Clearnet Announces Second Quarter 1996 Results.PICKERING Pick·er·ing , Edward Charles 1846-1919. American astronomer noted for his work on stellar photometry. His brother William Henry Pickering , Ontario--(BUSINESS WIRE)--Aug. 15, 1996--CLEARNET COMMUNICATION (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CLNTF) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). , ME:NET.A ) Clearnet Clearnet may refer to:
3 Months Ended 3 Months Ended
June 30, 1996 July 31, 1995
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(unaudited) (unaudited)
Revenue $ 9,036,000 $7,963,000 Net Loss Before Income Taxes (10,497,000) (1,635,000) Net Loss for the Period (10,824,000) (2,445,000) Loss per Share under Cdn. GAAP (0.31) (0.08) Loss per Share under U.S. GAAP (0.34) (0.13) Capital Expenditures 40,891,000 24,299,000
6 Months Ended 6 Months Ended
June 30, 1996 July 31, 1995
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(unaudited) (unaudited)
Revenue $ 18,048,000 $15,474,000 Net Loss Before Income Taxes (20,234,000) (5,924,000) Net Loss for the Period (20,852,000) (7,468,000) Loss per Share under Cdn. GAAP (0.64) (0.24) Loss per Share under U.S. GAAP (0.64) (0.30) Capital Expenditures 58,883,000 35,129,000 For the three and six month periods ended June June: see month. 30, 1996, revenue increased 13.5 percent to $9.0 million and 16.6 percent to $18.0 million from $8.0 million and $15.5 million in the three and six month periods ended July July: see month. 31, 1995 respectively. For the three and six month periods ended June 30, 1996, there was a net loss of $10.8 million and $20.9 million compared to a net loss of $2.4 million and $7.5 million in the three and six month periods ended July 31, 1995 respectively. The increase in net loss in the three and six month periods ended June 30, 1996 was consistent with the Company's business plan and resulted primarily from an increase in non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) (amortization expense of licences and frequencies and interest accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the on the senior discount notes) and to a lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. extent an increase in selling, general and administration expenses primarily related to developing the organizational capability to offer wireless services in the future. The net loss per share for the three and six month periods ended June 30, 1996 was $0.31 and $0.64 as compared to net loss of $0.08 and $0.24 per share for the three and six month periods ended July 31, 1995 respectively. The average number of Class A share equivalents outstanding in the three and six month periods ended June 30, 1996 was 34,813,000 and 32,791,000 versus 30,729,000 for the three and six month periods ended July 31, 1995. In addition, as at June 30, 1996, there were 2,261,471 and 1,211,100 warrants outstanding. CORPORATE DEVELOPMENTS BCS (1) (The British Computer Society, Swindon, Wiltshire, England, www.bcs.org) The chartered body for information technology professionals in the U.K., founded in 1957. Build-out Build-out is an urban planner’s estimate of the amount and location of potential development for an area. Build-out is one step of the land use planning process. Evaluation of potential development impacts begins with a build-out analysis. Update - As scheduled, on July 22, 1996, Clearnet activated activated a state of being more than usually active. In biological systems this is usually brought about by chemical or electrical means. Commonly said of pharmaceutical and chemical products. its Ontario-Quebec Business Communication Services ("BCS") network through-out a corridor over 1200 km long from Windsor Windsor, British royal family Windsor (wĭn`zər), family name of the royal house of Great Britain. The name Wettin, family name of Albert of Saxe-Coburg-Gotha, consort of Queen Victoria, was changed to Windsor by George V in 1917. to Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. City for "friendly commercial launch" after a period of network optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. involving only employee users. Test results to date have been encouraging with voice quality achieving the high competitive standards expected by Clearnet. The friendly launch will involve loading a controlled number of paying commercial subscribers for the purpose of seeking their feedback so that the BCS network and related Clearnet business processes are further tested and optimized prior to a full commercial launch. Consistent with the Company's 1996 business plan, Clearnet expects the full commercial turn-on of the BCS network to occur in the fall of 1996. Clearnet will continue 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: its BCS coverage in Ontario-Quebec during the balance of 1996. Selection of PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. Vendor - On July 16, Clearnet announced that its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Clearnet PCS Inc. (collectively "Clearnet" or "the Company") had entered into a memorandum of understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. for the purchase and financing of an estimated $425 million in CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. (Code Division Multiple Access) PCS (Personal