Cognicase - strong Q1 results & Purolator contract
FEBRUARY 3, 1998
COGNICASE Reports Higher Revenues and Net Earnings and
Announces Important Year 2000 Contract With Purolator
MONTREAL, QUEBEC--COGNICASE Inc. today reported strong growth in
revenues and net earnings for the first quarter of fiscal 1998.
Revenues for the quarter ended December 31, 1997 increased 238
percent to US$4,084,000 compared to US$1,207,000 for the three-
month period ended January 31, 1997. Net earnings rose to
US$1,813,000 ($0.16 per share in US GAAP) from US$30,000 (nil per
share) in the first quarter of fiscal 1997. (End of quarter dates
differ as a result of a change in the Company's fiscal year end to
September 30 from October 31 in the past fiscal year.)
On an adjusted basis, which excludes a pre-tax foreign exchange
gain of US$1,668,000, net earnings were US$780,000 ($0.07 per
share in US GAAP). This item results from the impact of the
depreciation of the Canadian dollar on the value of the net
proceeds of the Company's recent public offering of Common Shares,
which remained in US$ dollars.
Revenue and earnings growth is attributable mainly to an
acceleration of software conversions under fixed-priced contracts
for Year 2000 compliance. Revenues for the latest quarter also
include a contribution from ICOTECH, effective from December 5,
the closing date of this acquisition.
"These results demonstrate that Year 2000 conversions are gaining
momentum and that COGNICASE is winning contracts based on market
recognition of the reliability and cost-effectiveness of our
automated solutions," said Ronald Brisebois, President and Chief
Executive Officer. "During the quarter, we signed new Year 2000
contracts with Bombardier, Manulife and Otis Elevator and we are
in active negotiations with several potential customers. As well,
with partners we have been awarded two contracts for performing
Year 2000 compliance for the Department of National Defence of
Canada, commencing later this year."
Mr. Brisebois also noted that the integration of ICOTECH is
proceeding as planned. "We have confirmed and are working to
capture important synergies in sales and marketing, cross-selling
and increased delivery capability. Moreover, this subsidiary made
a contribution to earnings in December despite fewer billing days
and we expect it will be accretive for fiscal 1998."
Year 2000 contract with Purolator
Cognicase is also pleased to announce today that it has been
awarded a contract by Purolator for an important software system
modernization project encompassing a Unix migration and a Year
2000 conversion. The approximate value of this contract is
US$1,200,000 and COGNICASE plans to complete this project over the
next 6 months in its conversion factory facilities.
"The award of this project, resulting from a very competitive
bidding process by Purolator, once again confirmed COGNICASE's
leadership position in IT conversion outsourcing projects.
Purolator selected COGNICASE because its IT software solution
offering was substantiated by a proven track record, renown
experts in the domain and comprehensive, mature tools" said Ronald
Brisebois.
COGNICASE, with its wholly owned subsidiary ICOTECH, is an
integrated provider of value-added information technology
solutions and consulting services, differentiated by its
industry-leading toolsets and processes for automated systems
modernization and platform migration. The Company's flagship
product is COGNI-2000, a comprehensive, flexible software toolset
for Year 2000 compliance introduced in 1994.
This press release contains certain forward-looking statements
within the meaning of the Private securities litigation reform act
of 1995 (US), which involve risks and uncertainties. The
Company's actual results may differ significantly from the results
discussed in such statements. Certain factors that could cause
actual results to differ materially from those discussed in such
forward- looking statements include the ability of the Company to
(i) successfully integrate ICOTECH's business with its own (ii)
take advantage of opportunities on the Year 2000 market in the
short term and (iii) provide software maintenance and platform
migration solutions outside the Year 2000 market as well as the
risks described in the Company's final prospectus dated October 2,
1997 filed with the SEC, the OSC and the QSC in connection with
its Public Offering, which factors are incorporated herein by
reference.
/T/
COGNICASE Inc.
