Here's the news release - nothing we didn't know already, the company is simply re-stating financials over the past several years to reflect more commonly accepted accounting principles:
Q-MEDIA RESTATES FINANCIALS TO REFLECT CAPITALIZING OF
GOODWILL
VANCOUVER, B.C.--
Q-Media Services Corporation today reported that, at the request
of the Ontario Securities Commission and the British Columbia
Securities Commission, the Company has restated its financial
statements retroactive to fiscal 1995. The restatement reflects
the requirement to capitalize and amortize, rather than expense,
goodwill associated with both past and future acquisitions. In
the future, the goodwill portion of the purchase price of
acquisitions will be capitalized and amortized over a period of
not more than 20 years. In the past, the Company had expensed
goodwill at the time of acquisition. In addition, in accordance
with the Company's financial instruments policy, the $10 million
proceeds from the convertible debentures issued in December 1997
have been allocated $8.8 million to long term debt and $1.2
million to shareholders' equity.
The following table summarizes the restatement adjustments
recorded by the Company:
9 months ending
April 30, 1998 1997 1996 1995
--------------------------------------------------------------
Increase in total assets
$12.5 million $9.3 million $4.3 million $1.4 million
Increase in shareholders' equity
$3.6 million $9.3 million $4.3 million $1.4 million
Increase in liabilities
$8.9 million - - -
Increase (Decrease) to net income
$(0.5) million $5.1 million $2.8 million $1.4 million
Decrease to deficit
$8.9 million $9.3 million $4.3 million $1.4 million
Following is a summary of Q-Media's restated financials from
1995. All per share results reflect the Company's one for five
share consolidation.
Fiscal 1998 Nine Months Results, for the period ending April 30,
1998
----------------------------------------------------------------
* Revenues were unchanged at $31.0 million;
* Cash flow before changes in non-cash working capital items was
unchanged at $3.4 million;
* Net loss was changed from $5.3 million to $5.8 million,
including a non-cash write off of $7.8 million for goodwill
related to the Digimedia acquisition;
* Net loss per share was changed from $0.60 to $0.66 basic;
* Assets were changed from $23.8 million to $36.3 million;
* Liabilities were changed from $9.5 million to $18.4 million;
* Shareholders' equity was changed from $14.3 million to $17.9
million; and
* Retained earnings were changed from a deficit of $18.8 million
to a deficit of $9.9 million.
Fiscal 1998 Six Months Results, for the period ending January 31,
1998
-----------------------------------------------------------------
* Revenues were unchanged at $19.2 million;
* Cash flow before changes in non-cash working capital items was
unchanged at $1.9 million;
* Net loss was changed from $6.4 million to $6.7 million,
including a non-cash write off of $7.8 million for goodwill
related to the Digimedia acquisition;
* Net loss per share was changed from $0.80 to $0.84 basic;
* Assets were changed from $23.5 million to $36.2 million;
* Liabilities were changed from $10.3 million to $19 million;
* Shareholders' equity was changed from $13.2 million to $17.1
million; and
* Retained earnings were changed from a deficit of $19.9 million
to a deficit of $10.8 million.
The Company wrote off the goodwill of $7.8 million associated
with the Digimedia, Inc. purchase, effective January 31, 1998,
due to the pending sale of the major customer of this division.
Without the continued revenue and earnings associated with this
customer, management determined the continued revenue and
earnings of this division were permanently impaired. On July 6,
1998, the Company subsequently purchased this customer (Hart
Graphics' Supply Chain Management Business) and capitalized the
goodwill associated with that purchase of $5.3 million.
Fiscal 1998 Three Months Results, for the period ending October
31, 1998
----------------------------------------------------------------
* Revenues were unchanged at $7.9 million;
* Cash flow before changes in non-cash working capital items was
unchanged at $900,000;
* Net earnings were changed from $710,000 to $588,000;
* Net earnings per share was unchanged at $0.10;
* Assets were changed from $14.7 million to $23.9 million;
* Liabilities were unchanged at $8.5 million;
* Shareholders' equity was changed from $6.2 million to $15.4
million; and
* Retained earnings were changed from a deficit of $12.8 million
to a deficit of $3.6 million.
Fiscal 1997 Results
--------------------
* Revenues were unchanged at $28.7 million;
* Cash flow before changes in non-cash working capital items was
unchanged at $2.6 million;
* Net earnings were changed from a loss of $4.4 million to net
earnings of $651,000, including a non-cash write off of $1.1
million for goodwill related to the STAT acquisition;
* Net earnings per share was changed from a net loss per share of
$0.88 to net earnings per share of $0.13;
* Assets were changed from $12.3 million to $21.6 million;
* Liabilities were unchanged at $7.0 million;
* Shareholders' equity was changed from $5.2 million to $14.6
million; and
* Retained earnings were changed from a deficit of $13.5 million
to a deficit of $4.1 million.
The Company wrote off the goodwill of $1.1 million associated
with the STAT/Turnkey purchase, effective July 31, 1997.
Management determined the future revenue and earnings from this
purchase were permanently impaired due to the erosion of the
customer base.
Fiscal 1996 Results
-------------------
* Revenues were unchanged at $15.9 million;
* Cash flow to operations before changes in non-cash working
capital items was unchanged at $49,000;
* Net loss was changed from $3.2 million to $387,000;
* Net loss per share was changed from $0.76 to $0.09;
* Assets were changed from $9.9 million to $14.2 million;
* Liabilities were unchanged at $6.3 million;
* Shareholders' equity was changed from $3.7 million to $7.9
million; and
* Retained earnings were changed from a deficit of $9.0 million
to a deficit of $4.8 million.
Fiscal 1995 Results
--------------------
* Revenues were unchanged at $7.2 million;
* Cash flow to operations before changes in non-cash working
capital items was unchanged at $1.0 million;
* Net loss was changed from $3.1 million to $1.7 million;
* Net loss per share was changed from $1.45 to $0.80;
* Assets were changed from $7.9 million to $9.3 million;
* Liabilities were unchanged at $3.1 million;
* Shareholders' equity was changed from $4.8 million to $6.2
million; and
* Retained earnings were changed from a deficit of $5.8 million
to a deficit of $4.4 million.
Q-Media Services Corporation is a leading outsourced service
provider to the growing software industry. Its full range of
services include software replication (CD-ROM and other media),
packaging solutions, warehousing and inventory management and
fulfillment. It operates regional manufacturing facilities in
close proximity to customers in North America's software growth
areas; Vancouver, B.C.; Seattle, Washington; San Jose and Irvine,
California and Austin, Texas.
Shares of Q-Media trade on the Toronto Stock Exchange under the
symbol QMS. U.S. S.E.C. exemption: 12g3-2(b) 82-3761.
FOR FURTHER INFORMATION PLEASE CONTACT:
Marla Gale or Jon Kieran, Investor Relations
(416)868-1079
Hume, Kieran Inc.
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