COGNICASE Announces Record Third Quarter, Nine Month Results - Third Quarter Revenue Increased 768 Percent - Nine Month Earnings Growth of 851 Percent.MONTREAL--(BUSINESS WIRE)--July 30, 1998-- (All amounts are expressed in US$) COGNICASE Inc. (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.) today announced record results for the third quarter and nine months ended June June: see month. 30, 1998. For the three months ending June 30, 1998, revenue increased 768 percent to US$19,987,084 from US$2,301,000 in the same period a year ago. Net earnings increased 728 percent to US$2,277,000, or $0.18 per common share (excluding gain on foreign exchange), compared to US$275,000, or $0.03 per common share, for the same three month period last year. For the nine months ended June 30, 1998, revenue increased by 593 percent to US$34,389,926 from US$4,960,000 in the same nine-month period last year. Net earnings increased 851 percent to US$4,471,000, or $0.36 per common share (excluding gain on foreign exchange), compared to US$470,000, or $0.06 per common share in the first nine months of the prior fiscal year. Third quarter revenues in 1998 increased by US$9.5million over Q-2 1998 revenue, with 35 percent of this increase coming from internal growth in consulting, system integration and conversions. The strong growth in revenue and earnings is also attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the full contribution of acquisitions completed in March and April of 1998. The three companies acquired in this period are providing outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" revenue, demonstrating the positive effect of Cognicases' strategy, and efforts, to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. operations. 27 percent of third quarter revenues were related to Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 remediation contracts.
Financial Highlights
US$ 000
Nine Months Three Months
Period Ended June 30, 1998 1997 1998 1997
--------------------------------------------------------------
Revenues 34,389 4,960 19,987 2,301
Operating Profits 5,953 568 3,459 346
Net Earnings (1) 4,471 470 2,277 275
Earnings per Share(2) 0.36 0.06 0.18 0.03
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(1) Excluding FX gains and losses
(2) U.S. GAAP, fully diluted
-0- Ronald Brisebois, President and Chief Executive Officer of Cognicase commented, "These strong financial results demonstrate that our fundamental strategy of growing Cognicase's presence in the global IT marketplace is taking effect. We are clearly emerging as a leading provider of IT software, systems integration, and services to the international markets." Mr. Brisebois continued, "Through the outstanding contributions from our dedicated employees, acquisitions and strategic partnerships, Cognicase has been building a foundation that has diversified diversified (di·verˑ·s our base of software solutions and value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. , particularly in the outsourcing area. We are confident this foundation will enable Cognicase to continue to deliver strong performance." As a result of recent acquisitions, COGNICASE now has more than 1,200 employees and a revenue run rate of over US$80 million. This compares with reported revenue of US$6.6 million for the fiscal year ended September September: see month. 30, 1997. COGNICASE Inc., founded in 1991, is an international provider of 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 and information technology (IT) consulting services. The Company's services encompass three core areas: Software Solutions including Year 2000 remediation and technology migration projects, Business IT services and Business IT partnerships, including outsourcing. Through automation, reusability The ability to use all or the greater part of the same programming code or system design in another application. reusability - reuse , and high quality IT resources, COGNICASE delivers reliable, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. and timely solutions that generate added value Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
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. Certain factors that could cause actual results to differ materially from those discussed in such forward-looking statements include the ability of the Company to (i) successfully integrate business acquisitions (ii) take advantage of opportunities on the Year 2000 market in the short term and (iii) provide software maintenance and platform migration solutions outside the Year 2000 market, as well as the risks described in the Company's final prospectus Final Prospectus A legal document stating the price of a newly issued security, the delivery date, and other facts that are important for investors. Notes: The final prospectus must be given to every investor who purchases a new issue of registered securities. dated October October: see month. 2, 1997 filed with the SEC, the OSC O.S.C. n. short for Order to Show Cause. (See: Order to Show Cause) and QSC QSC Quality Service Communications (Cologne, Germany) QSC Quilter Sound Company (QSC Audio Products Inc.) QSC Queens Surface Corporation QSC Low-Traffic Ship (radiotelegraphy) in connection with its Public Offering, which factors are incorporated herein by reference.
COGNICASE Inc.
Changes in Cash Resources
(In thousands of U.S. dollars)
Nine Nine Three Three
Months Months Months Months
Ended Ended Ended Ended
June 30, July 31, June 30, July 31,
1998 1997 1998 1997
---------------------------------------------------------------
(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net earnings $5,581 $470 $2,475 $275
Adjustments to reconcile net
earnings to net cash
provided by (used for)
operating activities:
Loss on disposal of fixed
assets 385 - 385 -
Depreciation 564 135 312 58
Amortization of Goodwill 545 30 319 30
Decrease (increase) in assets
Accounts receivable (8,491) (712) (5,759) (699)
Investment tax credits
receivable 58 (498) 602 (197)
Work in process and
prepaid expenses (778) 325 (213) 32
Increase (decrease) in
liabilities
Accounts payable and
accrued liabilities 1,956 287 698 (148)
Income taxes payable 2,730 62 1,059 224
Deferred revenue 1,027 (557) 1,026 (133)
Deferred incentive benefit (27) 5 (10) (24)
----------------------------------------------------------------
Net cash provided by (used for)
operating activities 3,550 (453) 894 (582)
----------------------------------------------------------------
CASH FROM INVESTING ACTIVITIES
Temporary investments (5,153) (2,844) (10,229) (2,844)
Fixed assets (1,450) (320) (447) (124)
Business acquisition (29,764) (715) (8,801) (715)
----------------------------------------------------------------
Net cash used for
investing activities (36,367) (3,879) (19,477) (3,683)
----------------------------------------------------------------
CASH FROM FINANCING ACTIVITIES
Repayment of long-term debt (17) (145) (7) 5
Promissory note - 731 - -
Repayment of promissory note - (731) - -
Repayment of capital lease 110 - 118 -
Issuance of capital stock 55,835 - 3,489 -
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 318 - 2 -
Purchase of capital stock - (112) - (112)
----------------------------------------------------------------
Net cash provided (used for)
by financing activities 51,837 8,149 3,602 (107)
----------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 19,020 3,817 (14,981) (4,372)
Effect of foreign currency
translation adjustments (2,222) (118) (660) 135
Cash (deficit) brought upon
business acquisition (530) - 427 -
Cash and cash equivalents,
beginning of period 2,440 337 33,922 8,273
----------------------------------------------------------------
Cash and cash equivalents,
end of period $18,708 $4,036 $18,708 $4,036
================================================================
COGNICASE Inc. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Earnings (In thousands of U.S. dollars, except share and per share data) Nine Months Nine Months Three Months Three Months Ended Ended Ended Ended June 30, July July: see month. 31, June 30, July 31, ----------------------------------------------------------------- 1998 1997(i) 1998 1997(i) ----------------------------------------------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $34,390 $4,960 $19,987 $2,301 ----------------------------------------------------------------- Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Cost of revenues 20,830 2,530 12,228 1,125 General and administrative 4,246 694 2,523 351 Sales and marketing 1,638 216 986 79 Research and development, net of investment tax credits 615 787 161 312 Depreciation and amortization 1,108 165 630 88 ---------------------------------------------------------------- Total operating expenses 28,437 4,392 16,528 1,955 ---------------------------------------------------------------- Earnings from operations 5,953 568 3,459 346 ---------------------------------------------------------------- Other income Interest income 1,433 119 388 72 Gain on foreign exchange 1,791 - 320 - ---------------------------------------------------------------- 3,224 119 708 72 ---------------------------------------------------------------- Earnings before income taxes 9,177 687 4,167 418 Income taxes 3,596 217 1,692 143 ---------------------------------------------------------------- Net earnings $5,581 $470 $2,475 $275 ================================================================ Earnings per share Basic (CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) $0.47 $0.08 $0.20 $0.04 ================================================================ Fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. (CDN GAAP) $0.45 $0.07 $0.19 $0.04 ================================================================ Basic (U.S. GAAP) $0.47 $0.06 $0.20 $0.04 ================================================================ Fully diluted (U.S. GAAP) $0.45 $0.06 $0.20 $0.03 ================================================================ Weighted average number of shares outstanding Basic (CDN GAAP) 11,863,044 5,682,423 12,269,656 6,206,562 ================================================================ Fully diluted (CDN GAAP) 13,139,030 6,899,782 13,821,816 8,349,485 ================================================================ Basic (U.S. GAAP) 11,863,044 7,606,560 12,269,656 7,606,560 ================================================================ Fully diluted (U.S. GAAP) 12,264,883 8,049,487 12,671,495 8,049,487 ================================================================ (i) For comparative purposes, the Company is including the financial statements for the three and nine months ended July 31, 1997. Despite the fact that the Company has changed its fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. from October 31 to September 30, effective September 30, 1997, the Company has not recasted its financial data of prior periods, to present, for comparative purposes, the results for the three and nine months period ended June 30, 1997. The Company believes that the financial information presented is comparable as there are no seasonal or other factors that would cause a recasting re·cast tr.v. re·cast, re·cast·ing, re·casts 1. To mold again: recast a bell. 2. of data to be necessary.
COGNICASE Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
June 30, September 30,
1998 1997
-------- -------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $18,708 $2,440
Temporary investments,
at cost, 3.2 percent to 5.04
percent 10,430 5,025
Accounts receivable 17,894 1,718
Investment tax credits receivable 929 1,056
Work in process 3,080 439
Prepaid expenses 368 69
------- -------
51,409 10,747
Fixed assets 2,545 805
Deferred income taxes 2,213 284
Goodwill and other assets 25,737 1,468
-------- --------
$81,904 $13,304
======== ========
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities $9,873 $1,011
Income taxes payable 3,433 394
Deferred revenue
Parent company of a shareholder
company
exercising significant influence - 67
Other 1,163 10
Current portion of obligations under
capital lease 102 -
Installments on long-term debt 9 9
------- -------
14,580 1,491
Deferred incentive benefit 75 102
Obligations under capital lease 90 -
Long-term debt 18 29
------- -------
14,763 1,622
------- -------
SHAREHOLDERS' EQUITY
Capital stock 63,361 9,734
Retained earnings 7,633 2,052
Cumulative translation adjustment (3,853) (104)
------- -------
67,141 11,682
------- -------
$81,904 $13,304
======= =======
COGNICASE news releases are accessible at: http://www.cdn-news.com CONTACT: Cognicase Inc. Ronald Brisebois, 514/ 866-6161 brir@cognicase http://www.cognicase.ca or Cognicase Inc. Marc Lamy, 514/ 866-6161 lamm@cognicase.ca http://www.cognicase.ca |
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