Cognicase Reports 69 Percent Increase in net Earnings for Third Quarter of Fiscal 1999.MONTREAL--(BUSINESS WIRE)--July 29, 1999-- (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 :COGI COGI Coalition on Government Information (also known as the Minnesota Coalition on Government Information, or MNCOGI; promotes open access to public records) )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :COG.) (ME:COG.) -Third Quarter Revenues Increase of 81 percent -Nine-month Earnings Growth of 131 percent COGNICASE Inc. (NASDAQ: "COGI") today announced continued strong results for the third quarter and nine months ended June June: see month. 30, 1999. For the third quarter, revenues increased 81 percent to US$36,103,000 from US$19,987,084 for the similar period a year ago. Net earnings increased 69 percent to US$3,855,000, or $0.25 per common share (excluding foreign exchange gains and losses), compared to US$2,277,000, or $0.18 per common share, for the same three-month period last year. For the first nine months, revenues increased threefold to US$107,044,000 compared to US$34,389,926 for the first nine months of fiscal 1998. Net earnings, excluding foreign exchange gains and losses, more than doubled to US$10,315,000 compared to US $4,471,000 in the corresponding 1998 period. "We are very pleased with the Company's solid earnings growth," said Ronald Brisebois. "We have concluded four acquisitions, with aggregate revenues of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $US60 million since the end of the second quarter. These include our first US acquisition, as well as companies 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 France. Moreover, COGNICASE is benefiting from a growing 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 market recognition of our E-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. capabilities and Web-based solutions." These acquisitions and continued internal growth bring the company's revenue run rate over $US150 million. Such estimate excludes revenues from PRISM prism, in optics, a piece of translucent glass or crystal used to form a spectrum of light separated according to colors. Its cross section is usually triangular. Consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" Inc., which if, as expected, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval is obtained, will contribute to the fourth quarter results. "Looking at the results for the third quarter, we can now say that COGNICASE's transition from a Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 solution provider to a diversified company diversified company A company engaged in varied business operations not directly related to one another. A diversified company is less likely to suffer either a collapse or a spectacular gain in earnings compared with a firm concentrating its operations in a active in a broad range of IT business segments is now complete. COGNICASE's new positioning, in high-growth sectors such as Web/E-commerce, Internet/Intranet, and IT 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. , translates into a very positive outlook going forward", 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. Brisebois. Founded in 1991, COGNICASE is an international provider of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: information technology solutions, software and integration services. The company offers a full range of IT solutions including complete and partial outsourcing, Web/E-commerce development, ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. implementation, client/server An architecture in which the user's PC (the client) is the requesting machine and the server is the supplying machine, both of which are connected via a local area network (LAN) or wide area network (WAN). application development, network architecture and management, Web-based development tools, as well as software for automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. internet application conversion and platform migration. Following the integration of this acquisition, the Company will have over 2,500 human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. serving customers from offices located in 20 cities in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. .
Financial Highlights
US$000 except EPS
Q3/99 Q3/98 percent change 9mo/99 9mo/98
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Revenues 36,103 19,987 81 percent 107,044 34,389
Earnings from
Operations 6,531 3,459 89 percent 17,226 5,953
Net Earnings
(Excluding FX gains) 3,855 2,277 69 percent 10,315 4,471
EPS(1) 0.25 0.18 39 percent 0.71 0.36
Net Earnings
(Reported) 3,223 2,475 30 percent 9,362 5,581
Cash net
earnings(2) 4,820 2,596 85 percent 12,735 5,016
Cash EPS(2) 0.31 0.20 55 percent 0.88 0.41
(1) U.S. GAAP, fully diluted, excluding FX gains (losses) (2)
Excluding amortization of goodwill and FX gains (losses)
This section is a Year 2000 Readiness Disclosure Statement YEAR 2000 ISSUES In the Year 2000 Readiness Disclosure Statement contained in its 1998 Annual Report, COGNICASE disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). that its Year 2000 compliance program was completed on September September: see month. 30, 1998. No event has since occurred which might cause the Company to modify such statement. The Year 2000 compliance program covered all the main aspects of the business activities of the company and the technology it employs, including operating software, technological components, applications and supplier hardware. COGNICASE considers that it has taken the necessary measures to ensure a satisfactory transition of its information systems into the year 2000. With regards to contracts with customers, COGNICASE's responsibility is limited by specific provisions to the value of the services provided thereunder. Furthermore, COGNICASE is satisfied that its commercial activities other than Year 2000 conversion contracts have no impact on the Year 2000 conversion of its customers' computer hardware. COGNICASE has also taken the necessary steps to ensure that all software furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. by third parties for its internal administrative needs is Year 2000 compliant a. 1. (Computers) having dates fully and properly represented, and not susceptible to failure due to the year 2000 bug. . The software used by COGNICASE for the provision of services to its customers are not date sensitive and therefore are not subject to the Year 2000 risk. The costs associated with COGNICASE's compliance program and its implementation were minimal. This press release contains 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. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (US), which involve risks and uncertainties. As a result of a number of factors, including factors that the Company may not currently foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. , the Company's actual results could differ materially from those set forth in the forward-looking statements. Certain other factors that might cause the Company's actual results to differ materially from the forward-looking statements include the Company's ability to (i) successfully develop additional products and services and new applications for its existing products and services and otherwise respond to rapid changes in technology, (ii) successfully compete in its industry for customers and developers and other personnel with expertise in information technology, (iii) successfully identify and consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. acquisitions on favourable terms and integrate acquired businesses, and (iv) successfully manage its growth and changing business, as well as those factors set forth under the heading "Risk Factors" in its 1998 annual report.
