Looks like CTY is getting out of the satellite products business.
July 29, 1997
Restructuring
Shaun McEwan Vice President and Chief Financial Officer of Calian Technology Ltd.
announces intention to spin-off of its satellite products business. Calian Technology Ltd.
reported that it has reached an agreement in principle to spin off the operations of its mobile
satellite communications products business to the management team that currently operates the
business. This transaction will see Calian maintaining a small equity stake in the new satellite
products company.
Larry O'Brien, Calian's Chairman and Chief Executive Officer, stated "We have completed an
intensive strategic planning exercise over the past several months and have determined that our
satellite products business was not within the scope of our core competencies. Calian started in
1982 as a services company focused on the quality assurance market. We have grown through
acquisitions that have been within the services field; Miller Communications in 1988 with
contract engineering, SED systems in 1990 with its focus on systems integration for the satellite
market, and Pricon Staffing Services in 1996 that delivers flexible staffing services to the
information technology and telecommunications sector."
"In late 1993, we embarked on a strategy to enter the commercial products market, specifically
within the mobile satellite communications market. Accordingly, we acquired Skywave
Electronics, a company with technology and resources we believed would give us access to that
market. By fiscal 1995, this group had focused its efforts on the design and manufacture of
small mobile satellite receivers. It has developed two main products, one for international use
over the Inmarsat satellite network, and a North American version for use over the MSAT
network."
"As a result of our decision to exit the satellite products business, we will incur a one-time
write-off of $4,000,000. The write-off in the quarter ended June 30,1996 will consist of
$1,449,000 for inventory, $980,000 for previously deferred development charges, $537,000 in
goodwill remaining from the acquisition of Skywave, and other costs and charges totaling
$1,034,000. We will disclose the results from the satellite products business separately as a
discontinued business. These results indicate that for the nine months ended June 30, 1997, we
had lost $889,000 on this business unit excluding the write-off of $4,000,000 and that for the
same period in the previous year, the loss amounts to $660,000."
"We are also announcing our intention to restructure the operations within our systems division.
In an effort to expand its systems integration activities to include prime contracting, our systems
division has maintained a cost infrastructure that is not consistent with the expected level of
business. Accordingly we are also announcing that we are restructuring a portion of our
operations within our systems division. This restructuring will result in a further charge during
the quarter of $1,150,000."
"Calian is a technology services company. What we are doing now is recognizing this fact and
allowing the remainder of our business, some 97 percent of it, to clearly focus on what it does
best - technology services. Calian will now intensify its efforts to acquire technology service
companies with activities in the information technology and telecommunications sector. I am
confident that this decision is in the best interest of our shareholders over the long term."
Calian Technology Ltd. sells technology services to industry and government world-wide.
TEL: (613) 599-7200 Shaun McEwan Vice President and FAX: (613) 592-7771 Chief Financial
Officer
Calian Technology Ltd. Web Page: www.calian.com |
