BCE Emergis Posts Record Fourth Quarter and Year-End Results.Business Editors MONTREAL--(BUSINESS WIRE)--Jan. 22, 2002 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 posts record fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results:
- Q4 and Year-end revenues, EBITDA and baseline earnings at
record levels
- Breakthrough agreements with largest U.S. financial
institution players and industry-shaping initiatives in the
eHealth industry are Year 2001 highlights.
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 fourth quarter and fiscal 2001. Revenue for the fourth quarter ended December December: see month. 31, 2001 totaled $181.4 million, a 29% increase from the $141.0 million mark for the corresponding quarter of 2000, which both include revenue from acquired or exited activities. 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 (1) amounted to $35.2 million for the quarter, up 47% from the $24.0 million a year earlier. Baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version earnings (2) for the quarter rose 97%, coming in at $17.9 million, or $0.18 per share, compared to $9.1 million, or $0.10 per share for the same period last year. The company recorded a net loss of $101.3 million, or $1.03 per share for the last quarter of the year, compared to a loss of $72.8 million or $0.78 per share for the corresponding period in 2000. For fiscal 2001 ended December 31, 2001, revenue reached an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high of $656.4 million compared to $468.0 million in the previous year, a 40% increase. EBITDA (1) climbed to $126.8 million, significantly higher than the $74.8 million registered twelve months earlier, a 70% jump. Baseline earnings (2) climbed to $58.6 million or $0.62 per share, close to double the $30.6 million or $0.33 per share recorded in 2000. When acquisition-related amortization costs, one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges and future income tax benefits are included, BCE Emergis registered a net loss of $414.4 million or $4.35 per share compared to a net loss of $279.3 million or $3.04 per share in 2000. Finally, cash and temporary cash investments at the end of the year totaled $183.3 million. "All things considered All Things Considered (ATC) is a news radio program in the United States, broadcast on the National Public Radio network. It was the first news program on the network, and is broadcast live worldwide through several outlets. , 2001 was a stellar and outstanding year for Emergis. We grew our business, extended market leadership positions and gained considerable financial strength in a challenging and uncertain economy," said Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. Edwards, Vice-Chairman vice-chairman n → vicepresidente m vice-chairman vice irreg n → vice-président(e) vice-chairman vice- n 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. "Financially, we have never been stronger: our revenue and baseline earnings are at their highest-ever levels; our cash position is strong and we are now virtually debt free. In the U.S., as has been the case 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 , Emergis is rapidly becoming synonymous with synonymous with adjective equivalent to, the same as, identical to, similar to, identified with, equal to, tantamount to, interchangeable with, one and the same as industry-shaping 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. solutions, a trend which has contributed to a hefty heft·y adj. heft·i·er, heft·i·est 1. Of considerable weight; heavy. 2. Rugged and powerful. See Synonyms at heavy. 3. increase in our U.S. sourced revenue." Christian Christian flees the City of Destruction. [Br. Lit.: Pilgrim’s Progress] See : Escape Christian travels to Celestial City with cumbrous burden on back. [Br. Lit. Trudeau Tru·deau , Pierre Elliott 1919-2000. Canadian prime minister (1968-1979 and 1980-1984) whose administration was marked by efforts to contain the French separatist movement in Quebec and by the Constitution Act of 1982, which granted Canada full , President & COO (Cell Of Origin) See mobile positioning. , continued, "From an operations perspective, this was our best year yet. Our three business units performed strongly, adding industry-leading customers and market-defining projects to their roster, such as the eClaims exchange, the Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. Workplace and Safety Insurance Board (WSIB WSIB Workplace Safety and Insurance Board WSIB Washington State Investment Board ) undertaking and the e-payment initiative with Visa U.S.A. We aggressively leveraged the power of our electronic 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. solution to make noticeable inroads inroads Noun, pl make inroads into to start affecting or reducing: my gambling has made great inroads into my savings inroads npl to make inroads into [+ in corporate America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , mainly through our financial institution customers and to launch Emergis(R) e-Premiums, our new electronic group insurance premium statement service for the health insurance industry." Business outlook The Company has performed extremely well to date and has generated a high percentage of its revenue from a 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. transaction base. However, the prevailing economic climate and uncertain conditions create business risks. In particular, the Company will still have to grow its recurring-revenue base, as well as continue to sign agreements with new customers. In addition, the adoption of new technology is a key element in growing the revenue, and against the backdrop Backdrop may refer to:
Other financial highlights For the 4th quarter which ended December 31, 2001, revenue from each of the business units was as follows:
- The eHealth business unit registered $83.0 million, up from
$65.5 million in the 4th quarter of 2000.
- The Canadian business unit reached $82.7 million, up from
$67.8 million in the final quarter of 2000.
- U.S. business unit came in at $15.7 million, compared to
$7.7 million in the previous year.
- For each of the eHealth 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 activities.
- U.S.-sourced revenue remained relatively unchanged over the
fourth quarter of last year.
- Emergis recorded higher transaction revenue on a
quarter-over-quarter basis, for the 41st consecutive quarter.
- Gross margin, at 77.0%, was virtually constant compared to the
fourth quarter of 2000.
- EBITDA (1) margin at 19.4% was better than the 17.0% recorded
last year.
- The net loss of $101.3 million or $1.03 per share was greater
than the corresponding period last year, primarily due to
increases in taxes and depreciation in 2001, and to the inclusion
of a one-time gain that was recorded in 2000.
- Operations generated cash flow of $62.9 million, considerably
higher than $47.3 million for the corresponding quarter in 2000.
- Accounts receivable stood at 56 days outstanding for the quarter,
much better than the 65 days of the preceding quarter in 2001.
- BCE Emergis successfully tapped the Canadian capital market,
issuing $250 million dollars in common shares, and applied part
of the net proceeds to the reimbursement of the $150 million
convertible debenture held by BCE. The Company had $183.3 million
in cash and temporary cash investments at December 31, 2001.
For the fiscal year ended December 31, 2001:
- Revenue totaled $656.4 million:
- The eHealth business unit accounted for $307.0 or 47% of
total revenue compared to $209.9 million or 45% in 2000;
- The Canadian business unit recorded $296.4 million or 45%
of total revenue compared to $234.3 million or 50% in
2000
- The U.S. business unit generated $53.0 million or 8% of
total revenue versus $23.8 million or 5% in 2000.
- Revenue sourced from the U.S. rose to 41% compared to 36% for
last year, evidence of the Company's growing success in
expanding its U.S. business.
- The net loss, which totaled $414.4 million compared to a loss of
$279.3 million in 2000, reflects increases in depreciation,
amortization and the write-down of marketable securities and
other assets. The write-down of $41.3 million results mainly from
the decline in market value of the Descartes Systems Group
shares.
- Cash flow from operations totaled $105.7 million, up
substantially from $46.9 million at the end of 2000.
- At year-end, Emergis had working capital of $145.8 million
compared to $133.0 million on December 31, 2000.
- Recurring revenue for the twelve-month period remained in the
targeted 75-80% range.
- Over the twelve-month period, Emergis invested 9% of revenue in
research and development, and in particular in its e-Invoicing
and web-claims exchange projects, compared to 6% last year.
