COGNICASE Reports Higher Revenues and Earnings From Operations.Business Editors MONTREAL--(BUSINESS WIRE)--Aug. 7, 2001 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 :COGI COGI Coalition on Government Information (also known as the Minnesota Coalition on Government Information, or MNCOGI; promotes open access to public records) )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :COG.), an innovative IT solutions provider specializing in the development and integration of transactional solutions, today announced its results for the third quarter and first nine months ended June June: see month. 30, 2001. All amounts are in 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 .
Third quarter 2001 highlights:
-- Revenues totaled $106.7 million
-- Over 40% of revenues long term and recurring
-- e-Solutions revenues increase to $41.0 million - 38% of total
revenues
-- Earnings from operations of $8.2 million, an increase of 23%
sequentially and 136% year-over-year
-- Cash net earnings of $0.08 per share
Revenues increased 46% to $106.7 million in the third quarter of fiscal 2001 from $73.0 million in the corresponding period in fiscal 2000. On a sequential One after the other in some consecutive order such as by name or number. basis, revenues increased 2% compared to $104.8 million in the second quarter ended March 31, 2001. E-Solutions revenues have increased sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from $36.6 million to $41.0 million, representing 38% of total revenues. Earnings from operations increased 1.4 times to $8.2 million compared to $3.5 million in the third quarter of fiscal 2000. On a sequential basis, earnings from operations increased 23% from $6.6 million in the second quarter of the current fiscal year. Cash net earnings (excluding amortization of goodwill) were $2.5 million compared to $1.1 million in the same period last year and $2.9 million in the second quarter of the current year. For the first nine months, revenues increased 47% to $304.7 million compared to $207.0 million in the same period in fiscal 2000. Earnings from operations increased 35% to $18.1 million compared to $13.4 million. Cash net earnings were $6.6 million compared to $6.5 million a year ago. These results were in line with expectations. The Company increased earnings from operations through continued revenue growth and effective cost management. Cash net earnings were affected by the issuance of shares during the third quarter as well as certain external factors such as currency fluctuations and non-recurring charges. "Our focus on transactional solutions and recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue streams is proving beneficial by allowing COGNICASE to maintain revenue and 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 growth despite the recent slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in IT spending," said Ronald Brisebois, Chairman and Chief Executive Officer. "Driven by our strategy, we continue to significantly strengthen our position in transactional solutions with increasing ASP-based volumes as well as specific vertical markets through both acquisitions and internal initiatives." New contracts COGNICASE signed several new contracts during the third quarter which highlight the Company's expertise and enhance the sustainability of its recurring revenue base. Over 40% of the Company's revenue base is now recurring or under long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. contracts. Among the awards announced in the third quarter were the following:
-- Five-year project management contract in France for
operational support and management tools related to the design
of the Airbus A380.
-- Provision of an ASP-based e-Learning platform with HP CANADA
for Hydro-Quebec. The platform will be used on a pilot basis
to train up to 5,000 employees on SAP application
implementation.
-- Two high-profile contracts from the Ontario government: the
Ministry of Education's "Elementary/Secondary Data Warehouse"
project and the Ministry of the Environment's Provincial
Groundwater Monitoring Information System.
-- Development of an online career management portal for the
Canadian Institute of Chartered Accountants that will be
hosted in the COGNICASE state-of-the-art data centre.
-- Furthermore, during the quarter COGNICASE successfully
qualified for the Government On-Line (GOL) Composite Solutions
Standing Offer of the Federal Government.
