Avery Communications, Inc. Reports 2002 Results.Business Editors CHICAGO--(BUSINESS WIRE)--April 18, 2003 Avery A·ver·y , Oswald 1877-1955. American bacteriologist noted for establishing (1944) that DNA is responsible for the transmission of heritable characteristics. Communications, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB:AVYC AVYC Aliso Viejo Youth Commission ), a provider of outsourced billing and customer care solutions, has announced financial results for the year ended December December: see month. 31, 2002. On revenue of $40.5 million, Avery incurred a net loss of $5.7 million ($5.66 loss per share, basic and 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. ), compared with revenue of $41.9 million and a net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $1.8 million ($1.81 loss per share, basic and diluted) in 2001. "We are beginning to see the improvements in profitability arising from the successful integration of our two operations in 2002," stated Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Labedz, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "The significant cost savings arising from the integration allowed us to achieve an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in the fourth quarter. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we will be profitable in 2003." Mr. Labedz added, "We believe that the fundamentals in the industry are improving, and we continue to look for acquisitions which will fit well with our billing and customer care business units. Having now succeeded with the integration of the acquired OAN OAN Oregon Association of Nurserymen OAN Optical Access Network OAN On Another Note OAN Open Austrian Network OAN Optical Access Node OAN Operational Area Networks OAN Overshoot Amplitude Noise OAN Online Account Number OAN Open Aggregate Navigation business, we are pursuing similar opportunities to leverage our infrastructure." The Company indicated that it had recorded in the fourth quarter of 2002 a full valuation allowance on approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2 million of previously accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. deferred tax assets. This resulted in the recognition of a $0.6 million income tax expense in 2002. The Company also indicated that it had restated its 2001 financial statements to reflect a revised accounting treatment of the February February: see month. 2001 distribution of Primal pri·mal adj. 1. Being first in time; original. 2. Of first or central importance; primary. pri·mal  i·ty n. Solutions, Inc. The revised accounting treatment resulted in
the recognition of a $6.1 million loss from the distribution. The loss
was offset in full by an increase in paid-in-capital, and the revised
accounting treatment accordingly had no impact on aggregate
stockholders' deficit.The Company intends over the next month to implement a previously announced 1-for 5,000 reverse stock split under which parties otherwise entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive fractional shares Fractional share Stocks amounting to less than one full share, usually resulting from splits, acquisitions, exchanges, or dividend reinvestment programs. fractional share Less than one share of stock, that is, one-third or one-half a share. would instead receive cash in the amount of $1.27 for each pre-split share. The reverse stock split, when implemented, is expected to reduce the number of shareholders below the level at which the Company would be required to continue to file reports with the SEC. If this occurs as anticipated, Avery will no longer be publicly traded or quoted on the OTC Bulletin Board OTC Bulletin Board An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system. . About Avery Communications, Inc. Avery is a technology based service company engaged in outsourced customer care and billing services, principally for the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry. Through its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , ACI ACI American Concrete Institute ACI Arch Coal Inc ACI Airports Council International (formerly Airport Associations Coordinating Council) ACI Automobile Club d'Italia ACI American Competitiveness Initiative Billing Services, Inc. and HBS HBS Harvard Business School HBs Hepatitis B Surface HBS Heinrich Boell Stiftung (German Political Foundation) HBS Household Budget Survey HBS Hogere Burgerschool HBS Hawaii Biological Survey (Bishop Museum) Billing Services Company, Avery provides telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. billing and collection clearinghouse clearinghouse Institution established by firms engaged in similar activities to enable them to offset transactions with one another in order to limit payment settlements to net balances. services for inter-exchange carriers (communications) inter-exchange carrier - (IXC) A company allowed to handle long-distance calls following the break-up of the Bell system in the US by anti-trust regulators. , long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. resellers and other service providers. The clearinghouse operations maintain billing arrangements with approximately 1,300 telephone companies that provide access lines to, and collect for services from, end-users of telecommunication services. Through its Aelix, Inc. subsidiary, Avery offers message communication services and applications designed to improve customer service functions. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements contained in this document, including but not limited to statements concerning profitability in 2003, may be deemed to be forward-looking statements under federal securities laws. Such forward-looking statements can generally be identified by the use of 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. terminology such as "may," "will," "expect," "intend," "estimate", "anticipate," "plan," "seek," or "believe." Avery intends that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include, but are not limited to, risks as detailed from time to time in Avery's SEC reports, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . (see attached tables)
Avery Communications, Inc.