Year 2001 Business highlights The eHealth eHealth (also written e-health) is a relatively recent term for healthcare practice which is supported by electronic processes and communication. The term is inconsistently used: some would argue it is interchangeable with health care informatics, while others use it in the Solutions Group had a very successful year as it began to deliver on the tremendous opportunity of integrating ebusiness See e-business. into the health insurance and health management industry. The group drove the development of an industry-leading electronic claims exchange (eClaims) that presently has two major insurers as customers - Clarica Clarica can refer to:
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 further expanded its national reach through several key industry-shaping agreements. It is now a core provider to the Federal Government's Secure Channel initiative and to the Ontario government's corresponding electronic initiative to make government services available online. Additionally, Emergis became an important enabler of 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. electronic communities: e-route and Procuron, which are both operated by Emergis, started up their nation-wide nation-wide adj → diffuso/a in tutto il paese adv → in tutto il paese service; an agreement was finalized See finalization. with Agri-eBusiness Group Inc. (AEBG), an e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. initiative created by four major grain and oilseeds industry groups in Ontario; and the Company launched the Emergis(R) e-Lending Definitions of eLending 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:
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. through its possibility to cater to over half 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 . Finally, Emergis' ability to imprint im·print tr.v. im·print·ed, im·print·ing, im·prints 1. To produce (a mark or pattern) on a surface by pressure. 2. To produce a mark on (a surface) by pressure. 3. the Canadian e-commerce landscape was dramatically increased through a series of agreements 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 , to whom Emergis will provide advanced web-based services in the areas of security, customer care and ordering/invoicing/payment for its business customers. The U.S. Business unit, which was in start-up Start-up The earliest stage of a new business venture. mode, made tremendous inroads in 2001, as evidenced by its revenue growth of 123%. At the end of 2001, this unit, which mainly targets the financial institutions and their business customer groups, counted as customers and distribution partners for its top-ranking top-ranking adj → de alto rango top-ranking adj → très haut placé(e) top-ranking top adj [official] → 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 presentment: see indictment. and payment solution (EIPP EIPP Electronic Invoice Payment and Presentment EIPP Electronic Invoice Presentment and Payment ), three of the top five financial institutions - Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. , J.P. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Chase and Bank One. On the strength of this solution and its deep expertise in EIPP, Emergis partnered with Visa U.S.A. to expand the credit card organization's electronic payment capabilities, and gained several Fortune 100 customers such as Equifax  This article is subject to manipulation attempts by the described entity using multiple user names. Please be critical of edits and discussion page entries.Equifax, Inc. and PPG Industries PPG Industries (NYSE: PPG) was founded in 1883 as the Pittsburgh Plate Glass Company. PPG is an American manufacturer of glass and chemical products, including automotive safety glass. . Additional financial information is available on the BCE Emergis web site at www.emergis.com.
N.B: (1) EBITDA is defined as earnings before interest, taxes,
depreciation and amortization.
(2) Baseline earnings are defined as reported net earnings, in
accordance with Generally Accepted Accounting Principles,
before "Acquisition-related costs" (amortization of
intangibles and the option on convertible debenture),
one-time gains and charges, and future income tax benefits.
BCE Emergis is a premier e-business service 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 Having to do with the Web. A Web-centric view of something means that the application or system has been designed for the Web. See Webified. , 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 North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. 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 JANUARY January: see month. 22, 2002 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: Sylvia Sylvia may refer to:
n. 1. (Chem.) A yellow crystalline substance ( fustic rodby> (Chlorophora tinctoria syn. Vice President, Corporate Communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. (514) 868-2358 e-mail: sylvia.morin@emergis.com For investors: John Gutpell Director, Investor Relations Investor relations The process by which the corporation communicates with its investors. (514) 868-2232 e-mail: john.gutpell@emergis.com
Consolidated Statements of Earnings
(millions
of dollars, For the three For the three
except loss month period month period For the For the
per share ended ended year ended year ended
and number December 31, December 31, December 31, December 31,
of shares) 2001 2000 2001 2000
----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (audited)
Revenue 181.4 141.0 656.4 468.0
Direct costs 41.7 31.4 148.6 112.0
----------- ---------- ---------- ---------
Gross margin 139.7 109.6 507.8 356.0
----------- ---------- ---------- ---------
Expenses
Operations 49.1 43.8 178.3 148.1
Sales and marketing 22.1 16.9 77.1 53.7
Research and
development 16.5 10.0 58.3 28.0
General and
administrative 16.8 14.9 67.3 51.4
----------- ---------- ---------- ---------
104.5 85.6 381.0 281.2
----------- ---------- ---------- ---------
Earnings before
under-noted items 35.2 24.0 126.8 74.8
Depreciation 13.2 10.3 45.4 28.0
Amortization of
intangibles 97.1 97.9 407.1 317.7
Interest income (0.7) (0.5) (4.7) (5.6)
Interest on
long-term debt 2.3 2.2 12.2 10.8
Accretion on
convertible
debenture due
to parent,
related to the
option 10.5 8.1 21.0 25.2
Writedown of
marketable
securities
and other assets
(Note 3) 2.1 - 41.3 -
Gain on sale of
exited activities,
net - (16.2) - (16.2)
Other (0.5) (1.0) (2.2) 0.1
----------- ---------- ---------- ---------
Net loss before
income taxes (88.8) (76.8) (393.3) (285.2)
Income taxes
Current 3.0 3.9 17.5 10.9
Future 9.5 (7.9) 3.6 (16.8)
----------- ---------- ---------- ---------
Net loss (101.3) (72.8) (414.4) (279.3)
=========== ========== ========== =========
Basic loss per
share ($) (1.03) (0.78) (4.35) (3.04)
Weighted average
number of shares
used in computing
basic loss
per share 98,049,409 93,566,556 95,186,035 91,743,796
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 For the
year ended year ended
(millions of dollars) December 31, 2001 December 31, 2000
(unaudited) (audited)
-------------------------------------------------------------
Deficit - beginning of year (372.0) (124.1)
Adjustment related to the
adoption of new accounting
recommendation - 31.4
Net loss (414.4) (279.3)
------------- ----------------
Deficit - end of year (786.4) (372.0)
------------- ----------------
The accompanying notes are an integral part of the Interim
Consolidated Financial Statements.