Communications Services See PCS. ) infrastructure and subscriber equipment from Lucent Technologies 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 Inc. ("Lucent"). Lucent Technologies was formerly the systems and technology arm of AT&T. It is believed to be the largest wireless equipment supply arrangement and financing ever in Canada. The arrangements are subject to further negotiation and will require completion of definitive documentation, among other conditions. Clearnet is building-out the 33 largest cities in Canada This is a list of incorporated cities of Canada in alphabetical order categorized by province. More thorough lists of communities are available for each province. Significant cities by the end of 1998 and expects to commence PCS service in certain of the largest cities in 1997. Selection of PCS Technology - Clearnet selected CDMA technology for its Personal Communications Services ("PCS") system over competing standards for a variety of reasons. At the time of Clearnet's announcement in July, Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. C. Simmonds Simmonds is a surname, and may refer to
Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. manufacturers for CDMA." Financing Update - The memorandum of understanding with Lucent includes the provision of $475 million in vendor financing Vendor Financing The lending of money by a company to one of its customers so that the customer can buy products from it. By doing this, the company increases its sales even though it is basically buying its own products. to Clearnet for the purchase of PCS equipment and services from Lucent and other secondary suppliers as well as the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of interest in the first two years of borrowings. The financing commitment of Lucent is also subject to further negotiation and completion of definitive documentation, among other conditions. In May, Clearnet successfully closed an underwritten cross-border public offering in Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. of 9,200,000 of its Class A Non-Voting non-voting adj non-voting shares → azioni fpl senza diritto di voto Shares at Cdn.$26.00 (U.S.$19.00) per share for total gross proceeds of approximately Cdn.$239.2 million (U.S.$174.8 million). As a result of investor demand, the size of the offering was increased from the 7.0 million shares previously announced and the underwriters exercised an over-allotment option to purchase an additional 1.2 million shares at the offering price to cover over-allotments. Clearnet has approximately 40 million Class A Non-Voting Share Equivalents outstanding after completion of this issue including the issuance of shares pursuant to the underwriters' greenshoe option Greenshoe Option An option that allows the underwriting of an IPO to sell additional shares to the public if the demand is high. Notes: The name comes from the fact that the Green Shoe Company was the first to issue this type of option. . Including this vendor financing, Clearnet has now raised over $1.1 billion in financing for the build-out and implementation of the Company's Business Communications Services ("BCS") and PCS networks since completing its initial public offering in October October: see month. 1994. Clearnet does not expect any material cash interest payments to be required until after the completion of the build-out and commercialization of both its BCS and PCS digital networks. As a result, upon completion of the proposed vendor financing, Clearnet will have fully funded its estimated capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for both BCS and PCS for the next couple of years. Participation in LMCS LMCS Local Multipoint Communication Systems LMCS Lockheed Martin Control Systems LMCS Light Modular Causeway System LMCS Loan Management and Control System LMCS Lake Michigan Carferry Service, Inc. LMCS Logical Methods in Computer Science Application - On June 19, 1996, Clearnet announced that it was participating in an application for 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. Local Multipoint Communication Systems ("LMCS") licence on a national basis. The LMCS application is a joint effort being led by long distance provider, fONOROLA Inc. and also includes the participation of iSTAR internet inc., a leading provider of internet services in Canada. The application is for one of the first two LMCS licences in each of 367 cities, suburbs and towns which are expected to be awarded by the Minister of Industry this fall in using comparative evaluation process. Another four licences will be awarded by auction within the next 18-36 months according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Industry Canada Industry Canada is the department of the Government of Canada with responsibility for regional economic development, investment, and innovation/research and development. The department employs 6104 FTEs across Canada. . LMCS spectrum is at the 28 GHz range. LMCS technology can be viewed as "wireless fibre" and has the potential to become an effective and economical carrier of backhaul traffic for both Clearnet's BCS and PCS digital wireless networks. LMCS could possibly be utilized to provide a number of wireless services, including wireless cable service and wireless