Norsat Announces 2013 Third Quarter Financial Results
November 06, 2013 at 07:00 AM EST
Norsat Announces 2013 Third Quarter Financial Results
Company posts EBITDA of $1.4 million and Revenue of $8.8 million
- Management to Host Conference Call at 8:30 am Pacific Time (11:30 am Eastern Time) -
Conference Call Details
Norsat will host a conference call today, November 6, 2013, at 8:30 am Pacific Time (11:30 am Eastern Time) to discuss 2013 third quarter financial results. To access the conference call, please dial toll-free 1-888-396-8049 or 416-764-8646. The conference call ID is: 'Norsat Investor Call'. Please connect approximately 10 minutes prior to the beginning of the call to ensure participation. A digital recording and transcript of the call will be available later today at: http://www.norsat.com/investors/financial-information/conference-call-recordings/
Vancouver, British Columbia CANADA, November 06, 2013 /FSC/ - Norsat International Inc. (NII - TSX, NSATF - OTCQB), ("Norsat" or "the Company"), a leading provider of innovative communication solutions that enable the transmission of data, audio and video for remote and challenging applications, today reported financial results for the third quarter ended September 30, 2013. Norsat serves global customers primarily through three business units: Sinclair Technologies, Satellite Solutions and Microwave Products. All financial results are reported in U.S. dollars and have been prepared in accordance with International Financial Reporting Standards ("IFRS"), unless otherwise stated.
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------------------------------------ ------------------------------------
($000's) except per share amounts Three months ended September 30
------------------------------------ ------------------------------------
2013 2012 Change Change
------------------------------------ ------- --------- -------- ---------
$ $ $ %
------------------------------------ ------- --------- -------- ---------
------------------------------------ ------- --------- -------- ---------
Revenue 8,788 10,997 (2,209) (20%)
------------------------------------ ------- --------- -------- ---------
Gross profit 3,583 4,560 (977) (21%)
------------------------------------ ------- --------- -------- ---------
Gross profit % 41% 41% -
------------------------------------ ------- --------- -------- ---------
EBITDA (1) 1,361 1,659 (298) (18%)
------------------------------------ ------- --------- -------- ---------
Net earnings from
continuing operations 683 822 (139) (17%)
------------------------------------ ------- --------- -------- ---------
Net earnings from discontinued - 153 (153) 100%
operations
------------------------------------ ------- --------- -------- ---------
Net earnings for the period 683 975 (292) (30%)
------------------------------------ ------- --------- -------- ---------
Net earnings per share - basic and 0.01 0.02 (0.01) (50%)
diluted
------------------------------------ ------- --------- -------- ---------
------------------------------------ ------- --------- -------- ---------
Weighted average common shares
outstanding # #
------------------------------------ ------- --------- -------- ---------
Basic 57,674 58,037
------------------------------------ ------- --------- -------- ---------
Diluted 57,677 58,039
------------------------------------ ------- --------- -------- ---------
------------------------------------ ------------------------------------------
($000's) except per share amounts Nine months ended September 30
------------------------------------ ------------------------------------------
2013 2012 Change Change
------------------------------------ --------- ----------- --------- ----------
$ $ $ %
------------------------------------ --------- ----------- --------- ----------
------------------------------------ --------- ----------- --------- ----------
Revenue 25,740 31,831 (6,091) (19%)
------------------------------------ --------- ----------- --------- ----------
Gross profit 10,630 13,544 (2,914) (22%)
------------------------------------ --------- ----------- --------- ----------
Gross profit % 41% 43% (2%)
------------------------------------ --------- ----------- --------- ----------
EBITDA (1) 2,977 3,549 (572) (16%)
------------------------------------ --------- ----------- --------- ----------
Net earnings from
continuing operations 2,009 4,182 (2,173) (52%)
------------------------------------ --------- ----------- --------- ----------
Net earnings from discontinued - 81 (81) 100%
operations
------------------------------------ --------- ----------- --------- ----------
Net earnings for the period 2,009 4,263 (2,254) (53%)
------------------------------------ --------- ----------- --------- ----------
Net earnings per share - basic and
diluted 0.03 0.07 (0.04) (57%)
------------------------------------ --------- ----------- --------- ----------
------------------------------------ --------- ----------- --------- ----------
Weighted average common shares
outstanding # #
------------------------------------ --------- ----------- --------- ----------
Basic 57,846 58,183
------------------------------------ --------- ----------- --------- ----------
Diluted 57,874 58,185
------------------------------------ --------- ----------- --------- ----------
(1) EBITDA is a Non-IFRS Measure that is defined in the Q3 2013 Management's Discussion and Analysis posted on Norsat's website and SEDAR.