Strategic acquisitions COGNICASE completed several strategic acquisitions in the third quarter, adding important critical mass 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: components to its transactional solutions and systems integration expertise addressing its key vertical markets. The Company has a strong balance sheet and cash position which will enable it to continue to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its acquisition strategy of building a significant presence in its principal markets in order to benefit from economies of scale and to enrich its e-solutions offering. "Our recent acquisitions of United Systems Solutions, Radius radius, in anatomy: see arm. (Remote Authentication Dial-In User Service) The de facto standard protocol for authentication servers (AAA servers). , Personus and Data Vision, combined with our existing resources, position COGNICASE as a full services provider in the 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 market and provide privileged privileged not generally available; can be used only by selected persons or substances. privileged information information about a client's animals or business to which the veterinarian has access because of his/her professional access to a large base of new customers," noted Mr. Brisebois. "They also complement our expertise in major sectors such as 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. which is an important target market for us in Toronto." Outlook Based on its expanding recurring revenue stream, strength in key vertical markets and leading-edge transactional solutions, COGNICASE expects sustained revenue growth and profitability leading into fiscal 2002. Demand for IT services in the 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. market remains relatively strong and the Company's opportunity pipeline for the coming months is very promising. With the successful integration of recent acquisitions, the Company also expects to increase penetration The successful unauthorized breach of a security perimeter. See penetration test. in its existing markets. 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 Third Quarter and First Nine Months of Fiscal 2001 versus Third Quarter and First Nine Months of Fiscal 2000 The following Management's Discussion and Analysis should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the 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 , and accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes, for the third quarters of 2001 and 2000 and with the Management's Discussion and Analysis and notes to the consolidated financial statements appearing in the Annual Report for the fiscal year ended September September: see month. 30, 2000. Our financial statements are prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . Effective with the publication of the second quarter 2001 results, the Company has changed its reporting currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. to Canadian dollars from US dollars. The Company's fiscal year end is September 30 and all amounts included herein are in Canadian dollars, unless specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. otherwise. Results of Operations Revenues Total revenues for the third quarter ended June 30, 2001 increased by $33.7 million, or 46%, to $106.7 million compared to the third quarter of fiscal 2000. This growth resulted primarily from the inclusion of the results of SIBN Inc., the National Bank of Canada's information technology subsidiary acquired on May 31, 2000, as well as from an overall increase in both the size and scope of projects worked on, and businesses acquired. For the first nine months, revenues have increased from $207.0 million to $304.7 million due to the reasons presented above. Cost of revenues During the third quarter ended June 30, 2001, cost of revenues increased to $73.3 million from $53.4 million in the third quarter of fiscal 2000. This increase of $20 million in absolute dollars, or 37%, reflects a higher headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. as a result of business acquisitions and internal growth. As a percentage of revenues, cost of revenues decreased to 68.7% in the third quarter of 2001 from 73.1% for the same period last year, reflecting the increase in the utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be rate of resources, as well as the change in the overall cost structure related to the expansion of the e-Solutions business units which have a higher contribution margin. For the same reason, cost of revenues decreased from 72.6% to 69.7% for the first nine months of fiscal 2001 compared to fiscal 2000. Selling and administrative expenses On a sequential basis, selling and administrative expenses decreased to 20.2% of revenues compared to 22.3% in the second quarter due to effective cost management. As a percentage of revenues, selling and administrative expenses increased to 20.2% in the third quarter of fiscal 2001 from 17.2% for the same period last year. This increase is largely due to an increased investment in management infrastructure resulting from the SIBN transaction as well as continued increased investment in sales and marketing activities in the e-Solutions business units. Similarly, selling and administrative expenses increased to 21.1% of revenues for the first nine months of fiscal 2001, from 16.0% for the same period last year. Research and development expenses (R&D) R&D expenses remained stable at $3.6 million for the third quarter of fiscal 2001 and $10.1 million for the first nine months of fiscal 2001 compared to the same periods of fiscal 2000. As a percentage of revenues, R&D decreased to 3.4% from 5.0% in fiscal 2000 as a result of revenue growth in fiscal 2001. The decrease in relative spending is consistent with the Company's acquisition strategy toward acquiring solutions oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. businesses. Amortization of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) and other long-term assets Long-Term Assets 1. Reported on the balance sheet, it's the value of a company's property, equipment and other capital assets, less depreciation. 