------
Earnings before
restructuring costs,
interest, amortization
and income taxes 21,958 17,435 42,171 36,004
Restructuring costs 409 639 997 639
-------- -------- --------- ---------
Earnings before interest,
amortization and
income taxes 21,549 16,796 41,174 35,365
Interest and financing
expense 2,690 3,344 5,521 7,062
Amortization 10,238 6,967 19,271 13,437
-------- -------- --------- ---------
Earnings before income
taxes 8,621 6,485 16,382 14,866
Provision for income
taxes
Current 802 2,596 2,217 4,055
Future 2,152 (773) 3,225 264
-------- -------- --------- ---------
2,954 1,823 5,442 4,319
-------- -------- --------- ---------
Earnings before goodwill
charges 5,667 4,662 10,940 10,547
Goodwill charges - 7,782 - 15,545
-------- -------- --------- ---------
Net earnings (loss) 5,667 (3,120) 10,940 (4,998)
Deficit, beginning of
period (24,570) (23,690) (29,843) (21,812)
-------- -------- --------- ---------
Deficit, end of period $(18,903) $(26,810) $(18,903) $(26,810)
-------- -------- --------- ---------
-------- -------- --------- ---------
Earnings (loss) per
share:
Basic $0.07 ($0.04) $0.14 ($0.07)
Fully diluted $0.07 ($0.04) $0.13 ($0.07)
ASSANTE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
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Three Months Ended Six Months Ended
June 30 June 30
(in thousands) 2002 2001 2002 2001
--------------------------------------------------------------------
--------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings (loss) $ 5,667 $ (3,120) $ 10,940 $ (4,998)
Items not involving cash:
Goodwill charges - 7,782 - 15,545
Amortization 10,238 6,967 19,271 13,437
Gain on disposition of
capital assets - (80) (12)
Restructuring charge 409 639 997 639
Gain on sale of
investments (1,147) - (1,147) -
Future income taxes 2,152 (773) 3,225 264
-------- ---------- --------- ---------
Operating cash flow 17,319 11,420 33,286 24,875
Change in non-cash
operating working capital (2,818) (18,367) (1,572) (27,366)
-------- ---------- --------- ---------
14,501 (6,947) 31,714 (2,491)
-------- ---------- --------- ---------
Financing:
Due from shareholders (573) (110) (194) (1,425)
Long term debt and
capital leases, net (3,922) 5,312 (24,034) 4,716
Issue of shares, net of
return of capital - (101) (12) (101)
-------- ---------- --------- ---------
(4,495) 5,101 (24,240) 3,190
-------- ---------- --------- ---------
Investments:
Acquisitions, net of cash
acquired (1,292) 3 (1,570) (173)
Deferred charges and
sales commissions (10,857) (5,773) (22,683) (12,136)
Acquisition of capital
assets and equipment
under capital leases (3,515) 1,972 (6,095) (795)
Proceeds on disposition
of investments 1,326 1,326
Other (2,189) 528 (4,277) 726
-------- ---------- --------- ---------
(16,527) (3,270) (33,299) (12,378)
-------- ---------- --------- ---------
Effect of currency
translation adjustment on
cash flows (1,739) (202) (1,706) 23
-------- ---------- --------- ---------
Decrease in cash (8,260) (5,318) (27,531) (11,656)
Cash position, beginning
of period 29,435 27,964 48,706 34,302
-------- ---------- --------- ---------
Cash position, end of
period $ 21,175 $ 22,646 $ 21,175 $ 22,646
-------- ---------- --------- ---------
-------- ---------- --------- ---------
Operating cash flow per
share
Basic $ 0.21 $ 0.16 $ 0.42 $ 0.34
Fully diluted $ 0.20 $ 0.14 $ 0.39 $ 0.31
ASSANTE CORPORATION
SHARE INFORMATION (UNAUDITED)
--------------------------------------------------------------------
--------------------------------------------------------------------
Equivalent
As at June 30, 2002 Shares Common
Outstanding Shares
--------------------------------------------------------------------
--------------------------------------------------------------------
Voting securities outstanding
Common shares (note 1) 80,145,470 80,145,470
Securities convertible
into voting securities
Class I Special series I shares 1,339,796 2,982,990
Class I Special series VII shares 855,000 1,245,746
Securities in escrow subject to
earnouts
Common shares (note 2) 2,495,592 2,495,592
Class F Special series I shares
(note 3) 15,919,850 1,349,140
Class F Special series II
shares (note 3) 417,806 35,407
Note: (1) Common shares above include 8,050,000 common shares
issued on the exercise of special warrants on March 14,2002.
Note: (2) Common shares held in escrow are subject to earnout
conditions relating to periods subsequent to June 30, 2002.
Note: (3) The Class F Special Series I shares that are subject to
earnout conditions are convertible into one common share for each 11.8
Class F special shares. To the extent such shares have been earned to
June 30, 2002, the obligation is included in due to vendors, and the
common shares into which they are convertible are included in the
basic and fully diluted shares.
ASSANTE CORPORATION
SEGMENTED INFORMATION (UNAUDITED)
--------------------------------------------------------------------
--------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
(in thousands) 2002 2001 2002 2001
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue
Canada (excl
redemption fees) $ 69,223 $ 62,427 $ 140,312 $ 136,130
Redemption fees 1,201 991 2,372 2,164
-------- -------- --------- ---------
Total Canada 70,424 63,418 142,684 138,294
U.S. 25,255 24,670 51,723 48,938
-------- -------- --------- ---------
95,679 88,088 194,407 187,232
-------- -------- --------- ---------
EBITDA before
restructuring charges
Canada $ 17,657 $ 12,736 $ 33,235 $ 28,608
U.S. 4,301 4,699 8,936 7,396
-------- -------- --------- ---------
21,958 17,435 42,171 36,004
-------- -------- --------- ---------
Total assets
Canada $ 367,768 $ 363,584 $ 367,768 $ 363,584
U.S. 230,473 216,796 230,473 216,796
-------- -------- --------- ---------
598,241 580,380 598,241 580,380
-------- -------- --------- ---------
ASSANTE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1: Significant Accounting Policies The financial statements of the Company have been prepared in accordance with Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting using the same accounting policies and methods of application as disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the Company's audited financial statements for the year ended December December: see month. 31, 2001, except as discussed in note 2 and 3 below. These interim financial statements and the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Company's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge contained in its Annual Report for the year ended December 31, 2001. Note 2: Segmented Reporting In early 2002, the Company reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. its business units from financial advisory and sports & entertainment to Assante Canada and Assante U.S., to better reflect the business activities and management teams within the organization. Comparative segmented information has been restated to reflect the new reporting segments. For more information on the reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. , please see the management discussion and analysis. Note 3: Change in Accounting Policy for Goodwill and Intangible Assets Effective January 1, 2002, the Company changed its accounting policy and adopted the new Canadian New Canadian Noun Canad a recent immigrant to Canada Institute of Chartered Accountants' Handbook
This article is about reference works. For the subnotebook computer, see .
As a result of the application of the new standard, the Company segregated from goodwill the unamortized value of player representation agreements still in effect as at January 1, 2002 that were in place at the time of acquisition of each of the related sports agencies. The unamortized value of these contracts was $11.5 million, which has been segregated into other assets and will be amortized over the remaining life of the agreements. For the quarter and six months ended June 30, 2002, the amortization related to these contracts was $1.7 million and $3.0 million, respectively. Note 4: 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. During the quarter and six months ended June 30, 2002 the Company incurred costs related to the restructuring of certain U.S. operations of $0.4 million and $1.0 million, respectively. |
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