Calian Technology Reports Third Quarter Results: Dividend Increase and Acquisition Review Initiated.Business Editors/High-Tech Writers KANATA, Ontario--(BUSINESS WIRE)--July 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 third quarter ended June June: see month. 30, 2003. Revenues for the quarter were $34.2 million, compared to $34.2 million for the same quarter in the previous year. Net earnings were $1.3 million or $0.16 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 $1.1 million or $0.13 per share in the same quarter last year. "We are particularly pleased with the growth in our 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. and our increased cash flow during the quarter," said 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. . "Our plan is to continue to focus on steady controlled profitable growth in both our Systems Engineering and 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. divisions." Highlights of the Third Quarter:
- $91 million in new, booked business resulting in a backlog
of $202 million compared to $145 million at the end of the
second quarter.
- The Staffing and Outsourcing Division won a contract renewal
with the Royal Military College of Canada totaling $60 million
over a six-year period.
- During the quarter, the Systems Engineering Division
successfully installed in Italy the second of four RF systems,
which will be used to deliver the Inmarsat Broadband Global
Area Network service.
- The cash balance is healthy at $ 27 million.
- Increase in quarterly dividend from $0.04 per share to
$0.05 per share effective immediately.
"With steady growth in our cash position I am delighted we can increase our quarterly dividend to $0.05 per share and also re-establish re-establish Verb to create or set up (an organization, link, etc.) again re-establishment n our acquisition review program", 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 , Chairman and Chief Executive Officer. "Our criteria criteria (krītēr´ē  ),n. is simple. We want to buy successful specialty technology services companies with strong owner/management teams that want to continue running their companies. I will be inviting owners of these companies to contact me directly if they have an interest in converting equity in their private companies to cash and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. shares of Calian." "We expect the fourth quarter to be in line with current trends and therefore, we expect to complete fiscal 2003 with revenues of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $140 million and net earnings per share in the range of $0.58 to $0.60", said Larry O'Brien. About Calian Calian Technology Ltd. (TSX:CTY) provides 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 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 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. 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 Nine months ended
June 30 June 30
--------------------------------------------------------------------
2003 2002 2003 2002
--------------------------------------------------------------------
Revenues $34,188 $34,178 $106,827 $97,688
Cost of revenues 27,893 28,332 87,628 81,013
--------------------------------------------------------------------
Gross profit 6,295 5,846 19,199 16,675
Selling and marketing 1,079 1,153 3,366 3,342
General and
administration 2,140 1,909 6,512 6,225
Facilities 696 656 2,069 2,035
Amortization of
capital assets 287 358 873 1,141
--------------------------------------------------------------------
Earnings before
interest, taxes and
amortization of
goodwill 2,093 1,770 6,379 3,932
Interest income, net 106 50 240 143
--------------------------------------------------------------------
Earnings before taxes
and amortization
of goodwill 2,199 1,820 6,619 4,075
--------------------------------------------------------------------
Income taxes - current 268 263 970 698
Income taxes - future 645 418 1,685 944
--------------------------------------------------------------------
913 681 2,655 1,642
--------------------------------------------------------------------
Earnings before
amortization of
goodwill 1,286 1,139 3,964 2,433
Amortization of goodwill - 59 - 177
--------------------------------------------------------------------
Earnings from
continuing operation 1,286 1,080 3,964 2,256
Loss on disposal of
discontinued operation
(net of income taxes)
(Note 8) - - 480 -
--------------------------------------------------------------------
NET EARNINGS 1,286 1,080 3,484 2,256
Retained earnings,
beginning of period 11,830 8,966 11,057 9,797
Excess of purchase
price over stated
capital on repurchase
of shares (Note 10) (536) (108) (1,317) (2,115)
Dividend (321) - (965) -
--------------------------------------------------------------------
Retained earnings,
end of period $12,259 $9,938 $12,259 $9,938
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings per share
from continuing
operations: (Note 3)
Basic $0.16 $0.13 $0.49 $0.27
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted $0.16 $0.13 $0.48 $0.27
--------------------------------------------------------------------
--------------------------------------------------------------------
Net earnings per
share: (Note 3)
Basic $0.16 $0.13 $0.43 $0.27
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted $0.16 $0.13 $0.42 $0.27
--------------------------------------------------------------------
--------------------------------------------------------------------
Weighted average number
of shares: (Note 3)
Basic 7,999,225 8,047,923 8,010,491 8,419,163
--------------------------------------------------------------------
--------------------------------------------------------------------
Diluted 8,283,895 8,222,634 8,340,923 8,515,145
--------------------------------------------------------------------
--------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, 2003 September 30, 2002
(Unaudited)
--------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $26,787 $9,488
Accounts receivable 16,010 25,307
Unbilled accounts receivable 5,417 3,472
Prepaid expenses and other 301 726
