Clearnet announces financial results (PART 2 of 2 - financial tables) for three months ended July 31, 1995.TORONTO--(BUSINESS WIRE)--Sept. 27, 1995--CLEARNET(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) Depreciation and amortization increased by 95.3 percent to $0.8 million in the three months ended July 31, 1995 from $0.4 million in the prior year, resulting primarily from the depreciation and amortization of acquired assets. Clearnet generated an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $2.3 million for the three months ended July 31, 1995. Clearnet expects that it will incur net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. over the next several years in connection with the build-out of its 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 networks and related activities. Clearnet recorded a foreign exchange gain of $0.3 million for the three months ended July 31, 1995. This foreign exchange gain resulted from the translation of certain U.S. dollar denominated 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). of the October 20, 1994 initial public offering which are being held in U.S. currency to fund planned future U.S. dollar denominated capital expenditures. Foreign exchange translation gains or losses in the balance of the year could continue to be significant. Clearnet generated net interest income of $1.4 million for the three months ended July 31, 1995. Interest income results from the investment of net proceeds of the October 1994 share issuances. In the future, earning significant interest income may not be sustainable as the Company expends its cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. on its ESMR build-out capital program. In the future, interest expense could become significant as a substantial portion of planned capital expenditures are expected to be funded with bank debt or the proceeds of possible future bond issues. Net loss of $1.2 million for the three months ended July 31, 1995 includes a $0.7 million income tax provision resulting primarily from the tax effect of subsidiary losses not recorded. The Company has accounted for the October 20, 1994 acquisition of certain assets relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Motorola Canada's 800 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. SMR (Specialized Mobile Radio) The communications services used by police, ambulances, taxicabs, trucks and other delivery vehicles. Throughout the U.S., approximately 3,000 independent operators are licensed by the FCC to offer this service, which provides always-on business in Canada in exchange for shares in the Company as a non-monetary exchange of similar productive assets under which the purchased assets are recorded at their historical carrying values 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. . On March 31, 1995, the Emerging Issues Committee 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. (the "EIC EIC Editor-In-Chief EIC Euro Info Centre (DIN) EIC Earned Income Credit EIC Excellence in Cities (UK) EIC Enterprise Interaction Center (Interactive Intelligence) ") issued an Abstract, which by its terms may be applied prospectively and should be applied to all business combinations occuring after March 31, 1995, that concluded that an entity which issued its own shares as consideration in a business combination should measure the cost thereof at fair value rather than historical carrying values. Staff of 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. (the "OSC O.S.C. n. short for Order to Show Cause. (See: Order to Show Cause) ") has requested that the Company retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin change its accounting for the Motorola Transaction from that reflected in its financial statements issued to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the accounting recommended by the EIC. The Company believes its accounting is appropriate and is in accordance with Canadian 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 at the time of the acquisition and that retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. is not appropriate. If the Company is unable to resolve this issue with the OSC satisfactorily and is ultimately required to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its financial statements in the manner requested by the staff of the OSC, the effects would be an increase in share capital, 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. , accounts payable and deficit of $161.3 million, $158.2 million, $1.0 million and $4.1 million respectively at July 31, 1995 and an increase in the net loss for the period ended July 31, 1995 of $1.2 million ($0.03 per share). Primarily as a result of share issuances in October 1994, Clearnet had $86.6 million cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has as at July 31, 1995. Such amount will fund only a portion of the capital expenditures, working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. and operating losses related to the initial build-out of the ESMR networks. Capital requirements could be significantly increased if Clearnet is successful in its pending application for a 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. licence. As at July 31, 1995, Clearnet had no current or long term debt outstanding and had 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. of $130.1 million under