Calian Technology Reports Fourth Quarter Results: Earnings for the Year More Than Double the Prior Year.KANATA, Ontario Kanata is a large suburban area in the western part of Ottawa, Ontario, Canada,it has a population of 90,000 and is growing rapidly. It is located just to the west of the Greenbelt and is one of the largest of several communities that surround central Ottawa. -- Calian Technology Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : 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 fourth quarter ended September September: see month. 30, 2004. Revenues for the quarter were $37.7 million, an increase of over 10% from the $34.2 million reported in the same quarter of the previous year.Net earnings were $2.1 million or $0.25 per share basic and 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. , compared to $1.4 million or $0.17 per share basic and $0.16 per share diluted in the same quarter last year. "In addition to finishing the year on a strong note, we were able to increase the Company's cash balance to $31 million, an increase of $6 million over the prior quarter," stated Ray Basler, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "This increase was achieved even after paying for the initial $4.3 million for the Titan Titan, in astronomy Titan (tī`tən), in astronomy, the largest of the named moons, or natural satellites, of Saturn. Also known as Saturn VI (or S6), Titan is 3,200 mi (5,150 km) in diameter, orbits Saturn at a mean distance of acquisition and repurchasing 1.5% of the Company's shares for $1.2 million." "During the year Calian repurchased 214,900 shares representing 2.5% of our outstanding shares for a total of $2.5 million. We believe this is a good investment on behalf of the shareholders of Calian," 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 , Chief Executive Officer. "As a result of our strong cash position, the Board of Directors approved a 33% increase to the quarterly dividend from $0.06 to $0.08 effective with the next dividend payment."
Summary of 2004 Results:
(in millions of dollars, except per share data)
2004 2003 % Change
------------------------------------------------------------------
Revenues $170 $141 20%
EPS Continuing Operations $1.33 $0.66 102%
Net EPS $1.24 $0.60 107%
Cash Balance $31 $25 23%
Backlog $257 $189 36%
"After securing a significant portion of our existing 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. business in 2004, we begin 2005 with a healthy 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 $257 million. With this backlog in hand and adding the recent acquisition of Titan, we are well positioned to take advantage of future opportunities to contribute to revenues and profitability," continued Basler. "Although we believe the surveillance and security market will continue to be strong in the near term and that systems such as MSTAR MSTAR Moving and Stationary Target Acquisition and Recognition MSTAR Manportable Surveillance and Target Acquisition Radar MSTAR MLRS Smart Tactical Rocket MSTAR MAGTF C4I Systems/Technical Architecture & Repository will continue to be in demand, we presently do not have visibility into the timing, magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the and duration of potential new contracts in this area. Therefore, based on the assumption that revenues in the security and surveillance area will return to more traditional levels, we expect 2005 revenues to be in the range of $160 million to $170 million and net earnings per share in the range of $0.75 to $0.90." About Calian Calian Technology Ltd. (TSX:CTY) sells technology services to industry and government in 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 and around the world.Calian provides customers with ready access to an exceptional team of engineers, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and technology professionals, and other highly qualified staff. The Business and Technology Services Division augments customer workforces with flexible short and long-term placements, recruitment recruitment /re·cruit·ment/ (re-krldbomact´ment) 1. the gradual increase to a maximum in a reflex when a stimulus of unaltered intensity is prolonged. 2. 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. of engineering and other skilled professionals.The Systems Engineering Division plans, designs and implements solutions for many of the world's space agencies and leading communications satellite communications satellite artificial satellite that functions as part of a global radio-communications network. Echo 1, the first communications satellite, launched in 1960, was an instrumented inflatable sphere that passively reflected radio signals back to manufacturers and operators, as well as providing contract manufacturing services for customers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . DISCLAIMER (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the Certain information included in this press release is forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied 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. by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. ; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. . Calian disclaims any intention or obligation to update or revise any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from them.
