Sierra Systems Group Inc.
TSX : SSG

Sierra Systems Group Inc.

November 15, 2006 15:04 ET

Sierra Systems Reports Fourth Quarter and Fiscal 2006 Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 15, 2006) - Sierra Systems Group Inc. (TSX:SSG) today reported results for the fiscal year ended September 30, 2006. Services revenue for the year was $138 million and net income for the year was $5.4 million. Diluted earnings per share for the year were $0.57 as compared to $0.84 in fiscal 2005.

Fourth quarter services revenue was $32.8 million, a 10% decrease from the same period last year. Earnings from operations in the quarter were $1.6 million and diluted earnings per share for the quarter were $0.11 as compared to $0.19 in the fourth quarter of 2005.

Iraj Pourian, Sierra Systems President and CEO, commented on the Company's 2006 financial performance. "Both revenue and earnings in fiscal 2006 were impacted by performance issues in two of our operating locations, but despite these setbacks, the Company generated income from operations of $8.6 million in the year.

On October 16, 2006, the Company announced the proposed acquisition of Sierra Systems Group Inc. by Golden Gate Capital. This is an outstanding opportunity for Sierra Systems. For over forty years Sierra Systems has delighted our clients. Our strong legacy will remain intact, and our go-forward strategy is fully supported by Golden Gate Capital. I believe this partnership will provide an excellent foundation on which to profitably grow our company."



3 Months Ended September 30
Fiscal 2006 (unaudited)
--------------------------
2006 2005
(in thousands, except earnings
per share amounts)

Services Revenue 32,760 36,549
Earnings from Operations 1,609 2,837
Net earnings for the period 1,020 1,847
Earnings per share - basic 0.11 0.19
Earnings per share - diluted 0.11 0.19


Management's Discussion and Analysis of Fourth Quarter Fiscal 2006 Results

Services revenue, the Company's primary business line, decreased by 10% or $3.8 million from the same quarter last year. Without the acquisition of TkMC, services revenue decreased $4.9 million or 13%. The decrease was driven primarily by $2.2 million less revenues reported by our U.S. operations, a 29% decrease from 2005. The strengthening Canadian dollar further contributed to the decrease in Canadian dollar terms by 5% or $0.9 million. Our Canadian operations reported a decrease in revenues of $0.7 million ($1.8 million excluding the effects of the TkMC acquisition).

Compensation costs decreased by $1.9 million or 7% as compared to the same quarter last year. The decrease was due to lower salary costs of $0.7 million resulting from lower severance costs and reduced incentive compensation. Profit sharing costs were also $0.4 million lower this quarter and subcontractor costs were $0.2 million lower this quarter as compared to the same period last year. As a percentage of total compensation, subcontractor costs remained unchanged at 28%. U.S. compensation costs were also $0.4 million lower due to the strengthening of the Canadian dollar.

Compensation costs as a percentage of services revenue deteriorated slightly to 73% as compared to 71% in Q4 2005. This was a result of this quarter's weaker utilization of 72%, compared to 77% in the same quarter last year.

Other costs include non-recoverable travel, promotion, education, and recruitment costs. Compared to last year, other costs for the quarter decreased $0.7 million or 29% to $1.7 million. This saving was a result of reduced spending in all areas within this cost category.

General & Administration costs increased by $0.4 million or 10% as compared to last year. Higher professional fees this quarter contributed to the increase. Rent costs were also higher this quarter and resulted from additional rent costs in Toronto and the new Edmonton East location.

Earnings from operations this quarter were $1.6 million as compared to $2.8 million in the same period last year.

On a sequential quarterly basis, services revenue decreased by $2.1 million or 6% ($2.8 million or 8% without TkMC). The decrease resulted mainly from a decline in revenue from our U.S. operations, which decreased by $1.3 million or 18% compared to last quarter. The Canadian operations reported a decrease in revenue of $0.8 million from last period ($1.5 million without TkMC).

Compensation costs decreased $1.2 million or 5% from last quarter ($1.1 million or 4% without TkMC). The main contributors to this result were a $1.0 million decline in vacation costs, consistent with employees taking their summer vacations, and a $0.4 million decrease in subcontractor costs due to the wind down of key U.S. projects that made significant use of subcontractors. Both were offset by a $0.2 million increase in salary costs related to higher variable compensation and discretionary bonuses.

