ST SYSTEMS CORP ("SYT-V") - Year End Financial Report - Elects To Take Non-Cash Writeoffs Of $3.9M
ST Systems Corp. announced record revenues of US$17.8 million for the year ended December 31, 1999.
The Company also announced a decision to take certain one-time charges, writeoffs, and accruals totaling US$3.9
million to ensure that the 1999 financial statements better reflect the short-term effects of the Company's product-line
upgrades, recent management restructuring costs, certain inventory adjustments, and expansion of the Company's
distribution channels. The charges, writeoffs, and accruals include the items referred to above as well as other items
long carried on the books, namely US$1.5 million in R&D costs, US$800K in capital assets, and US$411K in goodwill
associated with historical acquisitions.
Year-End Results (year ended December 31, 1999 compared with year ended December 31, 1998) * Revenues were
US$17.8 million compared with US$12.5 million, an increase of 42%. * Profit, before one-time charges, writeoffs, and
accruals demonstrated a similar growth of 39%. However, the writeoffs reduced profit from US$568K in 1998 to, as
anticipated, a US$3.4 million loss in 1999. * The writeoffs also reduced the earnings per share from US$0.05 in 1998 to
a loss of US$0.30 per share in 1999. * Significantly, share market value increased from US$0.22 to US$0.65, a nearly
threefold increase.
Douglas Bailey, Chairman and CEO, said, "1999 saw a major shift in ST's strategy, with a clear mandate to grow the
Company more aggressively. We delivered on that mandate both in 1999 and to date in 2000 by: * Achieving revenue
growth of 42%; * Launching two new products and a new array of service offerings; * Installing the biggest contract in the
history of the Company for POS systems and service in 267 Lone Star Steakhouses; * Beginning to build a
company-owned dealer network through an acquisition program (three acquisitions announced in the past twelve
months); * Opening a Canadian office incorporating Marketing, Sales, and Product Management. * Expanding into the
sales and service of POS systems to pubs and beer-and-wine stores in BC and Alberta through acquisition of the
assets of Timeac International Inc. * Supplementing ST's historic teleselling program with "feet on the street"
salespeople; and, * Opening a new division-the Supplies Division-to sell consumables to restaurateurs."
All of ST's operating divisions recorded increased revenues in 1999, with Service being the star performer. The
Company's subsidiary for quick-service restaurant POS systems, Documentor Sciences, while increasing revenues,
did, however, under-perform. Strong measures are being taken to improve operations in this area since fast-food (or
quick-service) restaurants represent a huge potential market for ST. Sable Technologies, the Company's provider of
POS systems for table-service restaurants, continued to provide a stable, growing revenue base. "With the new sales
structure and products launched in late 1999, we expect Sable to perform even better in 2000," Mr. Bailey added.
Another change effected at the beginning of 2000 was to shift the Company's shares to trading in Canadian rather than
US dollars. ST also plans to change to reporting results in Canadian dollars in the first quarter of 2000.
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Disappointing results, without writeoffs, earnings were flat. Disappointment reflected in stock price. |
