Correction - BCE Emergis Announces Strong Second Quarter Results.Business Editors MONTREAL--(BUSINESS WIRE)--July 24, 2001 BCE EMERGIS (IFM\TSE) This release corrects and replaces the release sent out today July 24, 2001 @ 0635 et. A correction has been made to the month in the Consolidated Statements of Earnings
- Revenue of $158.7 million hits top end of target range
- All three business units - eHealth, U.S. and Canada- drive
revenue growth
- Positive baseline earnings at $0.13 per share
- Milestone agreements confirm Emergis' market leadership
BCE Emergis Inc. (TSE:IFM), a leading provider of e-commerce services and exchanges, today announced strong second quarter financial results. Revenue for the second quarter of 2001 reached $158.7 million, up from $122.2 million in the corresponding quarter of 2000, which included revenue from divested activities. Baseline earnings* for the quarter were $12.5 million, or $0.13 per share, compared to $8.4 million, or $0.09 per share for the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $30.9 million for the quarter, up from $20.1 million in 2000. When acquisition-related amortization costs and future income tax benefits are included, BCE Emergis recorded a net loss of $90.6 million, or a loss of $0.96 per share for the second quarter ended June 30, 2001, compared to a loss of $82.1 million or $0.88 per share for the corresponding period in 2000. "We are most satisfied with these quarterly results. Revenue grew strongly, reaching the high end of our target range, EBITDA hit a new high mark exceeding $30 million and we continued to generate positive baseline earnings. And, we accomplished all this while navigating through an uncertain economic climate." stated Brian Edwards, Vice Chairman and CEO of BCE Emergis. "Furthermore, we expect many of the major accounts we signed up over the past few months to position us well as we move forward." Christian Trudeau, President & COO further added, "As the past quarter illustrates, we have continued to grow our eHealth business and have made significant progress in expanding geographically our network of relationships with insurance companies and providers. Our e-invoicing technology is gaining traction, as evidenced by our signing of an agreement with Equifax. And, today, the strength of this technology has brought us to a new high point as we have entered into a partnership with Visa U.S.A. to integrate our electronic invoicing product into its commercial payment solutions." Edwards also pointed to the addition of Ernie Eves to the Board, as well as the appointment of Jean Monty to the position of Chairman, as highlights of the quarter: "With Jean Monty taking over the chairmanship duties, BCE reiterates its continued support and keen interest in our progress as a leading North American e-commerce services provider." Business outlook For the third quarter 2001, the Company is targeting revenue between $160 million and $175 million. As noted in the previous quarter, the economic slowdown, and its possible effect on the Company's business, is creating uncertainty and difficulty in predicting future results. Other financial highlights: For the 2nd quarter, revenue from each of the business units progressed solidly: - The eHealth sector remains the largest segment, registering $76.2 million in revenue for the quarter. This compares favorably to $70.3 million in the first quarter of 2001 and $63.2 million in the second quarter of 2000. - The Canadian business unit revenue grew to $72.0 million from $66.0 million in the previous quarter and $53.0 million in the second quarter of 2000, the last of which included revenue from since divested assets. - Revenue from the U.S. business unit jumped to $10.5 million, up from $7.0 million in the previous quarter and $6.0 million in the second quarter of 2000, the last of which also included revenue from since divested assets. - Baseline earnings(1) per share, while remaining positive, were impacted by foreign exchange differences in the amount of $0.03 per share, as compared to last quarter. - EBITDA reached the $30.9 million mark for the quarter, up significantly from $20.1 million in the corresponding period last year. - The net loss of $90.6 million or $0.96 per share for the three-month period was greater than last year primarily as a result of increases in depreciation and amortization. - Cash flow from operations came in at $20.7 million, ahead of the $19.3 million stated for the corresponding quarter in 2000. - The Company had $58.6 million of cash on June 30 2001, down from $86.5 million on June 30, 2000. Cash was used during the quarter for the acquisition of Associates for Health Care (AHC), and for investments in capital assets. - At the end of the quarter, Emergis had a working capital deficiency of $36.8 million primarily as a result of the $136 million debenture from BCE becoming a