Coreco Reports First Quarter Results: Earnings Grow by 30%, Revenues by 145%.Business Editors MONTREAL--(BUSINESS WIRE)--May 2, 2001 Coreco Inc. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CRC (Cyclical Redundancy Checking) An error checking technique used to ensure the accuracy of transmitting digital data. The transmitted messages are divided into predetermined lengths which, used as dividends, are divided by a fixed divisor. .) today announced its results for the first quarter ended March 31, 2001. (All results will be reported in U.S. dollars as of this period.) First-quarter revenues grew 145% to US$7,583,598 from US$3,101,429 last year. Net earnings from operations rose 30% to US$715,887 from US$548,649, amounting to US$0.10 on a per-share basis versus US$0.07 in 2000. This increase is mainly due to the contribution of Imaging Technology, Inc. (ITI (Information Technology Industry Council, Washington, DC, www.itic.org) Formerly the Computer and Business Equipment Manufacturers Association (CBEMA), founded in 1916. ITI is a membership organization composed of approximately 30 large high-tech companies. ), which was acquired on June June: see month. 30, 2000. After accounting for acquisition-related charges, the Company reported a first-quarter loss of US$725,074 or US$0.10 per share, compared with net earnings of US$525,755 or US$0.07 per share in the previous year. The gross margin for the quarter amounted to 56% of sales, compared with 64% for the same period one year ago before the acquisition of ITI and 59% in the last quarter. On a quarter-over-quarter basis, the gross margin was affected by volume orders of lower-margin products shipped to two OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers and the higher cost of manufacturing certain products for quick delivery to meet pent-up pent-up adj. Not given expression; repressed: pent-up emotions. pent-up Adjective not released; repressed: demand. Coreco continues to expect that it will achieve a blended gross margin of 60% in the second half of fiscal 2001, as it draws full benefit from the acquisition of ITI. Selling and marketing expenses were consistent with those of the first quarter in 2000, representing 16.6% of sales. R&D expenses during the same period dropped to 16.2% of sales from 23.5% in the previous year, reflecting the proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. lower level of R&D at the Company's U.S. group. During the first quarter, the Company built inventory at both its Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. and Montreal Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. locations to respond to an order 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. at the end of fiscal 2000 as well as to decrease lead times in delivering products to customers. This resulted in a decrease in net cash of US$1,278,598. Working capital increased to US$8,344,059 from US$7,714,556 in the first quarter of 2000. In the first quarter of 2001, sales to Asia, 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 the U.S.
increased by 149%, 291% and 115%, respectively, as a result of higher
sales by the Montreal office in the European Europeanemanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and Asian markets together with the added market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" provided by the ITI distribution network. At quarter-end, Asia accounted for 18% of total sales, Europe for 31% and the U.S. for 48%. Sales to 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 accounted for 3% of the total. In this quarter, Coreco achieved significant milestones in its strategy to target higher value and larger machine vision markets. The Company began shipment of vision solutions integrating hardware and application-specific software to a leading OEM in Asia. These products accounted for 3% of the Company's sales in the first quarter. The Company also entered the end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. segment of the machine vision market by beginning to market its Netsight and Sherlock A Macintosh utility starting with Version 8.5 of the operating system that provides a common facility for searching the local hard disk, the local network and the Internet. products for easy-to-use factory floor applications. Unlike OEMs which have sophisticated technical expertise to build Coreco's hardware and software into their own products, end-users typically have little or no machine vision expertise. Compared with the OEM market, end-users represent a much larger customer base and a greater number of machine vision applications. Coreco also launched and began to ship the new Bandit-II Series frame grabber A device that accepts standard TV signals and digitizes the current video frame into a single, bitmapped