Atlantis reports fiscal 2005 third quarter financial results
(Revenue grows by 130% versus prior period and earnings up significantly)
Toronto Stock Exchange Symbol: AIQ
TORONTO, Nov. 15 /CNW/ - Atlantis Systems Corp, (TSX: AIQ), a training
integrator specializing in military and commercial aviation markets worldwide,
today announced its financial and operating results for the three months ended
September 30, 2005. All dollar amounts are in Canadian dollars unless
otherwise specified.
Q3 2005 Summary
---------------
- Revenue of $8.6 million versus $3.7 million for the same period of 2004
- Net earnings of $1.6 million versus $0.2 million for the same period of
2004
- EBITDA of $2.5 million versus $0.3 million for the same period of 2004
- Basic earnings per share of $0.03, compared to $0.01 from previous year
- Diluted earnings per share of $0.02, compared to $0.00 from previous
year
Year-to-date Highlights
-----------------------
- Revenue of $25.8 million versus $13.4 million for the same period of
2004
- Net earnings of $1.1 million versus $0.9 million for the same period of
2004
- EBITDA of $2.4 million versus $2.1 million for the same period of 2004
- Basic earnings per share of $0.02, compared to $0.04 from previous year
- Diluted earnings per share of $0.01, compared to $0.03 from previous
year
- Contracted backlog of $23.1 million versus $3.8 million as at
December 31, 2004
- Working Capital $9.9 million versus $2.9 million as at
December 31, 2004
- Cash of $11.4 million versus $0.4 million as at December 31, 2004
"The third quarter of 2005 saw Atlantis continue to meet its stated
objectives of profitable revenue growth and further penetration of our core
markets," said Andrew Day, Atlantis' President and Chief Executive Officer.
"During the quarter we continued with our work on the initial portion of the
CFTS program and generated revenues of $2.6 million in the quarter. We also
bolstered our U.S. presence by expanding operations in our American-based
subsidiary company that will result in strengthened growth opportunities with
the U.S. military."
Business Highlights
-------------------
- As part of the Allied Wings consortium, Atlantis continued its work on
the initial portion of the Contracted Flying Training and Support
(CFTS) program. Throughout the quarter, The Company recognized revenues
of $2.6 million related to its work on CFTS
- Awarded $2 million follow-on contract to upgrade the Integrated
Maintenance Training Systems (IMTS) previously delivered to the
Canadian Forces in late 2004. The new program features upgrades to the
five original F/A-18 installations as well as a desktop configuration
of the existing software.
- Continued with work under previously awarded follow-on contract to
upgrade the IMTS delivered to the Royal Australian Air Force in April
2005. Revenues recorded in Q3 under the contract totaled $1.7 million
- Bolstered U.S. based operations that will allow Atlantis to expand its
presence in the U.S. military market and gain necessary government
clearance required to compete on contracts in the military sector
- Executed a Memorandum of Understanding with GSE Systems Inc. Under the
terms of the understanding, GSE will license to Atlantis its
proprietary simulation technology related to certain programs with the
U.S. government and military markets
- Named 19th to Deloitte and Touche's prestigious "Technology Fast 50"
program honouring Canada's fastest growing companies as defined by
revenue growth over a five-year period.
- Named by Military and Training Magazine as one of the top one hundred
global military suppliers for the second year in a row.
"I believe our inclusion in the CFTS program, as well as the follow-on
business we continue to earn from existing clients, is testimony to our
ability to consistently deliver leading-edge, cost-efficient training
solutions," commented Mr. Day. "CFTS will represent approximately $65 million
in revenue to Atlantis for 2005 and 2006, and we anticipate the completion of
the contracting process in the fourth quarter 2005."
Mr. Day continued, "In addition to the initial revenue effect, the CFTS
program allows Atlantis unprecedented access to foreign militaries as we work
with the Canadian Forces to market their new flight school internationally. We
intend to leverage CFTS to win similar training opportunities worldwide."
Financial Review
----------------
Atlantis reported revenues of $8,571,000 for the quarter ended September
30, 2005, compared with $3,723,000 for the three months ended September 30,
2004. Approximately $924,000 of this increase related to the settlement of a
prior claim.
During the quarter, the Company continued to recognize revenue under the
terms of the initial contract with the CFTS prime contractor. This led to
CFTS-related revenues of $2,630,000, of which $1,432,000 resulted from
subcontract work with the balance coming from the Atlantis in-house portion of
the contract.
