NHC Communications Inc. reports strong sales and profitability in third quarter
Financial and operational highlights:
- Growing order backlog of $6.5 million for the fourth quarter
- $9.8 million proceeds from oversubscribed special warrants issue
- Major CLEC customer expanded forecasted VCCS unit requirements
- Interoperability agreement with Tollgrade Communications
- Successful interoperability testing with Promatory Communications
- Strategic partnering agreement with Hekimian
- Signed exclusive distributor agreement with Allcom Telecomunicazioni
of Italy
- Introduced new application program interface (API) software to
position VCCS as industry standard for DSL local loop management
MONTREAL, May 16 /CNW/ - NHC Communications Inc. (TSE:NHC), a leading
provider of carrier class test access and deployment solutions for the Digital
Subscriber Line (DSL) service market, announced financial results for the
third quarter, ended April 28, 2000, that included robust quarterly sales of
$4.1 million.
"Third quarter sales rose strongly compared to last year and to the
second quarter of fiscal 2000, reflecting the success of our focused growth
strategy," said Sylvain Abitbol, President and CEO of NHC. "Our objective for
the balance of the year will be to sustain the sales momentum by investing in
key sales and marketing programs to position ourselves for further significant
growth. Through careful cost management throughout the organization, we have
reached profitability during this third quarter."
NHC's focused growth strategy has several key elements:
- Marketing to Competitive Local Exchange Carriers (CLECs),
Incumbent Local Exchange Carriers (ILECs) and Multiple
Tenant Units (MTUs) with a complete line of products
based on the same software platform
- Partnerships with major test equipment, DSLAM and OSS
vendors to benefit from cross sales referrals
- Partnerships with key international vendors seeking to
provide totally integrated solutions for managing DSL
networks through recently released "Tool Kit Software"
- The Virtual-Cross Connect Solution's (VCCS) modular
design allows for smaller initial configurations and
for our customers to expand as their own market
penetration evolves
During the third quarter sales increased by 45.5% to $4.1 million,
compared to $2.8 million in the same quarter of fiscal 1999. The company also
generated an income from continuing operations of $10,100 from a loss from
continuing operations of $449,600 a year earlier. During the period, income
from discontinued operations contributed $22,400 to lower the net loss to
$74,900 versus $443,000 in 1999
For the nine months ended April 28, 2000 sales totaled $7.1 million,
compared with $8.9 million in the same period of 1999. The Company's net loss
was $3.6 million, versus a loss of $441,400 in 1999.
"We believe that our strong sequential growth in the most recent quarter,
which was generated primarily through new business wins, will continue
throughout the fourth quarter and into 2001," said Mr. Abitbol.
NHC's current backlog for shipments to be made specifically during the
fourth quarter stands at $6.5 million. This is comprised of VCCS shipments
with a total value of $6.1 million scheduled for the remainder of May as well
as June and July. The turn around in NHC's sales performance was partially
responsible for the company's renewed ability to raise equity. During the
quarter, NHC completed a $21.4 million oversubscribed warrants issue whose net
proceeds to NHC were $9.8 million. A large proportion of the investors
subscribing to the issue were from the United States, where NHC expects to
increase its investor and customer bases. Cash provided from financing
activities rose to $9.97 million versus $120,600 in 1999.
The ability to return to equity markets has significantly enhanced the
Company's financial flexibility. Working capital at April 28, 2000 stood at
$11.7 million compared to $4.9 million at the end of fiscal 1999. NHC was also
able to completely pay down its operating bank loan and redeem the majority of
previously issued secured convertible debentures. Shareholders' equity rose to
$12.2 million as of April 28, 2000 compared to $5.5 million at July 31, 1999.
"The company has never been in a better position to fund growth. We have
a strong cash balance, moderate debt levels and increasingly valuable equity,"
said Mr. Abitbol.