Other costs decreased by $0.3 million or 15% as compared to the third quarter of fiscal 2006. Lower spending on education, advertising & promotion, and travel were the main contributors to the positive variance.

General and Administrative costs remained stable at $4.6 million. As a percentage of services revenue however, G&A costs increased this quarter to 14% as compared to 13% in the previous quarter.

Financial Capability

On September 30, 2006 the Company had cash on hand of $10.8 million, a $3.1 million increase from the previous quarter. The increase was mainly due to the $3.9 million of cash flow from operations, offset by the fourth quarter dividend payment of $0.7 million.

A key performance measure of accounts receivable is days sales in trade accounts receivable. This measure weakened this quarter to 69 days as compared to 66 days last quarter. Accounts receivable aging continued to remain strong in the quarter, with over 98% of accounts receivable less than 60 days old as at September 30, 2006.

Recent Accounting Changes

During the three months ended September 30, 2006, we did not adopt any new accounting policies or make changes to existing accounting policies that have a material impact on our consolidated financial statements.

Critical Accounting Estimates

The critical accounting estimates described in the Management's Discussion and Analysis presented in the 2005 Annual Report have not materially altered.

Business Risks

The business risks described in the Management's Discussion and Analysis presented in the 2005 Annual Report have not materially altered.

Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to Multilateral Instrument 52-109 is recorded, processed, summarized and reported within the time periods specified in the Canadian Securities Administrators' rules and forms. Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of September 30, 2006 and concluded that our current disclosure controls and procedures are effective.

Pursuant to Multilateral Instrument 52-109, we maintain a set of internal controls over financial reporting, designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. At September 30, 2006 there have been no material changes in our internal controls over financial reporting that required disclosure in our annual MD&A from our Chief Executive Officer and Chief Financial Officer.

Additional Information

Additional information relating to the Company, including the Company's most recently filed quarterly Management's Discussion and Analysis, can be found on SEDAR at www.sedar.com.

Caveat

The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties. Such statements are based on factors and assumptions in existence on November 14, 2006 and those factors and assumptions may change in the future. Sierra Systems' actual results could differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, technological shifts, employee retention, fixed price contract delivery, securing of new contracts, competition, general economic and market conditions, profitability of branches, foreign exchange and other risks detailed in the Company's Annual Report, Annual Information Form and other filings with Canadian securities regulatory authorities. We are under no obligation to update such forward-looking statements.

Notice of no auditor review of interim consolidated financial statements

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited, interim consolidated financial statements of the Company, as at and for the three months ended September 30, 2006 and September 30, 2005 have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.

Conference Call Details

Date: November 15, 2006

Start time: 1:30 p.m. Pacific (4:30 p.m. Eastern)

Dial-in number: 866.322.2356 or 416.640.3405

Live Web cast: www.SierraSystems.com

Presentation: A presentation to be viewed in conjunction with the conference call will be posted on the Company's website with a link on the home page to the presentation.

If you are unable to attend the conference call live, please call 866.244.4494 or 416.915.1028 through Wednesday, November 29, 2006 to hear a digital playback. The Conference ID to be entered is 710272. A playback of the call will be posted in the Investor Relations section of our Web site at www.SierraSystems.com approximately 24 hours after the call.

About Sierra Systems

Since 1966, Sierra Systems Group Inc. (TSX:SSG) has been improving the operational performance of our clients by delivering superior information technology and business consulting services. Through our extensive experience in Business Consulting, Solutions Delivery, and Managed Services, Sierra Systems has emerged as a trusted advisor to many leading private and public sector organizations across North America. With offices in Austin, Calgary, Edmonton, Fredericton, Halifax, Hartford, Los Angeles, Olympia, Ottawa, Seattle, Toronto, Vancouver, Victoria, and Winnipeg, our consultants are never far from our clients. In Justice, Health, Government, and various other industries, Sierra Systems continues to win exciting engagements in the face of stiff competition. Visit us at www.SierraSystems.com.



SIERRA SYSTEMS GROUP INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)

September 30 September 30
2006 2005
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 10,796 $ 7,017
Accounts receivable 25,247 28,470
Work-in-progress 5,044 8,078
Prepaid expenses 1,898 2,463
Income taxes recoverable 114 -
------------ ------------
43,099 46,028

Intangible assets (note 4) 181 514
Property and equipment 6,875 8,666
Goodwill 26,314 23,997
------------ ------------
$ 76,469 $ 79,205
------------ ------------
------------ ------------

Liabilities
Current liabilities
Accounts payable and accrued liabilities 10,898 14,614
Deferred revenue 1,547 1,706
Income taxes payable - 892

Deferred lease inducements 134 110
------------ ------------
12,579 17,322
Deferred lease inducements 408 386
Future income taxes (note 2) 267 205
------------ ------------
13,254 17,913

Shareholders' Equity
Capital stock (note 3(a)) 43,572 43,192
Contributed surplus 929 1,224
Retained earnings 22,161 19,711
Cumulative translation adjustment (3,447) (2,835)
------------ ------------
63,215 61,292
------------ ------------
$ 76,469 $ 79,205
------------ ------------
------------ ------------

Subsequent Event (note 8)


SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of RETAINED EARNINGS
(in thousands of Canadian dollars)

Three months ended Year ended
September 30 September 30
(unaudited)
2006 2005 2006 2005
-------- -------- -------- --------
Retained earnings -
Beginning of period $ 21,144 $ 18,520 $ 19,711 $ 14,544

Net earnings for the period 1,020 1,847 5,448 8,314

Dividend (note 3(e)) (3) - (2,661) -

Stock-based compensation adjustment - - - (691)


Shares purchased and cancelled - (656) (337) (2,456)
-------- -------- -------- --------

Retained earnings -
End of period $ 22,161 $ 19,711 $ 22,161 $ 19,711
-------- -------- -------- --------
-------- -------- -------- --------


SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of EARNINGS
(in thousands of Canadian dollars except per share and share figures)

Three months ended Year ended
September 30 September 30
(unaudited)
2006 2005 2006 2005
--------- --------- --------- ---------

Revenue
Services $ 32,760 $ 36,549 $ 138,069 $ 147,168
Product sales 1 175 754 933
Reimbursements 541 878 3,432 3,852
--------- --------- --------- ---------
33,302 37,602 142,255 151,953
--------- --------- --------- ---------

Expenses
Compensation costs 23,992 25,873 100,382 101,867
Other costs 1,723 2,429 7,583 8,490
Product costs 1 163 669 817
Reimbursable expenses 541 878 3,432 3,852
--------- --------- --------- ---------
26,257 29,343 112,066 115,026
--------- --------- --------- ---------

Gross profit 7,045 8,259 30,189 36,927

General and administration 4,615 4,200 18,172 18,697
Amortization (note 5) 821 1,222 3,385 4,243
Restructuring charge - - - 1,249
--------- --------- --------- ---------
Earnings from operations 1,609 2,837 8,632 12,738
--------- --------- --------- ---------
Foreign exchange loss (2) (140) (69) (226)
Other income 138 54 291 69
--------- --------- --------- ---------
Earnings before income taxes 1,745 2,751 8,854 12,581

Provision for (recovery of)
income taxes (note 2)
Current 697 1,038 3,344 4,456
Future 28 (134) 62 (147)
--------- --------- --------- ---------
725 904 3,406 4,309
--------- --------- --------- ---------

Earnings before equity
accounted investee 1,020 1,847 5,448 8,272
Equity earnings of
Donna Cona Inc. - - - 42
--------- --------- --------- ---------
Net earnings for the period $ 1,020 $ 1,847 $ 5,448 $ 8,314
--------- --------- --------- ---------
--------- --------- --------- ---------

Earnings per share $ 0.11 $ 0.19 $ 0.58 $ 0.86
--------- --------- --------- ---------
--------- --------- --------- ---------

Diluted earnings per share $ 0.11 $ 0.19 $ 0.57 $ 0.84
--------- --------- --------- ---------
--------- --------- --------- ---------

Weighted average number
of common shares
outstanding - basic 9,396,017 9,492,656 9,399,312 9,626,311
--------- --------- --------- ---------
--------- --------- --------- ---------

Weighted average number
of common shares
outstanding - diluted 9,531,815 9,788,110 9,633,562 9,872,126
--------- --------- --------- ---------
--------- --------- --------- ---------