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Third Quarter 2013 Overview
* Third quarter revenue was $8.8 million, compared to $11.0 million during the same period in 2012
* Gross margin remained consistent at 41% in the third quarter of 2013 compared to Q3 2012
* Third quarter EBITDA was $1.4 million compared to $1.7 million in Q3 2012
"We continued to broaden our product and service portfolio, diversify our customer base, and maintain tight control of costs as we responded to challenging market conditions in the third quarter of 2013," said Dr. Amiee Chan, President and CEO of Norsat.
"The ongoing US government budget sequestration has significantly impacted our business by delaying customer projects and purchasing activity. Our total third quarter sales declined to $8.8 million, from $11.0 million a year ago, primarily as a result of the US situation, and to a lesser degree, ongoing economic uncertainty in some of our markets."
"By maintaining strict cost discipline across our operations, we were successful in decreasing total third quarter expenses, excluding government funding and foreign exchange gains/losses, by $0.7 million, or 18%, compared to a year ago. This, in turn, helped us maintain positive EBITDA results."
"Our efforts to diversify our business have also begun to gain traction. So far this year, we have successfully increased our market penetration in Europe, the Middle East and Latin America."
"Our acquisition of CVG is also proving very positive, augmenting our product portfolio and enhancing our intellectual property within the Satellite Solutions and Microwave segments. As a result, we have been able to immediately enter new and additional markets for solid state power amplifiers ("SSPAs"), high power block upconverters ("BUCs"), SATCOM baseband kits and Microsatellite terminals."
"The CVG portfolio contributed approximately $320,000 in revenues by the third quarter and has since led to a major new contract win. On October 9, 2013, we announced a $6.3 million order from Harris Corporation for the compact and efficient ATOM series solid state power amplifiers we acquired as part of the CVG transaction. Harris is an acknowledged industry leader and we believe this partner's recognition of our product strengths will bolster Norsat's reputation and could further our expansion into the BUC market for high power block upconverters."
"In addition to these developments, we are seeing a general increase in customer activity in the Sinclair and Microwave segments. Taken together, we expect to see modest revenue improvements in the fourth quarter, compared to the third quarter just completed," said Dr. Chan.
Financial Review
For the three months ended September 30, 2013
For the three months ended September 30, 2013, Norsat recorded total sales of $8.8 million, compared to $11.0 million in Q3 2012.
Sales from the Sinclair Technologies segment were $5.4 million, compared to $6.0 million during the third quarter of 2012, reflecting reduced government spending in Canada and the negative impact of the US government budget sequestration.
Third quarter Satellite Solutions sales were $0.9 million, compared to $2.4 million in Q3 2012. The year-over-year change primarily reflects reduced equipment and services sales to US government agencies impacted by budget sequestration.
Third quarter Microwave Products sales were also negatively affected by sequestration with sales declining to $2.5 million, from $2.7 million in Q3 2012.
On a consolidated basis, third quarter gross margin percentages were 41%, on par with Q3 2012 results. Gross margins from the Sinclair Technologies segment also held steady at 41% in both the 2013 and 2012 periods. Satellite Solutions gross margins declined significantly to 29% in the third quarter of 2013, from 40% in Q3 2012, impacted by higher proportion of lower-margin equipment and airtime sales. Microwave gross margins remained consistent at 44% in the third quarters of 2013 and 2012.
For the three months ended September 30, 2013, total expenses decreased to $2.9 million, from $3.8 million last year, as the Company tightened spending. Selling and distributing expenses decreased to $1.5 million, from $2.0 million in Q3 2012, reflecting reductions in personnel costs and sales commissions as a result of lower sales volumes.