current liability due to the debenture maturing on June 30, 2002. Working capital stood at $133 million on December 31, 2000. - Accounts receivable stood at 61 days outstanding at quarter end. The increase over the prior quarter was primarily due to timing of revenues. For the six-month period ending June 30, 2001: - Total revenue was $302.0 million, with the eHealth business unit accounting for $146.5 million, the Canadian business unit $138.0 million and the U.S. business unit $17.5 million. - Revenue sourced from the U.S. rose to 41.4%, pointing to the Company's growing success in penetrating the U.S. market. - Recurring revenues for the six-month period remained within the targeted 80% to 85% range of total revenue. - EBITDA amounted to $57.2 million on June 30, 2001, compared to $25.1 million the previous year. - The net loss totaled $205.6 million or $2.19 per share for the six-month period in 2001, compared to a net loss of $123.2 million or $1.36 per share in 2000, reflecting increases in depreciation, amortization and the writedown of marketable securities and other assets. - Cash flow from operations totaled $6.1 million up substantially from a shortfall of $5.6 million for the corresponding period in 2000. Customer and operational highlights On the eHealth side of the business, Emergis continued to grow and expand its business and presence in this sector. Beyond geographic expansion, these agreements provide Emergis with increased opportunities for penetration of its eHealth solutions and services: - Emergis expanded its reach into the U.S. health insurance and service provider arena, through the acquisition of AHC, a leader in healthcare cost management in Wisconsin. - The Company also implemented a recently signed agreement with Formost Inc., a specialized network provider headquartered in New Jersey, which further strengthens Emergis' American network of healthcare providers. - During the period, Emergis terminated a royalty agreement with respect to retail access to its national network of physicians and hospitals, with a final one-time payment being recorded. - Emergis signed a three-year agreement with the State of North Carolina Teachers' and State Employees' Plan, and the North Carolina Health Choice Plan. This agreement furthers Emergis' efforts to increase its presence in state government programs, with the company already being involved in Texas, Florida, Louisiana and Kentucky. The U.S. business unit continued to make inroads in the financial services sector: - A multi-year agreement for electronic invoicing was signed with Equifax, a leading provider of consumer and commercial credit information worldwide. Equifax will deploy Emergis(R) e-Invoicing to its clients in both the U.S. and Canada, and may extend the solution to its global operations in both Europe and Latin America. The Canadian business unit continued to win major contracts: - As part of the BCE consortium that was awarded a $57 million contract to build and manage a state-of-the-art e-government infrastructure for the Government of Canada, Emergis will provide security related e-Commerce services, including PKI (Public Key Infrastructure) as well as the financial settlement capability. - Through its wholly-owned subsidiary Can-Act Payment Services Inc., Emergis signed five-year agreements with Alberta Treasury Branches, Laurentian Bank and TD Bank Financial Group. The agreements allow them to offer their business customers the ability to electronically and securely file and pay taxes over the Web to a variety of provincial and federal department and agencies. - The company's e-lending interchange focused on the automotive industry continued to gain momentum, increasing its reach in Ontario and Quebec. Software vendors for processing auto financing Oasis Auto Complete Systems, C.T. Soft and Novaciel have joined the Emergis(R) e-Lending Interchange providing dealership reach - especially in the Ontario and Greater Toronto area and links to close to half of Quebec auto dealerships. - Emergis and Bell Canada won a contract from Thomas Cook Travel to provide a private, fully-managed, e-commerce-ready, wide area network (WAN). Operationally, Emergis made several important strides: - Celent Communications, a Boston-based research firm specializing in technology solutions for the financial institutions industry recognized the strength of Emergis(R) e-Invoicing as a tool for that industry, and ranked BCE Emergis first in this area. - Emergis announced the upcoming release of its Emergis(R) Enabled MarketPlace 2.0 an enhanced network-centric solution that provides customers the entire benefit of interconnection with major eProcurement platforms, in addition to value added services such as advanced order management, business document exchange (BDX), e-Invoicing, and bank-sponsored payment. - To that end, Emergis signed an agreement with Clarus