Cognicase Reports Strong Revenue and E-Business Growth-Launches two Strategic Internet Business Units.Business Editors MONTREAL--(BUSINESS WIRE)--Feb. 7, 2000 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. accounts for 15 % of first quarter revenues COGNICASE Inc. (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.) today announced its results for the first quarter ended December December: see month. 31, 1999. Revenues increased 17 % to US$44.2 million from US$37.9 in the fourth quarter of fiscal 1999 and 27 % compared to US$34.9 million in the first quarter of fiscal 1999. E-business revenues rose 56 % to US$6.6 million to account for 15 % of the Company's revenues for the first quarter of fiscal 2000. Investment in research and development for Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and wireless software increased significantly during the quarter in support of the Company's e-business strategy. Net R& expenses were US$2.1 million, up 163 % compared to US$0.8 million (excluding a one time event related to investment tax credits of US$0.7 million) in the fourth quarter of fiscal 1999. The Company also incurred business development expenses related to the launch of two strategic Internet business units: COGNICASE Internet Technologies (CIT n. 1. A citizen; an inhabitant of a city; a pert townsman; - used contemptuously. Which past endurance sting the tender cit. - Emerson. ) and COGNICASE Internet Innovations (CII CII Confederation of Indian Industry CII Chartered Insurance Institute (UK) CII Construction Industry Institute (University of Texas) CII Council of Institutional Investors ). Cash earnings (excluding foreign exchange gains/losses and amortization of goodwill) in the first quarter were US$2.0 million compared to US$3.5 million for the same period in fiscal 1999. These results are in line with the Company's outlook as communicated in the press release announcing fourth quarter and 1999 fiscal year results. &uot;We are pleased to report strong cash earnings while making important investments in R& and e-business growth to create significant shareholder value going forward. The launch of CII and CIT is an important component of our e-business strategy. We expect a growing contribution from these business units in the coming quarters,&uot; said Ronald Brisebois, President and Chief Executive Officer. Last week, COGNICASE announced a strategic partnership with National Bank of Canada This article is about a commercial bank. For Canada's central bank, see Bank of Canada. National Bank of Canada (Banque Nationale du Canada) TSX: NA is the sixth largest bank in Canada, and so is one of the Big Six banks. under which the Company is acquiring the Bank's IT subsidiary to become a premier end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. electronic solutions provider. Under the transaction, which is expected to close in May 2000, COGNICASE will become the preferred IT supplier to National Bank and its affiliates for the next ten years under a 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. agreement. Based on current business derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. by SIBN Inc. from its existing arrangements with the National Bank, COGNICASE estimates that, if it maintains a similar level of business with the National Bank, it could generate revenues of CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $1.2 billion under such agreement over that same period. The transaction also positions COGNICASE advantageously to solicit an additional CDN$225 million per year over that same period in IT contracts from the Bank and its affiliates. &uot;Our partnership with National Bank and the launch of CII and CIT provide a very strong platform for continued revenue growth and profitability. COGNICASE is extremely well-positioned to serve customers in the Internet era and seize seize v. To exhibit symptoms of seizure activity, usually with convulsions. the tremendous opportunities arising from the explosion in e-business and the convergence convergence Mathematical property of infinite series, integrals on unbounded regions, and certain sequences of numbers. An infinite series is convergent if the sum of its terms is finite. of mobility and the Internet. We continue to explore other means to accelerate our penetration The successful unauthorized breach of a security perimeter. See penetration test. in e-business while pursuing internal growth,&uot; added Mr. Brisebois. In summary, giving effect to this strategic partnership, COGNICASE will have: * Over 3,500 employees * Over 2,000 major customers * Run rate revenues: US$265M * 20 business units in 10 countries * 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. of more than: US$1B over 10 years
Financial Highlights
(US$000 except EPS)
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Q1-2000
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Outsourcing Consoli-
&Integration CII CIT Adj. dated
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Revenues 37,633 1,548 5,008 - 44,189
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Earnings
from Operations 4,153 (232) (1,241) (256) 2,424
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Cash Net
Earnings (1) 3,442 (197) (1,185) (91) 1,969
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Cash EPS (1) 0.22 (0.01) (0.08) 0.00 0.13
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Q1-1999
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Outsourcing Consoli-
&Integration CII CIT Adj. dated
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Revenues 30,721 - 4,192 - 34,913
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Earnings
from Operations 5,762 - 571 (753) 5,580
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Cash Net
Earnings (1) 3,677 - 295 (468) 3,504
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Cash EPS (1) 0.28 0.00 0.02 (0.04) 0.26
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(1) U.S. GAAP, fully diluted, excluding FX gains (losses) and
amortization of goodwill
