Axia Releases Results for 2Q2008



    
    -   Increased revenues by 43 percent to $17.1 million for 2Q2008 compared
        to $12.0 million in the same period for fiscal 2007.
    -   Gross profit for the quarter ended December 31, 2007 increased
        43 percent to $8.3 million from $5.8 million for the same quarter
        last year.
    -   Net income, before one-time stock-based compensation expense, of
        $2.8 million ($0.04 per share) for 2Q2008 versus $2.5 million
        ($0.04 per share) for the prior quarter and $4.7 million ($0.08 per
        share) for the prior year.
    

    CALGARY, Feb. 11 /CNW/ - Axia NetMedia Corporation ("Axia" or the
"Corporation") today announced the results for its second quarter ended
December 31, 2007.

    2Q2008 Highlights

    Geoff Thompson, Axia's President remarked, "This quarter we continued to
make progress in our Alberta and France businesses. In Alberta, we have placed
substantial focus on connecting new customers to the Alberta SuperNet and
increasing bandwidth commitments from existing customers. We launched a
Gigabit Ethernet Service for our government customers who require large
amounts of bandwidth. We continue to work with the 61 active service providers
in Alberta to increase their bandwidth consumption as they continue to
penetrate Alberta's oil and gas/enterprise marketplace."
    He added, "In France, we successfully transferred substantially all of
the interests in the Délégations de Service Publique ("DSPs") held by VINCI
Networks to Covage. The transfers had a positive impact on our European
segment revenues. Subsequent to the end of the second quarter, another DSP was
transferred and we sold our nine percent equity interest in the Manche DSP to
an industry party. To date, seven networks are active while five networks are
either under construction or in the planning stage."
    Internationally, the Corporation continued to pursue Open Access Network
opportunities. Art Price, Chairman and CEO commented, "Our participation in
competitive bid processes and strategic dialogues gives Axia a window on
activities and the state of policy thinking in North America, Europe, the
Middle East and Asia. While government decision processes are by their nature
slow and not very predictable, the trend is obvious and the momentum is
growing towards Open Access Networks and less ownership-based conflict next
generation solutions."
    Mr. Price added, "Axia's operational and financial performance is on
track and Axia has cash and financial resources in hand to execute all its
commitments. While Axia's share price has been negatively affected its future
is not compromised by the character of our current capital markets."

    2Q2008 Consolidated Financial Information

    Consolidated revenues for the quarter ended December 31, 2007 increased
18 percent to $17.1 million from $14.5 million for the previous quarter.
Revenues for the first six months of fiscal 2008 were $31.6 million, an
increase of $8.7 million from $22.9 million for the first six months of fiscal
2007.
    Consolidated gross profit for the quarter ended December 31, 2007 was
$8.3 million from $5.8 million in the same quarter of the previous year. For
the first six months of fiscal 2008, Axia's consolidated gross profit
increased 45 percent to $15.5 million or 49 percent of revenue from
$10.7 million for the same period in fiscal 2007. The Corporation's gross
profit percentage over this period has remained relatively consistent with a
small increase this quarter due to the higher margins earned in the Europe
business segment.
    During the quarter ended December 31, 2007, total expenses were
$5.0 million as compared to $2.4 million for the same quarter last year and
$8.4 million for the first six months of fiscal 2008 compared to $4.2 million
for the prior year.
    Net income before tax for the current quarter of $3.4 million is
consistent with the same quarter of the prior year but represents an
11 percent decrease over the $3.8 million we reported for the first quarter of
this year. During this quarter however, the Corporation incurred an additional
stock-based compensation expense of $1.7 million reflecting the one million
stock options granted to the Chief Executive Officer in fiscal 2007 which was
approved by the shareholders on November 1, 2007. This expense is
non-recurring and did not involve a use of the Corporation's cash resources.
    Net income for the second quarter of fiscal 2008 was $1.1 million
($0.02 per common share on a fully diluted basis) as compared to $2.5 million
($0.04 per common share on a fully diluted basis) for the previous quarter. A
reason for the decrease in net income for the current quarter relates to a
one-time stock-based compensation expense of $1.7 million as noted above. For
the six-month period ended December 31, 2007 net income was $3.6 million
($0.05 per common share on a fully diluted basis) a decrease of $6.0 million
compared to the same period of the prior year. This decrease is more than
accounted for by the increased stock-based compensation expense and also for
the current year the Corporation has been recording a net income tax expense
as compared to the prior year when the Corporation earned a total of $3.1
million of income tax recoveries.
    As at December 31, 2007, the Corporation's working capital was
$28.7 million as compared to $43.1 million at June 30, 2007. The decrease in
working capital is primarily related to our increased network investments in
France. As at December 31, 2007, Axia had 63.6 million common shares issued
and outstanding.