Corporation for its specialized mid-market enterprise procurement solution. Clarus will also incorporate Emergis' e-Invoicing, as well as its document exchange (BDX) product into its B2B platform solution package. Both companies will jointly market and sell to the North American mid-sized enterprise market. - Emergis also recently acquired, subsequent to quarter-end, ProCure.com's strong supplier-focused technology to further expand and enrich Emergis(R) Enabled Marketplace 2.0. ProCure.com's technology is core to collaborative commerce on the supplier side. (1) Note: "Baseline earnings" is defined as reported net earnings before "Acquisition-related costs" (amortization of intangibles and the option on convertible debenture Convertible Debenture Any type of debenture that can be converted into some other security.Notes: For example, a convertible bond can be converted into stock. See also: Busted Convertible Bond, Convertible Bond, Convertible Preferred Stock, Convertibles, Debenture, Mandatory Convertible, Residual Security ), one-time gains and
charges, and future income tax benefits.Additional financial information is available on the BCE Emergis web site at www.emergis.com. BCE Emergis is a premier e-commerce infrastructure provider, strategically focusing on market leadership in the transaction-intensive eHealth and financial services sectors. By layering technologically advanced e-commerce services on existing Internet-based platforms, Emergis offers its customers increasing value in their e-commerce adoption and ever-increasing levels of sophisticated services. These scalable solutions electronically transform business processes, such as buying, selling, invoicing and payment, and enable companies to succeed in the web-centric, cost-driven, and highly competitive global Internet economy. BCE Emergis' customers include leading North American banks and insurance companies. The Company's shares are included in the TSE 100 composite index. This news release contains forward-looking statements which are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly. Factors which could cause actual results or events to differ materially from current expectations include, among other things: uncertainty as to whether BCE Emergis' strategies will yield the expected benefits and growth prospects, the current negative trends in North American economic conditions, BCE Emergis' ability to expand its operations in the United States particularly in the ehealth and financial sectors, the extent of its customers' use of its exchanges and services and the ability to integrate efficiently new acquisitions. For additional information with respect to certain of these and other factors, see the Annual Information Form of the Company filed with securities commissions. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESS RELEASE REPRESENT BCE EMERGIS EXPECTATIONS AS AT JULY 24, 2001 AND, ACCORDINGLY, ARE SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER BCE EMERGIS DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. For more information: Sylvia Morin Director, Corporate Communications (514) 868-2358 Email: sylvia.morin@emergis.com John Gutpell Director, Investor Relations (514) 868-2232 Email: john.gutpell@emergis.com
Consolidated Statements of Earnings
(millions of dollars, except loss per share and number of shares)
For the For the For the For the
three month three month six month six month
period period period period
ended ended ended ended
June 30, June 30, June 30 June 30,
2001, 2000 2001 2000
---------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue 158.7 122.2 302.0 194.9
Direct costs 35.8 25.5 67.9 47.3
----- ----- ----- -----
Gross margin 122.9 96.7 234.1 147.6
----- ----- ----- -----
Expenses
Operations 42.2 42.1 83.6 63.9
Sales and marketing 19.4 14.7 36.0 23.2
Research
and development 13.4 5.9 24.5 12.7
General
and administrative 17.0 13.9 32.8 22.7
---- ---- ----- -----
92.0 76.6 176.9 122.5
---- ---- ----- -----
Earnings before
under-noted items 30.9 20.1 57.2 25.1
Depreciation 10.8 6.0 20.1 11.8
Amortization
of intangibles 103.8 90.0 205.0 127.6
Interest income (1.2) (2.1) (2.8) (2.9)
Interest
on long-term debt 3.2 4.5 6.7 5.2
Accretion on
convertible
debenture due
to parent,
related to the
option 3.5 8.2 7.0 8.9
Writedown of
marketable
securities and other
assets (Note 3) 1.5 - 23.9 -
Other 0.8 0.4 (1.3) 0.8
------- ------- ------- -------
Net loss before
income taxes (91.5) (86.9) (201.4) (126.3)
Income taxes
Current 4.8 2.9 9.0 3.5
Future (5.7) (7.7) (4.8) (6.6)
------- ------- ------- -------
Net loss (90.6) (82.1) (205.6) (123.2)
====== ====== ======= =======
Basic loss
per share ($) (0.96) (0.88) (2.19) (1.36)
Weighted average number
of shares used
in computing
basic loss
per share 93,947,586 92,843,816 93,866,255 90,374,239
Fully diluted loss per share is not presented as it is anti-dilutive.
