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9mo results
AIT Advanced Information Technologies AIV
Shares issued 6,015,500 Aug 27 close $0.35
Thu 27 Aug 98 News Release
Mr. Peter Bennett reports
Results are for the third quarter ended June 30, 1998.
While AIT's Identification Products business continues to be profitable,
costs of operating its Interactive Security Products business have resulted
in a loss for the third quarter of 1998. Therefore, in order to return the
company to profitable operation and to allow it to focus on its exciting
new airline business, AIT has decided to divest its ISP division. The
company is currently in negotiation with several parties and it is
anticipated that final agreements will be reached shortly. These
transactions will result in the sale of assets, primarily inventory and
fixed assets, at amounts below their total net book value. The net book
value of those assets at June 30, 1998 was approximately $4.5-million.
Additionally, at year end the company will review the carrying value of its
investment tax credits of approximately $3.2-million as at June 30, 1999,
as a result of the pending divestiture.
Positive early results with AIT's new PAX Reader for airlines are
encouraging. The airlines market offers an exciting growth opportunity
levering from the company's strengths in document reading technologies. The
company expects to return to consistent profitability upon conclusion of
its strategic initiative with the ISP division. The potential market size
is much larger than the passport reader market, a market in which the
company continues to be the world leader.
Revenue for the third quarter of fiscal 1998 was $3,894,100 resulting in a
net loss of $867,000. This compares to revenue of $6,002,000 and net loss
of $913,000 for the same period last year. Gross margin for the period was
62 per cent or $2,419,000, compared to 49 per cent or $2,931,000 for the
same period last year. Gross margin for the third quarter of 1998 includes
some positive effects due to currency values. Gross margins for continuing
operations are expected to range between 55 per cent and 58 per cent.
Consistent with AIT's cost cutting measures, R&D and SG&A expenses were
$3,243,000, compared to $3,741,000 for the same period last year. The full
force of the more recent initiatives will be felt in the fourth quarter
with further declines in recorded operating expenditures. In addition, a
return to focus on the core ID products business will result in further
expense reductions in the coming weeks.
The company has discontinued its working capital line of credit with the
Royal Bank of Canada and replaced it with a $2.5-million revolving
receivables based facility made available from TCE Capital Corp. of
Toronto, Canada.
STATEMENT OF EARNINGS
Three months ended June 30
(in thousands of dollars)
1998 1997
Revenues $ 3,894 $ 6,002
Direct costs 1,475 3,071
-------- --------
Gross margin 2,419 2,931
-------- --------
Expenses
Selling, general and
administrative 2,402 2,525
Research and
development 841 1,216
-------- --------
3,243 3,741
-------- --------
Earnings from
operations (824) (810)
Net interest expense (43) (103)
Earnings (loss) before
income taxes (867) (913)
Income tax expense - -
-------- --------
Net earnings (loss) $ (867) $ (913)
======== ========
Earnings (loss) per
share (cents) (8) (14)
STATEMENT OF EARNINGS
Nine months ended June 30
(in thousands of dollars)
1998 1997
Revenues $ 13,025 $ 15,203
Direct costs 5,270 7,974
-------- --------
Gross margin 7,755 7,229
-------- --------
Expenses
Selling, general and
administrative 7,164 6,315
Research and
development 3,129 3,089
-------- --------
10,293 9,404
-------- --------
Earnings from
operations (2,538) (2,175)
Unusual item 1,000 -
Net interest expense 58 236
-------- --------
Earnings (loss)
before income taxes (3,596) (2,411)
Income tax expense - -
-------- --------
Net earnings (loss) $ (3,596) $ (2,411)
======== ========
Earnings (loss) per
share (cents) (33) (38)
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