    FY2008 Outlook

    Axia's management remains focused on its three strategic priorities:
growing bandwidth commitments on the Alberta SuperNet to increase its gross
profit contribution; developing and marketing other services for deployment in
Alberta and France; and winning and developing new Open Access Networks in
France and other jurisdictions.

    About Axia

    The unaudited Consolidated Financial Statements for the quarter ended
December 31, 2007 and related Management's Discussion & Analysis have been
reviewed and approved by the Corporation's Audit Committee and Board of
Directors. These reports have been filed on SEDAR at www.sedar.com and are
also posted at www.axia.com.
    Axia provides Real Broadband(TM) IP services and solutions through
planning, designing and operating Open Access Next Generation Networks. Axia
trades on the Toronto Stock Exchange under the symbol "AXX". For more
information, visit our website at www.axia.com.

    Conference Call Scheduled

    Axia will host a conference call for the investment community to discuss
its fiscal Second Quarter 2008 results on Tuesday, February 12, 2008 at 3 p.m.
(Eastern) and 1 p.m. (Mountain). Axia Chairman and CEO Art Price, President
Geoff Thompson and Chief Financial Officer Peter McKeown will participate.
    To participate in the conference call, please dial (416) 644-3416 in
Toronto and internationally. If you are connecting from other parts of Canada,
dial 1-800-732-9307. Please call ten minutes prior to the start of the call.
    A live webcast (listen only mode) of the conference call will be
available at:
    http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2161500
    A replay of the conference call will be available at (416) 640-1917 or
1-877-289-8525, passcode 21262261 followed by the number sign from 5 p.m. (ET)
Tuesday, February 12, 2008 to midnight (ET) Tuesday, February 19, 2008, or
through the webcast archives at http://www.newswire.ca.

    Forward-looking Statements: Except for historical information, this news
release may contain forward looking statements, including, without limitation,
statements containing the words "should", "believe", "anticipate", "may",
"plan", "will", "continue", "intend", "expect", "estimate" and other similar
expressions which constitute "forward-looking information" within the meaning
of applicable Canadian securities laws, which reflect Axia's current
expectations and assumptions, and are subject to a number of risks and
uncertainties that could cause actual results to differ materially from those
anticipated. These forward-looking statements involve risks and uncertainties
including, but not limited to, changes in customer markets, changes in demand
for Axia's services, inability of Axia to deliver services in a timely and
cost-efficient manner, technological change, general economic conditions and
other risks detailed from time-to-time in Axia's ongoing filings with the
Canadian securities regulatory authorities which filings can be found at
www.sedar.com. Given these risks and uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements. Axia undertakes no
obligation to publicly update or revise any forward-looking statements either
as a result of new information, future events or otherwise.


    
    CONSOLIDATED BALANCE SHEETS


    (unaudited)                                      December 31,    June 30,
    ($000s)                                                 2007        2007
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash                                             $   2,285   $  10,862
      Short-term investments                              36,415      41,309
      Accounts receivable                                 26,251       7,623
      Prepaid expenses                                     2,593       1,527
    -------------------------------------------------------------------------
                                                          67,544      61,321

    Technology and product development costs                 240         528
    Property and equipment                                25,918      12,666
    Intangible assets                                      4,673           -
    Goodwill                                               4,201       4,201
    Advances to joint venture                             16,754      12,932
    Other assets                                           2,135         719
    Future income tax asset                                4,215       4,753
    -------------------------------------------------------------------------
                                                       $ 125,680   $  97,120
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities         $  34,597   $  16,486
      Income taxes payable                                 2,919         193
      Current portion of deferred revenue                    991       1,197
      Current portion of cost of excess space                 80          80
      Current portion of lease obligation                    275         270
    -------------------------------------------------------------------------
                                                          38,862      18,226

    Deferred revenue                                       2,616         825
    Cost of excess space                                     143         187
    Lease obligation                                         221         360
    Minority interest                                         11           -
    -------------------------------------------------------------------------
                                                          41,853      19,598
    -------------------------------------------------------------------------

    Shareholders' equity:
    Share capital                                         48,052      47,740
    Contributed surplus                                    2,657         702

    Retained earnings                                     34,446      30,885
    Accumulated other comprehensive income                (1,328)     (1,805)
    -------------------------------------------------------------------------
                                                          33,118      29,080
    -------------------------------------------------------------------------
                                                          83,827      77,522
    -------------------------------------------------------------------------
                                                       $ 125,680   $  97,120
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS


    For the periods ended December 31, 2007 and 2006 (unaudited)

