TORONTO--(BUSINESS WIRE)--June 10, 1997--GrandeTel
Technologies Inc. (NASDAQ:GTTIF) (formerly MTC Electronic
Technologies Co. Inc.) today released its financial results for the year ended
Jan. 31, 1997.
GrandeTel had net income of CDN $0.2 million or 1 cent a share, compared
with a net loss of CDN $10.1 million or 50 cents a share for the year-earlier
period. The positive results for the latest period follow a two-year period
during which operations were revamped.
Revenue was CDN $14.6 million during the latest period, compared with
CDN $15.4 million for the earlier period, which included CDN $3.4 million
from discontinued operations. Revenue for the latest period on a comparable
basis increased approximately CD N $2.7 million.
A CDN $3.8 million reduction in operating, selling and administrative expenses
was principally the result of lower payroll costs.
Other income increased to CDN $12.1 million in the latest period (1996:
CDN $4.2 million) as a result of:
-- a CDN $8.5 million gain from the repurchase for cancellation of CDN
$10.5 million face value of convertible debentures. As a result, interest
expense was reduced by CDN $0.5 million;
-- compensation of CDN $3.8 million received by GrandeTel from several
co-defendants of the alleged stock option fraud lawsuit; and
-- accrued income of CDN $2.2 million from its 10% investment in Lafe
International Holdings Ltd., which manufactures computer magnetic heads and
storage devices.
Following its year end, the Company exchanged its LAFE investment for 9.7
million common shares of Nakamichi Corporation, which manufactures and
distributes high-end audio and video equipment. Nakamichi's shares trade on
the Tokyo Stock Exchange.
The exchange increased the value of GrandeTel's investment to US $27.0
million (based upon the trading price for Nakamichi shares of Yen 425 per
share or about US $3.50 per share) from US $7.3 million. The exchange
results from the sale by The Grande Holdings Limited, which holds 28.4% of
GrandeTel, of its 60% interest in Lafe to Nakamichi, and the subsequent
purchase by Grande of a 70% interest in Nakamichi. GrandeTel participated
in that transaction on the same terms as Grande Holdings. The closing price of
the Nakamichi shares on June 6 on the Tokyo Stock Exchange was Yen 508
per share (or about US $4.50 per share).
GrandeTel terminated its Mudanjiang cellular telephone project at year end
due to difficulties with its Chinese joint venture partner. The termination
reduces future financial commitments, allowing the Company to dedicate cash
to its Store and Forward Fax business, which was fully launched during the
1997 first quarter. Consideration is now being given to adding long distance
voice service and creating an alliance with a U.S. telecommunications carrier
to create a more competitive rate structure and a platform for a call-back
service.
"GrandeTel has established itself as a prominent player and recognizable name
in sales and distribution of cellular telephone products in China as a result of
tremendous marketing efforts during the past two years," said Christopher Ho,
Chairman and Chief Executive officer. "We are placing greater emphasis on
product development and marketing to increase our volumes and margins.
"However, the nature of the markets in which GrandeTel operates requires us
to organize our operations even more efficiently."
The Company will continue to consolidate its operations during its current
fiscal year:
-- Assembly and sales operations for existing cellular phone joint ventures will
be consolidated in response to more competitive conditions in the Chinese
market. Efforts are being focused on increasing sales and becoming the sole or
a major regional distributor of cellular phones with prominent brand names.
-- Subcontracting is being used to meet seasonal production demands as well
as to reduce engineering and administration overhead costs. Company
manufacturing operations will attempt to maintain stable production levels with
excess orders being subcontracted to third parties.
-- Considerable effort is being placed on reducing other costs as well as
inventories, and improving the turnover of accounts receivable.
The Company may continue to purchase for cancellation its outstanding
convertible debentures.
"The future of the Company remains obscured by the uncertainties of the
continuing class action lawsuits in which it is a defendant," said Mr. Ho. "While
the outcome of these lawsuits is uncertain, the Company is striving to control
and restrict its legal expenses while conducting a vigorous defense.
"We are interested in settling the lawsuits, which are to be scheduled for trial
early next year. However, the outcome of these lawsuits and any potential
discussions are very uncertain."
The Company's annual general meeting will be held on July 7, 1997 at 8:30
a.m. at the Sutton Place Hotel, in Vancouver, British Columbia.
GrandeTel is a Canadian company with its North American headquarters in Richmond, British
Columbia and its Asian headquarters in Hong Kong. The Company holds interests in joint
ventures that assemble and distribute cellular telephones and provide paging services in China.
The Company's common shares trade on the NASDAQ service.
CONSOLIDATED BALANCE SHEETS
GrandeTel Technologies Inc.
