Calian First Quarter 2002 Results

Transcription

1 Calian First Quarter 2002 Results CALIAN TECHNOLOGY REPORTS 1ST QUARTER RESULTS Profits Improve By Focusing On Costs Kanata, Ontario, February 14, 2002: Calian Technology Ltd. (TSE.CTY) today released unaudited results for the first quarter of its fiscal year 2002, ended December 31, Earnings from continuing operations were $0.4 million, which is $1.0 million higher than they had been in the first quarter of the prior fiscal year and $0.3 million greater than in the fourth quarter of fiscal Net earnings for the current quarter were also $0.4 million, and were significantly ahead of first quarter a year ago, when the Company reported a loss of $2.7 million. That loss was largely the result of the weak performance of its eservices business, which Calian disposed of in June of Earnings per share were $0.04 for the quarter ended December 31, 2001, compared with losses per share of ($0.07) from continuing operations and ($0.28) on a net basis for the same period a year prior. "Most of the improvement in the quarterly profitability can be attributed directly to our efforts in cost reduction," stated Larry O'Brien, President and CEO. "We have focused Calian on Systems Engineering and Resourcing, and we have resized the business. We are ready to take on increased volumes with substantially the same infrastructure as we now have. "We completed the buyback of almost 1.8 million Calian shares in December, and the Company has a strong cash balance of $8.7 million. Cash flows from operating activities were $2.1 million during the first quarter. "Although the economic environment for 2002 appears challenging, we face the coming year with some optimism. While revenue growth is anticipated to be moderate, we expect that profitability will improve on a quarterly basis. We have an order backlog of $116 million as we enter our second fiscal quarter, which provides a solid base from which to build." About Calian: Calian Technology Ltd. (TSE:CTY) sells systems engineering and resourcing (staffing/outsourcing) services to industry and government. CALIAN TECHNOLOGY LTD. CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (dollars in thousands except per share data) Three months ended December 31 (Unaudited) Revenues $30,265 $29,830 Cost of revenues 25,219 24,716 Gross profit 5,046 5,114 Selling and marketing 1,060 1,285 General and administration 2,208 2,474 Facilities Amortization of capital assets Special charge (Note 6) Earnings (loss) before interest, taxes and amortization of goodwill 695 (83) Interest income, net 64 44

2 Earnings (loss) before taxes and amortization of goodwill 759 (39) Income taxes - current 238 (13) Income taxes - future Earnings (loss) before amortization of goodwill 409 (637) Amortization of goodwill Earnings (loss) from continuing operations 350 (696) Loss from discontinued operation (net of income taxes) (Note 9) - (2,049) NET EARNINGS (LOSS) 350 (2,745) Retained earnings, beginning of period 9,797 24,491 Excess of purchase price over stated capital on repurchase of shares (Note 8) (2,000) - Retained earnings, end of period $8,147 $21,746 Earnings (loss) per share from continuing operations: (Note 2) Basic $0.04 $(0.07) Fully Diluted $0.04 $(0.07) Net earnings (loss) per share: (Note 2) Basic $0.04 $(0.28) Fully Diluted $0.04 $(0.28) Weighted average number of shares: (Note 2) Basic 9,179,049 9,734,390 Fully Diluted 9,185,658 9,734,390 CALIAN TECHNOLOGY LTD. CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, September 30, (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $8,717 $12,211 Accounts receivable 19,115 18,394 Unbilled accounts receivable 2,461 3,865 Prepaid expenses and other Note receivable Future income taxes 2,812 2,292 33,708 37,566 GOODWILL 3,423 3,482 CAPITAL ASSETS 4,979 5,067 INVESTMENT TAX CREDITS RECOVERABLE 2,009 2,176 FUTURE INCOME TAXES 5,273 5,906 NOTES RECEIVABLE

3 $49,642 $54,447 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $14,836 $16,053 Unearned contract revenue 11,530 10,148 Current portion of long-term debt ,527 26,361 LONG-TERM DEBT ,831 26,706 CONTINGENCIES (Note 7) SHAREHOLDERS' EQUITY Share capital (Note 8) Retained earnings 14,664 17,944 8,147 9,797 22,811 27,741 $49,642 $54,447 CALIAN TECHNOLOGY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Three months ended December 31 (Unaudited) CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net earnings (loss) $350 $(2,745) Items not affecting cash: Deferred lease inducements (2) (3) Amortization Investment tax credits Future income taxes 112 (369) 1,073 (2,334) Change in non-cash working capital Accounts receivable (721) 1,014 Unbilled accounts receivable 1,403 (2,779) Prepaid expenses and other Accounts payable and accrued liabilities (1,215) 1,955 Unearned contract revenue 1, ,123 (1,238) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Repayment of debt (38) (170) Issuance of common shares - 66