internet access See how to access the Internet. , which would complement Clearnet's BCS and PCS services. Clearnet's participation in the application includes the possible utilization for LMCS of many of Clearnet's over 1,000 radio transmission towers which either already exist or are expected to be deployed by the end of 1998. In addition, Clearnet's participation includes a seven year backhaul usage commitment of several million dollars per annum Per annum Yearly. subject to certain performance and cost conditions. Clearnet may convert a usage commitment or contribute capital at the sole option of Clearnet to obtain a minority ownership position in the entity which would hold the LMCS licence in the event of successfully being awarded a licence. Under certain conditions, Clearnet's minority ownership position could be increased at the sole option of Clearnet to up to an approximate 40 percent interest. Job Creation - Clearnet continues to have remarkable success in attracting highly qualified and enthusiastic employees as it builds the organization's execution capability. Since starting the expansion of Clearnet's organization in late 1994 for the build-out and future provision of digital wireless services, Clearnet has more than tripled the number of its employees to a total of 518 as at June 30, 1996. Clearnet's business plan entails increasing its employee count to over 700 by December 1996. In total, the deployment and provision of Clearnet's digital wireless services is expected to create over 1,000 direct and 3,000 indirect jobs over the next decade. Clearnet is a Canadian wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. company which was recently awarded a national 30 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. PCS licence in Canada. Clearnet currently provides dispatch A dispatch or dispatches can refer to:
tr.v. pop·u·lat·ed, pop·u·lat·ing, pop·u·lates 1. To supply with inhabitants, as by colonization; people. 2. regions in mid- mid- pref. Middle: midbrain. 1997. In addition, Clearnet is currently in the process of preparing for the launch of its BCS digital network in the Ontario-Quebec coverage area utilizing Enhanced Specialized Mobile Radio See SMR. ("ESMR ESMR Enhanced Specialized Mobile Radio ESMR Extended Specialized Mobile Radio (Nextel) ESMR Expert Systems Message Router ESMR Electrically/Electronically Scanned/ing Microwave Radiometer ESMR Engine Starter Motor Relay ") technology. CONSOLIDATED BALANCE SHEETS
June 30 December 31
1996 1995
(Unaudited) (Audited)
(In thousands of Canadian dollars) $ $
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ASSETS
Current assets
Cash and marketable securities 439,478 272,349
Accounts receivable (net of allowances) 7,947 6,560
Prepaid expenses 5,161 4,487
Inventories 3,961 4,320
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Total current assets 456,547 287,716
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Capital assets 190,669 134,300
Intangible and other assets 174,229 177,311
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Total 821,445 599,327
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities 69,106 71,638
Deferred revenue 155 130
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Total current liabilities 69,261 71,768
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Long-term debt 257,201 239,231
Obligations under capital lease 936 96
Deferred revenue 525 554
Deferred foreign exchange 2,679 2,698
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Total liabilities 330,602 314,347
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Shareholders' equity
Capital and contributed surplus 532,038 305,323
Deficit (41,195) (20,343)
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Total shareholders' equity 490,843 284,980
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Total 821,445 599,327
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Shareholders' equity under
Canadian GAAP 490,843 284,980
Add (deduct):
Cumulative effect of deferred
foreign exchange on long-term debt 2,679 2,698
Cumulative expensing of deferred
commissions (676) (690)
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Shareholders' equity under
United States GAAP 492,846 286,988
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CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
Three Months Ended
June 30 July 31
1996 1995
(Unaudited) (Unaudited)
(In thousands of Canadian dollars,
except share and per share data) $ $
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REVENUE
Network 3,698 3,568
Equipment sales, rental and service 5,338 4,395
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9,036 7,963
OPERATING COST AND EXPENSES
Network 429 406
Equipment sales, rental and service 2,445 2,287
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2,874 2,693
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Gross profit 6,162 5,270
Selling, general and administration 12,112 6,841
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Loss before interest, taxes,
depreciation, amortization and other (5,950) (1,571)
Depreciation and amortization 4,018(a) 1,840
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Operating loss (9,968) (3,411)
Foreign exchange (loss) gain 905 339
Interest income (expense) (1,434) 1,437