Third quarter general and administrative expenses decreased to $0.8 million, from $1.0 million. This year-over-year reduction reflects employee-related cost savings and a reduction in bonuses accrued due to lower sales volumes and earnings, partially offset by $0.1 million in acquisition costs related to the CVG transaction.
Third quarter direct product development expenses remained constant at $0.6 million as Norsat continued to invest in its product lines. Net product development costs declined to $0.2 million, from $0.3 million last year, reflecting slightly higher SADI claims in the third quarter of 2013.
For the three months ended September 30, 2013, other expenses decreased to $0.4 million, from $0.6 million in Q3 2012. The year-over-year change reflects a $0.2 million reduction in foreign exchange loss, together with a $0.1 million reduction in interest expenses as Norsat reduced its acquisition loan and promissory note payable balances.
The Company reported third quarter earnings before income taxes of $0.6 million, down slightly from $0.7 million in the same period last year. Third quarter net earnings from continuing operations were $0.7 million, or $0.01 per share basic and diluted, compared to $0.8 million, or $0.01 per share basic and diluted, in Q3 2012.
EBITDA for the three months ended September 30, 2013 was $1.4 million, compared to $1.7 million last year. The year-over-year change in EBITDA reflects a $1.0 million decrease in gross profit, partially offset by a $0.7 million reduction in operating expenses. The decrease in expenses reflects reduced sale commissions and bonuses accrued as a result of lower sales volumes and lower earnings in Q3 2013, lower G&A expenses from employee-related cost savings and slightly higher government contributions.
For the nine months ended September 30, 2013
For the nine months ended September 30, 2013, total sales were $25.7 million, compared to $31.8 million for the same period last year.
Sales from the Sinclair Technologies segment were $16.2 million, compared to $18.5 million during the first nine months of 2012. The year-over-year decrease reflects reduced government spending in Canada and the negative impact of US government budget sequestration.
Satellite Solutions sales were $3.9 million year-to-date, compared to $6.2 million during the same period in 2012. Sales from this segment were significantly impacted by reduced US military ordering of satellite equipment and services as a result of budget sequestration. Service revenues also declined as warranties and post-service contracts expired.
Microwave Products sales for the first nine months of 2013 were $5.7 million, compared to $7.1 million during the same period last year, again reflecting the impact of US budget sequestration.
On a consolidated basis, gross margin percentage was 41% for the nine months ended September 30, 2013, compared to 43% during the same period in 2012. The Microwave Products segment achieved gross margin of 44%, comparable with results from 2012. Margins from the Sinclair Technologies segment were 42%, compared to 44% in the first nine months of 2012, reflecting increased product warranty provision during the 2013 period. Satellite Solutions gross margin decreased to 33% from 38%, primarily reflecting a greater proportion of lower-margin revenues in the mix during 2013, especially related to airtime.
For the nine months ended September 30, 2013, total expenses decreased to $8.7 million, from $11.9 million during the same period in 2012.
Selling and distributing expenses decreased to $4.7 million, from $5.7 million during the first nine months of 2012, reflecting reduced personnel expenses and a decrease in sales commissions as a result of lower sales volumes.
General and administrative expenses decreased to $3.0 million year-to-date, from $3.8 million during the same period in 2012. The reduction in G&A expenses reflects the absence of approximately $0.3 million in severance costs paid in Q1 2012 for the former President of Sinclair, together with a $0.5 million reduction in bonuses accrued due to lower sales volumes and earnings in 2013. These savings were partially offset by CVG transaction-related costs of approximately $0.1 million.
Direct product development expenses increased to $2.5 million during the nine months ended September 30, 2013, from $2.1 million during the same period in 2012. This increase reflects investments made to accelerate development of the newly acquired CVG product lines. On March 28, 2013, Norsat secured a new repayable government contribution under the SADI program, which enables the Company to claim eligible costs incurred between July 27, 2012 and December 31, 2017. The timing of the award meant that over two quarters worth of government contributions were recorded in Q1 2013, compared to just one quarter of contribution in the first quarter of 2012. Accordingly, claims for the nine months ended September 30, 2013 were $1.7 million, compared to $0.9 million during the same period in 2012. As a result, net product development costs declined to $1.0 million for the nine months ended September 30, 2013, from $1.6 million during the same period in 2012.
