Calian Technology Reports 1st Quarter Results, Profits Improve by Focusing On Costs.Business Editors & Technology Writers KANATA, Ontario--(BUSINESS WIRE)--Feb. 14, 2002 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 its fiscal year 2002, ended December December: see month. 31, 2001. Earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $0.4 million, which is $1.0 million higher than they had been in the first quarter of the prior fiscal year and $0.3 million greater than in the fourth quarter of fiscal 2001. Net earnings for the current quarter were also $0.4 million, and were significantly ahead of first quarter a year ago, when the Company reported a loss of $2.7 million. That loss was largely the result of the weak performance of its eServices business, which Calian 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 in June June: see month. of 2001. Earnings per share were $0.04 for the quarter ended December 31, 2001, compared with losses per share of ($0.07) from continuing operations and ($0.28) on a net basis for the same period a year prior. "Most of the improvement in the quarterly profitability can be attributed directly to our efforts in cost reduction," stated Larry O'Brien
Lawrence "Larry" Francis O'Brien, Jr. (July 7 1917 – September 28, 1990) was one of the United States Democratic Party's leading electoral strategists when, for more than two , President and 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. . "We have focused Calian on Systems Engineering and Resourcing, and we have re-sized the business. We are ready to take on increased volumes with substantially the same infrastructure as we now have. "We completed the buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may of almost 1.8 million Calian shares in December, and the Company has a strong cash balance of $8.7 million. Cash flows from operating activities were $2.1 million during the first quarter. "Although the economic environment for 2002 appears challenging, we face the coming year with some optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. . While revenue growth is anticipated to be moderate, we expect that profitability will improve on a quarterly basis. We have an order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of $116 million as we enter our second fiscal quarter, which provides a solid base from which to build." About Calian: Calian Technology Ltd. (TSE:CTY) sells systems engineering and resourcing (staffing/outsourcing) services to industry and government.
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(dollars in thousands except per share data)
Three months ended
December 31
(Unaudited)
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2001 2000
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Revenues $30,265 $29,830
Cost of revenues 25,219 24,716
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Gross profit 5,046 5,114
Selling and marketing 1,060 1,285
General and administration 2,208 2,474
Facilities 698 685
Amortization of capital assets 385 422
Special charge (Note 6) - 331
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Earnings (loss) before
interest, taxes and
amortization of goodwill 695 (83)
Interest income, net 64 44
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Earnings (loss) before taxes
and amortization of goodwill 759 (39)
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Income taxes - current 238 (13)
Income taxes - future 112 611
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350 598
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Earnings (loss) before
amortization of goodwill 409 (637)
Amortization of goodwill 59 59
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Earnings (loss) from
continuing operations 350 (696)
Loss from discontinued
operation (net of income
taxes) (Note 9) - (2,049)
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NET EARNINGS (LOSS) 350 (2,745)
Retained earnings, beginning
of period 9,797 24,491
Excess of purchase price over
stated capital on repurchase
of shares (Note 8) (2,000) -
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Retained earnings, end of
period $8,147 $21,746
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Earnings (loss) per share from
continuing operations: (Note 2)
Basic $0.04 $(0.07)
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Fully Diluted $0.04 $(0.07)
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Net earnings (loss) per share:
(Note 2)
Basic $0.04 $(0.28)
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Fully Diluted $0.04 $(0.28)
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Weighted average number of
shares: (Note 2)
Basic 9,179,049 9,734,390
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Fully Diluted 9,185,658 9,734,390
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CALIAN TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31, September 30,
2001 2001
(unaudited)
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ASSETS CURRENT ASSETS
Cash and cash equivalents $8,717 $12,211
Accounts receivable 19,115 18,394
Unbilled accounts receivable 2,461 3,865
Prepaid expenses and other 503 704
Note receivable 100 100
Future income taxes 2,812 2,292
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33,708 37,566
GOODWILL 3,423 3,482
CAPITAL ASSETS 4,979 5,067
INVESTMENT TAX CREDITS
RECOVERABLE 2,009 2,176
FUTURE INCOME TAXES 5,273 5,906
NOTES RECEIVABLE 250 250
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$49,642 $54,447
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LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities $14,836 $16,053
Unearned contract
revenue 11,530 10,148
Current portion of
long-term debt 161 160
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26,527 26,361
LONG-TERM DEBT 304 345
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26,831 26,706
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CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY
Share capital (Note 8)
Retained earnings 14,664 17,944
8,147 9,797
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22,811 27,741
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$49,642 $54,447
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CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Three months ended
December 31
(Unaudited)
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2001 2000