Future income taxes 3,672 3,325
--------------------------------------------------------------------
52,187 42,318
GOODWILL 3,246 3,246
CAPITAL ASSETS 4,140 4,282
INVESTMENT TAX CREDITS RECOVERABLE 1,045 1,705
FUTURE INCOME TAXES 1,714 3,476
--------------------------------------------------------------------
$62,332 $55,027
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and
accrued liabilities $17,254 $15,291
Unearned contract revenue 17,196 13,483
Current portion of long-term debt 109 164
--------------------------------------------------------------------
34,559 28,938
LONG-TERM DEBT 111 181
34,670 29,119
CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY
Share capital (Note 10) 15,403 14,851
Retained earnings 12,259 11,057
--------------------------------------------------------------------
27,662 25,908
--------------------------------------------------------------------
--------------------------------------------------------------------
$62,332 $55,027
--------------------------------------------------------------------
--------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Three months ended Nine months ended
June 30 June 30
-------------------------------------------------------------------
2003 2002 2003 2002
-------------------------------------------------------------------
CASH FLOWS FROM
(USED IN) OPERATING
ACTIVITIES
Net earnings $1,286 $1,080 $3,484 2,256
Items not
affecting cash:
Deferred lease
inducements (2) (2) (7) (7)
Amortization 287 417 873 1,318
Investment
tax credits 157 100 660 349
Future income taxes 645 418 1,415 944
-------------------------------------------------------------------
2,373 2,013 6,425 4,860
Change in non-cash
working capital
Accounts receivable 1,388 5,339 9,297 2,380
Unbilled accounts
receivable (665) (160) (1,945) (585)
Prepaid expenses
and other 163 (251) 425 (132)
Accounts payable and
accrued liabilities (197) (534) 1,963 (1,189)
Unearned
contract revenue 6,443 (1,308) 3,713 (305)
-------------------------------------------------------------------
9,505 5,099 19,878 5,029
-------------------------------------------------------------------
CASH FLOWS FROM
(USED IN) FINANCING
ACTIVITIES
Repayment of debt (40) (38) (118) (112)
Issuance of
common shares 761 15 1,137 222
Repurchase of
common shares,
including cost
associated with
repurchase (Note 10) (739) (201) (1,902) (5,503)
Dividend payment (321) - (965) -
-------------------------------------------------------------------
(339) (224) (1,848) (5,393)
-------------------------------------------------------------------
CASH FLOWS FROM
(USED IN) INVESTING
ACTIVITIES
Acquisition of
capital assets (404) (178) (731) (579)
-------------------------------------------------------------------
NET CASH
INFLOW (OUTFLOW) 8,762 4,697 17,299 (943)
-------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS,
BEGINNING OF PERIOD 18,025 6,571 9,488 12,211
-------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS,
END OF PERIOD $26,787 $11,268 $26,787 $11,268
-------------------------------------------------------------------
-------------------------------------------------------------------
CALIAN TECHNOLOGY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the periods ended June 30, 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 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 nine month period ending June 30, 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 $177 or $0.02 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 for the purchase of shares is credited to share capital. During the nine month period ended June 30, 2003, the Company issued 23,688 shares under the ESPP, but did not grant any options. c. Disclosure of Guarantees Effective this quarter, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants ("CICA") Accounting Guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. 14, Disclosure of Guarantees. This guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. requires a guarantor guarantor n. a person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform. (See: guarantee) GUARANTOR, contracts. He who makes a guaranty. 2. to disclose in its notes to the consolidated financial statements significant information about guarantees it has provided. Under this guideline, a guarantee is defined as a contract or 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 agreement, which requires the Company to make payments to a third party contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent future events. The disclosures described in Note 9 are required even when the likelihood of the guarantor having to make any payment under the guarantee is remote. 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 Nine months ended
June 30 June 30
2003 2002 2003 2002
---------------------------------------------------------------------
Weighted average
number of shares
- basic 7,999,225 8,047,923 8,010,491 8,419,163
Additions to
reflect the
dilutive effect
of employee
stock options 284,670 174,711 330,432 95,982
---------------------------------------------------------------------
Weighted number
of shares
- diluted 8,283,895 8,222,634 8,340,923 8,515,145
---------------------------------------------------------------------
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. No shares were anti-dilutive for the three-month period ended June 30, 2003. In the nine-month period ended June 30, 2003, 50,734 stock options 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 (third quarter 2002: 253,555 and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2002: 428,592). 4. ACCOUNTING ESTIMATES For the period ended June 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. 5. SEASONALITY The Company's revenues and earnings have historically been subject to some 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. 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 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 June 30, 2003
---------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other Total
---------------------------------------------------------------------
Revenues $12,738 $21,450 $34,188