In August, Atlantis was awarded a $2 million follow-on contract to
upgrade the IMTS delivered to the Canadian Forces in late 2004. The Company
also continued work on a follow-up contract worth $8.6 million to upgrade the
F/A-18 IMTS for the Royal Australian Air Force, following the successful
completion of the original program in 2004. Revenues recognized during the
third quarter under this contract were $1,686,000.
Gross margin for the third quarter was $4,349,000 (50.7%) versus
$1,602,000 (43.0%) for the three months ended September 30, 2004. Once the
positive effect of a one-time settlement are excluded, gross margins for Q3
were 44.8%.
General and administrative (G&A) expenses for the third quarter were
$1,037,000, compared with $1,025,000 for the same period in 2004. Included in
this amount is the expensing of compensation-related stock options issued in
the year. Sales and marketing expenses for the third quarter were $849,000,
compared with $267,000 in Q3 2004. This amount included the Company's further
investments into sales and marketing as well as expenditures related to its
expansion into the U.S. marketplace.
Atlantis recorded earnings from continuing operations, before
depreciation, amortization, interest expense, and financing costs of
$2,515,000 for the three months ended September 30, 2005, compared to $318,000
during the same period in 2004.
For the three months ended September 30, 2005, the Company earned a net
income of $1,554,000 ($0.03 per share - basic; $0.02 diluted) compared with
net income of $178,000 ($0.01 per share - basic and diluted) in 2004.
Atlantis' order backlog currently stands at approximately $23.1 million,
compared with $3.8 million at year end.
Full financial information is available on SEDAR at www.sedar.com,
Notice of Conference Call
Atlantis will be hosting a conference call on Tuesday, November 15, 2005
at 10:00 am ET to discuss its third quarter financial results and other
corporate developments. To access the conference call by telephone, dial
416-644-3428 or 1-866-250-4910. A live audio webcast of the call will be
available at www.newswire.ca and at www.atlantissi.com. The webcast will be
archived for 90 days.
About Atlantis Systems Corp
Headquartered near Toronto, Canada, Atlantis is a globally recognized
training integrator for customers in the military and commercial aviation
sectors and new emerging markets. Atlantis combines desktop and full-flight
simulation, knowledge management, learning management systems, flight training
devices and multimedia courseware to provide integrated flight training and
aircraft maintenance training to a global list of customers. For over
twenty-seven years, Atlantis has drawn on its extensive engineering background
and proprietary technology to offer cost-efficient, state of the art
alternatives to real-life conditions and situations. Atlantis is registered
under a number of quality management programs including ISO 9001:2000,
AS 9100:2001; Boeing BQMS D6-82479 and Rockwell Collins RC-9000, among others.
To learn more, please visit the company's web site at www.atlantissi.com
<<
ATLANTIS SYSTEMS CORP.
Consolidated Balance Sheets
(in CDN $000's)
September December
30, 2005 31, 2004
----------- -----------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 11,430 $ 369
Accounts receivable (note 5) 3,697 4,932
Unbilled revenue 4,362 577
Inventory 94 1,783
----------- -----------
19,583 7,661
----------- -----------
Deferred development costs (note 6) 934 -
Capital assets, net 826 425
Mortgage receivable 367 358
Deferred financing costs 153 -
Goodwill 11,735 11,735
----------- -----------
14,015 12,518
----------- -----------
$ 33,598 $ 20,179
----------- -----------
----------- -----------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 2,512 $ 2,511
Accrued costs on percentage completion 500 184
Promissory notes - 986
Deferred revenue 6,671 1,059
----------- -----------
9,683 4,740
Convertible debentures (note 8) 2,360 -
----------- -----------
SHAREHOLDERS' EQUITY
Share capital (note 9) 91,954 87,522
Contributed surplus 3,666 3,117
Deficit (74,065) (75,200)
----------- -----------
21,555 15,439
----------- -----------
$ 33,598 $ 20,179
----------- -----------
----------- -----------
On behalf of the Board:
------------------------------ ---------------------------------
Director Director
The accompanying notes are an integral part of these consolidated
statements.
ATLANTIS SYSTEMS CORP.