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CASH FLOWS FROM (USED IN)
OPERATING ACTIVITIES
Net earnings (loss) $350 $(2,745)
Items not affecting cash:
Deferred lease inducements (2) (3)
Amortization 446 783
Investment tax credits 167 -
Future income taxes 112 (369)
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1,073 (2,334)
Change in non-cash working
capital
Accounts receivable (721) 1,014
Unbilled accounts receivable 1,403 (2,779)
Prepaid expenses and other 201 262
Accounts payable and accrued
liabilities (1,215) 1,955
Unearned contract revenue 1,382 644
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2,123 (1,238)
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CASH FLOWS FROM (USED IN)
FINANCING ACTIVITIES
Repayment of debt (38) (170)
Issuance of common shares - 66
Repurchase of common shares,
including cost associated with
repurchase (Note 8) (5,280) -
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(5,318) (104)
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CASH FLOWS FROM (USED IN)
INVESTING ACTIVITIES
Acquisition of capital assets (299) (294)
Proceeds on disposal of
capital assets - -
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(299) (294)
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NET CASH INFLOW (OUTFLOW) (3,494) (1,636)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 12,211 10,576
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CASH AND CASH EQUIVALENTS, END
OF PERIOD $8,717 $8,940
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CALIAN TECHNOLOGY LTD. NOTES TO 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 For the periods ended December 31, 2001 and 2000 (dollars in thousands) (Unaudited) 1. ACCOUNTING POLICIES These interim consolidated financial statements have been 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 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. 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 except that these interim consolidated financial statements do not provide full note disclosure. These interim consolidated financial statements have been prepared using the same accounting policies used in the preparation of the audited annual consolidated financial statements, with the exception of the application of the new recommendation with respect to the calculation of earnings per share as described in Note 2. These interim consolidated financial statements 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 audited annual consolidated financial statements. 2. EARNINGS (LOSS) PER SHARE During the quarter ended December 31, 2001, the Company adopted the new recommendation of the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. ("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) ") 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 are calculated. However, the new recommendations do affect the calculation of diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . Diluted earnings per share are now calculated based on the weighted average number of common shares outstanding during the period plus the effects of dilutive potential common shares outstanding during the period. This method requires that the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of outstanding options be calculated using the treasury stock method, as if all dilutive options 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 Trading price The price at which a security is currently selling. of the common shares during the period. This change, which has been applied retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin to the results of fiscal year 2000, did not result in any change in the diluted earnings per share for the three months ended December 31, 2000. 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. weighted average number of shares has been calculated as follows:
Period ended Period ended
December 31, 2001 December 31, 2000
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Denominator:
Weighted average number of
shares - basic 9,179,049 9,734,390
Additions to reflect the
dilutive effect of employee stock
options 6,609 -
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Denominator for diluted earnings per share:
Weighted number of
shares - diluted 9,185,658 9,734,390
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Options to purchase 1,054,501 common shares (2000 - 1,007,594) have been excluded from the above calculations since they would have an anti-dilutive effect. 3. ACCOUNTING ESTIMATES For the period ended December 31, 2001 there have been no material changes in estimates of amounts reported in prior interim periods or of amounts related to prior fiscal years. 4. SEASONALITY The Company's operations are not subject to significant cyclicality. However, given the nature of its operations, the Company's revenues may be affected by vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. or holiday schedules. 5. SEGMENTED INFORMATION Operating segments are identified as components of an enterprise about which separate discrete A component or device that is separate and distinct and treated as a singular unit. financial information is available for evaluation by the chief operating decision maker, regarding how to allocate To reserve a resource such as memory or disk. See memory allocation. resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company operates in two reportable segments described below, defined by their primary type of service offering, namely Systems Engineering and Resourcing. -- Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector. -- Resourcing involves both short and long-term placements of personnel to augment customers' workforces (Staffing) as well as the long-term management of projects, facilities and customer business processes (Outsourcing). The Company evaluates performance and allocates resources based on earnings before interest and income taxes. The company does not segregate seg·re·gate v. seg·re·gat·ed, seg·re·gat·ing, seg·re·gates v.tr. 1. To separate or isolate from others or from a main body or group. See Synonyms at isolate. 2. assets and other balance sheet accounts between Resourcing and Corporate services Activities that combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) customers and business partners. . The accounting policies of the segments are the same as those described in the significant accounting policies note in the audited annual consolidated financial statements.
