Sierra Systems Reports First Quarter Fiscal 2003 Results.Business Editors/Health/Medical Writers 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. , British Columbia--(BUSINESS WIRE)--Feb. 10, 2003 Grant Gisel, President and 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. of Sierra Systems Sierra Systems Group Inc. ("Sierra Systems") is a private information technology and business consulting corporation headquartered in Vancouver, BC, Canada. The company provides services to both the public and private sectors. Group Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :SSG SSG abbr. staff sergeant ), commented on the Company's first quarter results. "We produced a stellar quarter. Revenue and net earnings before tax increased 17% and 103% compared to the same quarter last year. This success was achieved through the diligent dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d effort and skill of our staff. I want to acknowledge their outstanding contribution." Amounts in tables are in thousands of 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 except earnings per share.
Fiscal 2003 3 Months Ended Dec 31
2002 2001
-------------------------
Revenue 36,950 31,568
Net Earnings for the Period 1,432 705
Basic and Diluted Earnings Per Share $0.15 $0.08
Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of First Quarter Fiscal 2003 Results First quarter revenue was 17% higher than the same period last year with our core business of services revenue up 16%. Utilization was higher at 75% compared to 71% with available hours also higher by 3%, a result of the new Winnipeg Winnipeg, city, Canada Winnipeg (wĭn`ĭpĕg), city (1991 pop. 616,790), provincial capital, SE Man., Canada, at the confluence of the Red and Assiniboine rivers. location. The ratio of compensation costs as a percentage of services revenue improved to 71% from 74%. Compensation costs were 11% higher than last year. Two thirds of this increase (or $1.7 million) arose from the increased use of external consultants. The main driver of that change was the partners involved in the large project in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . A further 20% (or $0.5 million) of the increase arose from higher benefit costs, a result of the refinement of the accounting of 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. government benefits to more accurately allocate To reserve a resource such as memory or disk. See memory allocation. the cost of these benefits over the year. Annual salary increases are made in January January: see month. each year and were very modest in 2002 at 1%. Other costs were reduced by 9% with cost savings arising in the quarter from lower education costs and recruitment. The lower costs arose from the cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. delivery of our education program. The ratio of other costs to services revenue therefore dropped to an unusually low level of 6% from 8%. The gross margin percentage improved considerably to 22% from 18%, leading to an increase in gross profit of 47%. General and administration costs increased 24%. The ratio of these costs to services revenue increased to 14% from 13%. Of the increase in costs, one third arose from an increase in office and administrative salaries. Other increases of note (though still below $0.2 million each) were in rent and in legal costs supporting our risk management activities. On a sequential quarterly basis, services revenue increased by 15%, a result of stronger utilization across the board at 75% compared to 70%. The average billable headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. during the quarter was stable. Compensation costs increased by 10%, but the ratio of compensation costs to services revenue improved to 71% from 74%. Half of the increase in costs arose from a higher use of external consultants, an increase of 36% or $1.2 million. Vacation accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. also caused a swing in the cost base of $0.6 million. Expenditures in other costs decreased by 3% or $0.1 million. General and administration costs increased 13%. The fluctuation Fluctuation A price or interest rate change. is distorted by the $0.3 million release of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying provision in Q4 of fiscal 2002. Outlook As stated in October October: see month. , Sierra Systems expects base revenue for its 2003 fiscal year to exceed $140 million and net earnings per share to exceed that of fiscal 2002. This guidance is based on information known today about market conditions and demand for its services, and excludes the impact of any acquisitions or a win of a large contract contributing more than $6 million per year in revenue. Services revenue for the second quarter of fiscal 2003 is expected to be between $37.0 million and $38.5 million and earnings per share between $0.10 and $0.14. About Sierra Systems Sierra Systems Group Inc. (TSX:SSG) is one of North America's original business consulting and technology services organizations. For over 36 years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Company has cultivated cultivated, n in herbal medicine, used to describe plants that are commercially farmed rather than collected from the wild. lasting associations with clients by integrating technical experience with industry knowledge for innovative, sustainable results. Sierra Systems has built industry-leading practices in health, justice, electronic government, enterprise solutions, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and insurance, utilities and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , and established regional market expertise in its 14 strategic locations. Reach Sierra Systems at www.SierraSystems.com. There will be a conference call on February February: see month. 10, 2003, at 1:30 p.m. Pacific (4:30 p.m. Eastern) time. People wishing to participate should call 1.800.553.2178 and enter the passcode #2955443 ten minutes prior to the scheduled time In rallying, the Scheduled Time of any crew is the time, calculated at the beginning of the event, that they should arrive at any given control. It is different from Due Time in that Due Time is dynamic, ie it can change throughout the event as competitors drop time; whereas . A digital playback Playback could mean:
A presentation to be viewed in conjunction with the conference call will be posted on the Company's web site at www.SierraSystems.com. There is a link on the home page to the presentation. The statements that are not historical facts contained in this release are 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. that involve risks and uncertainties. Sierra Systems' actual results could differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, technological shifts, employee retention, fixed price contract delivery, competition, general economic conditions, foreign exchange and other risks detailed in the Company's Annual Report and other filings with Canadian securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities .
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
(unaudited)
December 31 September 30
2002 2002
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 9,132 $ 10,803
Accounts receivable,
including work in progress 37,128 33,982
Current portion of long-term
accounts receivable 929 1,558
Income taxes recoverable 323 890
Prepaid expenses 2,482 2,306
----------- -----------
49,994 49,539
Property and equipment 10,939 10,265
Future income taxes 3,676 3,646
Goodwill 19,312 19,312
----------- -----------
$ 83,921 $ 82,762
----------- -----------
----------- -----------
LIABILITIES
Current liabilities
Bank indebtedness $ 4,872 $ 4,488
Accounts payable and
accrued liabilities 11,714 12,770
Deferred revenue 3,147 2,465
Current portion of project
financing 271 995
Current portion of capital
lease obligation 136 136
Future income taxes 894 465
----------- -----------
21,034 21,319
Capital lease obligation 20 54
----------- -----------
21,054 21,373
SHAREHOLDERS' EQUITY
Capital stock (note 4) 41,193 41,147
Retained earnings 21,674 20,242
----------- -----------
62,867 61,389
----------- -----------
$ 83,921 $ 82,762
----------- -----------
----------- -----------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of RETAINED EARNINGS
(in thousands of Canadian dollars)
(unaudited)
Three months ended
December 31
2002 2001
--------- ---------
Retained earnings - Beginning
of period $ 20,242 $ 18,554
Net earnings for the period 1,432 705
--------- ---------
Retained earnings - End of period $ 21,674 $ 19,259
--------- ---------
--------- ---------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of EARNINGS
(in thousands of Canadian dollars except per share and share figures)
(unaudited)
Three months ended
December 31
2002 2001
----------- -----------
Revenue
Services $ 36,496 $ 31,489
Product sales 454 79
----------- -----------
36,950 31,568
----------- -----------
Cost of sales
Compensation 26,041 23,447
Other costs 2,209 2,419
Product costs 422 57
----------- -----------
28,672 25,923
----------- -----------
Gross profit 8,278 5,645
General and administration 4,928 3,974
Amortization of property
and equipment 740 691
----------- -----------
Earnings from operations 2,610 980
----------- -----------
Other income (expense)
Foreign exchange (loss) gain (86) 159
Interest 12 96
----------- -----------
(74) 255
----------- -----------
Earnings before income taxes 2,536 1,235
Provision for income taxes 1,104 530
----------- -----------
Net earnings for the period $ 1,432 $ 705
----------- -----------
----------- -----------
Earnings per share $ 0.15 $ 0.08
----------- -----------
----------- -----------
Diluted earnings per share $ 0.15 $ 0.08
----------- -----------
----------- -----------
Weighted average number of
common shares outstanding 9,331,115 9,188,268
----------- -----------
----------- -----------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of CASH FLOWS
(in thousands of Canadian dollars)
(unaudited)
Three months ended
December 31
2002 2001
----------- -----------
Cash provided from (used for)
Operating activities
Net earnings for the period $ 1,432 $ 705
Items not affecting cash -
Amortization of property
and equipment 740 691
Future income taxes 382 153
Net change in non-cash
working capital relating
to operations (3,112) 328
Net change in long-term
accounts receivable 629 642
----------- -----------
71 2,519
Financing activities
Project financing (724) (642)
Shares purchased for
long-term incentive plan (40) (17)
Shares issued 86 65
Repayment of capital lease
obligation (34) -
----------- -----------
(712) (594)
Investing activities
Purchase of property and
equipment (1,414) (671)
Business
acquisitions (note 2) - (1,200)
----------- -----------
(1,414) (1,871)
(Decrease) increase in
cash and cash equivalents (2,055) 54
Cash and cash equivalents -
beginning of period 6,315 16,728
----------- -----------
Cash and cash equivalents -
end of period $ 4,260 $ 16,782
----------- -----------
----------- -----------
Represented by:
Cash and cash equivalents $ 9,132 $ 16,782
Bank indebtedness (4,872) -
----------- -----------
$ 4,260 $ 16,782
----------- -----------
----------- -----------
Supplementary cash flow
information (note 3)
Notes to Interim Consolidated Financial Statements (unaudited)
(Amounts in tables are in thousands of Canadian dollars
except per share figures)
1. Summary of significant accounting policies General These interim 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 have been prepared 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 generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , using the same accounting policies as outlined in Note 1 to the Consolidated Financial Statements for the year ended September September: see month. 30, 2002, except as noted below. Certain comparative figures in the Consolidated Financial Statements have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current period presentation. On October 1, 2002, the Company adopted the new recommendations of CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
This article is about reference works. For the subnotebook computer, see .
