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Bridges Announces Q1 2002 Financial Results
April 4, 2002 Bridges.com Inc. (TSE:BIT), North America's leading provider of career and educational planning tools, today reported results for its first quarter of fiscal 2002. The following message is from Bridges' CEO and President Doug Manning. CEO'S MESSAGE In Q1 2002, Bridges continued on course with its development of several expansion-oriented projects. New business systems to support an expanded subscriber base and higher rates of retention were introduced. Product development and new infrastructure projects are both on time and on budget. New sales initiatives were introduced for high schools, elementary schools, and corporate markets. The company continues to leverage growth opportunities in traditional and emerging markets. Bridges reported first-quarter revenues of $3,187,837. This is the first time Bridges' performance has not shown an increase quarter over quarter, with reported revenues 10% less than the $3,560,278 in the first quarter of 2001. First quarter revenues were impacted primarily by the inadequate implementation of our newly integrated customer management systems. This resulted in 31% of first quarter projected resubscriptions remaining 'in process' by quarter's end. In addition, Bridges continues to experience the migration of revenue from Q1 and Q2 into Q3 and Q4, as schools realign their subscription end dates around common end dates within Q3 and Q4. Bridges first and second quarters are already traditionally slower periods for sales, with more than two-thirds of Bridges' revenue historically generated in Q3 and Q4. In Q1, Bridges launched several new sales initiatives. The eGuidanceCenter was co-developed with Peterson's and introduced to the U.S. high school market during the quarter. More than 100 'leader schools' across the U.S. were identified to be involved in a Q2 pilot where parents from the ‘leader schools' will be directly involved in their child's career planning. A new sales team focusing on corporate and national markets introduced resources to the U.S. Army and Maine National Guard, and a team dedicated to sales in elementary schools was introduced. Each of these initiatives is expected to produce results in Q3 and Q4 of 2002. Bridges has committed significant resources to the development of a new technical infrastructure for our products. This will enable the company to support our planned growth in various career development markets. This project has been successfully managed in Q1, is on budget and will be completed in Q2 2002. The quarter also featured significant planning for integration and development of our current products into our expanded infrastructure. Product planning for our high school and corporate products was completed in the quarter, with product integration beginning in Q2. The loss before amortization, interest and taxes of $798,118 compares to a loss of $349,951 in Q1 of 2001. These losses also reflect the annual seasonality of our revenue cycle. Expenditures for Q1 were $3,985,955, compared to $3,910,229 in Q1 2001, demonstrating a strong consistency in year-over-year costs. The business is well positioned to capitalize on this cost structure trend in Q3 and Q4 of this year. The net loss of $891,604 for Q1 2002 compares to a net loss of $980,307 one year earlier. Although revenue shortfalls in Q1 will have an impact on our rate of annual revenue growth in 2002, management is very positive about our growth prospects. For the balance of Fiscal 2002 Bridges expects to remain on target with growth projections. We expect to see continued growth in the number of subscribing sites, average revenue per site, and EBITDA during the year. Our diversification strategies in corporate, national, e-applications, and elementary school markets are projected to increase the percentage of revenue generated outside our core business of subscription sales to North American schools. Growth in these markets should result in less seasonality in our revenue cycle. Second Quarter Objectives Retention Systems Completion - Business systems to support our new Customer Relations Management program will be completed in preparation for our high volume billing seasons of Q3 and Q4. An analysis of Q1 will be completed and utilized to enhance processing systems. Key clients and government distribution partners will be contacted to communicate internal administrative processing changes. New training initiatives designed to increase usage and customer retention will continue to develop Infrastructure Completion - The new infrastructure project will be completed in Q2, providing the foundation for product enhancement and development for the next several years. This sets the stage for the development of product solutions that increase our market position and average revenue per site in our core markets. eGuidanceCenter Research and Marketing - Q2 will feature over 2,000 families in 100 schools testing the parent components of the eGuidanceCenter. Parental involvement is a key