Subsequent Events:
On May 11, the Company announced a strategic partnership with Tollgrade
Communications, Inc., part of the Nortel Networks TotalCare DSL operating
system, to offer a complete end-to-end cross-connect and DSL loop
qualification program platform to local exchange carriers.
In addition, several CLECs are currently evaluating NHC's VCCS products
and services. The Company is also currently working on several additional
partnership agreements with test equipment vendors, DSLAM vendors, and OSS
vendors.
The industry outlook for the global DSL industry is extremely strong. The
number of DSL lines is expected to grow ten-fold in the United States during
the next four years while international deregulation is expected to create
significant further global expansion opportunities.
NHC Communications Inc. specializes in developing products that increase
the competitive edge of its customers by applying innovative technology
to the delivery of high-speed mixed media networks. NHC is committed to
delivering superior solutions for physical layer network infrastructures.
NHC sells through leading resellers supported by sales locations in
Montreal, Boston, Chicago, Medford (NJ), and Paris (France).
NHC may be contacted through its web site: www.nhc.com
-------------------------------------------------------------------------
Statements included here, which are not historical in nature, are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, including
without limitation, statements as to management's beliefs, strategies,
plans, expectations or opinions in connection with company performance,
which are based on a number of assumptions concerning future conditions
that may ultimately prove to be inaccurate. In addition, other
forward-looking statements that may be included here must be qualified
by important factors that could cause actual results to differ materially
from those achieved in the past or those expected by the companies. These
include: rapid technological change along with the need to continually
develop new products; the company's dependence on a dominant product
line; competition; the companies' dependence on key employees;
difficulties in managing the companies' growth; the company's dependence
upon certain customers and certain suppliers; the companies' dependence
upon proprietary rights; risks of third party claims of infringement;
and government regulation.
-------------------------------------------------------------------------
<<
NHC Communications Inc.
Summary of Unaudited Consolidated Statements of Income
For the Three-Month Period Ended April 28th, 2000
(in thousands of Canadian dollars, except per share amounts)
Q3 2000 Q3 99
-------------------------------------------------------------------------
Sales $ 4,087,000 $ 2,809,700
Gross profit $ 1,312,500 $ 1,298,700
Operating income (loss) from continuing
operations $ 10,100 $ (449,600)
Loss from continuing operations $ (97,300) $ (623,700)
(Loss) net income $ (74,900) $ (443,300)
Loss from continuing operations per share
- primary $ (0.01) $ (0.05)
(Loss) net income per share - primary $ (0.01) $ (0.04)
Loss per share - fully diluted Anti-dilutive Anti-dilutive
Shares used in the calculation
of the per share amounts:
Primary 13,300,600 12,615,659
Fully diluted 17,304,100 15,441,300
NHC Communications Inc.
Summary of Unaudited Consolidated Statements of Income
For the Nine-Month Period Ended April 28th, 2000
(in thousands of Canadian dollars, except per share amounts)
9 Months 2000 9 Months 99
-------------------------------------------------------------------------
Sales $ 7,063,700 $ 8,921,800
Gross profit $ 4,737,800 $4,061,400
Operating loss from continuing operations $ (2,386,000) $ (776,700)
Loss from continuing operations $ (3,610,700) $ (1,003,500)
(Loss) net income $ (3,597,200) $ (441,400)
Loss from continuing operations per share
- primary $ (0.27) $ (0.08)
Loss (net income) per share - primary $ (0.27) $ (0.03)
Loss (net income) per share - fully diluted Anti-dilutive Anti-dilutive