See Notes to Interim Consolidated Financial Statements.
Consolidated Statements of Deficit
---------------------------------------------------------------
For the six For the six
month period month period
ended ended
(millions of dollars) June 30, 2001 June 30, 2000
---------------------------------------------------------------
(unaudited) (unaudited)
Deficit - beginning of period (372.0) (124.1)
Adjustment related to the adoption of
new accounting recommendation - 31.4
Net loss (205.6) (123.2)
------- -------
Deficit - end of period (577.6) (215.9)
------- -------
Consolidated Balance Sheets
-----------------------------------------------------------------
As at As at
June 30, December 31,
(millions of dollars) 2001 2000
(unaudited) (audited)
ASSETS
Current
Cash and temporary cash investments 58.6 92.2
Marketable securities
(market value $29.7M as at June 30, 2001
and $67.9M as at December 31, 2000) 21.5 67.9
Accounts receivable 120.4 76.4
Future income taxes 7.5 7.5
Other 19.6 37.6
------- -------
227.6 281.6
Capital assets 138.4 152.3
Goodwill, net 620.8 737.8
Future income taxes 72.6 73.4
Other assets 81.5 71.2
------- -------
1,140.9 1,316.3
------- -------
LIABILITIES
Current
Accounts payable and accrued liabilities 80.0 99.9
Deferred revenue 16.0 17.4
Deferred credits 12.0 12.0
Long-term debt 20.4 19.3
Convertible debenture
due to parent (Note 4) 136.0 -
------- -------
264.4 148.6
Deferred credits 8.1 13.8
Long-term debt 33.7 29.9
Convertible debenture due to parent - 129.0
------- -------
306.2 321.3
------- -------
SHAREHOLDERS' EQUITY (Note 4)
Option on convertible
debenture due to parent 21.0 21.0
Capital stock 1,338.3 1,303.7
Contributed Surplus 25.2 25.2
Deficit (577.6) (372.0)
Foreign currency translation adjustment 27.8 17.1
------- -------
834.7 995.0
------- -------
1,140.9 1,316.3
------- -------
Consolidated Statements of Cash Flows
---------------------------------------------------------------
For the For the For the For the
three month three month six month six month
ended ended ended ended
(millions of
dollars) June 30, June 30, June 30, June 30,
2001 2000 2001 2000
---------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Operating activities
Net loss (90.6) (82.1) (205.6) (123.2)
Depreciation
and amortization 114.6 96.0 225.1 139.4
Accretion
on convertible
debenture due
to parent,
related to the option 3.5 8.2 7.0 8.9
Writedown
of marketable
securities and
other assets 1.5 - 23.9 -
Future income taxes (5.7) (7.7) (4.8) (6.6)
Other 0.8 (0.3) 0.5 (0.3)
Changes in working
capital (3.4) 5.2 (40.0) (23.8)
------ ------ ------ ------
Cash flows from
(used for) operating
activities 20.7 19.3 6.1 (5.6)
------ ------ ----- -----
Investing activities
Additions to capital
assets (13.6) (8.6) (16.3) (19.6)
Acquisitions (26.3) - (27.8) (797.2)
Cash acquired on
acquisition of UP&UP - - - 46.3
Cash acquired on
acquisition of AHC
(Note 2) 0.8 - 0.8 -
Proceeds on sale of
marketable securities 11.5 - 11.5 -
Note receivable from
former majority
shareholder of UP&UP - - - (11.6)
Settlement of note
payable to former
majority
shareholder
of UP&UP - - (1.5) -
------ ------ ------ -------
Cash flows used for
investing
activities (27.6) (8.6) (33.3) (782.1)
------ ------ ------ -------
Financing activities
Repayment of
long-term debt (4.8) (1.5) (10.4) (3.5)
Issue of convertible
debenture
due to parent - - - 150.0
Issue
of common shares 1.4 0.9 4.4 654.3
------ ------ ------ ------
Cash flows from
(used for) financing
activities (3.4) (0.6) (6.0) 800.8
------ ------ ------ ------
Foreign exchange gain
on cash held in foreign
currencies (0.7) (2.7) (0.4) (2.7)
Cash and
cash equivalents
Increase (decrease) (11.0) 7.4 (33.6) 10.4
Balance, beginning
of period 69.6 79.1 92.2 76.1
------ ------ ------ ------
Balance,
end of period 58.6 86.5 58.6 86.5
------ ------ ------ ------
Supplemental disclosure
of cash flow information
Interest paid 5.6 0.5 6.6 0.9
Income taxes paid 1.9 2.8 3.8 3.7
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As at June 30, 2001
(In millions of Canadian dollars except share data) (unaudited)
