Bridges Transitions Inc.
TSX : BIT

Bridges Transitions Inc.

May 11, 2006 16:15 ET

Bridges Announces Financial Results for Third Interim Period of Fiscal 2006

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - May 11, 2006) - Bridges Transitions Inc. (TSX:BIT) today releases its financial results for the nine months ending March 31, 2006. The following comments are excerpts from the Company's Interim Report mailed to shareholders and available online at www.bridges.com by May 15, 2006. A complete copy of the Company's Interim Report for the nine months ending March 31, 2006, including Financial Statements, Notes to the Financial Statements and Management's Discussion and Analysis, will be available online at www.sedar.com by May 15, 2006.



Selected Unaudited Key Financial Data

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Three months Three months Nine months Nine months
ended ended ended ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
--------------------------------------------------------------------
Invoicing $1,554,980 $1,339,839 $6,326,295 $8,151,739
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Revenue $2,746,027 $3,291,331 $8,746,560 $9,952,620
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Costs of Revenue $1,041,713 $1,095,025 $3,244,019 $3,505,251
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Expenses $1,447,112 $1,939,658 $4,655,544 $5,785,665
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EBITDA (1) $ 257,202 $ 256,648 $ 846,997 $ 661,704
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Net Earnings $ 68,823 $ 216,391 $ 420,301 $ 50,408
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(1) EBITDA - Earnings before Amortization, Foreign Currency Exchange
and Other Income (Loss), and Income Taxes. EBITDA is a non-GAAP
measure. The term EBITDA does not have a standardized meaning
prescribed by Canadian generally accepted accounting principles and
therefore may not be comparable to similarly titled measures
presented by other companies. EBITDA should not be construed as the
equivalent of net cash flows from operating activities. The Company
considers EBITDA to be a useful measure in assessing ongoing
performance.


Bridges' financial performance in the third quarter was highlighted by the following:

- Invoicing - Year-to-date invoicing in Fiscal 2006 trails the prior year ($6,326,295 in 2006 vs. $8,151,739 in 2005), but was much improved in the third quarter. During the three months ended March 31, 2006, the foreign exchange impact of a falling U.S. dollar was offset by early customer subscription renewals, which collectively resulted in invoicing increasing from $1,339,839 in Fiscal 2005 to $1,554,980 in Fiscal 2006.

- Revenue - The Company recognizes revenue throughout the life of its subscription services. As a result, revenue growth lagged the invoicing growth rate improvement. Should the positive invoicing trends continue over the coming periods, there will be a corresponding and positive growth in revenue.

- Cost of Sales and Expenses - Both third quarter and year-to-date expenses are reduced substantially when compared to the prior periods. The reductions are the result of prudent cost control as well as reductions in expense corresponding to the near completion of the Company's flagship product, Choices Planner.

- Profitability - In spite of reduced revenue, the Company has produced improved profitability. On a year-to-date basis, net earnings grew to $420,301 as compared to $50,408 in Fiscal 2005.



BRIDGES TRANSITIONS INC.
Consolidated Interim Statements of Operations and Deficit
(Unaudited)
--------------------------------------------------------------------
Three months Three months Nine months Nine months
ending ending ending ending
March 31, March 31, March 31, March 31,
----------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------
REVENUE $2,746,027 $3,291,331 $8,746,560 $9,952,620

COSTS OF REVENUE 1,041,713 1,095,025 3,244,019 3,505,251
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GROSS MARGIN 1,704,314 2,196,306 5,502,541 6,447,369
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EXPENSES
Sales and
marketing 871,964 974,260 2,638,341 3,241,012
Product
development 131,853 508,318 701,068 1,119,028
General and
administrative 443,295 457,080 1,316,135 1,425,625
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1,447,112 1,939,658 4,655,544 5,785,665
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EARNINGS BEFORE
AMORTIZATION,
FOREIGN EXCHANGE
AND OTHER INCOME
(LOSS), AND
INCOME TAXES 257,202 256,648 846,997 661,704

Recovery of
restructuring
charges - - - 74,796
Amortization of
property and
equipment (185,745) (183,051) (493,809) (546,911)
Foreign exchange
and other
income (loss) (1,462) 110,529 88,003 (167,570)
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EARNINGS BEFORE
INCOME TAXES 69,995 184,126 441,191 22,019
Income tax expense
(recovery) 1,172 (32,265) 20,890 (28,389)
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NET EARNINGS FOR
THE PERIOD 68,823 216,391 420,301 50,408