Three months ended December 31, 2001
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Systems Corporate and
Engineering Resourcing Other (a) Total
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Revenue $9,881 $20,384 $30,265
Earnings (loss)
before interest
and income taxes 955 67 (386) 636
Interest income 64
Income taxes 350
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Earnings from
continuing
operations and
net earnings $350
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Total assets other
than cash $8,423 $32,402 $40,825
Cash
Cash 8,717
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Total assets $49,542
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Three months ended December 31, 2000
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Systems Corporate and
Engineering Resourcing Other (a) (b) Total
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Revenue $10,527 $19,303 $29,830
Earnings (loss)
before interest
and income taxes 631 315 (1,087) (142)
Interest income 44
Income taxes 598
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Loss from continuing
operations $(696)
Discontinued operation (2,049)
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Net loss $(2,745)
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Total assets
other than
cash $11,421 $49,385 $60,806
Cash 8,940
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Total Assets $69,746
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a) Includes Corporate Services costs not appropriate to allocate to
the operating segments
b) Total Assets include the assets of the eServices business
6. SPECIAL CHARGE Special charges in the quarter ended December 31, 2000 included legal, settlement and other costs amounting to $331. 7. CONTINGENCIES Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. During its fiscal year 2000 the Company acquired PPI (1) (Pixels Per Inch) The measurement of the resolution of a monitor or scanner. For example, a monitor that is 16 inches wide and displays 1600 pixels across its width would have a resolution of 100 ppi (1600 divided by 16). 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 Ltd. (PPI). In the event it is determined that the acquired business achieved a certain level of profitability (as defined) during the twelve months following the acquisition, additional cash consideration for the shares of PPI will become payable. The maximum amount of such an additional payment is $1,600. In June 2001 the Company informed the selling shareholders of PPI that the acquired business' profitability (as defined) was lower than the earnings threshold The point at which a signal (voltage, current, etc.) is perceived as valid. 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. , and that accordingly, no additional payment for PPI shares was required to be made. In July July: see month. 2001 the selling shareholders of PPI filed a claim against the Company, claiming the additional payment of $1,600 and further damages in excess of $2,000.In October October: see month. 2001 the Company filed a statement of defence to this claim, and counterclaimed $2,000 from the selling shareholders. The amount of additional consideration for the shares, if any, is not determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. at this time. The Company is party to several other claims aggregating approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1,300, which are being contested. The potential outcomes of these matters are not determinable at this time. The Company intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on Calian's financial condition. 8. SHARE REPURCHASE Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. In December 2001, the Company acquired 1,786,956 (or 18.3%) of its outstanding common shares at a price of $2.80 per share, for a total of $5,280 including related expenses, through a Substantial Issuer Bid procedure known as a Dutch Auction Dutch Auction An auction where the price on an item is lowered until it gets its first bid, and then the item is sold at that price. Notes: The U.S. Treasury (and other countries) uses a Dutch auction when it sells securities. . The excess of the purchase price over the average stated capital stated capital See legal capital. of the shares has been charged to retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . 9. DISCONTINUED OPERATION discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. On May 16, 2001 the Company's Board of Directors approved a formal plan to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose all of the assets of the eServices business. The approved plan consisted of rationalizing the eServices operations by making adjustments to the workforce and facilities commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the size of the business and selling the resized business. The effective date of disposal was June 30, 2001. During its third quarter of fiscal 2001, the Company recorded a loss on disposal of the eServices business of $13,287 before tax and $11,341 after tax, including rationalization rationalization, in psychology: see defense mechanism. costs and operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. subsequent to May 16, 2001. These amounts (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) are as follows:
(i) Rationalization costs:
Workforce reduction $731
Legal, consulting and other 852
Provision for excess facilities 213
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$1,796
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(ii) Loss on disposal of assets:
Goodwill $7,485
Capital assets 2,755
Other assets 707
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$10,947
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(iii) Loss from operations from
May 16 to June 30, 2001 $544
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If there were to be additional consideration payable for the shares of PPI Canada Ltd. as described in Note 7, this would be accounted for as part of the discontinued operation. For the quarter ended December 31, 2000, the revenues of the eServices business were $2,151 and the net loss before tax was $3,030 ($2,049 after tax). That quarter included a provision of $1,669 before tax including one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. 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 to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc eServices. The carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the remaining assets and liabilities of the discontinued operation as at December 31, 2001 are as follows:
Trade receivables $390
Accounts payable and
accrued liabilities (1,353)
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$(963)
The loss per share from discontinued operation for the period ended
December 31, 2000 was ($0.21) basic and fully diluted.
Management Discussion and Analysis (MD&A) of the first fiscal quarter: Results of operations: For the first quarter of fiscal 2002, revenues were $30.3 million compared to $29.8 million in the first quarter of fiscal 2001, representing an increase of 1.5%. The Resourcing (Staffing/Outsourcing) segment reported growth with revenues increasing to $20.4 million from $19.3 million. System Engineering's revenues were $9.9 million in the quarter, down slightly from $10.5 million in the first quarter of last year. Gross profit was 16.7% in the first quarter of 2002 as compared to 17.1% in the comparable quarter a year ago, due to somewhat higher volumes on several contracts with lower margins. Selling, marketing, general and administration expenses totaled $3.3 million or 10.8% of revenues in the first quarter of 2002. This compares to $3.8 million or 12.6% of revenues in the first quarter of 2001. The decrease of $0.5 million is related largely to the Company's efforts to reduce costs by increasing operational efficiencies and eliminating redundancies. The provision for income taxes during the first quarter of fiscal 2002 was $0.4 million as compared to $0.6 million a year ago. Although the Company is reporting a current provision for income taxes of $0.2 million in the first quarter of fiscal 2002, most of the income taxes will be recovered through 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 of investment tax credits and therefore minimal cash taxes will be payable. As a result of the foregoing, the Company recorded earnings from continuing operations of $0.4 million or $0.04 per share basic and fully diluted in the first quarter of fiscal 2002, compared with a loss of $0.7 million or $(0.07) per share basic and fully diluted in the same quarter for the prior year. The Company had incurred a loss of $3.0 million ($2.0 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) on its discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: eServices operation in the first quarter ending December 31, 2000. There was no such income or loss in the first quarter of the current fiscal year. The Company has recorded net earnings of $0.4 million or $0.04 per share basic and fully diluted in the first quarter of fiscal 2002, compared with net loss of $2.7 million or $(0.28) per share basic and fully diluted in the same quarter the previous year. Financial Condition and Cash Flows Calian maintains a strong balance sheet and cash position, which 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's cash position at the end of the quarter amounted to $8.7 million, compared with $12.2 million at September September: see month. 30, 2001 and $8.9 million a year ago. Cash decreased by $3.5 million during the quarter, largely due to the purchase for $5.3 million in December 2001 of 1,786,956 Company shares under a Substantial Issuer Bid. There were positive cash flows from operating activities of $2.1 million during the quarter ended December 2001, based on the Company's profitability. Changes in working capital contributed $1.0 million to this amount. In the first quarter of the prior fiscal year, lower profitability resulted in a negative cash flow from operating activities of $1.2 million and a net cash outflow of $1.6 million overall. The foregoing discussion and analysis should be read in conjunction with the financial statements for the first quarter of fiscal 2002 and 2001, and with the Management Discussion and Analysis in the fiscal 2001 annual report, including the section on risks and opportunities. |
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