Nexient Learning Inc. announces third quarter results and update on strategic alternatives review



    SYDNEY, NS, Nov. 14 /CNW/ - Nexient Learning Inc. ("Nexient") (TSX: NXN),
announced today its unaudited financial results from the third quarter ended
September 30, 2007 and issued a further update on its review of strategic
alternatives available to the Company.
    Nexient is pleased to present its third quarter financial results. "Our
gross margin increase for the quarter to 51.4% from 44.3% in the third quarter
of fiscal 2006 is the positive byproduct of our efforts to create a more
variable cost model against our training revenue. This allows us to maintain
our gross margin during the seasonal cycles of our business. Although we did
not experience growth in absolute revenue, our leadership and business skills
(LBS) line of business grew by 46.7%. As well, we saw 8% growth in our
business process improvement (BPI) line of business." Said Colleen Moorehead,
President & Chief Executive Officer. Ms. Moorehead further commented, "We have
structured our operations and our public registrations on a shared services
model which improves our customer service, and we are continuing with the
alignment of the sales force with various customer segments to deliver our
four lines of business into national and global companies. This allows our
clients to respond to competitive and demographic forces by developing and
retaining a highly skilled and efficient workforce."
    On November 1st, 2007 at the annual Microsoft Canada Impact Awards,
Nexient was given the Learning Solutions of the Year award for 2007. The
Learning Solution of the Year Award recognizes a technology partner's
commitment and ability to delivery high quality learning services using a
consultative engagement model. Nexient, through its predecessor companies, has
been the proud recipient of the Learning Solutions of the Year award for the
past 6 years.

    
    Third Quarter Financial Highlights
    ----------------------------------

    For the three-month period ended September 30, 2007:

    - Revenues were flat for the third quarter of FY 2007 compared to the
      third quarter of FY 2006
    - LBS and BPI lines of business had revenue growth of 46.7% and 8%
      respectively for the quarter
    - Gross Margin increased to 51.4% from 44.3% for the same period in 2006
    - EBITDA(*) improved by $1.45 million in the third quarter of FY 2007
      compared to the third quarter of FY 2006
    - Positive cash flow from operations for all three quarters in 2007

    Financial Data
    --------------

                           Three months ended          Nine months ended
    In millions, except      September 30th              September 30th
     per share data             Unaudited                   Unaudited
                            2007          2006          2007          2006
    Revenues        $      11.66  $      11.72  $      44.69  $      44.75
    EBITDA(*)              (0.55)        (2.00)         2.46         (0.21)
    Net Income
     (Loss), Cont.
     Operations            (2.19)        (3.97)        (2.78)        (5.59)
    Net Income
     (Loss), Disc.
     Operations                -         (0.18)            -          (.31)
    Net Income
     (Loss)                (2.19)        (4.15)        (2.78)        (5.91)
    Earnings (Loss)
     Per Share            ($0.06)       ($0.14)       ($0.08)       ($0.23)

    (*) EBITDA - Earnings before interest, taxes, depreciation and
    amortization does not have a standardized meaning under GAAP. However,
    management believes that this is a useful performance measure as it
    approximates cash generated from operations.

    During the past several months, NewPoint Capital Partners ("Newpoint"),
the Company's financial advisors, have worked with management under the
direction of Nexient's Board of Directors and its Special Committee. Newpoint
has undertaken an extensive review of the Company's opportunities within the
capital markets and its strategic alternatives. Newpoint, along with Nexient
management, have engaged in discussions with various parties.
    On November 14, 2007, Nexient entered into a Memorandum of Understanding
(the "MOU") with a third party and Nexient's debenture holders regarding a
recapitalization of the Company. This recapitalization is subject to a number
of conditions including satisfactory completion of due diligence by this third
party. The proposed recapitalization would be comprised of a new revolving
credit and term loan facility and the issuance of new convertible debentures.
The proceeds of these facilities would be used to retire the $28,364,102 of
currently outstanding debentures that were to mature on November 8, 2007.
There can be no assurance that any binding agreement will result from this MOU
or that any transaction will be completed that would satisfy the Company's
current financial situation.
    As part of this potential recapitalization, Nexient has reached an
agreement with its debenture holders regarding an extension for a period up to
February 8, 2008, subject to certain conditions, in respect of the debt that
was to mature on November 8, 2007. Nexient expects that such extension should
be sufficient to permit the closing of the recapitalization contemplated by
the MOU entered into today.

    About Nexient Learning Inc.
    ---------------------------

    Nexient Learning Inc. is the largest corporate training and consulting
company in Canada. Nexient delivers the broadest choice of top calibre,
industry-recognized curricula in information technology, business process
improvement and leadership and business skills. Nexient's learning services
include learning management systems, curriculum development and strategic
consulting. With 18 locations across Canada, Nexient offers innovative
learning solutions in both classroom and online formats. Nexient is traded on
the Toronto Stock Exchange as "NXN". More information is available on the
company's website at www.nexientlearning.com.

