Consolidated Statements of Earnings
(in thousands of dollars, except for per share amounts)
For the Three Months ended June 30th,
2005 2004
Amended
(unaudited) (unaudited)
-----------------------------------------------------------
Wireless Tele- Wireless Tele-
Tele- communi- Tele- communi-
communi- cations communi- cations
-cations Service Conso- -cations Service Conso-
Products Provider lidated Products Provider lidated
Revenue
Equipment 9,457 - 9,457 26,141 - 26,141
Services 3,512 - 3,512 5,418 - 5,418
Tele-
communications - 4,719 4,719 - 5,039 5,039
-----------------------------------------------------------
Total revenue 12,969 4,719 17,688 31,559 5,039 36,598
Cost of revenue
Equipment 7,799 - 7,799 15,389 - 15,389
Services 2,122 - 2,122 2,959 - 2,959
-----------------------------------------------------------
Total cost
of revenue 9,921 - 9,921 18,348 - 18,348
Gross profit 3,048 4,719 7,767 13,211 5,039 18,250
Agent
commissions 371 - 371 2,083 - 2,083
Selling, general
and
administrative
expenses 9,616 5,979 15,595 12,146 4,760 16,906
Research and
development
expenses, net 2,997 - 2,997 7,546 - 7,546
Restructuring,
asset
impairment and
other charges 16,548 - 16,548 12,719 - 12,719
-----------------------------------------------------------
Operating (loss)
earnings (26,484) (1,260) (27,744) (21,283) 279 (21,004)
Interest
expense, net (1,714) (748) (2,462) (1,227) (734) (1,961)
(Loss) gain
on foreign
exchange (120) (235) (355) 1,102 (1,511) (409)
-----------------------------------------------------------
Loss before
income taxes (28,318) (2,243) (30,561) (21,408) (1,966) (23,374)
Income tax
expense (116) - (116) (6) - (6)
-----------------------------------------------------------
Net loss (28,434) (2,243) (30,677) (21,414) (1,966) (23,380)
-----------------------------------------------------------
-----------------------------------------------------------
Weighted average
number of common 17,610 17,610
shares outstanding
Net loss per
share, basic
and diluted (1.61) (0.13) (1.74) (1.22) (0.11) (1.33)
Consolidated Statements of Earnings
(in thousands of dollars, except for per share amounts)
For the Six Months ended June 30th,
2005 2004
Amended
(unaudited) (unaudited)
-----------------------------------------------------------
Wireless Tele- Wireless Tele-
Tele- communi- Tele- communi-
communi- cations communi- cations
-cations Service Conso- -cations Service Conso-
Products Provider lidated Products Provider lidated
Revenue
Equipment 19,421 - 19,421 42,691 - 42,691
Services 6,311 - 6,311 10,468 - 10,468
Tele-
communications - 9,853 9,853 - 9,646 9,646
-----------------------------------------------------------
Total revenue 25,732 9,853 35,585 53,159 9,646 62,805
Cost of revenue
Equipment 16,097 - 16,097 26,581 - 26,581
Services 3,682 - 3,682 5,649 - 5,649
-----------------------------------------------------------
Total cost of
revenue 19,779 - 19,779 32,230 - 32,230
Gross profit 5,953 9,853 15,806 20,929 9,646 30,575
Agent
commissions 911 - 911 2,677 - 2,677
Selling, general
and
administrative
expenses 19,457 10,763 30,220 25,332 9,626 34,958
Research and
development
expenses, net 6,521 - 6,521 14,808 - 14,808
Restructuring,
asset impairment
and other
charges 16,548 - 16,548 12,719 - 12,719
-----------------------------------------------------------
Operating (loss)
earnings (37,484) (910) (38,394) (34,607) 20 (34,587)
Interest
expense, net (3,249) (1,445) (4,694) (2,266) (1,492) (3,758)
(Loss) gain
on foreign
exchange (332) (767) (1,099) 651 (2,248) (1,597)
-----------------------------------------------------------
Loss before
income taxes (41,065) (3,122) (44,187) (36,222) (3,720) (39,942)
Income tax
expense (256) - (256) (298) (25) (323)
-----------------------------------------------------------
Net loss (41,321) (3,122) (44,443) (36,520) (3,745) (40,265)
-----------------------------------------------------------
-----------------------------------------------------------
Weighted average
number of common
shares outstanding 17,610 15,668
Net loss per
share, basic
and diluted (2.34) (0.18) (2.52) (2.33) (0.24) (2.57)
Consolidated Statements of Deficit
For the Six Months ended June 30th,
(in thousands of dollars)
2005 2004
Amended
(unaudited) (unaudited)
Deficit, beginning of period as previously
reported (180,561) (90,941)
Cumulative effect of adoption of new
accounting policy - (272)
------------------------
Deficit, beginning of period as restated (180,561) (91,213)
Net loss (44,443) (40,265)
Share issue costs - (3,214)
------------------------
Deficit, end of period (225,004) (134,692)
Consolidated Balance Sheets
As at June 30th, 2005 and December
31st, 2004
(in thousands of dollars)
2005 2004
(unaudited) (audited)
Assets
Current assets
Cash and cash equivalents 5,148 4,549
Short-term restricted cash 2,045 1,394