SIERRA SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS of CASH FLOWS
(in thousands of Canadian dollars)

Three months ended Year ended
September 30 September 30
(unaudited)
2006 2005 2006 2005
--------- --------- --------- ---------
Cash flows provided by (used in)

Operating activities
Net earnings for the period $ 1,020 $ 1,847 $ 5,448 $ 8,314
Items not affecting cash
Amortization (note 5) 821 1,222 3,385 4,243
Future income taxes (note 2) 28 (134) 62 (147)
Loss on disposal of
property and equipment 9 9 13 130
Stock-based compensation
charge (note 3(b)) 94 145 489 533
Net change in non-cash
working capital items
relating to operations 1,896 3,431 1,625 664
--------- --------- --------- ---------
3,868 6,520 11,022 13,737

Financing activities
Shares issued 67 604 1,010 1,283
Shares purchased and cancelled - (1,141) (651) (4,604)
Shares purchased for Long-Term
Incentive Plan (51) (5) (432) (345)
Repayment of capital
lease obligation - - - (9)
Dividend (note 3(e)) (666) - (2,661) -
--------- --------- --------- ---------
(650) (542) (2,734) (3,675)

Investing activities
Purchase of property
and equipment (149) (1,210) (1,031) (3,854)
Business acquisitions - - (3,275) -
--------- --------- --------- ---------
(149) (1,210) (4,306) (3,854)

Effect of foreign exchange
on translation 8 (64) (203) (24)

Increase in cash and
cash equivalents 3,077 4,704 3,779 6,184

Cash and cash equivalents -
Beginning of period 7,719 2,313 7,017 833
--------- --------- --------- ---------
Cash and cash equivalents -
End of period $ 10,796 $ 7,017 $ 10,796 $ 7,017
--------- --------- --------- ---------
--------- --------- --------- ---------

Supplementary cash flow information (note 7)


Notes to Consolidated Financial Statements

September 30, 2006 and 2005

(amounts in tables are in thousands of Canadian dollars except per share figures)

1. Basis of presentation

These unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles, using the same accounting policies as outlined in Note 2 to the most recent audited consolidated financial statements for the year ended September 30, 2005, except as noted below. These unaudited interim consolidated financial statements do not include all the disclosures required for annual financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended September 30, 2005. Certain comparative figures in the unaudited interim consolidated financial statements have been reclassified to conform to the current period presentation.

In the opinion of management, all adjustments (which include reclassifications and normal recurring adjustments) necessary to present fairly the consolidated financial position, consolidated earnings, and consolidated cash flows as at September 30, 2006 and for all periods presented, have been made. All amounts herein are expressed in Canadian dollars unless otherwise noted.

2. Income taxes


Three Three Twelve Twelve
months months months months
Ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
(unaudited) (unaudited) (unaudited) (unaudited)

Earnings before
income taxes $ 1,745 $ 2,751 $ 8,854 $ 12,581
Expected provision
based on a tax
rate of 34.1%
(2005 - 35.25%) 595 934 3,019 4,435
Increase (decrease)
resulting from
Non-deductible expenses 90 125 475 650
Foreign tax differential - 13 36 74
Canadian statutory rate
differential (1) 45 88 94
Change in valuation
allowance for net
operating loss
carry-forwards 41 (222) (212) (929)
Other - 9 - (15)
--------------------------------------------------------------------------
Income tax provision $ 725 $ 904 $ 3,406 $ 4,309
--------------------------------------------------------------------------
--------------------------------------------------------------------------


The Company's future tax assets and liabilities were as follows:



September 30, 2006 September 30, 2005

U.S. Canadian U.S. Canadian
Companies companies companies companies

Differences in working
capital deductions for tax
and accounting purposes $ (1,034) $ 135 $ (2,444) $ 164
Property and equipment (13) (285) (12) (309)
Goodwill - (117) - (60)
Loss carry-forwards 5,747 - 7,838 -
Valuation allowance (4,700) - (5,382) -
-------------------- ---------------------
Total net future tax assets
(liabilities) $ - $ (267) $ - $ (205)
-------------------- ---------------------
-------------------- ---------------------
Comprising
Non-current asset $ - $ -
Current liability - -
Non-current liability (267) (205)
-------- ---------
$ (267) $ (205)
-------- ---------
-------- ---------


