Calian Technology Ltd. Reports First Quarter Results.Business Editors KANATA, Ontario--(BUSINESS WIRE)--Feb. 16, 2001 Calian Technology Ltd. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CTY CTY - /sit'ee/ or /C-T-Y/ [MIT] The terminal physically associated with a computer's system console. The term is a contraction of "Console tty", that is, "Console TeleTYpe". ) today released unaudited results for the first quarter of fiscal 2001, ended December 31, 2000. These results are in line with the preliminary results that were released January 11, 2001. Revenues for the first quarter of fiscal 2001 were $32.0 million compared to $28.9 million in the first quarter of fiscal 2000, representing an overall increase of 10.6%. As a result of lower than expected revenues in its eServices division, Calian announced on January 11, 2001 that it will strengthen its position in eServices consulting by streamlining its operations and by adjusting its strategy to emphasize its systems integration expertise. In the first quarter, Calian recorded a special charge against earnings of $2.0 million, including one-time charges and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs relating principally to eServices. Including this charge, the company reported a net loss for the quarter of $1.9 million or $(0.17) per share on a 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. basis, compared to net earnings of $1.1 million or $0.11 per share on a fully diluted basis a year ago. The Company's Resourcing division and Systems Engineering division continued to perform as expected. "I am confident that we have taken the necessary steps to ensure that we will return to profitability in the second quarter," said Shaun McEwan, President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Bookings during the quarter, amounting to nearly $30 Million, indicate that the Company is on track, enjoying new successes and continuing to grow our service offerings with our existing client base." Highlights of the Quarter: The Systems Engineering division signed contracts totaling more than $7 Million with Hughes Network Systems Hughes Network Systems, LLC (HNS), is a provider of broadband satellite network products for businesses and consumers. HNS pioneered the development of high-speed satellite Internet access services and IP-based networks with its original DirecPC service but which it now markets , Santa Barbara Santa Barbara (săn'tə bär`brə, –bərə), city (1990 pop. 85,571), seat of Santa Barbara co., S Calif., on the Pacific Ocean; inc. 1850. Dual Spectrum, Computing computing - computer Devices Canada, Inmarsat and others. The Resourcing group, which includes Staffing and 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. , signed several contracts during the quarter. They included contracts or standing offers with the Department of National Defence, Citizenship Immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important. Canada (CIC CIC circulating immune complexes. CIC Circulating immune complexes. See Immune complexes. ), Bell Acti-Media, Canada Customs & Revenue Agency (CCRA CCRA Canada Customs and Revenue Agency CCRA Common Criteria Recognition Arrangement CCRA Campus Computer Resellers Alliance CCRA Certified Clinical Research Associate CCRA Commercial Credit Reference Agency CCRA California Court Reporters Association ), Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. & Development Canada (HRDC HRDC Harvard-Radcliffe Dramatic Club HRDC Human Resources and Development Canada HRDC Human Resources Development Council (Montana) HRDC Human Resources Development Center HRDC Hollister Ranch Design Committee HRDC Handheld Remote Controlled Device ) and Health Canada Health Canada (French: Santé Canada) is the department of the government of Canada with responsibility for national public health. Health Canada's goal is to improve Canadian life by improving Canadian longevity, lifestyle and use of public healthcare. . These contracts and standing offers are worth more than $18 million. The eServices group signed contracts during this quarter worth slightly more than $1 Million for eServices and management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects services with Canada Customs & Revenue Agency, the Bank of Canada Bank of Canada Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money. , Brooks/Cole, Mr. Lube, New Brunswick New Brunswick, province, Canada New Brunswick, province (2001 pop. 729,498), 28,345 sq mi (73,433 sq km), including 519 sq mi (1,345 sq km) of water surface, E Canada. Power, the Department of National Defence, Bell Acti-Media and Lippincott Williams. Managements' Discussion and Analysis: Revenue in the first quarter of 2001 increased by 10.6% to $32.0 million, from $28.9 million in the quarter ended December 31, 1999. Revenue growth was strongest in the Resourcing group, while revenues in eServices were somewhat lower than expected. Gross profit was 17.6% in the first quarter of 2001 as compared to 19.4% in the comparable quarter a year ago. This reduction reflects the service mix of the Company, as contracts in Resourcing tend to have lower margins than systems integration and management consulting. One of the Company's strategies is to grow the Resourcing business without adding significantly to overhead costs overhead costs see fixed costs. , thereby contributing to overall profitability. Selling and marketing, general and administration, facilities and aation of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) totaled $6.6 million or 20.7% of revenues in the first quarter of 2001. This compares to $4.5 million or 15.5% of revenues in the first quarter of 2000. This increase is related largely to infrastructure costs necessary to support continued profitable growth of the Company. Facilities costs and amortization expense are higher in fiscal 2001 because the Company expanded into additional space part way through 2000 and had a relatively high level of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. last year, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its new ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. system and leaseholds. As previously announced, the Company has taken a special charge against earnings in the first quarter of $2.0 million, including one-time charges and restructuring costs relating principally to its eServices division. These costs represent severances, settlement and legal costs, asset write-downs, and pre-accrued facilities costs. Effective with the fourth quarter of fiscal 2000, Calian adopted 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. Institute of Chartered Accountants' new rules in accounting for income taxes, which resulted in the Company recognizing the future benefit of investment tax credits created in prior years, of research expenditures not yet deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. , and prior years' net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. not yet claimed. Consequently Calian will henceforth From this time forward. The term henceforth, when used in a legal document, statute, or other legal instrument, indicates that something will commence from the present time to the future, to the exclusion of the past. be reporting its results on a fully taxed basis, although cash taxes may not be payable for several years. In the first quarter of fiscal 2000 the Company's effective tax rate was effectively zero, other than for income taxes 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. . In the first quarter of 2001, the Company has recorded a recovery of income taxes in its statement of earnings. Net loss was $1.9 million ($0.19) per share basic and $(0.17) per share fully diluted in the first quarter of fiscal 2001, compared with net earnings of $1.1 million or $0.12 per share basic and $0.11 per share fully diluted in the same quarter the previous year. Factors affecting net earnings (loss) are outlined above. The Company's cash position at the end of the quarter amounted to $8.9 million, which is $1.6 million less than at September 30, 2000. Calian maintains a strong balance sheet and cash position that, together with bank lines, are sufficient to support the Company's operations for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. The Company has a $10 million credit facility with a Canadian chartered bank Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission , all of which is available as at December 31, 2000. The foregoing discussion and analysis should be read in conjunction with the financial statements for the first quarter of fiscal 2001 and 2000, and with the Management Discussion and Analysis in the fiscal 2000 annual report, including the section on risks and uncertainties. About Calian: With annual revenues of more than $125 million, Calian is one of the largest providers of technology and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. in Canada. Calian's Professional Services practice assists customers by providing recruiting and placement services, strategic 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. outsourcing services and information technology consulting Information technology consulting (IT consulting or business and technology services) is a field that focuses on advising businesses on how best to use information technology to meet their business objectives. services. Calian's Systems Engineering division delivers leading-edge communications infrastructures to the aerospace, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and government sectors.
