NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: COGNICASE INC.
TSE, NASDAQ SYMBOL: COGIF
APRIL 30, 1998
COGNICASE Reports Sharply Higher Revenues and Net
Earnings
MONTREAL, QUEBEC--COGNICASE Inc. today reported strong growth in
revenues and net earnings for the second quarter and first six
months of fiscal 1998.
Revenues for the quarter ended March 31, 1998 increased more than
sevenfold to US$10,319,000 compared to US$1,452,000 for the
comparable three-month period ended April 30, 1997. Net earnings
rose to US$1,291,000 ($0.10 per share in US GAAP) from US$165,000
($0.02 per share) in the second quarter of fiscal 1997. (End of
quarter dates differ as a result of a change in the Company's
fiscal year end from October 31 to September 30 in the past fiscal
year.)
On an adjusted basis, which excludes an unrealized pre-tax foreign
exchange loss of US$197,000, net earnings for the second quarter
of fiscal 1998 were US$1,413,000 ($0.11 per share in US GAAP).
The strong growth in revenues and earnings is attributable mainly
to an acceleration of software conversions under fixed-priced
contracts for platform migration, a strong contribution from
consulting services as well as Year 2000-related software
conversions. Revenues for the latest quarter include a full three-
month contribution from Icotech and one month of Hexagon,
representing respectively US$5,578,000 and US$1,039,000 of the top
line increase.
On an adjusted basis, which excludes pre-tax foreign exchange gain
of US$1,274,000, net earnings for the first half of fiscal 1998
were US$2,316,000 ($0.18 per share in US GAAP), compared to net
earnings of US$195,000 ($0.02 per share in US GAAP) in the
comparable period of fiscal 1997.
"These results show the growing sales momentum of our software
conversion business and a healthy performance in consulting
services, particularly from Icotech," said Ronald Brisebois,
President and Chief Executive Officer. "Our third quarter will
show an even greater impact from consulting services, including a
full three months of Hexagon and more than two months of
Informatique B.F.G., acquired on April 8."
Mr. Brisebois also noted that "the integration of the consulting
services is resulting in synergies and the core software
conversion business is generating strong margins as volume
increases."
COGNICASE Inc., founded in 1991 and employing more than 900
people, provides information technology (IT) value-added solutions
and services internationally to Fortune 1000-sized companies and
government departments. The Company's services offering consist of
four core areas: Software Development and Maintenance Solutions,
Year 2000 Software Compliance and Platform Migration Solutions, IT
Consulting Services and IT Outsourcing. Industry-leading toolsets,
factory-based software development and maintenance capabilities,
certified processes and high quality resources differentiate the
Company's IT services and solutions. Through automation,
reusability, and high quality IT resources, COGNICASE delivers
reliable, cost-effective and timely solutions that generate added
value for customers, employees, and shareholders.
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 acquisitions (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)
Six Months Six Months
Ended Ended
March 31, April 30,
___________________________________________________________________
1998 1997(i)
___________________________________________________________________
(Unaudited)
Revenues $14,403 $2,659
___________________________________________________________________
Operating expenses
Cost of revenues 8,602 1,405
General and administrative 1,723 343
Sales and marketing 652 137
Research and development,
net of investment tax credits 454 475
Depreciation and amortization 478 77
___________________________________________________________________
Total operating expenses 11,909 2,437
___________________________________________________________________
Earnings from operations 2,494 222
___________________________________________________________________
Other income
Interest income 1,045 47
Gain (loss) on foreign
exchange 1,471 -
___________________________________________________________________
2,516 47
___________________________________________________________________
Earnings before income taxes 5,010 269
Income taxes 1,904 74
___________________________________________________________________
Net earnings $3,106 $195
___________________________________________________________________
___________________________________________________________________
Earnings per share
Basic (CDN GAAP) $0.27 $0.04
___________________________________________________________________
___________________________________________________________________
Fully diluted (CDN GAAP) $0.26 $0.04
___________________________________________________________________
___________________________________________________________________
Basic (U.S. GAAP) $0.27 $0.03
_________________________________________________________________
_________________________________________________________________
Fully diluted (U.S. GAAP) $0.25 $0.02
_________________________________________________________________
_________________________________________________________________
Weighted average number of
shares outstanding
Basic (CDN GAAP) 11,632,900 5,460,000
_________________________________________________________________
_________________________________________________________________
Fully diluted (CDN GAAP) 12,815,291 6,178,820
_________________________________________________________________
_________________________________________________________________
Basic (U.S. GAAP) 11,632,900 7,606,560
_________________________________________________________________
_________________________________________________________________
Fully diluted (U.S. GAAP) 12,353,825 8,049,487
_________________________________________________________________
_________________________________________________________________
Three Months Three Months
Ended Ended
March 31, April 30,
___________________________________________________________________
1998 1997(i)
___________________________________________________________________
Revenues $10,319 $1,452
___________________________________________________________________
Operating expenses
Cost of revenues 6,393 687
General and administrative 1,130 188
Sales and marketing 448 79
Research and development,
net of investment tax credits 218 287
Depreciation and amortization 343 41
___________________________________________________________________
Total operating expenses 8,532 1,282
