NHC Communications Inc. reports first quarter results
Highlights for the quarter and subsequent events:
- NHC received confirmation from a major Incumbent Local Exchange Carrier (ILEC) that it has been awarded a bid for
ControlPoint(TM)units; - NHC and Nortel completed successful interoperability testing and integration - Definitive agreement to
provide ControlPoint(TM) units to Last Mile Media Corp.; - Shipped first ControlPoint(TM) unit to PCS World, marking NHC's first
sale into the convention centre market; - Signed distribution agreements with Walker and Associates for the US, and Delhum
Technology & Service Corp for Asia; - ControlPoint(TM) chosen by Easynet Group to unbundle France's first Digital Subscriber
Line (DSL) copper loop; and - Introduction of two new products to the ControlPoint(TM) line.
MONTREAL, Dec. 8 /CNW/ - NHC Communications Inc. (TSE: NHC - news), a leading provider of remotely controlled physical
cross-connect solutions to the global copper-based telecommunications and Internet access markets, announced first quarter results for
the three-month period ended November 3, 2000.
Sales for the quarter were $4.2 million, up 169% from $1.5 million for the comparable period last year. On a sequential basis, sales for the
quarter were down from $8.6 million in the fourth quarter of fiscal 2000. First quarter sales met forecast levels in accordance with the
expected deployment plans of NHC's major US CLEC customer.
"First quarter sales were up significantly over last year, reflecting the continued success of our focused growth strategy," said Sylvain
Abitbol, President and CEO of NHC. "During the quarter, we took several new steps to position the Company for future growth. We
diversified and expanded our customer base with the addition of two new ControlPoint(TM) customers, and we concluded two
significant distribution agreements to address the North American and Asian telecommunications markets."
Operating loss from continuing operations was $837,100, compared with a loss from continuing operations of $1,090,700 in the first
quarter of fiscal 1999. Net loss for the quarter narrowed to $611,000, or $0.04 per share, from a net loss of $1.1 million, or $0.09 per share
for the same period in fiscal 1999.
The loss was due primarily to a 56% increase in sales and marketing expenses during the quarter. These expenses reflect further
investment in the infrastructure of the Company's newly-opened US subsidiary, NHC Communications USA Inc., in Manassas, Virginia.
In addition, NHC appointed a new US-based Director, a Chief Technology Officer and several senior salespeople.
"Our investment in NHC Communications USA Inc. positions us for continued success in the growing telecommunications and Internet
access markets in North America and internationally," continued Mr. Abitbol. "With a solid infrastructure in place, we will continue to
capitalize on the copper-based telecommunications market, and in particular DSL, and other markets where proven cross-connect
technology solutions are required."
The Company's balance sheet remains strong with $12.7 million in working capital, up from $3.9 million at the end of the same period last
year, and $9.0 million in cash.
Contract wins and backlog
- On November 9, NHC concluded a contract with Last Mile Media
Corporation. The contract follows an agreement in principle
for the provision of ControlPoint(TM) units announced in
October 2000. Last Mile Media is an emerging national supplier
of high-speed Internet services and infrastructures to residential
and commercial multi-tenant properties. Last Mile Media has indicated
its plans to install 3,000 units of NHC's ControlPoint(TM) solution
in thousands of primarily residential multi-tenant units (MTUs)
across the United States during the next three years. Deployment
is expected to ramp up during the length of the proposed contract,
reaching its highest level during the third year. If fully realized,
the contract would be worth approximately US$75 million.
- On November 8, 2000, NHC announced its first sale to the convention
centre market. PCS World plans to install NHC's ControlPoint(TM)
solution at the Jacob Javits Convention Center in New York City,
and has a potential customer base of an additional 350 convention
centres across the United States. PCS chose NHC as its supplier of
choice for the building of complete voice and data networks for
convention centres and other dynamic telecommunications sites.
- Since the beginning of the second quarter, which began on November 4,
2000, shipments to date and current backlog to be shipped during the
second quarter of fiscal 2001 now totals approximately $1 million. On
December 6, NHC announced it received confirmation from a major
Incumbent Local Exchange Carrier (ILEC), that it has been awarded a bid
for ControlPoint(TM) units. The number of ControlPoint(TM) units to be
provided to the major ILEC is still under negotiation. Under the
proposed terms of the agreement, the ILEC would use NHC's
ControlPoint(TM) to fully automate and remotely manage the physical
layer of voice and data cross-connections, such as POTS, T-1/E-1, ISDN,
and DSL. The successful completion of this deal could result in a
significant increase in backlog orders for NHC.
New products
In October 2000, NHC introduced two new complementary products to its ControlPoint(TM) line of advanced, robotics-based
cross-connect products:
- ControlPoint 5400 is the largest version of the system made
specifically for the central office locations of Incumbent Local
Exchange Carriers (ILECs) and Competitive Local Exchange Carriers
(CLECs) and can cross-connect up to 5,400 lines. In particular,
this product addresses the global ILEC market, which is facing
increasing need for wireline management at the physical layer.
