LGS Group Reports its Best Results Since its Creation
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JUNE 21, 1999
MONTREAL, QUEBEC--LGS Group Inc., one of Canada's largest
information technology consulting firms, reports the best annual
results since its creation twenty years ago.
In the fourth quarter of the fiscal year ended March 31, 1999,
revenue totaled $70.0 million, up 60 percent over $43.8 million
for the same period last year. Net earnings for the quarter were
$2.13 million, or 17.0 cents per share, a significant improvement
over last year's $1.29 million, or 13.0 cents per share.
LGS attained record revenue of $230.1 million for fiscal year of
1999, an increase of 71 percent over revenue of $134.6 million
during the same period in 1998. Net earnings for the year also
registered a strong increase at $8.5 million, over $3.5 million a
year ago. The company's earnings per share increased to 72.0
cents from 36.0 cents.
LGS' non-Year 2000 practices, namely, Electronic Commerce, Retail
Distribution, Work Management, Health, Packaged Software
Implementation and Data Warehousing, accounted for $91.7 million
in revenue for the year, compared to $60.4 million for a growth of
52 percent over last year. "We expect that revenue from these
practices should replace Year 2000 revenue in the new millennium",
commented Andre Gauthier, Senior Executive Vice President of the firm.
"These results are certainly the best ever experienced by LGS
since its inception in 1979", commented Raymond Lafontaine,
President of the Company, adding that these results come on the
heels of another record year in 1998. According to Andre
Gauthier: "Our strong growth can be partly explained by our
specialized practices' good performance, with a 52 percent growth
during the fiscal year." "Shareholders' equity is also expanding
rapidly, at $73.4 million, compared to $22.6 million the year
before", he added. LGS Group Inc. (LGSA at NASDAQ, LGS.A at ME) specializes in
management and systems integration. With annual sales of $230
million, LGS employs more than 2,200 professionals in 20 offices
in Canada, the United States and Europe. The company is active in
most areas of the private and public sectors.
This release may contain forward-looking statements that involve
risks and uncertainties which might cause the actual results to
differ materially from those projected. Potential risks and
uncertainties include the ability to procure, properly price,
retain, and successfully complete projects, the availability of
technical personnel, and competition. These risks and
uncertainties are discussed under the heading "Risk Management" in
the Company's Annual Report. /T/ LGS GROUP INC.
CONSOLIDATED STATEMENT OF EARNINGS
Three months Year
ended ended
March 31 March 31
_______________________________________________________________
1999 1998 1999 1998
_______________________________________________________________
(in thousands (in thousands
of dollars of dollars
except per except per
share amounts) share amounts)
(unaudited)
REVENUES 70,040 43,813 230,066 134,641
_______________________________________________________________EXPENSES
Operating and administrative 65,195 40,500 210,712 124,949
Amortization 1,481 908 5,188 2,856
Interest on long-term debt 15 25 78 90
Other interest (256) 112 (982) 275
_______________________________________________________________
66,435 41,545 214,996 128,170
_______________________________________________________________EARNINGS BEFORE
INCOME TAXES 3,605 2,268 15,070 6,471
PROVISION FOR INCOME TAXES (1,471) (980) (6,602) (2,969)
_______________________________________________________________NET EARNINGS FOR
THE PERIOD 2,134 1,288 8,468 3,502
_______________________________________________________________
_______________________________________________________________NET EARNINGS
PER SHARE $0.17 $0.13 $0.72 $0.36
_______________________________________________________________
_______________________________________________________________
FULLY DILUTED EARNINGS
PER SHARE $0.16 $0.13 $0.65 $0.36
_______________________________________________________________
_______________________________________________________________
WEIGHTED AVERAGE NUMBER OF OUTSTANDING CLASS A
AND B SHARES 12,818,639 9,735,308 11,757,438 9,735,308
_______________________________________________________________
_______________________________________________________________
LGS GROUP INC.
CONSOLIDATED BALANCE SHEETS
March 31
_______________________________________________________________
1999 1998
_______________________________________________________________
(in thousands of dollars)ASSETS
CURRENT ASSETS Cash and cash equivalents 24,030 1,708
Accounts receivable 67,934 44,134
Work in process 8,596 4,275
Inventories 2,001 -
Prepaid expenses 1,624 993
_______________________________________________________________
104,185 51,110
CAPITAL ASSETS 12,858 8,310
OTHER ASSETS 16,285 6,266
_______________________________________________________________
133,328 65,686
_______________________________________________________________
_______________________________________________________________LIABILITIES
CURRENT LIABILITIESBank indebtedness 424 3,038
Accounts payable and accrued
liabilities 37,122 24,348
Income taxes 4,279 1,983
Advance and deferred revenues 10,394 8,908
Current portion of long-term debt 2,000 1,586
_______________________________________________________________
54,219 39,863
LONG-TERM DEBT 3,018 596
OTHER LIABILITIES 2,717 2,662
_______________________________________________________________
59,954 43,121
_______________________________________________________________
SHAREHOLDERS' EQUITYCAPITAL STOCK 59,801 16,003
RETAINED EARNINGS 13,670 6,449
CUMULATIVE TRANSLATION ADJUSTMENT (97) 113
_______________________________________________________________
73,374 22,565
_______________________________________________________________
133,328 65,686
_______________________________________________________________
_______________________________________________________________
LGS GROUP INC.
CONSOLIDATED STATEMENT OF CHANGES IN CASH FLOWS
Three Months Year
ended ended
March 31 March 31
_______________________________________________________________
1999 1998 1999 1998
_______________________________________________________________
(in thousands (in thousands
of dollars) of dollars)
(unaudited)FUNDS PROVIDED FROM (USED IN)OPERATIONS
Net earnings for the period 2,134 1,288 8,468 3,502
Items not affecting cash -
Amortization 1,481 908 5,188 2,856
Pension plan 158 113 634 452
Future income taxes 101 (294) (58) 252
_______________________________________________________________
3,874 2,015 14,232 7,062
Changes in non-cash working capital
components (3,229) (3,287) (11,857) (8,366)
_______________________________________________________________
645 (1,272) 2,375 (1,304)
_______________________________________________________________FINANCING
Bank indebtedness (354) 3,005 (3,385) 1,161
Increase in long-term
debt - 1,033 - 1,033
Repayment of long-term
debt - (15) (1,682) (515)
Net proceeds on issue of
shares and warrants 87 19 37,151 5,295
Lease inducement - 789 - 789
_______________________________________________________________
(267) 4,831 32,084 7,763
_______________________________________________________________INVESTMENTS
Purchase of capital
assets (1,468) (3,191) (5,597) (5,205)
Deferred development
costs - 207 - (2,658)
Business acquisitions (289) (82) (6,540) (82)
Investments 3,950 - - -
_______________________________________________________________
2,193 (3,066) (12,137) (7,945)
NET CHANGE IN CASH AND
CASH EQUIVALENTS 2,571 493 22,322 (1,486)CASH AND CASH
EQUIVALENTS - BEGINNING OF
PERIOD 21,459 1,215 1,708 3,194
_______________________________________________________________CASH AND CASH
EQUIVALENTS - END OF PERIOD 24,030 1,708 24,030 1,708
_______________________________________________________________
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