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Microforum
Inc. (ticker: MCF.TO, exchange: Toronto Stock Exchange) Microforum Inc. receives final receipts for special unit financing completed on May 10, 1999TORONTO, July 5 - Microforum Inc. (TSE: MCF - News) today announced its financial results for the fiscal year ended February 28, 2002. The Company also warned that it has incurred significant operating losses over the past twenty-four months and its ability to continue as a going concern is dependent upon achieving and maintaining profitable operations. The outcome of these matters cannot be accurately predicted at this time. The Operating Highlights provided have been prepared on a going concern basis and do not include any adjustments to the amounts that might be necessary should the Company be unable to continue business. Results of Continuing Operations The Company reported a loss from continuing operations of $23.3 million for the fiscal year ended February 28, 2002 compared to a loss from continuing operations of $53.9 million during the previous fiscal year ended February 28, 2001. A major portion of the loss from continuing operation for fiscal 2002 is represented by non-cash items relating to the amortization and write-down of capital assets for $7.6 million ($5.4 million in fiscal 2001) and the amortization and impairment of goodwill for $4.4 million ($30.4 million in fiscal 2001). The loss from continuing operations during the year ended February 28, 2002, however, benefited from the sale of certain business units, namely the sale of Deployed Consulting Services (DCS) unit, for a combined total amount of $2.2 million. Investment income during fiscal 2002 was $0.5 million, substantially lower than the $1.8 million reported in the previous year, resulting from the utilization of available cash and cash equivalents to continue to fund the operations of the Company. The Company did not increase its provision for doubtful account during the year, as the provision set-up as at February 28, 2001 was sufficient to absorb actual losses. Severances and other costs reported under Operating Expenses were $2.2 million during the year ended February 28, 2002 compared to $4.5 million during the previous fiscal year. Of the amount reported during fiscal 2002, $0.6 million related to the agreed settlement with the landlord at the Company's premises at Ferrand Drive. Revenues Revenues during the year ended February 28, 2002 were $17.8 million, a decrease of $8.9 million from the $26.7 million reported in the previous fiscal year. As a result of the Company having disposed of substantially all of its assets and businesses, revenue comparatives between business units have not been presented. Gross margin of $4.3 million during the current year is down from the $8.4 million reported in the year ended February 28, 2001 and at 24.2% of revenues, is also down from the 31.3% reported in the previous year. Operating Expenses Operating expenses before investment income, gain on disposition of business units, amortization and write-down of capital assets, and amortization and impairment of goodwill during the year decreased by $10.0 million to $18.1 million from the $28.1 million reported during the fiscal year ended February 28, 2001. Operating Expenses consists of the following: Selling, general and administrative expenses decreased during the year to $15.7 million from the reported $19.5 million during the previous fiscal year, reflecting reductions in wages and other employee costs as a result of the cost initiatives undertaken by the Company at the end of the previous fiscal year and the disposition late in the current year of all but one of the Company's businesses. Bad debt expense decreased by $4.0 million from the amount reported during the previous fiscal year and reflects an adjustment needed as a result of the reversal of certain provisions taken during the previous year. Severance and other costs decreased to $2.1 million during the year ended February 28, 2002 from the $4.5 million reported during the previous year when the Company recorded such a charge as a result of its program to adjust its business in light of rapidly changing circumstances, to fix its cost structure and strengthen the management team. The amount reported during the current year relates essentially to the settlement of the Ferrand lease as discussed previously. Amortization and Write-down Amortization and write-down of capital assets and amortization and impairment of goodwill decreased by approximately $23.8 million from the $35.8 million reported during the year ended February 28, 2001. Amortization and write-down of capital assets of $7.6 million for fiscal 2002 ($5.4 million in fiscal 2001) reflects the Company's sale of substantially all of its assets following the disposition of all but one of its business units and the impairment in the carrying value of its few remaining assets. Amortization and impairment of goodwill of $4.4 million during the year ended February 28, 2002 reflects the complete write-down of the remaining goodwill as at February 28, 2001 resulting from the sale of all but one of the business units and the impairment in the carrying value of the goodwill relating to the remaining operating asset. Results of Discontinued Operations The Company