BW Reaches a Record $9.9 Million in Revenues.Business Editors CALGARY, Alberta--(BUSINESS WIRE)--March 7, 2002 BW Technologies Ltd. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :BWT BWT Burrows Wheeler Transform (compression technology) BWT Boundary Waters Treaty (United States and Canada) BWT Basic Warrior Training BWT Bronchial Wall Thickness BWT Big White Truck .), a manufacturer of gas detection equipment for global safety today announced net earnings of $1,232,000 ($0.22 per share) for the three months ended January 31, 2002, an increase of 97% over the $624,000 ($0.11 per share) reported last year. Revenue during the current quarter reached $9,912,000, which is 37% above the prior year's third quarter figure. Earnings for the nine months ended January 31, 2002 were $2,882,000 ($0.51 per share) or 116% above last year's figure of $1,332,000 ($0.24 per share). Current nine months revenues were $27,279,000 or 46% above last year. A webcast on quarterly results will be held today at 3:00PM MST See micro systems technology. at http://www.newswire.ca/webcast/pages/BWTechnologies20020307/ "A key component of our current success has been the production improvements resulting from our new facility and the purchase of surface mount technology machinery, allowing us to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the strong results generated by our sales team. BW reached record levels of production during the month of January resulting in product shipments to customers worth $4.5 million. Key to this performance was the flexibility provided by manufacturing circuit board assemblies in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. compared to outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. this work," said Cody Slater slat·er n. 1. One employed to lay slate surfaces, as on roofs. 2. See pill bug. 3. See sow bug. Noun 1. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. at BW Technologies. MANAGEMENT DISCUSSION AND ANALYSIS
SUMMARY OF FINANCIAL PERFORMANCE
Three months ended
January 31
Percent
2002 2001 Change
Revenue $9,912,000 $7,212,000 +37%
Gross margin 4,794,000 2,974,000 +61%
Net Income 1,232,000 624,000 +97%
Earnings before interest,
taxes, depreciation and
amortization 2,485,000 1,364,000 +82%
Operating cash flow 1,830,000 1,066,000 +72%
Operating cash flow per
share .32 .19 +68%
Earnings per share
- Basic .22 .11 +100%
- Fully Diluted .20 .11 +82
Nine months ended
January 31
Percent
2002 2001 Change
Revenue $27,279,000 $18,706,000 +46%
Gross margin 13,418,000 8,070,000 +66%
Net Income 2,882,000 1,332,000 +116%
Earnings before interest,
taxes, depreciation and
amortization 6,240,000 3,388,000 +84%
Operating cash flow 4,589,000 2,668,000 +72%
Operating cash flow per
share .81 .48 +69%
Earnings per share
- Basic .51 .24 +113%
- Fully Diluted .48 .24 +100%
RESULTS OF OPERATIONS Revenue during the nine months ended January 31, 2002 was $27,279,000 which is 46% higher than the $18,706,000 generated during the first nine months of last year. It is also virtually equal to the revenue figure for all of last year. Current third quarter revenue reached $9,912,000, a new record and a 37% increase over the $7,212,000 recorded during the three months ended January 31, 2001. BW's sales growth is directly attributable to the success of the GasAlert line of products which now accounts for over one-half of total revenue. The line was introduced in the fall of 1999. It is comprised of four types of portable instruments with standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. operating and display characteristics. GasAlert instruments range from a disposable detector detector: see particle detector. designed to operate for 90 days to a unit which monitors four gases simultaneously and which maintains a datalog of gas concentrations encountered. The GasAlert Clip (CLassical IP) See Classical IP. 1. CLIP - Compiler Language for Information Processing. 2. CLIP - Common LISP in Parallel. 3. (programming, tool) CLiP - A documentation extractor by Eric W. produces the highest volume of sales within the line. This instrument is a single gas detector A gas detector is a device which detects the presence of various gases within an area, usually as part of a system to warn about gases which might be harmful to humans or animals. Gas detectors can be used to detect combustible, toxic, and oxygen gases. which is used to detect either hydrogen sulfide hydrogen sulfide, chemical compound, H2S, a colorless, extremely poisonous gas that has a very disagreeable odor, much like that of rotten eggs. It is slightly soluble in water and is soluble in carbon disulfide. , carbon monoxide carbon monoxide, chemical compound, CO, a colorless, odorless, tasteless, extremely poisonous gas that is less dense than air under ordinary conditions. It is very slightly soluble in water and burns in air with a characteristic blue flame, producing carbon dioxide; or oxygen deficiency. It operates for two years without maintenance. This means that all-in end user costs are held to about 50 cents per day, a decided advantage when compared to other instruments which require ongoing calibration calibration /cal·i·bra·tion/ (kal?i-bra´shun) determination of the accuracy of an instrument, usually by measurement of its variation from a standard, to ascertain necessary correction factors. and other maintenance. No-maintenance instruments are manufactured by competitors, however the Clip has several unique features which distinguish it from these units. The features include a full function self-test, two levels of alarm and an LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. status panel together with displays of alarm set-points, the most recent peak alarm and the time elapsed e·lapse intr.v. e·lapsed, e·laps·ing, e·laps·es To slip by; pass: Weeks elapsed before we could start renovating. n. since that alarm. A review of revenue by geographic region is also useful in analyzing operations. This is set out in the table below.
(thousands of dollars)
Three months Percent Nine months Percent
ended January 31 Change ended January 31 Change
2002 2001 2002 2001
-------------------------------------------------------
United States $4,839 $2,960 +63% $12,250 $7,961 +54%
Canada 2,174 2,175 +0% 6,319 5,508 +15%
International 1,386 863 +61% 4,640 2,553 +82%
Europe 1,513 1,214 +25% 4,070 2,684 +52%
-------------------------------------------------------
$9,912 $7,212 $27,279 $18,706
-------------------------------------------------------
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. accounted for 49% of third quarter revenue as BW continues to gain market share in that country. BW has long recognized the US as its largest and most accessible potential market. Accordingly, the sales organization in that country has been expanded as rapidly as possible consistent with high standards of professionalism professionalism the upholding by individuals of the principles, laws, ethics and conventions of their profession. and quality. A BW America sales and service office was established in Dallas in the fall of 2001 and regional sales managers sales manager n → gerente m/f de ventas sales manager n → directeur commercial sales manager sale n → are now deployed in most important American industrial areas. Similar expansion is being engineered in other markets with the result that substantial year over year gains have been registered in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and International sales divisions. The BW offices in Oxford are now a full-fledged service center and sufficient inventory is stocked at that location to provide 24 hour delivery throughout the Common Market area for most products. BW sales managers are located in England, Scotland, France and Germany. A regional sales office has been established in Dubai in the Middle East. This will enhance the continuity and permanence Permanence law of the Medes and Persians Darius’s execution ordinance; an immutable law. [O.T.: Daniel 6:8–9] leopard’s spots there always, as evilness with evil men. [O.T.: Jeremiah 13:23; Br. Lit. of BW's presence in that area. It is planned that other International offices will be established during the next fiscal year. Canada was the only region without quarterly growth compared to last year. A large portion of BW's 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. sales has been dependant upon Adj. 1. dependant upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, contingent upon, dependant on, dependent on, dependent upon, depending on, contingent upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger oil and gas activity. Low prices have depressed petroleum drilling activity with the result that BW's Canadian revenues were held to last year's levels. Gross margin, expressed as a percentage of sales, reached 49.2% for the nine months ended January 31, 2002 as compared to 43.1% for the same period last year. The improvement is attributable to a combination of factors. Increased volumes allowed fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). to be spread over a larger base, reducing per unit costs. Also, a number of efficiency improvements have been effected, the most important of which is the transfer of the electronic board population process from a third party contractor to BW's internal manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . Finally, lower prices were negotiated for a number of electronic components as worldwide demand for these items weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. .The third quarter gross margin percentage was 48.4%, a reduction of 3.2 percentage points from second quarter levels. One reason for this was a 7% decline in quarterly production which was an expected result of the December holiday season. This caused a reduction in gross margins because overhead costs overhead costs see fixed costs. remained relatively constant despite the decline. In addition, an engineering modification necessitated the revision of an existing stock of components of one product. Finally, a reduction in the pound sterling exchange rate predicated a quarter end translation loss of approximately $85,000. These are not 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. factors and an improvement in fourth quarter margins is expected. Selling, general and administrative expenses for the nine months ended January 31, 2002 were $7,736,000 a 52% increase over the $5,072,000 recorded during the first three quarters of fiscal 2001. 70% of the $2,664,000 increase resulted from increases in costs attributable to sales and marketing salaries, travel, tradeshows, literature and advertising. Third quarter selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. decreased by $379,000 from second quarter levels. The 15% reduction was mostly a result of the fact that the third quarter is relatively light in trade show activity, resulting in lower travel, exhibition space rental, advertising and other associated activities. FINANCIAL CONDITION AND CASH FLOWS Operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. reached $1,830,000 for the third quarter and $4,589,000 for the first three quarters of the year. Both of these amounts are approximately 70% higher than the comparable figures last year. The higher cash generation is a direct result of increased operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . 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 were maintained at levels which represent 58 days of sales as BW's credit and collections team continued to work efficiently. A $248,000 decrease in inventories was effected during the third quarter. This reflected a $689,000 increase in finished goods and work in progress as the company maintained its policy of maintaining stocks at levels which allow fast delivery. On the other hand, the inventory of parts and sub-assemblies was reduced by $937,000. The reduction was attributable partly to the initiation of a policy which requires vendors, rather than BW to maintain inventory. It is also partly a result of setting up an in-house electronic board population operation. This has dramatically increased the flexibility of production scheduling, thereby reducing inventory requirements. Product development costs were maintained at 6% of sales for both the quarter and year to date. BW is continuing its aggressive program of new product design and existing product enhancement. The GasAlert Max Datalogger was recently announced and the introduction of a small four gas unit is imminent. Capital asset additions were $266,000 during the quarter, a significant reduction from the previous two quarters. The major current addition was an automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. inventory storage system for finished goods. This has reduced the inventory space required for these products from 495 to 109 square feet. BW has one planned purchase of additional electronic board manufacturing equipment during the fourth quarter. This will amount to approximately $100,000 and will complete the infrastructure plan for supporting near term growth projections. Future foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. needs are restricted to ongoing expenditures for new product moulds and for additional computer equipment. BW's positive operating cash flow has resulted in a strong financial position. The company continues to maintain a healthy cash reserve of $2,427,000 at January 31. BW also has an unused $3 million bank operating line of credit. The following table summarizes the company's financial position.
(thousands of dollars except ratios)
January 31, October 31, July 31, April 30,
2002 2001 2001 2001
----------------------------------------------
Cash $2,427 $1,896 $2,352 $2,727
Working capital $14,450 $13,247 $12,256 $12,100
Working capital ratio 4.38 3.88 3.83 4.10
Quick ratio 2.23 1.85 1.89 2.40
Shareholders' equity 18,990 $17,545 $16,385 $15,456
Debt equity ratio 0.25 0.29 0.26 0.25
debt includes debt financing and current liabilities
Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in the Quarterly Report and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of BW to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and assumptions include the following: general economic and business conditions, changing foreign exchange rates, actions by government authorities, rapid technology development and changes, industry pricing pressures, capacity and other trends and misjudgments in the course of preparing forward-looking statements.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Thousands of Dollars)
January 31 April 30
2002 2001
-------------------------
ASSETS
Current Assets
Cash and short-term
investments $ 2,427 $ 2,727
Accounts Receivable 7,089 6,628
Inventory (note 2) 8,671 5,887
Prepaid expenses
and deposits 356 301
Investment tax credit
receivable 180 460
-------------------------
18,723 16,003
Other assets 37 11
Deferred product
development costs 3,794 3,099
Capital assets 3,252 2,026
-------------------------
$25,806 $21,139
-------------------------
LIABILITIES
Current liabilities
Accounts payable and
accrued liabilities $ 3,319 $ 3,351
Income taxes payable 796 542
Current portion of
long-term debt (note 3) 158 10
-------------------------
4,273 3,903
Long-term debt (note 3) 563 8
Future income taxes 1,980 1,772
-------------------------
$ 6,816 $ 5,683
SHAREHOLDERS' EQUITY
Capital stock (note 4) 11,874 11,222
Retained earnings 7,116 4,234
-------------------------
18,990 15,456
-------------------------
$25,806 $21,139
-------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
(Thousands of Dollars)
Nine month period ended January 31 2002 2001
-------------------------
Retained earnings -
Beginning of period $ 4,234 $ 1,525
Net earnings for the period 2,882 1,332
-------------------------
Retained earnings -
End of period $ 7,116 $ 2,857
-------------------------
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Thousands of Dollars Except Per Share Amounts)
Three Months ended Nine Months ended
January 31 January 31
2002 2001 2002 2001
--------------------------------------------
REVENUE $ 9,912 $ 7,212 $27,279 $18,706
Cost of sales 5,118 4,238 13,861 10,636
--------------------------------------------
Gross margin 4,794 2,974 13,418 8,070
--------------------------------------------
EXPENSES
Selling, general &
administrative 2,497 1,741 7,736 5,072
Amortization of
product development
costs 314 302 941 905
Interest 12 - 16 24
--------------------------------------------
2,823 2,043 8,693 6,001
--------------------------------------------
Net income before tax 1,971 931 4,725 2,069
Income taxes (739) (307) (1,843) (737)
--------------------------------------------
NET INCOME $ 1,232 $ 624 $ 2,882 $ 1,332
--------------------------------------------
EARNINGS PER COMMON SHARE
Basic $ 0.22 $ 0.11 $ 0.51 $ 0.24
Fully diluted $ 0.20 $ 0.11 $ 0.48 $ 0.24
--------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
Three Months ended Nine Months ended
January 31 January 31
2002 2001 2002 2001
--------------------------------------------
Cash provided by (used in)
OPERATING ACTIVITIES
Net Income $ 1,232 $ 624 $ 2,882 $ 1,332
Items not affecting cash
Depreciation 188 131 558 390
Amortization of
product development
costs 314 302 941 905
Amortization of other
assets - 7 - 21
Future income taxes 96 2 208 20
--------------------------------------------
1,830 1,066 4,589 2,668
Net change in non-cash
working capital (571) (119) (2,798) (985)
--------------------------------------------
1,259 947 1,791 1,683
--------------------------------------------
FINANCING ACTIVITIES
Operating loan - - - (19)
Long-term debt (40) (4) 703 (22)
Issuance of
capital stock 214 64 652 341
--------------------------------------------
174 60 1,355 300
--------------------------------------------
INVESTING ACTIVITIES
Purchase of
capital assets (266) (169) (1,784) (672)
Purchase of other
assets (5) (1) (26) (14)
Additions to deferred
product development
costs (631) (452) (1,636) (1,291)
--------------------------------------------
(902) (622) (3,446) (1,977)
--------------------------------------------
Increase (decrease)
in cash 531 385 (300) 6
Cash and short-term
investments,
beginning of period 1,896 249 2,727 628
--------------------------------------------
Cash and short-term
investments, end of
period $ 2,427 $ 634 $ 2,427 $ 634
--------------------------------------------
Notes to 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 (unaudited) (tabular tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. amounts are in thousands 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 as noted) 1. ACCOUNTING POLICIES a) Basis of presentation The Interim Consolidated Financial Statements of BW Technologies Ltd. ("the company") have been prepared by management 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 accounting principles generally accepted in Canada. Certain information and disclosures normally required to be included in notes to annual consolidated financial statements has been condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. or omitted. The Interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. in the company's Annual Report for the year ended April 30, 2001. b) Significant accounting policies The Interim Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. as the Consolidated Financial Statements for the year ended April 30, 2001. c) Comparative figures Certain of the comparative amounts have been reclassified to conform with the presentation adopted in the current period.
2. INVENTORY
January 31, 2002 April 30, 2001
$ $
Parts 3,643 3,189
Sub-assemblies 719 792
Work-in-progress and
finished goods 4,309 1,906
-------------------------
8,671 5,887
-------------------------
3. LONG-TERM DEBT
January 31, 2002 April 30, 2001
$ $
Bank loan (i) 713 0
Capital leases 8 18
------------------------
721 18
Less: Current portion (158) (10)
------------------------
563 8
i) The company entered into a long-term bank loan during the quarter. The loan bears interest at prime plus 0.5% and is secured by a chattel mortgage A transfer of some legal or equitable right in Personal Property as security for the payment of money or performance of some other act. Chattel mortgages have generally been superseded by other types of Secured Transactions under the Uniform Commercial Code on specific assets along with a general security agreement. The loan matures in October, 2006. 4. CAPITAL STOCK a) Authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: Unlimited common shares and unlimited preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. issuable in series at the discretion of the directors of the company.
b) Issued
Number Amount
Common Shares $
Balance - April 30, 2001 5,582,915 11,222
Exercise of stock options 148,438 652
---------------------
Balance - January 31, 2002 5,731,353 11,874
---------------------
5. FINANCIAL INSTRUMENTS The fair values of monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. are not considered to be materially different from their stated values Stated Value A value that, instead of being par value, is assigned to a corporation's stock for accounting purposes. Stated value has no relation to market price. Notes: , due to the relatively short period to maturity of all significant balances. Hedging instruments The company often enters into forward exchange option contracts to protect its future Canadian dollar earnings and cash flows from the potential adverse impact of unfavourable rates of exchange of U.S. dollars and pounds sterling into Canadian dollars. The forward contracts reduce fluctuations in sales revenues by locking in exchange rates on the portion of its sales covered by the contracts. While forward contracts reduce the risk of exposure to adverse change in exchange rates, they also reduce the potential benefit of favourable changes in exchange rates. At January 31, 2002, the company had entered into a series of risk reversal Risk Reversal 1. In commodities trading, it is a hedge strategy that consists of selling a call and buying a put option. This strategy protects against unfavorable, downward price movements but limits the profits that can be made from favorable upward price movements. 2. options covering US$900,000 and 600,000 pounds sterling expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. July 30 and October 30, 2002 respectively. Unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on outstanding forward contracts and options are not recorded in the financial statements until completion of the underlying transactions. The Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. has neither approved nor disapproved of the information contained herein. |
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