(Stated in Canadian Dollars)
January 31 1997 1996
(Thousands of Dollars)
ASSETS
Current
Cash $ 2,883 $ 18,023
Term deposits (Note 1) 1,424 1,944
Accounts receivable (Note 2) 11,978 4,759
Inventories (Note 3) 10,498 15,292
Prepaid and deposits 1,546 898
28,329 40,916
Long-term Receivable (Note 4) 1,288 1,524
Investments (Note 5) 19,673 15,278
Investments Held for Disposal (Note 6) 3,033 7,399
Capital Assets (Note 7) 5,068 5,624
Pre-Operating Costs (Note 8) 2,291 427
Deferred Charges and Other 152 -
$ 59,834 $ 71,168
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accruals $ 11,908 $ 14,688
Long Term
Long term debts (Note 9) 21,571 30,902
Deferred foreign exchange gain 557 -
22,128 30,902
34,036 45,590
Commitments and Contingencies (Notes 15 and 17)
Shareholders' Equity
Share capital (Note 10)
Authorized
50,000,000 Common shares
without par value
Issued
18,329,376 Common shares without
par value 141,393 154,389
(1996 -- 20,014,076 common shares)
Contributed surplus (Note 10) 12,996 -
Deficit (128,591) (128,811)
25,798 25,578
$ 59,834 $ 71,168
CONSOLIDATED STATEMENTS OF OPERATIONS
GrandeTel Technologies Inc.
(Stated in Canadian Dollars)
For the year ended January 31 1997 1996 1995
(Thousands of Dollars)
Sales (Note 13) $ 14,563 $ 15,357 $ 28,173
Cost of sales 13,442 13,050 27,137
Gross Profit 1,121 2,307 1,036
Write down of inventory 782 - 9,256
Operating, selling and
administrative expenses (Note 18) 10,157 14,040 41,994
Operating loss (9,818) (11,733) (50,214)
Interest expense on long-term debt 2,045 2,496 2,520
Other income (expense) (Note 18) 12,083 4,176 (22,409)
Income (loss) before income
taxes (Note 11) 220 (10,053) (75,143)
Income taxes (Note 11) - - -
Net Income (loss) for the year $ 220 $(10,053) $(75,143)
Net income (loss) per share $ 0.01 $ (0.50) $ (4.38)
Weighted average common shares
outstanding 19,656,912 20,014,076 17,139,007
CONSOLIDATED STATEMENTS OF DEFICIT
GrandeTel Technologies Inc.
(Stated in Canadian Dollars)
For the year ended January 31 1997 1996 1995
(Thousands of Dollars)
Deficit, beginning of year $ (128,811) $ (118,758) $ (44,373)
Net income (loss) for the year 220 (10,053) (75,143)
Amortization and transfer
of appraisal increase - - 758
Deficit, end of year $ (128,591) $ (128,811) $ (118,758)
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Stated in Canadian Dollars)
GrandeTel Technologies Inc.
For the year ended January 31 1997 1996 1995
(Thousands of Dollars)
Cash provided by (used in)
Operating activities
Net income (loss) for the year $ 220 $ (10,053) $ (75,143)
Items not involving cash
Amortization of capital assets 1,204 847 1,223
Amortization of pre-operating costs 47 51 17
Share of equity income
from investments (2,271) - -
Fixed return from Hubei PT MTC (181) - -
Share of joint venture loss 286 205 66
(Gain)loss on sale of capital assets - (352) 1,329
Amortization of deferred
foreign exchange loss - - 234
Write off of pre-operating costs 84 371 -
Write off of rights to participate
in Hubei Joint Venture - - 10,029
Write down of investment in Hubei
manufacturing Joint Venture - - 1,165
Write down of investments held
for disposal 214 689 10,202
Write down of investment 1,193 - -
Write off of capital assets 67 45 4,429
Gain on buy back of debenture (8,529) - -
Provision for long term receivable 236 - -
(7,430) (8,197) (46,449)
Changes in non-cash working
capital balances (5,333) (5,929) 27,199
(12,763) (14,126) (19,250)
Investing activities
Additions to capital assets (850) (3,943) (2,795)
Additions to pre-operating costs (1,995) (333) (533)
Additions to investments (6,742) (8,592) (17,523)
Long-term receivable - 7,036 (388)
Additions to deferred
charges and other (152) - -
Return of capital from Hubei PT MTC 4,797 - -
Recovery of investment cost of
Mudanjiang project 2,675 - -
Proceeds on sale of capital assets 135 1,931 579
(2,132) (3,901) (20,660)
Financing activities
Share capital proceeds - - 13,886
Deferred foreign exchange gain(loss) 557 880 (956)
Letters of credit - purchases - - 11,486
- payments - - (15,927)
Long-term debt - borrowings 5,282 - 1,671
- repayments/
buy-back (6,084) (760) -
(245) 120 10,160
Decrease in cash during the year (15,140) (17,907) (29,750)
Cash, beginning of year 18,023 35,930 65,680
Cash, end of year $ 2,883 $ 18,023 $ 35,930
Schedule of changes in non-cash
working capital :
Increase (decrease) from changes
in assets :
Term deposits - restricted $ 520 $ 6,618 $ 3,984
Accounts receivable (7,219) (96) 3,488
Inventories 4,794 (5,162) 3,517
Prepaid and deposits (648) (29) 632
(Increase) decrease from changes
in liabilities :
Deferred revenue - (825) -
Accounts payable and accruals (2,780) (6,435) 15,656
Current portion of long-term debt - - (78)
$ (5,333) $ (5,929) $ 27,199
CONTACT: Howe & Company
J. Patrick Howe
416/863-6632
E mail: jphowe@howeco.com |