These interim consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles,
using the same accounting policies as were used for the consolidated
financial statements for the year ended December 31, 2000 except as
discussed below. These interim consolidated financial statements
should be read in conjunction with the consolidated financial
statements for the year ended December 31, 2000, as set out in the
2000 Annual Report.
1. Summary of Significant Accounting Policies
On January 1, 2001, the Company adopted the new recommendations issued
by the Canadian Institute of Chartered Accountants with respect to
earnings per share (Handbook section 3500). Under the revised section,
the treasury stock method is used instead of the current imputed
earnings approach for determining the dilutive effect of options and
warrants issued. In addition, this section requires that a
reconciliation of the numerator and denominator be disclosed.
For three-month period ended
---------------------------------------------------------------
June 30, 2001
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss available to
common shareholders (90.6) 93,947,586 (0.96)
---------------------------------------------------------------
For three-month period ended
---------------------------------------------------------------
June 30, 2000
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss available to
common shareholders (82.1) 92,843,816 (0.88)
---------------------------------------------------------------
For the six-month period ended
---------------------------------------------------------------
June 30, 2001
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss available to
common shareholders (205.6) 93,866,255 (2.19)
---------------------------------------------------------------
For the six-month period ended
---------------------------------------------------------------
June 30, 2000
---------------------------------------------------------------
$ Number of $
Net loss shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
Net loss available to
common shareholders (123.2) 90,374,239 (1.36)
---------------------------------------------------------------
1. Summary of Significant Accounting Policies (continued)
The following were not included in the computation of diluted earnings
per share because to do so would have been anti-dilutive for the
periods presented.
--------------------------------------------------------------------
For the three month For the six-month
period ended period ended
--------------------------------------------------------------------
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
--------------------------------------------------------------------
Number of Number of Number of Number of
Shares Shares Shares Shares
--------------------------------------------------------------------
Convertible
debenture due to
parent (a) 1,989,390 1,273,344 1,989,390 686,191
-------------------------------------------------------------------
Options (a) 4,039,034 2,972,117 3,797,442 2,834,427
-------------------------------------------------------------------
Warrants (a) 1,650,000 - 1,161,111 -
-------------------------------------------------------------------
Common shares to be issued
related to
acquisitions 770,987 - 761,223 -
-------------------------------------------------------------------
Common shares to
be issued
as contingent
consideration
related to
acquisitions 90,610 - 90,610 -
-------------------------------------------------------------------
(a) Incremental shares are assumed issued and weighted for the period
the convertible debenture, options or warrants were outstanding.
2. Acquisition
In June 2001, the Company acquired all of the outstanding shares of
Associates for Health Care, Inc. ("AHC"), a privately held company
involved in health care cost management in the state of Wisconsin in
the US for $45.5 million.
Pursuant to the Agreement and Plan of Merger, the Company paid $15.2
million at closing. The balance of the purchase price will be paid in
three equal installments on June 28, 2002, June 28, 2003, and June 28,
2004, by the issuance of shares with a value of $30.3 million. The
Company has the option to settle the balance of the purchase price
with cash payments in the amount of $10.1 million at each of the
above-mentioned dates.
The Company incurred transaction costs in the amount of approximately
$3.1 million in connection with the acquisition relating mostly to
professional fees. The transaction was accounted for using the
purchase method.
An amount of $1.9 million otherwise payable on June 28, 2002 will be
held to be applied against indemnification claims, if any, arising
within a defined period after closing.
The results of operations of AHC have been included in the Company's
results since June 28, 2001, the date of acquisition.