Accounts receivable, net 29,868 47,500
Income taxes receivable 1,202 911
Inventory 41,803 59,556
Prepaid expenses and deposits 5,500 3,504
------------------------
85,566 117,414
Investment tax credits 13,150 13,150
Long-term accounts receivable, net 5,737 5,644
Long-term restricted cash 502 493
Property, plant and equipment, net 81,321 85,442
Intangible assets, net 4,043 4,494
Other assets, net 5,233 987
------------------------
195,552 227,624
------------------------
------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 51,870 55,682
Customer advances 2,189 1,932
Current portion of lease liability 6,415 5,043
Current portion of long-term debt 1,005 106,680
------------------------
61,479 169,337
Long-term credit facility 12,153 -
Long-term lease liability 1,191 3,577
Long-term liability 1,840 1,810
Long-term debt 110,553 260
------------------------
187,216 174,984
Shareholders' equity
Capital stock 219,653 219,653
Warrants 13,029 13,029
Contributed surplus 658 519
Deficit (225,004) (180,561)
------------------------
8,336 52,640
195,552 227,624
------------------------
------------------------
Consolidated Statements of Cash Flows
For the Three Months ended June 30th,
(in thousands of dollars)
2005 2004
Amended
(unaudited) (unaudited)
Cash flows used in operating activities
Net loss (30,677) (23,380)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 3,076 3,199
Restructuring, asset impairment and
other charges 16,548 1,352
Loss (gain) on disposal of property,
plant and equipment 2 (104)
Asset write-down 71 38
Stock-based compensation 70 72
Future income taxes - 279
Increase in lease liability 150 -
Changes in operating assets and liabilities:
Decrease in long-term accounts receivable - 61
Decrease in non-cash working capital items 2,600 6,490
Unrealized foreign exchange (3) 373
------------------------
Net cash used in operating activities (8,163) (11,620)
Cash flows from (used in) financing activities
Issuance of long-term credit facility 12,386 -
Repayment of bank indebtedness - (2,300)
Repayment of long-term lease liability - (1,322)
Repayment of long-term debt - (5,367)
------------------------
Net cash from (used in) financing activities 12,386 (8,989)
Cash flows (used in) from investing activities
Decrease in restricted cash 446 1,026
Purchase of property, plant and equipment (501) (1,322)
Proceeds on sale of property, plant and equipment 64 231
Purchase of short-term investments - (930)
Proceeds on sale of short-term investments - 23,686
Increase in other assets (4,403) -
------------------------
Net cash (used in) from investing activities (4,394) 22,691
(Decrease) increase in cash and cash equivalents (171) 2,082
Cash and cash equivalents, beginning of period 5,319 8,479
Cash and cash equivalents, end of period 5,148 10,561
------------------------
------------------------
Supplemental Information
Cash paid for:
Interest 1,395 4,339
Income taxes 7 91
Consolidated Statements of Cash Flows
For the Six Months ended June 30th,
(in thousands of dollars)
2005 2004
(unaudited) Amended
(unaudited)
Cash flows used in operating activities
Net loss (44,443) (40,265)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 5,811 6,381
Restructuring, asset impairment and
other charges 16,548 1,352
Gain on disposal of property, plant and
equipment (64) (83)
Asset write-down 130 65
Stock-based compensation 139 112
Future income taxes - 435
Increase in lease liability 150 -
Changes in operating assets and liabilities:
Decrease in long-term accounts receivable - 1,571
Decrease in non-cash working capital items 17,042 2,205
Unrealized foreign exchange 401 1,042
------------------------
Net cash used in operating activities (4,286) (27,185)
Cash flows from financing activities
Issuance of long-term credit facility 12,386 -
Repayment of bank indebtedness - (3,000)
Repayment of long-term lease liability (1,314) (2,851)
Repayment of long-term debt - (5,367)
Proceeds from issue of shares and warrants,
net of share issue costs - 46,787
------------------------
Net cash from financing activities 11,072 35,569
Cash flows used in investing activities
(Increase) decrease in restricted cash (651) 1,547
Purchase of property, plant and equipment (1,112) (2,395)
Proceeds on sale of property, plant and equipment 332 231
Purchase of short-term investments - (41,213)
Proceeds on sale of short-term investments - 35,573
Increase in other assets (4,756) -
------------------------
Net cash used in investing activities (6,187) (6,257)
Increase in cash and cash equivalents 599 2,127
Cash and cash equivalents, beginning of period 4,549 8,434
Cash and cash equivalents, end of period 5,148 10,561
------------------------
------------------------
Supplemental Information
Cash paid for:
Interest 1,404 4,424
Income taxes 41 107