CLEARLINK Capital Corporation
TSX : CNK

CLEARLINK Capital Corporation

June 23, 2005 16:10 ET

CLEARLINK Reports Fiscal 2005 Results

MISSISSAUGA, ONTARIO--(CCNMatthews - June 23, 2005) - CLEARLINK Capital Corporation (TSX:CNK) today reported audited results of operations for the year ended March 31, 2005. CLEARLINK's performance reflects a gradual recovery in technology markets during the year tempered by issues specific to CLEARLINK. Litigation matters and related publicity continued to distract the organization and impede new business originations.

Net Loss for the quarter ended March 31, 2005 was $11.8 million or $1.32 per share, the result of adjusting litigation provisions to reflect current expectations and exposures. This compares to Net Income of $1.8 million or $0.20 per share generated in the corresponding quarter last year. All per share values are fully diluted.

During Fiscal 2003, the Corporation recorded a litigation charge of $25 million reflecting the belief that through reasonable negotiation and applying principles consistent with historic settlements, the remaining litigation could be resolved. Over the past two years, however, the Corporation has been unsuccessful in settling its disputes. Based on discussions with various litigants and reviewing its alternatives, the Corporation believed that the litigation reserve needed to be increased. Accordingly, a special charge of $20 million ($13.4 million after tax) was recorded in the quarter.

For the full year, a Net Loss of $7.1 million or $0.80 per share was incurred. This compares with Fiscal 2004 Net Income of $7.3 million or $0.81 per share. Income from operations was $9.4 million in the current year, a reduction from $11.2 million last year as the impact of reduced lease activity levels offset increases in trading and investment income.

Overall, lease margin declined to $14.1 million this year from $18.3 million in Fiscal 2004. On a year over year basis, the owned lease portfolio has on average reduced by approximately 27% to $243 million at March 31, 2005. Portfolio runoff significantly exceeded the full year new business volumes of approximately $77 million. Residual realizations remained high throughout the year generating a realization rate of 138% on $36.8 million of residuals processed. This compares with a 161% realization rate on $20.4 million of residuals in Fiscal 2004.

Trading margin of $3.1 million in the year was up significantly from last year's value of $2.1 million reflecting a 30% increase in trading volume as market conditions improved. Margins in this business unit maintained at approximately 9%.

Investment income was $3.6 million, an increase over last year's value of $2.5 million as cash and marketable securities continued to increase to approximately $64 million.

Expense levels remained relatively constant throughout the year and totaled $11.4 million.

Issuer bid activity in the quarter was 75,900 shares. On a full year basis, 131,600 shares have been purchased for cancellation at an average price of $9.90. Fully diluted net book value per share at March 31, 2005 was $12.52.

CLEARLINK Capital Corporation is a leading provider of innovative financial solutions in technology and equipment leasing, and equipment trading. Based in Mississauga, Ontario, CLEARLINK operates throughout North America and Europe.

CLEARLINK™ is a trademark of CLEARLINK Capital Corporation.



CLEARLINK CAPITAL CORPORATION
Consolidated Balance Sheets
(in thousands of dollars)
---------------------------------------------------------------------

March 31, March 31,
2005 2004
ASSETS (Audited) (Audited)
---------------------------
CASH $ 22,206 $ 20,636

MARKETABLE SECURITIES 41,731 34,448

LEASES 243,111 328,161

EQUIPMENT HELD FOR LEASING OR SALE 3,319 3,153

RECEIVABLES, NET OF ALLOWANCES 18,054 22,272

LONG-TERM TAXES RECOVERABLE 14,000 31,300

CAPITAL ASSETS 1,600 2,876

---------------------------
$ 344,021 $ 442,846
---------------------------
---------------------------

LIABILITIES

DEBT $ 147,419 $ 209,808

ACCOUNTS PAYABLE AND ACCRUED CHARGES 70,125 72,847

FUTURE INCOME TAX LIABILITIES 15,731 34,644

---------------------------

233,275 317,299
---------------------------

SHAREHOLDERS' EQUITY

SHARE CAPITAL 48,098 48,454

FOREIGN CURRENCY TRANSLATION ADJUSTMENT (2,207) 949

RETAINED EARNINGS 64,855 76,144
---------------------------

110,746 125,547
---------------------------

$ 344,021 $ 442,846
---------------------------


CLEARLINK CAPITAL CORPORATION
Consolidated Statements of Operations and Retained Earnings
(in thousands of dollars except per share data)
---------------------------------------------------------------------

Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
(Unaudited) (Unaudited) (Audited) (Audited)
----------- ----------- --------- ---------
REVENUE
LEASING $31,395 $32,258 $94,671 $105,077
EQUIPMENT TRADING 8,322 6,977 33,306 25,697
INVESTMENT 1,262 723 3,553 2,536
----------- ----------- --------- ---------

40,979 39,958 131,530 133,310
----------- ----------- --------- ---------

EXPENSES
LEASING - AMORTIZATION
AND OTHER COSTS 25,513 23,979 68,784 69,853
INTEREST 2,515 3,870 11,747 16,918
EQUIPMENT TRADING 7,592 6,315 30,232 23,570
----------- ----------- --------- ---------
35,620 34,164 110,763 110,341
----------- ----------- --------- ---------