still image. Frame grabbers can be stand-alone devices that plug into a port on the computer or a function built into the video capture board or display adapter. in the first quarter of 2001. Aimed at high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" medical imaging and industrial inspection applications, the Bandit-II is designed to interface with multiple camera inputs and can be supported by application-specific imaging software, providing wide performance flexibility. New products accounted for 48% of total sales, compared with 35% in the first quarter of 2000. The Company's broad product categories include frame grabbers, embedded Inserted into. See embedded system. products (frame grabber and embedded processor A CPU chip used in a system other than a general purpose workstation, desktop or laptop computer. Such chips are used by the billions every year in a myriad of products. See embedded system. ) and application-specific software. By product category, sales of frame grabbers and software grew by 308% and 52%, respectively, while sales of embedded products grew by 50%. At quarter-end, frame grabbers made up 61% of sales, embedded products 33% and software the remaining 6% of sales. "With this quarter, we are beginning to see the results of our strategy to migrate into higher-value and higher-volume machine vision markets," commented Coreco 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. Keith Keith may refer to: People with the given name Keith:
 `bən), in the Bible, Jacob's eldest son and eponymous ancestor of one of the 12 tribes of Israel. . "Today, Europe
and Asia, which represent about half of the world's machine vision
market, account for nearly 50% of our sales. We are also moving up the
value chain as we begin to ship specific machine vision applications to
end-users that manufacture products on the factory floor. At this time,
we are taking the next step to achieve quicker penetration of this large
market, with the development of a smart camera that we are aiming to
deliver in the fourth quarter of the current fiscal year."Mr. Reuben concluded, "Over the last two decades, Coreco has earned a worldwide reputation for technology leadership and performance. In this quarter, we were awarded 11design-wins by important OEM customers to participate in the development of their leading-edge products. By continuing to focus on new product development and the penetration of higher-value machine vision markets, we will build on this track record to deliver increasing top-line and bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. growth in the future." Measurement Currency Effective January January: see month. 1, 2001, the Company adopted the U.S. dollar as its measurement currency as a result of the significance of business activities conducted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the increasing proportion of operating, financing and investing transactions in 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. operations that are denominated in U.S. dollars. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , comparative figures for the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the period ended March 31, 2000 have also been presented in U.S. dollars, using the convenience translation method whereby all 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 amounts were converted into U.S. dollars at the closing exchange rate at December December: see month. 31, 2000, which was $1.5002 Canadian dollar per U.S. dollar. Webcast The Company's conference call will be webcast on www.Q1234.com at 10 a.m. on Wednesday Wednesday: see week. , May 2, 2001. Coreco Inc. is a leader in the design, development, manufacturing and marketing of hardware and software for high-performance computer vision applications, primarily in the medical imaging, machine vision and industrial inspection markets. The Company employs approximately 160 people and has operations in Montreal (QC), Ottawa Ottawa, city, Canada Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. (ON), Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. (BC) and Bedford (MA), with additional sales offices in Cleveland (OH) and San Juan Capistrano San Juan Capistrano (săn wän kăpĭsträ`nō), city (1990 pop. 26,183), Orange co., S Calif.; inc. 1961. San Juan Capistrano has some manufactures, including aircraft parts, medical apparatus, and boats, but the economy is (CA). Founded in 1979, Coreco's success is driven by sound financial management combined with its commitment to the research and development of value-added products to serve the evolving needs of the computer vision market. This press release contains statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. All data in U.S. dollars unless otherwise indicated.