Shares used in the calculation
of the per share amounts:
Primary 13,300,600 12,615,659
Fully diluted 17,304,100 15,441,300
NHC COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
COMPARISON BETWEEN FISCAL 1999 AND 2000
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED APRIL 28, 2000
(Unaudited. In thousands of Canadian dollars, except per share amounts)
2000A 2000A 2000A 2000A 1999A 1999A
Q1 Q2 Q3 9M Q3 9M
-------------------------------------------------------------------------
Revenue
Sales 1,549.4 1,427.3 4,087.0 7,063.7 2,809.7 8,921.8
Cost of sales 950.3 1,013.0 2,774.5 4,737.8 1,511.0 4,860.4
-------------------------------------------------------------------------
Gross profit 599.1 414.3 1,312.5 2,325.9 1,298.7 4,061.4
-------------------------------------------------------------------------
Operating
expenses
General and
administrative 400.9 529.7 311.7 1,242.3 350.4 967.0
Sales and
marketing 886.4 785.1 697.8 2,369.3 1,039.9 2,849.1
Research and
development,
net 402.5 404.9 292.9 1,100.3 358.0 1,022.0
-------------------------------------------------------------------------
Total operating
expenses 1,689.8 1,719.7 1,302.4 4,711.9 1,748.3 4,838.1
-------------------------------------------------------------------------
Operating (loss)
income from
continuing
operations (1,090.7) (1,305.4) 10.1 (2,386.0) (449.6) (776.7)
-------------------------------------------------------------------------
Other
Financial
income
(expense) (30.1) (85.0) (48.9) (164.0) (7.5) (48.4)
Gain (loss)
on foreign
exchange (18.1) (88.3) (0.3) (106.7) (166.6) (220.0)
Restructuring
costs 0.0 (912.4) (58.2) (970.6) 0.0 0.0
-------------------------------------------------------------------------
(48.2) (1,085.7) (107.4) (1,241.3) (174.1) (268.4)
-------------------------------------------------------------------------
(Loss) income
before income
taxes and
discontinued
operations (1,138.9) (2,391.1) (97.3) (3,627.3) (623.7) (1,045.1)
Benefit
(provision)
for income
taxes 0.0 16.6 0.0 16.6 41.6 41.6
-------------------------------------------------------------------------
(Loss) income
from
continuing
operations (1,138.9) (2,374.5) (97.3) (3,610.7) (582.1) (1,003.5)
Discontinued
operations 2.8 (11.7) 22.4 13.5 138.8 562.1
-------------------------------------------------------------------------
(Loss) net
income (1,136.1) (2,386.2) (74.9) (3,597.2) (443.3) (441.4)
Deficit,
beginning
of the
period (2,208.6) (3,344.7) (5,768.0) (2,208.6) 0.8 (18,879.1)
Share capital
issue costs 0.0 (37.1) (899.9) (937.0) 0.0 0.0
Reduction in
stated capital
transferred
to deficit 0.0 0.0 0.0 0.0 0.0 18,878.0
-------------------------------------------------------------------------
Deficit,
end of the
period (3,344.7) (5,768.0) (6,742.7) (6,742.7) (442.5) (442.5)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Loss) net income from continuing operations
per common and equivalent share:
Primary ($0.09) ($0.19) ($0.01) ($0.27) ($0.05) ($0.08)
Fully diluted
(ad: anti-
dilutive) ad ad Ad Ad ad ad
(Loss) net income per common and equivalent share:
Primary ($0.09) ($0.19) ($0.01) ($0.27) ($0.04) ($0.03)
Fully diluted
(ad: anti-
dilutive) ad ad ad Ad ad ad
Common and equivalent shares used in computing per share amount:
Primary
(in 000's) 12,629.2 12,642.6 13,300.6 13,300.6 12,615.7 12,615.7
Fully diluted
(in 000's) 15,491.4 16,707.5 17,304.1 17,304.1 15,441.3 15,441.3
NHC COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
COMPARISON BETWEEN FISCAL 1999 AND 2000
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED APRIL 28, 2000
(Unaudited. In thousands of Canadian dollars)
2000A 2000A 2000A 2000A 1999A 1999A
Q1 Q2 Q3 9M Q3 9M
-------------------------------------------------------------------------
CONTINUING OPERATIONS
Income (loss)
from
continuing
operations (1,138.9) (2,374.5) (97.3) (3,610.7) (582.1) (1,003.5)
Add item not
involving cash:
Depreciation
and
amortization 91.4 79.6 70.0 241.0 75.1 251.5
-------------------------------------------------------------------------