2. Acquisition (continued)
The total purchase price of the acquisition was $48.6 million and was
allocated as follows:
Current assets 4.8
Capital assets 0.7
Current liabilities (1.1)
Allocation of excess of purchase price over net assets:
Goodwill 44.2
48.6
3. Write down of marketable securities and other assets
During the first quarter of 2001, the market value of certain of our
marketable securities was $22.4 million below our carrying value. As a
result, a write-down of $22.4 million was recorded in our Consolidated
Statement of Earnings to reflect this unrealized loss in the market
value of The Descartes Systems Group Inc. for the six-month period
ended June 30, 2001. These securities were received as partial
consideration in 2000 for the disposal of our non-core assets related
to the delivery of logistics electronic messaging services in the
transportation industry.
During the three-month period ended June 30, 2001, a provision of
approximately $4.0 million was recorded on certain other current
assets due to reflect an impairment in their net realizable value.
We also recorded a gain on the disposal of some of our marketable
securities during the three-month period ended June 30, 2001.
4. Equity Components
The stated capital stock as at June 30, 2001 is detailed as follows:
Number $
Millions
-------------------------------
Balance beginning of year 93,651,603 1,303.7
Issue of common shares (a) 389,878 4.4
Share issue costs (0.1)
-------------------------------
94,041,481 1,308.0
Common shares to be issued (b) 30.3
-------
1,338.3
-------
Option on convertible debenture 21.0
-------
Contributed surplus 25.2
-------
(a) 389,878 stock options were exercised to purchase 389,878 common
shares for cash consideration of $4,400,685.
(b) The number of shares to be issued in connection with the AHC
acquisition as described in note 2 is not determinable at this time.
Debenture:
6.3%, Convertible debenture, convertible at the holder's option into
1,989,389 common shares at a conversion price of $75.40 per share up
to the maturity date
on June 30, 2002 $136.0 million
Stock option plans:
Stock option plans for common shares
at prices ranging from $0.66 to $172.80
per share and expiry dates up to 2010 4,127,339 options
5. Operating Segment Information
The Company focuses its activities in three business units (Canada,
U.S.A. and eHealth Solutions Group), offering a full suite of products
to companies in transaction-intensive, eHealth and financial services
sectors. The following table shows the activities of each of the three
business units:
For the three-month period ended
---------------------------------------------------------------
Canada USA
Business Unit Business Unit
---------------------------------------------------------------
$ June 30, June 30, June 30, June 30,
Millions 2001 2000 2001 2000
---------------------------------------------------------------
Revenues 72.0 53.0 10.5 6.0
---------------------------------------------------------------
Direct
Costs 22.6 15.9 0.6 0.5
---------------------------------------------------------------
Gross
Margin 49.4 37.1 9.9 5.5
---------------------------------------------------------------
For the three-month period ended
---------------------------------------------------------------
e-Health Solutions
Group
Business Unit Total
---------------------------------------------------------------
$ June 30, June 30, June 30, June 30,
Millions 2001 2000 2001 2000
---------------------------------------------------------------
Revenues 76.2 63.2 158.7 122.2
---------------------------------------------------------------
Direct
Costs 12.6 9.1 35.8 25.5
---------------------------------------------------------------
Gross
Margin 63.6 54.1 122.9 96.7
---------------------------------------------------------------
For the six-month period ended
---------------------------------------------------------------
Canada USA
Business Unit Business Unit
---------------------------------------------------------------
$ June 30, June 30, June 30, June 30,
Millions 2001 2000 2001 2000
---------------------------------------------------------------
Revenues 138.0 102.0 17.5 11.5
---------------------------------------------------------------
Direct
Costs 43.7 33.4 0.8 1.5
---------------------------------------------------------------
Gross
Margin 94.3 68.6 16.7 10.0
---------------------------------------------------------------
For the six-month period ended
---------------------------------------------------------------
e-Health Solutions
Group
Business Unit Total
---------------------------------------------------------------
$ June 30, June 30, June 30, June 30,
Millions 2001 2000 2001 2000
---------------------------------------------------------------
Revenues 146.5 81.4 302.0 194.9
---------------------------------------------------------------
Direct
Costs 23.4 12.4 67.9 47.3
---------------------------------------------------------------
Gross
Margin 123.1 69.0 234.1 147.6
---------------------------------------------------------------
Geographic information
The following table sets out certain geographical information relative
to the Company:
Revenue
