BCE Emergis Announces Solid Third Quarter Results.Business Editors MONTREAL--(BUSINESS WIRE)--Oct. 24, 2001 BCE BCE abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. Emergis Emergis Incorporated (TSX: EME) is a Canadian e-Business company dealing with interactions between companies and electronic commerce. The company is linked to the merger of Bell Canada's Electronic Business Solutions and MPACT Immedia Announces Solid Third Quarter Results -- Revenue climbs to $173 million; -- Baseline earnings from operations reach $0.16 per share; -- All three business units - eHealth, U.S. and Canada - post strong performance; -- New business contracts confirm Emergis leadership in key sectors. BCE Emergis Inc.(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :IFM IFM Institut Français de la Mode (French Fashion Institute) IfM Institute for Micromanufacturing (Louisiana Tech University) IFM Interface Module IFM Instantaneous Frequency Measurement ), a leading provider of business-to-business  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. eCommerce See e-commerce. services and exchanges, today announced record results for the third fiscal quarter ended September September: see month. 30, 2001. Revenue for the third quarter of 2001 reached $173.0 million, up from $132.1 million in the corresponding quarter of 2000, which included revenue from divested activities. Baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version earnings* for the quarter were $15.2 million, or $0.16 per share, compared to $14.9 million, or $0.16 per share for the same period last year. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
"Emergis had an excellent quarter and this is reflected in the strong financial results as well as the key agreements across our three business units", said Brian Edwards, Vice-Chairman 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. of BCE Emergis. "In terms of numbers, we have exceeded revenue consensus targets and generated a record level of baseline earnings, and all this, in a challenging environment. Revenue and baseline earnings growth stems from the strength of our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue business model, the high operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. it affords and a rapidly growing base of U.S. activity." Christian Trudeau, President & COO (Cell Of Origin) See mobile positioning. , continued, "From an operations perspective, our three business units all posted strong performances supporting our position as industry leader. In our U.S. business unit, we continue to see strong traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. around our e-Invoicing solution, and our recent agreement with Visa U.S.A. has spurred additional interest. In our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. eHealth division, we are delivering on our promise to bring the best eCommerce solutions to the insurance sector. Our agreement with The Principal Group is a case in point. In Canada, we have leveraged our relationship with Bell Canada Bell Canada Enterprises (TSX: BCE, NYSE: BCE), legally BCE Inc., is a major Canadian telecommunications company. Through its subsidiaries including Bell Canada, Bell Aliant, Northwestel, Télébec, and NorthernTel, it is the incumbent local exchange carrier for through the signing of major contracts to provide secure and advanced eCommerce services for their business customer base." Business outlook The company has performed well to date and we continue to be encouraged by our prospects. With respect to a Fourth Quarter financial outlook, given the uncertain economic climate and conditions, we are targeting revenue in the $175 million to $185 million range; EBITDA in the $34 million and $37 million range and baseline earnings between $0.16 and $0.19 per share. Other financial highlights -- For the 3rd quarter, revenue from each of the business units progressed: -- The eHealth sector remains the largest segment, registering $77.5 million in revenue for the quarter, up from $76.2 million in the second quarter of 2001, and $63.1 million in the third quarter last year. -- The Canadian business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. unit revenue grew to $75.7 million from $72.0 million in the previous quarter and $64.4 million in the third quarter last year. -- Revenue from the U.S. business unit jumped to $19.8 million, up from $10.5 million in the previous quarter and $4.6 million in the third quarter last year. -- For each of the eHealth, 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. and U.S. business units, revenue for the corresponding period in 2000 is not comparable to 2001, as they include either revenue related to acquisitions or revenue from since-exited assets. -- Emergis recorded increased transaction revenues on a quarter-over-quarter basis for the 40th consecutive quarter. -- Gross margins for the quarter came in at 77%, which is the same as last quarter. EBITDA margins reached 20%, slightly ahead of last quarter and in line with targets. -- Emergis continued to invest in research and development, and in particular in