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(dollars in thousands except per share data)
Three months ended Year ended
September 30 September 30
(Unaudited)
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
Revenues $37,746 $34,213 $169,707 $141,040
Cost of revenues 29,881 28,026 135,668 115,654
--------------------------------------------------------------------
Gross profit 7,865 6,187 34,039 25,386
Selling and marketing 1,078 1,043 4,508 4,409
General and administration 2,494 2,062 9,664 8,574
Facilities 633 700 2,691 2,769
Amortization of
capital assets 392 343 1,236 1,216
Amortization of intangibles 70 - 70 -
--------------------------------------------------------------------
Earnings before other income,
interest and income taxes 3,198 2,039 15,870 8,418
Gain on sale of
investment (Note 5) 741 - 741 -
Interest income, net 135 124 467 364
--------------------------------------------------------------------
Earnings from continuing
operations before
income taxes 4,074 2,163 17,078 8,782
--------------------------------------------------------------------
Income taxes - current 429 309 3,424 1,279
Income taxes - future 780 490 2,460 2,175
--------------------------------------------------------------------
1,209 799 5,884 3,454
--------------------------------------------------------------------
Earnings from continuing
operations 2,865 1,364 11,194 5,328
Loss on disposal of
discontinued operation
(net of income taxes)
(Note 15) 756 - 756 480
--------------------------------------------------------------------
NET EARNINGS 2,109 1,364 10,438 4,848
Retained earnings, beginning
of period 19,143 12,259 13,202 11,057
Excess of purchase price
over stated capital on
repurchase of shares
(Note 8) (1,008) (12) (2,052) (1,329)
Dividend (504) (409) (1,848) (1,374)
--------------------------------------------------------------------
Retained earnings,
end of period $19,740 $13,202 $19,740 $13,202
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings per share from
continuing operations:
(Note 9)
Basic $0.34 $0.17 $1.33 $0.66
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted $0.34 $0.16 $1.31 $0.64
--------------------------------------------------------------------
--------------------------------------------------------------------
Net earnings per share:
(Note 9)
Basic $0.25 $0.17 $1.24 $0.60
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted $0.25 $0.16 $1.22 $0.58
--------------------------------------------------------------------
--------------------------------------------------------------------
Weighted average number
of shares: (Note 9)
Basic 8,384,425 8,159,519 8,389,220 8,047,748
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted 8,545,465 8,455,212 8,578,138 8,389,822
---------------------------------------------------------------------
---------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
September 30 September 30
2004 2003
--------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $30,997 $25,185
Accounts receivable 18,726 20,519
Note receivable (Note 5) 158 -
Work in process 3,747 4,759
Prepaid expenses and other 875 486
Future income taxes 2,428 3,625
--------------------------------------------------------------------
56,931 54,574
INVESTMENT TAX CREDITS RECOVERABLE - 866
NOTE RECEIVABLE (Note 5) 358 -
FUTURE INCOME TAXES - 1,271
CAPITAL ASSETS 3,873 4,110
INTANGIBLES (Note 6) 1,412 -
GOODWILL (Note 7) 5,923 3,246
--------------------------------------------------------------------
$68,497 $64,067
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $18,136 $17,048
Unearned contract revenue 14,094 18,045
--------------------------------------------------------------------
32,230 35,093
--------------------------------------------------------------------
FUTURE INCOME TAX LIABILITY 96 -
--------------------------------------------------------------------
32,326 35,093
--------------------------------------------------------------------
CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY
Share capital (Note 8) 16,431 15,772
Retained earnings 19,740 13,202
--------------------------------------------------------------------
36,171 28,974
--------------------------------------------------------------------
--------------------------------------------------------------------
$68,497 $64,067
--------------------------------------------------------------------
--------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Three months ended Year ended
September 30 September 30
(Unaudited)
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
CASH FLOWS FROM (USED IN)
OPERATING ACTIVITIES
Earnings from continuing
operations $2,865 $1,364 $11,194 $5,328
Items not affecting cash:
Deferred lease inducements (2) (2) (9) (9)
Amortization 462 343 1,306 1,216
Gain on sale of
investment (Note 5) (516) - (516) -
Investment tax credits 238 179 866 839
Future income taxes 780 489 2,460 2,175
--------------------------------------------------------------------
3,827 2,373 15,301 9,549
Change in non-cash
working capital
Accounts receivable 10,702 (4,509) 4,077 4,788
Work in process 458 658 1,070 (1,287)
Prepaid expenses and other (449) (185) (385) 240
Accounts payable and
accrued liabilities (671) (386) (941) 826
Unearned contract
revenue (2,257) 849 (3,951) 4,562
--------------------------------------------------------------------
11,610 (1,200) 15,171 18,678
--------------------------------------------------------------------
CASH FLOWS USED IN
FINANCING ACTIVITIES
Repayment of debt (825) (37) (888) (155)
Issuance of common shares 46 373 1,085 1,510
Repurchase of common
shares, including cost
associated with
repurchase (Note 8) (1,246) (16) (2,478) (1,918)
Dividend (504) (409) (1,848) (1,374)
--------------------------------------------------------------------
(2,529) (89) (4,129) (1,937)
--------------------------------------------------------------------
CASH FLOWS USED IN
INVESTING ACTIVITIES
Acquisition of capital
assets (260) (313) (928) (1,044)
Business acquisition
(Note 14) (4,302) - (4,302) -
--------------------------------------------------------------------
(4,562) (313) (5,230) (1,044)
--------------------------------------------------------------------
NET CASH INFLOW (OUTFLOW) 4,519 (1,602) 5,812 15,697
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 26,478 26,787 25,185 9,488
--------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $30,997 $25,185 $30,997 $25,185
--------------------------------------------------------------------
--------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the periods ended September 30, 2004 and 2003
(dollars in thousands)
(Unaudited)
1. ACCOUNTING POLICIES These interim 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 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 for the year ended September 30, 2003, with the exception of the application of the new recommendations 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. ADOPTION OF NEW ACCOUNTING POLICIES Stock-based compensation Effective October October: see month. 1, 2003, the Company early adopted the amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. recommendations 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. Handbook
This article is about reference works. For the subnotebook computer, see .