reported income from discontinued operations of $0.6 million during the current fiscal year compared to a loss of $19.7 million during the previous year. The income item consisted of an operating loss for $1.3 million compensated by applying $1.9 million against the provision available at the end of the previous fiscal year. As indicated above, the Company concluded a sale of its Strategic Marketing Business (PPL Marketing) subsequent to the year-end for a nominal amount and retained certain working capital items. The results of operating losses from discontinued operations since the measurement date of November 30, 2000 have been reported separately in the consolidated financial statements and as further described in the notes, including the remaining provision for the expected loss of the Strategic Marketing Business to its expected sale date. Liquidity and Capital Resources The Company reported working capital of $4.5 million at February 28, 2002 compared to $14.7 million at the end of the previous year, a decrease of $10.2 million during the year. This decrease in working capital reflects the utilization of these resources to fund the cash losses from continued operations for $13.3 million cash before proceeds from the sale of the assets of the Deployed Consulting Group for $2.0 million, the sale of the Media Replication Services business for $0.3 million and the elimination of the equipment lease obligation for a net of $0.7 million and others for $0.1 million. Working Capital consists of the following: At February 28, 2002, the Company had cash and cash equivalents of $5.9 million compared to $21.8 million at the end of the previous year, a reduction of $15.9 million. This reduction in cash is the result of the utilization of $13.3 million to fund continued operations, the utilization of $5.7 million to fund non-cash working capital items net of cash realizations from the discontinued operation of $3.7 million and others for $0.6 million. Accounts receivable of $3.9 million (inclusive of the $2.0 million receivable by the Company from Cognicase in connection with the sale of the Deployed Consulting Services Group business) represents a reduction of $6.7 million from the $10.6 million reported at the end of the previous year. This decrease is the result of the sale and closure of all but one of the Company's business units by the end of the fiscal year as well as the reduced activities in the remaining CALMS business. As part of the agreement with Cognicase, the selling price of $2.0 million was paid to the Company subsequent to the end of the year in the form of common shares in Cognicase, which are restricted to July 20, 2002. Work in progress of $1.2 million as at February 28, 2002 represents a decrease of $0.7 million from the $1.9 million reported at the end of the previous year, reflecting timing of projects completion in the CALMS business. Accounts payable and accrued liabilities were $4.6 million as at February 28, 2002 compared to $13.1 million as at February 28, 2001, a decrease of $8.5 million. This decrease is the result of reduced activities and the sale and closure of all but one of the Company's business units as well as the payment of certain severances accrued at the end of the previous year in connection with the then reorganization program undertaken by the Company. Accrued loss from discontinued operations, which represents a decrease of $1.9 million from the amount reported at the end of the previous year, reflects the utilization during the year of the accrual made by the Company at the end of the previous year for the disposition of its Strategic Marketing Business (PPL Marketing). The balance of $0.2 million as at February 28, 2002 was paid subsequent to the year-end following the sale of the business. Income taxes payable increased by $0.4 million from a recoverable position at the end of the previous fiscal year as a result of the CCAA proceedings, which temporarily barred the Company from making payments to fulfill its large corporation tax and capital tax liabilities. Deferred revenue at February 28, 2002 was $1.3 million, a decrease of $2.9 million from the previous year, reflecting the completion of a number of projects within the CALMS business during the year. Capital lease obligations of $1.1 million as at February 28, 2001 were partly paid ($0.4 million) and eliminated ($0.7 million) as part of the reorganization undertaken by the Company under the CCAA and as discussed earlier.
Established in 1987, Microforum sells software solutions to organizations that seek a competitive edge. The company is listed on The Toronto Stock Exchange (TSE: MCF - News). For more information, please visit www.microforum.com. Forward-Looking Statements Investors should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks and uncertainties. These forward-looking statements include statements that are subject to risks and uncertainties. Forward-looking statements are subject by their nature to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the forward-looking statements. Any forward-looking statements speak only as of the date made. The Company is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by the securities laws. For further information please contact: |
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