Canbras Releases Fourth Quarter Results.Business Editors/High-Tech Writers MONTREAL--(BUSINESS WIRE)--Jan. 29, 2004 Canbras Communications Corp. (NEX NEX abbr. Navy exchange .CBC (1) (Cell Broadcast Center) See cell broadcast. (2) (Cipher Block Chaining) In cryptography, a mode of operation that combines the ciphertext of one block with the plaintext of the next block. .H): -- Canbras' broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communications operations sold -- Receipt of shareholder approval for the wind-up and dissolution Act or process of dissolving; termination; winding up. In this sense it is frequently used in the phrase dissolution of a partnership. The dissolution of a contract is its Rescission by the parties themselves or by a court that nullifies its binding force and reinstates each of the Corporation following the final distribution of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the sale transaction -- Voluntary de-listing from TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension , trading moved to NEX Canbras Communications Corp. (NEX.CBC.H) ("Canbras" or the "Corporation") today released unaudited results for the fourth quarter of 2003. As the Corporation completed the sale of all of its broadband communications operations on December 24, 2003, the Corporation's unaudited consolidated statements of earnings for the fourth quarter of 2003 reflect the activities and financial results of its broadband communications operations for the full three month period ended December 31, 2003. Beginning in the first quarter of 2004, Canbras' consolidated statements of earnings will reflect only the winding up activities of the Corporation and its holding company subsidiaries. Pursuant to a purchase and sale agreement entered into in October 2003 (the "Sale Agreement") with Horizon Cablevision Do Brasil S.A ("Horizon"), Canbras sold to Horizon all of its equity and debt interests in its Brazilian subsidiary, Canbras Participacoes Ltda., through which Canbras held substantially all of its interests in its cable television and related broadband operations in Brazil (the "Sale Transaction"). Canbras received gross proceeds of $32.6 million, comprised of $22.168 million in cash and a one-year promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. in the original amount of $10.432 million bearing interest at 10%. The amount of the promissory note is subject to reduction in the event 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 obligations of Canbras arise under the terms of the Sale Agreement with Horizon. Following the receipt, at a special shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. held on December 17, 2003, of the requisite approvals in respect of the Sale Transaction and the wind-up and dissolution of the Corporation, Canbras ceased all business activities other than those related to the completion of the Sale Transaction and the winding up process. The winding up process, which Canbras estimates will be completed by year-end 2005, consists of the satisfaction of all remaining liabilities and obligations of the Corporation, the distribution of net proceeds to shareholders, compliance with reporting obligations under applicable laws and regulations until the dissolution of the Corporation is completed, and such other activities as are ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. to the winding up and final liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of the Corporation. On January 14, 2004, following the filing by Canbras of a Statement of Intent to Dissolve A Web site design technique borrowed from the film and video industry in which the transition between two Web pages is represented visually by one page fading into another. Also known as a "soft cut," the result is achieved in the HTML coding of the images to gradual pre-determined , the Corporation was issued by the Director under the Canada Business Corporations Act The Canada Business Corporations Act, also known as Bill C-44, is a Canadian act respecting Canadian business corporations. See also
Canbras anticipates that distributions will be made to shareholders in one or more instalments, with the initial distribution of approximately $13.7 million ($0.25 per share) estimated to be made during the first half of 2004, and the final distribution of approximately $14.3 million ($0.26 per share), to be made in one or more instalments after the receipt of the balance of the purchase price payable by Horizon under the one-year note and the satisfaction of all remaining liabilities of the Corporation. Estimated total proceeds to be distributed to shareholders of $28.1 million reflect Canbras' net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. as at December 31, 2003 of $29.3 million less estimated net costs of wind-up of $1.2 million and assume no unforeseen claims against the Corporation will arise. Accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. of $2.9 million at December 31, 2003 represent the provision for estimated costs of completing the Sale Transaction. Excess cash held by the Corporation pending shareholder distributions will be invested in high grade money market instruments Money market instruments See: Cash investments . At the close business on January 23, 2004, Canbras voluntarily de-listed its common shares from the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSX), and on January 26, 2004 Canbras' common shares commenced trading on the NEX, a new and separate board of the TSX Venture Exchange TSX Venture Exchange Originally called the Canadian Venture Exchange (CDNX), this was a result of the merger of the Vancouver and Alberta stock exchanges. The goal of TSX Venture Exchange is to provide venture companies with effective access to capital while protecting investors. . On January 29, 2004, the Board of Directors of Canbras accepted the resignation of Mr. Renato Ferreira as a director, and as President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Canbras. Mr. Louis Tanguay, Chairman of the Board of Directors of Canbras, stated: "On behalf of the Board and our shareholders, I would like to thank Mr. Ferreira and to recognize his hard work, dedication and tremendous contributions to the Canbras Group during his tenure as our CEO for the past several years. Through his efforts and leadership, Canbras was able to conclude a successful sale of its operations to Horizon, an experienced cable operator in Brazil, and we are confident that Canbras' operations will continue to provide best-in-class services to its customers under its new ownership." Below is a summary of operating results of the Canbras Group for the fourth quarter of 2003 and the year ended December 31, 2003. Fourth Quarter 2003 versus Fourth Quarter 2002 Revenue for the three months ended December 31, 2003 was $16.4 million, an increase of 25% over the fourth quarter of 2002. The increase was