CORRECTION FROM SOURCE: Alta Genetics releases 12 month report to December 31, 1996.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 , Alberta--(BUSINESS WIRE)--April 1, 1997--Alta Genetics genetics, scientific study of the mechanism of heredity. While Gregor Mendel first presented his findings on the statistical laws governing the transmission of certain traits from generation to generation in 1856, it was not until the discovery and detailed study of (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :AGI (Artificial General Intelligence) A machine intelligence that resembles that of a human being. Considered impossible by many, most artificial intelligence (AI) research, projects and products deal with specific applications such as industrial robots, playing chess, .). "In the news release transmitted on March 27, 1997 for ALTA GENETICS INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . there was an error in the Table entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Statement of Earnings (Loss)". The Earnings (Loss) for 1996 should have read (2,946) and for 1995 Re-stated it should have read 1,989. The Earnings per Share (basic) for 1995 Re-stated should have read $0.40. The complete corrected release is as follows:" PRESIDENT'S MESSAGE 1996 was a successful year for Alta Genetics in terms of implementing our global growth strategy. We positioned ourselves in both established and developing diary semen semen or seminal fluid Whitish viscous fluid emitted from the male reproductive tract that contains sperm and liquids (seminal plasma) that help keep them viable. markets around the world and strengthened our presence in markets where we were previously active. During the past year, we increased control of our product distribution in two of our key international markets. In Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Northern 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). , we terminated past contracts with distributors and
opened new offices. These offices now serve as hubs for more
concentrated marketing activity to surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. areas. Our joint venture with Koepon Holdings in 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. , AltaPon, was launched January January: see month. 1, 1996. From this location, we are able to effectively market to seven established Northern European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. dairy markets. The European cattle industry provides a relatively stable market for genetically superior dairy semen and is backed by strong economies. Customers have the financial capability and experience to use artificial insemination artificial insemination, technique involving the artificial injection of sperm-containing semen from a male into a female to cause pregnancy. Artificial insemination is often used in animals to multiply the possible offspring of a prized animal and for the breeding and a year-round breeding program A breeding program is the planned breeding of a group of animals or plants, usually involving at least several individuals and extending over several generations. Breeding programs are commonly employed in several fields where humans wish to manage the characteristics of their creates a stable demand for high quality dairy semen. Our strategy for this joint venture is to supply the market with semen from our proven North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sires and, at the same time, begin to establish a distinctive European product line thought the selection of livestock livestock Farm animals, with the exception of poultry. In Western countries the category encompasses primarily cattle, sheep, pigs, goats, horses, donkeys, and mules; other animals (e.g., buffalo, oxen, or camels) may predominate in other areas. genetics aimed to appeal to the genetics goals of the majority of European dairy farmers Dairy Farmers is one of Australia's largest and oldest dairy manufacturers, established in 1900, supplying products to local and international markets such as eastern Europe, the Middle East and Asia. . Following the four year development cycle, this line will offer superior genetic material for enhanced milk production that meets the specific European requirements. This product line will be available to our customers worldwide. In 1995, Brazil ranked as the largest importer of semen dosages for Alta Genetics. In the early part of 1996, our Brazilian distributor notified us they were being purchased by a competitor. Our solution was to react quickly and positively by assuming control over marketing and distribution ourselves. We hired several staff, including two key people who had worked for our former distributor, and by mid-year had started up our own network. The Brazilian dairy semen market is continuing to develop at a strong pace and we are expecting a successful year for 1997. Our international growth continues. In February 1997, we developed a strategic alliance with a national, 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. player in the strong Argentinean market. Alta Genetics is providing the diary semen product line for CIALE, a well established, respected, private artificial insemination company who specializes in marketing dairy and beef