4 Repurchase of common shares, including cost associated with repurchase (Note 8) (5,280) - (5,318) (104) CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Acquisition of capital assets (299) (294) Proceeds on disposal of capital assets - - (299) (294) NET CASH INFLOW (OUTFLOW) (3,494) (1,636) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,211 10,576 CASH AND CASH EQUIVALENTS, END OF PERIOD $8,717 $8,940 CALIAN TECHNOLOGY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the periods ended December 31, 2001 and 2000 (dollars in thousands) (Unaudited) 1. ACCOUNTING POLICIES These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles except that these interim consolidated financial statements do not provide full note disclosure. These interim consolidated financial statements have been prepared using the same accounting policies used in the preparation of the audited annual consolidated financial statements, with the exception of the application of the new recommendation with respect to the calculation of earnings per share as described in Note 2. These interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements. 2. EARNINGS (LOSS) PER SHARE During the quarter ended December 31, 2001, the Company adopted the new recommendation of the Canadian Institute of Chartered Accountants (``CICA'') with respect to the calculation of earnings per share. These new recommendations do not result in any changes to the way in which basic earnings per share are calculated. However, the new recommendations do affect the calculation of diluted earnings per share. Diluted earnings per share are now calculated based on the weighted average number of common shares outstanding during the period plus the effects of dilutive potential common shares outstanding during the period. This method requires that the dilutive effect of outstanding options be calculated using the treasury stock method, as if all dilutive options had been exercised at the later of the beginning of the reporting period or date of issuance, and that the funds obtained thereby were used to purchase common shares of the Company at the average trading price of the common shares during the period. This change, which has been applied retroactively to the results of fiscal year 2000, did not result in any change in the diluted earnings per share for the three months ended December 31, The diluted weighted average number of shares has been calculated as follows: Period ended Period ended December 31, 2001 December 31, 2000 Denominator: Weighted average number of shares - basic 9,179,049 9,734,390 Additions to reflect the dilutive effect of employee stock options 6,609 - Denominator for diluted earnings per share: Weighted number of shares - diluted 9,185,658 9,734,390 Options to purchase 1,054,501 common shares (2000-1,007,594) have been excluded from the above calculations since they would have an anti-dilutive effect.

5 3. ACCOUNTING ESTIMATES For the period ended December 31, 2001 there have been no material changes in estimates of amounts reported in prior interim periods or of amounts related to prior fiscal years. 4. SEASONALITY The Company's operations are not subject to significant cyclicality. However, given the nature of its operations, the Company's revenues may be affected by vacation or holiday schedules. 5. SEGMENTED INFORMATION Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, regarding how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company operates in two reportable segments described below, defined by their primary type of service offering, namely Systems Engineering and Resourcing. Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector. Resourcing involves both short and long-term placements of personnel to augment customers' workforces (Staffing) as well as the longterm management of projects, facilities and customer business processes (Outsourcing). The Company evaluates performance and allocates resources based on earnings before interest and income taxes. The company does not segregate assets and other balance sheet accounts between Resourcing and Corporate services. The accounting policies of the segments are the same as those described in the significant accounting policies note in the audited annual consolidated financial statements. Three months ended December 31, 2001 Systems Corporate and Engineering Resourcing Other (a) Total Revenue $9,881 $20,384 $30,265 Earnings (loss) before interest and income taxes (386) 636 Interest income 64 Income taxes 350 Earnings from continuing operations and net earnings $350 Total assets other than cash $8,423 $32,402 $40,825 Cash Cash 8,717 Total assets $49,542 Three months ended December 31, 2000 Systems Corporate and Engineering Resourcing Other (a) (b) Total Revenue $10,527 $19,303 $29,830 Earnings (loss) before interest and income taxes (1,087) (142) Interest income 44 Income taxes 598 Loss from continuing operations $(696)

