Q3 results
FEBRUARY 17, 1998
LGS Reports Strong Third Quarter
MONTREAL, QUEBEC--LGS Group Inc. is pleased to announce its
financial results for the period ended December 31, 1997.
Consolidated revenues for the quarter reached $34,606,000 compared
to $24,511,000 for the same period last year. This represents an
increase of 41.2 percent. Profits improved significantly to
$961,000 or $0.10 per share increasing by 26.6 percent from
$759,000, or $0.08 per share last year.
For the nine-month period, consolidated revenues totaled
$90,828,000 compared to $65,878,000 last year, representing an
increase of 37.9 percent from the prior year. Net profit stood at
$2,214,000 or $0.23 per share, an increase of 93.9 percent over
net profits of $1,142,000 or $0.12 per share last year.
Year 2000 transformation activities continued to grow in the
quarter. Revenues in this area are increasing and the Company now
has over 70 contracts. In addition to the contract awarded to
Team LGS from the Department of National Defense valued at
approximately $25 million, the Company was recently awarded a
three-year contract from Agriculture Canada and Agri-food Canada
for Year 2000 transformation valued at $5-15 million. These
contracts add to LGS's growing list of commercial and government
clients in this area. Recent findings by Task Force Year 2000 on
behalf of the Canadian Government and headed by Mr. Jean Monty
indicate that there is still a significant amount of investment to
be made in both the public and private sectors to address the
millennium issue.
The Company continues to move towards increased specialization in
various business areas which include : Electronic Commerce, Data
Warehousing, Work Management, Software package Implementation,
Retailing and Health Services. As part of this strategy, LGS
recently acquired Artefact Informatique Inc. of Quebec City, a
firm active in record management systems for outpatients and
engineering of home care processes for caregivers. This expertise
complements LGS's know how in the area, enhancing overall service
offerings in Health Care.
LGS Group Inc. is an international information technology service
firm, headquartered in Canada and specializing in systems
integration and management consulting. LGS, whose annual sales
exceed $120 million, is a major Year 2000 transformation provider
and employs approximately 1,400 professionals located in 15
offices in Canada and Europe.
/T/
LGS GROUP INC.
CONSOLIDATED STATEMENT OF EARNINGS
(unaudited)
Three Months Nine Months
ended ended
December 31 December 31
______________ ______________
1997 1996 1997 1996
____ ____ ____ ____
(in thousands of (in thousands of
dollars except dollars except
per share per share
amounts) amounts)
REVENUES $34,606 $24,511 $90,828 $65,878
_______ _______ _______ _______
EXPENSES
Operating and
administrative 31,930 22,590 84,205 61,669
Amortization 840 608 2,191 2,213
Interest on long-term debt 22 23 65 96
Interest and bank charges 77 49 164 142
_______ _______ _______ _______
32,869 23,270 86,625 64,120
_______ _______ _______ _______
EARNINGS BEFORE
INCOME TAXES 1,737 1,241 4,203 1,758
PROVISION FOR INCOME TAXES 776 482 1,989 616
_______ _______ _______ _______
NET EARNINGS FOR THE PERIOD $961 $759 $2,214 $1,142
_______ _______ _______ _______
_______ _______ _______ _______
NET EARNINGS PER SHARE $0.100 $0.080 $0.230 $0.121
_______ _______ _______ _______
_______ _______ _______ _______
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING CLASS A, B
AND C SHARES 9,624,823 9,471,928 9,624,823 9,471,928
_________ _________ _________ _________
_________ _________ _________ _________
LGS GROUP INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
December 31
_______________
1997 1996
____ ____
ASSETS (in thousands of dollars)
CURRENT ASSETS
Cash $1,215 $460
Accounts receivable 28,147 21,850
Work in process 7,381 2,877
Inventories 225 289
Income taxes --- 753
Prepaid expenses 1,285 927
_______ _______
38,253 27,156
CAPITAL ASSETS 5,544 4,513
DEFERRED DEVELOPMENT COSTS 3,685 4,086
OTHER ASSETS 2,661 2,847
_______ _______
$50,143 $38,602
_______ _______
_______ _______
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $- $-
Accounts payable and accrued liabilities 18,261 15,222
Income taxes 873 -
Advance and deferred revenues 7,041 5,990
Current portion of long-term debt 500 500
_______ _______
26,675 21,712
LONG-TERM DEBT 500 1,000
DEFERRED INCOME 1,545 -
DEFERRED INCOME TAXES 541 1,427
_______ _______
29,261 24,139
_______ _______
SHAREHOLDERS' EQUITY
CAPITAL STOCK 15,608 10,250
RETAINED EARNINGS 5,161 4,100
CUMULATIVE TRANSLATION ADJUSTMENT 113 113
_______ _______
20,882 14,463
_______ _______
$50,143 $38,602
_______ _______
_______ _______
LGS GROUP INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(unaudited)
Three Months Nine Months
ended ended
December 31 December 31
____________________ ______________________
1997 1996 1997 1996
____ ____ ____ ____
(in thousands of dollars) (in thousands of dollars)
FUNDS PROVIDED FROM (USED IN)
OPERATIONS
Net earnings for
the period $961 $759 $2,214 $1,142
Items not affecting
cash
Amortization 840 608 2,191 2,213
Amortization of
deferred gain on
sale-leaseback (67) - (200) -
Deferred income
taxes 8 209 546 697
_______ _______ _______ _______
1,742 1,576 4,751 4,052
Changes in non-cash working
capital
components (1,826) 3,063 (4,784) 636
_______ _______ _______ _______
(84) 4,639 (46) 4,688
_______ _______ _______ _______
FINANCING
Repayment of long-
term debt - - (500) (500)
Share issue
costs (13) _ (13) _
Net proceeds on Issue
of shares 5,173 _ 5,290 12
_______ _______ _______ _______
5,160 _ 4,790 (488)
_______ _______ _______ _______
INVESTMENTS
Purchase of capital
assets (274) (794) (2,014) (1,691)
Deferred development
costs _ (665) (2,865) (2,455)
________ _______ _______ ________
(274) (1,459) (4,879) (4,146)
________ _______ _______ ________
NET CHANGE IN
CASH 4,802 3,180 (135) 54
CASH (BANK INDEBTEDNESS)-
BEGINNING OF
PERIOD (3,587) (2,720) 1,350 406
_______ _______ _______ ______
CASH (BANK INDEBTEDNESS)-
END OF
PERIOD $1,215 $460 $1,215 $460
_______ _______ _______ ______
_______ _______ _______ ______ |