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Loss before income taxes (10,497) (1,635)
Income tax provision 327 810
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NET LOSS (10,824) (2,445)
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Deficit, beginning of period (30,371) (7,223)
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Deficit, end of period (41,195) (9,668)
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Net loss under Canadian GAAP (10,824) (2,445)
Additional amortization of
licences and frequencies (1,606) (810)
Expensing of commissions as incurred (13) (36)
Deferred income taxes recovery 1,606 810
Additional compensation expense - -
Foreign exchange (971) -
Change in depreciation policy - (561)
Change in accounting for the
Motorola Transaction - (800)
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Net loss under United States GAAP (11,808) (3,842)
AVERAGE NUMBER OF CLASS A EQUIVALENT SHARES OUTSTANDING DURING THE PERIOD (in thousands) Under Canadian GAAP 34,813 30,729 Under United States GAAP 34,813 30,729 NET LOSS PER SHARE Under Canadian GAAP (0.31) (0.08) Under United States GAAP (0.34) (0.13)
Six Months Ended
June 30 July 31
1996 1995
(Unaudited) (Unaudited)
(In thousands of Canadian dollars,
except share and per share data) $ $
----------- -----------
REVENUE
Network 7,334 7,116
Equipment sales, rental and service 10,714 8,358
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18,048 15,474
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OPERATING COST AND EXPENSES
Network 877 1,236
Equipment sales, rental and service 5,161 4,742
----------- -----------
6,038 5,978
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Gross profit 12,010 9,496
Selling, general and administration 20,168 13,577
----------- -----------
Loss before interest, taxes,
depreciation, amortization and other (8,158) (4,081)
Depreciation and amortization 7,916(1) 3,281
----------- -----------
Operating loss (16,074) (7,362)
Foreign exchange (loss) gain 192 (1,630)
Interest income (expense) (4,352) 3,068
----------- -----------
Loss before income taxes (20,234) (5,924)
Income tax provision 618 1,544
----------- -----------
NET LOSS (20,852) (7,468)
----------- -----------
Deficit, beginning of period (20,343) (2,200)
Deficit, end of period (41,195) (9,668)
----------- -----------
Net loss under Canadian GAAP (20,852) (7,468)
Additional amortization of
licences and frequencies (3,213) (1,594)
Expensing of commissions as incurred 14 (72)
Deferred income taxes recovery 3,213 1,594
Additional compensation expense - (1,061)
Foreign exchange (19) -
Change in depreciation policy - (578)
Change in accounting for the
Motorola Transaction - -
----------- -----------
Net loss under United States GAAP (20,857) (9,179)
----------- -----------
AVERAGE NUMBER OF CLASS A EQUIVALENT SHARES OUTSTANDING DURING THE PERIOD (in thousands) Under Canadian GAAP 32,791 30,729 Under United States GAAP 32,791 30,729 NET LOSS PER SHARE Under Canadian GAAP (0.64) (0.24) Under United States GAAP (0.64) (0.30) (a) Effective January 1, 1996, the Company reduced the amortization period of its licences and frequencies from 40 to 20 years. The effect of this change was to increase amortization expense for the three and six month periods ended June 30, 1996 by $1.1 million and $2.2 million respectively. CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30 July 31
1996 1995
(Unaudited) (Unaudited)
(In thousands of Canadian dollars) $ $
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OPERATING ACTIVITIES
Net loss (20,852) (7,468)
Items not affecting cash:
Gain on sale of capital assets - (46)
Depreciation and amortization 7,916 3,345
Interest on long-term debt 11,805 -
----------- -----------
(1,131) (4,169)
Net change in non cash working
capital items 8,644 3,191
----------- -----------
7,513 (978)
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FINANCING ACTIVITIES
Deferred tax effect of share
issuance cost - 476
Increase (decrease) in accounts
payable for capital assets (14,019) 15,675
Proceeds from issuance of shares,
net of share issue costs 226,715 (336)
Proceeds from (repayment of) debt
and capital leases 1,857 (473)
----------- -----------
214,553 15,342
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INVESTING ACTIVITIES
Net additions of capital assets (58,883) (35,129)
Interest on long-term debt capitalized 6,266 -
Acquisition of intangible and
other assets (2,320) 216
Proceeds from sale of capital assets - 42
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(54,937) (34,871)
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Increase (decrease) in cash 167,129 (20,507)
Cash and marketable securities,
beginning of period 272,349 107,074
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Cash and marketable securities,
end of period 439,478 86,567
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CONTACT: Clearnet Communications Inc. Robert McFarlane For the Canadian politician, see . Robert Carl "Bud" McFarlane (born July 12, 1937), was National Security Advisor to President Ronald Reagan from 1983 to late 1985 and was one of the major players in the Iran-Contra Affair. , 905/837-3007 INTERNET: investorrelations@clearnet.com |
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