6 Discontinued operation (2,049) Net loss $(2,745) Total assets other than cash $11,421 $49,385 $60,806 Cash 8,940 Total Assets $69,746 a) Includes Corporate Services costs not appropriate to allocate to the operating segments b) Total Assets include the assets of the eservices business 6. SPECIAL CHARGE Special charges in the quarter ended December 31, 2000 included legal, settlement and other costs amounting to $ CONTINGENCIES During its fiscal year 2000 the Company acquired PPI Canada Ltd. (PPI). In the event it is determined that the acquired business achieved a certain level of profitability (as defined) during the twelve months following the acquisition, additional cash consideration for the shares of PPI will become payable. The maximum amount of such an additional payment is $1,600. In June 2001 the Company informed the selling shareholders of PPI that the acquired business' profitability (as defined) was lower than the earnings threshold specified, and that accordingly, no additional payment for PPI shares was required to be made. In July 2001 the selling shareholders of PPI filed a claim against the Company, claiming the additional payment of $1,600 and further damages in excess of $2,000.In October 2001 the Company filed a statement of defence to this claim, and counterclaimed $2,000 from the selling shareholders. The amount of additional consideration for the shares, if any, is not determinable at this time. The Company is party to several other claims aggregating approximately $1,300, which are being contested. The potential outcomes of these matters are not determinable at this time. The Company intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on Calian's financial condition. 8. SHARE REPURCHASE In December 2001, the Company acquired 1,786,956 (or 18.3%) of its outstanding common shares at a price of $2.80 per share, for a total of $5,280 including related expenses, through a Substantial Issuer Bid procedure known as a Dutch Auction. The excess of the purchase price over the average stated capital of the shares has been charged to retained earnings. 9. DISCONTINUED OPERATION On May 16, 2001 the Company's Board of Directors approved a formal plan to dispose of all of the assets of the eservices business. The approved plan consisted of rationalizing the eservices operations by making adjustments to the workforce and facilities commensurate with the size of the business and selling the resized business. The effective date of disposal was June 30, During its third quarter of fiscal 2001, the Company recorded a loss on disposal of the eservices business of $13,287 before tax and $11,341 after tax, including rationalization costs and operating losses subsequent to May 16, These amounts (pre-tax) are as follows: (i) Rationalization costs: Workforce reduction $731 Legal, consulting and other 852 Provision for excess facilities 213 $1,796 (ii) Loss on disposal of assets: Goodwill $7,485 Capital assets 2,755 Other assets 707 $10,947 (iii) Loss from operations from May 16 to June 30, 2001 $544 If there were to be additional consideration payable for the shares of PPI Canada Ltd. as described in Note 7, this would be accounted for as part of the discontinued operation. For the quarter ended December 31, 2000, the revenues of the eservices business were $2,151 and the net loss before tax was $3,030 ($2,049 after tax). That quarter included a provision of $1,669 before tax including one-time charges and restructuring costs relating to

7 eservices. The carrying value of the remaining assets and liabilities of the discontinued operation as at December 31, 2001 are as follows: Trade receivables $390 Accounts payable and accrued liabilities (1,353) $(963) The loss per share from discontinued operation for the period ended December 31, 2000 was ($0.21) basic and fully diluted. Management Discussion and Analysis (MD&A) of the first fiscal quarter: Results of operations: For the first quarter of fiscal 2002, revenues were $30.3 million compared to $29.8 million in the first quarter of fiscal 2001, representing an increase of 1.5%. The Resourcing (Staffing/Outsourcing) segment reported growth with revenues increasing to $20.4 million from $19.3 million. System Engineering's revenues were $9.9 million in the quarter, down slightly from $10.5 million in the first quarter of last year. Gross profit was 16.7% in the first quarter of 2002 as compared to 17.1% in the comparable quarter a year ago, due to somewhat higher volumes on several contracts with lower margins. Selling, marketing, general and administration expenses totaled $3.3 million or 10.8% of revenues in the first quarter of This compares to $3.8 million or 12.6% of revenues in the first quarter of The decrease of $0.5 million is related largely to the Company's efforts to reduce costs by increasing operational efficiencies and eliminating redundancies. The provision for income taxes during the first quarter of fiscal 2002 was $0.4 million as compared to $0.6 million a year ago. Although the Company is reporting a current provision for income taxes of $0.2 million in the first quarter of fiscal 2002, most of the income taxes will be recovered through the utilization of investment tax credits and therefore minimal cash taxes will be payable. As a result of the foregoing, the Company recorded earnings from continuing operations of $0.4 million or $0.04 per share basic and fully diluted in the first quarter of fiscal 2002, compared with a loss of $0.7 million or $(0.07) per share basic and fully diluted in the same quarter for the prior year. The Company had incurred a loss of $3.0 million ($2.0 million after-tax) on its discontinued eservices operation in the first quarter ending December 31, There was no such income or loss in the first quarter of the current fiscal year. The Company has recorded net earnings of $0.4 million or $0.04 per share basic and fully diluted in the first quarter of fiscal 2002, compared with net loss of $2.7 million or $(0.28) per share basic and fully diluted in the same quarter the previous year. Financial Condition and Cash Flows Calian maintains a strong balance sheet and cash position, which together with bank lines are sufficient to support the Company's operations for the foreseeable future. The Company's cash position at the end of the quarter amounted to $8.7 million, compared with $12.2 million at September 30, 2001 and $8.9 million a year ago. Cash decreased by $3.5 million during the quarter, largely due to the purchase for $5.3 million in December 2001 of 1,786,956 Company shares under a Substantial Issuer Bid. There were positive cash flows from operating activities of $2.1 million during the quarter ended December 2001, based on the Company's profitability. Changes in working capital contributed $1.0 million to this amount. In the first quarter of the prior fiscal year, lower profitability resulted in a negative cash flow from operating activities of $1.2 million and a net cash outflow of $1.6 million overall. The foregoing discussion and analysis should be read in conjunction with the financial statements for the first quarter of fiscal 2002 and 2001, and with the Management Discussion and Analysis in the fiscal 2001 annual report, including the section on risks and opportunities. For further information, please contact: Brian Aitken Chief Financial Officer Calian Telephone: (613) ext. 217 Back to Quarterly Reports DISCLAIMER Certain information included in press releases on this site is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or

8 credit risk with major customers; technical risks on firm fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them. Information posted on this website was accurate at the time of posting, but may be superceded by subsequent information. "Calian" and the Calian Logo are Trademarks owned by Calian Technologies Ltd.

9 Calian Second Quarter 2002 Results CALIAN TECHNOLOGY REPORTS 2ND QUARTER RESULTS Company "Back in the Black" following changes implemented during past year Kanata, Ontario - May 9, 2002: Calian Technology Ltd (TSX.CTY) today released unaudited results for the second quarter of its fiscal year 2002, ended March 31, Revenues for the quarter were $33.2 million, up 4% from $31.9 million for the same quarter in the previous year, and up 10% from $30.2 million in the first quarter of this year. Earnings from continuing operations were $0.8 million, up slightly from the same quarter last year, and double the $0.4 million reported in the first quarter of this year. Year-to-date revenues for the first half were $63.5 million, up 6% from $61.7 million in the first half of last year. Earnings from continuing operations were $1.2 million compared to $0.1 million in the first half of last year. "This quarter was our best-ever in terms of revenue from existing businesses", said Larry O'Brien, President and CEO. "Equally important, we have returned to a solid level of profitability, thanks to our strategy of re-focusing our business on our core strengths in systems engineering and resourcing, coupled with significant improvements in our cost structure. We are delighted to be back in the black." Net earnings per share were $0.10 for the quarter ended March 31, 2002, compared with $0.08 per share in the same quarter last year and $0.04 per share in the first quarter of this year. Year-to-date net earnings for the first half were $0.14 per share compared with $0.01 per share in the first half of last year. "This is our third consecutive quarter of improved earnings, and our best quarterly net earnings per share in the last 6 quarters," said O'Brien. "Our transition out of the eservices business a year ago and of refocusing on our two core areas is clearly showing positive results for the company, investors and employees." During the quarter, the Company booked $36 million in new business improving our order backlog to $119 million, of which $53 million will be earned as revenue over the course of the current year. " We are approaching the balance of the year with confidence due to our re-focused business strategy, a better cost structure, an increased order backlog, and an unparalleled team of professionals." About Calian: Calian Technology Ltd. (TSX:CTY) provides systems engineering and resourcing services to industry, government and major organizations in Canada, the United States and around the world. With two decades of success and over $125 million in annual revenues, Calian provides customers with ready access to an exceptional team of over 2,200 engineers, telecommunications and technology professionals, and other highly qualified staff. The Resourcing Division augments customer workforces with flexible short and long-term placements, recruitment and outsourcing of engineering and other skilled professionals. The Systems Engineering Division plans, designs and implements solutions for many of the world's space agencies and leading communications satellite manufacturers and operators. For further information, please visit our website at or contact: Larry O'Brien President & CEO Telephone: (613) ext. 271 Jacqueline Gauthier Chief Financial Officer Telephone: (613) ext. 277 CALIAN TECHNOLOGY LTD. CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (dollars in thousands except per share data) (Unaudited) Three months ended Six months ended

10 March 31 March Revenues $33,245 $31,898 $63,510 $61,728 Cost of revenues 27,462 25,499 52,681 50,215 Gross profit 5,783 6,399 10,829 11,513 Selling and marketing 1,129 1,478 2,189 2,763 General and administration 2,108 2,295 4,316 4,769 Facilities ,379 1,406 Amortization of capital assets Special charge (Note 6) Earnings before interest, taxes and amortization of goodwill 1,467 1,475 2,162 1,392 Interest income, net Earnings before taxes and amortization of goodwill 1,496 1,498 2,255 1,459 Income taxes - current Income taxes - future , ,238 Earnings before amortization of goodwill , Amortization of goodwill Earnings from continuing operations , Loss from discontinued operation (net of income taxes) (Note 9) - (645) - (2,694) NET EARNINGS (LOSS) ,176 (2,592) Retained earnings, beginning of period 8,147 21,746 9,797 24,491 Excess of purchase price over stated capital on repurchase of shares (Note 8) (7) - (2,007) - Retained earnings, end of period $8,966 $21,899 $8,966 $21,899 Earnings per share from continuing operations: (Note 2) Basic $0.10 $0.08 $0.14 $0.01 Fully Diluted $0.10 $0.08 $0.14 $0.01 Net earnings (loss) per share: (Note 2) Basic $0.10 $0.02 $0.14 $(0.26) Fully Diluted $0.10 $0.02 $0.14 $(0.26)

