Sierra Systems Reports Strong Sequential Revenue Growth and a Return to Profitability; First Quarter Fiscal 2001 Results.Business Editors 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. , B.C.--(BUSINESS WIRE)--Feb. 8, 2001 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(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :SSG SSG abbr. staff sergeant .) 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. , commented on the quarter's results, "As I indicated in our Annual Report, the IT Services Industry in 2000 was negatively impacted by Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 fatigue fatigue, in engineering fatigue, in engineering, microscopic cracking of materials, especially metals, after repeated applications of stress. Fissures may be formed within pieces of metal during their manufacture when, while cooling from the molten state, and the dot-com (1) Refers to the period (dot) followed by the abbreviation of the commercial domain (.com) at the end of an Internet address. Since the .com domain is so widely used, the Internet became known as the "dot-com" world, and dot-com companies are those formed to offer services or collapse. However, by fiscal Q1, markets were rebuilding and heavy-duty heav·y-dut·y adj. Made to withstand hard use or wear. heavy-duty Adjective made to withstand hard wear, bad weather, etc. Adj. 1. work in the eWorld An online service from Apple aimed at the consumer market. It was introduced in 1994 and closed in 1996. was underway. Sierra Systems saw substantial growth in sequential One after the other in some consecutive order such as by name or number. quarterly revenue and net profit. Key to this was our sales successes, which began improving in our fiscal 2000 Q3." Major new contracts were signed both in Specialty Practices and as a result of local branch initiatives. Noteworthy Practice wins included the RCMP Canada-wide Integrated Police Records Management System, the Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee Public Services Public services is a term usually used to mean services provided by government to its citizens, either directly (through the public sector) or by financing private provision of services. Corporation Customer Information System, and the Capital Health Region Integration project in Victoria. Examples of other local branch successes included the Association of Trial Lawyers of America The Association of Trial Lawyers of America (ATLA) is a nonprofit organization that represents the interests of personal injury attorneys. The ATLA is the world's largest trial bar organization, with about 60,000 members worldwide. in Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , DC, and the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). School Information System in Sacramento, California “Sacramento” redirects here. For other uses, see Sacramento (disambiguation). Sacramento is the capital of the State of California and the county seat of Sacramento County. . Press releases in December December: see month. 2000 and January January: see month. 2001 covered four of these mandates and are available on the Company's Web site for more detailed information. The RCMP initiative is a five-year engagement with a planned budget of over one hundred million dollars. Sierra Systems is responsible for driving the Project Office and a variety of implementation tasks. Revenue to the Company, while not yet defined, is expected to be substantial. These and other new projects indicate fiscal Q2 will see a continuing upward trend. Sequential quarterly revenue growth should be in the 8% to 10% range and a greater earnings improvement is anticipated. These represent a solid trend toward the 2001 goals set in the Company's Annual Report. 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:
3 Months Ended December 31
2000 1999
Revenue 30,137 31,417
Net Earnings for the Period 565 1,279
Basic and Fully Diluted Earnings Per Share $0.06 $0.14
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 2001 Results First quarter revenue was 4% lower than the same period last year. This was a result of the reduction in market demand throughout fiscal 2000. Compensation costs were also lower by 4%, a result of a lower average 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. in the quarter. Gross margin declined marginally from 21% to 20%, leading to a reduction in gross profit by 8%. General and administrative expenses increased 14% arising largely from increased rent costs. The Company posted net earnings of $0.6 million in the quarter compared to $1.3 million in the prior year. On a sequential quarterly basis, revenue increased 11%, a result of a 9% increase in utilization. Compensation costs were flat, as average headcount remained level. This improved the ratio of compensation costs as a percentage of services revenue to 70% from 78%. Other costs increased 9%, but the ratio of other costs as a percentage of services revenue remained level at 10%. Gross margin therefore increased to 20% from 13%, leading to an increase of gross profit of 74%. General and Administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. declined 26%. Without the unusual bad debt charge in quarter four of fiscal 2000 of $1.6 million, these costs increased 4% as a result of increased rent costs. Amortization of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) declined 38%, a result of the Company's depreciation policy of taking a half year of depreciation in the year of acquisition. This gave rise to an increase in net earnings of $2.8 million, from a loss of $2.2 million. About Sierra Systems Sierra Systems Group Inc. (TSE - SSG) is a leading source for solutions to North America's top business and technology initiatives. Sierra Systems' core systems integration and management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects excellence, built over 34 years, gives clients a solid foundation to draw from for their successful eWorld ventures. Sierra Systems' thought leadership is recognized across traditional and emerging industries including health, justice, government, 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. . Practical, reliable and innovative, Sierra Systems knows how to identify and deliver high-impact results for clients at any level. Visit Sierra Systems' Web site at www.SierraSystems.com . There will be a conference call on Thursday Thursday: see week. , February February: see month. 8, 2001 at 1:30 p.m. Pacific (4:30 p.m. Eastern) time. People wishing to participate should call 1-800-273-9672 or 416-695-5806 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:
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, and other risks detailed in the Company's filings with 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. 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 STATEMENTS of EARNINGS
(in thousands of Canadian dollars except per share and share figures)
(unaudited)
Three months ended
December 31
2000 1999
Revenue
Services $ 29,857 $ 31,194
Product sales 280 223
-----------------------
30,137 31,417
-----------------------
Cost of sales
Compensation 20,937 21,846
Other costs 2,874 2,776
Product costs 243 194
-----------------------
24,054 24,816
-----------------------
Gross profit 6,083 6,601
General & administration 3,956 3,469
Amortization of capital assets 673 583
-----------------------
Earnings from operations 1,454 2,549
Other income 206 111
-----------------------
Earnings before income taxes
and goodwill amortization 1,660 2,660
-----------------------
Provision for income taxes 827 1,213
-----------------------
Earnings before goodwill amortization 833 1,447
-----------------------
Goodwill amortization 268 168
-----------------------
Net earnings for the period $ 565 $ 1,279
-----------------------
Earnings per share
before goodwill amortization $ 0.09 $ 0.16
-----------------------
Earnings per share
after goodwill amortization $ 0.06 $ 0.14
-----------------------
Fully diluted earnings per share $ 0.06 $ 0.14
-----------------------
Weighted average number of
common shares 9,197,538 9,043,478
-----------------------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
(unaudited)
December 31 September 30
2000 2000
ASSETS
Current assets
Cash $ - $ 4,944
Temporary investments 13,998 13,441
Accounts receivable, including
unbilled work in progress 28,456 28,166
Other current assets 6,920 6,447
-----------------------
49,374 52,998
-----------------------
Long-term accounts receivable 2,343 2,651
Capital assets 10,086 8,908
Future income taxes 1,672 1,741
Goodwill 12,400 12,668
-----------------------
$ 75,875 $ 78,966
-----------------------
LIABILITIES
Current liabilities
Bank indebtedness $ 1,437 $ 3,490
Accounts payable & accrued liabilities 9,449 11,714
Other current liabilities 4,700 3,856
-----------------------
15,586 19,060
Project financing 2,343 2,651
-----------------------
17,929 21,711
-----------------------
SHAREHOLDERS' EQUITY
Capital stock 40,362 40,236
Retained earnings 17,584 17,019
-----------------------
57,946 57,255
-----------------------
$ 75,875 $ 78,966
-----------------------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of CASH FLOWS
(in thousands of Canadian dollars)
(unaudited)
Three months ended
December 31
2000 1999
Cash provided from (used for)
Operating Activities
Net earnings for the period $ 565 $ 1,279
Items not affecting cash -
Amortization 941 751
Future income taxes 219 -
Net change in non-cash
operating working capital (2,334) 245
Net change in long-term
accounts receivable 308 287
-----------------------
(301) 2,562
Financing Activities
Project financing - net (308) (287)
Shares issued 126 285
-----------------------
(182) (2)
Investing Activities
Temporary investments (557) (179)
Purchase of capital assets (1,851) (1,216)
-----------------------
(2,408) (1,395)
(Decrease) increase in cash (2,891) 1,165
Cash (bank indebtedness) -
beginning of period 1,454 (781)
-----------------------
(Bank indebtedness) cash -
end of period $ (1,437) $ 384
-----------------------
Certain comparative figures have been reclassified to conform with
the financial presentation adopted in the current year.
SIERRA SYSTEMS GROUP INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Business segment information
(in thousands of Canadian dollars)
The Company operates in one business segment - providing IT
services. The Company primarily operates in Canada and the United
States.
For the three months ended December 31, 2000
Canada U.S. Total
Revenue 19,816 10,321 30,137
For the three months ended December 31, 1999
Canada U.S. Total
Revenue 20,764 10,653 31,417
As at December 31, 2000
Canada U.S. Total
Capital assets and goodwill 19,332 3,154 22,486
As at September 30, 2000
Canada U.S. Total
Capital assets and goodwill 18,305 3,271 21,576
2. Capital stock
As at As at
December 31, September 30,
2000 2000
Issued
Common shares 9,198,639 9,178,603
Amount (000's) $ 40,362 $ 40,236
3. Statement of cash flows
(in thousands of Canadian dollars)
Three months ended December 31
2000 1999
Interest paid 140 162
Interest received 211 290
Income taxes paid 968 1,202
Income taxes refunded - 412
4. Future income taxes
Effective October 1, 2000, the Company adopted the liability
method of accounting for income taxes. Under the liability method,
future tax assets and liabilities are determined based upon
differences between financial reporting and tax bases of assets and
liabilities measured using current income tax rates. The Company has
adopted the new recommendations retroactively. The cumulative effect
of adopting the liability method of accounting for income taxes was
not material; therefore there has been no change to retained earnings
for the year ended September 30, 2000. Prior to October 1, 2000,
income taxes were accounted for by the deferral method.
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