(1,047.5) (2,294.9) (27.3) (3,369.7) (507.0) (752.0)
Net change in
non-cash
working capital
balances
related to
operations (76.3) 1,549.8 (320.4) 1,153.1 (343.7) (467.4)
-------------------------------------------------------------------------
Cash generated
(used) in
continuing
operations (1,123.8) (745.1) (347.7) (2,216.6) (850.7) (1,219.4)
-------------------------------------------------------------------------
DISCONTINUED ACTIVITIES
Cash generated
(used) in
discontinued
activities 2.8 (11.7) 22.4 13.5 184.2 (758.9)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of
fixed and other
assets (11.1) (1.1) (10.0) (22.2) (202.9) (325.1)
-------------------------------------------------------------------------
Cash provided
from (used in)
investing
activities (11.1) (1.1) (10.0) (22.2) (202.9) (325.1)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Common shares
and units 108.0 29.5 11,180.5 11,318.0 0.0 0.0
Secured
convertible
debentures 0.0 325.0 (282.0) 43.0 0.0 0.0
Proceeds from
obligations 0.0 0.0 0.0 0.0 162.6 234.4
Repayment of
obligations (47.8) (30.6) (32.1) (110.5) (42.0) (133.0)
Share capital
issue costs 0.0 (37.1) (899.9) (937.0) 0.0 0.0
-------------------------------------------------------------------------
Cash provided
from (used in)
financing
activities 60.2 286.8 9,966.5 10,313.5 120.6 101.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net increase
(decrease) of
the period (1,071.9) (471.1) 9,631.2 8,088.2 (748.8) (2,202.0)
Net cash,
beginning of
the period 1,525.1 453.2 (17.9) 1,525.1 2,391.5 3,844.7
-------------------------------------------------------------------------
Net cash,
end of
the period 453.2 (17.9) 9,613.3 9,613.3 1,642.7 1,642.7
-------------------------------------------------------------------------
NHC COMMUNICATIONS INC.
CONSOLIDATED ACTUAL AND PRO FORMA BALANCE SHEETS
FOR THE SIX MONTH PERIOD ENDED JANUARY 28, 2000
(Unaudited. In thousands of Canadian dollars)
1999A 2000A 2000A 2000A 2000A
July Aug Sept Oct Nov
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash
equivalents 1,525.1 1,193.3 879.6 848.0 170.2
Trade receivable 2,614.1 2,027.0 1,627.8 1,625.3 1,382.3
Government receivable 223.6 245.7 287.7 326.7 350.8
Other receivable 539.8 636.5 669.3 567.5 584.9
Inventories 2,726.1 2,764.7 2,872.6 2,932.1 3,001.1
Prepaid expenses 205.0 245.1 327.1 328.9 213.3
------------------------------------------------------------------------
Total current assets 7,833.7 7,112.4 6,664.1 6,628.5 5,702.7
Fixed and other assets 804.6 779.4 749.6 724.3 698.6
-------------------------------------------------------------------------
8,638.3 7,891.7 7,413.6 7,352.7 6,401.2
-------------------------------------------------------------------------
LIABILITIES
Current
Bank loan 0.0 50.0 130.0 394.8 0.0
Accounts payable and
accrued liabilities 2,727.6 2,370.9 2,427.9 2,123.1 2,023.7
Unsecured Convertible
Debentures 0.0 0.0 0.0 0.0 0.0
Current portion of
long-term debt 68.8 68.8 68.8 68.8 68.8
Current portion of
obligations 153.9 130.7 153.8 149.2 144.5
-------------------------------------------------------------------------
Total current
liabilities 2,950.3 2,620.4 2,780.5 2,735.9 2,237.0
Obligations under
capital leases 222.3 232.7 191.5 179.3 178.3
-------------------------------------------------------------------------
Total liabilities 3,172.6 2,853.1 2,972.0 2,915.2 2,415.3
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common shares and
warrants 7,637.3 7,637.3 7,637.3 7,745.3 7,745.3
Contributed surplus 42.5 42.5 42.5 42.5 42.5
Retained earnings
(deficit) (2,208.7) (2,635.8) (3,232.7) (3,344.8) (3,796.5)
Cumulative translation
adjustments (5.4) (5.4) (5.4) (5.4) (5.4)
-------------------------------------------------------------------------
Total shareholders'
equity 5,465.7 5,038.6 4,441.6 4,437.5 3,985.9
-------------------------------------------------------------------------
8,638.3 7,891.7 7,413.6 7,352.7 6,401.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NHC COMMUNICATIONS INC.