Consolidated Balance Sheets
As at As at
December 31, December 31,
(millions of dollars) 2001 2000
(unaudited) (audited)
------------------------------------------------------------
ASSETS
Current
Cash and temporary cash
investments 183.3 92.2
Marketable securities
(market value $3.1M
as at December 31, 2001 and
$67.9M as at December 31, 2000) 1.9 67.9
Accounts receivable 98.6 76.4
Future income taxes 5.6 7.5
Other 9.6 37.6
------------- ------------
299.0 281.6
Capital assets 158.7 152.3
Goodwill, net 490.6 737.8
Future income taxes 68.7 73.4
Other assets 89.9 71.2
------------- ------------
1,106.9 1,316.3
LIABILITIES
Current
Accounts payable and accrued
liabilities 100.2 99.9
Deferred revenue 12.3 17.4
Deferred credits 12.0 12.0
Long-term debt 28.7 19.3
------------- ------------
153.2 148.6
Deferred credits 1.9 13.8
Long-term debt 36.9 29.9
Convertible debenture due
to parent - 129.0
------------- ------------
192.0 321.3
------------- ------------
SHAREHOLDERS' EQUITY (Note 4)
Option on convertible debenture
due to parent - 21.0
Capital stock 1,596.0 1,303.7
Contributed Surplus 46.2 25.2
Deficit (786.4) (372.0)
Foreign currency translation
adjustment 59.1 17.1
------------- ------------
914.9 995.0
------------- ------------
1,106.9 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
three three
month month For the For the
period period year year
(millions of ended ended ended ended
dollars) December December December December
31, 2001 31, 2000 31, 2001 31, 2000
-----------------------------------------------------------------
(unaudited)(unaudited)(unaudited)(audited)
Operating activities
Net loss (101.3) (72.8) (414.4) (279.3)
Depreciation and
amortization 110.3 108.2 452.5 345.7
Accretion on convertible
debenture due to parent,
related to the option 10.5 8.1 21.0 25.2
Writedown of marketable
securities and other
assets 2.1 - 41.3 -
Future income taxes 9.5 (11.4) 3.6 (16.8)
Gain on sale of exited
activities - (16.2) - (16.2)
Other (4.3) 0.1 (1.9) -
Changes in working capital 36.1 31.3 3.6 (11.7)
-------- ------- --------- --------
Cash flows from operating
activities 62.9 47.3 105.7 46.9
-------- ------- --------- --------
Investing activities
Additions to capital
assets (35.7) (12.3) (57.0) (53.8)
Acquisitions (13.6) - (59.2) (810.6)
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
Proceeds on sale of
marketable securities 4.8 - 26.0 -
Loan receivable (12.0) - (12.0) -
Advance to a company
under common control - 0.1 - (2.2)
Note receivable from
former majority
shareholder of UP&UP - - - (11.6)
Settlement of note
payable to former
majority shareholder
of UP&UP - - (1.5) -
Proceeds on exited
activities - net of
transaction costs - 7.7 - 7.7
-------- ------- --------- --------
Cash flows used for
investing activities (56.5) (4.5) (102.9) (823.1)
-------- ------- --------- --------
Financing activities
Issue of convertible
debenture due to parent - 150.0 - 300.0
Issue of long-term debt 8.0 - 15.7 -
Repayment of convertible
debenture due to parent (150.0) (150.0) (150.0) (150.0)
Repayment of long-term
debt (10.1) (3.9) (30.4) (16.3)
Bank advances - - - (5.6)
Issue of common shares 247.1 2.2 252.6 657.8
-------- ------- --------- --------
Cash flows from (used for)
financing activities 95.0 (1.7) 87.9 785.9
-------- ------- --------- --------
Foreign exchange gain on
cash held in foreign
currencies - 0.7 0.4 0.8
Cash and cash equivalents
Increase 101.4 41.8 91.1 10.5
Balance, beginning of
period 81.9 50.4 92.2 81.7
-------- ------- --------- --------
Balance, end of period 183.3 92.2 183.3 92.2
-------- ------- --------- --------
Supplemental disclosure
of cash flow information
Interest paid 4.6 2.5 14.5 6.6
Income taxes paid 4.4 7.3 10.7 9.3
The accompanying notes are an integral part of the Interim
Consolidated Financial Statements.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As at December 31, 2001
(In millions of Canadian dollars except share data)
(unaudited)
These interim consolidated financial statements have been prepared
in accordance with Canadian generally accepted accounting principles,
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
In July 2001, the Canadian Institute of Chartered Accountants
("CICA") issued Handbook section 1581 "Business Combinations" and
Handbook section 3062 "Goodwill and other intangible assets".
Under the new rules, goodwill and certain intangible assets with
an indefinite 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). Identifiable
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 annually.
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 earnings approach for determining
the dilutive effect of options and warrants issued. In addition, this
section requires that a reconciliation of the numerator and
denominator be disclosed.
For the three-month period ended
December 31, 2001
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss attributable to
common shareholders (101.3) 98,049,409 (1.03)
----------------------------------------------------------------
December 31, 2000
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss attributable to
common shareholders (72.8) 93,566,556 (0.78)
---------------------------------------------------------------
For the year ended
December 31, 2001
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss attributable to
common shareholders (414.4) 95,186,035 (4.35)
---------------------------------------------------------------
December 31, 2000
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss attributable to
common shareholders (279.3) 91,743,796 (3.04)
---------------------------------------------------------------
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 For the year
period ended ended
--------------------------------------------------------------------
Dec. 31, Dec. 31, Dec. 31, Dec.31,
2001 2000 2001 2000
--------------------------------------------------------------------
Number of Number of Number of Number of
Shares Shares Shares Shares
---------------------------------------------------------------
Convertible debenture
due to
parent (a) - 1,273,344 - 981,389
Options (a) 5,009,600 3,364,517 4,368,996 3,038,765
Warrants (a) 1,650,000 - 1,400,685 -
Common shares to be
issued related to
acquisitions 1,909,507 - 1,320,178 -
--------------------------------------------------------------------
(a) Incremental 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 I, LLC, wholly-owned subsidiary of
Bank of America, N.A., for $8.5 million USD; $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) was allocated to goodwill.
In July 2001, the Company acquired the assets of ProCure.Com, a
technology provider of supplier enablement applications in the
Province of Ontario, Canada for a total cash consideration of $5.9
million. The Company also incurred transaction costs 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 date of acquisition.
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"), a privately held company
involved in health care cost management in the state of Wisconsin 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 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.
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 to goodwill 44.2
-------------
48.6
=============
3. Write down of marketable securities and other assets
During the year ended December 31, 2001, the market value of
certain marketable securities was $33.1 million below their carrying
value. As a result, a write-down of $33.1 million was recorded in the
Consolidated Statement of Earnings to reflect this unrealized loss in
the market value of The Descartes Systems Group Inc. for the year
ended December 31, 2001. 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 services in the
transportation industry.
During the year ended December 31, 2001, a provision of
approximately $5.4 million was recorded on certain other current
assets to reflect an impairment in their net realizable value.
We also recorded a net loss on the disposal of certain marketable
securities during the year ended December 31, 2001.
