|
EMJ ANNOUNCES FIRST QUARTER 2003 FINANCIAL RESULTS
EMJ ANNOUNCES FIRST QUARTER 2003 FINANCIAL RESULTS
--EMJ releases first quarter results; declares $0.08 dividend--
Press Release
FOR IMMEDIATE RELEASE Trade Symbol TSX:EMJ
EMJ ANNOUNCES FIRST QUARTER 2003 FINANCIAL RESULTS
--EMJ releases first quarter results; declares $0.08 dividend--
GUELPH, ON -- November 28, 2002 -- EMJ Data Systems Ltd. (TSE:EMJ), a leading Canadian distributor of computer hardware and peripherals, today announced its financial results for the first quarter ended October 31, 2002.
The Company reported net income for the quarter of $200,000 or $0.03 per share compared to $1.5 million or $0.19 per share the comparable period the previous year. The Companys twelve-month trailing earnings are $0.34 per share.
Sales in the first quarter were $47.7 million, a decrease of $4.5 million or 8.6% from the first quarter the previous year.
The gross margin as a percentage of sales decreased to 7.0% from 9.0%. Strategic inventory purchases from distressed companies helped gross margins for the first quarter the previous year. As a result of adoption of the new accounting policy relating to foreign currency translation gains or losses on non-hedged exposures will be reflected in net income for the period. In prior years the foreign exchange was included in the Companys cost of goods sold. The foreign exchange gain for the period ended October 31, 2002 was $54,000 compared to a loss the previous year of $85,000.
An increase in bad debt expense increased selling, general and administrative expenses for the three months ended October 31, 2002. The average days outstanding for accounts receivable at October 31, 2002 decreased to 42 days compared to 56 days at October 31,2001.
According to EMJs CEO and President, Jim Estill, I am very pleased with how our team has reacted to the adverse economic climate. This is our 93rd quarter of operating profit."
EMJ is announcing the payment of a dividend in the amount of $0.08 per share on the 7.9 million outstanding common shares on January 3, 2003 to the shareholders of record at the close of business December 16, 2002.
About EMJ Data Systems Ltd.:
EMJ Data Systems Ltd., headquartered in Guelph, Ontario, is a Canadian, publicly owned distributor of computer products and peripherals. EMJ specializes in niche-market products for Apple, Bar Coding/Auto-ID/Point-of-Sale, Digital Video, Internetworking, Security, Storage Solutions, Unix and Wireless applications. EMJ has Canadian branch offices in Vancouver, Calgary, Winnipeg, Ottawa, Markham, Montreal and Halifax, as well as one office in the United States. EMJ is traded on the Toronto Stock Exchange (TSX) under the symbol 'EMJ'. Interested parties can reach EMJ via the World Wide Web at http://www.emj.ca.
For information, contact:
Jim Estill, Chief Executive Officer
(519) 837-2444, ext. 213
EMJ Data Systems Ltd.
P. O. Box 1012, Guelph, ON N1H 6N1
EMJ Data Systems Ltd.
Consolidated Balance Sheets
31-Oct 31-Jul 31-Oct
($000s unaudited) 2002 2002 2001
(Audited)
ASSETS
Current
Accounts receivable - Trade 21,811 21,916 32,001
- Other 455 221 867
Inventory 21,441 21,496 18,089
Prepaid expenses 318 1,016 346
Notes receivable - current portion 1,565 290 --
Mortgage receivable - current portion 8 -- --
Income taxes recoverable 38 -- 11
Future tax asset 1,410 1,984 1,970
Investment in sales-type leases -- current portion 542 463 396
Total current assets 47,588 47,386 53,680
Note receivable - net of current portion 614 720 --
Mortgage receivable - net of current portion 296 -- --
Future tax asset - net of current portion 2,397 1,913 3,121
Investment in sales-type leases - net of current portion 362 403 362
Capital assets 4,678 4,930 4,361
Investments 183 183 78
Total assets 56,118 55,535 61,602
LIABILITIES AND SHAREHOLDERS EQUITY
Current
Bank indebtedness 20,949 16,273 17,303
Accounts payable and accrued charges 11,224 15,475 21,078
Income taxes payable -- 12 --
Deferred tax benefit 953 1,361 1,366
Total current liabilities 33,126 33,121 39,747
Long-term debt 425 420 405
Deferred tax benefit 1,769 1,425 2,242
Shareholders equity
Share capital 8,011 7,982 7,818
Contributed surplus 344 344 344
Retained earnings 12,443 12,243 11,046
Total shareholders equity 20,798 20,569 19,208
Total liabilities and shareholders equity 56,118 55,535 61,602
EMJ Data Systems Ltd.
Consolidated Statements of Income and Retained Earnings
Three Months Ended October 31
($000s except per share figures, unaudited) 2002 2001
SALES 47,693 52,185
Cost of goods sold 44,332 47,507
Gross margin 3,361 4,678
EXPENSES
Selling, general and administrative 3,056 2,713
Foreign exchange (54) 85
Interest, net 133 186
3,135 2,984
Income from operations 226 1,694
Provision for income taxes 26 201
Net income for period 200 1,493
Retained earnings, beginning of period 12,243 9,553
Retained earnings, end of period 12,443 11,046
Earnings per share $0.03 $0.19
Diluted earnings per share $0.02 $0.19
Weighted average number of shares outstanding 7,897,851 7,854,051
EMJ Data Systems Ltd.
Consolidated Statements of Cash Flows
Three Months Ended October 31
($000s unaudited) 2002 2001
OPERATING ACTIVITIES
Net income 200 1,493
Adjustments for non-cash items:
Amortization 66 51
Allocation of recorded tax loss benefits 26 215
(Gain) on sale of capital assets (110) --
Imputed interest expense 5 5
187 1,764
Change in non-cash working capital components
(Increase) in trade and other receivables (129) (11,747)
(Increase) in notes receivable (1,169) --
Decrease in inventory 55 422
Decrease (increase) in prepaid expenses 698 (10)
(Decrease) increase in accounts payable and accrued charges (4,251) 7,689
(Increase) decrease in income taxes recoverable (38) 26
(Decrease) in income taxes payable (12) --
(4,846) (3,620)
Cash (applied to) operating activities (4,659) (1,856)
INVESTING ACTIVITIES
(Investment in) proceeds from sales-type leases (38) 48
Proceeds on sale of capital assets, net 11 --
Capital asset additions (19) (571)
Cash (applied to) by investing activities (46) (523)
FINANCING ACTIVITIES
Increase in bank loan 4,676 2,356
Issuance of common shares 29 23
Cash provided by financing activities 4,705 2,379
Cash provided during period - --
Cash, beginning of period -- --
Cash, end of period -- --
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies
These interim consolidated financial statements have been prepared in accordance with the same accounting
policies and methods of computation as the annual financial statements as at July 31, 2002, except that
certain disclosures required for annual financial statements have not been included. The significant
accounting policies are consistent with the policies outlined in EMJ Data Systems Ltd. 's ("the Company")
audited consolidated financial statements for the year ended July 31, 2002, except for the treatment of
foreign currency translation and stock-based compensation as noted below. These interim consolidated
financial statements should be read in conjunction with the consolidated financial statements for the year
ended July 31, 2002 as set out in the 2002 Annual Report.
Foreign Currency Translation
Effective August 1, 2002, the Company adopted the revised CICA Handbook Section 1650, Foreign Currency
Translation. As a result of adopting this section, gains or losses on non-hedged exposures related to
long-term monetary items will be reflected in net income for the period. The effect of adopting this accounting
policy was not significant and accordingly, no retroactive adjustment has been reflected in the financial
statements.
Stock-Based Compensation
Effective August 1, 2002, the Company adopted CICA Handbook Section 3870 Stock-based Compensation
and Other Stock-based payments. As permitted by CICA 3870, the Company has applied this change
prospectively for new awards granted on or after August 1, 2002. The Company has chosen to recognize
no compensation cost when stock options are granted to employees and directors under stock option plans
with no cash settlement features. However, direct awards of stock to employees and stock and stock option
awards granted to non-employees have been accounted for in accordance with the fair value method of
accounting for stock-based compensation. The fair value of direct awards of stock are determined by the
quoted market price of the Company's stock and the fair value of stock options are determined using the Black-
Scholes option pricing model. In periods prior to August 1, 2002, the Company recognized no compensation
cost when stock or stock options were issued to employees.
2. Earnings per share
The diluted earnings per share disclosure has been calculated using the treasury stock method.
Diluted earnings per share computation
For the three months ended October 31 2002 2001
Weighted average common shares 7,897,851 7,854,051
Incremental shares from assumed conversion
of employee stock options 389,005 27,880
Adjusted weighted average shares 8,286,856 7,881,931
3. Share Capital
(a) Authorized and Issued Share Capital as at October 31, 2002:
The Company's authorized share capital consists of an unlimited number of common, first preference and second
preference shares. The rights and restrictions attached to the preference shares are determined by the Board of
Directors prior to issue.
7,902,851 common shares have been issued for a total of $8,010,583.
(b) Options, Warrants and Convertible Securities Outstanding as at October 31, 2002:
The Company has outstanding stock options for 558,556 shares, of which 400,022 are vested as at October 31, 2002.
During the three months ended October 31, 2002, options for 7,700 shares were exercised for cash proceeds
of $28,336.
4. Stock-Based Compensation
In accordance with CICA Handbook Section 1650, pro forma information regarding net income is required to be
disclosed as if the Company accounted for employee stock options granted after July 31, 2002 under the fair value
method. No options were granted in the three months ended October 31, 2002 and accordingly no pro forma
information is required.
5. Comparative Figures
Certain comparative figures have been restated to conform with the presentation for the current period.
|