its e-Invoicing and web-claims exchange projects. It has raised the level of investment to 10% of revenues, ahead of 8.4% last quarter and 4.0% in the third quarter last year. -- Baseline earnings reached a record level of $15.2 million. This increase is in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite additional depreciation expense, owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the increased investment in capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) to build out infrastructure, as well as increased current income taxes due to the higher level of revenues from the U.S. -- The net loss of $107.5 million or $1.14 per share for the three-month period was greater than last year primarily as a result of increases in depreciation and amortization, and a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of $10.7 million due to the decline in the value of shares of Descartes Systems Group. -- Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses came in at $36.7 million, ahead of the $5.1 million stated for the corresponding quarter in 2000. -- The Company had $81.9 million of cash on September 30 2001, up from $58.6 million on June 30, 2001, and $50.4 million on September 30, 2000. -- At the end of the quarter, Emergis had a working capital deficiency of $76.4 million primarily as a result of the $139.5 million debenture debenture (dəbĕn`chər), document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond, and debenture stock is similar to preferred stock. from BCE, which has become a current liability due to its maturing date of June 30, 2002. With the BCE debenture excluded, working capital stood at $63.1 million on September 30, 2001. Working capital stood at $133.0 million on December 31, 2000. -- Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying stood at 65 days outstanding at quarter end, slightly higher than the 61 days at the end of last quarter, owing principally to timing differences. For the nine-month period ending September 30, 2001: -- Total revenue was $475.0 million, with the eHealth business unit accounting for $224.0 million, the Canadian business unit $213.7 million and the U.S. business unit $37.3 million. -- Revenue sourced from the U.S. rose to 42%, compared to 34% for the corresponding period last year and points to the Company's growing success in penetrating penetrating breaching the tissues of the body. the U.S. market. -- Recurring revenues for the nine-month period was within an 80% range. -- EBITDA amounted to $91.6 million on September 30, 2001, compared to $50.8 million the previous year. -- The net loss totaled $313.1 million or $3.33 per share for the nine-month period in 2001, compared to a net loss of $206.5 million or $2.26 per share in 2000, reflecting increases in depreciation, amortization and the write-down of marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. securities and 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. . The write-down of $15.3 million results mainly from the decline in the value of shares of Descartes Systems Group. -- Cash flow from operations totaled $42.8 million, up substantially from a shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. of $0.4 million for the corresponding period in 2000. Business highlights eHealth Solutions, North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. -- In August, Emergis named Faye S Faye may refer to:
of its North American eHealth Solutions Group. Baggiano joined Emergis from EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. , where she served as president of the Health Care Global Industry Group. -- Emergis was selected by the state of Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). to provide a solution for electronically processing standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. healthcare claims. The solution puts the state on track to meet the data formatting requirements of the Health Insurance Portability and Accountability Act There are a number of piece of legislation known as the Accountability Act:
claims and related documents with nationwide insurers, hospitals and healthcare providers. -- Emergis signed the Principal Financial Group(r) to a five-year, multi-million dollar transaction-based agreement for a new electronic premium presentment presentment: see indictment. and management service. As a result, Emergis will enable the Group Life and Health business unit of The Principal to generate and present its corporate customers with an electronic premium statement. -- Emergis inked a five-year deal with Canada Life. The insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. becomes the second health insurance company to join the Emergis web-enabled claims and premium exchange, which includes the recently announced electronic premiums presentment technology. Canadian Business Unit -- Emergis signed agreements to provide Bell Canada with advanced eCommerce services. Over the term of the contracts, Emergis will realize guaranteed revenue of $315 million. Included in these services are a best-of-breed security application for the Bell Virtual Private Network (VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. ) offering and the BCE Emergis Electronic Business Network (BEBN), as well as a series of other solutions that will provide capabilities such as online web-based customer care; small, medium and large enterprise web-based automation of ordering, invoicing in·voice n. 1. A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill. 2. The goods or services itemized in an invoice. tr.v. and payment functions; and enablement services to support suppliers and buyers for electronic procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. . -- A five-year contract was announced between the Ontario government and a consortium of companies, including BCE Emergis and Bell Canada, to make government services available online, by telephone, and over self-serve terminals. -- Emergis continued its leadership as the key enabler of Canadian electronic communities. It announced an agreement with Agri-eBusiness Group Inc. (AEBG), an e-business initiative created by four major grain and oilseeds industry groups in Ontario to improve the collection of sales and marketing information and create a central loans system for commodity organizations. Emergis also expanded the reach and functionality of its Emergis(r) e-Lending Interchange An interchange is a location where two things meet, usually perform some kind of exchange, and possibly go on their ways again. It is most commonly used in four contexts:
50% of Canada's new car dealerships This article is about car dealerships. For the indie pop band, see Dealership (band). A car dealership or vehicle local distribution is a business that sells new cars and/or used cars at the retail level, based on a dealership contract with an automaker or will be able to use the Interchange, which allows dealers, financial institutions and information bureaus to communicate and transact An earlier e-commerce system for the Web from Open Market that included order capture and secure order fulfillment using credit cards, ecash and other payment systems. It included customer service and subscription administration capabilities as well as an integrated database for reporting instantly and securely. U.S. Business Unit -- Emergis announced a partnership with leading payment brand Visa that dramatically expands the penetration of Emergis' electronic invoice An itemized statement or written account of goods sent to a purchaser or consignee by a vendor that indicates the quantity and price of each piece of merchandise shipped. A consular invoice is one used in foreign trade. presentment and payment technology in the U.S. and beyond. Emergis will integrate its electronic invoicing product into Visa's commercial payment solutions and provide Visa with other payment-related application tools to facilitate implementation and adoption among its large commercial customer base. -- This business unit has grown from $7.0 million in the first quarter of 2001, to $10.5 million in the second, to $19.8 million in the current period. It is experiencing extremely strong traction around our e-Invoicing solution. Corporate development Subsequent to quarter end, BCE Emergis Corporation, a U.S. subsidiary, won an appeal before the Seventh Circuit Court of Appeals, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a previously disclosed civil suit complaint that had been filed by First Health Group Corporation in 1996. Additional financial information is available on the BCE Emergis web site at www.emergis.com. Note: "Baseline Earnings" is defined as reported net earnings before "Acquisition-related costs" (amortization of intangibles and the option on convertible debenture Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. ), one-time gains and charges, and future income tax benefits. BCE Emergis is a premier e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. infrastructure provider, strategically focusing on market leadership in the transaction-intensive eHealth 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. sectors. By layering technologically advanced e-commerce services on existing Internet-based platforms, Emergis offers its customers increasing value in their e-commerce adoption and ever-increasing levels of sophisticated services. These scalable solutions electronically transform business processes, such as buying, selling, invoicing and payment, and enable companies to succeed in the web-centric, cost-driven, and highly competitive global Internet economy The Internet Economy refers to conducting business through markets whose infrastructure is based on the Internet and World-Wide Web. An Internet economy differs from a traditional economy in a number of ways, including: communication, market segmentation, distribution costs, and price. . BCE Emergis' customers include leading North American banks and insurance companies. The Company's shares are included in the TSE 100 composite index Composite Index A grouping of equities, indexes or other factors combined in a standardized way, providing a useful statistical measure of overall market or sector performance over time. Also known simply as a "composite". . This news release contains 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. , which are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly. Factors which could cause actual results or events to differ materially from current expectations include, among other things: uncertainty as to whether BCE Emergis' strategies will yield the expected benefits and growth prospects, the current negative trends in North American economic conditions, BCE Emergis' ability to expand its operations in the 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. particularly in the ehealth and financial sectors, the extent of its customers' use of its exchanges and services and the ability to integrate efficiently new acquisitions. For additional information with respect to certain of these and other factors, see the Annual Information Form of the Company filed with securities commissions. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESS RELEASE REPRESENT BCE EMERGIS EXPECTATIONS AS AT OCTOBER 24, 2001 AND, ACCORDINGLY, ARE SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER BCE EMERGIS DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
For information:
For media : For investors:
Sylvia Morin John Gutpell
Director, Corporate Communications Director, Investor Relations
(514) 868-2358 (514) 868-2232
e-mail : sylvia.morin@emergis.com e-mail: john.gutpell@emergis.com
Consolidated Statements of Earnings
For the For the For the For the
three three nine nine
month month month month
(millions of period period period period
dollars, ended ended ended ended
except loss per Septem- Septem- Septem- Septem-
share and ber 30, ber 30, ber 30, ber 30,
number 2001 2000 2001 2000
of shares) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 173.0 132.1 475.0 327.0
Direct costs 39.0 33.3 106.9 80.6
------------ ---------- ----------- ----------
Gross margin 134.0 98.8 368.1 246.4
------------ ---------- ----------- ----------
Expenses
Operations 45.6 40.4 129.2 104.3
Sales and marketing 19.0 13.6 55.0 36.8
Research and
development 17.3 5.3 41.8 18.0
General and
administrative 17.7 13.8 50.5 36.5
------------ ---------- ----------- ----------
99.6 73.1 276.5 195.6
------------ ---------- ----------- ----------
Earnings before
under-noted items 34.4 25.7 91.6 50.8
Depreciation 12.1 5.9 32.2 17.8
Amortization of
intangibles 105.0 92.3 310.0 220.0
Interest income (1.2) (2.2) (4.0) (5.0)
Interest on
long-term debt 3.2 3.4 9.9 8.6
Accretion on
convertible debenture
due to parent, related
to the option 3.5 8.2 10.5 17.1
Writedown of marketable
securities and other
assets (Note 3) 15.3 - 39.2 -
Other (0.4) 0.2 (1.7) 1.3
------------ ---------- ----------- ----------
Net loss before
income taxes (103.1) (82.1) (304.5) (209.0)
Income taxes
Current 5.5 3.5 14.5 6.4
Future (1.1) (2.3) (5.9) (8.9)
------------ ---------- ----------- ----------
Net loss (107.5) (83.3) (313.1) (206.5)
============ ========== =========== ==========
Basic loss per
share ($) (1.14) (0.90) (3.33) (2.26)
Weighted average
number of shares
used in computing
basic loss per
share 94,244,706 93,033,751 94,000,113 91,187,759
Fully diluted loss per share is not presented as it is
anti-dilutive. The accompanying notes are an integral part of the
Interim Consolidated Financial Statements.
Consolidated Statements of Deficit
For the nine For the nine
month period month period
ended ended
September September
30, 30,
2001 2000
(unaudited) (unaudited)
Deficit - beginning of period (372.0) (124.1)
Adjustment related to the
adoption of
new accounting recommendation - 31.4
Net loss (313.1) (206.5)
------------ ----------
Deficit - end of period (685.1) (299.2)
------------ ----------
The accompanying notes are an integral part of the Interim
Consolidated Financial Statements.
Consolidated Balance Sheets
(millions of dollars)
As at As at
September 30 December 31
2001 2000
(unaudited) (audited)
ASSETS
Current
Cash and temporary cash
investments 81.9 92.2
Marketable securities
(market value $6.2M as at
September 30, 2001
and $67.9M as at
December 31, 2000) 5.9 67.9
Accounts receivable 129.1 76.4
Future income taxes 5.6 7.5
Other 8.3 37.6
---------- ----------
230.8 281.6
Capital assets 148.2 152.3
Goodwill, net 576.0 737.8
Future income taxes 73.0 73.4
Other assets 79.3 71.2
---------- ----------
1,107.3 1,316.3
---------- ----------
LIABILITIES
Current
Accounts payable and
accrued liabilities 119.6 99.9
Deferred revenue 11.5 17.4
Deferred credits 12.0 12.0
Long-term debt 24.6 19.3
Convertible debenture due
to parent (Note 4) 139.5 -
---------- ----------
307.2 148.6
Deferred credits 5.1 13.8
Long-term debt 30.8 29.9
Convertible debenture due
to parent - 129.0
---------- ----------
343.1 321.3
---------- ----------
SHAREHOLDERS' EQUITY (Note 4)
Option on convertible debenture
due to parent 21.0 21.0
Capital stock 1,349.0 1,303.7
Contributed Surplus 25.2 25.2
Deficit (685.1) (372.0)
Foreign currency translation
adjustment 54.1 17.1
---------- ----------
764.2 995.0
---------- ----------
1,107.3 1,316.3
---------- ----------
The accompanying notes are an integral part of the Interim
Consolidated Financial Statements.