___________________________________________________________________
Earnings from operations 1,787 170
___________________________________________________________________
Other income
Interest income 493 51
Gain (loss) on foreign
exchange (197) -
___________________________________________________________________
296 51
___________________________________________________________________
Earnings before income taxes 2,083 221
Income taxes 792 56
___________________________________________________________________
Net earnings $1,291 $165
___________________________________________________________________
___________________________________________________________________
Earnings per share
Basic (CDN GAAP) $0.11 $0.03
___________________________________________________________________
___________________________________________________________________
Fully diluted (CDN GAAP) $0.11 $0.02
___________________________________________________________________
___________________________________________________________________
Basic (U.S. GAAP) $0.11 $0.02
_________________________________________________________________
_________________________________________________________________
Fully diluted (U.S. GAAP) $0.10 $0.02
_________________________________________________________________
_________________________________________________________________
Weighted average number of
shares outstanding
Basic (CDN GAAP) 11,905,671 5,460,000
_________________________________________________________________
_________________________________________________________________
Fully diluted (CDN GAAP) 13,243,309 6,921,870
_________________________________________________________________
_________________________________________________________________
Basic (U.S. GAAP) 11,905,671 7,606,560
_________________________________________________________________
_________________________________________________________________
Fully diluted (U.S. GAAP) 12,626,596 8,049,487
_________________________________________________________________
_________________________________________________________________
(i) For comparative purposes, the Company is including the
financial statements for the three and six months ended April 30,
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 and six months period ended March 31, 1997. 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)
March 31, September 30,
1998 1997
_________________________________________________________________
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $33,922 $2,440
Temporary investments,
at cost, 2.25 p.c. to 3.2 p.c. 201 5,025
Accounts receivable 10,084 1,718
Investment tax credits
receivable 1,531 1,056
Work in process 2,565 439
Prepaid expenses 245 69
_________________________________________________________________
48,548 10,747
Fixed assets 2,112 805
Deferred income taxes 2,117 284
Goodwill and other assets 17,694 1,468
_________________________________________________________________
$70,471 $13,304
_________________________________________________________________
_________________________________________________________________
LIABILITIES
Current liabilities
Accounts payable and
accrued liabilities $5,398 $1,011
Income taxes payable 1,980 394
Deferred revenue
Parent company of a
shareholder company
exercising significant
influence - 67
Other 137 10
Current portion of obligations
under capital lease 60 -
Installments on long-term debt 9 9
_________________________________________________________________
7,584 1,491
Deferred incentive benefit 85 102
Obligations under capital lease 14 -
Long-term debt 19 29
_________________________________________________________________
7,702 1,622
_________________________________________________________________
SHAREHOLDERS' EQUITY
Capital stock 59,347 9,734
Retained earnings 5,158 2,052
Cumulative translation adjustment (1,736) (104)
_________________________________________________________________
62,769 11,682
_________________________________________________________________
$70,471 $13,304
_________________________________________________________________
_________________________________________________________________
COGNICASE Inc.
Changes in Cash Resources
(In thousands of U.S. dollars)
Six Months Six Months
Ended Ended
March 31, April 30,
1998 1997
___________________________________________________________________
(Unaudited)
CASH FROM OPERATING ACTIVITIES
Net earnings $3,106 $195
Adjustments to reconcile
net earnings to net
cash provided by
(used for) operating
activities:
Depreciation 252 77
Amortization of Goodwill 226 -
Deferred income taxes - -
Decrease (increase)
in assets
Accounts receivable (2,732) (13)
Investment tax credits
receivable (544) (301)
Work in process and
prepaid expenses (565) 293
Increase (decrease) in
liabilities Accounts payable and
accrued liabilities 1,258 435
Income taxes payable 1,671 (162)
Deferred revenue 1 (424)
Deferred incentive
benefit (17) 29
___________________________________________________________________
Net cash provided by (used for)
operating activities 2,656 129
___________________________________________________________________
CASH FROM INVESTING ACTIVITIES
Temporary investments 5,076 -
Fixed assets (1,003) (196)
Business acquisition (20,963) -
___________________________________________________________________
Net cash used for investing
activities (16,890) (196)
___________________________________________________________________
CASH FROM FINANCING ACTIVITIES
Repayment of long-term debt (10) (150)
Promissory note - 731
Repayment of promissory note - (731)
Repayment of capital lease (8) -
Issuance of capital stock 52,346 -
Issuance of special warrants - 9,332
Expenditures related to
issue of special warrants - (926)
Expenditures related to
issue of capital stock (4,409) -
Other assets 316 -
Purchase of capital stock - -
___________________________________________________________________
Net cash provided by
financing activities 48,235 8,256
___________________________________________________________________
Increase (decrease) in cash
and cash equivalents 34,001 8,189
Effect of foreign currency
translation adjustments (1,562) (253)
Cash (deficit) brought upon
business acquisition (957) -
Cash and cash equivalents,
beginning of period 2,440 337
___________________________________________________________________
Cash and cash equivalents,
end of period $33,922 $8,273
___________________________________________________________________
___________________________________________________________________
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