NHC Addresses new accounting issues
MONTREAL, March 12 /CNW/ - NHC Communications Inc. (TSE: NHC), a leading
provider of carrier class test access and deployment solutions for the copper-
based telecommunications and Internet access markets, today announced that the
Company has decided to refine its accounting policy on revenue recognition
based on applicable accounting guidance.
The decision to refine the Company's accounting policy on revenue
recognition results from consultation with the Company's auditors and is
supported by a thorough study. The Company's auditors' recommendations
regarding the refined revenue recognition policy were provided to the Company
on March 8, 2001.
This new accounting policy complements the change in the accounting
policy for revenue recognition to be consistent with US GAAP as clarified by
Staff Accounting Bulletin 101 (SAB 101), "Revenue Recognition", which NHC
previously announced on March 5, 2001. The Company's amended accounting policy
on revenue recognition is as follows:
The Company's revenue is derived from sales to resellers and end-users.
The Company recognizes revenue from product sales upon delivery, if a
signed agreement exists, the fee is fixed or determinable, collection of
resulting receivables is reasonably assured and product returns are reasonably
estimable. Delivery of the products occurs at the latest of the following
dates: date of shipment of the product to the customer, customer acceptance
and date of transfer of title of the product.
Where the product includes software/firmware that is more than incidental
and post-contract customer support for the software (PCS), revenues related to
the software/firmware and PCS are accounted for separately based on vendor
specific objective evidence of the fair value of those elements. Revenue
related to the software/firmware is recognized at the same time as the product
revenue, except where vendor specific objective evidence does not exist for
the PCS, in which case the revenues for both the software/firmware and the PCS
are deferred and recognized ratably over the period of the contract for the
provision of the PCS.
This refinement of the accounting policy will be effective the second
quarter of fiscal 2001 and has been applied retroactively. The effect of this
change on the second quarterly results was to increase revenues by $0.56
million (decrease revenues by $1.17 million and $0.28 million for fiscal 2000
and first quarter of fiscal 2001 respectively), decrease the loss by $0.54
million (increase the loss by $1.06 million and $0.26 million for fiscal 2000
and first quarter of fiscal 2001 respectively) and decrease the loss per share
by $0.03 (increase the loss per share by $0.08 and $0.02 for fiscal 2000 and
first quarter of fiscal 2001 respectively).
In summary, all of the above-mentioned revenues that have been deferred
up to end of the second quarter of fiscal 2001 will be recognized ratably over
the next ten months ending January 26, 2002.
Finally, the Company has restated its first quarterly results of
operations of fiscal 2001 to record an amount of $0.58 million ($0.04 per
share) with respect to the Company's liability for social benefits taxes
related to the exercise of options by employees during calendar year 2000.
Restated audited financial statements for fiscal 2000 and unaudited
interim financial statements for the first and second quarters of fiscal 2001
will be filed later this week.
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 managements' 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.
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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 |
