- Decreased sales due to reduced orders from Nortel and Flextronics
- Operating results significantly improved
- Completion of acquisition and major financing
MONTREAL, Aug. 15 /CNW Telbec/ - Mindready Solutions Inc. (TSX: MNY), a
leading supplier of innovative solutions for test and embedded systems, today
reported its financial results for the second quarter ended June 30, 2005.
"We are pleased to report a significantly-improved bottom line despite a
reduction in sales resulting from lower orders from Nortel and Flextronics and
currency exchange factors. Our financial performance represents a positive
swing of $1 million dollars compared to the second quarter of 2004 and
confirms the benefits of the restructuring completed during the last 12
months. Now that we have a sound operating structure in place, our efforts are
focused on top-line growth through targeted sales and marketing strategies,
partnerships and acquisitions," stated Claude Delage, President and Chief
Executive Officer.
Sales for the second quarter of 2005 declined to $4.2 million compared to
$5.3 million for the same period in 2004. The year-over-year decline in the
value of the US dollar and pound sterling against the Canadian dollar reduced
sales by approximately $280,000 in the last quarter, and orders from Nortel
and Flextronics declined by $882,000 compared to the same period in 2004. Net
loss, which takes into account stock-based compensation expenses of $115,000
in the second quarter of 2005, was $0.3 million compared to a net loss of
$2.6 million in the second quarter of 2004.
Operating loss before certain items was $35,000 compared to an operating
loss of $1.0 million for the second quarter of 2004. The main contributing
factors to the improvement were a higher operating margin, lower selling and
administrative expenses, and higher research and development tax credits. With
this lower cost structure, management is confident that future sales growth
will have a favourable impact on earnings.
During the second quarter, Mindready completed the acquisition of
Specialized Test Engineering Inc. Now fully integrated, STE will contribute to
revenue and earnings for its first full quarter starting with the third
quarter of 2005.
Following the opening of an office in Austin, Texas, Mindready can report
a high level of commercial activity in the defense sector, which will
significantly contribute to revenue and earnings in a significant way starting
in the fourth quarter of 2005.
The financing closed in June 2005 provides Mindready with a US
$4.0 million facility, from which only US $2.25 million has been drawn. This
financing, which does not include any restrictive financial covenants,
empowers Mindready with the financial flexibility to pursue its two-pronged
business plan of internal growth and acquisitions.
Operating loss before certain items excludes amortization of property and
equipment, interest income, exchange gains and losses, stock-based
compensation and non-recurring charges.
Forward-Looking Statements
The statements regarding the company's future operating results,
performance and business prospects contained in this press release, and any
other statements not constituting historical information, are forward-looking
statements. These forward-looking statements reflect the company's current
opinions and assumptions with respect to future business decisions and
results, and are based on the information currently available to the company.
Accordingly, these statements are subject to risks, uncertainties and
contingencies that could cause the company's future operating results,
performance or business prospects to differ from those expressed in, or
implied by, these statements.
About Mindready
Mindready Solutions Inc. (TSX: MNY) is a leading supplier of innovative
solutions for test and embedded systems serving the military/aerospace,
automotive/transportation and telecommunications markets from design to
manufacturing. Mindready's clients include companies such as Lockheed Martin,
Raytheon, Northrop Grumman, Boeing, Visteon, Bose, Nortel and Alcatel. More
information about Mindready and its products, systems and engineering services
can be found at www.mindready.com .
<<
Mindready Solutions Inc.
Consolidated statements of operations and deficit (unaudited)
(in thousands of dollars, except per share amounts)
June 30, 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
3 months ended 6 months ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
-------------------------------------------------------------------------
Sales $ 4 189 $ 5 297 $ 8 522 $ 9 818
Cost of sales 2 953 3 975 5 818 7 247
-------------------------------------------------------------------------
1 236 1 322 2 704 2 571
Expenses:
Selling and
administrative 1 449 1 779 2 815 3 760
Research and
development (178) 593 (39) 893
-------------------------------------------------------------------------
1 271 2 372 2 776 4 653
Loss before
depreciation
and amortization,
interest,
(gain) loss
on exchange
rate,
restructuring
charges and
income taxes (35) (1 050) (72) (2 082)
Depreciation
and
amortization
of capital
assets 127 181 259 366
Interest
income, net
amount (2) (63) (9) (141)
(Gain) loss
on exchange
rate 22 (5) (49) (54)
Stock-based
compensation 115 0 202 -
Non recurring
charges - 1 136 - 1 136
-------------------------------------------------------------------------
262 1 249 403 1 307
-------------------------------------------------------------------------
Loss before
income taxes (297) (2 299) (475) (3 389)
Current income
taxes (1) 342 5 349
-------------------------------------------------------------------------
Net loss (296) (2 641) (480) (3 738)
-------------------------------------------------------------------------
Weighted
average
number of
common
shares
outstanding 13,256,479 11,999,409 13,133,048 11,999,409
Basic and
diluted
loss per
share $ (0.02) $ (0.22) $ (0.04) $ (0.31)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Mindready Solutions Inc.
Consolidated balance sheets
(in thousands of dollars)
-------------------------------------------------------------------------
June 30, December 31,
2005 2004
(unaudited) (audited)
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,513 $ 2,336
Accounts receivable 3,818 4,215
Income tax receivable 22 14
Tax credits receivable 733 55
Work in progress 1,583 1,014
Inventories 1,500 1,401
Prepaid expenses 218 92
-------------------------------------------------------------------------
10,387 9,127
Capital assets 638 895
Deferred financing expenses 678 -
Goodwill 2,867 2,097
-------------------------------------------------------------------------
$ 14,570 $ 12,119
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,142 $ 1,037
Accrued liabilities 2,704 3,975
Deferred revenue 202 228
Current portion of long-term
debt and convertible term notes 397 -
-------------------------------------------------------------------------
4,445 5,240
Liability component of the
convertible term notes 48 -
Long-term debt 58 -
-------------------------------------------------------------------------
106 -
Shareholders' equity:
Share capital 7,914 6,740
Contributed surplus 2,664 96
Deficit (745) (265)
Cumulative translation adjustment 186 308
-------------------------------------------------------------------------
10,019 6,879
-------------------------------------------------------------------------
$ 14,570 $ 12,119
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
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