About COGNICASE COGNICASE is among the leading North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. e-business integrators and solutions providers, with offices in several major North American and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. business centers. Based on its results-driven approach, Internet software technologies, international IT engineering/hosting center and critical mass of business and technology expertise, COGNICASE offers innovative solutions that contribute to the business success of its customers in the digital economy. Our solutions include: turnkey See turnkey system. e-business solutions including portal development and evolution, e-services An umbrella term for services on the Internet. E-services include e-commerce transaction services for handling online orders, application hosting by application service providers (ASPs) and any processing capability that is obtainable on the Web. See e-speak. software and solutions, re-engineering re-engineering - The examination and modification of a system to reconstitute it in a new form and the subsequent implementation of the new form. http://erg.abdn.ac.uk/users/brant/sre. of existing applications for e-business, technology configuration management, as well as project management and business process improvement 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" . COGNICASE INTERNET TECHNOLOGIES (CIT) mission is to deliver &uot;smart information on demand&uot; by developing leading-edge Internet and wireless software solutions. It capitalizes on COGNICASE's Internet products, re-engineering technologies and search engines based on rules and fuzzy logic fuzzy logic, a multivalued (as opposed to binary) logic developed to deal with imprecise or vague data. Classical logic holds that everything can be expressed in binary terms: 0 or 1, black or white, yes or no; in terms of Boolean algebra, everything is in one set or , and using JAVA and XML XML in full Extensible Markup Language. Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations. . COGNICASE INTERNET INNOVATIONS (CII) mission is to accelerate the creation, start-up Start-up The earliest stage of a new business venture. and development of new Internet See Web 2.0 and Internet2. companies (dot-coms) and portals offering state-of-the-art solutions. Backed by the power of the Internet, and the most reliable, flexible and advanced technologies and functionalities, CII allows optimal development of integrated business solutions that are adapted to the specific needs of each industry 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 favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms and integrate acquired businesses, (iv) successfully manage its growth and changing business, (v) close the transaction described herein, (vi) be awarded contracts under IS/IT and Preferred Supplier Agreement to be negotiated with the National Bank of Canada, as well as other risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the finalisation n. 1. same as finalization. Noun 1. finalisation - the act of finalizing finalization mop up, windup, completion, culmination, closing - a concluding action of definitive agreements relating to the proposed transaction,and those factors set forth under the heading &uot;Risk and Risk Management&uot; in its 1999 annual report.
COGNICASE Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
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December 31 September 30
1999 1999
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(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $6,761 $8,290
Accounts receivable 38,807 39,551
Work in process 5,531 6,283
Income tax receivable 1,897 -
Taxes credits receivable 6,262 6,470
Prepaid expenses 563 785
Future income taxes - 279
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59,821 61,658
Capital assets 6,735 6,416
Future income taxes 2,379 2,379
Goodwill 104,862 104,719
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$173,797 $175,172
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LIABILITIES
Current liabilities
Accounts payable and accruals $25,579 $27,786
Income taxes payable - 328
Deferred revenue 3,713 3,540
Future income taxes 447 -
Current portion of long-term debt 698 1,286
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30,437 32,940
Long-term debt 555 597
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30,992 33,537
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SHAREHOLDERS' EQUITY
Capital stock 122,350 121,903
Retained earnings 24,302 23,822
Cumulative translation adjustment (3,847) (4,090)
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142,805 141,635
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$173,797 $175,172
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COGNICASE Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)
-------------------------------------------------------------------
Three Months Three Months
Ended Ended
December 31 December 31
1999 1998
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(Unaudited) (Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Net earnings $480 $2,848
Adjustments for:
Loss on disposal of
capital assets 1 -
Amortization of
capital assets 650 379
Amortization
of goodwill 1,366 542
Future income taxes 761 -
Decrease (increase) in assets: -
Accounts receivable 722 (6,333)
Income taxes receivable (1,835) -
Tax credits receivable 292 (1,268)
Work in process 1,058 105
Increase (decrease)
in liabilities: -
Accounts payable and
accrued liabilities (2,101) 987
Income taxes payable (359) 1,438
Deferred revenue 317 93
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Net cash flows from (used in)
operating activities 1,352 (1,209)
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CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of capital assets (750) (407)
Proceeds on disposal of
capital assets 6 -
Business acquisitions -
net of cash and cash
equivalents acquired
or deficit assumed (1,312) (440)
Other 66 -
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Net cash flows used in
investing activities (1,990) (847)
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CASH FLOWS FROM
FINANCING ACTIVITIES
Repayment of bank advances (188) (647)
Repayment of long-term debt (577) (971)
Issuance of capital stock 177 1,231
Other - 268
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Net cash flows used in
financing activities (588) (119)
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Decrease in cash and
cash equivalents (1,226) (2,175)
Effect of exchange rate
changes on cash and
cash equivalents (303) 598
Cash and cash equivalents
- beginning of period 8,290 18,974
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Cash and cash equivalents
- end of period $6,761 $17,397
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COGNICASE Inc.