    ($000s except per                Three Months             Six Months
     share data)                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Revenue                    $  17,130   $  11,980   $  31,586   $  22,914
    Cost of products and
     services sold                 8,821       6,197      16,037      12,176
    -------------------------------------------------------------------------
    Gross profit                   8,309       5,783      15,549      10,738
    Expenses:
      Marketing                      208         199         480         466
      Administration                 688         709       1,506       1,297
      Business development         2,362         665       4,065       1,174
      Stock-based compensation     1,877         219       2,041         247
      Interest expense (income)   (1,420)       (419)     (1,885)       (761)
      Interest and financing
       charges                       227         222         303         172
      Depreciation and
       amortization                1,016         848       1,881       1,606
    -------------------------------------------------------------------------
                                   4,958       2,443       8,391       4,201
    -------------------------------------------------------------------------
    Income before income tax:      3,351       3,340       7,158       6,537
      Current income tax          (1,464)          -      (3,126)          -
      Future income tax
       reduction (expense)          (788)      1,368        (460)      3,068
    -------------------------------------------------------------------------
                                  (2,252)      1,368      (3,586)      3,068
    -------------------------------------------------------------------------
    Income before minority
     interest                      1,099       4,708       3,572       9,605
    -------------------------------------------------------------------------
    Minority interest                 11           -          11           -
    -------------------------------------------------------------------------
    Net income                     1,088       4,708       3,561       9,605
    Retained earnings, beginning
     of period                    33,358      19,793      30,885      14,896
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                 $  34,446   $  24,501   $  34,446   $  24,501
    -------------------------------------------------------------------------

    Net income per share:
      Basic                    $    0.02   $    0.08   $    0.06   $    0.17
      Diluted                  $    0.02   $    0.08   $    0.05   $    0.17
    -------------------------------------------------------------------------

    Weighted average shares
     outstanding (000s):
      Basic                       63,563      56,175      63,481      55,363
      Diluted                     65,163      57,206      64,761      57,515
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME


    For the periods ended December 31, 2007 and 2006 (unaudited)

                                     Three Months             Six Months
    ($000s)                         2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net income                 $   1,088   $   4,708   $   3,561   $   9,605
    Other comprehensive loss,
     net of tax:
      Unrealized losses on
       short-term investments        (49)          -         (15)          -
      Unrealized gains on
       translation of self
       sustaining operations         834           -         460           -
    -------------------------------------------------------------------------
    Other comprehensive income       785           -         445           -
    -------------------------------------------------------------------------
    Comprehensive income       $   1,873   $   4,708   $   4,006   $   9,605
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS


    For the periods ended December 31, 2007 and 2006 (unaudited)

                                     Three Months             Six Months
    ($000s)                         2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash provided by (used in):
    Operating activities:

      Net income               $   1,088   $   4,708   $   3,561   $   9,605
      Items not involving cash:
        Depreciation and
         amortization              1,016         848       1,881       1,606
        Future income tax
         (reduction)                 871      (1,368)        561      (3,068)
        Minority interest             11           -          11           -
        Cost of excess space         (27)        (21)        (44)        (55)
        Stock-based compensation   1,877         219       2,041         247
    -------------------------------------------------------------------------
                                   4,836       4,386       8,011       8,335
      Changes in non-cash
       working capital items:
        Accounts receivable      (10,312)       (306)    (15,169)     (1,637)
        Prepaid expenses            (853)        418      (1,020)       (488)
        Other assets                 150      (1,440)     (1,416)     (1,223)
        Accounts payable and
         accrued liabilities         696      (2,142)       (938)     (2,058)
        Income taxes payable       1,197           -       2,676           -
        Deferred revenue            (796)        888         107       1,015
    -------------------------------------------------------------------------
                                  (5,082)      1,804      (7,749)      3,944
    Financing activities:
      Decrease in restricted
       cash                            -           4           -         162
      Issue of common shares         141      22,674         226      22,706
      Repayment of lease
       obligation                    (68)        (62)       (134)       (124)
    -------------------------------------------------------------------------
                                      73      22,616          92      22,744
    Investing activities:
      Short-term investments        (670)    (20,786)      6,804     (33,080)
      Advance to joint venture    (1,298)          -      (3,822)          -
      Acquisitions                (1,107)          -      (1,107)          -
      Purchase of property
       and equipment              (1,418)       (395)     (3,272)       (631)
      Technology and product
       development costs               -           -           -        (374)
    -------------------------------------------------------------------------
                                  (4,493)    (21,181)     (1,397)    (34,085)
    -------------------------------------------------------------------------
    Effect of currency
     translation on cash
     balances                        785           -         477           -
    -------------------------------------------------------------------------

    Change in cash                (8,717)      3,239      (8,577)     (7,397)
    Cash, beginning of period     11,002       5,370      10,862      16,006
    -------------------------------------------------------------------------
    Cash, end of period        $   2,285   $   8,609   $   2,285   $   8,609
    -------------------------------------------------------------------------
    

    %SEDAR: 00002394E




For further information:

For further information: please visit Axia's website at www.axia.com, or
contact: Art Price, CEO, (403) 538-4001; Geoff Thompson, President, (403)
538-4030; Peter McKeown, CFO, (403) 538-4052; Dawn Tinling, VP, Investor
Relations and Communications, (403) 538-4074

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