The following table provides details of net operating loss carry-forwards of Sierra Systems Inc.:



Loss carry-forwards
Expiry date US$

2020 1,879
2021 681
2022 3,988
2023 5,009
2024 4,889
2025 429


3. Capital stock and stock options

a) Capital stock

Authorized

unlimited common shares without par value

unlimited preferred shares without par value

Issued



Twelve months ended Twelve months ended
September 30, 2006 September 30, 2005

Common Common
shares Amount shares Amount

Balance -
Beginning of period 9,449,787 $ 43,192 9,746,842 $ 44,191
Issued pursuant to the ESBP 22,901 211 26,118 182
Exercise of options 24,410 799 161,300 1,101
Shares purchased for
Long-Term Incentive Plan (45,609) (431) (40,053) (345)
Long-Term Incentive Plan
shares vested 15,000 115 28,140 211
Shares purchased and
cancelled (69,147) (314) (472,560) (2,148)
--------------------------------------------------------------------------
Balance -
End of period 9,397,342 $ 43,572 9,449,787 $ 43,192
--------------------------------------------------------------------------
--------------------------------------------------------------------------


b) Stock options

The Company has a stock option plan that grants to directors and certain employees of the Company the option to purchase up to 1,312,900 common shares of the Company. The exercise price of each option is determined by the market price of the Company's stock on the date of the grant and an option's maximum term is 10 years. Options generally vest over three to five years.

For the three months ended September 30, 2006, the total stock-based compensation charge was $94,000 (2005 - $145,000), which has been included in compensation cost on the consolidated statement of earnings. Of this cost, $4,000 (2005 - $12,000) relates to the granting of 31,000 (2005 - 60,000) options to employees during this quarter, $11,000 (2005 - $102,000) relates to the granting of 15,000 options (2005 - 352,000) in the previous three quarters, and the balance relates to the amortization of previous awards granted prior to October 1, 2005.

For the twelve months ended September 30, 2006, the total stock-based compensation charge was $489,000 (2005 - $533,000), which has been included in compensation cost on the consolidated statement of earnings. Of this cost, $15,000 (2005 - $301,000) relates to the granting of 46,000 (2005 - 412,000) options to employees during the year, and the balance relates to the amortization of previous awards granted prior to October 1, 2005.

The following assumptions were used in the Black-Scholes option-pricing model:



Three months ended Twelve months ended
September 30, September 30,
2006 2005 2006 2005
(unaudited)(unaudited)

Dividend yield 2.8% 0% 2.8% 0%
Expected volatility 34% 32% 31% - 34% 31% - 36%
Risk-free interest rate 3.9% 3.2% 3.6% - 4.5% 3.2% - 3.8%
Expected life (years) 1 1 1 - 3 1 - 4
Weighted average grant
date fair value $ 1.49 $ 2.55 $ 1.71 $ 2.58


The following table summarizes the movement in options outstanding under this plan:



Twelve months ended Twelve months ended
September 30, September 30,
2006 2005

Balance - Beginning of year 826,000 850,300
Options granted 46,000 412,000
Options exercised (24,410) (161,300)
Options expired (65,200) (165,000)
Options cancelled (112,590) (110,000)
--------------------------------------------------------------------------
Balance - End of year 669,800 826,000
--------------------------------------------------------------------------
--------------------------------------------------------------------------


c) Shares held in escrow

Pursuant to the acquisition of Eastbridge Consulting Incorporated ("Eastbridge") and its subsidiary, Eastech Advanced Development Incorporated ("Eastech") on January 1, 2004, consideration of $1,167,000 in cash and 164,528 shares were held in escrow with scheduled release dates to certain vendors contingent upon their employment with the Company. On January 1, 2006 the Company released $632,000 and 89,182 shares held in escrow. The remaining $535,000 and 75,346 shares held in escrow are scheduled for release on January 1, 2007. These shares are included in the calculation of issued and outstanding shares.

d) Employee Share Ownership Plan ("ESOP")