Consolidated Statements of Cash Flows
For the For the For the For the
three three nine nine
month month month month
period period period period
ended ended ended ended
September September September September
30, 2001 30, 2000 30, 2001 30, 2000
(unaudited)(unaudited)(unaudited)(unaudited)
Operating activities
Net loss (107.5) (83.3) (313.1) (206.5)
Depreciation and
amortization 117.1 98.2 342.2 237.7
Accretion on convertible
debenture due to parent,
related to the option 3.5 8.2 10.5 17.1
Writedown of marketable
securities and other
assets 15.3 - 39.2 -
Future income taxes (1.1) 1.2 (5.9) (5.4)
Other 1.9 - 2.4 (0.3)
Changes in working
capital 7.5 (19.2) (32.5) (43.0)
----------- --------- --------- ----------
Cash flows from
(used for) operating
activities 36.7 5.1 42.8 (0.4)
----------- --------- --------- ----------
Investing activities
Additions to capital
assets (5.0) (21.8) (21.3) (41.5)
Acquisitions (17.8) (8.6) (45.6) (805.8)
Cash acquired on
acquisition of UP&UP - - - 46.3
Cash acquired on
acquisition of AHC
(Note 2) - - 0.8 -
Cash acquired on
acquisition of
InvoiceLink - 1.1 - 1.1
Proceeds on sale of
marketable securities 9.7 - 21.2 -
Advance to a company
under common control - (2.3) - (2.3)
Note receivable from
former majority
shareholder of UP&UP - - - (11.6)
Settlement of note
payable to former
majority shareholder
of UP&UP - - (1.5) -
----------- --------- --------- ----------
Cash flows used for
investing activities (13.1) (31.6) (46.4) (813.8)
----------- --------- --------- ----------
Financing activities
Repayment of long-term
debt (9.9) (8.9) (20.3) (12.4)
Long-term debt 7.7 - 7.7 -
Issue of convertible
debenture due to parent - - - 150.0
Issue of common shares 1.1 1.3 5.5 655.6
----------- --------- --------- ----------
Cash flows from
(used for)
financing activities (1.1) (7.6) (7.1) 793.2
----------- --------- --------- ----------
Foreign exchange gain
(loss) on cash held
in foreign currencies 0.8 (2.0) 0.4 (4.7)
Cash and cash
equivalents
Increase (decrease) 23.3 (36.1) (10.3) (25.7)
Balance, beginning of
period 58.6 86.5 92.2 76.1
----------- --------- --------- ----------
Balance, end of
period 81.9 50.4 81.9 50.4
----------- --------- --------- ----------
Supplemental disclosure
of cash flow information
Interest paid 3.3 0.2 9.9 4.1
Income taxes paid 2.5 0.1 6.3 2.0
The accompanying notes are an integral part of the Interim 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 . NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS As at September 30, 2001 (In millions of Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents except share data) (unaudited) These interim consolidated financial statements have been prepared 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 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 as were used for the consolidated financial statements for the year ended December 31, 2000 except as discussed below. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2000, as set out in the 2000 Annual Report. 1. Summary of Significant Accounting Policies Business Combinations/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. In July 2001, 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. ("CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) ") issued Handbook
This article is about reference works. For the subnotebook computer, see .
Under the new rules, goodwill and certain intangible assets with an indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those useful life arising from business combinations accounted for using the purchase method are no longer amortized but are reviewed annually (or more frequently under certain conditions). Separable sep·a·ra·ble adj. Possible to separate: separable sheets of paper. sep intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. These amortization provisions apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company will apply the new accounting rules in 2002. We are currently assessing the financial impact that these new rules will have on our Consolidated Financial Statements. Application of the new rules is expected to have a positive impact on our net earnings since goodwill will no longer be amortized, but be measured for 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. . Earnings per share On January 1, 2001, the Company adopted the new recommendations issued by the CICA with respect to earnings per share (Handbook section 3500). Under the revised section, the treasury stock method is used instead of the current imputed Attributed vicariously. In the legal sense, the term imputed is used to describe an action, fact, or quality, the knowledge of which is charged to an individual based upon the actions of another for whom the individual is responsible rather than on the individual's earnings approach for determining the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of options and warrants issued. In addition, this section requires that a reconciliation of the numerator numerator the upper part of a fraction. numerator relationship see additive genetic relationship. numerator Epidemiology The upper part of a fraction and denominator denominator the bottom line of a fraction; the base population on which population rates such as birth and death rates are calculated. denominator be disclosed.