Consolidated Statements of Operations
For the Twelve Months Ended December 31, 2002 and 2001
----------------------------
Year Ended December 31,
----------------------------
2002 2001
----------------------------
(Restated)
Revenues $ 40,536,391 $ 41,915,531
Cost of revenues (27,559,187) (29,979,882)
------------- -------------
Gross profit 12,977,204 11,935,649
Operating expenses (16,236,600) (10,414,334)
------------- -------------
Operating income (loss) (3,259,396) 1,521,315
------------- -------------
Other income (expense):
Interest expense (499,001) (68,812)
Write-off investment in affiliate - (2,361,405)
Reserve for non-recourse notes receivable (1,300,000) (930,608)
Other, net 16,003 206,492
------------- -------------
Total other income (expense), net (1,782,998) (3,154,333)
------------- -------------
Loss from continuing operations before
provision for income taxes and
discontinued operations (5,042,394) (1,633,018)
Income tax benefit (expense) (629,709) (216,945)
------------- -------------
Loss from continuing operations (5,672,103) (1,849,963)
Loss from discontinued operations (666,036)
Loss on non pro rata distribution of
Primal Solutions, Inc. - (6,114,255)
------------- -------------
Net loss (5,672,103) (8,630,254)
Less: dividends earned on preferred
stock (492,767) (453,715)
Add: excess of carrying value of
Series G preferred stock exchanged
for Primal Solutions, Inc. common
stock, at fair value - 4,455,187
------------- -------------
Net loss attributable to common
shareholders $ (6,164,870)$ (4,628,782)
============= =============
Per share data:
Basic and diluted net loss per share:
Continuing operations loss $ (5.66)$ (1.81)
Discontinued operations - (1.82)
------------- -------------
Net loss $ (5.66)$ (3.63)
============= =============
Weighted average number of common
shares outstanding:
Basic common shares 1,089,515 1,274,687
============= =============
Diluted common shares 1,089,515 1,274,687
============= =============
Avery Communications, Inc.
Consolidated Balance Sheet
December 31, 2002
ASSETS
12/31/02 12/31/01
(Restated)
Current assets:
Cash and cash equivalents $ 4,142,377 $ 5,422,202
------------ ------------
Accounts receivable:
Trade accounts, net 3,182,984 3,231,166
Advance payment receivables 3,322,057 1,794,352
LEC billing and collection fees
receivable 4,285,232 4,948,502
Receivable from OAN 5,484,364 5,360,845
Other receivables 11,825 94,376
------------ ------------
Total accounts receivable 16,286,462 15,429,241
------------ ------------
Deferred tax asset - 1,090,690
Deposits with LECs 1,300,000 933,618
Other current assets 600,155 53,354
------------ ------------
Total current assets 22,328,994 22,929,105
------------ ------------
Property and equipment:
Computer equipment and software 5,538,422 5,718,172
Furniture and fixtures 487,410 500,003
Leasehold improvements 199,608 -
Accumulated depreciation and amortization (2,510,046) (1,379,877)
------------ ------------
Property and equipment, net 3,715,394 4,838,298
------------ ------------
Other assets:
Goodwill, net 5,577,735 5,577,735
Investments in affiliates 93,172 30,100
Deposits with LECs, net of current portion 1,470,648 2,236,983
Purchased contracts, net 100,000 14,267
Notes receivable due from related parties,
net 382,700 752,700
Capitalized financing fees, net 547,258 718,299
Other assets 854 43,036
------------ ------------
Total other assets 8,172,367 9,373,120
------------ ------------
Total assets $ 34,216,755 $ 37,140,523
============ ============
Liabilities and Stockholders' Deficit
12/31/02 12/31/01
(Restated)
Current liabilities:
Lines of credit $ 6,076,312 $ 2,607,705
Trade accounts payable 3,326,361 4,800,543
Accrued liabilities 861,701 1,051,087
Current portion of customer cure liability 317,701 317,701
Income taxes payable - 163,994
Deposits and other payables related to
customers 28,718,804 27,118,482
------------ ------------
Total current liabilities 39,300,879 36,059,512
------------ ------------
Non-current liabilities:
Long-term notes payable to related parties 680,681 680,681
Customer cure liability 1,011,461 1,576,021
------------ ------------
Total non-current liabilities 1,692,142 2,256,702
------------ ------------
------------ ------------
Redeemable preferred stock 2,321,667 2,321,667
------------ ------------
Stockholders' deficit:
Preferred stock 32,401 42,505
Common stock 12,680 12,680
Additional paid-in capital 12,100,929 12,753,592
Accumulated deficit (20,841,370) (15,169,267)
Treasury stock, at cost (383,730) (58,440)
Subscription notes receivable, net (18,843) (1,078,428)
------------ ------------
Total stockholders' deficit (9,097,933) (3,497,358)
------------ ------------
Total liabilities and stockholders'
deficit $ 34,216,755 $ 37,140,523
============ ============
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