The ESOP permits all full-time employees of the Company to purchase common shares through payroll deductions. Shares are purchased quarterly at prevailing market prices with a 15% subsidy from the Company via funds paid into a trust account. During the three months ended September 30, 2006 , the Company contributed $17,000 (2005 - $15,000) and issued 9,170 shares (2005 - 4,782) pursuant to this plan. For the twelve months ended September 30, 2006, the Company contributed $63,000 (2005 - $58,000) and issued 22,901 shares (2005 - 26,118) pursuant to this plan. The contributed amount has been included in compensation expense in the consolidated statement of earnings.

e) Dividend

On November 20, 2005, the Company declared an annual dividend of $0.28 on each outstanding common share, payable at $0.07 quarterly. On this date, the Company recorded a "Dividend payable" on the consolidated balance sheet and made a corresponding adjustment to retained earnings for the total dividend liability of $2,642,000. The dividend liability was adjusted by $16,000 in the second quarter and $3,000 in this quarter to reflect the liability for shares held under the Long-Term Incentive Plan. The fourth quarter payment of $666,000 was made on September 8, 2006, to all shareholders of record as at the close of business on September 1, 2006.

4. Intangible assets



Accumulated Net book value at
Cost amortization September 30, 2006
Customer relationships with
an economic life of 44 months
at inception $ 683 $ 506 $ 177

Sub-contracting agreement
from Donna Cona Inc. 856 852 4

Sales backlog of customer
contracts with an economic
life of 4 months 70 70 -
--------------------------------------------------------------------------
$ 1,609 $ 1,428 $ 181
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Accumulated Net book value at
Cost amortization September 30, 2005

Customer relationships with
an economic life of 44 months
at inception $ 683 $ 322 $ 361

Sub-contracting agreement
from Donna Cona Inc. 856 703 153
--------------------------------------------------------------------------
$ 1,539 $ 1,025 $ 514
--------------------------------------------------------------------------
--------------------------------------------------------------------------


5. Amortization



Three months ended Twelve months ended
September 30, September 30,
2006 2005 2006 2005
(unaudited)(unaudited)

Amortization of property
and equipment $ 723 $ 1,001 $ 2,982 $ 3,583
Amortization of customer
relationships 46 46 184 184
Amortization of sales backlog
of customer contracts 52 - 70 -
Amortization of
sub-contracting Agreement
from Donna Cona Inc. - 175 149 476
--------------------------------------------------------------------------
$ 821 $ 1,222 $ 3,385 $ 4,243
--------------------------------------------------------------------------
--------------------------------------------------------------------------


6. Business segment information

The Company has twelve branches that operate in two geographical regions, Canada and the United States. Each branch engages in business activities and generates its own discrete financial information. As all branches operate in one segment, the provision of IT services, they qualify for aggregation into one operating segment. Geographical information is based upon the country in which the Company's operations are located.



Canada United States Total
(unaudited) (unaudited) (unaudited)

Revenue:
For the three months ended
September 30, 2006 $ 26,927 $ 6,375 $ 33,302
For the three months ended
September 30, 2005 $ 28,057 $ 9,545 $ 37,602

For the twelve months ended
September 30, 2006 $ 110,497 $ 31,758 $ 142,255
For the twelve months ended
September 30, 2005 $ 115,784 $ 36,169 $ 151,953

Property, equipment, intangible
assets, and goodwill:
As at September 30, 2006 $ 32,201 $ 1,169 $ 33,370
As at September 30, 2005 $ 31,398 $ 1,779 $ 33,177


7. Supplementary cash flow information



Three months ended Twelve months ended
September 30, September 30,
2006 2005 2006 2005
(unaudited)(unaudited)

Interest paid $ - $ 2 $ 5 $ 10
Interest received $ 139 $ 56 $ 296 $ 79
Income taxes paid $ 690 $ 1,003 $ 4,360 $ 4,273
Income taxes refunded $ - $ - $ - $ 225


8. Subsequent event

On October 16, 2006, the Company announced that it had reached a definitive agreement with Golden Gate Capital, whereby Golden Gate Capital would acquire all the outstanding shares of the Company in an all-cash transaction valued at $9.25 per share, or approximately $93.2 million. Golden Gate Capital is a private equity firm focused on investing in high growth businesses in change intensive industries.

The Company's Board of Directors have unanimously approved the plan of arrangement, however, the transaction is subject to shareholder and court approval. If the transaction is approved, costs of approximately $2.5 million will be incurred on closing relating to commissions, legal fees, board fees, insurance, and bonuses.


Contact Information