4. Equity Components
The stated capital stock as at December 31, 2001 is detailed as
follows:
$
Number Millions
------------------------
Balance beginning of year 93,651,603 1,303.7
Issue of common shares (a) 583,598 6.0
Issue of common shares (b) 146,672 3.9
Issue of common shares (c) 455,676 5.7
Issue of common shares (d) 2,600,000 100.8
Issue of common shares (e) 3,870,968 150.0
Share issue costs (f) - (4.4)
------------------------
101,308,517 1,565.7
------------------------
Common shares to be issued (g) 30.3
--------
1,596.0
========
Contributed Surplus (h)
Balance, beginning of year 25.2
Unexercised conversion option 21.0
--------
Balance, end of year 46.2
========
(a) 583,598 stock options were exercised to purchase 583,598 common
shares for cash consideration of $5,962,178.
(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) 2,600,000 common shares were issued for $100,750,000 in cash in
connection with the November 15, 2001 offering to the public.
(e) 3,870,968 common shares were issued for $150,000,000 in cash to
BCE in connection with the November 15, 2001 offering.
(f) Share issue costs in the amount of $4,393,856 were in connection
with the November 15, 2001 offering.
(g) The number of shares to be issued in connection with the AHC
acquisition as described in note 2 is not determinable at this
time.
(h) The increase in contributed surplus represents the amount of the
unexercised conversion option on the BCE convertible debenture
repaid with the proceeds of the issuance and the sale of the
3,870,968 common shares to BCE.
Debenture:
The convertible debenture due to parent in the amount of
$150,000,000 was repaid to BCE in full with the proceeds
generated from the issuance of 3,870,968 common
shares to BCE. -
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 5,052,783 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
---------------------------------------------------------------
$
Millions Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
---------------------------------------------------------------
Revenues 82.7 67.8 15.7 7.7
Direct Costs 25.8 23.3 1.5 2.8
Gross Margin 56.9 44.5 14.2 4.9
----------------------------------------------------------------
e-Health Solutions
Group
Business Unit Total
---------------------------------------------------------------
$
Millions Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
---------------------------------------------------------------
Revenues 83.0 65.5 181.4 141.0
Direct Costs 14.4 5.3 41.7 31.4
Gross Margin 68.6 60.2 139.7 109.6
---------------------------------------------------------------
For the year ended
---------------------------------------------------------------
Canada USA
Business Unit Business Unit
---------------------------------------------------------------
$
Millions Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
---------------------------------------------------------------
Revenues 296.4 234.3 53.0 23.8
Direct Costs 96.1 78.2 3.1 4.6
Gross Margin 200.3 156.1 49.9 19.2
---------------------------------------------------------------
e-Health Solutions
Group
Business Unit Total
---------------------------------------------------------------
$
Millions Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
---------------------------------------------------------------
Revenues 307.0 209.9 656.4 468.0
Direct Costs 49.4 29.2 148.6 112.0
Gross Margin 257.6 180.7 507.8 356.0
---------------------------------------------------------------
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 year year
month month ended ended
period period Dec. 31, Dec. 31,
ended ended 2001 2000
$ Dec. 31, Dec. 31,
Millions 2001 2000
---------------------------------------------------------------
Canada 110.8 85.1 385.5 297.8
United States 70.6 55.4 270.2 168.3
Other - 0.5 0.7 1.9
===============================================================
181.4 141.0 656.4 468.0
---------------------------------------------------------------
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 year year
month month ended ended
period period Dec. 31, Dec. 31,
ended ended 2001 2000
$ Dec. 31, Dec. 31,
Millions 2001 2000
---------------------------------------------------------------
Revenue (a) 76.6 41.0 205.4 122.6
Direct costs and
expenses 54.6 28.1 155.7 117.2
Interest expense on
convertible debenture
due to parent 1.4 2.6 8.5 7.9
---------------------------------------------------------------
(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 Dec. 31, 2001 Dec. 31, 2000
-------------------------------------------------------------------
Accounts receivable 23.0 16.5
Accounts payable and accrued liabilities 16.7 4.2
Convertible debenture due to parent - 129.0
Option on convertible debenture
due to parent - 21.0
Long term debt 1.1 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 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. The warrants expire five years after vesting. No amount has
been recorded in the financial statements as a result of these
arrangements.
8. Contingency
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 and damages of $29 million
USD to $37 million USD based on claims of trademark infringement,
false advertising, deceptive 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 granted summary judgment in favour of BCE Emergis
Corporation on the false advertising claims and on April 10, 2000, the
Court granted summary judgment in favour 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 favour 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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