COGNICASE Inc.
Consolidated Statements of Earnings
(In thousands of U.S. dollars, except share and per share data)
Nine Nine Three Three
Months Months Months Months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
1999 1998 1999 1998
-----------------------------------------------------------------
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenues $107,044 $34,390 $36,103 $19,987
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Operating expenses
Cost of revenues 64,017 20,830 22,552 12,228
General and
administrative 8,621 4,246 2,664 2,523
Sales and marketing 10,004 1,638 2,095 986
Research and
development, net of
tax credits 3,191 615 689 161
Amortization 3,985 1,108 1,572 630
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Total operating expenses 89,818 28,437 29,572 16,528
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Earnings from operations 17,226 5,953 6,531 3,459
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Interest income 511 1,433 117 388
Gain (loss) on
foreign exchange (1,595) 1,791 (1,091) 320
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(1,084) 3,224 (974) 708
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Earnings before
income taxes 16,142 9,177 5,557 4,167
Provision for
income taxes 6,780 3,596 2,334 1,692
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Net earnings $9,362 $5,581 $3,223 $2,475
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Earnings per share CDN GAAP:
Basic $0.67 $0.47 $0.21 $0.20
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Fully diluted $0.63 $0.45 $0.20 $0.19
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U.S. GAAP:
Basic $0.67 $0.47 $0.21 $0.20
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Fully diluted $0.65 $0.45 $0.21 $0.20
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Fully diluted excluding
net impact of gain (loss)
on foreign exchange $0.71 $0.36 $0.25 $0.18
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Weighted average
number of shares
outstanding
CDN GAAP:
Basic 13,985,398 11,863,044 15,084,848 12,269,656
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Fully diluted 15,398,520 13,139,030 16,497,970 13,821,816
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U.S. GAAP:
Basic 13,985,398 11,863,044 15,084,848 12,269,656
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Fully diluted 14,455,312 12,264,883 15,486,268 12,671,495
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COGNICASE Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
June 30 September 30
1999 1998
----------------------------------------------------------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $31,422 $18,974
Temporary investments 940 -
Accounts receivable 40,467 27,674
Tax credits receivable 3,268 861
Work in process 5,096 2,234
Prepaid expenses 962 852
Future income taxes 1,061 1,653
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83,216 52,248
Capital assets 5,781 5,089
Future income taxes 1,480 659
Goodwill 78,186 45,630
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$168,663 $103,626
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----------------------------------------------------------------
LIABILITIES
Current liabilities
Bank advances $1,264 $647
Accounts payable and accruals 23,189 23,455
Income taxes payable 2,950 3,218
Deferred revenue 3,923 5,508
Current portion of long-term debt 1,285 2,139
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32,611 34,967
Long-term debt 911 1,688
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33,522 36,655
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SHAREHOLDERS' EQUITY
Capital stock 119,424 63,546
Retained earnings 19,885 10,523
Cumulative translation adjustment (4,168) (7,098)
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135,141 66,971
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$168,663 $103,626
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COGNICASE Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
1999 1998 1999 1998
----------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $9,362 $5,581 $3,223 2,475
Adjustments for :
Loss on disposal of
capital assets 4 385 4 385
Amortization of
capital assets 1,565 564 607 312
Amortization of
goodwill 2,420 545 965 319
Future income taxes 1,086 - 272 -
Decrease (increase)
in assets:
Accounts
Receivable (4,307) (8,491) 985 (5,759)
Tax credits
Receivable (2,211) 58 (471) 602
Work in process
and prepaid
expenses (2,484) (778) (1,389) (213)
Increase (decrease)
in liabilities:
Accounts payable
and accrued
liabilities (4,179) 1,929 (1,323) 688
Income taxes
Payable (160) 2,730 2,007 1,059
Deferred
Revenue (1,428) 1,027 (1,354) 1,026
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Net cash flows from
(used in) operating
activities (332) 3,550 3,526 894
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CASH FLOWS FROM INVESTING ACTIVITIES
Temporary
Investments (235) (5,153) (235) (10,229)
Purchase of capital
assets (1,546) (1,450) (725) (447)
Proceeds on disposal
of capital assets 101 - 101 -
Other assets 1,539 - 1,539 -
Business acquisitions
- net of cash and
cash equivalents
acquired or deficit
assumed (30,097) (30,294) (25,197) (8,374)
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Net cash flows
used in investing
activities (30,238) (36,897) (24,517) (19,050)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of
bank advances (1,018) - (371) -
Repayment of
long-term debt (1,947) 93 (540) 111
Issuance of
capital stock 50,340 55,835 514 3,489
Expenditures
related to
issue of
capital stock (2,190) (4,409) 100 -
Other - 318 - 2
----------------------------------------------------------------
Net cash flows
from financing
activities 45,185 51,837 (297) 3,602
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Increase
(decrease) in
cash and cash
equivalents 14,615 18,490 (21,288) (14,554)
Effect of
exchange rate
changes on
cash (2,167) (2,222) (3,260) (660)
Cash and cash
equivalents,
beginning of
period 18,974 2,440 55,970 33,922
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Cash and cash
equivalents,
end of period $31,422 $18,708 $31,422 $18,708
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