primarily a result of price increases and a 6% appreciation of the average translation rate of Brazilian reais into Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents relative to the fourth quarter of 2002. In Brazilian reais, revenue for the fourth quarter of 2003 increased by approximately 18% over the fourth quarter of 2002 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation, amortization and foreign exchange) for the three months ended December 31, 2003 reached $6.7 million, up from $4.0 million a year ago. This increase was a result of higher revenues, partially offset by higher cost of sale due to programming rebates received during the fourth quarter of 2002. The net loss for the quarter ended December 31, 2003 was $50.6 million, compared to a net loss of $3.6 million for the same period the previous year. The higher net loss is primarily attributable to the loss on investments in the amount of $56.1 million consisting of a loss on net long-lived assets sold of $ 5.6 million and a charge of $50.5 million reflecting foreign exchange losses previously included in the foreign currency translation adjustment account in the shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. section of the balance sheet. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. December 2003 versus Year-to Date December 2002 Revenue for the twelve months ended December 31, 2003 was $61.7 million virtually unchanged from the same period of the previous year. Significant price increases implemented throughout 2003 together with modest subscriber growth were offset by a 22% devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the average translation rate of Brazilian reais into Canadian dollars relative to the twelve months period ended December 31, 2002. In Brazilian reais, revenue for the twelve months ended December 31, 2003 increased by more than 20% over the same period of 2002. EBITDA for the twelve months ended December 31, 2003 reached $20.6 million, up from $12.4 million a year ago. This increase was the result of lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and cost of service mainly due to the weaker foreign exchange translation rate of the Brazilian real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. . The net loss for the year ended December 31, 2003 was $89.2 million, compared to a net loss of $10.0 million for the same period the previous year. The higher net loss is primarily attributable to the loss on investments in the amount of $99.0 million consisting of the $42.9 million 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. of the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of long-lived assets recorded in the third quarter of 2003, which also includes a provision for estimated cost of disposal, a loss on net long-lived assets sold of $ 5.6 million recorded in the fourth quarter of 2003 and a charge of $50.5 million reflecting foreign exchange losses previously included in the foreign currency translation adjustment account in the shareholders' equity section of the balance sheet recorded in the fourth quarter of 2003. The increased net loss was partially offset by lower depreciation and amortization expenses primarily as a result of the change in the functional currency of the Corporation's Brazilian subsidiaries and the increased EBITDA. Forward looking statements This news release may contain certain 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. that reflect the current views and/or expectations of Canbras with respect to future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future events, and may contain words like "believe" "anticipate", "expect", "will likely result", or words or phrases of similar meaning. Such statements are subject to a number of important risks and uncertainties which are difficult to predict and assumptions which may prove to be inaccurate. Whether actual events and developments conform with the Corporation's expectations and predictions are subject to a number of known and unknown risks and uncertainties. Factors that could cause actual events to differ materially from current expectations include, among other things: whether any claims are asserted which would reduce the amounts due under the one-year promissory note; the collectibility of amounts due under the one-year promissory note; whether any unforeseen claims are asserted against the Corporation (or its directors and officers) in connection with the winding up and liquidation of the Corporation or otherwise; the timing or amount of distributions of net proceeds of the Horizon Sale transaction to shareholders; the timing of and costs associated with the final winding up and liquidation of the Corporation; and certain other factors set forth in the Corporation's filings with the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. securities commissions. In addition, forward-looking statements do not reflect the potential impact of future monetizations of potential assets or any legal or regulatory proceedings that may be announced after these statements are made. Canbras disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
CANBRAS COMMUNICATIONS CORP.
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Estimated Net Assets for Distribution to Shareholders
(unaudited, in thousands of Canadian dollars)
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Assets as at December 31, 2003
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Cash and cash equivalents $21,321
Note and interest receivable 10,452
Prepaid expenses and other 448
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Total Assets 32,221
Liabilities as at December 31, 2003
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Accounts payable and accrued liabilities 2,910
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Total liabilities 2,910
Net assets as at December 31, 2003 29,311
Estimated future net costs for
wind-up to December 31, 2005 (1) (1,211)
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Estimated future net assets as at Dec 31, 2005 (2) 28,100
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(1) Includes interest income of $1.04 million on the $10.4 million
one year promissory note from Horizon
(2) Before distributions to shareholders
Selected Statistics (unaudited, in thousands of Canadian dollars)
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Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
(reclassified)(3) (reclassified)(3)
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Revenue $16,428 $13,110 $61,744 $61,634
EBITDA 6,708 3,994 20,566 12,444
Net Loss (50,558) (3,564) (89,166) (10,023)
As at As at
Dec 23, 2003 Dec 31, 2002
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Total cable subscribers 193,044 191,900
(3) Certain comparative figures have been reclassified to conform
with the 2003 presentation.
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