- The ControlPoint 800RT (remote terminal) is NHC's response to
customer demand to extend management capabilities to remote locations
requiring DSL services. ControlPoint 800RT is weather-hardened to
withstand extreme temperatures throughout North America.
Partnerships
- On October 13, NHC announced a strategic marketing partnership with
Walker and Associates, Inc. of Welcome N.C. Walker and Associates
is recognized as a premier source of state-of-the-art
telecommunications equipment.
- On November 13, NHC entered into a joint marketing agreement with
Orckit Communications Inc. to target the ILEC, CLEC and BLEC markets.
- On November 14, NHC announced a distribution agreement for the sale
of ControlPoint(TM)solution by Taiwan based Delhum Technology & Service
Corp. (DTSC). This agreement will assist NHC to expand within the
growing Taiwanese market and other areas of the Asian Pacific region.
NHC has established a four-pronged growth strategy for penetrating the global copper-based telecommunications and Internet access
markets, including the DSL market:
- Marketing a complete line of vendor-compatible products to ILECs,
CLECs, Multiple Tenant Units (MTUs) and Multiple Dwelling Units
(MDUs) based on the ControlPoint(TM) platform;
- Establishing partnerships with key international vendors of
end-to-end DSL solutions, such as large international
telecommunications companies, to market ControlPoint(TM) and
share technologies jointly;
- Establishing partnerships with major test equipment, Digital
Subscriber Line Access Multiplexer (DSLAM) and Operations Support
System (OSS) vendors to benefit from cross-sales referrals, ensuring
that NHC's products are recommended on compatibility, cost and
performance; and
- Providing a scalable, modular product to enable customers to expand
as they penetrate their own markets.
About NHC
NHC Communications Inc. is an international leader in the design and manufacture of innovative physical layer high-speed switched
access solutions for established and next-generation voice/data networks. With a unique range of technologies developed from years of
experience, NHC is now at the heart of today's corporate enterprise service market and the telecommunications industry.
NHC may be contacted through its web site: www.nhc.com
Statements included here, which are not historical in nature, are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, including
without limitation, statements as to managements' beliefs, strategies,
plans, expectations or opinions in connection with company performance,
which are based on a number of assumptions concerning future conditions
that may ultimately prove to be inaccurate. In addition, other
forward-looking statements that may be included here must be qualified
by important factors that could cause actual results to differ materially
from those achieved in the past or those expected by the companies. These
include: rapid technological change along with the need to continually
develop new products; the company's dependence on a dominant product
line; competition; the companies' dependence on key employees;
difficulties in managing the companies' growth; the company's dependence
upon certain customers and certain suppliers; the companies' dependence
upon proprietary rights; risks of third party claims of infringement;
and government regulation.
<<
NHC Communications Inc.
Summary of Unaudited Consolidated Statements of Income
For the Three-Month Period Ended November 3rd, 2000
(in thousands of Canadian dollars, except per share amounts)
Q1 2001 Q1 2000
-------------------------------------------------------------------------
Sales $ 4,164.9 $ 1,549.4
Gross profit $ 1,387.8 $ 599.1
Operating loss from continuing
operations $ (837.1) $ (1,090.7)
Loss from continuing operations $ (610.9) $ (1,138.9)
Loss $ (610.9) $ (1,136.1)
Loss from continuing operations per share
- primary $ (0.04) $ (0.09)
Loss per share - primary $ (0.04) $ (0.09)
Loss per share - fully diluted Anti-dilutive Anti-dilutive
Shares used in the calculation of the per share amounts:
Primary (in 000's) 17,278.5 12,629.2
Fully diluted (in 000's) 18,869.1 15,271.4
NHC COMMUNICATIONS INC
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
COMPARISON BETWEEN FISCAL 2000 AND 2001
FOR THE THREE-MONTH PERIOD ENDED November 3, 2000
(Unaudited. In thousands of Canadian dollars, except per share amounts)
-------------------------------------------------------------------------
2001 2000
Q1 Q1
-------------------------------------------------------------------------
Revenue
Sales 4,164.9 1,549.4
Cost of sales 2,777.1 950.3
-------------------------------------------------------------------------
Gross profit 1,387.8 599.1
-------------------------------------------------------------------------
Operating expenses
General and administrative 435.8 400.9
Sales and marketing 1,380.9 886.4
Research and development, net 408.2 402.5
-------------------------------------------------------------------------
Total operating expenses 2,224.9 1,689.8
-------------------------------------------------------------------------
Loss from continuing operations (837.1) (1,090.7)
-------------------------------------------------------------------------
Other
Financial income (expense) 108.3 (30.1)
Gain (loss) on foreign exchange 99.5 (18.1)
Restructuring costs 18.4 0.0
-------------------------------------------------------------------------
226.2 (48.2)
