Well, she's taking it on the chin today as the buy on rumor and sell on the news effect is taking its toll on NSATF. Here's the earnings report:
Thursday November 4, 9:31 am Eastern Time
Company Press Release
Norsat Reports Third Quarter Financial Results
BURNABY, B.C.--(BUSINESS WIRE)--Nov. 4, 1999--Norsat International Inc. (NASDAQ:NSATF - news; TSE:NII. - news) today reported financial results for the third quarter and nine months ended September 30, 1999.
For the quarter, sales from continuing operations were $19,275,000, up 51 percent from $12,763,000 a year ago. Sales were strong at Norsat America, the Company's U.S. satellite television distribution business. Satellite and Cable Division sales were expected to benefit from a new line of transmitters, which experienced a manufacturing delay that postponed product availability. The resulting shift in the revenue mix reduced the consolidated gross margin. In addition, to capitalize on its leadership position in satellite access terminal technology, Norsat continued to invest in new product programs, which further affected results.
Earnings from continuing operations of $9,000, or $0.00 per share, were below the $234,000, or $0.01 per share, a year ago, but represented an improvement from Norsat's per-share losses of $0.05 and $0.02 for the 1999 first and second quarters, respectively. For the first nine months of 1999, sales rose 31 percent to $42,782,000, from $32,729,000 in the corresponding period last year. The loss from continuing operations for the year to date was $1,443,000, or $0.07 per share, compared with earnings of $55,000, or $0.00 per share.
Robert H. Bucher, Norsat's President and CEO, said, ``We continue to focus investment in advanced broadband product development. In addition, as we said previously, improved near term performance was dependent on the new transmitters being shipped. While we now have shipped limited quantities to customers, qualifying a key purchased component took longer than expected, thereby delaying production. Customer interest in the product remains strong and we expect to achieve planned sales quantities in the first quarter of 2000.'
During the quarter, Norsat shipped prototypes of the advanced satellite access unit it is developing for Nortel Networks under a strategic agreement announced in June, and began work on pre-production models. Norsat's new outdoor unit, including a satellite signal receiver, transmitter, and dish antenna, will be integrated into the ASTRA-NET system which Nortel is supplying to Societe Europeenne des Satellites. ASTRA-NET is expected to be the world's first commercial provider of two-way broadband Internet access via satellite when it is deployed in Europe beginning early next year.
Mr. Bucher commented, ``We have demonstrated our ability to provide a technologically advanced, reliable, and cost-effective outdoor unit under the Nortel agreement, and are working with potential customers on products for other satellite broadband systems in development. To take advantage of these opportunities, Norsat has made substantial investments this year in product development and marketing activities, which should contribute to a broadened product line and customer base in 2000.'
Norsat America continued to gain market share during the quarter, as installations of DIRECTV satellite television systems through its dealer network were more than triple the year-ago level. The performance reflected both an expanded dealer network and increased sales through existing dealers, and included significant gains among suburban consumers, who are becoming increasingly receptive to broadcast satellite television as an attractive alternative to cable. Norsat America also remained the largest U.S. provider of DirecPC(r) systems for Internet access via satellite, with its DirecPC installations up significantly from a year ago.
Mr. Bucher concluded, ``Norsat has made excellent strategic progress so far in 1999. We have broadened our core product offerings for commercial satellite access terminals, developed advanced products for applications in emerging broadband interactive satellite systems, and significantly strengthened Norsat America's market position. We look forward to achieving improved financial performance in the quarters ahead.'
Norsat International Inc. designs, engineers and distributes premium products for use in the satellite wireless communications and cable television industries. Its Satellite & Cable group is a leading supplier of satellite signal receivers and other ground station equipment. The Company's Norsat America Inc. subsidiary operates a network of 14 branch offices across the U.S. and is a distributor of DIRECTV(r) satellite service to the direct-to-home (DTH) market and a DIRECTV(r) Master System Operator (MSO) for the multiple dwelling unit (MDU) market. Norsat America also distributes DirecPC.
Summary Consolidated Balance Sheets
Unaudited
In thousands of Canadian dollars
September 30
1999 1998
-----------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 4,368 $ 4,697
Accounts receivable 8,953 7,815
Inventory 9,734 14,950
Prepaid expenses 704 226
Current portion of receivable on
disposition of business 823 -
-----------------------------------------------------------
24,582 27,688
Capital assets 3,554 4,397
Other assets 3,800 3,477
-----------------------------------------------------------
$ 31,936 $ 35,562
-----------------------------------------------------------
Liabilities
Current liabilities:
Bank indebtedness $ 6,535 $ 5,891
Accounts payable and accrued
liabilities 5,976 6,983
-----------------------------------------------------------
12,511 12,874
Long-term debt - 86
Shareholders' Equity
Share capital (note 2) 22,457 22,421
Deficit (3,313) (303)
Cumulative translation adjustment 281 484
-----------------------------------------------------------
19,425 22,602
-----------------------------------------------------------
$ 31,936 $ 35,562
-----------------------------------------------------------
Consolidated Statements Of Operations
Unaudited
In thousands of Canadian dollars
except per share figures
Three months Nine months
ended September 30 ended September 30
1999 1998 1999 1998
-----------------------------------------------------------------
(Restated) (Restated)
Sales $ 19,275 $ 12,763 $ 42,782 $ 32,729
Cost of sales 14,955 9,026 31,926 23,029
-----------------------------------------------------------------
Gross profit 4,320 3,737 10,856 9,700
Expenses:
Selling, marketing
and administrative 3,074 2,647 8,475 7,406
Amortization of
capital assets and
goodwill 358 263 1,055 713
Product development 886 593 2,561 1,356
Interest and other
costs (7) - 208 170
-----------------------------------------------------------------
4,311 3,503 12,299 9,645
Earnings (loss) from
continuing operations 9 234 (1,443) 55
Loss from discontinued
operations (note 1) - (7) (235) (789)
-----------------------------------------------------------------
Net earnings (loss) $ 9 $ 227 $ (1,678) $ (734)
-----------------------------------------------------------------
Net earnings (loss) from continuing operations per share:
Basic $ - $ 0.01 $ (0.07) $ -
-----------------------------------------------------------------
Net earnings (loss) per share:
Basic $ - $ 0.01 $ (0.08) $ (0.04)
-----------------------------------------------------------------
Consolidated Statements Of Changes In Financial Position
Unaudited
In thousands of Canadian dollars
Three months Nine months
ended September 30 ended September 30
1999 1998 1999 1998
Cash provided by (used for):
Operations:
Earnings (loss) from
continuing operations $ 9 $ 234 $ (1,443) $ 55
Items not involving cash:
Amortization 358 263 1,055 713
Changes in non-cash
operating working
capital (682) (952) (2,247) (3,882)
Other 20 - 35 -
----------------------------------------------------------------
Cash provided by (used for)
continuing operations (295) (455) (2,600) (3,114)
Loss from discontinued
operations - (7) (235) (789)
Items not involving cash:
Amortization - 23 - 67
----------------------------------------------------------------
Cash provided by (used
for) discontinued
operations - 16 (235) (722)
Financing:
Issue of common shares 203 - 228 2,619
Repurchase of common shares - - - (249)
Increase in long-term debt - - - 18
Principal payments on
long-term debt - (88) - (88)
----------------------------------------------------------------
203 (88) 228 2,300
Investments:
Purchase of capital assets (344) (170) (1,089) (407)
Purchase of investment - - - (200)
Increase in deferred costs - - - (30)
Acquisition of business - - - (3,190)
Decrease in receivable on
disposition 201 - 1,677 -
----------------------------------------------------------------
(143) (170) 588 (3,827)
Change in foreign
currency denominated
working capital (5) 185 (172) 296
----------------------------------------------------------------
Decrease in cash position (240) (512) (2,191) (5,067)
Cash position, beginning
of period (1,927) (682) 24 3,873
-----------------------------------------------------------------
Cash position, end of
period $(2,167) $(1,194) $ (2,167) $ (1,194)
Cash position is defined as cash and cash equivalents less bank
indebtedness.
Notes To The Interim Consolidated Financial Statements
1.Discontinued Operations
(a) On December 31, 1998, the Company sold the business
operations of its Aurora Distributing division. Accordingly, certain
figures in 1998 have been restated to account for the discontinued
operations. For the three month and nine month periods ended September
30, 1998 the results from discontinued operations were a profit of
$150,000 and a loss of $262,000 respectively.
As at September 30, 1999 the receivable for disposition of the
business was as follows:
-----------------------------------------------------------
Receivable on disposition of business $ 1,678,753
Less current portion 623,471
-----------------------------------------------------------
$ 1,055,282
-----------------------------------------------------------
(b) On March 31, 1999, the Company sold the business operations
of its manufacturing division and began outsourcing this function. The
Company recorded a loss from discontinued operations of $235,000
representing an operating loss of $209,000 and a loss on sale of
$26,000. For the three month and nine month periods ended September
30, 1998 the losses from discontinued operations were $157,000 and
$527,000 respectively.
As at September 30, 1999 the receivable for disposition of the
business was as follows:
-----------------------------------------------------------
Receivable on disposition of business $ 591,278
Less current portion 200,000
-----------------------------------------------------------
$ 391,278
-----------------------------------------------------------
2. Share Capital
During the three month and nine month periods ended September 30,
1999, the Company issued 136,000 and 150,000 common shares
respectively, on exercise of stock options.
3. Year 2000
The Year 2000 Issue revolves around the fact that many computer
systems and software have been designed to recognize dates using only
the last two digits of a year. Norsat has completed the process of
examining and implementing solutions to mitigate its risk exposure as
disclosed in its December 31, 1998 annual report. As at September 30,
1999 the Company has no further material issues to report on. It is
not possible to be certain that all aspects of the Year 2000 Issue
affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
The Company continues to evaluate appropriate courses of action, and
has developed and is implementing a contingency plan designed to
mitigate the effects of the Year 2000 on the Company.
This document may contain certain forward-looking information and statements concerning the Company's operations, performance and financial condition, including, in particular, the likelihood of the Company's success in developing and expanding its business. These statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements.
--------------------------------------------------------------------------------
Contact:
Norsat International Inc.
Derick J. Walker, 604/292-9000
604/292-9100 (FAX)
Website: www.norsat.com
Email: info@norsat.com |