CONSOLIDATED ACTUAL AND PRO FORMA BALANCE SHEETS
FOR THE SIX MONTH PERIOD ENDED JANUARY 28, 2000
(Unaudited. In thousands of Canadian dollars)
2000A 2000A 2000A 2000A 2000A
Dec Jan Feb Mar Apr
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash
equivalents 149.4 36.5 347.3 4,671.6 9,613.3
Trade receivable 1,323.4 920.2 1,411.6 1,919.0 2,039.2
Government receivable 384.2 422.5 448.5 479.2 503.1
Other receivable 417.8 412.6 488.3 567.8 669.3
Inventories 3,040.9 2,258.1 2,309.7 2,537.2 2,898.4
Prepaid expenses 295.5 222.9 237.2 244.9 321.2
-------------------------------------------------------------------------
Total current assets 5,611.2 4,272.8 5,242.7 10,419.7 16,044.5
Fixed and other assets 673.0 645.8 629.0 607.5 585.8
-------------------------------------------------------------------------
6,284.2 4,918.5 5,871.6 11,027.1 16,630.3
-------------------------------------------------------------------------
LIABILITIES
Current
Bank loan 38.8 54.4 0.0 0.0 0.0
Accounts payable and
accrued liabilities 2,272.4 2,128.5 2,712.5 3,162.7 4,003.1
Unsecured Convertible
Debentures 0.0 325.0 325.0 265.0 43.0
Current portion of
long-term debt 68.8 68.8 68.8 68.8 68.8
Current portion of
obligations 139.8 134.9 130.0 129.9 129.8
-------------------------------------------------------------------------
Total current
liabilities 2,519.8 2,711.7 3,236.3 3,626.4 4,244.7
Obligations under
capital leases 171.4 163.0 154.6 146.1 136.0
-------------------------------------------------------------------------
Total liabilities 2,691.2 2,874.7 3,390.9 3,772.5 4,380.7
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common shares and
warrants 7,745.3 7,774.7 8,278.8 13,133.5 18,955.2
Contributed surplus 42.5 42.5 42.5 42.5 42.5
Retained earnings
(deficit) (4,189.4) (5,768.0) (5,835.2) (5,916.1) (6,742.7)
Cumulative translation
adjustments (5.4) (5.4) (5.4) (5.4) (5.4)
-------------------------------------------------------------------------
Total shareholders'
equity 3,593.0 2,043.8 2,480.6 7,254.6 12,249.6
-------------------------------------------------------------------------
6,284.2 4,918.5 5,871.5 11,027.1 16,630.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
%SEDAR: 00001989EB
-30-
For further information: Sylvain Abitbol, President and CEO, NHC
Communications Inc., e-mail: pr@nhc.com; Sylvain Brossard, CA, VP Finance
and Operations, NHC Communications Inc., e-mail: s.brossard@nhc.com,
Telephone: 1-800-361-1965, Fax: (514) 735-8057 |