Consolidated Statements of Operations and Deficit
(in CDN $000's except per common share amounts)
For the three months For the nine months
ended September 30 ended September 30
------------------------ ------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue from commercial
operations (note 3) $ 8,571 $ 3,723 $ 25,800 $ 13,398
Cost of sales 4,222 2,121 19,359 8,277
----------- ----------- ----------- -----------
Gross margin 4,349 1,602 6,441 5,121
Other income 52 8 88 35
----------- ----------- ----------- -----------
4,401 1,610 6,529 5,156
Expenses
General and
administrative 1,037 1,025 2,565 2,283
Selling and marketing 849 267 1,590 816
----------- ----------- ----------- -----------
Operating income before
the undernoted items 2,515 318 2,374 2,057
Depreciation and
amortization 39 50 102 138
Interest expense and
financing costs 208 90 423 988
----------- ----------- ----------- -----------
Operating income before
the undernoted items 2,268 178 1,849 931
Other expenses (note 10) 714 - 714 -
----------- ----------- ----------- -----------
Net income $ 1,554 $ 178 $ 1,135 $ 931
Deficit, beginning of
period (75,619) (74,459) (75,200) (75,212)
----------- ----------- ----------- -----------
Deficit, end of period $ (74,065) $ (74,281) $ (74,065) $ (74,281)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per common
share, basic (note 12) 0.03 0.01 0.02 0.04
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per common
share, diluted
(note 12) 0.02 0.00 0.01 0.03
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated
statements.
ATLANTIS SYSTEMS CORP.
Consolidated Statements of Cash Flows
(in CDN $000"s)
For the three months For the nine months
ended September 30 ended September 30
--------------------------------------------------
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flows provided by
(used in) :
Operating activities :
Net Income $ 1,554 $ 178 $ 1,135 $ 931
Items not affecting
cash:
Depreciation and
amortization 39 50 102 138
Accrued interest on
special shares - - - 28
Stock options expensed 87 - 549 -
Accretion on
debentures 73 - 105 -
Amortization of
deferred financing
costs 116 - 116 -
------------------------ ------------------------
1,869 228 2,007 1,097
Interest on mortgage
receivable (3) (3) (9) (8)
Deferred development
costs (534) - (934) -
Net change in
non-cash working
capital (note 11) (914) (1,441) 5,069 (5,028)
------------------------ ------------------------
417 (1,216) 6,132 (3,939)
------------------------ ------------------------
Investing activities :
Investment in capital
assets (87) (36) (503) (36)
------------------------ ------------------------
(87) (36) (503) (36)
------------------------ ------------------------
Financing activities :
Common share issuance - - 2,040 5,625
Share issuing costs - - (113) (526)
Exercise of common
share purchase warrants - - 1,734 -
Exercise of options to
common shares - - 55 -
Issuance of convertible
debenture - - 3,100 -
Debenture financing
costs - - (398) -
Repayment of promissory
notes - - (986) -
Bank indebtedness - - - (1,101)
Secured loan - (3,000) - -
Line of credit - - - 7
------------------------ ------------------------
- (3,000) 5,432 4,005
------------------------ ------------------------
Net increase (decrease)
in cash and cash
equivalents 330 (4,252) 11,061 30
Cash and cash
equivalents, beginning
of period 11,100 4,286 369 4
------------------------ ------------------------
Cash and cash
equivalents, end of
period $ 11,430 $ 34 $ 11,430 $ 34
------------------------ ------------------------
------------------------ ------------------------
SUPPLEMENTAL INFORMATION
Conversion of special
shares & accrued
dividends $ - $ - $ - $ (1,000)
Conversion of
promissory notes - - - (1,912)
Conversion of line of
credit - - - (188)
Conversion of accounts
payable - (513) - (1,528)
Interest paid 116 98 264 243
The accompanying notes are an integral part of these consolidated
statements.
Net Change in Non-Cash Working Capital
(in CDN $000's)
Balance at Balance at
September December
30, 2005 31, 2004 Change
Accounts Receivable 3,697 4,932 1,235
Unbilled Revenue 4,362 577 (3,785)
Income Taxes Receivable
Inventory 94 1,783 1,689
Accounts Payable & Accrued Liabilities 2,512 2,511 1
Accrued Costs on Percentage Completion 500 184 316
Promissory Notes/Lines of Credit
Deferred Revenue 6,671 1,059 5,612
Adjustment Due to Rounding 1
-----------
Total 5,069
-----------
-----------
ATLANTIS SYSTEMS CORP.
Notes to Financial Statements
Q3 - Fiscal 2005
November 12, 2005
In addition to the auditors adjustments of Nov 10/05 this draft includes
the following adjustments
Additional revenue of $770,494 for MSO 4397 which was booked in Q2 and
reversed in Q3 was reinstated in Q3 since it was determined that the
amount was realized due to higher exchange rates allowed in the
reimbursement agreement. The offsetting entry will be a debit to deferred
revenue. An audit adjustment is being booked for this item.
The accrued receivable for CCC in the amount of $312,500 was originally
reversed into cost of goods sold and the adjustment is now being
transferred out of that account and credited to revenue in response to
information from the auditors that the amount was booked as revenue when
the funds were originally received. An audit adjustment is being booked
for this item. |