Consolidated Statements of Earnings
(In thousands of U.S. dollars,
except share and per share data)
Three Months Three Months
Ended Ended
December 31, January 31,
______________________________________________________________
1997 1997(i)
(Unaudited) (Unaudited)
Revenues $4,084 $1,207
______________________________________________________________
Operating expenses
Cost of revenues 2,209 718
General and administrative 593 155
Sales and marketing 204 58
Research and development, net
of investment tax credits 236 188
Depreciation and amortization 135 36
______________________________________________________________
Total operating expenses 3,377 1,155
______________________________________________________________
Earnings from operations 707 52
______________________________________________________________
Other income
Interest income 552 (4)
Gain on foreign exchange 1,668 -
______________________________________________________________
2,220 (4)
______________________________________________________________
Earnings before income taxes 2,927 48
Income taxes 1,112 18
______________________________________________________________
Net earnings $1,815 $30
______________________________________________________________
______________________________________________________________
Earnings per share
Basic (CDN GAAP) 0.16 0.01
______________________________________________________________
______________________________________________________________
Fully diluted (CDN GAAP) 0.15 0.01
______________________________________________________________
______________________________________________________________
Basic (U.S. GAAP) 0.16 0.00
______________________________________________________________
______________________________________________________________
Fully diluted (U.S. GAAP) 0.16 0.00
______________________________________________________________
______________________________________________________________
Weighted average number of
shares outstanding
Basic (CDN GAAP) 11347680 5460000
______________________________________________________________
______________________________________________________________
Fully diluted (CDN GAAP) 12526154 5460000
______________________________________________________________
______________________________________________________________
Basic (U.S. GAAP) 11347680 7606560
______________________________________________________________
______________________________________________________________
Fully diluted (U.S. GAAP) 11709474 8049487
______________________________________________________________
______________________________________________________________
(i) For comparative purposes, the Company is including the
financial statements for the three months ended January 31, 1997.
Despite the fact that the Company has changed its fiscal year-end
from October 31 to September 30, effective September 30, 1997, the
Company has not recasted its financial data of prior periods, to
present, for comparative purposes, the results for the three months
period ended December 31, 1996.The Company believes that the
financial information presented is comparable as there are no
seasonal or other factors that would cause a recasting of data to
be necessary.
COGNICASE Inc.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
December 31, September 30,
1997 1997
_________________________________________________________
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $39,109 $2,440
Temporary investments, at cost,
2.25 percent to 3.2 percent 205 5,025
Accounts receivable 6,265 1,718
Investment tax credits
receivable 1,339 1,056
Work in process 2,129 439
Prepaid expenses 109 69
_________________________________________________________
49,156 10,747
Fixed assets 1,081 805
Deferred income taxes 1,635 284
Goodwill and other assets 10,306 1,468
_________________________________________________________
$62,178 $13,304
_________________________________________________________
_________________________________________________________
LIABILITIES
Current liabilities
Accounts payable and
accrued liabilities 2,953 $1,011
Income taxes payable 1,157 394
Deferred revenue
Parent company of a
shareholder company
exercising significant
influence - 67
Other 111 10
Installments on long-term debt 9 9
_________________________________________________________
4,230 1,491
Deferred incentive benefit 92 102
Long-term debt 29 29
_________________________________________________________
4,351 1,622
_________________________________________________________
SHAREHOLDERS' EQUITY
Capital stock 56,085 9,734
Retained earnings 3,867 2,052
Cumulative translation adjustment (2,125) (104)
_________________________________________________________
57,827 11,682
_________________________________________________________
$62,178 $13,304
_________________________________________________________
_________________________________________________________
disclaimer
FOR FURTHER INFORMATION PLEASE CONTACT:
COGNICASE Inc.
Ronald Brisebois
Chief Executive Officer
(514) 866-6161
brir@cognicase.ca
cognicase.ca
or
COGNICASE Inc.
Marc Lamy
Chief Financial Officer
(514) 866-6161
lamm@cognicase.ca
COGNICASE news releases are accessible at:
cdn-news.com
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: COGNICASE INC.
TSE SYMBOL: COG
NASDAQ SYMBOL: COGIF
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