semen. Argentina has a large cattle population and a strong imported semen market which is growing at a rate exceeding 15 percent per year. Consistent with our global strategy, we are also assuming direct control of marketing and distribution in Canada. Termination of our reciprocal Bilateral; two-sided; mutual; interchanged. Reciprocal obligations are duties owed by one individual to another and vice versa. A reciprocal contract is one in which the parties enter into mutual agreements. marketing contract with the other four major artificial insemination centres in Canada will take effect August 15, 1997 and will allow us to expand nationally. The Prairie provinces Prairie Provinces, Canada: see Manitoba; Saskatchewan; Alberta. , where Alta Genetics has been marketing directly for over 27 years, represents only about 14 percent of 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 for dairy semen. We have hired key management familiar with the eastern Canadian and British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography markets and staff are currently developing their marketing strategy for implementation this fall. We are confident in these developments for our company, however the cost has negatively impacted our 1996 bottom line. Setting up new offices, hiring new marketing staff, buying out contracts with past distributors, increasing our inventory and receivable write-downs account for this significant impact. We justify these costs as necessary to strategically position ourselves within these countries' dairy semen market. We have laid the foundation for the long-term growth of our operations in many of the key markets around the world; now we can focus our efforts on marketing our products and services in an economical and efficient manner. Furthermore, we believe that to be successful in these markets, it is important to build our business from a national base. This ensures Alta Genetics is recognized as a national player rather than a foreign importer. OUR FUTURE With a crucial year of implementing our international growth strategy behind us, we look to 1997 as a year to implement our strategy of profitable growth. MANAGEMENT DISCUSSION AND ANALYSIS For the 12 month period ending December 31, 1996 compared to December 31, 1995: Revenues of $45.1 million for fiscal 1996 increased by 13 percent over the same period last year due to the inclusion of AG USA for an additional two months this year, and improved export markets for dairy semen and live cattle. Dairy semen accounts for 69 percent of revenues, the same as last year. Retail sales of dairy semen in Northern Europe and Brazil increased as we moved during the year to a direct selling Direct selling is the marketing of products or services to consumers through sales tactics including presentations, demonstrations, and phone calls. It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or brokers. organization. Significant sales of beef cattle were made to China, and markets for dairy cattle were particularly active. In July 1996 our USA distributor of Canadian dairy semen, Mapleleaf Genetics Inc., was sold to Semex USA. The decreased revenues this caused over the last six months of fiscal 1996 were more than compensated for by increased sales of company owned sires through the AG USA expanded national marketing network. Beef semen sales were down in all markets due to low prices at the primary producer level. This was accentuated by the drought conditions "Drought Conditions" is episode 126 of The West Wing. Plot Senator Rafferty, a new presidential candidate garnered much media attention with a ground-breaking speech about health care. in prime beef Prime BEEF Prime Base Engineer Emergency Force (US DoD) PRIME BEEF Priority Improved Management Effort - Base Engineer Emergency Force producing areas of the USA. Sales of other products were about the same year-over-year. On a geographical basis, revenues in the USA and internationally represent 79 percent of total revenues in 1996 compared to 73 percent in 1995. Revenues in Canada were lower due to the difficulties currently affecting the beef industry, the transition out of our agency agreements with Semex Canada and with the other Canadian A.I. Units, and to a shift in small ruminant ruminant, any of a group of hooved mammals that chew their cud, i.e., that regurgitate and chew again food that has already been swallowed. Ruminants have an even number of toes on each foot and a stomach with either three or four chambers. activity from domestic to export sales. Gross profit of $26.6 million for the 12 month period ending December 31,1996 was $2.8 million higher than gross profit of $23.8 million recorded for the same 12 months of 1995. The gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. declined slightly to 59 percent from 60 percent between 1996 and 1995 respectively, because 1996 figures include a provision of $1.4 million for possible losses in our inventory of beef genetic products. This provision was necessary as the company's assessment is that there will not be a significant near term improvement in the primary beef production industry. It is the company strategy to focus new investments on the core business of dairy semen marketing. This direction is supported by the fact that our dairy semen product lines generated profit margins of 78 percent during fiscal 1996 compared to 73 percent in fiscal 1995. Selling and marketing expenses of $17.1 million and general and administration expenses of $8.9 million for fiscal 1996 were up over fiscal 1995 by $6.1 million and $3.4 million respectively. These amounts include a full year of expenses in 1996 for AG USA compared to only 10 months for 1995. Higher selling costs were also incurred in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. due to additional salesmen, commissions, travel and vehicle costs and related staff benefits. Furthermore, increases relate to selling, travel, advertising and administration costs for the planned expansion of our direct marketing network in Northern Europe, Brazil and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. . This expansion necessitated the termination of arrangements with former Landmark distributors and the refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. of business plans for our Brazil and Argentina offices. These office and distributorship changes added extra costs, and the impact of the ongoing depressed situation in the beef industry resulted in the uneconomic nature of some longer term beef embryo embryo (ĕm`brēō), name for the developing young of an animal or plant. In its widest definition, the embryo is the young from the moment of fertilization until it has become structurally complete and able to survive as a separate organism. projects. Provisions for losses on outstanding accounts and embryo projects were therefore increased by $0.8 million. In total, write-downs of $1.2 million in accounts receivables 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 are included in fiscal 1996 administration expenses compared to write-downs in the amount of $0.3 in fiscal 1995. Research and development is down by $0.3 million this year over fiscal 1995 due to reduced research in embryo in an incipient or undeveloped state; in conception, but not yet executed. - Swift. See also: Embryo sexing and semen production over last year. Research projects during fiscal 1996 concentrated primarily on improving in-vitro embryo production and related technologies. Total amortization and depreciation of $3.4 million for fiscal 1996 was up slightly from the amount of $3.3 million for fiscal 1995. These amounts include sire and donor The party conferring a power. One who makes a gift. One who creates a trust. donor n. a person or entity making a gift or donation. DONOR. He who makes a gift. (q.v.) amortization which is capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. to an inventory pool. When the product is sold or otherwise disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of, these costs flow through cost of goods at average pool costs. The net amortization not capitalized this year was $1.7 million compared to $1.4 million for fiscal 1995, reflecting higher amortization on equipment and buildings. Interest expense was higher by $0.3 million during fiscal 1996 compared to fiscal 1995 since loans this year were outstanding for a full 12 months, while during 1995 a major portion of these loans ($11.8 million) were only drawn down in March to complete the acquisition of Landmark. Preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. were also issued as part of this acquisition, and in compliance with new CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) accounting rules, the 5 percent dividends payable Dividends payable The declared dividend dollar amount that a company is obligated to pay. to preferred shareholders now appears on the income statement. Fiscal 1995 financials are restated accordingly. A large portion of these bank loans are funded through Can$ BA or US$ LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). borrowings at varying rates and terms designed to minimize borrowing costs and to act as a partial natural exchange rate hedge. The loss of $2.9 million for fiscal 1996 is primarily due to additional expenses incurred relative to the corporate strategy to transition out of existing agency agreements in order to move into and expand our direct international semen marketing network. Additions were also made to the sales force in the USA to expand market share in dairy and beef semen. LIQUIDITY AND CAPITAL RESOURCES Cash position and bank loans: During fiscal 1996, $6.0 million in net additional bank operating and term loans were arranged with Canadian and Netherland banks. Operating bank loans were needed to support the expansion of our direct marketing organizations until such time as they become self- funding. This includes funds for additional working capital for international accounts and inventories. Term loans were used primarily to fund additional investments in sires and related housing facilities and in computer systems. Bank loans are within 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: limits. The accounts receivables at year-end fiscal 1996 were $11.2 million, the same as fiscal 1995. These amounts are net of provisions against doubtful accounts of $1.6 million in 1996 which is twice the provision of $0.8 million for 1995. Receivable turnover improved slightly to 4.1 times for fiscal 1996, compared to 3.9 times for fiscal 1995. Current inventories stood at $10.9 million and $9.1 million at the end of fiscal 1996 and 1995 respectively. In connection with the corporate direction of focusing on dairy semen marketing, the inventory mix has shifted towards dairy semen. Reductions in inventories occurred with our beef genetic products. The increase in the development inventory pool relates primarily to the additional semen produced on young dairy sires prior to the time. Alta Genetics is engaged in the production, research and marketing of products and services based on cattle genetics. The company specializes in bull semen, cow embryos, live cattle, and reproductive technologies Reproductive technology is a term for all current and anticipated uses of technology in human and animal reproduction, including assisted reproductive technology, contraception and others. . Research is focused on the application of technology to maintain the company's worldwide reputation for quality genetics. Alta Genetics has sales in over 50 countries, other than Canada, which currently provide 75 percent of the company's revenues. Common shares of Alta Genetics Inc. trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol "AGI". -0-
CONSOLIDATED STATEMENT OF CASH FLOWS
December 31, 1996 vs. 1995
(000's)
(Audited)
1996 1995
Operating Activities
Earnings (2,946) 1,989
Depreciation and amortization 3,435 3,299
Deferred income taxes 4 855
Net increase in non-cash
working capital items
affecting operations (1,186) (3,349)
---------------------------------
Cash provided by
operating activities (693) (2,794)
---------------------------------
---------------------------------
Financing activities
Proceeds from of
long-term debt 7,108 12,023
Proceeds from Bank
demand loans (1,355) (100)
Drawdown/(Repayment) of
bank demand loans 186 500
Issuance of shares (net) 0 11,965
---------------------------------
Cash provided by
financing activities 5,939 24,388
---------------------------------
---------------------------------
Investing activities
Acquisition of Landmark Genetics 0 (25,157)
Acquisition of capital assets,
net of government assistance (2,546) (2,346)
Acquisition of production
livestock. (2,191) (1,857)
Increase in development
inventory (686) (916)
Acquisition of goodwill (86) (300)
Increase in investment
tax credits (160) (163)
Foreign exchange translation 148 (38)
Net proceeds on minor dispositions
of production livestock 553 362
Repayment of loans receivable 9 250
Proceeds on disposition of
capital assets 432 74
-----------------------------
Cash used in investing
activities (4,527) (30,091)
-----------------------------
-----------------------------
Cash inflow (outflow) 719 (2,909)
Cash beginning of period 1,670 4,579
-----------------------------
Cash end of period 2,389 1,670
-----------------------------
-----------------------------
ALTA GENETICS INC.
Consolidated Balance Sheet
December 31, 1996 vs 1995
(000's)
(Audited)
1996 1995
ASSETS
Current Assets
Cash $2,389 $1,670
Accounts Receivable 11,247 11,174
Income taxes recoverable 243 91
Inventories 10,883 9,109
Prepaid Expenses 206 240
-------------------------
24,968 22,284
Loans Receivable 250 259
Development inventory 3,045 2,359
Production livestock 4,826 4,649
Investment tax credits 766 606
Capital assets 13,450 12,872
Other Assets 12,773 13,126
-------------------------
$60,078 $56,155
-------------------------
-------------------------
LIABILITIES
Current liabilities
Bank indebtedness $686 $500
Accounts payable & accrued
liabilities 7,820 7,090
Deferred revenue 189 140
Current portion of long-term
debt 1,169 240
-------------------------
9,864 7,970
Long-term debt 16,393 11,529
Deferred taxes 859 855
Deferred foreign exchange gain 136 177
Preferred shares 11,965 11,965
-------------------------
39,217 32,496
SHAREHOLDERS' EQUITY
Share Capital 17,810 17,810
Retained Earnings 3,413 6,359
Foreign exchange adjustment (362) (510)
-------------------------
20,861 23,659
$60,078 $56,155
--------------------------
--------------------------
ALTA GENETICS INC.
Statement of Earnings (Loss)
Years ended December 31, 1996 vs 1995
(000's)
(Audited)
1996 1995
Re-stated
Revenue 45,130 39,934
Cost of Sales 18,572 16,145
-------------------------
Gross Profit 26,558 23,789
Expenses
Selling and administration 25,900 16,426
Research 519 801
Depreciation and amortization 1,678 1,356
-------------------------
Total Expenses 28,097 18,583
Earnings (loss) before interest
& Income tax EBIT (1,539) 5,206
-------------------------
-------------------------
Interest on Debt 1,103 769
Dividends on preferred shares 589 489
-------------------------
Total Interest 1,692 1,258
Earnings (loss) before income
taxes (3,231) (3,948)
Income taxes (recovery)
-Current (260) 1,104
-Deferred 855
-------------------------
(260) 1,959
Earnings (loss) before
non-controlling interest (2,971) 1,989
Non-controlling interest 25 0
Earnings (Loss) (2,946) 1,989
-------------------------
-------------------------
Shares outstanding
(Basic) 4,989 4,989
(Fully Diluted) 7,586 6,668
Earnings per Share
(Basic) ($0.59) $0.40
(Fully Diluted) ($0.59) $0.36
CONTACT: Alta Genetics Inc. Douglas G. Blair, 403/239-8882 Fax: 403/241-4524 or Alta Genetics Inc. Donald B. Dufault, 403/226-0666 Fax: 403/226-4259 |
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