COGNICASE Announces Record Fourth Quarter, 12-Month Results; Q4 and 12-Month Net Earnings Both Increase More Than 12 Times.MONTREAL--(BUSINESS WIRE)--Nov. 19, 1998--(NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :COGIF) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :COG.) (All amounts are expressed in US$) COGNICASE Inc. (NASDAQ:COGIF) today announced record results for the fourth quarter and 12 months ended September September: see month. 30, 1998. -0- Financial Highlights US$000 except EPS 12 months 11 months 3 months 2 months Period Ended Sept. 30 1998 1997 1998 1997 Revenues 59,116 6,563 24,726 1,603 Operating Profits 10,618 870 4,665 302 Net Earnings 8,471 697 2,890 227 Earnings per Share(i) 0.56 0.10 0.20 0.03 (i) U.S. GAAP, fully diluted, excluding FX gains For the 12 months ended September 30th, revenue increased ninefold ninefold Adjective 1. having nine times as many or as much 2. having nine parts Adverb by nine times as much or as many Adj. 1. to $59,116,000 from $6,563,000 last year. Net earnings increased 12 times to $8,471, or $0.56 per common share (excluding gains on foreign exchange), compared to $697,000, or $0.10 per common share in 1997. It should be noted that the 1997 fiscal year was only 11 months long because of a change in the 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. from October October: see month. 31 to September 30. For the last three months ended September 30, 1998, revenues rose fifteenfold to $24,726,000 from $1,603,000 in the fourth quarter a year ago. Net earnings in the fourth quarter of this year increased 12 times to $2,890,000, or $0.20 per common share (excluding gains on foreign exchange), from $227,000, or $0.03 per common share, for the fourth quarter last year. The fourth quarter of 1997 was only two months long because of the shortened short·en v. short·ened, short·en·ing, short·ens v.tr. 1. To make short or shorter. 2. fiscal year. "These very positive numbers in 1998 show that COGNICASE has been able to rapidly expand while still increasing net profits and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ," said Ronald Brisebois, President and Chief Executive Officer of COGNICASE. "We have grown this Company from a niche player focused on conversion software, including Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 solutions, into a global player in the total information technology market with offices across 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. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). as well as Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. ."
Mr. Brisebois added that the strong growth in COGNICASE's revenue and earnings in fiscal 1998 was attributable to both internal and external growth. "The companies acquired in the past fiscal year are providing significant revenues to COGNICASE in the areas of consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , systems integration, 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. and business solutions - demonstrating the positive effects of COGNICASE's strategy to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. operations and to maximize the cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. opportunities between its divisions," he said. "Approximately 20 percent of our fourth quarter 1998 revenues was related to Y2K contracts." COGNICASE's revenues in the fourth quarter included a full 3-month contribution from consulting-firm, Marinbridge, which was acquired in June June: see month. 1998, as well as one month's contribution from Nat Systems International, whose acquisition was effective September 1, 1998. The acquisition of Nat Systems International in France was a major event for COGNICASE in Q4 1998, because it reinforced the Company's presence in France and gave it an entry into the IT markets of Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. , Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. , Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the and Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. . Other significant developments during the last quarter 1998 include a US$2 million contract to perform Y2K work for the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). Tax and Revenue Office in Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C.; development of a new multi-protocol server to facilitate communication between users and applications operating on different platforms for the Videotron cable-TV group; the implementation of an Internet-based banking system for the Laurentian Lau·ren·tian adj. 1. Of, relating to, or being in the vicinity of the St. Lawrence River. 2. Geology Of or relating to the Precambrian gneissic granite of the Lake Superior area. Bank; and a US$2-million contract to perform Y2K work for a large European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Bank. Founded in 1991, COGNICASE is an international provider of total information technology (IT) services and value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: software solutions. The Company's offerings are divided into three core areas: Consulting Services and Systems Integration, Business Solutions (including IT Outsourcing), and Software. The Company has over 1,600 employees. It develops and markets its products through offices in Montreal Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. , Ottawa Ottawa, city, Canada Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. , Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing , Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. City, Calgary Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Washington, D.C., Paris, Brussels Brussels (brŭ`səlz), Fr. Bruxelles, Du. Brussel, city and region (1995 pop. 948,122), 63 sq mi (162 sq km), capital of Belgium, central Belgium, on the Senne River and at the junction of the Charleroi-Brussels and Willebroek , Munich Munich (my  `nĭk), Ger. München (mün`khən), city (1994 pop. 1,255,623), capital of Bavaria, S Germany, on the Isar River near the Bavarian Alps. , Milan, Madrid, Lisbon, London and Sydney
(Australia).
This new release contains certain 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. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (US), which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in such statements. -0-
COGNICASE Inc.
Consolidated Statements of Earnings
(In thousands of U.S. dollars, except share and per share data)
Twelve Eleven Three Two
Months Months Months Months
Ended Ended Ended Ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
----------------------------------------------
1998 1997(i) 1998 1997(i)
----------------------------------------------
(Unaudited)(Unaudited)
$ $ $ $
Revenues 59,116 6,563 24,726 1,603
------------------------------------------------------------------
Operating expenses
Cost of revenues 34,955 3,249 14,125 719
General and
administrative 6,820 896 2,574 202
Sales and marketing 3,634 343 1,995 127
Research and
development, net
of investment tax
credits 1,161 979 545 192
Depreciation and
amortization 1,928 226 820 61
------------------------------------------------------------------
Total operating
expenses 48,498 5,693 20,059 1,301
------------------------------------------------------------------
Earnings from
operations 10,620 870 4,667 302
------------------------------------------------------------------
Other income
Interest income 1,656 171 223 52
Gain (loss) on foreign
exchange 2,305 - 514 -
------------------------------------------------------------------
3,961 171 737 52
------------------------------------------------------------------
Earnings before
income taxes 14,580 1,041 5,404 354
Income taxes 6,108 344 2,513 127
------------------------------------------------------------------
Net earnings 8,471 697 2,890 227
------------------------------------------------------------------
------------------------------------------------------------------
Earnings per
share
Basic (CDN GAAP) 0.71 0.11 0.23 0.03
------------------------------------------------------------------
------------------------------------------------------------------
Fully diluted
(CDN GAAP) 0.66 0.11 0.21 0.03
------------------------------------------------------------------
------------------------------------------------------------------
Basic (U.S. GAAP) 0.71 0.11 0.23 0.03
------------------------------------------------------------------
------------------------------------------------------------------
Fully diluted
(U.S. GAAP) 0.68 0.10 0.22 0.03
------------------------------------------------------------------
------------------------------------------------------------------
Weighted average
number of shares
outstanding
Basic(CDN GAAP) 11,990,280 6,429,675 12,481,511 8,212,000
------------------------------------------------------------------
------------------------------------------------------------------
Fully diluted
(CDN GAAP) 14,055,465 7,654,410 14,546,696 9,436,735
------------------------------------------------------------------
------------------------------------------------------------------
Basic
(U.S. GAAP) 11,990,280 6,429,675 12,481,511 8,212,000
------------------------------------------------------------------
------------------------------------------------------------------
Fully diluted
(U.S. GAAP) 12,470,510 6,858,439 12,848,818 8,650,446
------------------------------------------------------------------
------------------------------------------------------------------
(i) For comparative purposes, the Company is including the financial
statements for the two and eleven months ended September 30, 1997
since last year the Company has changed its fiscal year-end from
October 31 to September 30.
COGNICASE Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
September September
30, 30,
1998 1997
---------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $18,974 $2,440
Temporary investments, at cost,
3.2 percent to 5.04 percent - 5,025
Accounts receivable 27,674 1,718
Investment tax credits receivable 861 1,056
Work in process 2,234 439
Inventory 108 -
Prepaid expenses 744 69
---------------------------------------------------------------
50,594 10,747
Fixed assets 5,089 805
Deferred income taxes 2,312 284
Goodwill and other assets 45,630 1,468
---------------------------------------------------------------
$103,627 $13,304
---------------------------------------------------------------
---------------------------------------------------------------
LIABILITIES
Current liabilities
Bank advances $647 $-
Accounts payable and accrued liabilities 23,389 1,011
Income taxes payable 3,218 394
Deferred revenue
Parent company of a shareholder company
exercising significant influence - 67
Other 5,508 10
Current portion of obligations under
capital lease 624 -
Installments on long-term debt 1,515 9
---------------------------------------------------------------
34,899 1,491
Deferred incentive benefit 66 102
Obligations under capital lease 393 -
Long-term debt 1,295 29
---------------------------------------------------------------
36,653 1,622
---------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 63,546 9,734
Retained earnings 10,523 2,052
Cumulative translation adjustment (7,096) (104)
---------------------------------------------------------------
66,974 11,682
---------------------------------------------------------------
$103,627 $13,304
---------------------------------------------------------------
---------------------------------------------------------------
COGNICASE Inc.
Changes in Cash Resources
In thousands of U.S. dollars
Twelve Eleven Three Two
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
---------------------------------------------------------------
(Unaudited)(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net earnings $8,471 $697 $2,890 $227
Adjustments to reconcile
net earnings to
net cash provided
by (used for)
operating activities:
Loss on disposal
of fixed assets 222 - (163) -
Depreciation 980 179 417 44
Amortization of
other assets 217 - 217 -
Amortization of
Goodwill 948 47 403 17
Deferred income taxes 1,236 66 1,236 66
Decrease (increase)
in assets
Accounts
receivable (11,083) (101) (2,592) 611
Investment tax credits
receivable 337 (640) 279 (142)
Work in process and
prepaid expenses 518 79 1,296 (246)
Inventory 3 - -
Increase (decrease)
in liabilities
Accounts payable and
accrued liabilities 2,387 560 431 273
Income taxes payable 2,481 244 (249) 182
Deferred revenue 1,813 (747) 786 (190)
Deferred incentive
benefit (36) 16 (10) 11
---------------------------------------------------------------
Net cash provided by
(used for) operating
activities 8,495 400 4,942 853
---------------------------------------------------------------
CASH FROM INVESTING ACTIVITIES
Temporary investments 5,277 (5,025) 10,430 (2,181)
Fixed assets (2,721) (434) (1,271) (114)
Disposal of fixed assets 87 - 87 -
Purchase of
other assets (2,551)
Business acquisition (24,773) (715) (6,351) -
---------------------------------------------------------------
Net cash
used for investing
activities (24,681) (6,174) 2,894 (2,295)
---------------------------------------------------------------
CASH FROM FINANCING ACTIVITIES
Repayment of
bank advances (876) - (876) -
Issuance of long-term
debt - - - -
Repayment of
long-term debt (23) (145) (6) -
Repayment of secured
notes payable (2,689)
Promissory note - 731 - -
Repayment of
promissory note - (731) - -
Repayment of
capital lease 108 - (2) -
Issuance of
capital stock 45,205 - 711 -
Issuance of
special warrants - 9,332 - -
Expenditures related
to issue of special
warrants - (926) - -
Expenditures related
to issue of capital
stock (4,409) - - -
Other assets - (320) (318) (320)
Purchase of capital stock - (112) - -
---------------------------------------------------------------
Net cash provided
(used for) by financing
activities 37,316 7,829 491 (320)
---------------------------------------------------------------
Increase in cash and
cash equivalents 21,128 2,055 7,346 (1,762)
Effect of foreign
currency translation
adjustments (4,594) 48 (2,373) 166
Cash and cash
equivalents, beginning
of period 2,440 337 18,708 4,036
---------------------------------------------------------------
Cash and cash equivalents,
end of period $18,974 $2,440 $24,211 $2,440
---------------------------------------------------------------
---------------------------------------------------------------
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