Sierra Systems Reports Third Quarter Fiscal 2002 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. , British Columbia--(BUSINESS WIRE)--Aug. 1, 2002 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 .TO), commented on the third quarter 2002 results. "We achieved a 4% increase in sequential One after the other in some consecutive order such as by name or number. quarterly services revenue and 7% compared to the same quarter last year. This was an outstanding result under current business and economic circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , substantially exceeding the IT services industry quarterly average results. Our sales pipeline continues to strengthen. This provides considerable encouragement for our fiscal 2003." 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 June 30
2002 2001
-----------------------
Revenue 33,418 31,412
Net Earnings (Loss) for the Period 145 (662)
Basic and Fully Diluted Earnings (Loss) Per Share $0.02 $(0.07)
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 Third Quarter Fiscal 2002 Results On June June: see month. 1, 2002, the Company acquired all of the outstanding shares of INSI INSI Initial Nuclear Safety Inspection strategic technologies inc. ("INSI"). The consideration and assets acquired are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in note 2 to the interim financial statements. The effect of the results of INSI in the quarter by line item was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. to increase revenue by $600,000, compensation costs $470,000, 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. $90,000 and depreciation (for capital leases) $12,000. Third quarter revenue was 6% higher than the same period last year with services revenue 7% higher. There was marginally lower utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of 72% compared to 73% and also lower available hours, despite a slightly higher 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. . The addition of 61 billable employees from the INSI acquisition for the month of June was offset in part by a slight lowering of headcount in the U.S. Compensation costs were 5% higher than last year. Three quarters of the increase in compensation costs arose largely from the increased use of external consultants in the quarter, a 29% increase or $0.9 million. Annual salary increases made in January January: see month. were very modest this year at 1%. Benefit costs were level in the quarter, a result of refinement of the accounting of costs of government benefits in 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 to more accurately allocate To reserve a resource such as memory or disk. See memory allocation. the cost of these benefits over the year. The ratio of compensation costs to services revenue decreased to 74% from 75%. Other costs were reduced by 13% with cost savings arising in the quarter from lower education costs. The ratio of other costs to services revenue also dropped to 7% from 9%. The gross margin percentage increased to 19% from 16%, leading to an increase in gross profit of 25%. General and administration costs declined by 4%, a result of lower charges for doubtful accounts. Changes in accounting policy (described in note 1 to the financial statements) require that goodwill no longer be amortized. Net earnings for the quarter of $0.02 is therefore comparable to a net loss before goodwill amortization disclosed in the financial statements of $0.04. Pursuant to the 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) accounting standard on goodwill, the Company has concluded its annual assessment of the goodwill and has determined there is no impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss. On a sequential quarterly basis, services revenue increased by 4%, a result of improvement in the average realized rate due to the performance of fixed price projects. The average billable headcount during the quarter increased due to the INSI acquisition by 1%. Compensation costs decreased by 1%, a result of fluctuations in the U.S. foreign exchange rate and lower 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. for variable compensation plans. Expenditures on other costs increased slightly by $0.1 million. General and administration increased by $0.2 million due to salaries, a result of increased headcount of administrative staff. Amounts in tables are in thousands of Canadian dollars except earnings per share.
Fiscal 2002 9 Months Ended June 30
2002 2001
-----------------------
Revenue 98,019 96,623
Net Earnings for the Year 851 1,375
Basic and Fully Diluted Earnings Per Share $0.09 $0.15
Services revenue for the nine months increased 1% compared to the same period last year. Compensation costs increased by 6% due to salary increases, the effect of the U.S. exchange rate and an increase in the cost of external consultants. Spending on other costs has dropped 16% due to lower advertising and promotion and education costs. Gross margin has decreased to 17% from 19%, leading to a decline in gross profit of 8%. General and administration costs decreased 4%. About Sierra Systems Sierra Systems Group Inc. (TSX:SSG) is one of North America's original business consulting and technology services organizations. For over 35 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 Thursday Thursday: see week. , August 1, 2002, at 1:30 p.m. Pacific (4:30 p.m. Eastern) time. People wishing to participate should call 1.800.482.2239 and enter the passcode #2029990 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 (company, games) Sierra - (Or "Sierra On-Line") A computer game developer founded in the early 1980s by Ken and Roberta Willams in the small mountain town of Oakhurst California. Sierra was named after the local mountian range, 15 miles from the famous Yosemite National Park. Systems' actual results could differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 BALANCE SHEETS