$
Millions
For the three For the three For the six For the six
month period month period month period month period
ended ended ended ended
June 30, 2001 June 30, 200 June 30, 2001 June 30, 2000
-------------------------------------------------------------------
Canada 88.6 69.0 176.6 134.4
-------------------------------------------------------------------
United States 70.1 50.3 125.3 56.4
-------------------------------------------------------------------
Other - 2.9 0.1 4.1
-------------------------------------------------------------------
158.7 122.2 302.0 194.9
-------------------------------------------------------------------
6. Related Party Information
The following transactions occurred in the normal course of operations
with BCE, the parent company, and other companies in the BCE group
subject to common control during the respective periods and were
measured at the exchange value:
$
Millions
For the three For the three
month period month period
ended ended
June 30, 2001 June 30, 2000
---------------------------------------------------------
Revenue (a) 40.6 26.9
---------------------------------------------------------
Direct costs and expenses 32.7 26.5
---------------------------------------------------------
Interest expense on convertible
debenture due to parent 2.4 2.6
---------------------------------------------------------
$
Millions
For the six For the six
month period month period
ended ended
June 30, 2001 June 30, 2000
--------------------------------------------------------
Revenue (a) 81.9 49.2
--------------------------------------------------------
Direct costs and expenses 62.0 61.5
--------------------------------------------------------
Interest expense on convertible
debenture due to parent
4.7 2.8
--------------------------------------------------------
(a) Includes services for resale to third parties and for internal
use.
The balance sheet includes the following balances with BCE, the parent
company, and other companies in the BCE group subject to common
control:
$
Millions
As at As at
June 30, 2001 Dec. 31, 2000
----------------------------------------------------------
Cash and temporary cash
investments 15.0 15.0
----------------------------------------------------------
Accounts receivable 25.7 16.5
----------------------------------------------------------
Accounts payable and accrued
liabilities 10.9 4.2
----------------------------------------------------------
Convertible debenture due to
parent 136.0 129.0
----------------------------------------------------------
Option on convertible debenture
due to parent 21.0 21.0
----------------------------------------------------------
Long term debt 1.6 2.1
----------------------------------------------------------
7. Warrants
From time to time, the Company enters into formal business
arrangements for the use and distribution of certain technology
solutions with strategic partners. Under the terms of such
arrangements, the partners may acquire warrants to purchase shares of
the Company.
During the first quarter of 2001, warrants to purchase 1,000,000
common shares were acquired under such arrangements of which warrants
convertible into 250,000 common shares vested upon signature of the
agreements and are exercisable at $73.55 per common share. The
remaining balance will vest upon the attainment of certain contractual
arrangements and the exercise price will be determined at the time of
vesting. The warrants expire five years after vesting. No amount has
been recorded in the financial statements as a result of these
arrangements.
8. Contingency
On April 26, 1996, First Health Group Corporation ("First Health")
filed a civil complaint against BCE Emergis Corporation, a subsidiary
of the Company, seeking injunctive relief and damages of US $29
million to US $37 million based on claims of trademark infringement,
false advertising, deceptive trade practices, fraud, interference with
contract, interference with prospective economic relations and unfair
competition. First Health's principal contention is that
representatives of BCE Emergis Corporation made false and misleading
statements during contract negotiations with health care providers in
order to cause them to join the BCE Emergis Corporation provider
network.
On March 21, 2000, the U.S. District Court for the Northern District
of Illinois granted summary judgment in favor of BCE Emergis
Corporation on the false advertising claims and on April 10, 2000, the
Court granted summary judgment in favor of BCE Emergis Corporation on
the contractual interference and damages claims. An appeal of those
court rulings has been filed. The Company believes First Health's
claims lack merit and that its potential liability, if any, arising
from the litigation will not be material to its consolidated financial
statements.
9. Subsequent event
On July 6, 2001, the Company acquired the assets of ProCure.com, a
technology provider of supplier enablement applications in the
province of Ontario, Canada for a total cash consideration of $5.9
million. The acquisition will be accounted for using the purchase
method.
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion