Counsel Corporation Announces 2002 Third Quarter Results.Business Editors TORONTO--(BUSINESS WIRE)--Nov. 21, 2002 Counsel Corporation (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CXS CXS Coherent X-Ray Scattering ) (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 :CXSN) today reported its financial results for the third quarter of 2002. All amounts are stated in US dollars. Counsel's results for the quarter and nine months ended September September: see month. 30, 2002 are in line with management's expectations. Communications - WorldxChange, Counsel's international and domestic long distance service provider, has achieved its second consecutive quarter of positive operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and third consecutive quarter of positive EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . Traffic on the network remains constant, and while softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. rates per minute led to reduced revenue in the quarter, margins are being maintained based on the current carrier contract structure and ongoing network efficiency-enhancing initiatives. The WorldxChange business, since its initial capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , has not required any additional parent company funding. The achievement of positive operating income for the two most recent quarters provides confidence that the business will continue to be cash flow self-sufficient self-suf·fi·cient adj. 1. Able to provide for oneself without the help of others; independent. 2. Having undue confidence; smug. self on an organic growth basis. Additional funding will be required for new acquisitions as management scales the business, making greater utilization of network capacity. The WorldxChange management team is well on its way to realizing on its value creation vision. Real estate - This quarter, Counsel made a strategic entry into the real estate business when it acquired 731,000 square feet of gross leaseable retail space for $35.5 million. Included in this acquisition is a 13-acre site in Peterborough Peterborough, city, Canada Peterborough, city (1991 pop. 68,371), SE Ont., Canada, NE of Toronto. It is at the falls of the Otonabee River, which connects, through the Trent Canal, with lakes Ontario and Huron. Settled early in the 19th cent. , Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. for which a plan of development is underway. For the quarter ended September 30, 2002, Counsel's consolidated revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $31.4 million down from $31.7 million in the second quarter, and down from $35.4 million in the third quarter of 2001. This quarterly reduction in revenues is directly attributable to a shift in Counsel's mix of communications services, toward retail and away from wholesale. The rationale rationale (rash´  nal´),n the fundamental reasons used as the basis for a decision or action. for this shift is to develop a business with higher margins and a more loyal customer base, which will ultimately result in the optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. of network capacity. For the nine months ended September 30, 2002, consolidated revenues were $97.4 million, up 41% from $69.1 million in the first nine months of 2001. This significant growth in revenues is attributable to growth at the Company's communications operations from its acquisition of WorldxChange in June June: see month. 2001. Net loss in the third quarter of 2002 was $8.4 million or $0.41 per share, compared with a net loss of $12.8 million or $0.59 per share, in the third quarter of 2001. The consolidated net loss for the nine months ended September 30, 2002 was $13.2 million or $0.70 per share, basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared with a net loss of $39.3 million or $1.80 per share for the prior year. Operations showed a significant improvement on a quarter-over-quarter basis with the loss from operations (defined as net loss before other gains, other impairments and losses, interest, taxes, minority and equity interests) declining to $4.7 million in the third quarter of 2002 from a loss of $5.7 million in the second quarter of 2002. Year over year, operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. declined by $ 9.5 million, from $14.2 million. Counsel's long distance segment had its second consecutive profitable quarter in the third quarter of 2002 with earnings from operations totaling $0.6 million and net earnings of $0.8 million compared to earnings from operations of $0.4 million and net earnings of $0.1 million in the second quarter. For the nine months ended September 30, 2002, cash and cash equivalents decreased by $10.5 million. Funds were used primarily to acquire income producing properties, to fund the ongoing operations of I-link's VoIP business and scheduled payments on capital leases and debt, and to purchase the Company's stock for cancellation. Offsetting these uses was primarily the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). on the sale of short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Allan Allan can refer to:
About Counsel Corporation Counsel Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CXS / NASDAQ:CXSN) is a dynamic, 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 focused on acquiring and building businesses using its financial and operational expertise in three specific sectors: communications, real estate and seniors living. Counsel's communications platform, Counsel Springwell Communications LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , is focused on building upon its existing communications investments, I-Link Inc. and WorldxChange Corp., through organic growth and by acquiring substantial additional customer revenues. I-Link (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :ILNK.OB; www.i-link.com) is an enhanced Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. voice and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. service provider, and WorldxChange (www.worldxchange.com) is an international and domestic long distance service provider. Counsel's real estate platform has a focused strategy of investing in and developing income-producing commercial properties, primarily retail shopping centres. Counsel's seniors living platform owns five retirement homes in Canada and three nursing homes 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 leases seven nursing homes in Canada. For further information, visit Counsel's website at www.counselcorp.com. This news release may include statements that constitute 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. , usually containing the words "believe," "estimate," "project," "expects," or similar expressions. These statements are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions 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. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this document.
Counsel Corporation
Consolidated Statements of Operations
(In 000's of US$, except share and per share amounts) (Unaudited)
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For the three months For the nine months
ended September 30 ended September 30
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2002 2001 2002 2001
$ $ $ $
Revenues
Communication services 21,535 25,742 69,014 40,902
Communication technology
licensing 321 1,420 2,790 3,310
Seniors living services 8,079 7,965 23,790 23,627
Income producing properties 1,486 - 1,639 -
Technology services - 225 188 1,235
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31,421 35,352 97,421 69,074
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Cost of revenues
Communication services 12,433 22,989 42,295 38,959
Technology services - 309 258 803
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12,433 23,298 42,553 39,762
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Operating expenses
Selling, general and
administrative 19,657 20,192 59,091 47,478
Research and development 317 434 1,164 1,315
Provision for doubtful
accounts 1,137 1,278 3,833 2,564
Depreciation and amortization 2,531 4,353 8,748 9,059
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23,642 26,257 72,836 60,416
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Operating loss (4,654) (14,203) (17,968) (31,104)
Gains and other income:
Short-term investments 224 26,861 27,724 37,759
Portfolio investments - - - 64
Property, plant and equipment - 3,373 - 3,373
Other 1,569 - 1,569 -
Impairments and other losses:
Write-down of investments - 8,040 - 23,576
Short-term investments 1,201 - 3,992
Portfolio investments 640 8,500 640 1,833
Property, plant and equipment 1,336 - 3,200 -
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Earnings (loss) before
undernoted (6,038) (509) 3,493 (15,317)
Equity interests in
significantly influenced
companies - (761) - (5,582)
Interest income 76 294 369 1,582
Interest expense (1,083) (1,182) (2,954) (3,323)
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Earnings (loss) before income
taxes (7,045) (2,158) 908 (22,640)
Provision for income taxes 447 9,211 11,940 14,641
Non-controlling interest - 243 (64) 1,498
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Loss from continuing
operations (7,492) (11,126) (11,096) (35,783)
Discontinued operations (868) (1,648) (2,117) (3,521)
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Net loss (8,360) (12,774) (13,213) (39,304)
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Loss per share
Loss from continuing
operations (0.37) (0.52) (0.60) (1.65)
Loss from discontinued
operations (0.04) (0.07) (0.10) (0.15)
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Net loss per share (0.41) (0.59) (0.70) (1.80)
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Weighted average number of
common shares outstanding 22,149 22,903 22,247 23,088
Counsel Corporation
Consolidated Balance Sheet
(In 000's of US$)
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September 30 December 31
2002 2001
(Unaudited) (Audited)
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Assets $ $
Current assets
Cash and cash equivalents 14,109 24,624
Short-term investments 3,033 8,932
Accounts receivable, net (less
allowance for doubtful accounts
of $ 842 ; 2001- $ 2,198) 14,173 20,053
Income taxes recoverable 2,206 2,202
Future income tax assets 125 970
Prepaid expenses and deposits 9,106 5,975
Assets of discontinued
operations 3,665 9,678
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46,417 72,434
Long-term assets
Income producing properties, net 34,821 -
Real estate under development 2,963 2,433
Loans and mortgage 9,448 9,221
Portfolio investments 3,927 3,219
Property, plant and equipment, net 33,096 43,226
Goodwill, net 284 3,368
Acquired technology, net 7,530 9,969
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138,486 143,870
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Liabilities
Current liabilities
Accounts payable 4,586 10,719
Accrued liabilities 18,749 26,262
Current portion of deferred revenue 623 2,563
Current portion of mortgages and
loans payable 10,992 10,508
Current portion of capital leases 3,292 3,034
Liabilities of discontinued operations 2,424 3,763
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40,666 56,849
Long-term liabilities
Deferred revenue 337 768
Mortgages and loans payable 33,259 14,690
Capital leases 4,790 6,986
Convertible debentures payable 3,736 4,801
Future income tax liabilities 34,362 23,282
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117,150 107,376
Shareholders' Equity 21,336 36,494
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138,486 143,870
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