DEFICIT, BEGINNING
OF PERIOD (978,835) (358,521) (703,362) (17,633,038)
Capital reduction - - - 17,633,038
Shareholder loan
reduction - - (633,988) -
Interest on
shareholder loans - (4,638) 7,037 14,264
Excess of purchase
cost over carrying
value of common
shares cancelled - (90,494) - (301,934)
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DEFICIT, END OF
PERIOD $ (910,012) $ (237,262) $ (910,012) $ (237,262)
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Basic earnings
per share $ 0.01 $ 0.02 $ 0.04 $ 0.00
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Diluted earnings
per share $ 0.01 $ 0.02 $ 0.04 $ 0.00
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Weighted average
number of shares
used to
calculate basic
earnings per
share 11,762,979 11,808,583 11,762,979 11,896,521
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Weighted average
number of shares
used to calculate
diluted earnings
per share 11,762,979 11,995,723 11,762,979 12,083,661
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BRIDGES TRANSITIONS INC.
Consolidated Interim Balance Sheets
(Unaudited)
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ASSETS March 31, June 30,
Current 2006 2005
------------------------------
Cash and cash equivalents $1,829,476 $2,291,780
Accounts receivable 945,308 3,231,267
Prepaid expenses 336,890 467,374
Prepaid fees 586,523 308,555
Deferred costs 361,857 450,204
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4,060,054 6,749,180
Restricted cash 300,000 -
Property and equipment 1,557,143 1,980,436
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$5,917,197 $8,729,616
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LIABILITIES
Current
Accounts payable and accrued
liabilities $1,051,246 $1,790,894
Current portion of long-term debt 71,698 285,883
Deferred revenue 4,681,808 7,102,073
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5,804,752 9,178,850
Long-term debt 99,646 127,402
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5,904,398 9,306,252
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SHAREHOLDERS'
DEFICIENCY/EQUITY
Common stock 773,358 54,076
Contributed surplus 149,453 72,650
Deficit (910,012) (703,362)
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12,799 (576,636)
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$5,917,197 $8,729,616
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BRIDGES TRANSITIONS INC.
Consolidated Interim Statements of Cash Flows
(Unaudited)
--------------------------------------------------------------------
Three months Three months Nine months Nine months
ending ending ending ending
March 31, March 31, March 31, March 31,
----------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------
CASH FLOWS FROM
OPERATING
ACTIVITIES
Earnings for
the period $ 68,823 $ 216,391 $ 420,301 $ 50,408
Items not
affecting cash
Amortization
of property
and equipment 185,745 183,051 493,809 546,911
Recovery of
restructuring
charge - - - (74,796)
Stock-based
compensation 25,752 16,708 76,803 37,450
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280,320 416,150 990,913 559,973
Changes in
operating assets
and liabilities:
Accounts
receivable 202,062 603,251 2,285,959 2,815,133
Prepaid expenses
and other 47,808 5,268 (147,484) (352,218)
Deferred costs 92,592 72,578 88,347 338,033
Accounts payable
and accrued
liabilities (96,005) (211,594) (739,649) (1,315,459)
Deferred
revenue (1,191,047) (1,951,493) (2,420,266) (1,800,882)
Accrued
restructuring
charge - (68,233) - (240,476)
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(664,270) (1,134,073) 57,820 4,104
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CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of
property and
equipment, net
of related
accounts payable - 620 (70,516) (95,061)
Restricted cash - 200,000 (300,000) 200,000
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- 200,620 (370,516) 104,939
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CASH FLOWS FROM
FINANCING
ACTIVITIES
Issuance of common
shares on exercise
of stock options - 4,936 - 6,573
Shares purchased
for cancellation - (11,335) - (11,335)
Shares purchased
and cancelled - (75,860) - (380,285)
Interest on
shareholder loans - (4,638) 7,037 14,264
Share purchase loan
proceeds - - 85,294 -
Repayment of
obligations under
long-term debt (80,793) (280,217) (241,939) (440,242)
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(80,793) (367,114) (149,608) (811,025)
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NET CASH OUTFLOW
DURING THE PERIOD (745,063) (1,300,567) (462,304) (701,982)
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 2,574,539 4,848,654 2,291,780 4,250,069
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CASH AND CASH
EQUIVALENTS,
END OF PERIOD $1,829,476 $3,548,087 $1,829,476 $3,548,087
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CASH AND CASH
EQUIVALENTS
ARE COMPOSED OF:
Cash in bank $ 678,669 $1,133,971 $ 678,669 $1,133,971
Short-term
deposits 1,150,807 2,414,116 1,150,807 2,414,116
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$1,829,476 $3,548,087 $1,829,476 $3,548,087
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Supplemental
Cash Flow
Disclosure:
Interest earned $ 18,612 $ 21,825 $ 47,498 $ 65,568
Interest paid $ 3,521 $ 9,430 $ 16,730 $ 38,378
Income taxes
paid $ 1,745 $ 1,482 $ 36,608 $ 56,542
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Supplemental
Non-cash
Investing and
Financing
Activity
Settlement of
share purchase
loans $ - $ - $ 664,606 $ -
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About Bridges: Bridges is the leading provider of software-based and online education planning, career exploration, and high school/college test prep resources designed to help students achieve education and career success. Bridges' planning and exploration products give students and adults in transition reasons to achieve more - exploring all their options, setting goals and making plans to get there. Test prep products available from Bridges give students ways to achieve - by improving math, reading and other academic skills, raising test scores, and by giving educators and administrators instant performance feedback that enables data-driven instruction. Over 14,500 schools and other agencies across the U.S. and Canada use Bridges' products and services. Bridges serves the needs of more than one million annually graduating high school students seeking educational or career planning assistance. For more information, visit http://www.bridges.com. The Company is listed on the Toronto Stock Exchange under the symbol: BIT.

Forward-Looking Statements: The foregoing includes forward-looking statements which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement to the Company's services and products; customer demand for its products and services; expectations concerning future revenue and earnings; control of costs and expenses; loss of key employees; stock market volatility; changes in laws and regulations; Bridges' ability to compete successfully and adapt to technological advances and changing industry standards; currency exchange rate fluctuations; economic, political, and other risks associated with international sales and operations; U.S. government regulation; price and product competition; the ability to implement in a timely manner the Company's restructuring plans; the ability to form and implement alliances, and other factors and risks. All forward-looking statements in this news release are based on management's reasonable beliefs, intentions, and expectations with respect to future events and are subject to certain risks, uncertainties, and assumptions as of the date of this release. In light of the many risks and uncertainties, readers are cautioned not to put undue reliance on such forward-looking statements which are not a guarantee of performance and are subject to a number of uncertainties and other factors - many of which are outside of Bridges' control - that could cause actual results, performances or achievements of Bridges to differ materially from any future results, performances or achievements expressed or implied by such forward-looking statements. The Company cannot give assurance that the forward-looking statements contained in this news release will be realized. Bridges assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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