-------------------------------------------------------------------------
Loss before income taxes and discontinued operations (610.9) (1,138.9)
Benefit (provision) for income taxes 0.0 0.0
-------------------------------------------------------------------------
Loss from continuing operations (610.9) (1,138.9)
Discontinued operations 0.0 2.8
-------------------------------------------------------------------------
Loss (610.9) (1,136.1)
Deficit, beginning of the period (5,575.0) (2,208.6)
Share capital issue costs (7.3) 0.0
Reduction in stated capital transferred to deficit 0.0 0.0
-------------------------------------------------------------------------
Deficit, end of the period (6,193.2) (3,344.7)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Loss) net income from continuing operations per
common share:
Primary ($0.04) ($0.09)
Fully diluted (ad: anti-dilutive) ad ad
(Loss) net income per common and equivalent share:
Primary ($0.04) ($0.09)
Fully diluted (ad: anti-dilutive) ad ad
Common and equivalent shares used in computing per
share amount:
Primary (in 000's) 17,278.5 12,629.2
Fully diluted (in 000's) 18,869.1 15,271.4
Capital Stock - As at December 8, 2000
Issued and fully paid (in 000's) 17,318.2 13,065.7
Stock options unexercised (in 000's) 1,470.9 2,161.2
Compensation warrants (in 000's) 93.0 0.0
Stock options subject to shareholders' approval
(in 000's) 616.5 0.0
Performance shares subject to shareholders'
approval (in 000's) 437.5 0.0
----------------------
19,936.1 15,226.8
----------------------
----------------------
NHC COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
COMPARISON BETWEEN FISCAL 2000 AND 2001
FOR THE THREE-MONTH PERIOD ENDED NOVEMBER 3, 2000
(Unaudited. In thousands of Canadian dollars)
-------------------------------------------------------------------------
2001A 2000A
Q1 Q1
-------------------------------------------------------------------------
CONTINUING OPERATIONS
Loss from continuing operations (610.9) (1,138.9)
Add item not involving cash:
Depreciation and amortization 77.0 91.4
-------------------------------------------------------------------------
(533.9) (1,047.5)
Net change in non-cash working
capital balances related to operations (412.2) (76.3)
Cash used in continuing operations (946.1) (1,123.8)
-------------------------------------------------------------------------
DISCONTINUED ACTIVITIES
Cash generated by discontinued activities 0.0 2.8
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of fixed and other assets (198.0) (11.1)
-------------------------------------------------------------------------
Cash used in investing activities (198.0) (11.1)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Common shares and units 621.2 108.0
Proceeds from obligations 55.8 0.0
Repayment of obligations (37.0) (47.8)
Share capital issue costs (7.3) 0.0
-------------------------------------------------------------------------
Cash provided by financing activities 632.7 60.2
-------------------------------------------------------------------------
Net increase (decrease) of the period (511.4) (1,071.9)
Net cash, beginning of the period 9,566.2 1,525.1
-------------------------------------------------------------------------
Net cash, end of the period 9,054.8 453.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NHC COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEETS
AS AT NOVEMBER 3, 2000
(Unaudited. In thousands of Canadian dollars)
-------------------------------------------------------------------------
July Aug Sept Oct
2000 2000 2000 2000
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 9,566.2 7,832.7 9,708.9 9,054.8
Trade receivable 4,296.5 5,750.9 4,706.3 4,847.0
Government receivable 448.0 464.5 483.2 504.5
Other receivable 897.7 792.6 699.8 763.5
Inventories 2,445.2 2,679.3 2,750.3 3,165.6
Prepaid expenses 346.7 432.1 607.3 745.9
-------------------------------------------------------------------------
Total current assets 18,000.3 17,952.1 18,955.9 19,081.3
-------------------------------------------------------------------------
Fixed and other assets 629.5 626.4 701.2 750.5
-------------------------------------------------------------------------
18,629.7 18,578.5 19,657.0 19,831.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued
liabilities 4,958.5 4,913.4 5,467.6 6,138.7
Current portion of long-term
debt 68.8 68.8 68.8 68.8
Current portion of obligations 140.9 138.3 145.6 150.6
-------------------------------------------------------------------------
Total current liabilities 5,168.2 5,120.5 5,682.0 6,358.1
-------------------------------------------------------------------------
Obligations under capital leases 186.5 176.2 189.5 195.6
-------------------------------------------------------------------------
Total liabilities 5,354.7 5,296.7 5,871.5 6,553.7
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common shares and special
warrants 19,012.9 19,062.3 19,570.0 19,634.0
Contributed surplus 42.5 42.5 42.5 42.5
Retained earnings (deficit) (5,775.0) (5,817.6) (5,821.6) (6,393.2)
Cumulative translation adjustments (5.4) (5.4) (5.4) (5.4)
-------------------------------------------------------------------------
Total shareholders' equity 13,275.0 13,281.7 13,785.4 13,277.9
-------------------------------------------------------------------------
18,629.7 18,578.5 19,657.0 19,831.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>> |