For the three-month period ended
September 30, 2001
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
-------------------------------------
Net loss
available to
common
shareholders (107.5) 94,244,706 (1.14)
=====================================
(table continued)
September 30, 2000
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
-------------------------------------
Net loss
available to
common
shareholders (83.3) 93,033,751 (0.90)
=====================================
1. Summary of Significant Accounting Policies (continued)
For the nine-month period ended
September 30, 2001
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
-------------------------------------
Net loss available
to common
shareholders (313.1) 94,000,113 (3.33)
(table continued)
September 30, 2000
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
-------------------------------------
Net loss available
to common
shareholders (206.5) 91,187,759 (2.26)
The following were not included in the computation of diluted
earnings per share because their inclusion would have been
anti-dilutive for the periods presented.
For the three month
period ended
Sept. 30, Sept. 30,
2001 2000
Number of Number of
Shares Shares
----------------------
Convertible debenture due to
parent (a) 1,989,390 1,273,344
Options (a) 4,483,424 3,191,121
Warrants (a) 1,650,000 -
Common shares to be
issued related to acquisitions 1,858,596 -
----------------------
(table continued)
For the nine-month
period ended
Sept. 30, Sept. 30,
2001 2000
Number of Number of
Shares Shares
----------------------
Convertible debenture due to
parent (a) 1,989,390 881,909
Options (a) 4,138,350 2,948,839
Warrants (a) 1,324,074 -
Common shares to be issued related
to acquisitions 1,129,083 -
(a) Incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. shares are assumed issued and weighted for the period the convertible debenture, options or warrants were outstanding. 2. Acquisitions In September 2001, the Company acquired, through a merger, the assets in the business-to-business electronic invoice presentment and payment business of San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden I, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control for $8.5 million USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ; $6.0 million USD in cash and $2.5 million USD in shares. The transaction was accounted for using the purchase method and the purchase price acquisition cost of $8.5 million USD ($13.4 million CAD CAD: see computer-aided design. (Computer-Aided Design) Using computers to design products. CAD systems are high-speed workstations or desktop computers with CAD software. ) was allocated to goodwill. 2. Acquisitions (continued) In July 2001, the Company acquired the assets of ProCure To cause something to happen; to find and obtain something or someone. Procure refers to commencing a proceeding; bringing about a result; persuading, inducing, or causing a person to do a particular act; obtaining possession or control over an item; or making a person .Com, a technology provider of supplier enablement Supplier Enablement is the process of electronically connecting suppliers (or other trading partners) to a company's supply chain. Supplier enablement is achieved when suppliers of goods and services are connected to a company's back-office systems to exchange critical business applications in the Province of Ontario, Canada for a total cash consideration of $5.9 million. The Company also incurred transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). in the amount of $0.5 million in connection with the acquisition relating mostly to professional fees. The transaction was accounted for using the purchase method. The results of operations of ProCure.Com have been included in the Company's results since July 6, 2001. The total purchase price of the acquisition was $6.4 million and was allocated as follows:
$ in
Millions
--------
Current assets 0.3
Capital assets 0.8
Allocation of excess of
purchase price to acquired
technologies 5.3
--------
6.4
========
In June 2001, the Company acquired all of the outstanding shares of Associates for Health Care, Inc. ("AHC AHC Appalachian Hardwood Center AHC American Heritage Center (University of Wyoming, Laramie, WY) AHC American Horse Council AHC Association for History and Computing AHC Australian Heritage Commission AHC Assault Helicopter Company "), a privately held company privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. involved in health care cost management in the state of Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee in the US for $30.0 million USD. Pursuant to the Agreement and Plan of Merger, the Company paid $10.0 million USD at closing. The balance of the purchase price will be paid in three equal installments on June 28, 2002, June 28, 2003, and June 28, 2004, by the issuance of shares with a value of $20.0 million USD. The Company has the option to settle the balance of the purchase price with cash payments in the amount of $6.7 million USD at each of the above-mentioned dates. The Company incurred transaction costs in the amount of approximately $2.0 million USD in connection with the acquisition relating mostly to professional fees. The transaction was accounted for using the purchase method. An amount of $1.25 million USD otherwise payable on June 28, 2002 will be held to be applied against indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from claims, if any, arising within a defined period after closing. The results of operations of AHC have been included in the Company's results since June 28, 2001, the date of acquisition. 2. Acquisition (continued) The total purchase price of the acquisition was $32.0 million USD ($48.6 million CAD) and was allocated as follows:
$ in
Millions
--------
Current assets 4.8
Capital assets 0.7
Current liabilities (1.1)
Allocation of excess of
purchase price over net assets:
Goodwill 44.2
--------
48.6
========
Contingent consideration Under the terms of the purchase agreement of InvoiceLink Corporation, now renamed BCE Emergis Technologies, Inc. ("Technologies"), in September 2000, the Company agreed to pay additional purchase consideration of up to $6.0 million USD upon the achievement of specific objectives by Technologies. The achievement of these objectives in the current period ended September 30, 2001 resulted in an increase in the purchase price of Technologies, and a corresponding increase to the goodwill recorded on the acquisition in the amount of $6.0 million USD. 3. Write down of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and other assets During the nine-month period ended September 30, 2001, the market value of certain marketable securities was $33.1 million below their 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. . As a result, a write-down of $33.1 million was recorded in the Consolidated Statement of Earnings to reflect this unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. in the market value of The Descartes Systems Group Inc. for the nine-month period ended September 30, 2001. Of this amount, $10.7 million was recorded in the current quarter. These securities were received as partial consideration in 2000 for the disposal of our non-core assets related to the delivery of logistics electronic messaging See e-mail and messaging system. services in the transportation industry. During the nine-month period ended September 30, 2001, a provision of approximately $4.0 million was recorded on certain other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. to reflect an impairment in their net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. . We also recorded a net loss on the disposal of certain marketable securities during the nine-month period ended September 30, 2001. 4. Equity Components The stated capital stated capital See legal capital. stock as at September 30, 2001 is detailed as follows:
$
Number Millions
----------------------
Balance beginning of year 93,651,603 1,303.7
Issue of common shares (a) 526,357 5.4
Issue of common shares (b) 146,672 3.9
Issue of common shares (c) 455,676 5.7
----------------------
94,780,308 1,318.7
Common shares to be issued (d) 30.3
---------
1,349.0
=========
Option on convertible debenture 21.0
=========
Contributed surplus 25.2
=========
(a) 526,357 stock options were exercised to purchase 526,357 common
shares for cash consideration of $5,432,600.
(b) 146,672 common shares were issued for a total consideration of
$3,947,500 in connection with the acquisition in September 2001
as described in note 2.
(c) 455,676 additional common shares were issued for the first
installment payment and the payment of the contingent
consideration related to the acquisition of InvoiceLink now
renamed BCE Emergis Technologies, Inc.
(d) The number of shares to be issued in connection with the AHC
acquisition as described in note 2 is not determinable at this
time.
Debenture:
6.3%, Convertible debenture, convertible
at the holder's option into 1,989,389
common shares at a conversion price of
$75.40 per share up to the maturity date
on June 30, 2002 $139.5 million
Stock option plans:
Stock option plans for common shares at
prices ranging from $0.66 to $172.80
per share and expiry dates up to 2010 4,624,942 options
5. Operating Segment Information
The Company focuses its activities in three business units
(Canada, U.S.A. and eHealth Solutions Group), offering a full suite of
products to companies in transaction-intensive, eHealth and financial
services sectors. The following table shows the activities of each of
the three business units:
For the three-month period ended
Canada USA
Business Unit Business Unit
-----------------------------------------
$ Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Millions 2001 2000 2001 2000
----------------------------------------------------------
Revenues 75.7 64.4 19.8 4.6
Direct Costs 26.6 21.4 0.8 0.3
----------------------------------------------------------
Gross Margin 49.1 43.0 19.0 4.3
----------------------------------------------------------
(table continued)
e-Health Solutions
Group
Business Unit Total
----------------------------------------
$ Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Millions 2001 2000 2001 2000
----------------------------------------------------------
Revenues 77.5 63.1 173.0 132.1
Direct Costs 11.6 11.6 39.0 33.3
----------------------------------------------------------
Gross Margin 65.9 51.5 134.0 98.8
----------------------------------------------------------
For the nine-month period ended
Canada USA
Business Unit Business Unit
-----------------------------------------
$ Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Millions 2001 2000 2001 2000
----------------------------------------------------------
Revenues 213.7 166.4 37.3 16.1
Direct Costs 70.3 54.8 1.6 1.8
----------------------------------------------------------
Gross Margin 143.4 111.6 35.7 14.3
----------------------------------------------------------
(table continued)
e-Health Solutions
Group
Business Unit Total
-----------------------------------------
$ Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Millions 2001 2000 2001 2000
----------------------------------------------------------
Revenues 224.0 144.5 475.0 327.0
Direct Costs 35.0 24.0 106.9 80.6
----------------------------------------------------------
Gross Margin 189.0 120.5 368.1 246.4
----------------------------------------------------------
Geographic information
The following table sets out certain geographical information
relative to the Company:
Revenue For the For the For the For the
three three nine nine
month month month month
period period period period
$ ended ended ended ended
Millions Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
----------------------------------------------------------
Canada 98.1 81.5 274.7 215.9
United States 74.3 50.2 199.6 109.7
Other 0.6 0.4 0.7 1.4
==========================================================
173.0 132.1 475.0 327.0
----------------------------------------------------------
6. Related Party Information
The following transactions occurred in the normal course of
operations with BCE, the parent company, and other companies in the
BCE group subject to common control during the respective periods and
were measured at the exchange value:
For the For the For the For the
three three nine nine
month month month month
period period period period
$ ended ended ended ended
Millions Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
----------------------------------------------------------
Revenue (a) 46.9 32.4 128.8 81.6
Direct costs and
expenses 39.1 27.6 101.1 89.1
Interest expense on
convertible debenture
due to parent 2.4 2.5 7.1 5.3
----------------------------------------------------------
(a) Includes services for resale to third parties and for internal
use.
The balance sheet includes the following balances with BCE, the
parent company, and other companies in the BCE group subject to common
control:
$ As at As at
Millions Sept. 30, 2001 Dec. 31, 2000
----------------------------------------------------------
Accounts receivable 34.6 16.5
Accounts payable and
accrued liabilities 13.9 4.2
Convertible debenture due
to parent 139.5 129.0
Option on convertible
debenture due to parent 21.0 21.0
Long term debt 1.3 2.1
----------------------------------------------------------
7. Warrants From time to time, the Company enters into formal business arrangements for the use and distribution of certain technology solutions with strategic partners. Under the terms of such arrangements, the partners may acquire warrants to purchase shares of the Company. During the first quarter of 2001, warrants to purchase 1,000,000 common shares were acquired under such arrangements of which warrants convertible into 250,000 common shares vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) upon signature of the agreements and are exercisable at $73.55 per common share. The remaining balance will vest upon the attainment of certain contractual arrangements and the exercise price will be determined at the time of vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: . The warrants 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. five years after vesting. No amount has been recorded in the financial statements as a result of these arrangements. 8. Contingency contingency n. an event that might not occur. On April 26, 1996, First Health Group Corporation ("First Health") filed a civil complaint against BCE Emergis Corporation, a subsidiary of the Company, seeking injunctive relief injunctive relief n. a court-ordered act or prohibition against an act or condition which has been requested, and sometimes granted, in a petition to the court for an injunction. and damages of $29 million USD to $37 million USD based on claims of trademark infringement Trademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees (provided that such authorization was within the scope of the license). , false advertising, deceptive de·cep·tive adj. Deceptive or tending to deceive. de·cep  tive·ness n. trade practices, fraud,
interference with contract, interference with prospective economic
relations and unfair competition. First Health's principal
contention is that representatives of BCE Emergis Corporation made false
and misleading statements during contract negotiations with health care
providers in order to cause them to join the BCE Emergis Corporation
provider network.
On March 21, 2000, the U.S. District Court for the Northern District of Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. granted summary judgment in favor of upon the side of; favorable to; for the advantage of. See also: favor BCE Emergis Corporation on the false advertising claims and on April 10, 2000, the Court granted summary judgment in favor of BCE Emergis Corporation on the contractual interference and damages claims. An appeal of these court rulings has been decided by the Seventh Circuit Court of Appeals in favor of BCE Emergis Corporation on October 16, 2001. The Company believes that any appeal or judicial proceeding to reverse this ruling from the Court of Appeals which could be initiated by First Health is unlikely to succeed. |
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