Canadian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ($287.6 million under U.S. GAAP). On April 25, 1995 the Company's ESMR/SMR operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Clearnet Inc. agreed to allow a bank commitment for an $85.0 million debt facility to expire. In so doing, Clearnet decided to re-focus its efforts on establishing an appropriate senior debt facility that is better suited for Clearnet's future requirements. In August 1995, Clearnet announced that it has entered into an approximate $125.0 million senior debt facility (available in Canadian and U.S. currency) with a Canadian chartered bank Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission . The facility is expected to provide significantly increased borrowing availability compared with the expired commitment. The facility is primarily designed to bridge the Company's funding needs in respect of the build-out of the Ontario-Quebec region with iDEN technology until a planned bond issue by late 1996. The net proceeds of such a bond issue, if completed, would be required under terms of the commitment, to permanently repay any outstanding borrowings under the bank facility with the exception of a $25 million working capital facility. The working capital facility is expected to remain available subsequent to the planned bond issue. The combination of the new bank facility and existing cash on hand is expected to provide adequate funding for the completion of the initial phase of the Ontario-Quebec ESMR build-out. The bank's obligation to fund under this commitment is conditional, amongst other things, upon completion of definitive documentation. Clearnet intends to fund the remaining capital expenditures, working capital requirements and initial operating losses primarily with borrowings through future debt financings Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and, to a lesser extent, equity offerings. Should additional financing not be available on favourable terms, Clearnet believes it could redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re its system to reduce or defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. capital requirements. As a result of payment terms agreed to with Clearnet's principal supplier of iDEN technology, Motorola Canada Limited, approximately 25 percent of Clearnet's total projected capital expenditures for the initial build-out of the Ontario- Quebec coverage region are payable only after Clearnet exceeds certain agreed to digital subscriber thresholds, including a certain minimum number of mobile telephone subscribers. Accordingly, a delay in the successful commercialization of Clearnet's ESMR network utilizing iDEN technology will have the consequent effect of delaying Clearnet's obligation to pay for a material portion of the firm's capital expenditures. In addition to the ESMR funding plans outlined above, Clearnet PCS Inc., a new 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. of the Company, is developing potential PCS supply and 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. arrangements conditional upon Clearnet being granted a PCS licence. Clearnet expects to raise additional capital in 1996 should it be granted a PCS licence. -0- CONSOLIDATED BALANCE SHEETS
April 30 July 31
1995 1995
(Audited - as restated) (1) (Unaudited)
(in thousands of
Canadian dollars) $ $
------------------------------------------------------------
ASSETS
Current assets
Cash and marketable
securities 93,932 86,567
Accounts receivable
(net of allowances) 5,195 5,499
Prepaid expenses 2,214 1,772
Inventories 3,250 3,606
------------------------------------------------------------
Total current assets 104,591 97,444
------------------------------------------------------------
Capital assets 21,286 44,887
Intangible assets 10,824 10,801
------------------------------------------------------------
Total 136,701 153,132
------------------------------------------------------------
-0- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities 4,403 22,088 Current portion of long-term debt 176 - Deferred revenue 208 190 ------------------------------------------------------------ Total current liabilities 4,787 22,278 ------------------------------------------------------------ Obligations under capital lease 128 112 Deferred revenue 703 642 ------------------------------------------------------------ Total liabilities 5,618 23,032 ------------------------------------------------------------ Shareholders' equity Share capital and contributed surplus 135,394 135,640 Deficit (4,311) (5,540) ------------------------------------------------------------ Total shareholders' equity 131,083 130,100 ------------------------------------------------------------ Total 136,701 153,132 ------------------------------------------------------------
Shareholders' equity under
Canadian GAAP 131,083 130,100
------------------------------------------------------------
Add (deduct):
Acquisition of Motorola net assets at fair value,
net of amortization and deferred income taxes
159,205 158,189
Cumulative expensing of
deferred commissions (634) (670)
Effect of retroactive change
in depreciation policy 561 -
------------------------------------------------------------
Shareholders' equity under
United States GAAP 290,215 287,619
------------------------------------------------------------
(1) Capital assets and deficit have been restated
for the change in depreciation policies.
-0- CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
Three Months Ended July 31
1994 1995
(Unaudited) (Unaudited)
(in thousands of Canadian dollars,
except share data) $ $
------------------------------------------------------------
REVENUE
Network 1,615 3,568
Equipment sales,
rental and service 3,450 4,395
------------------------------------------------------------
5,065 7,963
------------------------------------------------------------
OPERATING COSTS AND EXPENSES Network 312 406
Equipment sales,
rental and service 1,827 2,287
------------------------------------------------------------
2,139 2,693
------------------------------------------------------------
Gross profit 2,926 5,270
Selling, general
and administration 2,491 6,751
------------------------------------------------------------
Earnings (loss) before
interest, taxes, depreciation,
amortization and other 435 (1,481)
Depreciation and amortization 422 824
------------------------------------------------------------
Operating income (loss) 13 (2,305)
Foreign exchange gains - 339
Interest income (expense) (64) 1,437
------------------------------------------------------------
Loss before income taxes (51) (529)
Income tax provision 12 700
------------------------------------------------------------
Loss before minority interest (63) (1,229)
Minority interest 80 -
------------------------------------------------------------
NET INCOME (LOSS) 17 (1,229)
------------------------------------------------------------
Deficit, as previously
reported (2,556) (3,750)
Change in depreciation
policy (629) (561)
------------------------------------------------------------
Deficit, as restated (3,185) (4,311)
-----------------------------------------------------------
Deficit, end of period (3,168) (5,540)
------------------------------------------------------------
Net Income (loss) under
Canadian GAAP 17 (1,229)
Additional amortization of
licences and frequencies - (1,826)
Expensing of commissions
as incurred 13 (36)
Deferred income taxes recovery - 810
------------------------------------------------------------
Income (loss) under United States
GAAP before change in
depreciation policy 30 (2,281)
Change in depreciation policy (17) (561)
------------------------------------------------------------
Net Income (loss) under
United States GAAP 13 (2,842)
------------------------------------------------------------
AVERAGE NUMBER OF CLASS A
EQUIVALENT SHARES
OUTSTANDING DURING
THE PERIOD (in thousands)
Under Canadian GAAP 3,956 30,729
Under United States GAAP 5,030 30,729
NET INCOME (LOSS)
PER SHARE
Under Canadian GAAP 0.00 (0.04)
Under United States GAAP 0.00 (0.09)
Effect of change in
depreciation policy
under United States GAAP 0.00 (0.02)
-0- CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended July 31
1994 1995
(Unaudited) (Unaudited)
(in thousands of
Canadian dollars) $ $
------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) 17 (1,229)
Items not affecting cash:
Gain on sale of capital assets (38) (12)
Depreciation and amortization 422 824
Change in minority interest (80) -
---------------------------------------------------------
321 (417)
Net change in non cash
working capital items 199 17,430
---------------------------------------------------------
520 17,013
---------------------------------------------------------
FINANCING ACTIVITIES
Deferred tax effect
of share issuance cost - 246
Proceeds from (repayment of)
debt and capital leases 108 (205)
--------------------------------------------------------
108 41
--------------------------------------------------------
INVESTING ACTIVITIES
Net additions of
capital assets (703) (24,299)
Acquisition of
intangible assets (46) (120)
--------------------------------------------------------
(749) (24,419)
--------------------------------------------------------
Decrease in cash (121) (7,365)
Cash and marketable
securities, beginning
of period 2,497 93,932
--------------------------------------------------------
Cash and marketable
securities, end of period 2,376 86,567
--------------------------------------------------------
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. , VP/CFO, 905/837-3007 Internet - InvestorRelations@Clearnet.com INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED ComEd Commonwealth Edison COMED Combined Map and Electronic Display EARNINGS REPEATS: New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of 212-575-8822 or 800-221-2462; Boston 617-236-4266 or 80 |
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