    Forward Looking Statements

    This press release contains forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
including economic conditions which may cause the actual results, performance
or achievements of the Corporation to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. As discussed in this press release and in the
third quarter Management's Discussion and Analysis, the Company has initiated
a cost restructuring plan for the purpose of streamlining business processes
and restoring profitability. There is always risk inherent in restructuring
plans that the end result will not have the desired outcome and further action
will need to be taken by the Company. As indicated in this press release and
in the third quarter Management's Discussion and Analysis, and as previously
announced, the Company is assessing all available financing opportunities that
will allow the Company to meet its debt obligations that mature in November
2007. The Company will use its best efforts to complete such a financing
transaction but can make no assurances that such a transaction will be
completed and if so when. The Company has focused its efforts on realizing the
synergies of its acquired intellectual property for the purpose of revenue
growth however revenue growth may not be achieved because of customer demand,
plan execution or competitive forces. There can be no assurance that the
financing will be completed or that other forward-looking statements will
prove to be accurate and readers should not place undue reliance on
forward-looking statements. The Corporation specifically disclaims any
obligation to update these forward-looking statements.


                        Nexient Learning Incorporated
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)

                                                September 30,  December 31,
    As at                                               2007          2006
    -------------------------------------------------------------------------

    Assets

    Current assets:
    Cash and cash equivalents                   $    257,720  $    969,688
    Accounts receivable                            9,231,719    12,921,866
    Inventories                                      465,410       480,106
    Prepaid expenses                                 589,356       655,851
    -------------------------------------------------------------------------
                                                  10,544,205    15,027,511

    Capital assets                                 4,627,502     3,356,933
    Other assets                                     689,810     3,322,954
    Intangible assets                              7,606,423     8,484,878
    Future income tax                              2,545,202     2,504,642
    Goodwill                                      11,199,780    11,199,780
    -------------------------------------------------------------------------
                                                  26,668,717    28,869,187

    -------------------------------------------------------------------------
                                                $ 37,212,922  $ 43,896,698
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Deficiency

    Current liabilities:
    Operating loan                              $  4,000,000  $  2,983,424
    Accounts payable and accrued
     liabilities                                  11,700,729    14,218,406
    Deferred revenue                               2,086,681     3,011,147
    Convertible debentures (note 3)                  854,043            -
    Current portion of long-term
     debt (note 4)                                27,672,222    28,158,808
    Current portion of
     obligations under capital
     lease                                           142,003       192,688
    Current portion of deferred
     lease inducements                               160,839        90,906
    -------------------------------------------------------------------------
                                                  46,616,517    48,655,379

    Long-term debt (note 4)                          474,015       750,000
    Obligations under capital
     lease                                           151,250        91,383
    Deferred lease inducements                     1,122,358       609,455

    Shareholders' deficiency:
    Share capital                                 19,213,851    19,115,275
    Contributed surplus                            4,514,187     4,386,405
    Deficit                                      (34,879,256)  (29,711,199)
    -------------------------------------------------------------------------
                                                 (11,151,218)   (6,209,519)

    -------------------------------------------------------------------------
                                                $ 37,212,922  $ 43,896,698
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.


    Nexient Learning Incorporated
    Consolidated Statements of Earnings, Comprehensive Loss and Deficit
    Periods ended September 30, 2007 and 2006

    (unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               Three Months                Nine Months
                            2007          2006          2007          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenues
     (note 6)       $ 11,659,284  $ 11,722,480  $ 44,685,892  $ 44,753,132

    Cost of
     revenues          5,671,845     6,529,875    20,923,575    22,051,448
    -------------------------------------------------------------------------
    Gross margin       5,987,439     5,192,605    23,762,317    22,701,684

    Operating
     expenses:
      General and
       administrative  3,697,289     4,302,849    12,066,182    14,259,814
      Sales and
       marketing       2,777,913     2,373,115     8,926,680     8,103,266
      Restructuring       67,559       518,686       310,117       549,135
    -------------------------------------------------------------------------
                       6,542,761     7,194,650    21,302,979    22,912,215
    -------------------------------------------------------------------------
    Income (loss)
     before the
     following          (555,322)   (2,002,045)    2,459,338      (210,531)

    Depreciation
     and
     amortization        702,811       631,221     1,960,576     2,141,870
    Gain on sale
     of business
     analyst
     agreement                 -             -             -      (450,722)
    Interest on
     long-term debt      840,433       864,438     2,644,015     2,592,929
    Other interest
     expense             104,527       354,492       648,989       958,868
    -------------------------------------------------------------------------
                       1,647,771     1,850,151     5,253,580     5,242,945
    -------------------------------------------------------------------------
    Loss before
     taxes            (2,203,093)   (3,852,196)   (2,794,242)   (5,453,476)