(in thousands of Canadian dollars)
(unaudited)
June 30 September 30
2002 2001
---------------------------
ASSETS
Current assets
Cash $ 4,297 $ 2,976
Temporary investments 7,152 13,752
Accounts receivable, including unbilled
work in progress 28,453 28,092
Current portion of long-term accounts
receivable 2,150 2,920
Income taxes recoverable 1,249 695
Prepaid expenses 2,519 1,148
Future income taxes - 472
---------------------------
45,820 50,055
Long-term accounts receivable - 851
Property and equipment 10,786 10,959
Future income taxes 2,523 2,406
Goodwill 19,280 11,406
---------------------------
$ 78,409 $ 75,677
---------------------------
---------------------------
LIABILITIES
Current liabilities
Accounts payable & accrued liabilities $ 13,830 $ 11,928
Deferred revenue 2,045 1,354
Current portion of project financing 1,712 2,920
Current portion of capital lease obligation 136 -
Future income taxes 121 -
---------------------------
17,844 16,202
Capital lease obligation 94 -
Project financing - 851
---------------------------
17,938 17,053
SHAREHOLDERS' EQUITY
Capital stock (note 4) 41,065 40,070
Retained earnings 19,406 18,554
---------------------------
60,471 58,624
---------------------------
$ 78,409 $ 75,677
---------------------------
---------------------------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of RETAINED EARNINGS
(in thousands of Canadian dollars)
(unaudited)
Three months ended Nine months ended
June 30 June 30
2002 2001 2002 2001
------------------------------------------
Retained earnings
- Beginning of period $ 19,261 $ 19,056 $ 18,554 $ 17,019
Net earnings (loss)
for the period 145 (662) 852 1,375
------------------------------------------
Retained earnings
- End of period $ 19,406 $ 18,394 $ 19,406 $ 18,394
------------------------------------------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of EARNINGS
(in thousands of Canadian dollars except per share and share figures)
(unaudited)
Three months ended Nine months ended
June 30 June 30
2002 2001 2002 2001
------------------------------------------
Revenue
Services $ 33,296 $ 31,148 $ 96,723 $ 95,382
Product sales 122 264 1,296 1,241
------------------------------------------
33,418 31,412 98,019 96,623
------------------------------------------
Cost of sales
Compensation 24,485 23,252 72,768 68,569
Other costs 2,405 2,764 7,096 8,433
Product costs 58 203 1,167 1,075
------------------------------------------
26,948 26,219 81,031 78,077
------------------------------------------
Gross profit 6,470 5,193 16,988 18,546
General and administration 4,234 4,397 12,267 12,728
Amortization of property and
equipment 784 796 2,171 2,196
------------------------------------------
Earnings from operations 1,452 - 2,550 3,622
------------------------------------------
Other income (expense)
Foreign exchange (loss) gain (716) (350) (509) 134
Interest 46 204 189 588
------------------------------------------
(670) (146) (320) 722
------------------------------------------
Earnings (loss) before income
taxes and goodwill amortization 782 (146) 2,230 4,344
Provision for income taxes 637 248 1,379 2,166
------------------------------------------
Earnings (loss) before
goodwill amortization 145 (394) 851 2,178
Goodwill amortization (note 1) - 268 - 803
------------------------------------------
Net earnings (loss) for the
period $ 145 $ (662) $ 851 $ 1,375
------------------------------------------
Earnings (loss) per share
before goodwill
amortization $ 0.02 $ (0.04) $ 0.09 $ 0.24
------------------------------------------
Earnings (loss) per share
after goodwill amortization $ 0.02 $ (0.07) $ 0.09 $ 0.15
------------------------------------------
Fully diluted earnings (loss)
per share $ 0.02 $ (0.07) $ 0.09 $ 0.15
------------------------------------------
Weighted average number of
common shares 9,242,910 9,216,458 9,209,651 9,208,982
------------------------------------------
SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of CASH FLOWS
(in thousands of Canadian dollars)
(unaudited)
Three months ended Nine months ended
June 30 June 30
2002 2001 2002 2001
------------------------------------------
Cash provided from (used for)
Operating activities
Net earnings (loss) for
the period $ 145 $ (662) $ 851 $ 1,375
Items not affecting cash -
Amortization of property
and equipment 784 796 2,171 2,196
Amortization of goodwill - 268 - 803
Future income taxes 148 (530) 142 (267)
Net change in non-cash
operating working capital 1,224 2,846 1,783 2,035
Net change in long-term
accounts receivable 439 496 1,621 1,211
------------------------------------------
2,740 3,214 6,568 7,353
Financing activities
Project financing (714) (496) (2,059) (1,211)
Shares purchased for
long-term incentive plan (176) (340) (193) (340)
Shares issued 63 48 188 298
Repayment of capital lease
obligation (12) - (12) -
------------------------------------------
(839) (788) (2,076) (1,253)
Investing activities
Temporary investments 6,600 37 6,600 68
Purchase of property and
equipment (551) (1,562) (1,699) (4,231)
Business acquisitions
(note 2) (6,872) - (8,072) -
------------------------------------------
(823) (1,525) (3,171) (4,163)
Increase in cash 1,078 901 1,321 1,937
Cash - beginning of period 3,219 2,490 2,976 1,454
------------------------------------------
Cash - end of period $ 4,297 $ 3,391 $ 4,297 $ 3,391
------------------------------------------
Supplementary cash flow information (note 3)
Notes to 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 (unaudited) (Amounts in tables are in thousands of Canadian dollars except per share figures) 1. Summary of significant accounting policies General These consolidated financial statements 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 the Canadian Institute of Chartered Accountants' ("CICA") recommendations for the preparation of interim financial statements. Certain information and note disclosures normally included in the Company's annual consolidated financial statements are not presented. These interim consolidated financial statements and notes should be read in conjunction with the Company's annual consolidated financial statements for the year ended September September: see month. 30, 2001. These interim consolidated financial statements follow the same accounting policies and methods as have been followed for the most recent annual consolidated financial statements, except for the treatment of goodwill amortization and computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of earnings per share as discussed below. Goodwill On October October: see month. 1, 2001, the Company adopted the new recommendations of the CICA relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the treatment of goodwill. Under the revised recommendation, all business combinations are accounted for using the purchase method. Additionally, goodwill will no longer be amortized to earnings and will be assessed for impairment on an annual basis in accordance with the new standards, including a transitional impairment test whereby any resulting impairment will be charged to opening retained earnings Retained Earnings 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. . In fiscal 2002, the effect of the non-amortization of goodwill will result in an increase in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net earnings of approximately $1,287,000 ($323,000 for the current period). The Company has completed its annual impairment test and concluded that no goodwill impairment charge is required. Earnings per share Effective October 1, 2001, the Company adopted the CICA's recommendation related to computing computing - computer earnings per share. These recommendations require the application of the treasury stock method for the calculation of the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of stock options and other dilutive securities. The Company has adopted these recommendations retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin . The application of these new recommendations has had no impact on the comparative earnings per share calculations. 2. Business acquisitions INSI strategic technologies inc. ("INSI") On June 1, 2002, the Company acquired all the outstanding shares of INSI, a Winnipeg-based company specializing in the provision of systems integration services. The cost of the acquisition was $7,872,000 of which $6,829,000 was assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to goodwill. The acquisition was accounted for using the purchase method and, accordingly, the purchase price was allocated to the assets acquired and the liabilities assumed based on their fair values at June 1, 2002 as follows.
Net assets at fair values
Working capital $ 929
Property and equipment 220
Goodwill 6,829
Long-term liabilities (106)
----------
Cost of acquisition $ 7,872
----------
Consideration
Cash $ 6,872
Common shares 1,000
----------
$ 7,872
----------
Transformation Solutions Inc. ("TSI TSI Total Solar Irradiance (sum solar light in energy per unit of time) TSI Trading Standards Institute (UK) TSI Transportation Safety Institute (US DOT) ") On November November: see month. 1, 2001, the Company acquired all of the outstanding shares of TSI, a 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 company. The cost of the acquisition was $1,200,000. The acquisition was accounted for using the purchase method and, accordingly, the purchase price was allocated to the assets acquired and the liabilities assumed based on their fair values at November 1, 2001, as follows.
Net assets at fair values
Working capital $ 76
Property and equipment 79
Goodwill 1,045
----------
Cost of acquisition $ 1,200
----------
Consideration
Cash $ 1,200
----------
3. Supplementary cash flow information
Three months ended Nine months ended
Interest and income taxes June 30 June 30
2002 2001 2002 2001
----------------------------------------
Interest paid $ 29 $ 63 $ 105 $ 293
Interest received $ 19 $ 279 $ 180 $ 830
Income taxes paid $ 708 $ 960 $ 1,365 $ 2,896
Income taxes refunded $ 317 $ 317
Non-cash financing activities
Shares issued for business
acquisitions $ 1,000 - $ 1,000 -
Non-cash investing activities
Assets acquired under capital
leases $ 182 - $ 182 -
4. Capital stock
a) Capital stock
Issued
As at June 30, 2002 As at September 30, 2001
---------------------------------------------
Common shares 9,313,434 9,182,520
Amount $ 41,065 $ 40,070
b) Options
Three months ended Nine months ended
June 30, 2002 June 30, 2002
--------------------------------------
Balance - beginning of period 920,687 851,077
Options granted in period 7,900 115,900
Options exercised in period (1,000) (1,000)
Options cancelled in period (38,390)
--------------------------------------
Balance - end of period 927,587 927,587
5. Business segment information
The Company operates in one business segment - providing IT
services. The Company operates primarily in Canada and the United
States.
Revenue Canada U.S. Total
---------------------------
For the three months ended June 30, 2002 $21,180 $12,238 $33,418
For the three months ended June 30, 2001 $20,029 $11,383 $31,412
For the nine months ended June 30, 2002 $62,089 $35,930 $98,019
For the nine months ended June 30, 2001 $62,590 $34,033 $96,623
Property, equipment and goodwill
As at June 30, 2002 $27,442 $ 2,624 $30,066
As at September 30, 2001 $19,298 $ 3,067 $22,365
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