GROSS MARGIN 5,359 5,794 20,767 22,969

SELLING, GENERAL AND
ADMINISTRATION 2,912 2,995 11,407 11,765
----------- ----------- --------- ---------

INCOME FROM OPERATIONS
BEFORE THE FOLLOWING 2,447 2,799 9,360 11,204

CHARGE FOR LITIGATION MATTERS 20,000 - 20,000 -
----------- ----------- --------- ---------

(LOSS) INCOME FROM
OPERATIONS (17,553) 2,799 (10,640) 11,204

(RECOVERY OF) PROVISION FOR
INCOME TAXES (5,792) 980 (3,511) 3,922
----------- ----------- --------- ---------

NET (LOSS) INCOME FOR THE
PERIOD $(11,761) $1,819 $(7,129) $7,282

RETAINED EARNINGS,
BEGINNING OF PERIOD 77,868 74,325 76,144 69,364

DIVIDENDS (886) - (3,576) -

PREMIUM ON CANCELATION OF
SHARES (366) - (584) (502)
----------- ----------- --------- ---------
RETAINED EARNINGS, END OF
PERIOD $64,855 $76,144 $64,855 $76,144
----------- ----------- --------- ---------
----------- ----------- --------- ---------

EARNINGS PER COMMON SHARE
BASIC $(1.32) $0.20 $(0.80) $0.81
----------- ----------- --------- ---------
----------- ----------- --------- ---------
FULLY DILUTED $(1.32) $0.20 $(0.80) $0.81
----------- ----------- --------- ---------
----------- ----------- --------- ---------
SHARES OUTSTANDING
BASIC 8,907,110 8,945,460 8,949,693 8,978,635
----------- ----------- --------- ---------
----------- ----------- --------- ---------
FULLY DILUTED 8,907,110 8,952,830 8,951,028 8,997,154
----------- ----------- --------- ---------
----------- ----------- --------- ---------



CLEARLINK CAPITAL CORPORATION
Consolidated Statements of Cash Flows
(in thousands of dollars)
---------------------------------------------------------------------

Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
(Unaudited) (Unaudited) (Audited) (Audited)
----------- ----------- --------- ---------

NET INFLOW (OUTFLOW) OF
CASH RELATED TO THE
FOLLOWING ACTIVITIES

OPERATING
NET(LOSS) INCOME FOR
THE PERIOD $(11,761) $1,819 $(7,129) $7,282
ITEMS NOT AFFECTING CASH
AMORTIZATION OF LEASING
AND OTHER ASSETS 4,571 7,390 20,706 28,995
PARTICIPATION IN LIMITED
PARTNERSHIP LOSS (INCOME) - 55 - (339)
GAIN ON SALE OF LEASING
ASSETS (2,031) (1,376) (5,062) (4,682)
CHARGE FOR LITIGATION
MATTERS 20,000 - 20,000 -
INTEREST ACCRUED AND
OTHER ITEMS RELATED
TO MARKETABLE SECURITIES (654) (430) (491) (521)
FUTURE INCOME TAX RECOVERY (19,411) (6,858) (18,674) (4,833)
----------- ----------- --------- ---------
(9,286) 600 9,350 25,902

NET DECREASE (INCREASE)
IN EQUIPMENT HELD
FOR LEASING OR SALE,
RECEIVABLES, ACCOUNTS
PAYABLE AND ACCRUED CHARGES 1,576 3,191 (20,319) 18,592
DECREASE (INCREASE) IN
LONG-TERM TAXES RECOVERABLE 11,000 - 17,300 (18,300)
----------- ----------- --------- ---------
3,290 3,791 6,331 26,194
----------- ----------- --------- ---------

FINANCING
INCREASE IN DEBT 17,423 16,870 65,594 75,703
REPAYMENT OF DEBT (32,508) (31,653) (123,385) (152,288)
REPURCHASE OF SHARES, NET (780) - (940) (1,503)
DIVIDENDS PAID (894) - (2,690) -
----------- ----------- --------- ---------
(16,759) (14,783) (61,421) (78,088)
----------- ----------- --------- ---------

INVESTING
ADDITIONS AND INVESTMENTS
IN LEASES (17,645) (25,864) (77,433) (103,931)
REDUCTIONS AND DISPOSALS
OF LEASES 39,892 39,354 142,105 167,640
ADDITIONS TO MARKETABLE
SECURITIES, NET (7,151) (3,578) (6,792) (8,387)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS, NET - 1,469 - 5,154
ADDITIONS TO OTHER ASSETS,
NET (20) (166) (134) (267)
----------- ----------- --------- ---------
15,076 11,215 57,746 60,209
----------- ----------- --------- ---------

EFFECT OF EXCHANGE RATE
CHANGES 256 (181) (1,086) (1,110)
----------- ----------- --------- ---------

NET CASH INFLOW 1,863 42 1,570 7,205

CASH, BEGINNING OF PERIOD 20,343 20,594 20,636 13,431
----------- ----------- --------- ---------

CASH, END OF PERIOD $22,206 $20,636 $22,206 $20,636
----------- ----------- --------- ---------
----------- ----------- --------- ---------

SUPPLEMENTAL CASH FLOW DATA:
CASH PAID (RECOVERED)
DURING THE YEAR FOR:
INTEREST $2,714 $4,046 $12,436 $17,640
INCOME TAXES $(3,936) $596 $11,329 $1,542


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