    Income tax
     expense
     (recovery)          (16,791)      120,241       (10,937)      137,492
    -------------------------------------------------------------------------
    Loss from
     continuing
     operations       (2,186,302)   (3,972,437)   (2,783,305)   (5,590,968)
    Loss from
     discontinued
     operations
     (note 5)                  -      (176,772)            -      (314,756)
    -------------------------------------------------------------------------
     Net loss and
      comprehensive
      loss            (2,186,302)   (4,149,209)   (2,783,305)   (5,905,724)
    -------------------------------------------------------------------------
    Deficit,
     beginning
     of period       (32,692,954)  (22,585,966)  (29,711,199)  (20,829,451)
    Adoption of
     accounting
     policy
      Financial
       instruments
       (note 2)                                   (2,384,752)            -
    -------------------------------------------------------------------------
    Deficit, end
     of period      $(34,879,256) $(26,735,175) $(34,879,256) $(26,735,175)
    -------------------------------------------------------------------------

    Loss per
     share (note 8):
      Continuing
       operations           (6.3)"       (13.3)"        (8.0)"       (21.4)"
      Discontinued
       operations              -          (0.6)"           -          (1.2)"
    -------------------------------------------------------------------------
                            (6.3)"       (13.9)"        (8.0)"       (22.6)"

    Weighted average
     number of
     common shares
     outstanding      34,708,816    29,812,942    34,641,322    26,084,272

    See accompanying notes to consolidated financial statements.


    Nexient Learning Incorporated
    Consolidated Statements of Cash Flows
    Periods ended September 30, 2007 and 2006
    (unaudited)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               Three Months                Nine Months
                            2007         2006           2007          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash provided by
     (used in):

    Operating
     activities:
      Loss from
       continuing
       operations   $ (2,186,302) $ (3,972,437) $ (2,783,305) $ (5,590,968)
      Add items
       not involving
       cash:
        Stock-based
         compensation     44,240        46,830       127,782       105,213
        Amortization
         of deferred
         finance
         charges               -       333,870             -       882,410
        Amortization
         of deferred
         lease
         inducements     (41,603)       (6,832)     (114,802)       (6,832)
        Cash interest
         payments
         deferred and
         converted to
         convertible
         debenture
         (note 3)              -                     864,102
        Accretion of
         convertible
         debenture        23,680             -        64,712        41,071
        Accretion of
         long-term
         debt             21,713                      77,704             -
        Depreciation
         and
         amortization    702,811       631,221     1,960,576      2,141,870
        Gain on
         sale of
         business
         analyst
         agreement             -             -             -      (450,722)
        Future
         income
         taxes           (26,791)      (10,457)      (40,560)       (4,639)
      Cash received
       for lease
       inducements        33,426       628,054       697,638       628,054
      Changes in
       non-cash
       working
       capital
       balances        1,719,167    (1,130,091)      317,767    (3,479,915)
      Discontinued
       operations
       (note 5)                -       (89,881)            -      (270,996)
    -------------------------------------------------------------------------
      Cash provided
       by (used in)
       operating
       activities        290,341    (3,569,723)    1,171,614    (6,005,454)

    Financing
     activities:
      Issue of
      share capital
      for cash             2,443     2,771,356        23,805     3,271,356
      Increase in
       operating
       loan               50,000     2,525,000     1,016,576     2,525,000
      Increase in
       long-term
       debt                    -     2,500,000             -     2,656,647
      Repayments of
       long-term
       debt              (42,308)   (3,741,717)     (616,744)   (4,514,895)
      Repayments of
       obligations
       under capital
       lease             (49,144)      (89,024)     (261,294)     (184,133)
    -------------------------------------------------------------------------
      Cash provided
       by (used in)
       financing
       activities        (39,009)    3,965,615       162,343     3,753,975

    Investing
     activities:
      (Increase)
       decrease in
       other assets          (67)     (167,368)       24,894      (332,368)
      Sale of
       intangible
       assets                  -             -             -     2,854,239
      Purchase of
       intangible
       assets            (80,901)      (83,866)     (256,875)     (210,054)
      Purchase of
       capital
       assets           (668,674)     (832,346)   (1,813,944)     (884,882)
      Cash required
       for
       acquisition             -      (115,187)            -      (260,283)
      Discontinued
       operations              -             -             -       (28,003)
    -------------------------------------------------------------------------
      Cash used in
       investing
       activities       (749,642)   (1,198,767)   (2,045,925)    1,138,649

    Decrease in
     cash for the
     period             (498,310)     (802,875)     (711,968)   (1,112,830)

    Cash and cash
     equivalents,
     beginning of
     period              756,029       439,895       969,688       749,850


    Cash and cash
     equivalents,
     end of period  $    257,719  $   (362,980)  $   257,720  $   (362,980)
    -------------------------------------------  ----------------------------
    -------------------------------------------  ----------------------------

    Supplementary cash flow information (note 9)
    See accompanying notes to consolidated financial statements.
    

    %SEDAR: 00002373E




For further information:

For further information: Donna de Winter, CFO, Nexient Learning Inc.,
(416) 964-8688 x2636, ddewinter@nexientlearning.com

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NEXIENT LEARNING INC.

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