Other income for the first nine months of 2013 was $31,094, compared to other expenses of $0.8 million during the same period in 2012. This increase in other income was driven by a $0.7 million foreign exchange gain realized as the US dollar strengthened against the Canadian dollar, and by a $0.2 million decrease in interest expenses resulting from the reduction in acquisition loan and promissory note payable balances.
For the nine months ended September 30, 2013, earnings before income taxes increased to $1.9 million, from $1.7 million during the same period in 2012.
Net income tax recovery was $0.1 million in the first nine months of 2013, compared to $2.5 million during the same period in 2012. The significant income tax recovery in the 2012 period resulted from the reorganization of Norsat's legal structure.
Nine month net earnings from continuing operations decreased to $2.0 million, or $0.03 per share, basic and diluted, from $4.3 million, or $0.07 per share, basic and diluted, during the same period in 2012. The higher earnings in the 2012 period reflect the positive impact of the $2.5 million net income tax recovery.
EBITDA for the nine months ended September 30, 2013 was $3.0 million, compared to $3.6 million last year. The change in EBITDA reflects a $2.9 million reduction in gross profit contributions resulting from lower sales volumes in the current period, partially offset by a $2.3 million decrease in operating expenses. The decrease in expenses reflects reduced sale commissions as a result of lower sales volumes, lower G&A expenses from the reduction in bonuses accrued due to lower sales volumes and lower earnings, and higher government contributions.
Financial Position
Norsat ended the third quarter with cash and cash equivalents of $2.6 million, compared to $5.1 million as at December 31, 2012. The $0.5 million purchase price for the CVG transaction was financed with cash from operations.
In connection with its acquisition of Sinclair in January 2011, the Company secured a non-revolving acquisition loan of $12.0 million and a promissory note payable of $0.7 million, for a total of $12.7 million. As at September 30, 2013, the promissory note had been fully repaid and the acquisition loan balance had been reduced to $5.0 million. Norsat is fully in compliance with its bank covenants.
The Company also had access to undrawn credit facilities totaling $4.2 million as at November 5, 2013. Working capital as at September 30, 2013 was $9.3 million, compared to $7.5 million at December 31, 2012. The current ratio as at September 30, 2013 was 1.8 times, compared to 1.5 times as at December 31, 2012.
Outlook
While the US government budget sequestration and ongoing economic uncertainties continue to have a negative impact on market demand, Norsat anticipates modest revenue improvement in the fourth quarter of 2013 as customer activity in the Sinclair and Microwave segments begins to increase. Sales in the Microwave segment should be further supported by the Company's diversification activities, including the addition of the CVG product portfolio and the recent and related win of the $6.3 million Harris contract.
Going forward, Norsat will continue to diversify its business by broadening its product portfolio and expanding its customer base on a geographic and market sector basis. The Company is continuing to focus on markets beyond the US, as well as on the commercial, resource, transportation and public safety segments. It is also continuing to pursue other new revenue opportunities.
The current global economic uncertainties, coupled with Norsat's stable financial position and capital structure, are creating excellent conditions for realizing growth through business combinations. Norsat will continue to actively pursue merger and acquisition opportunities that provide strong value, further the Company's strategic objectives and have the potential to be accretive to shareholders.
Norsat will also continue to execute a balanced growth strategy that incorporates investment in staffing levels, new product introductions, continued enhancement of existing product lines, greater diversification by geographic region as well as by industry verticals, and a broadening of the solutions provided to customers. In addition, the Company continues to evaluate other strategic opportunities for improving its overall operating and financial performance.
A full set of financial statements and Management's Discussion and Analysis for Norsat is available at www.norsat.com and at www.sedar.com.
