CALGARY, Feb. 15 /CNW/ - The Westaim Corporation announced today that for the year ended December 31, 2007, it recorded a net loss of $58.0 million, or 62 cents per share, on revenues of $31.8 million compared to a net loss of $50.6 million, or 54 cents per share, on revenues of $27.6 million in the previous year. For the three months ended December 31, 2007, the Company posted a net loss of $26.8 million, or 28 cents per share, compared to a net loss of $11.0 million, or 12 cents per share, in the same period in the previous year.
The 2007 net loss includes significantly improved operating results at Nucryst Pharmaceuticals Corp. due to lower R&D spending and to milestone revenues from Smith & Nephew earned in the year; reduced operating costs at iFire Technology Ltd.; gains on sale of real estate; and gains on the sale of a non-core subsidiary. These improvements were offset in part by reorganization and severance costs related to operational changes in both Westaim and iFire that will reduce future annual operating costs; and by write-downs and realized losses incurred on the Company's investment in Canadian third-party asset-backed commercial paper (ABCP) totaling $5.1 million.
The 2007 results also include a net loss from discontinued operations of $55.2 million compared to a net loss from discontinued operations of $37.7 million in 2006. These losses, which relate to the Company's wholly owned subsidiary iFire Technologies Ltd., include a write-down of capital assets of $22.1 million in the fourth quarter of 2007.
At December 31, 2007, Westaim had $31.0 million in consolidated cash and short-term investments, compared to $62.5 million at December 31, 2006. Westaim's cash position, excluding cash and short-term investments held by its 74.5 per cent owned affiliate NUCRYST Pharmaceuticals Corp., was $13.2 million. In addition, Westaim held ABCP with a book value of $6.0 million.
"Westaim is continuing to explore strategic alternatives," said Drew Fitch, President & CEO of Westaim. "Late in 2007 we announced our intention to seek a buyer for the business or assets of iFire Technology and this process is still underway. We are continuing our effort to monetize non-core assets and early in 2008 we realized $4.5 million in proceeds from the sale of 75 per cent of our equity interest in a non-core subsidiary. At the same time, we are assessing alternative structures for the Company."
As a result of Westaim's announcement in late 2007 that it would seek a buyer for its iFire Technology subsidiary, the assets and liabilities of iFire are reflected on Westaim's consolidated balance sheet as held for sale and the results of iFire operations are reflected on the consolidated statement of operations as discontinued operations.
The Westaim Corporation's investments include iFire Technology Ltd., and a 74.5 per cent interest in NUCRYST Pharmaceuticals Corp. (NASDAQ: NCST; TSX: NCS). Westaim's common shares are listed and on The Toronto Stock Exchange under the trading symbol WED.
A more detailed discussion of Westaim's 2007 consolidated year end results can be found in the 2007 audited consolidated financial statements and Management's Discussion and Analysis, which will be available at www.westaim.com and www.sedar.com.
This news release contains forward-looking statements. These statements are based on current expectations that are subject to risks and uncertainties, and Westaim can give no assurance that these expectations are correct. Various factors could cause actual results to differ materially from those projected in such statements, including but not limited to statements regarding the effect of reorganization and severance costs related to operational changes in both Westaim and iFire to reduce future annual operating costs, and Westaim's intention to explore strategic alternatives, to seek a buyer for the business or assets of iFire, and to monetize non-core assets. Westaim disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise. Accordingly, readers are advised not to place undue reliance on forward-looking statements, and should not rely on this information at any date other than the date of this news release. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.
THE WESTAIM CORPORATION
Financial Highlights
(unaudited)
(thousands of dollars except per share data)
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Three Months Ended Twelve Months Ended
December 31 December 31
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Consolidated Statements of
Operations 2007 2006 2007 2006
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Revenue $ 11,174 $ 5,140 $ 31,830 $ 27,591
Income (loss) from continuing
operations 1,169 (2,200) (2,830) (12,861)
Net loss (26,807) (11,019) (58,033) (50,557)
Net income (loss) per common
share - basic and diluted
Continuing operations 0.01 (0.02) (0.03) (0.14)
Net loss (0.28) (0.12) (0.62) (0.54)
Weighted average number of
common shares outstanding
(thousands) 94,136 93,797 94,070 93,523
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Three Months Ended Twelve Months Ended
December 31 December 31
--------------------- ---------------------
Segmented Information 2007 2006 2007 2006
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Revenue from continuing
operations
Nucryst Pharmaceuticals $ 11,174 $ 5,140 $ 31,830 $ 27,591
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Operating income (loss)
Nucryst Pharmaceuticals $ 3,532 $ (2,200) $ (635) $ (11,216)
Other (including
corporate costs) (1,826) (1,311) (10,805) (6,128)
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Operating income (loss) from
continuing operations $ 1,706 $ (3,511) $ (11,440) $ (17,344)
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December December
Consolidated Balance Sheets 31, 2007 31, 2006
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Cash and short-term
investments $ 30,993 $ 62,486
Current assets 51,561 80,256
Other assets 31,826 68,083
Current liabilities 8,461 15,977
Shareholders' equity 56,371 112,977
THE WESTAIM CORPORATION
Consolidated Statements of Operations and Consolidated Statements
of Comprehensive loss and Deficit
(unaudited)
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Three Months Twelve Months
Ended December 31 Ended December 31
--------------------- ---------------------
(thousands of dollars except
per share data) 2007 2006 2007 2006
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Revenue $ 11,174 $ 5,140 $ 31,830 $ 27,591
Costs
Manufacturing 3,226 2,899 14,617 17,324
Research and development 1,334 1,966 6,356 12,112
General and administrative 2,660 2,101 9,348 6,762
Depreciation and amortization 403 635 2,093 2,614
Corporate costs 1,845 1,050 10,856 6,123
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Operating income (loss) 1,706 (3,511) (11,440) (17,344)
Foreign exchange (loss)
gain (305) 1,331 (3,804) (720)
Interest 141 653 1,822 3,242
Change in fair value of
third party asset-backed
commercial paper (1,067) - (4,048) -
Loss on sale of third
party asset-backed
commercial paper (1,067) - (1,067) -
Write-down of capital
assets and intangible
assets - (1,210) (1,203) (1,210)
Gain on sale of capital
assets 75 - 8,722 -
Dilution gain - - 4,525 -
Gain on sale of investment 2,648 - 2,648 -
Loss on issuance of shares
of subsidiary (14) (5) (134) (99)
Non-controlling interest (806) 466 1,293 3,222
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Income (loss) from
continuing operations
before income taxes 1,311 (2,276) (2,686) (12,909)
Income tax (expense) recovery (142) 76 (144) 48
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Income (loss) from continuing
operations 1,169 (2,200) (2,830) (12,861)
Loss from discontinued
operations net of income
taxes (27,976) (8,819) (55,203) (37,696)
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Net loss $ (26,807) $ (11,019) $ (58,033) $ (50,557)
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Income (loss) per common share
Continuing operations
- basic and diluted $ 0.01 $ (0.02) $ (0.03) $ (0.14)
Net loss - basic and
diluted (0.28) (0.12) (0.62) (0.54)
Weighted average number of
common shares outstanding
(thousands) 94,136 93,797 94,070 93,523
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Consolidated Statements of
Comprehensive Loss
Net loss for the period $ (26,807) $ (11,019) $ (58,033) $ (50,557)
Unrealized (loss) gain on
translation of net foreign
operations (145) 103 (1,103) (173)
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Comprehensive loss $ (26,952) $ (10,916) $ (59,136) $ (50,730)
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Consolidated Statements of
Deficit
Deficit at beginning of
period $(349,074) $(306,829) $(317,848) $(267,291)
Net loss for the period (26,807) (11,019) (58,033) (50,557)
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Deficit at end of period $(375,881) $(317,848) $(375,881) $(317,848)
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THE WESTAIM CORPORATION
Consolidated Balance Sheets
(unaudited)
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December 31 December 31
(thousands of dollars) 2007 2006
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ASSETS
Current
Cash and cash equivalents $ 30,993 $ 45,035
Short-term investments - 17,451
Accounts receivable 14,931 8,189
Inventories 4,373 8,506
Other 674 589
Current assets held for sale 590 486
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51,561 80,256
Investments 5,968 -
Capital assets 12,581 19,201
Capital assets held for sale 10,086 44,757
Intangible assets 799 951
Intangible assets held for sale 2,392 3,174
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$ 83,387 $ 148,339
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 7,018 $ 6,165
Accounts payable and accrued liabilities held
for sale 1,443 1,812
Current portion of long-term debt - 8,000
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8,461 15,977
Deferred gain 218 -
Provision for site restoration 6,580 6,580
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15,259 22,557
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Non-controlling interest 11,757 12,805
Shareholders' equity
Capital stock 426,262 426,122
Contributed surplus 7,769 5,379
Accumulated other comprehensive loss (1,779) (676)
Deficit (375,881) (317,848)
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56,371 112,977
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$ 83,387 $ 148,339
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THE WESTAIM CORPORATION
Consolidated Cash Flow Statements
(unaudited)
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Three Months Ended Twelve Months Ended
December 31 December 31
--------------------- ---------------------
(thousands of dollars) 2007 2006 2007 2006
-------------------------------------------------------------------------
Operating Activities
Net income (loss) from
continuing operations $ 1,169 $ (2,200) $ (2,830) (12,861)
Items not affecting cash
Gain on sale of capital
assets (75) - (8,722) -
Gain on sale of investment (2,648) - (2,648) -
Change in fair value of
third party asset-backed
commercial paper 1,067 - 4,048 -
Loss on sale of third
party asset-backed
commercial paper 1,067 - 1,067 -
Depreciation and
amortization 403 635 2,093 2,614
Stock-based compensation
expense 667 372 2,469 1,412
Non-controlling interest 806 (466) (1,293) (3,222)
Loss on issuance of shares
of subsidiary 14 5 134 99
Write-down of capital
assets and intangible
assets - 1,210 1,203 1,210
Dilution gain - - (4,525) -
Foreign exchange on
short-term investments - - - (52)
Accounts receivable (4,407) 1,690 (7,190) (320)
Inventories 1,508 (587) 4,128 (838)
Other 1,087 173 (98) (30)
Accounts payable and
accrued liabilities (5,808) (1,504) 1,131 (6,563)
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Cash used in continuing
operations (5,150) (672) (11,033) (18,551)
Cash used in discontinued
operations (3,462) (6,290) (19,739) (25,703)
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Cash used in operating
activities (8,612) (6,962) (30,772) (44,254)
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Investing activities
Capital expenditures (402) (755) (2,376) (6,541)
Capital expenditures
- discontinued operations - (56) - (1,339)
Maturity of short-term
investments - 1,285 46,904 30,594
Purchase of short-term
investments - (17,450) (29,453) (44,039)
Purchase of short-term
investments reclassified
to investments - - (14,400) -
Reclassification of cash
equivalents to investments (16) - (2,650) -
Proceeds on sale of third
party asset-backed
commercial paper 5,968 - 5,968 -
Intangible assets (11) (50) (72) (245)
Intangible assets
- discontinued operations (12) (106) (480) (404)
Proceeds on sale of
investment 1,582 - 1,582 -
Proceeds on sale of
capital assets 75 - 14,437 -
Proceeds on sale of
discontinued operations 15 - 24 312
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Cash provided from (used in)
investing activities 7,199 (17,132) 19,484 (21,662)
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Financing activities
Repayment of long-term debt
- discontinued operations - - - (10,434)
Issuance of common shares
of subsidiary - 40 14 325
Issuance of common shares - - 27 4,484
Issuance of convertible
debentures of subsidiary - - - 2,000
Net cash outflow on
deconsolidation of former
subsidiary - - (2,306) -
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Cash provided from (used in)
financing activities - 40 (2,265) (3,625)
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Effect of exchange rate changes
on cash and cash equivalents 29 33 (489) 26
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Net decrease in cash and
cash equivalents (1,384) (24,021) (14,042) (69,515)
Cash and cash equivalents
at beginning of period 32,377 69,056 45,035 114,550
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Cash and cash equivalents
at end of period $ 30,993 $ 45,035 $ 30,993 $ 45,035
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Cash and cash equivalents
is comprised of:
Cash $ 12,537 $ 9,180 $ 12,537 $ 9,180
Cash equivalents 18,456 35,855 18,456 35,855
Supplemental disclosure of
cash flow information:
Non-cash capital asset
additions included in
accounts payable and
accrued liabilities $ 452 $ 508 $ 452 $ 508
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%SEDAR: 00002793E