11 Weighted average number of shares: (Note 2) Basic 8,030,518 9,769,822 8,604,784 9,752,106 Fully Diluted 8,137,142 9,828,795 8,661,400 9,878,269 CALIAN TECHNOLOGY LTD. CONSOLIDATED BALANCE SHEETS (dollars in thousands) March 31, 2002 September 30, (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $6,571 $12,211 Accounts receivable 21,353 18,394 Unbilled accounts receivable ,865 Prepaid expenses and other Note receivable Future income taxes 2,952 2,292 35,851 37,566 GOODWILL 3,364 3,482 CAPITAL ASSETS 4,685 5,067 INVESTMENT TAX CREDITS RECOVERABLE 1,927 2,176 FUTURE INCOME TAXES 4,720 5,906 NOTES RECEIVABLE $50,797 $54,447 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $15,398 $16,053 Unearned contract revenue 11,151 10,148 Current portion of long-term debt ,712 26,361 LONG-TERM DEBT ,975 26,706 CONTINGENCIES (Note 7) SHAREHOLDERS' EQUITY Share capital (Note 8) 14,856 17,944 Retained earnings 8,966 9,797 23,822 27,741 $50,797 $54,447 CALIAN TECHNOLOGY LTD.

12 CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) Three months ended Six months ended March 31 March CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net earnings (loss) $826 $153 1,176 $(2,592) Items not affecting cash: Deferred lease inducements (3) (3) (5) (6) Amortization ,576 Investment tax credits Future income taxes (33) - 1,774 1,279 2,847 (1,055) Change in non-cash working capital Accounts receivable (2,238) (946) (2,959) 68 Unbilled accounts receivable (1,828) 3,670 (425) 891 Prepaid expenses and other (82) Accounts payable and accrued liabilities 560 1,920 (655) 3,875 Unearned contract revenue (379) (3,429) 1,003 (2,785) - (2,193) 2,583 (70) 1,345 - CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Repayment of debt (36) (354) (74) (524) Issuance of common shares Repurchase of common shares, including cost associated with repurchase (Note 8) (22) - (5,302) (224) (5,169) (328) - CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Acquisition of capital assets (102) (598) (401) (892) Proceeds on disposal of capital assets (102) (598) (401) (892) - NET CASH INFLOW (OUTFLOW) (2,146) 1,761 (5,640) 125 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,717 8,940 12,211 10,576 - CASH AND CASH EQUIVALENTS, END OF PERIOD $6,571 $10,701 $6,571 $10, CALIAN TECHNOLOGY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13 For the periods ended March 31, 2002 and 2001 (dollars in thousands) (Unaudited) 1. ACCOUNTING POLICIES These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles except that these interim consolidated financial statements do not provide full note disclosure. These interim consolidated financial statements have been prepared using the same accounting policies used in the preparation of the audited annual consolidated financial statements, with the exception of the application of the new recommendation with respect to the calculation of earnings per share as described in Note 2. These interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements. 2. EARNINGS (LOSS) PER SHARE During the quarter ended December 31, 2001, the Company adopted the new recommendation of the Canadian Institute of Chartered Accountants ("CICA") with respect to the calculation of earnings per share. These new recommendations do not result in any changes to the way in which basic earnings per share are calculated. However, the new recommendations do affect the calculation of diluted earnings per share. Diluted earnings per share are now calculated based on the weighted average number of common shares outstanding during the period plus the effects of dilutive potential common shares outstanding during the period. This method requires that the dilutive effect of outstanding options be calculated using the treasury stock method, as if all dilutive options had been exercised at the later of the beginning of the reporting period or date of issuance, and that the funds obtained thereby were used to purchase common shares of the Company at the average trading price of the common shares during the period. This change, which has been applied retroactively to the results of fiscal year 2001, did not result in any change to the diluted earnings per share for the three and six month periods ended March 31, The diluted weighted average number of shares has been calculated as follows: Three Months ended Six months ended March 31st March 31st Denominator: Weighted average number of shares - basic 8,030,518 9,769,822 8,604,784 9,752,106 Additions to reflect the dilutive effect of employee stock options 106,624 58,973 56, ,163 - Denominator for diluted earnings per share: Weighted number of shares - diluted 8,137,142 9,828,795 8,661,400 9,878,269 - In the three and six month periods ended March 31, 2002, options to purchase 925,076 and 975,084 common shares ( ,980 and

14 826,791) have been excluded from the above calculations since they would have an anti-dilutive effect. 3. ACCOUNTING ESTIMATES For the period ended March 31, 2002 there have been no material changes in estimates of amounts reported in prior interim periods or of amounts related to prior fiscal years. 4. SEASONALITY The Company's operations are not subject to significant cyclicality. However, given the nature of its operations, the Company's revenues may be affected by vacation or holiday schedules. 5. SEGMENTED INFORMATION Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, regarding how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company operates in two reportable segments described below, defined by their primary type of service offering, namely Systems Engineering and Resourcing. * Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector. * Resourcing involves both short and long-term placements of personnel to augment customers' workforces (Staffing) as well as the long-term management of projects, facilities and customer business processes (Outsourcing). The Company evaluates performance and allocates resources based on earnings before interest and income taxes. The company does not segregate assets and other balance sheet accounts between Resourcing and Corporate services. The accounting policies of the segments are the same as those described in the significant accounting policies note in the audited annual consolidated financial statements. Three months ended March 31, Corporate Systems and Engineering Resourcing Other(a) Total - Revenue $11,337 $21,908 - $33,245 Earnings (loss) before interest and income taxes 1, (389) 1,408 Interest income 29 Income taxes Earnings from continuing operations and net earnings $ Total assets other than cash $11,517 $32,709 $44,226 Cash 6,571

15 - Total assets $50, Three months ended March 31, Corporate Systems and Engineering Resourcing Other(a)(b) Total - Revenue $10,185 $21,713 - $31,898 Earnings (loss) before interest and income taxes 1, (754) 1,415 Interest income 23 Income taxes Earnings from continuing operations $798 Discontinued operation (645) - Net earnings $ Total assets other than cash $12,211 $45,252 $57,463 Cash 10,701 - Total Assets $68, Six months ended March 31, Corporate Systems and Engineering Resourcing Other(a) Total - Revenue $21,218 $42,292 - $63,510 Earnings (loss) before interest and income taxes 2, (775) 2,044 Interest income 93 Income taxes Earnings from continuing operations and net earnings $1, Total assets other than cash $11,517 $32,709 $44,226 Cash 6,571 - Total assets $50, Six months ended March 31, 2001

16 - Corporate Systems and Engineering Resourcing Other(a)(b) Total - Revenue $20,712 $41,016 - $61,728 Earnings (loss) before interest and income taxes 2,030 1,084 (1,841) 1,273 Interest income 67 Income taxes 1,238 - Earnings from continuing operations 102 Discontinued operation (2,694) - Net loss $(2,592) - - Total assets other than cash $12,211 $45,252 $57,463 Cash 10,701 - Total Assets $68, a) Includes Corporate Services costs not appropriate to allocate to the operating segments b) Total Assets include the assets of the eservices business 6. SPECIAL CHARGE Special charges in the six months ended March 31, 2001 included legal, settlement and other costs amounting to $ CONTINGENCIES During its fiscal year 2000 the Company acquired PPI Canada Ltd. (PPI). In the event it is determined that the acquired business achieved a certain level of profitability (as defined) during the twelve months following the acquisition, additional cash consideration for the shares of PPI will become payable. The maximum amount of such an additional payment is $1,600. In June 2001 the Company informed the selling shareholders of PPI that the acquired business' profitability (as defined) was lower than the earnings threshold specified, and that accordingly, no additional payment for PPI shares was required to be made. In July 2001 the selling shareholders of PPI filed a claim against the Company, claiming the additional payment of $1,600 and further damages in excess of $2,000. In October 2001 the Company filed a statement of defence to this claim, and counterclaimed $2,000 from the selling shareholders. The amount of additional consideration for the shares, if any, is not determinable at this time. The Company is party to several other claims aggregating approximately $900, which are being contested. The potential outcomes of these matters are not determinable at this time. The Company intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on Calian's financial condition. 8. SHARE REPURCHASE In December 2001, the Company acquired 1,786,956 (or 18.3%) of its outstanding common shares at a price of $2.80 per share, for a total of $5,280 including related expenses, through a Substantial Issuer Bid procedure known as a Dutch Auction. The excess of the purchase price over the average stated capital of the shares has

17 been charged to retained earnings. 9. DISCONTINUED OPERATION On May 16, 2001 the Company's Board of Directors approved a formal plan to dispose of all of the assets of the eservices business. The approved plan consisted of rationalizing the eservices operations by making adjustments to the workforce and facilities commensurate with the size of the business and selling the resized business. The effective date of disposal was June 30, During its third quarter of fiscal 2001, the Company recorded a loss on disposal of the eservices business of $13,287 before tax and $11,341 after tax, including rationalization costs and operating losses subsequent to May 16, These amounts (pre-tax) are as follows: (i) Rationalization costs: Workforce reduction $731 Legal, consulting and other 852 Provision for excess facilities $1, (ii) Loss on disposal of assets: Goodwill $7,485 Capital assets 2,755 Other assets $10, (iii) Loss from operations from May 16 to June 30, 2001 $ If there were to be additional consideration payable for the shares of PPI Canada Ltd. as described in Note 7, this would be accounted for as part of the discontinued operation. For the three and six month periods ended March 31, 2001, the revenues of the eservices business were $2,384 and $4,535 respectively. The net loss before tax was $918 ($645 after tax) and $3,948 ($2,694 after tax) for the same periods ending March 31, The carrying value of the remaining assets and liabilities of the discontinued operation as at March 31, 2002 are as follows: Trade receivables $380 Accounts payable and accrued liabilities (1,191) $(811) The loss per share from discontinued operation for the three and six month periods ended March 31, 2001 was ($0.07) and ($0.28) respectively, basic and fully diluted. Management Discussion and Analysis (MD&A) of the second fiscal quarter: During the third quarter of fiscal 2001, the Company disposed of all of the assets of its eservices business to focus on Resourcing and Systems Engineering. All revenues and expenses of the eservices business have been classified separately in the

18 accompanying interim financial statements as a discontinued operation. Results of operations: For the second quarter of fiscal 2002, revenues were $33.2 million compared to $31.9 million in the second quarter of fiscal 2001, representing an increase of 4.1%. The Resourcing (Staffing/Outsourcing) segment reported revenues of $21.9 million compared to $21.7 million for the prior year. Systems Engineering's revenues were $11.3 million in the quarter, up from $10.2 million in the second quarter of last year. Gross profit was 17.4% in the second quarter of 2002 as compared to 20.1% in the comparable quarter a year ago. This decrease is explained by a change in the overall sales mix. Selling, marketing, general and administration expenses totaled $3.2 million or 9.7% of revenues in the second quarter of This compares to $3.8 million or 11.8% of revenues in the second quarter of The decrease of $0.6 million is related largely to the Company's efforts to reduce costs by increasing operational efficiencies and eliminating redundancies. As a result of the foregoing, the Company recorded earnings from continuing operations of $0.8 million or $0.10 per share basic and fully diluted in the second quarter of fiscal 2002, compared with net earnings of $0.8 million or $0.08 per share basic and fully diluted in the same quarter for the prior year. The Company had incurred a loss of $0.9 million ($0.6 million after-tax) on its discontinued eservices operation in the second quarter ending March 31, There was no such income or loss in the second quarter of the current fiscal year. The Company has recorded net earnings of $0.8 million or $0.10 per share basic and fully diluted in the second quarter of fiscal 2002, compared with net earnings of $0.2 million or $0.02 per share basic and fully diluted in the same quarter the previous year. For the fiscal year to date, revenues were $63.5 million compared to $61.7 million for the first six months of fiscal 2001, representing an increase of 2.9%. Growth in revenues was modest both in the Resourcing segment, where revenues increased to $42.3 million from $41.0 million and in the Systems Engineering segment where revenues increased to $21.3 million from $20.7 million. Gross profit was 17.5% during the first half of 2002, a 1.2% decline from the equivalent period last fiscal year, again as a result of an overall change in sales mix. Selling, marketing and general and administration, totaled $6.5 million or 10.2% of revenues in the first half of This compares to $7.5 million or 12.2% of revenues in the first half of This decrease is due to factors explained above. The provision for income taxes for the six month period ending March 31, 2002 was $1.0 million, compared to $1.2 million a year ago. Although the Company is reporting a current provision for income taxes of $0.4 million, a significant portion of the income taxes will be recovered through the utilization of investment tax credits. The Company recorded net earnings from continuing operations of $1.2 million or $0.14 per share basic and fully diluted in the first two quarters of fiscal 2002, as compared to net earnings from continuing operations of $0.1 million or $0.01 per share basic and fully diluted in the same period last year. The Company had incurred a loss of $3.9 million ($2.7 million after tax) on its discontinued services operation in the first

19 half of fiscal There was no such income or loss in the first two quarters of the current fiscal year. The Company has recorded net earnings of $1.2 million or $0.14 per share basic and fully diluted in the six month period ended March 31, 2002, compared with a net loss of $2.6 million or ($0.26) per share basic and fully diluted for the same period the previous year. Financial Condition and Cash Flows Calian maintains a strong balance sheet and cash position, which together with bank lines are sufficient to support the Company's operations for the foreseeable future. The Company's cash position at the end of the quarter amounted to $6.6 million, compared with $12.2 million at September 30, During the second quarter of 2002, cash utilized by operating activities, including changes in working capital was $2.2 million, as compared to a positive cash contribution of $2.6 million in the second quarter a year ago. This variation is mainly due to an increase in billed and unbilled accounts receivable. Net cash outflow for the second quarter of fiscal 2002 was $2.1 million as compared to a net cash inflow of $1.8 million for the same period the previous year. For the first two quarters of fiscal 2002, cash utilized by operating activities, including changes in working capital was $0.1 million, as compared to a positive cash contribution of $1.3 million for the same period a year prior. This decrease is due to factors explained above. During the first quarter of fiscal 2002, the Company repurchased 1,786,956 of its outstanding shares under a Substantial Issuer Bid for a total cash outflow of $5.3 million. Including the $5.3 million cash outflow resulting from the share repurchase, the net cash outflow for the six month period ended March 31, 2002 was $5.6 million compared to $0.1 million a year prior. The foregoing discussion and analysis should be read in conjunction with the financial statements for the second quarter of fiscal 2002 and 2001, and with the Management Discussion and Analysis in the fiscal 2001 annual report, including the section on risks and opportunities. Back to Quarterly Reports DISCLAIMER Certain information included in press releases on this site is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on firm fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them. Information posted on this website was accurate at the time of posting, but may be superceded by subsequent information.

20 "Calian" and the Calian Logo are Trademarks owned by Calian Technologies Ltd.

21 Calian Third Quarter 2002 Results CALIAN TECHNOLOGY REPORTS THIRD QUARTER 2002 RESULTS Quarterly earnings exceed million-dollar mark Kanata, Ontario, August 6, 2002 Calian Technology Ltd. (TSE.CTY) today released unaudited results for the third quarter of its fiscal year 2002, ended June 30, Revenues for the quarter were $34.2 million, up 17% from $29.2 million for the same quarter in the previous year. Earnings from continuing operations were $1.1 million, compared to a ($0.5) million loss in the same quarter last year. Year-to-date revenues for the first nine months were $97.7 million, up 8% from $90.9 million in the first nine months of last year. Net earnings per share were $0.13 for the quarter ended June 30, 2002, compared with a net loss per share of ($1.25) in the same quarter last year, when the Company recorded a loss per share on its discontinued operation of ($1.20). Year-todate net earnings per share for the first nine months were $0.27 compared with a net loss per share of ($1.51) for the same period last year. " We continue to show consistent revenue growth in all segments of our business, from existing contracts and new contracts", said Larry O'Brien, President and CEO. " As a result of our commitment to quality services, delivered by a team of highly qualified professionals, Calian continues to provide value-added services to our customers, resulting in increased revenues and opportunities." Highlights of the Third Quarter: $43 million in new business was booked to produce a near-record order backlog of $128 million. Calian won a $12 million project management and engineering support contract for the Maritime Helicopter Program with the Department of National Defence. Calian completed its cost reduction program and reduced operating costs by 5% compared to its second quarter levels. Long-standing legal claims relating to the acquisition of PPI Canada Ltd. were fully settled. "Solid revenues and earnings, steady growth, a solid cash situation and the predictability of a near-record order backlog leave us in a strong position." said Larry O'Brien. "Our current expectation is that we will complete the year with earnings per share of $0.40. For the fiscal year 2003, we expect to achieve earnings per share in the range of $0.45 to $0.50." About Calian: Calian Technology Ltd. (TSX:CTY) provides systems engineering and staffing and outsourcing services to industry, government and major organizations in Canada, the United States and around the world. With two decades of success and over $125 million in annual revenues, Calian provides customers with ready access to an exceptional team of over 2,200 engineers, telecommunications and technology professionals, and other highly qualified staff. The Staffing and Outsourcing Services Division augments customer workforces with flexible short and long-term placements, recruitment and outsourcing of engineering and other skilled professionals. The Systems Engineering Division plans, designs and implements solutions for many of the world's space agencies and leading communications satellite manufacturers and operators. CALIAN TECHNOLOGY LTD. CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (dollars in thousands except per share data) (Unaudited) Three months ended Nine months ended June 30 June Revenues $34,178 $29,166 $97,688 $90,894 Cost of revenues 28,332 24,153 81,013 74,368 - Gross profit 5,846 5,013 16,675 16,526

22 Selling and marketing 1,153 1,377 3,342 4,140 General and administration 1,909 2,390 6,225 7,159 Facilities ,035 2,128 Amortization of capital assets ,141 1,314 Special charge (Note 6) Earnings before interest, taxes and amortization of goodwill 1, ,932 1,454 Interest income, net Earnings before taxes and amortization of goodwill 1, ,075 1,541 - Income taxes - current Income taxes - future , ,642 1,778 - Earnings (loss) before amortization of goodwill 1,139 (458) 2,433 (237) Amortization of goodwill Earnings (loss) from continuing operations 1,080 (516) 2,256 (414) Loss from discontinued operation (net of income taxes) (Note 9) - (341) - (3,035) Loss on disposal of discontinued operation (net of income taxes) (Note 9) - (11,341) - (11,341) - NET EARNINGS (LOSS) 1,080 (12,198) 2,256 (14,790) Retained earnings, beginning of period 8,966 21,899 9,797 24,491 Excess of purchase price over stated capital on repurchase of shares (Note 8) (108) - (2,115) - - Retained earnings, end of period $9,938 $9,701 $9,938 $9, Earnings (loss) per share from continuing operations: (Note 2) Basic $.13 $(0.05) $.27 $(0.04) - - Fully Diluted $.13 $(0.05) $.27 $(0.04) - - Net earnings (loss) per share: (Note 2) Basic $.13 $(1.25) $.27 $(1.51) - - Fully Diluted $.13 $(1.25) $.27 $(1.51) - - Weighted average number of shares: (Note 2) Basic 8,047,923 9,774,701 8,419,163 9,759, Fully Diluted 8,222,634 9,774,701 8,515,145 9,759,