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Norsat International Inc.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in US Dollars - Unaudited)
-----------------------------------------------------------------------------
September December
30, 2013 31, 2012
-----------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 2,622,048 $ 5,053,445
Trade and other receivables 6,584,371 7,093,169
Inventories 11,333,752 9,039,415
Prepaid expenses and other 492,201 624,025
Assets held for sale 24,978 -
-----------------------------------------------------------------------------
Current assets 21,057,350 21,810,054
Non-current assets
Property and equipment, net 1,180,189 941,352
Intangible assets, net 7,748,310 8,544,267
Goodwill 5,232,859 5,388,501
Long-term prepaid expenses and other 9,340 26,295
Deferred income tax assets 4,172,000 4,172,000
-----------------------------------------------------------------------------
Non-current assets 18,342,698 19,072,415
-----------------------------------------------------------------------------
Total assets $ 39,400,048 $ 40,882,469
-----------------------------------------------------------------------------
LIABILITIES
Current liabilities
Trade and other payables $ 2,658,125 $ 2,340,985
Accrued liabilities 2,239,706 3,482,535
Provisions 994,836 385,950
Promissory note payable - 693,129
Taxes payable 188,810 174,939
Deferred revenue 734,415 231,068
-----------------------------------------------------------------------------
Current liabilities before acquisition loan 6,815,892 7,308,606
Acquisition loan 4,961,288 6,953,255
-----------------------------------------------------------------------------
Current liabilities 11,777,180 14,261,861
Non-current liabilities
Long-term deferred revenue 15,428 22,344
Deferred income tax liabilities 2,109,817 2,364,702
-----------------------------------------------------------------------------
Non-current liabilities 2,125,245 2,387,046
-----------------------------------------------------------------------------
Total liabilities 13,902,425 16,648,907
-----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Issued capital 39,850,648 39,850,648
Treasury shares (318,255) (131,474)
Contributed surplus 4,221,916 4,041,715
Accumulated other comprehensive income (486,739) 251,826
Deficit (17,769,947) (19,779,153)
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Total shareholders' equity 25,497,623 24,233,562
-----------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 39,400,048 $ 40,882,469
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Norsat International Inc.
Condensed Interim Consolidated Statements of Earnings and Comprehensive Income
(Expressed in US Dollars - Unaudited)
-----------------------------------------------------------------------------
----------------------------------
Three months ended September 30
----------------------------------
2013 2012
-----------------------------------------------------------------------------
Revenue $ 8,788,047 $ 10,997,204
Cost of sales 5,205,414 6,437,329
-----------------------------------------------------------------------------
Gross profit 3,582,633 4,559,875
Expenses:
Selling and distributing expenses 1,486,965 1,965,095
General and administrative expenses 847,178 992,763
Product development expenses, gross 729,108 739,297
Less: Government contributions (490,881) (450,517
-----------------------------------------------------------------------------
2,572,370 3,246,638
-----------------------------------------------------------------------------
Earnings before other expenses/(income) 1,010,263 1,313,237
Gain on bargain purchase - -
Reversal of gain on bargain purchase 47,773 -
Loss on disposal of property and equipment - -
Interest and bank charges 75,216 162,924
Loss/(gain) on foreign exchange 251,625 414,251
-----------------------------------------------------------------------------
Earnings before income taxes 635,649 736,062
Current income tax expense 21,060 54,341
Deferred income tax recovery (68,038) (140,147
-----------------------------------------------------------------------------
Net earnings for the period from continuing 682,627 821,868
operations
Net gain for the period from discontinued
operations - 152,984
-----------------------------------------------------------------------------
Net earnings for the period $ 682,627 $ 974,852
-----------------------------------------------------------------------------
Other comprehensive income/(loss)
Exchange differences on translation of
operations in currencies
other than US Dollars 457,435 (668,365
-----------------------------------------------------------------------------
Total comprehensive income for the period $ 1,140,062 $ 306,487
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Net earnings per share
Basic earnings per share
Earnings from continuing operations $ 0.01 $ 0.01
Earnings from discontinued operations - 0.00
-----------------------------------------------------------------------------
Total $ 0.01 $ 0.02
Diluted earnings per share
Earnings from continuing operations $ 0.01 $ 0.01
Earnings from discontinued operations - 0.00
-----------------------------------------------------------------------------
Total $ 0.01 $ 0.02
Weighted average number of shares
outstanding
Basic 57,674,356 58,036,732
Diluted 57,676,816 58,038,685
-----------------------------------------------------------------------------
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-----------------------------------
Nine months ended September 30
-----------------------------------
2013 2012
------------------------------------------------------------------------------
Revenue $ 25,739,913 $ 31,831,139
Cost of sales 15,109,853 18,286,937
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Gross profit 10,630,060 13,544,202
Expenses:
Selling and distributing expenses 4,667,320 5,681,417
General and administrative expenses 3,032,593 3,761,493
Product development expenses, gross 2,724,499 2,512,421
Less: Government contributions (1,688,728) (912,773)
------------------------------------------------------------------------------
8,735,684 11,042,558
------------------------------------------------------------------------------
Earnings before other expenses/(income) 1,894,376 2,501,644
Gain on bargain purchase (47,773) -
Reversal of gain on bargain purchase 47,773 -
Loss on disposal of property and equipment 8,367 15,016
Interest and bank charges 260,397 439,971
Loss/(gain) on foreign exchange (299,858) 359,623
------------------------------------------------------------------------------
Earnings before income taxes 1,925,470 1,687,034
Current income tax expense 121,268 710,453
Deferred income tax recovery (205,004) (3,205,830)
------------------------------------------------------------------------------
Net earnings for the period from continuing 2,009,206 4,182,411
operations
Net gain for the period from discontinued
operations - 80,690
------------------------------------------------------------------------------
Net earnings for the period $ 2,009,206 $ 4,263,101
------------------------------------------------------------------------------
Other comprehensive income/(loss)
Exchange differences on translation
of operations in currencies
other than US Dollars (738,565) 65,132
------------------------------------------------------------------------------
Total comprehensive income for the period $ 1,270,641 $ 4,328,233
------------------------------------------------------------------------------
Net earnings per share
Basic earnings per share
Earnings from continuing operations $ 0.03 $ 0.07
Earnings from discontinued operations - 0.00
------------------------------------------------------------------------------
Total $ 0.03 $ 0.07
Diluted earnings per share
Earnings from continuing operations $ 0.03 $ 0.07
Earnings from discontinued operations - 0.00
------------------------------------------------------------------------------
Total $ 0.03 $ 0.07
Weighted average number of shares
outstanding
Basic 57,845,925 58,182,759
Diluted 57,874,382 58,185,435
------------------------------------------------------------------------------
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Norsat International Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in US Dollars - Unaudited)
-------------------------------------------------------------------------------
---------------------------------
Three months ended September 30
---------------------------------
2013 2012
-------------------------------------------------------------------------------
Cash and cash equivalents provided
by/(used in)
Operating activities:
Net earnings for the period $ 682,627 $ 974,852
Income taxes paid (11,965) (725)
Non-cash adjustments to reconcile net
earnings to net cash flows: -
Amortization 357,093 372,822
Foreign exchange loss/(gain) 251,625 414,251
Loan acquisition cost amortization 6,787 6,623
Loss on disposal of property
and equipment - -
Gain on bargain purchase - -
Reversal of gain on bargain purchase 47,773 -
Gain on sale of subsidiary - (93,986)
Current income tax expense 21,060 54,342
Deferred income tax recovery (68,038) (140,147)
Share-based payments 65,957 66,577
Accretion of promissory notes - 29,734
Government contribution (490,881) (456,100)
Changes in non-cash working capital (1,292,529) 89,601
-------------------------------------------------------------------------------
Net cash flows (used in)/ provided by
operating activities (430,491) 1,317,844
Investing activities:
Acquisition of business - -
Purchase of intangible assets, property
and equipment (450,879) (103,952)
Proceeds from government contributions
for acquisition of property and equipment 103,517 -
Proceeds from sale of property and equipment - -
Proceeds from sale of asset held for sale - -
Redemption of short-term investment - -
Proceeds from sale of subsidiary - 24,641
-------------------------------------------------------------------------------
Net cash flows used in investing activities (347,362) (79,311)
Financing activities:
Repayment of acquisition loan (480,000) (750,000)
Payment of promissory note -
Purchase of treasury shares -
Vesting of RSUs -
Proceeds from government contributions 1,188,902 19,609
-------------------------------------------------------------------------------
Net cash flows provided by/(used in)
financing activities 708,902 (730,391)
Effect of foreign currency translation on
cash and cash equivalents (79,253) 156,828
Increase/(decrease) in cash and cash
equivalents (148,204) 664,970
Cash and cash equivalents, beginning of period 2,770,252 3,743,871
-------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 2,622,048 $ 4,408,841
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------
Nine months ended September 30
-------------------------------
2013 2012
-------------------------------------------------------------------------------
Cash and cash equivalents provided by/(used in)
Operating activities:
Net earnings for the period $ 2,009,206 $ 4,263,101
Income taxes paid (72,318) (679,481)
Non-cash adjustments to reconcile net
earnings to net cash flows:
Amortization 1,029,396 1,118,318
Foreign exchange loss/(gain) (299,858) 359,623
Loan acquisition cost amortization 20,360 20,058
Loss on disposal of property and equipment 8,367 15,016
Gain on bargain purchase (47,773)
Reversal of gain on bargain purchase 47,773
Gain on sale of subsidiary - (93,986)
Current income tax expense 121,268 710,454
Deferred income tax recovery (205,004) (3,205,830)
Share-based payments 231,106 169,416
Accretion of promissory notes 31,871 64,771
Government contribution (1,722,877) (951,147)
Changes in non-cash working capital (1,633,036) (224,630)
-------------------------------------------------------------------------------
Net cash flows (used in)/ provided by
operating activities (481,519) 1,565,683
Investing activities:
Acquisition of business (530,170) -
Purchase of intangible assets,
property and equipment (519,011) (481,817)
Proceeds from government contributions - -
for acquisition of property and equipment 103,517 260,214
Proceeds from sale of property and equipment 4,200 42,390
Proceeds from sale of asset held for sale 7,800 -
Redemption of short-term investment - 67,918
Proceeds from sale of subsidiary 13,583 24,641
-------------------------------------------------------------------------------
Net cash flows used in investing activities (920,081) (86,654)
Financing activities:
Repayment of acquisition loan (1,890,000) (2,050,000)
Payment of promissory note (725,000) -
Purchase of treasury shares (229,881) (131,474)
Vesting of RSUs (7,805) -
Proceeds from government contributions 1,863,874 727,459
-------------------------------------------------------------------------------
Net cash flows provided by/(used in)
financing activities (988,812) (1,454,015)
Effect of foreign currency translation on
cash and cash equivalents (40,985) 190,952
Increase/(decrease) in cash and cash equivalents (2,431,397) 215,966
Cash and cash equivalents, beginning of period 5,053,445 4,192,875
-------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 2,622,048 $ 4,408,841
-------------------------------------------------------------------------------
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About Norsat International Inc.
Founded in 1977, Norsat International Inc. is a leading provider of innovative communication solutions that enable the transmission of data, audio and video for challenging applications and environments. Norsat's products and services include leading-edge product design and development, production, distribution and infield support and service of fly-away satellite terminals, microwave components, M2M Solutions, antennas, Radio Frequency (RF) conditioning products, maritime-based satellite terminals and remote network connectivity solutions. More information is available at www.norsat.com, via email at investor@norsat.com or by phone at 1-604-821-2800.
Forward-Looking Statements
The discussion and analysis of this news release contains forward-looking statements concerning anticipated developments in Norsat's operations in future periods, the adequacy of its financial resources, and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as "expects," "anticipates," "believes," "intends," "estimates,", "predicts," "potential," "targeted," "plans," "possible" and similar expressions, or statements that events, conditions or results "will," "may," "could" or "should" occur or be achieved. These forward-looking statements include, without limitation, statements about Norsat's market opportunities, strategies, competition, expected activities and expenditures as it pursues its business plan, the adequacy of available cash resources, and other statements about future events or results. Forward-looking statements are statements about the future and are inherently uncertain. The actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, such as business and economic risks and uncertainties. The forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. Consequently, all forward-looking statements made in this news release are qualified by this cautionary statement and there can be no assurance that actual results or anticipated developments will be realized. For the reasons set forth above, investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date of this news release and Norsat assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by law.
###
For further information, contact:
Dr. Amiee Chan
President & CEO
Tel: 604 821-2800
Email: achan@norsat.com
Mr. Arthur Chin
Chief Financial Officer
Tel: 604 821-2800
Email: achin@norsat.com
To view the press release as a PDF file, please click on the following link:
http://www.usetdas.com/pr/norsat11062013.pdf
Source: Norsat International Inc. (TSX: NII) (OTCBB: NSATF) http://www.norsat.com
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