relating to relate prep → bezüglich +gen, mit Bezug auf +acc its Employee Share Purchase Plan. Business combinations, Goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. As a result of its recent acquisition of Titan Consulting Group Ltd., the Company adopted the recommendations of the Canadian Institute of Chartered Accountants Handbook Section 1581, Business Combinations and Section 3062, Goodwill and Other Intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. Assets. The standard requires that the acquisition be accounted for using the purchase method of accounting and accordingly, the purchase price is allocated to the assets and liabilities based on their estimated fair values as of the acquisition date. The results of operations relating to the acquisition must be included in the consolidated financial statements from the effective date of acquisition. Intangibles are comprised of acquired customer relationships, order backlog, consultant database and non-competition agreements. Intangibles are amortized on a straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis over their estimated useful life not to exceed five years. 3. ACCOUNTING ESTIMATES For the period ended September 30, 2004 and the period ended September 30, 2003, there have been no material changes in estimates of amounts reported in prior interim periods or of amounts related to prior fiscal years, with the exception of the additional provisions related to the eServices business referred to in Note 15. 4. SEASONALITY The Company's revenues and earnings have historically been subject to some quarterly seasonality due to the timing of 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. periods and statutory holidays. 5. NOTE RECEIVABLE note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. The Company holds a note receivable for $600 from Square Peg Communications Inc. ("Square Peg") as final settlement for the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. by Square Peg of its shares owned by the Company.The note is non-interest bearing and is secured by a general security agreement over the assets of Square Peg second to any bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. .The note is repayable re·pay v. re·paid , re·pay·ing, re·pays v.tr. 1. To pay back: repaid a debt. 2. in three equal instalments of $200 on September 30 of each consecutive year commencing in 2005. Each instalment INSTALMENT, contracts. A part of a debt due by contract, and agreed to be paid at a time different from that fixed for the, payment of the other part. For example, if I engage to pay you one thousand dollars, in two payments, one on the first clay of January, and the other on the first payment can be delayed by one year at which time interest will accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. at a rate of prime + 3%. The book value of the note of $516 represents the fair value at September 30, 2004 after considering an implied interest rate of prime + 3%. The gain on sale of investment was determined as follows:
----------------------------------------
Cash received $250
Note receivable 516
Legal and accounting costs (25)
----------------------------------------
$741
6. INTANGIBLES
---------------------------------------------------------------------
2004 2003
---------------------------------------------------------------------
Cost Accumulated Net Book Net Book
Amortization Value Value
---------------------------------------------------------------------
Acquired customer
relationships 788 16 772 -
Non-competition
agreements $480 $8 $472 -
Order backlog 126 44 82 -
Consultant database 88 2 86 -
---------------------------------------------------------------------
$1,482 $70 $1,412 $-
---------------------------------------------------------------------
---------------------------------------------------------------------
7. GOODWILL The change in the book value of goodwill in the amount of $2,677 relates to the acquisition of Titan Consulting Group Ltd during the fourth quarter of 2004 (see Note 14). 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. During the quarter ending September 30, 2004, the Company acquired 120,000 of its outstanding common shares at an average price of $10.35 per share for a total of $1,246 including related expenses, through the Normal Course Issuer Bid initiated in May 2004.During the quarter ending September 30, 2003, the Company acquired 2,000 of its outstanding common shares at an average price of $8.00 per share for a total of $16 including related expenses, through the Normal Course Issuer Bid initiated in May 2003. During the twelve-month period ending September 30, 2004, the Company acquired 214,900 (2003: 316,300) of its outstanding common shares at an average price of $11.50 (2003: $6.03) per share for a total of $2,478 (2003: $1,918) including related expenses, through Normal Course Issue Bids initiated in May 2003 (2003: May 2002) and May 2004 (2003: May 2003) each for a period of one year.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. EARNINGS PER SHARE The diluted weighted average number of shares has been calculated as follows:
---------------------------------------------------------------------
Three Months ended Twelve months ended
September 30 September 30
2004 2003 2004 2003
---------------------------------------------------------------------
Weighted average number
of common shares - basic 8,384,425 8,159,519 8,389,220 8,047,748
Additions to reflect the
dilutive effect of
employee stock options 161,040 295,693 188,918 342,074
---------------------------------------------------------------------
Weighted average number of
common shares - diluted 8,545,465 8,455,212 8,578,138 8,389,822
---------------------------------------------------------------------
