Calian Technology Reports Second Quarter Results, Earnings and Backlog Rise in Q2.Business Editors/High-Tech Writers KANATA, Ontario--(BUSINESS WIRE)--April 24, 2003 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 second quarter ended March 31, 2003. Revenues for the quarter were $37.9 million, up 14% from $33.2 million for the same quarter in the previous year. 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 $1.6 million or $0.20 per share basic and $0.19 per share 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. ; and after recording a non-recurring charge of $0.8 million ($0.5 million after tax) or $0.06 per share, net earnings were $1.1 million or $0.14 per share basic and $0.13 per share diluted, compared to $0.8 million or $0.10 per share in the same quarter last year. "The second quarter earnings from continuing operations exceeded our expectations", said 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. "Many of our customers in the Staffing and Outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. Division required increased service levels during this quarter and the Systems Engineering Division experienced record 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. We are extremely pleased with our performance to date and we will continue to ensure we provide a high quality service to our customers." Highlights of the Second Quarter: -- Cash position increased to $18.0 million. -- $59 million in new, booked business resulting in a 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 $145 million. -- Our Systems Engineering Division won a major contract from the European Space Agency European Space Agency (ESA), multinational agency dedicated to the promotion, for exclusively peaceful purposes, of cooperation among European states in space research and technology. for the addition of a second antenna system that will be developed and installed in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. over a 30-month period ending mid- mid- pref. Middle: midbrain. 2005. -- The Company recorded a non-recurring charge relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the eServices 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. of $0.8 million ($0.5 million net of tax) or $0.06 per share. This non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. relates to management's revised estimates Revised estimate The third estimate of GDP released about three months after the measurement period. of its exposure on excess space for which the Company has a lease commitment extending to May 2010. This excess space resulted from the Company's exit from the 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. sector in 2001. "We expect activity to return to more normal levels for the balance of the fiscal year," said Larry O'Brien. "Therefore, we expect to complete fiscal 2003 with revenues in the range of $140 to $142 million and earnings per share in the range of $0.55 to $0.60." About Calian Calian Technology Ltd. (TSX:CTY) provides technical 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 over 2,300 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 Staffing and Outsourcing Services Division augments customer workforces with flexible short and 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. 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 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. 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. The information on this website is protected by copyright. Copyright (C) 2002 Calian Ltd. All rights reserved. Except as specifically permitted herein, no portion of the information on this website may be reproduced in any form or by any means without the prior written permission from Calian.
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(dollars in thousands except per share data)
(Unaudited)
Three months ended Six months ended
March 31 March 31
------------------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------------------
Revenues $37,865 $33,245 $72,639 $63,510
Cost of revenues 30,903 27,462 59,735 52,681
------------------------------------------------------------------
Gross profit 6,962 5,783 12,904 10,829
Selling
and marketing 1,124 1,129 2,287 2,189
General and
administration 2,253 2,108 4,372 4,316
Facilities 700 681 1,373 1,379
Amortization of
capital assets 295 398 586 783
------------------------------------------------------------------
Earnings before
interest, taxes and
amortization
of goodwill 2,590 1,467 4,286 2,162
Interest income, net 86 29 134 93
------------------------------------------------------------------
Earnings before
taxes and
amortization
of goodwill 2,676 1,496 4,420 2,255
------------------------------------------------------------------
Income
taxes - current 480 197 702 435
Income
taxes - future 577 414 1,040 526
------------------------------------------------------------------
1,057 611 1,742 961
------------------------------------------------------------------
Earnings before
amortization
of goodwill 1,619 885 2,678 1,294
Amortization
of goodwill - 59 - 118
------------------------------------------------------------------
Earnings from
continuing
operation 1,619 826 2,678 1,176
Loss on disposal
of discontinued
operation
(net of income taxes)
(Note 8) 480 - 480 -
------------------------------------------------------------------
NET EARNINGS 1,139 826 2,198 1,176
Retained earnings,
beginning
of period 11,388 8,147 11,057 9,797
Excess of purchase
price over stated
capital on
repurchase of
shares (Note 9) (375) (7) (781) (2,007)
Dividend (322) - (644) -
------------------------------------------------------------------
Retained earnings,
end of period $11,830 $8,966 $11,830 $8,966
------------------------------------------------------------------
------------------------------------------------------------------
Earnings per share
from continuing
operations: (Note 3)
Basic $0.20 $0.10 $0.33 $0.14
------------------------------------------------------------------
------------------------------------------------------------------
Diluted $0.19 $0.10 $0.32 $0.14
------------------------------------------------------------------
------------------------------------------------------------------
Net earnings per
share: (Note 3)
Basic $0.14 $0.10 $0.27 $0.14
------------------------------------------------------------------
------------------------------------------------------------------
Diluted $0.13 $0.10 $0.26 $0.14
------------------------------------------------------------------
------------------------------------------------------------------
Weighted average
number of shares:
(Note 3)
Basic 7,974,689 8,030,518 8,016,124 8,604,784
------------------------------------------------------------------
------------------------------------------------------------------
Diluted 8,381,728 8,137,142 8,343,401 8,661,400
------------------------------------------------------------------
------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
March 31, 2003 September 30, 2002
(Unaudited)
--------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $18,025 $9,488
Accounts receivable 17,398 25,307
Unbilled accounts receivable 4,752 3,472
Prepaid expenses and other 414 676
Note receivable 50 50
Future income taxes 3,628 3,325
--------------------------------------------------------------------
44,267 42,318
GOODWILL 3,246 3,246
CAPITAL ASSETS 4,023 4,282
INVESTMENT TAX CREDITS RECOVERABLE 1,202 1,705
FUTURE INCOME TAXES 2,402 3,476
--------------------------------------------------------------------
$55,140 $55,027
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and
accrued liabilities $17,450 $15,291
Unearned contract revenue 10,753 13,483
Current portion of long-term debt 127 164
--------------------------------------------------------------------
28,330 28,938
LONG-TERM DEBT 135 181
--------------------------------------------------------------------
28,465 29,119
--------------------------------------------------------------------
CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY
Share capital (Note 9) 14,845 14,851
Retained earnings 11,830 11,057
--------------------------------------------------------------------
26,675 25,908
--------------------------------------------------------------------
--------------------------------------------------------------------
$55,140 $55,027
--------------------------------------------------------------------
--------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Three months ended Six months ended
March 31 March 31
------------------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------------------
CASH FLOWS FROM
(USED IN) OPERATING
ACTIVITIES
Net earnings $1,139 $826 $2,198 $1,176
Items not
affecting cash:
Deferred lease
inducements (3) (3) (5) (5)
Amortization 295 455 586 901
Investment tax
credits 346 82 503 249
Future
income taxes 308 414 771 526
------------------------------------------------------------------
2,085 1,774 4,053 2,847
Change in non-cash
working capital
Accounts
receivable 5,108 (2,238) 7,909 (2,959)
Unbilled accounts
receivable (905) (1,828) (1,280) (425)
Prepaid expenses
and other 351 (82) 262 119
Accounts payable
and accrued
liabilities 4,371 560 2,159 (655)
Unearned
contract revenue (4,533) (379) (2,730) 1,003
------------------------------------------------------------------
6,477 (2,193) 10,373 (70)
------------------------------------------------------------------
CASH FLOWS FROM
(USED IN) FINANCING
ACTIVITIES
Repayment of debt (39) (36) (78) (74)
Issuance of
common shares 274 207 376 207
Repurchase of
common shares,
including cost
associated with
repurchase (Note 9) (546) (22) (1,163) (5,302)
Dividend payment (322) - (644) -
------------------------------------------------------------------
(633) 149 (1,509) (5,169)
------------------------------------------------------------------
CASH FLOWS FROM
(USED IN) INVESTING
ACTIVITIES
Acquisition of
capital assets (162) (102) (327) (401)
------------------------------------------------------------------
(162) (102) (327) (401)
------------------------------------------------------------------
NET CASH INFLOW
(OUTFLOW) 5,682 (2,146) 8,537 (5,640)
------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS,
BEGINNING
OF PERIOD 12,343 8,717 9,488 12,211
------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS,
END OF PERIOD $18,025 $6,571 $18,025 $6,571
------------------------------------------------------------------
------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the periods ended March 31, 2003 and 2002
(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, 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. CHANGE IN ACCOUNTING POLICIES a. 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. On October October: see month. 1, 2002, the Company adopted the new 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. ("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) ") Handbook
This article is about reference works. For the subnotebook computer, see .
INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those life will no longer be amortized to earnings and will be assessed for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on an annual basis in accordance with the new standards, including a transitional impairment test whereby any resulting impairment will be charged to opening 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. . During the six month period ending March 31, 2003, the effect of the non-amortization of goodwill resulted in an increase in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net earnings of $118 or $0.01 per share. The Company completed the transitional impairment test at October 1, 2002 and concluded that no write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. is necessary as a result of implementing the new standards. b. Stock-based compensation Effective October 1, 2002, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments and in accordance with the recommendations has applied them only to awards granted on or after the date of the adoption. The new standard requires that all stock based awards made to non-employees be measured and recognized using the fair-value based method. Options granted to employees and shares issued to employees under the Employee Stock Purchase Plan (ESPP See Employee Stock Purchase Plan. ) may be accounted for using either the fair-value based method or other common practice. As such, the Company has continued the use of the settlement method of accounting for stock-based compensation awards granted to employees. Accordingly, no compensation expense is recognized for options granted and shares issued to employees under the ESPP. Any consideration paid by employees and purchase of shares is credited to share capital. During the six month period ended March 31, 2003, the Company issued 18,696 shares under the ESPP, but did not grant any options. 3. EARNINGS PER SHARE Effective October 1, 2001, the Company adopted the new recommendation of the Canadian Institute of Chartered Accountants ("CICA") with respect to the calculation of earnings per share. These new recommendations do not result in any changes to the way in which basic earnings per share is calculated. However, the new recommendations do affect the calculation of diluted earnings per share diluted earnings per share 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 is 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. The diluted weighted average number of shares has been calculated as follows:
Three months ended Six months ended
March 31 March 31
------------------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------------------
Weighted average
number of shares
- basic 7,974,689 8,030,518 8,016,124 8,604,784
Additions to
reflect the
dilutive effect
of employee
stock options 407,039 106,624 327,277 56,616
Weighted number
of shares
- diluted 8,381,728 8,137,142 8,343,401 8,661,400
------------------------------------------------------------------
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. In the three and six month periods ended March 31, 2003, 43,100 and 52,400 stock options respectively were excluded from the above computation of diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. because they were anti-dilutive (2002 - 438,450, 498,155). 4. ACCOUNTING ESTIMATES For the period ended March 31, 2003 and with the exception of the additional provision related to the eServices business referred to in Note 8, there have been no material changes in estimates of amounts reported in prior interim periods or of amounts related to prior fiscal years. 5. SEASONALITY The Company's revenues and earnings have historically been subject to some seasonality in its Staffing and Outsourcing Services segment 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. 6. 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 Staffing and Outsourcing 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. -- Staffing and Outsourcing 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 March 31, 2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other (a) Total
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenues $13,617 $24,248 $37,865
Earnings before
interest and
income taxes 1,799 1,191 (400) 2,590
Interest income 86
Income taxes 1,057
--------------------------------------------------------------------
Earnings from
continuing
operations 1,619
Discontinued operation 480
--------------------------------------------------------------------
Net Earnings $1,139
--------------------------------------------------------------------
--------------------------------------------------------------------
Total assets other
than cash $16,028 $20,937 $150 $37,115
Cash 18,025
--------------------------------------------------------------------
Total assets $55,140
--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended March 31, 2002
--------------------------------------------------------------------
--------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other (a) Total
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue $11,337 $21,908 $33,245
Earnings (loss)
before interest
and income taxes 1,266 531 (389) 1,408
Interest income 29
Income taxes 611
--------------------------------------------------------------------
Net earnings $826
--------------------------------------------------------------------
--------------------------------------------------------------------
Total assets other
than cash $18,855 $24,921 $450 $44,226
Cash 6,571
--------------------------------------------------------------------
Total assets $50,797
--------------------------------------------------------------------
--------------------------------------------------------------------
Six months ended March 31, 2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other (a) Total
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue $25,601 $47,038 $72,639
Earnings (loss)
before interest
and income taxes 3,115 1,953 (782) 4,286
Interest income 134
Income taxes 1,742
--------------------------------------------------------------------
Earnings from continuing operations 2,678
Discontinued Operation 480
--------------------------------------------------------------------
Net earnings $2,198
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Total assets other
than cash $16,028 $20,937 $150 $37,115
Cash 18,025
--------------------------------------------------------------------
Total Assets $55,140
--------------------------------------------------------------------
--------------------------------------------------------------------
Six months ended March 31, 2002
--------------------------------------------------------------------
--------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other (a) Total
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue $21,218 $42,292 - $63,510
Earnings (loss)
before interest
and income taxes 2,220 599 (775) 2,044
Interest income 93
Income taxes 961
--------------------------------------------------------------------
Net earnings $1,176
--------------------------------------------------------------------
--------------------------------------------------------------------
Total assets other
than cash $18,855 $24,921 $450 $44,226
Cash 6,571
--------------------------------------------------------------------
Total assets $50,797
--------------------------------------------------------------------
--------------------------------------------------------------------
(a) Includes corporate services costs not applicable to allocate to
operating segments.
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. 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. $450, which are 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 Calian's financial condition. 8. COMMITMENTS As part of its e-business 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 May 2010. Upon exit of the e-business sector in 2001, the Company did not have any requirements for the space and accordingly sub-let 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 sub-lease 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. During the quarter, 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: eServices business and recorded an additional non-recurring charge related to the leased premises of $750 ($480 after tax). This adjustment brings the total provision available for future costs associated with the eServices discontinued operation to approximately $1.1 million. 9. 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 December: see month. 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. During the current quarter, the Company acquired 91,800 (or 1.15%) of its outstanding shares at an average price of $5.92 per share for a total of $546 through a Normal Course Issuer Bid initiated in May 2002 for a period of one year. On a year to date basis, the company has acquired 205,800 (or 2.6%) of its outstanding shares at an average price of $5.62 per share for a total of $1,163. The excess of the purchase price over the average stated capital of the shares has been charged to retained earnings. Management Discussion and Analysis (MD&A) of the second fiscal quarter: RESULTS OF OPERATIONS: SECOND QUARTER 2003 Revenues: For the second quarter of fiscal 2003, revenues were $37.9 million compared to $33.2 million in the second quarter of fiscal 2002, representing an increase of 14%. The Staffing and Outsourcing Services segment reported an increase of 11% with revenues of $24.2 million compared to $21.9 million for the prior year. This increase is attributed to an unusually high level of activity with existing government customers, additional revenue generated from new contracts awarded late in fiscal 2002 and early fiscal 2003, compounded by a higher level of billable days in the quarter compared to other quarters. Systems Engineering's revenues were $13.6 million in the quarter, up 20% from the $11.3 million recorded in the second quarter of last year. The majority of this increase is attributed to higher non-labour flow-through on projects coupled with high utilization rates. During the quarter, the Systems Engineering Division was awarded a large contract with the European Space Agency for a total of $33 million over a 30-month period. This contract will contribute towards revenues starting in the next quarter of 2003. Including this recent contract win in the SED (1) (Stream EDitor) A Unix text editor that processes an entire file. It is the stream-oriented version of ed, an earlier text editor. Sed executes ed commands, but instead of editing one line at a time, sed applies the commands to the whole file. Division along with other contracts and business renewals, the Company booked $59 million in new business this quarter, increasing its order backlog to $145 million. $51 million of this backlog is expected to be earned as revenue over the course of fiscal 2003. Gross Margin: Gross margin was 18.4% in the second quarter of 2003 as compared to 17.4% in the second quarter a year ago. Gross margins are better than the same quarter last year but can vary significantly based on the overall sales mix sales mix See product mix. of our services and the level of non-labour flow through on projects. Gross margin was 23.6% in SED compared to 22.8% in the second quarter of 2002. Gross margin in Staffing and Outsourcing Services was 15.5% compared to 14.6% in the second quarter of 2002. 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 $3.4 million or 9% of revenues in the second quarter of 2003. This compares to $3.2 million or 10% of revenues in the second quarter of 2002. This decline in operating expenses as a percentage of revenues is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Company's strong back office, which has the capacity to absorb absorb To offset sell orders or a new security offering with buy orders. increased activity without equivalent increased costs. Income Taxes: The provision for income taxes for the second quarter of 2003 was $1.0 million compared to $0.6 million a year ago. The tax expense in 2003, as a percentage of earnings before taxes and amortization of goodwill, reflects the declining federal and provincial Provincial has several meanings and may refer to:
Net Earnings before discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. : As a result of the foregoing, the Company recorded net earnings before discontinued operations of $1.6 million or $0.20 per share basic and $0.19 per share diluted in the second quarter of fiscal 2003, compared to $0.8 million or $0.10 per share basic and diluted in the same quarter of the prior year. The improvement is attributable to the Company's increased revenue base, improved margins while continuing to maintain a similar level of operating expenses as in the prior year. Loss on disposal of the eServices business: As indicated in Note 8 of these interim financial statements, Calian has a significant commitment with regards to premises leased during its fiscal year 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 eServices expansion and growth. As a result of the eServices business being discontinued, the Company no longer requires this excess space. This lease commitment extends to May 2010. The space is currently sub-let to a third party until May 2006. During the quarter, the sub-tenant SUB-TENANT. The same as under-tenant. See Under-leaser; Under-tenant, and 1 Bell's Com. 76. of this facility approached the Company and requested a review of the current Sub-lease agreement. Calian and the sub-tenant were not able to agree on modifications that were acceptable to both parties. To date, the sub-tenant has fulfilled ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. its sub-lease obligations and has indicated it will continue to do so. As a result of these discussions and the insight it provided to the Company, management believes it is prudent to increase its existing provision related to the exit of the eServices business and therefore recorded an additional loss on disposal of the eServices business of $0.8 ($0.5 after tax) or $0.06 per share relating to the leased premises. This adjustment brings the total provision available for future costs associated with the eServices discontinued operation to approximately $1.1 million. Net Earnings: As a result of the foregoing, the Company recorded net earnings of $1.1 million or $0.14 per share basic and $0.13 per share diluted in the second quarter of fiscal 2003, compared to $0.8 million or $0.10 per share basic and diluted in the same quarter of the prior year. SIX-MONTH PERIOD ENDING MARCH 31, 2003 Revenues: During the first six months of this year, revenues were $72.6 million compared to $63.5 million for the first six months of fiscal 2002, representing an increase of 14%. Revenues in the Staffing and Outsourcing Services segment increased 11% to $47.0 million from 42.3 million and revenues in the Systems Engineering segment increased 21% to $25.6 million from $21.2 million. Gross Profit: Gross profit percentage was 17.8% during the first six months of 2003, versus 17.0% in the equivalent period last fiscal year, as a result of the increased demand of high margin projects and the high utilization rates experienced in 2003. Operating expenses: Selling, marketing and general and administration, totaled $6.7 million or 9% of revenues in the first six months of 2003. This compares to $6.5 million or 10% of revenues for the same period in 2002. The Company's operating costs are now stable and are expected to remain at these levels 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. Income Taxes: The provision for income taxes for the six-month period ending March 31, 2003 was $1.7 million, compared to $1 million a year ago. As explained above, the income tax expense for fiscal 2002 was impacted by the effect of income tax rate reductions on the valuation of future income tax assets. Although the Company is reporting a current provision for income taxes of $0.7 million, a significant portion of the income taxes will be recovered through the utilization of investment tax credits. Net Earnings: As a result of the foregoing, the Company recorded net earnings before discontinued operations of $2.7 million or $0.33 per share basic and $0.32 per share diluted and net earnings of $2.2 million or $0.27 per share basic and $0.26 per share diluted for the first six months of fiscal 2003, compared to $1.2 million or $0.14 per share basic and diluted in the same period of the prior year. FINANCIAL CONDITION AND CASHFLOWS: 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 future. The Company's cash position at the end of the quarter amounted to $18.0 million, compared with $6.6 million at March 31, 2002. During the second quarter of 2003, cash flow from operating activities, including changes in working capital was $6.5 million, as compared to a cash outflow of $2.2 million in the second quarter a year ago. This variation is mainly due to an increase in operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the period, a decrease in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and an increase in accounts payable. In May 2002, the Company initiated a normal course issuer bid and in the second quarter of 2003, repurchased for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. 91,800 shares for a total cash outflow of $0.5 million. As a result of the changes described above, the net cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. for the second quarter of fiscal 2003 was $5.7 million as compared to a net cash outflow of $2.1 million for the same period the previous year. SEASONALITY The Company's operations have historically been subject to some seasonality in its Staffing and Outsourcing Services segment 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 margin. This seasonality may not be apparent in the overall results of the division depending on the impact of the realized sales mix of its various projects. OUTLOOK The Company's strong backlog is expected to provide a solid base of revenue for the next several quarters and its stable business environment will be conducive con·du·cive adj. Tending to cause or bring about; contributive: working conditions not conducive to productivity. See Synonyms at favorable. to achieving controlled profitable growth through strategically focused business development activities. The business development activities will have to take into consideration the extremely competitive environment in the satellite industry and the recent delays in the government procurement Government procurement, also called public tendering, is the procurement of goods and services on behalf of a public authority, such as a government agency. With 10 to 15% of GDP in developed countries, and up to 20% in developing countries, government procurement accounts cycle, which may result in the delay in the awarding of new contracts. The Company is increasing its marketing activities in various other government related communications and defence related programs. Therefore, in both the Staffing and Outsourcing Services Division and the Systems Engineering Division, there will be some reliance on increased 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. . GUIDANCE Based on the information known today about the current market conditions and demand and incorporating the results of recent contract wins, the Company believes it can complete the year with revenues increasing in the range of 6% to 8% and earnings per share in the range of $0.55 to $0.60. 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 second quarter of fiscal 2003 and 2002, and with the Management Discussion and Analysis in the fiscal 2002 annual report, including the section on risks and opportunities. |
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