Consolidated Statements of Earnings
(In thousands of U.S. dollars, except share and per share data)
-------------------------------------------------------------------
Three Months Three Months
Ended Ended
December 31 December 31
1999 1998(1)
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(Unaudited) (Unaudited)
Revenues $44,189 $34,913
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Operating expenses
Direct costs, selling
and administrative 39,040 27,475
Research and development
- net of tax credits 2,075 1,479
Amortization of
capital assets 650 379
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Total operating expenses 41,765 29,333
Earnings from operations 2,424 5,580
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Financial expense
(income) - net 86 (57)
Loss on foreign exchange 265 183
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351 126
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Earnings before income taxes and
amortization of goodwill 2,073 5,454
Provision for income taxes 327 2,064
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Earnings before amortization
of goodwill 1,746 3,390
Amortization of goodwill
(net of tax of 100; 1998 - 0) 1,266 542
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Net earnings $480 $2,848
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Net earnings per share CDN GAAP:
Basic (in U.S. dollars) $0.03 $0.22
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Fully diluted (in U.S. dollars) $0.04 $0.21
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U.S. GAAP:
Basic (in U.S. dollars) $0.03 $0.22
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Fully diluted (in U.S. dollars) $0.03 $0.22
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Fully diluted excluding net
impact of loss on
foreign exchange and
amortization of goodwill
(in U.S. dollars) $0.13 $0.26
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Weighted average number of
shares outstanding
CDN GAAP:
Basic 15,553,778 12,661,950
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Fully diluted 17,041,212 14,438,029
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U.S. GAAP:
Basic 15,553,778 12,661,950
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Fully diluted 15,742,950 13,232,092
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(1) Comparative figures have been restated in order to comply
with the new basis of presentation.
COGNICASE Inc.
Segment Information
(In thousands of US dollars, except per share data)
Q1-2000
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Outsourcing Consolidation
and Integration CII ** CIT*** Entries Consolidated
Revenues 37,633 1,548 5,008 - 44,189
Inter-Segment
Revenues 2,333 27 600 (2,960) -
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Total Revenues 39,966 1,575 5,608 (2,960) 44,189
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Earnings from
Operations 4,153 (232) (1,241) (256) 2,424
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Cash Net
Earnings (1) 3,442 (197) (1,185) (91) 1,969
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Cash EPS 0.22 (0.01) (0.08) 0.00 0.13
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Q1-1999
(Restated) (2)
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Outsourcing Consolidation
and Integration* CII** CIT*** Entries Consolidated
Revenues 30,721 - 4,192 - 34,913
Inter-Segment
Revenues 1,885 - - (1,885) -
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Total Revenues 32,606 4,192 (1,885) 34,913
-----------------------------------------------------------------------
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Earnings from
Operations 5,762 - 571 (753) 5,580
-----------------------------------------------------------------------
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Cash Net
Earnings (1) 3,677 - 295 (468) 3,504
-----------------------------------------------------------------------
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Cash EPS 0.28 - 0.02 (0.04) 0.26
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(1) Net earnings excluding foreign exchange gains/losses and
amortization of goodwill.
(2) On October 1, 1999, the Company reorganized its corporate
structure and segmented its activities in three principal
operating segments: Outsourcing and Integration, COGNICASE
Internet Innovations (&uot;CII&uot;) and COGNICASE Internet Technologies
(&uot;CIT&uot;). Comparative figures have been restated to comply with
this new reporting
basis.
* Outsourcing and Integration includes project management and
consulting services in business processe improvement,
re-engineering, systems integration, as well as IT outsourcing and
training.
** CII is a new business unit which focuses on creating and promoting
new Internet companies (.com) as well as on-line solutions and
services. It includes portal incubator, portal hosting and
security, portal performance management and portal development and
management.
*** The CIT business unit brings together all of the Company's
software assets related to the Internet and artificial
intelligence. It includes personalized e-software, Internet
catalog software, e- services Internet applications, as well as
Internet and wireless server software.
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