The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . The Section establishes standards for the recognition, measurement and disclosure of stock-based compensation made in exchange for goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. and requires the use of the fair value method to account for awards to non-employees and direct awards of stock to employees and encourages, but does not require, the use of the fair value method to account for stock-based compensation costs arising from awards to employees. The Section requires pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma disclosure of net earnings and earnings per share as if the fair value method of accounting had been used. The Company has chosen to adopt the disclosure-only provisions of the Section relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the fair value method of accounting for options granted to employees. Property and equipment Effective October 1, 2002, the Company changed the method of amortization for furniture and equipment, computer hardware and computer software from declining balance to straight-line. The change was accounted for prospectively and did not have a material effect on the reported results. Property and equipment are carried at the lower of cost, accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. amortization and net recoverable amount. Amortization is calculated over their estimated useful lives at the following rates:
Furniture and equipment 7 years straight-line
Computer hardware 4 years straight-line
Computer software 3 years straight-line
Leasehold improvements over the remaining life of the lease
Enterprise application software 8 years straight-line
2. Supplementary cash flow information
Interest and income taxes
Three months ended
December 31
2002 2001
Interest paid $ 35 $ 40
Interest received $ 50 $ 132
Income taxes paid $ 484 $ 48
3. Capital stock
a) Capital stock
Issued As at As at
December 31, September 30,
2002 2002
----------- -----------
Common shares 9,332,014 9,324,827
Amount $ 41,193 $ 41,147
b) Options The Company has a stock option plan that grants to
directors and certain employees of the Company the option to
purchase up to 1,311,900 common shares of the Company. The
exercise price of each option is determined by the market
price of the Company's stock on the date of the grant and an
option's maximum term is 10 years. Options generally vest over
three to five years. Had compensation costs been determined
using the fair value method at the day of the grant for awards
granted since October 1, 2002, under this stock option plan,
the Company's pro forma net earnings, basic and diluted
earnings per share would have been $1,427,000, $0.15 and
$0.15, respectively, for the quarter ended December 31, 2002.
These pro forma amounts include a compensation cost based on a
weighted-average grant date fair value of $6.91 per stock
option for 23,000 stock options granted during the quarter
ended December 31, 2002. These calculations were made using
the Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 4.17%, dividend yield
of 0%, expected volatility of 50% and expected life of four
years. As permitted by CICA Handbook Section 3870, the pro
forma disclosure omits the effect of awards granted before
October 1, 2002.
Three months ended
December 31, 2002
----------------------
Balance - beginning of period 1,043,957
Options granted in period 23,000
Options exercised in period -
Options cancelled in period (20,897)
----------------------
Balance - end of period 1,046,060
4. Business segment information The Company operates in one business segment - providing IT services. The Company operates primarily in Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. . Geographical information is based upon the country in which the Company's operations are located.
Revenue Canada U.S. Total
---------------------------------------
For the three months
ended December 31, 2002 $ 24,098 $ 12,852 $ 36,950
For the three months
ended December 31, 2001 $ 18,761 $ 12,807 $ 31,568
Property, equipment and
goodwill
As at December 31, 2002 $ 27,001 $ 3,250 $ 30,251
As at December 31, 2001 $ 20,526 $ 2,943 $ 23,469
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