2. A stock, bond or other asset that you plan on holding in your portfolio for a lengthy period of time. Amortization of capital assets and other long-term assets for the third quarter of fiscal 2001 increased by $1.4 million, or 75%, to $3.2 million compared to the same period last year. For the first nine months of fiscal 2001, amortization expenses increased to $7.1 million from $3.9 million in 2000, reaching 2.3% of revenues compared to 1.9% for the same period of fiscal 2000. These increases were due primarily to purchases of computer equipment and software to support business growth as well as capital expenditures related to the Company's new head office 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. , new office in 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 and data center in Montreal. Provision for income taxes The provision for income taxes for the third quarter of fiscal 2001 increased by $0.9 million to $1.3 million compared to the third quarter of fiscal 2000. As a percentage of earnings before income taxes and amortization of goodwill, provision for income taxes represents 35% in 2001 compared to 24% in 2000. For the first nine months of fiscal 2001, provision for income taxes as a percentage of earnings before taxes and amortization of goodwill represents 35% in 2001 compared to 19% in 2000. The increase in the effective tax rate is principally due the 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. impact of fixed amount tax savings as well as tax benefits in fiscal 2000 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc prior year tax losses of certain acquired businesses. Earnings before amortization of goodwill (cash net earnings) Cash net earnings increased to $2.5 million in the third quarter of fiscal 2001 from $1.1 million for the third quarter of fiscal 2000. This increase is mainly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the improvement in operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before . For the first nine months of fiscal 2001, cash net earnings increased by $0.1 million to $6.6 million compared to the first nine months of fiscal 2000. Consistent with industry practice, the Company reports cash net earnings since this is a more accurate measure of performance than net earnings. The Company will continue to present earnings on this basis. Amortization of goodwill Amortization of goodwill for the third quarter of fiscal 2001 increased by $0.7 million to $7.5 million compared to the third quarter of fiscal 2000 due to business acquisitions. As a percentage of revenues, amortization of goodwill decreased to 7.1% in the third quarter of fiscal 2001 from 9.4% in the third quarter of fiscal 2000. For the first nine months of fiscal 2001, amortization of goodwill also represented 7.1% of revenues compared to 5.1% for the same period last year. Liquidity and Capital Resources The Company has a strong balance sheet which comprises a cash position of $26.9 million and working capital of $91.3 million. During the third quarter of fiscal 2001, operating activities generated net cash of $2.3 million compared to $3.7 million in the third quarter of fiscal 2000. This decrease is partly due to an increase in tax credits receivable and a decrease in accounts payable. Cash flows used in operating activities in the first nine months of 2001 amounted to $6.1 million for similar reasons. The increase in 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 reflects revenue growth as well as recent business acquisitions. Tax credits receivable are related to Research & Development and to a Quebec Government program that supports companies operating in the information technology and multimedia sectors. The decrease in accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. in the third quarter relates principally to the payment of leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. accounted for in the first two quarters. In the quarter ended June 30, 2001, investing activities used cash of $4.3 million. For the first nine months of fiscal 2001, investing activities used cash of $21.9 million, compared to $12.4 for the same period last year. Investing activities consisted of purchase of capital assets for $20.7 million, primarily related to the Company's new head office premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person in Montreal, new office in Quebec City and data center in Montreal for 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. operations. On May 23, 2001, the Company completed a public offering of 3,500,000 common shares at a price of $8.25 per share for gross proceeds of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $29.0 million. The underwriters fully exercised the over-allotment option of 525,000 common shares bringing total gross proceeds to $33.2 million. Business acquisitions The Company completed seven business acquisitions during the third quarter of 2001, for a total of thirteen during the first nine months of fiscal 2001. The recent acquisitions have made a moderate contribution to current revenues and cash earnings. An overview of the more significant acquisitions in fiscal 2001 is as follows:
-- Maxon Financial Services, a leading provider of remotely
managed network security products and services;
-- Dynabec Informatique Municipale, a provider of municipal
management systems, consolidating the Company's position as
the Quebec market leader in this sector;
-- United Systems Solutions, an IT consultancy with a leading
Customer Relationship Management (CRM) product;
-- Personus, specialized in customer relationship applications,
with expertise in end-to-end solutions from online strategy to
implementation and hosting;
-- Radius Information Systems, a systems integrator specialized
in business intelligence services to the financial sector; and
-- Data Visions, a provider of data warehousing solutions,
business intelligence services and data reporting solutions to
the financial, telecommunication and government sectors in
North America.