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(dollars in thousands except per share data)
Three months ended
December 31
(Unaudited)
------------------------
2000 1999
---------- ----------
Revenues $ 31,981 $ 28,928
Cost of revenues 26,363 23,326
---------- ----------
Gross profit 5,618 5,602
---------- ----------
Selling and marketing 2,058 1,543
General and administration 3,148 1,977
Facilities 800 582
Amortization of capital assets 615 385
Special charges 2,000 -
---------- ----------
Earnings (loss) before interest, taxes
and amortization of goodwill (3,003) 1,115
Interest income, net 44 132
---------- ----------
Earnings (loss) before taxes and
amortization of goodwill (2,959) 1,247
Provision for (recovery of) income taxes
- current (13) 20
- future (1,226) -
---------- ----------
Earnings (loss) before amortization of
Goodwill (1,720) 1,227
Amortization of goodwill 168 128
---------- ----------
NET EARNINGS (LOSS) (1,888) 1,099
Retained earnings, beginning of period 24,491 12,047
---------- ----------
Retained earnings, end of period $ 22,603 $ 13,146
---------- ----------
---------- ----------
Earnings (loss) per share before
amortization of goodwill
Basic $ (0.18) $ 0.14
Fully Diluted $ (0.15) $ 0.12
Net earnings (loss) per share
Basic $ (0.19) $ 0.12
Fully Diluted $ (0.17) $ 0.11
Weighted average number of shares
Basic 9,734,390 8,924,047
Fully Diluted 10,741,984 10,282,525
CALIAN TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31, September 30,
2000 2000
------------- -------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,940 $ 10,576
Accounts receivable 22,424 23,121
Unbilled accounts receivable 7,633 4,853
Prepaid expenses and other 757 1,336
Future income taxes 3,758 3,276
------------- -------------
43,512 43,162
GOODWILL 11,519 11,686
CAPITAL ASSETS 8,860 9,182
INVESTMENT TAX CREDITS RECOVERABLE 2,243 2,243
FUTURE INCOME TAXES 4,469 3,724
------------- -------------
$ 70,603 $ 69,997
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities $ 13,543 $ 11,586
Unearned contract revenue 15,591 14,947
Note payable 334 334
Current portion of long-term debt 330 376
------------- -------------
29,798 27,243
LONG-TERM DEBT 388 515
------------- -------------
30,186 27,758
------------- -------------
SHAREHOLDERS' EQUITY
Share capital 17,814 17,748
Retained earnings 22,603 24,491
------------- -------------
40,417 42,239
------------- -------------
$ 70,603 $ 69,997
------------- -------------
------------- -------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Three months ended
December 31
(Unaudited)
------------------------
2000 1999
---------- ----------
CASH FLOWS FROM (USED IN) OPERATING
ACTIVITIES
Net earnings (loss) $ (1,888) $ 1,099
Items not affecting cash
Deferred lease inducements (3) (2)
Amortization 783 513
Future Income Taxes (1,226) -
---------- ----------
(2,334) 1,610
Change in non-cash working capital
Accounts receivable 1,014 (3,913)
Unbilled accounts receivable (2,779) 722
Prepaid expenses and other 262 202
Accounts payable and accrued liabilities 1,955 (1,451)
Unearned contract revenue 644 4,194
---------- ----------
(1,238) 1,364
---------- ----------
CASH FLOWS FROM (USED IN) FINANCING
ACTIVITIES
Repayment of debt (170) (1,042)
Issuance of common shares 66 109
---------- ----------
(104) (933)
---------- ----------
CASH FLOWS FROM (USED IN) INVESTING
ACTIVITIES
Acquisition of capital assets (294) (1,316)
---------- ----------
(294) (1,316)
---------- ----------
NET CASH INFLOW (OUTFLOW) (1,636) (885)
CASH, BEGINNING OF PERIOD 10,576 19,692
---------- ----------
CASH, END OF PERIOD $ 8,940 $ 18,807
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