CORECO INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
note (3)
Three months ended March 31,
---------------------------------------------------------------------
2001 2000 2001
(US dollars) (US dollars) (CAN dollars)
---------------------------------------------------------------------
Sales $7,583,598 $3,101,429 $11,588,496
Cost of goods sold 3,324,222 1,108,917 5,079,744
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Gross profit 4,259,376 1,992,512 6,508,752
Expenses:
Research and development
expenditures 1,232,223 728,305 1,882,960
Less research tax credits (280,000) (290,121) (427,868)
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952,223 438,184 1,455,092
Selling and marketing 1,260,624 517,637 1,926,360
General and administrative 688,865 218,929 1,052,655
Depreciation and amortization
of equipment and leasehold
improvements 177,632 79,584 271,439
Financial, net 65,102 (131,065) 99,482
---------------------------------------------------------------------
3,144,446 1,123,269 4,805,028
---------------------------------------------------------------------
Earnings before income taxes
and undernoted items 1,114,930 869,243 1,703,724
Acquisition-related charges
(note 1) 1,458,004 40,195 2,227,976
---------------------------------------------------------------------
Earnings before income taxes (343,074) 829,048 (524,252)
Income taxes 382,000 303,293 583,734
---------------------------------------------------------------------
Net (loss) earnings $(725,074) $525,755 $(1,107,986)
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings (loss) per share,
basic and fully-diluted $(0.10) $0.07 $(0.15)
Net earnings from operations
(note 2) $715,887 $548,649 $1,093,947
---------------------------------------------------------------------
---------------------------------------------------------------------
Net earnings from operations
per share, basic and
fully-diluted (note 2) $0.10 $0.07 $0.15
Weighted average number of
shares outstanding:
Basic 7,274,785 7,330,508 7,274,785
Fully-diluted 7,334,522 7,341,105 7,334,522
(1) Includes the amortization of intangibles related to acquisitions. (2) Excludes the after-tax amortization of intangibles related to acquisitions. (3) For information only, the results for Q1, 2001 have been converted at exchange rate of $1.5281 Canadian dollar per US dollar.
CORECO INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2001 December 31,
2000
In US dollars (unaudited) (audited)
---------------------------------------------------------------------
Assets
Current assets:
Cash $359,359 $1,637,958
Accounts receivable 5,890,415 5,429,536
Research tax credits recoverable 2,369,603 2,190,271
Inventories 4,986,927 3,717,502
Prepaid expenses 356,743 326,283
Future income taxes 340,385 501,066
---------------------------------------------------------------------
14,303,432 13,802,616
Capital assets 1,790,262 1,850,553
Investment, at cost 987,888 987,888
Goodwill 7,400,429 8,834,629
Future income taxes 124,616 113,935
Deferred financing charges 75,921 80,981
---------------------------------------------------------------------
$24,682,548 $25,670,602
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities * $4,034,799 $4,062,169
Income taxes payable 1,621,111 1,747,928
Current portion of long-term debt 62,500 -
Future income taxes 240,963 277,963
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5,959,373 6,088,060
Long-term debt 3,437,500 3,500,000
Future income taxes 148,650 126,650
Shareholders' equity:
Share capital 10,860,235 10,875,779
Cumulative translation adjustment - 115,663
Retained earnings 4,276,790 4,964,450
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15,137,025 15,955,892
---------------------------------------------------------------------
$24,682,548 $25,670,602
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---------------------------------------------------------------------
* Including acquisition-related reserves
CORECO INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended
March 31
In US dollars 2001 2000
---------------------------------------------------------------------
Cash flows from operating activities:
Net (loss) earnings $(725,074) $525,755
Adjustments for:
Depreciation and amortization of
capital assets 177,632 79,584
Amortization of goodwill 1,434,198 16,389
Amortization of acquired software 23,806 23,806
Amortization of deferred financing fees 5,061 -
Future income taxes 135,000 21,997
Changes in operating assets and liabilities
Accounts receivable (460,879) (191,480)
Research tax credits recoverabl (179,333) (303,435)
Inventories (1,269,425) (381,993)
Prepaid expenses (30,460) (25,765)
Accounts payable and accrued liabilities (54,983) 583,580
Income taxes payable (157,497) 265,298
---------------------------------------------------------------------
(1,101,954) 613,736
Cash flows from financing activities:
Dividends paid - (122,206)
Repurchase of shares (37,795) -
Proceeds from issuance of common shares 2,298 (38,857)
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(35,497) (161,063)
Cash flows from investing activities:
Purchase of capital assets (141,147) (142,738)
Net proceeds from (purchases of)
disposal of short-term investments - (121,525)
---------------------------------------------------------------------
(141,147) (264,263)
---------------------------------------------------------------------
Increase (decrease) in cash during
the period (1,278,598) 188,410
Cash, beginning of period 1,637,957 51,249
---------------------------------------------------------------------
Cash, end of period $359,359 $239,659
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash position at the end of the period is :
Cash 359,359 239,659
Short-term investments - 10,017,266
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$359,359 $10,256,925
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