Options that are anti-dilutive because the exercise price was greater than the average market price of the common shares are not included in the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. 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 . For the three and twelve-month periods ended September 30, 2004 no stock options were excluded from the above computation of diluted weighted average number of common shares because they were anti-dilutive (2003: nil - 45,600). 10. 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 Business and Technology Services. - Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector. - Business and Technology Services involves both short and long-term placements of personnel to augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: 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 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 September 30, 2004
---------------------------------------------------------------------
Business and
Systems Technology
Engineering Services Corporate Total
---------------------------------------------------------------------
Revenues $16,320 $21,426 $- $37,746
Earnings before other
income, interest and
income taxes 3,070 581 (453) 3,198
Gain on sale
of investment 741
Interest income, net 135
Income taxes 1,209
---------------------------------------------------------------------
Earnings from continuing
operations 2,865
Discontinued operation 756
---------------------------------------------------------------------
Net earnings $2,109
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash and
goodwill $11,014 $19,872 $691 $31,577
Goodwill - 5,923 - 5,923
Cash 30,997
---------------------------------------------------------------------
Total assets $68,497
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months ended September 30, 2003
---------------------------------------------------------------------
Business and
Systems Technology
Engineering Services Corporate Total
---------------------------------------------------------------------
Revenue $12,059 $22,154 $- $34,213
Earnings before
interest and
income taxes 1,556 888 (405) 2,039
Interest income, net 124
Income taxes 799
---------------------------------------------------------------------
Net earnings $1,364
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash and
goodwill $15,685 $19,851 $100 $35,636
Goodwill - 3,246 - 3,246
Cash 25,185
---------------------------------------------------------------------
Total assets $64,067
---------------------------------------------------------------------
---------------------------------------------------------------------
Twelve months ended September 30, 2004
---------------------------------------------------------------------
Business and
Systems Technology
Engineering Services Corporate Total
---------------------------------------------------------------------
Revenue $83,942 $85,765 $- $169,707
Earnings before other
income, interest and
income taxes 14,744 2,790 (1,664) 15,870
Gain on sale of
investment 741
Interest income, net 467
Income taxes 5,884
---------------------------------------------------------------------
Earnings from continuing
operations 11,194
Discontinued operation 756
---------------------------------------------------------------------
Net earnings $10,438
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash and
goodwill $11,014 $19,872 $691 $31,577
Goodwill - 5,923 - 5,923
Cash 30,997
---------------------------------------------------------------------
Total assets $68,497
---------------------------------------------------------------------
---------------------------------------------------------------------
Twelve months ended September 30, 2003
---------------------------------------------------------------------
Business and
Systems Technology
Engineering Services Corporate Total
---------------------------------------------------------------------
Revenue $50,398 $90,642 $- $141,040
Earnings before
interest and
income taxes 6,361 3,630 (1,573) 8,418
Interest income, net 364
Income taxes 3,454
---------------------------------------------------------------------
Earnings from continuing operations 5,328
Discontinued operation 480
---------------------------------------------------------------------
Net earnings $4,848
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash and goodwill $15,685 $19,851 100 $35,636
Goodwill $3,246 - - $3,246
Cash 25,185
---------------------------------------------------------------------
Total assets $64,067
---------------------------------------------------------------------
---------------------------------------------------------------------
11. 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. The Company is party to several claims aggregating to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $120, which is being contested.The potential outcomes of these matters are 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 intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on the Company's financial condition. 12. COMMITMENTS As part of its e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. strategy, during the year 2000, the Company entered into a 10-year lease for an office building in the Ottawa Ottawa, city, Canada Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. area expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in April 2010.Upon exit of the e-business sector in 2001, the Company did not have any requirements for the space and accordingly sublet sub·let tr.v. sub·let, sub·let·ting, sub·lets 1. To rent (property one holds by lease) to another. 2. To subcontract (work). n. the excess space to a third party for a period of 5 years ending May 2006.In the event the sub-lessee defaults on the payment or the Company cannot sublease sublease n. the lease of all or a portion of premises by a tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. the 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 for the remaining 4 years, Calian will be required to assume the lease including related operating costs operating costs npl → gastos mpl operacionales for the remaining term of the lease.The lease payments including operating costs relating to the excess space amount to approximately $960 per year. 13. GUARANTEES In the normal course of business, the Company enters into agreements that may provide for indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from and guarantees to customers in transactions such as staffing, outsourcing and engineering. These indemnification undertakings and guarantees may require the Company to compensate customers for costs and losses incurred as a result of various events, including breaches of representations and warranties warranties, n.pl the details of a contract; considered less important than the conditions. Whereas the penalty for breach of conditions is the termination of the contract, the penalty for breach of warranties is payment of damages to the innocent party. , intellectual property right infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. , claims that may arise while providing services, or as a result of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. that may be suffered by customers. The Company mitigates its responsibility by removing from its contracts clauses related to liabilities for indirect or special damages Pecuniary compensation for injuries that follow the initial injury for which compensation is sought. The terminology and classification of types of damages is varied, at times contradictory, and often confusing. such as loss of revenue or profit in all of its engineering agreements. The Company also mitigates the risk of loss by including, where possible, similar indemnification clauses in the agreements entered into with its subcontractors. The term and nature of these indemnifications vary based upon the agreement, which often provides no limit. Consequently, the Company is unable to make a reasonable estimate of the maximum potential amounts that the Company could be required to pay to its customers. Historically, the Company has not been obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to make significant payments under these indemnification clauses. 14. BUSINESS ACQUISTION On September 7, 2004, the company acquired all of the outstanding shares of Titan Consulting Group Ltd ("Titan").Titan specializes in delivering skilled SAP sap, fluid in plants consisting of water and dissolved substances. Cell sap refers to this fluid present in the large vacuole, or cell cavity, that occupies most of the central portion of mature plant cells. , PeopleSoft (PeopleSoft, Inc., Pleasanton, CA, www.peoplesoft.com) A software company that specialized in enterprise-wide applications for client/server environments. Initially specializing in human resources, its package offerings covered the gamut including financial, distribution, manufacturing , Oracle and Siebel For the tech company, see . Siebel, originally Flugzeugbau Halle, was a German aircraft manufacturer in Halle an der Saale. Siebel aircraft included:
The purchase price will be satisfied with 90% cash and the balance through the issuance of common shares. On September 7, 2004, the Company paid $691 for the book value of the assets and liabilities as of the date of acquisition and $3,611 as an advance payment on the earnout Earnout A contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals. Notes: The financial goals are usually stated as a percentage of gross sales or earnings. amount.This amount is recorded based on the fact that management believes beyond a reasonable doubt that Titan can achieve the level of earning 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 this payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. .The Company has not accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. the shares that would be issuable upon achievement of this earnings level, due to the fact that the number of shares is unknown as it is based on the market price of the shares as at September 30, 2005.Based on the earnings level the Company believes beyond a reasonable doubt will be met and the share price as at September 30, 2004, 34,822 shares would be issuable. The acquisition has been accounted for using the purchase method of accounting and accordingly, the purchase price was allocated to the assets and liabilities based on their estimated fair values as of the acquisition date. The results of operations relating to the acquisition have been included in the consolidated financial statements from the effective date of acquisition. The following table summarizes the purchase price allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as which was determined by the Company based on internal appraisals of the fair value of the tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. and intangible assets acquired. ----------------------------------------------------------------- Non-cash working capital $1,426 Capital assets 70 Intangibles 1,482 Long-term debt (805) Future income tax liability (548) Goodwill 2,677 ----------------------------------------------------------------- Purchase Price $4,302 ----------------------------------------------------------------- ----------------------------------------------------------------- Consideration: Net cash, including cost of acquisition $4,302 ----------------------------------------------------------------- Following the completion of the 12-month earnout period, the balance of the cash and shares are to be calculated and paid during the first six months of fiscal 2006. The final purchase price will be determined and accounted for as an incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. of the acquisition resulting in an increase to goodwill. 15. 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. During the year, the Company revised its estimate of the provision for future costs relating to the 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: e-business operation and recorded an additional charge of $1,200 ($756 after tax). During 2003, the Company recorded a similar adjustment to the provision for $750 ($480 after tax). These charges represent non-cash transactions. These adjustments bring the total provision related to the discontinued operation to $2,300 as at September 30, 2004 (2003: $1,100). 16. COMPARATIVE FIGURES Certain of the comparative figures have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the financial statement presentation adopted this fiscal year. Management Discussion and Analysis - Fourth Quarter 2004: RESULTS OF OPERATIONS - FOURTH QUARTER 2004 Revenues: For the fourth quarter of 2004, revenues were $37.7 million, representing an increase of 10% over the $34.2 million reported in the fourth quarter of 2003. Systems Engineering's revenues were $16.3 million in the quarter, which is an increase of 35% over the $12.1 million recorded in the fourth quarter of last year. This increase is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increased activities associated with certain large contracts awarded during 2003 and 2004.Revenues were less than the reported revenues in the second and third quarter of 2004 as work related to the large SEI order diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. as the contract neared completion. The Business and Technology Services segment reported a 3% decrease with revenues of $21.4 million compared to $22.1 million for the same quarter of last year.Continued delays in federal program initiatives and budget reallocations continue to affect the division's ability to expand its service offerings to new customers within the federal government. We expect the impediments IMPEDIMENTS, contracts. Legal objections to the making of a contract. Impediments which relate to the person are those of minority, want of reason, coverture, and the like; they are sometimes called disabilities. Vide Incapacity. 2. to continue over the next several quarters. However, with the acquisition of Titan late in the fourth quarter, the division has now expanded its base of private customers and is also well positioned to take advantage of expected growth in the 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. markets both with private sector customers and the federal government. The Company added $45 million in new business this quarter resulting in an order backlog in excess of $257 million. $92 million of this backlog is expected to be earned as revenue over the next fiscal year. Gross margin: Gross margin was 20.8% in the fourth quarter of 2004 compared to 18.1% in the fourth quarter a year ago. Gross margins improved over the same quarter last year as a result of System Engineering revenues representing a greater portion of total revenues. Gross margin in Systems Engineering was 28.1% compared to 23.6 % in the fourth quarter of 2003. Margins are significantly higher than in the previous year as a result of higher labour 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 rates, excellent project execution and economies of scale. With a similar revenue mix as in the prior year, gross margin in Business and Technology Services was 15.3% compared to the 15.1% reported in the fourth quarter of 2003. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. : Selling, marketing, general and administration expenses totaled $3.6 million or 9.5% of revenues in the fourth quarter of 2004 compared to the $3.1 million or 9% of revenues reported in the fourth quarter of 2003.The increase is mainly attributable to incentives directly related to the higher level of profitability. Amortization of intangibles During 2004, the Company acquired intangibles as a result of its acquisition of Titan. The intangibles are amortized over their expected useful life, not exceeding 5 years. During 2004, the Company amortized $0.1 million representing the amortization required for the one-month period subsequent to the acquisition date. Amortization in 2005 will represent a full year. Gain on sale of investment On September 30, 2004, the Company 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 its 18% interest in Square Peg Communications Inc. for an amount of $0.8 million, net of costs.The Company has held this investment since 1993 and the majority shareholders wished to repurchase all the outstanding shares held by non-employees. The Company received $0.2 million on closing and a note receivable for $0.6 million as indicated in Note 6.After discounting the non-interest bearing note to its fair value, income of $0.7 million was recorded in 2004. Income taxes The provision for income taxes for the fourth quarter of 2004 was $1.2 million compared to $0.8 million a year ago commensurate with the level of earnings before tax. 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 : As a result of the foregoing, the Company recorded net earnings from continuing operations of $2.9 million or $0.34 per share basic and diluted for the fourth quarter of fiscal 2004, compared to $1.4 million or $0.17 per share basic and $0.16 per share diluted in the same period of the prior year. The improvement is attributable to the Company's increased revenue base and improved margins while continuing to maintain a similar level of operating expenses as in the prior year. Loss on disposal of discontinued operation: As indicated in Note 15 the Company has a significant commitment with regards to premises leased during 2000 in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of the e-business operation expansion and growth. As a result of the e-business operation being discontinued, the Company no longer requires this excess space. This lease commitment extends to April 2010. The space is currently sublet to a third party until May 2006. During the fourth quarter of 2004, the Company assessed the current market condition for leased space in the Kanata area and management determined it was prudent to increase its existing provision and recorded an additional loss on disposal of the e-business operation of $1.2 million ($0.8 million after tax) or $0.09 per share. Net earnings: As a result of the foregoing, the Company recorded net earnings of $2.1 million or $0.25 per share basic and diluted in the fourth quarter of 2004, compared to $1.4 million or $0.17 per share basic and $0.16 per share diluted in the same quarter of the prior year. RESULTS OF OPERATIONS - TWELVE-MONTH PERIOD ENDING SEPTEMBER 30, 2004 Revenues: Total revenues for the year ended September 30, 2004 were $169.7 million, a 20% increase over 2003 revenues of $141.0 million. A significant portion of this increase is related to the contract awarded and executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. during the year by the Systems Engineering Division on the MSTAR product. The general business environment in 2004 continued to be very competitive. The Company began the year with $73 million of its backlog to be earned in 2004. This backlog combined with Calian's strong customer relationships and its reputation for delivering high quality service resulted in a solid revenue stream for 2004. Calian's Systems Engineering Division accounted for revenues of $83.9 million or 49% of total revenues compared to $50.4 million or 36% of revenues a year earlier, representing an increase of 67% over the prior year. The growth during 2004 was partly due to the continued success with long time customers in the satellite communication sector, but was largely a result of the division delivering on its contract with SEI worth in excess of $28 million awarded and executed in its entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. in 2004. Business and Technology Services Division accounted for the balance of $85.8 million or 51% of revenues compared to $90.6 million or 64% a year earlier. This decrease of 5% over the prior year is attributed to a general 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. with the federal government, especially as it relates to short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. services. Delays in the funding of new federal government programs and increased delays in the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. cycle of other programs have created a difficult market environment for winning new business. The long-term nature of a significant portion of the division's business and its reputation for delivering quality services helped the division maintain a healthy level of revenues despite these market conditions. Gross Margin: Gross margin was 20.1% during the twelve months of 2004, compared to 18.0% in the equivalent period of 2003, Gross margins improved over the same period last year as a result of System Engineering revenues representing a greater proportion of the total revenues. Gross margin was 24.9% in the Systems Engineering Division during 2004 compared to 23.3% the previous year. This was a result of a higher labour component in revenues, which generally attracts higher margins, along with exceptional labour utilization rates and economies of scale associated with the increased level of business. Excellent project control once again ensured that margins were not eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. by cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor . In the Business and Technology Services Division, the gross margin was 15.3% in 2004 compared with 15.0% in 2003. Although revenues decreased in this division during 2004, the revenue mix improved slightly. In addition, the division's variable cost structure allowed it to adjust its direct costs simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics with its level of revenues ensuring stable gross profit percentages. The prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in some of the Company's markets and the uncertainty regarding federal government spending Government spending or government expenditure consists of government purchases, which can be financed by seigniorage, taxes, or government borrowing. It is considered to be one of the major components of gross domestic product. will continue to produce a very competitive marketplace for new business in the near future, which in turn will add pressure on gross margins. However, with a healthy backlog and efficient execution of projects, management believes it can maintain margins in each of its two division at traditional levels of 21% to 23% for the Systems Engineering Division and 14.5% to 15.5% for the Business and Technology Services Division. Because of the significant difference in gross margin between each of the two divisions, the overall gross margin of the Company is dependent on the relative level of revenue generated from each division. Operating expenses: Selling, marketing, general and administration, totaled $14.2 million or 8.4% of 2004 revenues.This compares to $13.0 million or 9.2% of revenues for the same period in 2003. The increase is mainly attributable to incentives directly related to the higher level of profitability and the decrease as a % of revenues is attributable to the increased levels of revenues for 2004. The Company's operating costs are expected to remain relatively stable with only minimal increases required to support future growth. Income Taxes: Calian reports its results on a fully taxed basis. The provision for income taxes during 2004 was $5.9 million compared to $3.5 million in 2003 commensurate with the level of earnings before tax. The total pool of federal income tax losses, research expenditures and investment tax credits available to reduce future earnings as at September 30, 2003 amounted to $7.9 million. During 2004, the Company utilized the remaining balance of these pools to reduce the current year's taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. and was required to pay taxes on a large portion of its taxable earnings. Total income taxes paid in 2004 were $2.5 million, compared to $0.3 million in 2003. For 2005, the Company will be required to pay taxes on all of its taxable earnings. Earnings from continuing operations: As a result of the foregoing, the Company recorded net earnings from continuing operations of $11.2 million or $1.33 per share basic and $1.31 per share diluted for the twelve months of fiscal 2004, compared to $5.3 million or $0.66 per share basic and $0.64 per share diluted in the same period of the prior year. The improvement is attributable to the Company's increased revenue base and improved margins while continuing to maintain a similar level of operating expenses as in the prior year. Loss on disposal of discontinued operation: During 2004, the Company recorded an additional loss on disposal of the eServices business of$1.2 million ($0.8 million after tax) or $0.09 per share. During 2003, the Company recorded a similar adjustment to the provision for $0.8 million ($.05 million after tax) or $0.06 per share. These adjustments bring the total provision available for future real estate and other potential costs associated with the e-business discontinued operation to approximately $2.3 million. Net Earnings: As a result of the foregoing, the Company recorded net earnings of $10.4 million or $1.24 per share basic and $1.22 per share diluted for the twelve months of fiscal 2004, compared to $4.8 million or $0.60 per share basic and $0.58 per share diluted in the same period of the prior year. FINANCIAL CONDITION AND CASHFLOWS: Cash flows provided from operating activities in 2004 were $15.2 million as compared with $18.7 million during 2003. During the year, the Company generated cash flows from earnings of $15.3 million (2003, $9.5) offset by a decrease in unearned contract revenue of $4.0 million (2003, increase of $4.6). 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 generated cash of $4.1 million in 2004 compared to $4.8 million in 2003 with all other working capital items remaining relatively constant. As discussed in Note 14, on September 7, 2004 the Company acquired Titan. The total value of the acquisition is expected to be in the range of $6 to $8 million to be paid when the 12 month earnout period is completed. On closing, the Company paid $4.3 million in cash. In addition during 2004 the Company paid $.1.9 million in dividends or $0.22 per share compared to $1.4 million or $0.17 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. and acquired 214,900 common shares under Normal Course Issuer Bids at an average price of $11.50 compared to acquiring 316,300 at an average price of $6.03 in 2003. SEASONALITY The Company's operations have historically been subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays. Typically the Company's first and last quarter will be negatively impacted as a result of the Christmas Christmas [Christ's Mass], in the Christian calendar, feast of the nativity of Jesus, celebrated in Roman Catholic and Protestant Churches on Dec. 25. In liturgical importance it ranks after Easter, Pentecost, and Epiphany (Jan. 6). season and summer vacation Summer vacation (also called summer holidays or summer break) is a vacation in the summertime between school years in which students are off for 3 months, depending on the country and district. period.During these periods, the Company can only invoice An itemized statement or written account of goods sent to a purchaser or consignee by a vendor that indicates the quantity and price of each piece of merchandise shipped. A consular invoice is one used in foreign trade. for work performed and is also required to pay for statutory holidays.This results in reduced levels of revenues and in a drop in gross margins. This seasonality may not be apparent in the overall results of the Company depending on the impact of the realized sales mix sales mix See product mix. of its various projects. OUTLOOK Management believes the Company is well positioned for sustained growth in the long-term. The Company operates in markets that will continue to require the services that the Company delivers. To further assure itself of a stable source of revenues, the Company will focus on increasing the percentage of its revenues derived from 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. business. Its acquisition strategy focusing on adding complementary businesses to the Company's mix will also be an additional source for growth. The Systems Engineering Division has been working within a depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. satellite sector for the last few years with no significant rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective expected in the near-term near-term adj. Of, for, or involving a short period of time in the near future. .However, management believes that new satellites adopting the latest technologies will be required in the medium term to maintain and improve service offerings. In addition, management believes the surveillance and security market will continue to be strong in the near term and that systems such as MSTAR will continue to be in demand. Although management cannot predict the timing and extent of future orders, it is confident that this market will continue to provide a good revenue stream going forward. The Business and Technology Services Division's services are adaptable a·dapt·a·ble adj. Capable of adapting or of being adapted. a·dapt  a·bil to many different markets. Currently, its strength is with
the Department of National Defence. Management believes that this
department and many others within the federal government will continue
to require more outsourcing services from private enterprises to
supplement their current workforce. Although the delays noticed over
the last few years have slowed the growth of this division, management
believes that the types of service the division offers will continue to
be attractive to government agencies going forward. Management also
believes that there will be an increase in requirements for ERP
expertise supplied on a per-diem basis. With its recent acquisition of
Titan and the award to Calian of two standing agreements with the
Federal government for SAP and Peoplesoft resources, Calian is now well
positioned to take advantage of this expected growth.While Calian has the benefit of a healthy backlog, continued strengthening of the Canadian dollar 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 may negatively impact the Systems Engineering Division's competitiveness when bidding against foreign competition on projects denominated in US dollars. GUIDANCE As a result of our present backlog and based on the above information related to the current market conditions and demand, the Company expects 2005 revenues to be in the range of $160 million to $170 million and net earnings per share in the range of $0.75 to $0.90. FORWARD-LOOKING STATEMENT Certain information included in this management discussion and analysis is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by the Company with the Ontario Securities Commission.Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them. The foregoing discussion and analysis should be read in conjunction with the financial statements for the fourth quarter of 2004 and 2003, and with the Management Discussion and Analysis in the 2003 annual report, including the section on risks and opportunities. Calian Technology Ltd. (TSX:CTY) |
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