Hummingbird Acquires Valid Information Systems Limited Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Beck - RBC Capital Markets - Analyst : Just a couple of quick questions. Fred, you mentioned the company's revenue run rate at roughly around 4m pounds. Is it profitable and do you expect the acquisition to be accretive and at what point do you expect to be accretive?

Question: David Beck - RBC Capital Markets - Analyst : Okay. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 02, 2003 / 9:30PM, OTEX.TO - Hummingbird Acquires Valid Information Systems Limited

Question: David Beck - RBC Capital Markets - Analyst : What would those figures be and what time frame do you expect the acquisition to be accretive?

Question: David Beck - RBC Capital Markets - Analyst : Great. And what kind of additive revenue -- what's a realistic revenue target? Is there an earn-out associated with this acquisition like the Kramer Lee?

Question: David Beck - RBC Capital Markets - Analyst : Okay and I'm sorry, 10m pounds upfront and how much over time?

Question: David Beck - RBC Capital Markets - Analyst : Over two years as opposed to last year -- last one was one year I believe.

Question: David Beck - RBC Capital Markets - Analyst : And what do they have to do get that other 8m pounds over those two years? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 02, 2003 / 9:30PM, OTEX.TO - Hummingbird Acquires Valid Information Systems Limited

Question: David Beck - RBC Capital Markets - Analyst : Okay. That's all in pounds, okay.

Question: David Beck - RBC Capital Markets - Analyst : Okay.

Question: David Beck - RBC Capital Markets - Analyst : Okay that's great. Thanks. Or don't, no wait, is there a reseller of Hummingbird product at this time?

Question: David Beck - RBC Capital Markets - Analyst : Is there a reseller --?

Question: David Beck - RBC Capital Markets - Analyst : They have a separate product?

Question: David Beck - RBC Capital Markets - Analyst : And are you going to take that product to sell it through the rest of the Hummingbird channel or is it excluding --?

Question: David Beck - RBC Capital Markets - Analyst : Okay. Very good. Thank you.

Question: Seitz Dilani - UBS Warburg - Analyst : Actually Seitz Dilani (ph) for Jeff Fan. I was wondering if you could give me the revenue breakdown for Valid with respect to license and services I guess in the last year and I guess what you would expect going forward? And also it's on a separate issue document of a competitor of yours, I guess, weren't today and they mentioned slower government spending and I was wondering if you've seen any of that at all from your perspective? Thanks.

Question: Seitz Dilani - UBS Warburg - Analyst : Yes.

Question: Seitz Dilani - UBS Warburg - Analyst : Yes.

Question: Seitz Dilani - UBS Warburg - Analyst : Okay.

Question: Seitz Dilani - UBS Warburg - Analyst : Okay great and with respect to the government environment, the government spending, what are you seeing in terms of progress there?

Question: Seitz Dilani - UBS Warburg - Analyst : Okay, thank you.

Question: David Shore - Desjardins Securities - Analyst : Thanks. Do they have any cash?

Question: David Shore - Desjardins Securities - Analyst : Okay and when is that due? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 02, 2003 / 9:30PM, OTEX.TO - Hummingbird Acquires Valid Information Systems Limited

Question: David Shore - Desjardins Securities - Analyst : Okay.

Question: David Shore - Desjardins Securities - Analyst : Okay. Okay. Will you be issuing any options?

Question: David Shore - Desjardins Securities - Analyst : Okay and I am just trying to understand this on the product side.

Question: David Shore - Desjardins Securities - Analyst : So, this is going to leverage off of Enterprise 5.1?

Question: David Shore - Desjardins Securities - Analyst : Or it's going to be the new, it's going to be the basis for the next generation? Do you have kind of an estimated release date when you think you are going to be coming out with that?

Question: David Shore - Desjardins Securities - Analyst : Okay and you intend to leverage this as far as targeting the governments outside of the UK as well?

Question: David Shore - Desjardins Securities - Analyst : Okay, thank you.

Question: Scott Preston - Research Capital - Analyst : Hi. Four quick questions. First of all, I didn't -- I think I am missing - you talked of the profitability whether or not --?

Question: Scott Preston - Research Capital - Analyst : Breakeven. Okay, thank you. I mean outside (ph) , you've made a couple of acquisitions now in Europe and second UK. What's the timeline as far as consolidating the offices and maybe the employee base over there and what kind of synergies do you see there and kind of the timeline for those?

Question: Scott Preston - Research Capital - Analyst : Okay. I am just talking of the, now with all the offices that you have in UK, do you intend to merge kind of the operations of the companies of --

Question: Scott Preston - Research Capital - Analyst : Okay.

Question: Scott Preston - Research Capital - Analyst : Yes. Of course, okay. Do they have any revenue outside the UK?

Question: Scott Preston - Research Capital - Analyst : Okay and then, as far as OEM do they OEM any other or maybe your competitor's solutions?

Question: Scott Preston - Research Capital - Analyst : Okay and then, final question. On the partners, you mentioned in your presentation that they have some partnerships with some major systems integrators. However, I didn't see any on their site. Can you talk about who you think that might be?

Question: Scott Preston - Research Capital - Analyst : Okay.

Question: Scott Preston - Research Capital - Analyst : Fred, can you comment on the -- what the growth rate has been for the topline of the company in the last couple of years?

Question: Scott Preston - Research Capital - Analyst : Okay, all right. Thanks guys.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thank you very much. So, will this product be sold as a module to your current system? Is it an upgrade to the current RM product you have or a replacement for it or how does it make sense?

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes.

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. So, you can increase this -- the average size of their sales?

Question: David Wright - BMO Nesbitt Burns - Analyst : And will the new product be incremental to what you currently have or a replacement of what you currently have?

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes.

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes.

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes. Okay, very good. And you talked about the timing of when you hope to get approvals in the US. What about timing for other European countries? Is that any sooner?

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes, in European countries?

Question: David Wright - BMO Nesbitt Burns - Analyst : So, you can essentially start selling this in France and Germany as long as you like?

Question: David Wright - BMO Nesbitt Burns - Analyst : Yes? So, the expectations you gave for forecast for this division now, that was solely for the UK. Is that correct?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 02, 2003 / 9:30PM, OTEX.TO - Hummingbird Acquires Valid Information Systems Limited

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay, and then a last question. This is obviously a sort of an awkward or nervous time for everybody as quarter results close and documents are messed. Is it possible for you state at this stage that your Q3 numbers are within your guidance at this point in time?

Question: David Wright - BMO Nesbitt Burns - Analyst : Right. It's a public conference call. So, I'll just - okay, you are not prepared. Okay, thank you very much.

Question: Paul Steep - Orion Securities Inc. - Analyst : Hi, couple of quick questions. One I guess for Tony or someone in the UK just to give us a quick update in terms of where the UK government is in terms of their electronic initiatives. I know there was a 2005 deadline. I don't know if that's moved around at all or where the markets are in terms of an opportunity for you?

Question: Paul Steep - Orion Securities Inc. - Analyst : Have they managed roll out any of their early pilots or are any of the early pilots already ongoing, Tony?

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay, great and then I guess to just follow on to that, Fred I can't remember if you gave us any indication on backlog? I know there is some data around the fact that they have won some large deals, $1m plus or 1m pound plus deals. What's the backlog look like today for Valid?

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay.

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay, fair enough.

Question: Paul Steep - Orion Securities Inc. - Analyst : Is this built, I guess ---?

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay. And that's sort of where I was heading with the next question, which is - it sounds like there is the latest version of product version 10 launched. Has a lot of that backlog built off for that product or?

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay.

Question: Paul Steep - Orion Securities Inc. - Analyst : And maybe the last one would just be, can you give us a sense of sort of the pricing or what the average project size is looking like these days so that we can start to look at the opportunity?

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay. And then just the final one on the staff break down, how many - how much they have in terms of sales or is that primarily R&D or consulting folks?

Question: Paul Steep - Orion Securities Inc. - Analyst : Yes.

Question: Paul Steep - Orion Securities Inc. - Analyst : Sorry, and final would it be scanning? It sounds like that's a business over time that would logically be sort of moved away from. Is there plan there to get it there (ph) ?

Question: Paul Steep - Orion Securities Inc. - Analyst : And just to clarify, in the scanning, is it actually reselling somebody else's product or is it your own?

Question: Paul Steep - Orion Securities Inc. - Analyst : Okay, got it. All right, thanks.