Earnings before
interest and
income taxes 1,690 789 (386) 2,093
Interest income 106
Income taxes 913
---------------------------------------------------------------------
Net Earnings $1,286
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash $15,678 $19,766 $100 $35,544
Cash 26,787
---------------------------------------------------------------------
Total assets $62,331
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months ended June 30, 2002
---------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other(a) Total
---------------------------------------------------------------------
Revenue $12,991 $21,187 $34,178
Earnings before
interest and
income taxes 1,299 721 (309) 1,711
Interest income 50
Income taxes 681
---------------------------------------------------------------------
Net earnings $1,080
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash $16,753 $21,338 $450 $38,541
Cash 11,268
---------------------------------------------------------------------
Total assets $49,809
---------------------------------------------------------------------
---------------------------------------------------------------------
Nine months ended June 30, 2003
---------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other Total
---------------------------------------------------------------------
Revenue $38,339 $68,488 $106,827
Earnings before interest
and income taxes 4,805 2,742 (1,168) 6,379
Interest income 240
Income taxes 2,655
---------------------------------------------------------------------
Earnings from continuing
operations 3,964
Discontinued Operation 480
---------------------------------------------------------------------
Net earnings $3,484
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash $15,678 $19,766 $100 $35,544
Cash 26,787
---------------------------------------------------------------------
Total Assets $62,331
---------------------------------------------------------------------
---------------------------------------------------------------------
Nine months ended June 30, 2002
---------------------------------------------------------------------
Staffing and
Systems Outsourcing Corporate and
Engineering Services Other(a) Total
---------------------------------------------------------------------
Revenue $34,209 $63,479 $97,688
Earnings before interest
and income taxes 3,519 1,320 (1,084) 3,755
Interest income 143
Income taxes 1,642
---------------------------------------------------------------------
Net earnings $2,256
---------------------------------------------------------------------
---------------------------------------------------------------------
Total assets other
than cash $16,753 $21,338 $450 $38,541
Cash 11,268
---------------------------------------------------------------------
Total assets $49,809
---------------------------------------------------------------------
(a) Includes discontinued operation assets 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 $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 the Company's financial condition. 8. 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 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the excess space amount to approximately $960 per year. During the second 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). 9. GUARANTEES In the normal course of business, the Company enters into agreements that may provide for indemnification and guarantees to customers in transactions such as staffing and outsourcing services and engineering agreements. 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 eliminating any liability 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 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. 10. 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 third quarter, the Company acquired 108,500 or (1.4%) of its outstanding common shares at an average price of $6.77 per share for a total of $739 including related expenses, through both the Normal Course Issuer Bid initiated in May 2002 and the Normal Course Issuer Bid initiated in May 2003 for a period of one year. On a year to date basis, the company has acquired 314,300 (or 3.9%) of its outstanding shares at an average price of $6.02 per share for a total of $1,902 including related expenses. 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 third fiscal quarter: RESULTS OF OPERATIONS: THIRD QUARTER 2003 Revenues: For the third quarter of fiscal 2003, revenues were $34.2 million, which is comparable to the $34.2 million reported in the third quarter of fiscal 2002. The Staffing and Outsourcing Services segment reported an increase of 1% with revenues of $21.5 million compared to $21.2 million for the prior year. Delays in Federal program initiatives and budget reallocations resulted in minimal growth during this quarter. Systems Engineering's revenues were $12.7 million in the quarter, slightly less than the $13.0 million recorded in the third quarter of last year. This decrease is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower non-labour flow-through partially offset by higher labour sales. The Company booked $91 million in new business this quarter, resulting in an order backlog of $202 million. $28 million of this backlog is expected to be earned as revenue over the course of fiscal 2003 and $68 million in 2004. Gross Margin: Gross margin was 18.4% in the third quarter of 2003 compared to 17.1% in the third 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 24.1% in 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. compared to 19.6% in the third quarter of 2002 reflecting a higher proportion of labour sales coupled with excellent 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. Gross margin in Staffing and Outsourcing Services was 15.1% compared to 15.6% in the third quarter of 2002 mainly due to the realized sales mix during the quarter. 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 $3.2 million or 9% of revenues in the third quarter of 2003 which is comparable to the $3.1 million or 9% of revenues reported in the third quarter of 2002. Operating expenses continue to remain stable and the Company's strong back office continues to have 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 third quarter of 2003 was $0.9 million compared to $0.7 million a year ago commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the level of earnings before tax. The tax expense in 2003, as a percentage of earnings before taxes and amortization of goodwill, reflects the impact of declining federal and provincial Provincial has several meanings and may refer to:
Net Earnings: As a result of the foregoing, the Company recorded net earnings of $1.3 million or $0.16 per share basic and diluted in the third quarter of fiscal 2003, compared to $1.1 million or $0.13 per share basic and diluted in the same quarter of the prior year. NINE-MONTH PERIOD ENDING JUNE 30, 2003 Revenues: During the first nine months of this fiscal year, revenues were $106.8 million compared to $97.7 million for the first nine months of fiscal 2002, representing an increase of 9%. Revenues in the Staffing and Outsourcing Services segment increased 8% to $68.5 million from $63.5 million and revenues in the Systems Engineering segment increased 12% to $38.3 million from $34.2 million. This increase is attributable to increased demand for our staffing and outsourcing services with existing customers during the first and second quarter of 2003, higher non-labour flow-through on projects coupled with high utilization rates in our Systems Engineering Division and the impact of new contracts awarded during the past 12 months. Gross Profit: Gross profit percentage was 18% during the first nine months of 2003, versus 17.1% in the equivalent period last fiscal year with improvements generated from both business segments. Operating expenses: Selling, marketing and general and administration, totaled $9.9 million or 9% of revenues in the first nine months of 2003. This compares to $9.6 million or 10% of revenues for the same period in 2002. The Company's operating costs are 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 nine-month period ending June 30, 2003 was $2.7 million, compared to $1.6 million a year ago. The income tax expense for fiscal 2002 was impacted by the effective income tax rate applied to the valuation of future income tax assets. Although the Company is reporting a current provision for income taxes of $1.0 million, a significant portion of the income taxes will be recovered through the utilization of investment tax credits. The Company expects to have fully utilized its loss carry-forwards and R&D expenditures for purposes of provincial income taxes by the end of 2003 and will therefore be required to pay provincial taxes during 2004. The Company expects to begin paying Federal income taxes early in 2005. 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 $4.0 million or $0.49 per share basic and $0.48 per share diluted for the first nine months of fiscal 2003, compared to $2.3 million or $0.27 per share basic and diluted in the same period 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 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 second 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. At that time, management believed it was 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 $750 ($480 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 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. to approximately $1.1 million. Net Earnings: As a result of the foregoing, the Company recorded net earnings of $3.5 million or $0.43 per share basic and $0.42 per share diluted for the first nine months of fiscal 2003, compared to $2.3 million or $0.27 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 was $26.8 million, compared with $11.3 million at June 30, 2002. As a result of this strong cash position and the Company's ability to continue generating positive cash flows, the Company is increasing its dividend payment to $0.05 in its fourth quarter of this year. During the third quarter of 2003, cash flow from operating activities, including changes in working capital was $9.5 million, as compared to a cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. of $5.1 million in the third quarter a year ago. This variation is mainly attributable to a significant advance payment received on a recent contract win and accordingly, deferred revenues increased by $6.4 million. Cash will be consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. as the work is performed over the life of the contract. SEASONALITY The Company's operations have historically been subject to some 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 margin. This seasonality may not be apparent in the overall results of the Company depending on the impact of the realized sales mix of its various projects. OUTLOOK The Company is operating in an increasingly competitive environment. The sustained 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 the satellite industry and delays in the funding of new Federal programs compounded by increased delay in the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. cycle of the Federal Government is resulting in increased competitive pressures and delays in the awarding of new contracts. However, the Company's strong backlog is expected to provide a solid base of revenue for the next several quarters and this 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. To ensure reasonable 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. growth after considering the above noted challenges, the Company will leverage its excellent reputation for providing the highest quality service in its areas of expertise and focus its marketing activities in various government related communications, defence and IT programs. GUIDANCE Based on the information cited above about the current market conditions and demand, the Company believes it can complete the year with revenues of approximately $140 million and earnings per share in the range of $0.58 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 third 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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