component of the 'No Child Left Behind' document that is the foundation for President Bush's new educational initiatives in the U.S. In addition, our sales and marketing teams will continue to introduce this expanded career development solution to American high schools during the quarter. Sales Team Initiatives - Sales initiatives and promotions for Q1 and Q2 historically produce results in Q3 and Q4, when schools tend to do the majority of their purchasing and repurchasing of products. During Q2, sales team members will continue with their sales calls, training initiatives and marketing strategies during the quarter. Staff development for all sales and service team members, regarding new and old funding sources, will also be completed early in the quarter. Corporate/National Market Development - A version of our eChoices product designed for the outplacement market will be completed during the quarter. A national distribution strategy will be completed and implementation of this strategy will begin during the quarter. Updated Guidance for Fiscal 2002 In addition, new research into our sales mix and timing for 2002 sales has led Bridges to project a $1.6 million increase in deferred revenue for the year. This has caused us to reset our projected average revenue per site to $1,210, a 7% adjustment from the November 6, 2001 metrics. Our new venture business projections remain at 13% of total Fiscal 2002 revenue. Our productivity rate, for Fiscal 2002 defined as EBITDA over Revenue, is reset to 21%, reflecting changes in revenue projections. Conference Call To listen to the conference call, please dial 1-800-273-9672 or 1-416-695-5806 ten minutes before the scheduled start of the call. No password is required. If you experience problems during the call or reaching the numbers above, please call Darome Teleconferencing at 1-800-268-9072 or 1-416-695-6740.
A PowerPoint presentation coinciding with the conference call will be available on the Bridges' Web site at http://corporate.bridges.com/confcall/040402/index.htm. The news release announcing Bridges' Q1 2002 results will be distributed through Canadian Corporate News before markets open on April 4, 2002. The news release will also be posted on Bridges' Web site. Replays of the conference call will be available through midnight on April 18, 2002. Replay information is as follows: Replay: 1-416-695-5800 / 1-800-408-3053 If you have any questions, please contact: Pat Horrill, Bridges.com at 1-250-869-4349 or 1-800-281-1168. |
Consolidated Financial Statements - Three Months Ended February 28, 2002
BRIDGES.COM INC. Consolidated Balance Sheets
February 28 November 30
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(Unaudited) 2002 2001
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ASSETS
CURRENT
Cash and cash equivalents $ 6,180,062 $ 6,952,794
Accounts receivable 3,945,846 6,611,783
Prepaid expenses and other 791,017 690,369
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10,916,925 14,254,946
Capital assets 6,926,086 4,681,239
Future income taxes 1,211,839 542,127
Intangibles 292,058 842,232
Goodwill 2,235,114 2,235,114
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$ 21,582,022 $ 22,555,658
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 4,521,385 $ 3,155,955
Deferred revenue 2,674,818 3,246,207
Current portion of capital lease obligations 155,101 149,196
------------------------------------------------------------------------
7,351,304 6,551,358
Capital lease obligations, net of
current portion 57,572 96,001
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7,408,876 6,647,359
------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock 17,791,524 18,220,754
Deficit (3,618,378) (2,312,455)
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14,173,146 15,908,299
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$ 21,582,022 $ 22,555,658
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BRIDGES.COM INC. Consolidated Statements of Operations and Deficit
Three months Three months
ended ended
(Unaudited) February 28, February 28,
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2002 2001
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REVENUE $ 3,187,837 $ 3,560,278
COSTS OF REVENUE 1,315,747 1,404,863
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GROSS MARGIN 1,872,090 2,155,415
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EXPENSES
Sales and marketing 1,755,490 1,446,118
Research and development 63,995 118,172
General and administrative 850,723 941,076
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2,670,208 2,505,366
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LOSS BEFORE AMORTIZATION, INTEREST AND TAXES (798,118) (349,951)
Amortization of capital assets (290,095) (201,366)
Amortization of intangibles (550,174) (550,174)
Other income 88,168 106,314
------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES AND
AMORTIZATION OF GOODWILL (1,550,219) (995,177)
Income tax recovery (658,615) (433,954)
------------------------------------------------------------------------