Subsequent event On August 6, 2001, the Company entered into an acquisition agreement for all the issued and outstanding shares of Ezenet Corp., a software development company that provides transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. services. The transaction is valued at approximately $54,000,000 and is comprized of COGNICASE's shares and a cash option to a maximum of $20,000,000. Period-to-period comparisons A variety of factors may cause period to period fluctuations in the Company's operating results, including business acquisitions, revenues and expenses related to the introduction of new products and services or new versions of existing products, new or stronger competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in the marketplace as well as currency fluctuations. Historical operating results are not indicative indicative: see mood. of future results and performance. About COGNICASE COGNICASE (TSE: "COG", Nasdaq: "COGI") is an innovative IT solutions provider specializing in the development and integration of transactional solutions. Relying on its results-driven approach, its software and technology and its international Internet engineering A person responsible for developing and maintaining the infrastructure that supports the public Web site, intranet and associated LANs and WANs. May be involved in developing transaction-based applications for e-commerce. See e-commerce engineer. and hosting center, COGNICASE offers secure and scalable solutions that contribute to the success of its customers in the new economy. The Company is active in several countries, including 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 , 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. , France, 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. , 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. , the Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. and 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. . Forward-Looking Statement 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. This press release contains forward-looking statements 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. As a result of a number of factors, including factors that the Company may not currently foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. , the Company's actual results could differ materially from those set forth in the forward-looking statements. Certain other factors that might cause the Company's actual results to differ materially from the forward-looking statements include the Company's ability to (i) successfully develop additional products and services and new applications for its existing products and services and otherwise respond to rapid changes in technology, (ii) successfully compete in its industry for customers and developers and other personnel with expertise in information technology, (iii) successfully identify and consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. acquisitions on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms and integrate acquired businesses, (iv) successfully manage its growth and changing business, (v) be awarded contracts under its IS/IT and Preferred Supplier Agreement with the National Bank of Canada This article is about a commercial bank. For Canada's central bank, see Bank of Canada. National Bank of Canada (Banque Nationale du Canada) TSX: NA is the sixth largest bank in Canada, and so is one of the Big Six banks. , as well as other risks and uncertainties set forth under the heading "Risk and Risk Management" in its 2000 annual report.
COGNICASE Inc.
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except share and per share data)
---------------------------------------------------------------------
Nine Nine Three Three
months months months months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
2001 2000 2001 2000
---------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(note 2) (note 2) (note 2) (note 2)
Revenues $304,656 $207,030 $106,703 $73,003
---------------------------------------------------------------------
Operating expenses
Cost of revenues 212,258 150,324 73,332 53,363
Selling and
administrative
expense 64,148 33,163 21,573 12,525
Research and
development -
net of tax credit 10,119 10,103 3,638 3,662
---------------------------------------------------------------------
Earnings from operation
before the undernoted 18,131 13,440 8,160 3,453
---------------------------------------------------------------------
286,525 193,590 98,543 69,550
---------------------------------------------------------------------
Financial expenses 648 204 429 70
Loss (gain) on foreign
exchange 148 1,224 392 (1)
Other expenses 147 61 333 41
Amortization of capital and
other asset 7,146 3,935 3,194 1,823
---------------------------------------------------------------------
8,089 5,424 4,348 1,933
---------------------------------------------------------------------
Earnings before income taxes
and amortization of
goodwill 10,042 8,016 3,812 1,520
Provision for income
taxes 3,490 1,528 1,320 372
---------------------------------------------------------------------
Earnings before
amortization of
goodwill 6,552 6,488 2,492 1,148
Amortization of goodwill
(net of future income
taxes of 548; 539
in 2000) 21,488 10,653 7,543 6,833
---------------------------------------------------------------------
Net Loss $(14,936) $(4,165) $(5,051) $(5,685)
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per share,
excluding amortization
of goodwill
Basic $0.23 $0.38 $0.08 $0.06
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted $0.23 $0.37 $0.08 $0.06
---------------------------------------------------------------------
---------------------------------------------------------------------
Net loss per share
Basic and Diluted $(0.53) $(0.25) $(0.16) $(0.30)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average number
of shares outstanding
Basic 28,417,072 16,985,101 31,902,552 19,047,167
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted 28,703,303 17,467,076 32,090,142 19,602,502
---------------------------------------------------------------------
---------------------------------------------------------------------