NET LOSS BEFORE AMORTIZATION OF GOODWILL (891,604) (561,223)
Amortization of goodwill - (419,084)
------------------------------------------------------------------------
NET LOSS (891,604) (980,307)
DEFICIT, BEGINNING OF PERIOD (2,312,455) (956,572)
Excess of purchase cost over carrying
value of common shares cancelled (414,319) -
------------------------------------------------------------------------
DEFICIT, END OF PERIOD $(3,618,378) $ (1,936,879)
------------------------------------------------------------------------
Basic loss before amortization of
goodwill per share $ (0.07) $ (0.04)
------------------------------------------------------------------------
Basic loss per share $ (0.07) $ (0.07)
------------------------------------------------------------------------
Weighted average number of shares used
to calculate basic loss per share 12,855,558 13,220,197
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BRIDGES.COM INC. Consolidated Statements of Cash Flows
Three months Three months
ended ended
(Unaudited) February 28, February 28,
------------------------------------------------------------------------
2002 2001
------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (891,604) $ (980,307)
Items not affecting cash
Amortization of capital assets 290,096 201,365
Amortization of intangibles 550,174 550,174
Amortization of goodwill - 419,084
Income tax recovery (669,712) (433,954)
Changes in operating assets and liabilities:
Accounts receivable 2,665,936 1,741,553
Prepaid expenses and other (100,648) 30,204
Accounts payable and accrued liabilities (114,333) (409,267)
Deferred revenue (571,389) (554,732)
------------------------------------------------------------------------
1,158,520 564,120
------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets, net of
related accounts payable (1,055,179) (719,818)
------------------------------------------------------------------------
(1,055,179) (719,818)
------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares 23,065 19,899
Shares purchased for cancellation (223,161) -
Shares purchased and cancelled (643,453) -
Repayment of obligations under capital lease (32,524) (35,194)
------------------------------------------------------------------------
(876,073) (15,295)
------------------------------------------------------------------------
NET CASH OUTFLOW DURING THE PERIOD (772,732) (170,993)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 6,952,794 8,232,897
------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,180,062 $ 8,061,904
------------------------------------------------------------------------
Supplemental Cash Flow Disclosures:
Interest paid $ 8,706 $ 14,190
------------------------------------------------------------------------
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Annual General Meeting Update -- Bridges will hold its annual general meeting at the Grand Okanagan Resort, 1310 Water Street, Kelowna, British Columbia, at 3:00 p.m., May 22, 2002. About Bridges Bridges.com Inc. is North America's leading provider of self-directed career and educational planning tools. From students exploring future careers to retirees pursuing their vocational passion, Bridges connects people to opportunity. Our Internet and CD-ROM products are sold by subscription to over 15,300 North American middle and secondary schools, libraries, employment centres, military sites, and post-secondary schools. Our resources are also uniquely adapted to service a wide range of corporate, consumer and global markets. Bridges is a public company trading on the Toronto Stock Exchange (TSE), Canada's senior exchange. Bridges trades under the symbol BIT and is headquartered in Kelowna, B.C., with offices in Ottawa, Ontario, and Ogdensburg, New York. For more information, see www.bridges.com. Forward-Looking Statements These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement to the company's services and products; expectations concerning future revenue and earnings; market opportunities; general economic and business conditions; loss of key employees; integration of acquisitions; stock market volatility; supply and demand for services offered by Bridges; changes in laws and regulations; Bridges ability to compete successfully, and adapt to technological advances and changing industry standards and other factors. All forward-looking statements in this news release are based on management's reasonable beliefs, intentions and expectations with respect to future events and are subject to certain risks, uncertainties and assumptions as of the date of this release. In light of the many risks and uncertainties that may cause future results to differ materially from those expected, the company cannot give assurance that the forward-looking statements contained in this news release will be realized. Forward-looking statements are not guarantees of future performance. Bridges assumes no obligation to update its forward-looking statements to reflect subsequent information or events. Contacts:
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