COGNICASE Inc.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
---------------------------------------------------------------------
June September
30 30
2001 2000
---------------------------------------------------------------------
(Unaudited) (note 2)
ASSETS (note 2)
Current assets
Cash and cash equivalents $26,939 $17,286
Accounts receivable 87,289 70,932
Work in process 15,109 14,859
Income taxes recoverable 14,666 15,770
Tax credits receivable 20,502 5,148
Prepaid expenses 4,614 3,105
Future income taxes 2,783 1,194
---------------------------------------------------------------------
171,902 128,294
Capital assets 40,499 21,320
Investments 14,755 12,976
Goodwill 374,348 349,916
Other assets 8,060 7,277
---------------------------------------------------------------------
$609,564 $519,783
---------------------------------------------------------------------
---------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank advances $3,498 $1,296
Accounts payable and accrued liabilities 64,020 56,465
Deferred revenue 9,663 6,090
Current portion of long-term debt 3,378 2,347
---------------------------------------------------------------------
80,559 66,198
Long-term debt 4,266 1,108
Future income taxes 338 198
Non-controlling interests 653 1,176
Capital stock to be issued 9,790 -
---------------------------------------------------------------------
95,606 68,680
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 518,207 442,732
Retained earnings 9,081 24,017
Cumulative translation adjustment (13,330) (15,646)
---------------------------------------------------------------------
513,958 451,103
---------------------------------------------------------------------
$609,564 $519,783
---------------------------------------------------------------------
---------------------------------------------------------------------
COGNICASE Inc.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
---------------------------------------------------------------------
Nine Nine Three Three
months months months months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
2001 2000 2001 2000
---------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(note 2) (note 2) (note 2) (note 2)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $(14,936) $(4,165) $(5,051) $(5,685)
Adjustments for:
Loss on disposal of
capital assets 103 60 89 40
Amortization of capital
and other assets 7,146 3,935 3,194 1,823
Amortization of
goodwill 22,036 11,192 7,729 7,012
Future income taxes (1,561) 1,517 189 271
Share of losses from
companies subject to
significant Influence 286 - 286 -
Non-controlling interests (242) 1 (42) 1
Decrease (Increase)
in assets
Accounts receivable (5,454) 4,375 7,742 3,571
Income tax recoverable 2,538 (8,158) 1,552 (1,035)
Tax credits
receivable (14,945) (2,454) (6,991) (2,054)
Work in process and
prepaid expenses 92 (816) 4,829 (137)
Increase (decrease) in
liabilities:
Accounts payable and
accrued liabilities (1,676) 629 (5,764) 2,309
Income taxes payable - (523) - (50)
Deferred revenue 555 (1,820) (5,477) (2,374)
---------------------------------------------------------------------
Net cash flows from
(used in) operating
activities (6,058) 3,773 2,285 3,692
---------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital
assets (20,745) (5,085) (4,498) (2,034)
Proceeds on disposal
of capital assets 56 18 6 5
Business acquisitions 719 (6,081) 657 (4,116)
Investments (1,322) (1,252) (596) -
Other (575) 40 98 (8)
---------------------------------------------------------------------
Net cash flows used in
Investing activites (21,867) (12,360) (4,333) (6,153)
---------------------------------------------------------------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Bank advances 1,483 (97) (14,522) (97)
Increase in long-term
debt 4,316 - 1,568 -
Repayment of long-term
debt (2,339) (1,664) (777) (580)
Issuance of capital
stock 36,590 27,900 34,897 20,965
Expenditures related to
Issuance of capital
stock (1,876) - (1,876) -
---------------------------------------------------------------------
Net cash flows from
financing activities 38,174 26,139 19,290 20,288
---------------------------------------------------------------------
Increase in cash and
cash equivalents 10,249 17,552 17,242 17,827
Effect of exchange rate
changes on cash and
cash equivalents (596) (1,379) (1,369) (985)
Cash and cash equivalents -
beginning of period 17,286 12,418 11,066 11,749
---------------------------------------------------------------------
Cash and cash equivalents -
end of period $26,939 $28,591 $26,939 $28,591
---------------------------------------------------------------------
---------------------------------------------------------------------
COGNICASE Inc.
Notes to consolidated financial statements
(Unaudited)
Note 1: Foreign currency translation
The financial statements of the Company were presented in U.S.
dollars up to December 31, 2000. Effective January 1, 2001, the
Canadian dollar has been adopted as the reporting currency. The
functional currency of the company and each of its subsidiaries
continues to be the local currency. The financial statements for all
periods prior to January 1, 2001 have been presented in Canadian
dollars in accordance with a translation of convenience method using
the representative exchange rate at January 1, 2001 of $CAN1.00 = USD
The translated amount for non-monetary items at January 1, 2001 became
the historical basis for subsequent periods.
Note 2: Foreign operations
The Company's foreign operations are considered to be self-
sustaining. Accordingly, the accounts of the Company's foreign
operations are translated into Canadian dollars using the current rate
method. Under this method, assets and liabilities are translated at
the exchange rate in effect at the end of the reporting period and
revenues and expenses are translated at the average exchange rate for
the reporting period. Gains and losses on translation of these foreign
operations into Canadian dollars are included in the cumulative
translation adjustment in shareholders' equity. Changes in the
cumulative translation adjustment result solely from the application
of this translation method.
Note 3: Change in accounting policy
During the second quarter of fiscal 2001, the Company adopted the
new recommendations of the Canadian Institute of Chartered Accountants
with respect to the calculation of earnings per share. These new
recommendations do not result in any changes to the way in which basic
earnings per share is calculated. However, the new recommendations do
affect the calculation of diluted earnings per share.
Diluted earnings per share is now calculated based on the weighted
average number of common shares outstanding during the period, plus
the effects of dilutive potential common shares, such as options and
warrants, outstanding during the period. This method requires that
diluted earnings per share be calculated using the treasury stock
method, as if all dilutive potential common shares had been exercised
at the later of the beginning of the reporting period or date of
issuance, and that the funds obtained thereby were used to purchase
common shares of the company at the average trading price of the
common shares during the period.
This change, which has been applied retroactively, did not result
in any change in diluted net earnings per share for the periods of
three and nine months ended June 30, 2000.
Note 4: Business acquisitions
On January 25, 2001, the Company acquired a 100% interest in
Services Financiers Maxon (1981) Inc. ("Maxon"), which provides
remotely managed network security solutions and services, in exchange
for total consideration amounting to $8,381,000, consisting of cash of
$613,000, the issuance of 524,383 common shares valued at $5,768,000
and a balance of purchase price of $2,000,000 to be paid by the
issuance of common shares.
On April 26, 2001, the Company acquired a 100% interest in United
System Solutions Inc.(USS), a full service IT consultancy specialist
and developer of CRM product, in exchange for a total consideration
amounting to $11,604,000 consisting of cash of $104,000 and the
issuance of 1,638,872 common shares valued at $11,500,000.
During the period ended June 30, 2001, the Company acquired 100%
interest in 11 other companies ("Other"), which provide software and
web site consultation and development, affinity programs and
development and sales and marketing of Internet, wireless, human
resources software, customer relationship applications and integration
of information technology solutions in the financial sector, in
exchange for a total consideration amounting to $30,199,000 consisting
of cash of $550,000, a balance of purchase price of $7,790,000 of
common shares to be issued and the issuance of 2,316,350 common shares
valued at $21,859,000.
(In thousands of Canadian dollars)
---------------------------------------------------------------------
USS Maxon Other Total
Current assets 3,480 4,265 8,535 16,280
Capital assets 499 696 2,875 4,070
Other assets - 284 435 719
---------------------------------------------------------------------
Total assets acquired 3,979 5,245 11,845 21,069
---------------------------------------------------------------------
Current liabilities 2,634 3,810 7,103 13,547
Long-term debt and capital lease
obligations 49 - 904 953
Future income taxes - - 45 45
---------------------------------------------------------------------
Total liabilities assumed 2,683 3,810 8,052 14,545
---------------------------------------------------------------------
-
Net identifiable assets acquired 1,296 1,435 3,793 6,524
Goodwill 10,308 6,946 26,406 43,660
---------------------------------------------------------------------
Purchase Price 11,604 8,381 30,199 50,184
Less:
Common shares issued 11,500 5,768 21,859 39,127
Balance of purchase price - 2,000 7,790 9,790
Cash and cash equivalents acquired 16 724 1,246 1,986
---------------------------------------------------------------------
Cash paid net of cash and cash
equivalents acquired /
(cash acquired net of cash and
cash equivalents paid) 88 (111) (696) (719)
---------------------------------------------------------------------
Note 5: Capital stock
Pursuant to the filing of a prospectus dated May 8, 2001, the
Company issued 4,025,000 common shares for gross cash proceeds of
$8.25 per share. The net proceeds to the Company amounted to
$32,115,000 after deducting underwriting commissions and other
expenses totaling $1,091,000, net of future income taxes of $785,000.
Note 6: Outstanding shares data
As of July 27, 2001, the Company had 35,088,817 common shares and
3,153,106 options outstanding. As of June 30, 2001, the Company has
completed seven acquisitions under which capital stock, valued at
$9,790,000, will be issued from six to thirty months after the
acquisition dates. As of June 30, 2001, there were 1,118,850 common
shares to be issued related to these acquisitions.
Note 7: Commitments
On March 9, 2001, the Company rented additional space under an
operating lease contract beginning June 1, 2001 and ending on December
31, 2010. The minimum lease obligation is $ 7,100,000.
Note 8: Segmented information
(In thousands of Canadian dollars, except per share data)
---------------------------------------------------------------------
Nine months ended June 30, 2001
(Unaudited)
---------------------------------------------------------------------
e-Solutions
---------------------------------------------------------------------
Outsourcing
& W/W e- Consoli-
Integra- Integra- Commerce dation Consoli-
tion tion entries dated
(a) (b) (c)
---------------------------------------------------------------------
Revenues from external
customers 194,872 32,511 77,273 - 304,656
---------------------------------------------------------------------
Earnings (loss) from
Operations (1) 14,821 224 3,954 (868) 18,131
---------------------------------------------------------------------
Earnings (loss) before
amort. of goodwill 5,644 (464) 159 1,213 6,552
---------------------------------------------------------------------
Cash EPS diluted (2) 0.20 (0.02) 0.01 0.04 0.23
---------------------------------------------------------------------
Nine months ended June 30, 2001
(Unaudited)
---------------------------------------------------------------------
e-Solutions
---------------------------------------------------------------------
Outsourcing
& W/W e- Consoli-
Integra- Integra- Commerce dation Consoli-
tion tion entries dated
(a) (b) (c)
---------------------------------------------------------------------
Revenues from external
Customers 170,391 9,244 27,395 - 207,030
---------------------------------------------------------------------
Earnings (loss) from
Operations (1) 16,722 334 (2,849) (767) 13,440
---------------------------------------------------------------------
Earnings (loss) before
amort. of goodwill 12,267 172 (4,133) (1,818) 6,488
---------------------------------------------------------------------
Cash EPS diluted (2) 0.70 0.01 (0.24) (0.10) 0.37
---------------------------------------------------------------------
Three months ended June 30, 2001
(Unaudited)
---------------------------------------------------------------------
e-Solutions
---------------------------------------------------------------------
Outsourcing
& W/W e- Consoli-
Integra- Integra- Commerce dation Consoli-
tion tion entries dated
(a) (b) (c)
---------------------------------------------------------------------
Revenues from external
Customers 65,692 11,818 29,193 - 106,703
---------------------------------------------------------------------
Earnings (loss) from
Operations (1) 5,708 965 1,530 (43) 8,160
---------------------------------------------------------------------
Earnings (loss) before
amort. of goodwill 2,052 203 (3) 240 2,492
---------------------------------------------------------------------
Cash EPS diluted (2) 0.07 0.01 - - 0.08
---------------------------------------------------------------------
Three months ended June 30, 2001
(Unaudited)
---------------------------------------------------------------------
e-Solutions
---------------------------------------------------------------------
Outsourcing
& W/W e- Consoli-
Integra- Integra- Commerce dation Consoli-
tion tion entries dated
(a) (b) (c)
---------------------------------------------------------------------
Revenues from
external customers 57,093 5,047 10,863 - 73,003
---------------------------------------------------------------------
Earnings (loss) from
Operations (1) 2,723 946 (432) 216 3,453
---------------------------------------------------------------------
Earnings (loss) before
amort. of goodwill 1,732 722 (1,262) (44) 1,148
---------------------------------------------------------------------
Cash EPS diluted (2) 0.09 0.04 (0.06) (0.01) 0.06
---------------------------------------------------------------------
(1) Earnings (loss) from operations before amortization of capital
assets.
(2) Net earnings (loss) per share, excluding amortization of
goodwill.
(a) Outsourcing & Integration includes project management and
consulting services in the areas of business process
improvement, re-engineering, systems integration, as well as
IT outsourcing and training.
(b) W/W Integration is an e-Business unit which focuses on
providing Web and Wireless solutions and services as well as
creating and promoting new Internet companies. It includes
interactive integration, portal hosting and security and
portal performance management.
(c) E-commerce is an e-Business unit which comprises COGNICASE's
e- commerce business and solutions related to the Internet and
artificial intelligence. It includes electronic transaction
processing solutions and services, personalized software,
Internet catalog software and e-services Internet
applications.
Note 9: Subsequent event
On August 6, 2001, the Company entered into an acquisition
agreement for all the issued and outstanding shares of Ezenet Corp., a
software development company that provides transaction processing
services. The transaction is valued at approximately $54,000,000 and
is comprized of COGNICASE's shares and a cash option to a maximum of
$20,000,000.
Note 10: Comparative figures
Certain comparative figures have been reclassified in order to
comply with the new basis of presentation.
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion