CAMBRIDGE, ON, Aug. 17, 2011 /CNW/ -- CAMBRIDGE, ON, Aug. 17, 2011
/CNW/ - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or
the "Company") today reported its financial results for the three
months ended July 3, 2011. IFRS As of this current fiscal quarter,
the results of ATS were prepared under International Financial
Reporting Standards ("IFRS"), with a transition date of April 1,
2010. As a result, prior period comparative information reflects
conversion from previous Canadian Generally Accepted Accounting
Principles ("GAAP") to IFRS. Discontinued Operations Reflecting
advancement of the Company's separation strategy via the spinoff of
the Photowatt business, and as required under IFRS, the Company's
solar operations were classified as "held for distribution to
owners" on the balance sheet and as "discontinued operations" on
the income statement. Continuing operations are those of Automation
Systems Group ("ASG") and corporate and are reported as one
segment. Financial Results In millions 3 months ended 3 months
ended of Canadian dollars, except per July 3, 2011 June 27, 2010
share data Revenues Continuing $ 126.9 $ 101.8 Operations
Discontinued $ 62.9 $ 48.8 Operations EBITDA Continuing $ 13.6 $
10.6 Operations Continuing $ 6.2 $ 5.6 Net income Operations (loss)
Discontinued $ (11.2) $ (0.4) Operations From continuing $ 0.07 $
0.06 operations (basic & diluted) Earnings per share From $
(0.13) $ (0.00) discontinued operations (basic & diluted) "The
strong first quarter performance of ASG reflected revenue
contributions from recent acquisitions and continued strong
performance from our base business," said Anthony Caputo, Chief
Executive Officer. "Market activity remains healthy and record
period-end backlog provides a foundation for growth. We advanced
our plans to separate Photowatt and are targeting completion by the
end of the calendar year." Continuing Operations Highlights --
Earnings from continuing operations for the first quarter of fiscal
2012 were $10.5 million (8% operating margin) compared to $8.5
million (8% operating margin) in the first quarter of fiscal 2011,
reflecting higher revenues and gross margins; -- Order Bookings
increased 85% year over year to $157 million in the first quarter
of fiscal 2012, reflecting higher activity levels in transportation
and life sciences; -- Period end Order Backlog was $328 million, an
increase of 53% from $215 million a year ago; -- Order Bookings
were $90 million during the first 6 weeks of the second quarter of
fiscal 2012. By industrial market, revenues from life sciences
increased 10% to $43.8 million year over year primarily as a result
of the increase in Order Backlog entering the first quarter
compared to a year ago and the inclusion of Sortimat for the full
fiscal quarter. Computer-electronics revenues decreased 49% to $7.1
million on lower Order Backlog entering the first quarter compared
to a year ago. Revenues generated in the energy market decreased
29% to $25.0 million on lower Order Backlog entering the first
quarter compared to a year ago. Transportation revenues increased
344% to $40.4 million compared to a year ago primarily reflecting
higher Order Backlog entering the first quarter compared to a year
ago and the inclusion of ATW which was acquired in the fourth
quarter of fiscal 2011. "Other" revenues increased 186% year over
year to $10.6 million primarily due to increased revenues in the
consumer products market. Discontinued Operations Summary --
Photowatt's fiscal 2012 first quarter revenues of $62.9 million
were 29% higher than in the first quarter of fiscal 2011, primarily
reflecting an increase in total megawatts ("MWs") sold to 14.7 from
11.4 a year ago; -- Photowatt fiscal 2012 first quarter loss from
operations was $11.2 million compared to a loss from operations of
$0.1 million a year ago and included $6.0 million of non-cash
charges related to the write-down of inventory, following declines
in market average selling prices due to changes in European feed-in
tariffs ("FIT") and excess module supply in the European solar
industry. -- Production on Photowatt Ontario's 100 MW module
manufacturing line continued to ramp-up and the division operated
at approximately breakeven; -- At Photowatt France, implementation
of a restructuring plan initiated in the fourth quarter of fiscal
2011 is underway and is intended to: focus on growing system sales
in France and other emerging European solar markets with attractive
FIT regimes for systems sales; reduce manufacturing costs; and
improve its global supply chain, including subcontracting the
assembly of solar modules to third parties. Subsequent to the end
of the first quarter, the workforce reductions were completed,
resulting in a one-third reduction in PWF's workforce. Effective in
the second quarter of fiscal 2012, all internal module production
has ceased and is now subcontracted. PWF continues to monitor
market conditions and intends to take appropriate actions in
relation to such conditions. -- Under IFRS, the Company recorded a
non-cash impairment charge in the fourth quarter of fiscal 2011
which reduced net income by $61.7 million compared to previously
reported results under Canadian GAAP. Proposed Spinoff of Photowatt
In fiscal 2011, the Company's Board of Directors approved a plan
designed to implement the separation of Photowatt from ATS. The
Company initiated a dual track process to effect the separation; a
spinoff of the Company's combined solar businesses or a sale of PWF
and/or PWO. The Company is engaged with a number of interested
parties regarding the potential sale of PWF. If a favourable
offer is made for PWF, the Company would give it full
consideration. In the interim, detailed plans to effect the spinoff
of Photowatt to ATS shareholders have been developed. Actions
required to implement the spinoff are underway. PWF has notified
and received advice from its employee works council regarding the
spinoff transaction. The Company has identified a shortlist of
candidates for the CEO and board of director roles for the spinoff
entity and expects to confirm the appointments in the next fiscal
quarter. The Company currently plans to structure the proposed
spinoff as a return of capital to be implemented via a plan of
arrangement. The transaction will be subject to approval by
ATS shareholders, the satisfaction of applicable regulatory
requirements and certain other customary conditions including court
approval of the plan of arrangement. The Company will retain sole
and absolute discretion to determine whether it is appropriate to
implement the spinoff transaction and if so, the timing of its
implementation. Additionally, any or all of the elements of the
spinoff transaction may not occur as currently expected or within
the time frames that are currently contemplated. See "Risk
Factors" in the Company's most recently filed Annual Information
Form. Quarterly Conference Call ATS's quarterly conference call
begins at 10 am eastern on Wednesday August 17 and can be accessed
live at www.atsautomation.com or on the phone by dialing 416 644
3414 five minutes prior. First Quarter Interim Consolidated
Financial Statements The Company's interim consolidated financial
statements for the first quarter of fiscal 2012 with accompanying
notes to the interim consolidated financial statements can be found
on the Company's website at www.atsautomation.com. Annual Meeting
of Shareholders ATS will hold its Annual Meeting of Shareholders on
September 15, 2011 at 10:00 a.m. (eastern) at the Holiday Inn Hotel
and Conference Centre, 30 Fairway Road South, Kitchener, Ontario,
Canada. About ATS ATS Automation provides innovative, custom
designed, built and installed manufacturing solutions to many of
the world's most successful companies. Founded in 1978, ATS uses
its industry-leading knowledge and global capabilities to serve the
sophisticated automation systems' needs of multinational customers
in industries such as life sciences, computer/electronics, energy,
transportation and consumer products. It also leverages its many
years of experience and skills to fulfill the specialized
automation product manufacturing requirements of customers. Through
Photowatt, ATS participates in the growing solar energy industry.
ATS employs approximately 2,900 people at 21 manufacturing
facilities in Canada, the United States, Europe, Southeast Asia and
China. The Company's shares are traded on the Toronto Stock
Exchange under the symbol ATA. Visit the Company's website at
www.atsautomation.com. Management's Discussion and Analysis This
Management's Discussion and Analysis ("MD&A") for the three
months ended July 3, 2011 (first quarter of fiscal 2012) is as of
August 16, 2011 and provides information on the operating
activities, performance and financial position of ATS Automation
Tooling Systems Inc. ("ATS" or the "Company") and should be read in
conjunction with the unaudited interim consolidated financial
statements of the Company for the first quarter of fiscal 2012. The
interim consolidated financial statements for the three months
ended July 3, 2011 have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and are
reported in Canadian dollars. The Company assumes that the reader
of this MD&A has access to, and has read the audited
consolidated financial statements prepared in accordance with
Canadian GAAP and MD&A of the Company for the year ended March
31, 2011 (fiscal 2011) and, accordingly, the purpose of this
document is to provide a first quarter update to the information
contained in the fiscal 2011 MD&A. These documents and other
information relating to the Company, including the Company's fiscal
2011 audited consolidated financial statements, MD&A and annual
information form may be found on SEDAR at www.sedar.com.
International Financial Reporting Standards The Company adopted
IFRS as issued by the International Accounting Standards Board
("IASB") effective for its interim and annual financial statements
beginning April 1, 2011 with a transition date of April 1, 2010.
First quarter fiscal 2012 interim consolidated financial statements
are the first financial statements of the Company to be presented
on an IFRS basis. Comparative data for all periods subsequent to
March 31, 2010 has been restated to be presented on an IFRS basis,
including an opening balance sheet as at April 1, 2010. The
Company's annual consolidated financial statements for the year
ending March 31, 2012 will be the first annual financial statements
that comply with IFRS and these annual consolidated financial
statements will be prepared as described in note 2 to the interim
consolidated financial statements, including the application of
IFRS 1. IFRS 1 requires an entity to adopt IFRS in its first
annual financial statements prepared under IFRS by making an
explicit and unreserved statement in those financial statements of
compliance with IFRS. IFRS Transition Impact on Operating Results
The Company has assessed the effect of adoption of IFRS and the
resulting changes in accounting policies based on IFRS standards
expected to be in effect at March 31, 2012. Set out below are the
key differences identified that had a material impact on the
operating results of ATS in the comparative period, fiscal 2011.
Impairment of PWF long-lived assets Impairment testing of property,
plant and equipment under Canadian GAAP is based on a two-step
approach when circumstances indicate the carrying value of an asset
may not be recoverable. At March 31, 2011, under Canadian GAAP,
indicators of impairment were identified in the Company's PWF
division. The property, plant and equipment assets were therefore
required to be tested for impairment. The first step of the
impairment test conducted under Canadian GAAP used undiscounted
cash flows projected over the life of the primary asset and
compared them to the carrying value of the assets being tested. The
first step of the impairment test completed as of March 31, 2011
under Canadian GAAP indicated that the value of PWF's property,
plant and equipment was recoverable, and therefore the second step
to determine the amount of the impairment loss was not required.
IFRS requires a one-step impairment test for identifying and
measuring impairment. This test requires a comparison of the
asset's carrying value to the higher of its value in use or its
fair value less costs to sell. IFRS tests asset groups for
impairment at the independent cash-generating unit ("CGU") level,
which is the lowest grouping of assets that generates independent
cash inflows. For non-current assets, the Company has determined
its CGU's to be at the operating division level. Under IFRS, the
Company's impairment test was carried out at the CGU level using a
discounted cash flow model to determine the recoverable amount of
the PWF CGU. A discount rate of 25% was selected based on the risks
specific to the solar industry and PWF's specific standing in the
industry. The fair value determined from the recoverable amount
calculation was compared to the carrying amount of the PWF CGU,
resulting in an impairment of PWF's non-current assets. As a
result, under IFRS, the Company recorded a non-cash impairment
charge in the fourth quarter of fiscal 2011 which reduced net
income by $61.7 million compared to previously reported results
under Canadian GAAP. Classification of Photowatt as "Discontinued
Operations" IFRS requires that an evaluation is made as to whether
non-current assets (or a disposal group) should be classified as
"held for sale" or as "held for distribution to owners" when
specific criteria related to their sale or distribution are met.
Canadian GAAP requires that non-current assets to be distributed to
owners continue to be classified as held and used until disposed
of. The Company has determined that under IFRS, the separation of
Photowatt met the criteria of non-current assets held for
distribution to owners as of March 31, 2011 and therefore has
reclassified this disposal group as "held for distribution to
owners" as of March 31, 2011 and reclassified Photowatt's operating
results as "discontinued operations" for the current and
comparative periods presented in the interim consolidated financial
statements. Business combinations Acquisition-related costs
directly attributable to a business combination may be capitalized
to the cost of the acquisition as part of the purchase price
allocation under Canadian GAAP. Under IFRS, with the
exception of share issuance costs, these costs are to be expensed
as incurred. Additionally, restructuring costs included in the
purchase price allocation under Canadian GAAP are expensed under
IFRS. As a result, under IFRS, the Company recorded additional
expenses which reduced net income by $1.2 million in the first
quarter of fiscal 2011 and $4.9 million for the fiscal year 2011
compared to previously reported results under Canadian GAAP.
Revenue recognition Construction contracts are specifically defined
under IFRS and require percentage-of-completion revenue
recognition. Additionally, service revenues are to be
accounted for on a percentage-of-completion basis under IFRS.
All revenue contracts have been analyzed to ensure that appropriate
revenue recognition criterion has been applied under IFRS. Revenues
previously recognized using completed contract revenue recognition
that are required to be recognized under percentage-of-completion
accounting under IFRS have been adjusted. As a result, under IFRS,
the Company adjusted revenues recognized which increased net income
by $0.3 million in the first quarter of fiscal 2011 and reduced net
income by $0.9 million for the fiscal year 2011 compared to
previously reported results under Canadian GAAP. Provisions Under
IFRS, restructuring costs are recognized as a provision when an
obligation occurs as a result of a past event; it is probable that
an outflow of resources will be required; and a reliable estimate
of the obligation can be made. Under Canadian GAAP, certain
restructuring-related expenses are precluded from being recognized
until they are incurred. This results in timing differences between
the recognition of certain expenses under Canadian GAAP and IFRS.
As a result, under IFRS, the Company recorded an additional
restructuring charge in the fourth quarter of fiscal 2011 which
reduced net income by $0.7 million compared to previously reported
results under Canadian GAAP. Income taxes Income tax is
recalculated based on differences between Canadian GAAP and
IFRS. Income taxes and equity also includes an adjustment to
tax effect the share issuance costs which should be reported in
equity under IFRS but are reported in income under Canadian GAAP.
As a result, under IFRS, the Company recorded additional income tax
expenses in the fourth quarter of fiscal 2011 which reduced net
income by $0.2 million and income tax recoveries in the fiscal year
2011 which increased net income by $1.1 million compared to
previously reported results under Canadian GAAP. For a full
description of all IFRS differences including adjustments to the
opening balance sheet as of April 1, 2010, refer to note 25 of the
interim consolidated financial statements. Notice to Reader:
Non-IFRS Measures Throughout this document the term "operating
earnings" is used to denote earnings (loss) from operations. EBITDA
is also used and is defined as earnings (loss) from operations
excluding depreciation and amortization (which includes
amortization of intangible assets). The term "margin" refers to an
amount as a percentage of revenue. The terms "earnings (loss) from
operations", "operating earnings", "margin", "operating loss",
"operating results", "operating margin", "EBITDA", "Order Bookings"
and "Order Backlog" do not have any standardized meaning prescribed
within IFRS and therefore may not be comparable to similar measures
presented by other companies. Operating earnings and EBITDA are
some of the measures the Company uses to evaluate the performance
of its segments. Management believes that ATS shareholders and
potential investors in ATS use non-IFRS financial measures such as
operating earnings and EBITDA in making investment decisions and
measuring operational results. A reconciliation of operating
earnings and EBITDA to net income from continuing operations for
the three month periods ending July 3, 2011 and June 27, 2010 is
contained in this MD&A (See "Reconciliation of EBITDA to IFRS
Measures"). EBITDA should not be construed as a substitute for net
income determined in accordance with IFRS. Order Bookings represent
new orders for the supply of automation systems that management
believes are firm. Order Backlog is the estimated unearned portion
of ASG revenue on customer contracts that are in process and have
not been completed at the specified date. A reconciliation of
Order Bookings and Order Backlog to total Company revenues for the
three month periods ending July 3, 2011 and June 27, 2010 is
contained in the MD&A (See "ASG Order Backlog Continuity").
References to cell ''efficiency'' means the percentage of incident
energy that is converted into electrical energy in a solar cell.
Solar cells and modules are sold based on wattage output. Company
Profile The Company has two operating segments: Automation Systems
Group ("ASG") and Photowatt Technologies ("Photowatt") which
includes Photowatt France ("PWF") and Photowatt Ontario ("PWO").
Through ASG, ATS provides innovative, custom designed, built and
installed manufacturing solutions to many of the world's most
successful companies. Founded in 1978, ATS uses its
industry-leading knowledge and global capabilities to serve the
sophisticated automation systems' needs of multinational customers
in industries such as life sciences, computer/electronics, energy,
transportation and consumer products. It also leverages its many
years of experience and skills to fulfill the specialized
automation product manufacturing requirements of customers. Through
Photowatt, ATS participates in the growing solar energy industry.
ATS employs approximately 2,900 people at 21 manufacturing
facilities in Canada, the United States, Europe, Southeast Asia and
China. Value Creation Strategy To drive value creation, the Company
implemented a three-phase strategic plan: (1) fix the business
(improve the existing operations, gain operating control of the
business and earn credibility); (2) separate the businesses (create
standalone ASG and Photowatt businesses, monetize non-core assets
and strengthen the balance sheet); and (3) grow (both organically
and through acquisition). In fiscal 2011, the Board of Directors of
ATS approved a plan designed to implement the separation of
Photowatt from ATS. The Company is advancing its separation
strategy via the spinoff of the Photowatt business as a standalone
public company to the existing shareholders of ATS or a sale of PWF
and/or PWO. As a result, as required by IFRS, Photowatt is
presented as "held for distribution to owners'" in the interim
consolidated statements of financial position and as "discontinued
operations" in the interim consolidated statements of income (loss)
and for all periods presented in this MD&A (see note 7 to the
interim consolidated financial statements). The Company's
continuing operations are reported as one operating segment, ASG
(see note 21 to the interim consolidated financial statements).
Proposed Spinoff of Photowatt The Company has initiated a dual
track process to effect the separation of Photowatt from ATS; a
spinoff of the Company's combined solar businesses or a sale of PWF
and/or PWO. The Company is engaged with a number of interested
parties regarding the potential sale of PWF. If a favourable offer
is made for PWF, the Company would give it full consideration. In
the interim, the Company is advancing its separation strategy via
the spinoff of the Photowatt businesses as a standalone public
company to the existing shareholders of ATS. Management believes
separation will provide a number of benefits to ATS shareholders
and both of its automation and solar businesses. -- Enhanced market
understanding. ASG and Photowatt have different value creation
models, risk profiles, and capitalization requirements and they
therefore attract different shareholders. Separating ASG and
Photowatt will benefit shareholders by providing better visibility,
enhanced market understanding and appropriate valuation. Separation
will allow both businesses to attract a dedicated investor base and
gain improved potential access to growth capital. -- Greater focus.
The board of directors and management of each entity will have a
singular focus on developing their respective business models,
balance sheets and strategies. This can enhance decision making and
performance and allow both the automation and solar businesses to
pursue their short and long-term business objectives and strategies
best suited to their unique assets, expertise, and opportunities.
-- Improved value creation for all stakeholders. Separation will
allow each business to better serve its customer base and pursue
strategic opportunities that may not be available as part of a
combined ATS. Employees could benefit from business-specific
incentives which better align employee compensation with business
performance and improve the ability of each business to attract,
retain and motivate employees. Detailed plans to effect the spinoff
of Photowatt to ATS shareholders as an independent, publicly traded
company have been developed. Actions required to implement the
spinoff are underway. PWF has notified and received advice from its
employee works council regarding the spinoff transaction. The
Company has identified a shortlist of candidates for the CEO and
board of director roles for the spinoff entity and expects to
confirm the appointments in the next fiscal quarter. The Company
currently plans to structure the proposed spinoff as a return of
capital to be implemented via a plan of arrangement. The plan of
arrangement will be subject to court approval. The Company intends
to structure the spinoff transaction on a tax-efficient basis for
both the Company and shareholders. The transaction will be subject
to approval by ATS shareholders, the satisfaction of applicable
regulatory requirements and certain other customary conditions.
Upon receipt of necessary approvals and satisfaction of certain
conditions, the Company anticipates completing the spinoff
transaction before the end of calendar 2011. However,
notwithstanding the receipt and satisfaction of such approvals and
conditions, the Company will retain sole and absolute discretion to
determine whether it is appropriate to implement the spinoff
transaction and if so, the timing of its implementation. The
Company is considering the initial capitalization requirements of
Photowatt and various alternatives to achieve this. The Company has
the resources to capitalize Photowatt without materially impacting
ATS' overall capital resources and therefore its ability to pursue
both organic and inorganic growth in its core business.
However, the Company is actively considering a number of options
with respect to sources of capital for Photowatt. The spinoff
transaction as currently contemplated involves a number of steps
and transactions, including obtaining various Court and regulatory
approvals. In addition, future financial conditions, superior
alternatives or other factors may arise that make another course of
action preferable to proceeding with part or all of the spinoff
transaction. Any or all of the elements of the spinoff
transaction may not occur as currently expected or within the time
frames that are currently contemplated. See "Risk Factors" in
the Company's most recently filed Annual Information Form. Growth
To further the Company's growth strategy, ASG will continue to
target providing value based, complete automation program solutions
for customers based on differentiating technological solutions,
value of customer outcomes achieved and global capability. With
respect to acquisitions, the Company has an organizational
structure, business processes and the experience to successfully
integrate companies into the group. Acquisition opportunities are
targeted and evaluated based on their ability to bring ATS market
or technology leadership, scale and/or an opportunity brought on by
the economic environment. Financially, targets are reviewed for
their potential to add accretive earnings to current operations.
Business Acquisitions In fiscal 2011 management completed two
acquisitions: Sortimat Group On June 1, 2010, ATS completed its
acquisition of 100% of Sortimat Group ("Sortimat"). Sortimat
is a manufacturer of assembly systems for the life sciences
market. Established in 1959, Sortimat has locations in
Germany, Chicago and a small, 60% owned subsidiary in India.
Sortimat's integration into the Company's ASG segment is materially
complete. The Sortimat acquisition aligned with ATS' strategy of
expanding its position in the global automation market and
enhancing growth opportunities, particularly in strategic segments
such as life sciences. The Company benefits from Sortimat's
significant experience and products in advanced system development,
manufacturing, handling, and feeder technologies. This
acquisition provided ATS with the scale required to further
organize its marketing and divisions into a group focused on life
sciences with the objective to grow its exposure to this market
segment and help customers differentiate themselves from their
competitors. To integrate Sortimat and effect margin improvements,
the Company deployed people to apply best practices, command and
control, and program management and to advance approach to market.
The benefits of these integration initiatives are now being
realized. Improvements in program management have led to the
elimination of a significant number of RED programs (programs which
are not delivered to specification, on-time, or on budget). For
additional information on the acquisition of Sortimat, refer to
note 6 of the interim consolidated financial statements. ATW On
January 5, 2011, the Company completed its acquisition of the
majority of Assembly & Test Worldwide, Inc.'s U.S.-based and
German automation and test systems businesses (collectively
"ATW"). ATW is a manufacturer of assembly and test systems,
with capability in the transportation, life sciences and energy
segments. The Company benefits from ATW's significant experience,
particularly in the transportation segment. The acquisition of ATW
provided ATS with the scale required to further organize its
marketing and divisions into a group within the Company's ASG
segment that is focused on transportation. The integration of ATW
is in its early stages. To date, management has initiated the
consolidation of ATW's Saginaw division into its Livonia and Dayton
divisions. Additional incremental margin improvements are targeted
through the application of best practices, command and control,
program management and approach to market. Management expects the
integration process to continue for a number of quarters. For
additional information on the acquisition of ATW, refer to note 6
of the interim consolidated financial statements. OVERVIEW -
OPERATING RESULTS FROM CONTINUING OPERATIONS The operating results
from continuing operations comprise the results of ASG. The results
of Photowatt are reported as a discontinued operations commencing
in the fourth quarter of fiscal 2011, with comparative periods
reclassified as discontinued operations. Consolidated Revenues from
Continuing Operations (In millions of dollars) Three Months Three
Months Ended Ended July 3, 2011 June 27, 2010 Revenues by market
Life sciences $ 43.8 $ 39.8 Computer-electronics 7.1 14.0 Energy
25.0 35.2 Transportation 40.4 9.1 Other 10.6 3.7 Total revenues
from continuing $ 126.9 $ 101.8 operations First quarter revenues
were 25% higher than for the same period a year ago as a result of
increased Order Backlog entering the first quarter compared to a
year ago and revenues earned by Sortimat and ATW. By industrial
market, revenues from life sciences increased 10% year over year
primarily as a result of the increase in Order Backlog entering the
first quarter compared to a year ago and the inclusion of Sortimat
for the full fiscal quarter. The 49% decrease in
computer-electronics revenues reflected lower Order Backlog
entering the first quarter compared to a year ago. Revenues
generated in the energy market decreased 29% on lower Order Backlog
entering the first quarter compared to a year ago. The 344%
increase in transportation revenues compared to a year ago
primarily reflected higher Order Backlog entering the first quarter
compared to a year ago and the inclusion of ATW. "Other" revenues
increased 186% year over year primarily due to increased revenues
in the consumer products market. Quarter over quarter foreign
exchange rate changes negatively impacted the translation of ASG
revenues, reflecting the strengthening of the Canadian dollar
relative to the U.S. dollar. Consolidated Operating Results (In
millions of dollars) Three Months Three Months Ended Ended July 3,
2011 June 27, 2010 Earnings from operations $ 10.5 $ 8.5
Depreciation and amortization 3.1 2.1 EBITDA $ 13.6 $ 10.6 Fiscal
2012 first quarter earnings from operations were $10.5 million
(operating margin of 8%) compared to earnings from operations of
$8.5 million (operating margin of 8%) in the first quarter of
fiscal 2011. Higher earnings from operations primarily reflect
higher revenues earned during the period. Increased operating
margins in the ATS base business was partially offset by the
inclusion of Sortimat and ATW, which had lower operating margins
than ASG's other operations, resulting in a consistent operating
margin compared to the corresponding period a year ago. Corporate
costs decreased on a year over year basis due to lower spending on
acquisitions. Depreciation and amortization expense was $3.1
million in the first quarter of fiscal 2012 compared to $2.1
million in the same period a year ago. The increase in fiscal 2012
first quarter depreciation and amortization primarily related to a
$0.9 million increase in amortization on the identifiable
intangible assets recorded on the acquisitions of Sortimat and ATW.
ASG Order Bookings ASG Order Bookings in the first quarter were
$157 million, 85% higher than in the first quarter in the previous
year, reflecting improved Order Bookings in transportation
following a general recovery in the automotive market and new
product launches by OEMs and tier 1 suppliers. Improved Order
Bookings also reflected additional activity in life sciences
markets. Order Bookings in the first six weeks of the second
quarter of fiscal 2012 were $90 million. ASG Order Backlog
Continuity (In millions of dollars) Three Months Three Months Ended
Ended July 3, 2011 June 27, 2010 Opening Order Backlog $ 296 $ 209
Revenue (127) (102) Order Bookings 157 85 Order Backlog
adjustments(1) 2 23 Total $ 328 $ 215 1. Order Backlog adjustments
include foreign exchange adjustments, cancellations and, for the
three months ended June 27, 2010, incremental Order Backlog of $27
million acquired with Sortimat. ASG Order Backlog by Industry (In
millions of dollars) July 3, 2011 June 27, 2010 Life sciences $ 112
$ 87 Computer-electronics 15 14 Energy 44 54 Transportation 143 15
Other 14 45 Total $ 328 $ 215 At July 3, 2011, ASG Order Backlog
was $328 million, 53% higher than at June 27, 2010, reflecting
improved Order Bookings during the last four quarters. This growth
was due to improved market conditions, particularly in life
sciences and transportation and the addition of Sortimat and ATW.
ASG Outlook The general economic environment, which negatively
impacted the Company throughout fiscal 2010, continued to recover
in the last four quarters. The Company has seen some improvement in
certain customer markets; however, many customers remain cautious
in their approach to capital investment. Management believes that
increased capital spending will lag behind general economic
recovery as customers are hesitant to invest until their markets
stabilize and/or show signs of growth. Management expects this will
continue to cause volatility in Order Bookings, however, the size
of ASG's Order Backlog and the portion of Order Backlog that is
moving from design to build phases will partially negate the impact
of volatile Order Bookings on revenues in the short term. As the
global economy and some of the Company's markets have shown signs
of strengthening, activity in the Company's front-end of the
business has increased. Management expects that the implementation
of its strategic initiatives to improve leadership, business
processes and supply chain management will continue to have a
positive impact on ATS operations. The integration of Sortimat is
materially complete. Efforts to control and eliminate RED programs,
reduce costs and integrate Sortimat into ATS' sales and marketing,
program management, and command and control processes are
significantly advanced. These initiatives, combined with improved
Order Backlog and therefore factory utilization, are expected to
drive continued improvements in operating results. The integration
of ATW is well underway. The consolidation of ATW's Saginaw
division into divisions in Livonia and Dayton is substantially
complete. ATS will target margin improvements through the
application of best practices in command and control, program
management, performance management and approach to market. The
acquisition of ATW has increased ATS revenues; however, until ATW
is fully integrated, operating margins are expected to be
negatively impacted. The Company's strong financial position
provides a solid foundation to pursue organic growth and the
flexibility to pursue its acquisition growth strategy. The Company
is actively seeking to expand its position in the global automation
market organically and through acquisition. To further this
objective, management will continue to review and pursue attractive
opportunities. CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS (In
millions of dollars, except per share data) Three Months Three
Months Ended Ended July 3, 2011 June 27, 2010 Revenues $ 126.9 $
101.8 Cost of revenues 92.4 76.9 Selling, general 15.9 and
administrative 22.9 Stock-based 0.5 compensation 1.1 Earnings from
$ 8.5 operations $ 10.5 Net finance costs $ 0.6 $ 0.2 Provision for
2.7 (recovery of) income taxes 3.7 Net income from $ 5.6 continuing
operations $ 6.2 Loss from $ (0.4) discontinued operations, net of
tax $ (11.2) Net income (loss) $ (5.0) $ 5.2 Earnings (loss) per
share Basic and diluted - from continuing operations $ 0.07 $ 0.06
Basic and diluted - from discontinued operations (0.13) (0.00) $
(0.06) $ 0. Revenues. At $126.9 million,
consolidated revenues from continuing operations for the fiscal
2012 first quarter were 25% higher than for the corresponding
period a year ago as a result of increased Order Backlog entering
the first quarter compared to a year ago and revenues earned by
Sortimat and ATW. Cost of revenues. Fiscal 2012 first quarter
cost of revenues increased by $15.5 million or 20% from a year ago
to $92.4 million. The increase in gross margin to 27% in
fiscal 2012 from 24% a year ago reflects higher revenues and
improved program management, partially offset by lower margins from
acquired businesses. Selling, general and administrative
("SG&A") expenses. SG&A expenses for the first quarter of
fiscal 2012 increased 44% or $7.0 million to $22.9 million compared
to the corresponding prior-year period. Higher SG&A costs
reflected incremental spending from acquired businesses, increased
sales and marketing expenses and incremental amortization related
to identifiable intangible assets recorded on the acquisition of
Sortimat, partially offset by lower professional fees for
acquisition activities. Stock-based compensation cost. In the first
quarter of fiscal 2012, stock-based compensation expense increased
to $1.1 million from $0.5 million a year earlier primarily
reflecting additional expense from new stock grants. The expense
associated with the Company's performance-based stock options is
recognized in income over the estimated assumed vesting period at
the time the stock options are granted. Upon the Company's
stock price trading at or above a stock price performance threshold
for a specified minimum number of trading days, the options
vest. When the performance-based options vest, the Company is
required to recognize all previously unrecognized expenses
associated with the vested stock options in the period in which
they vest. As at July 3, 2011, the following performance-based
stock options were un-vested: Weighted average Current Remaining
Stock price Number of Grant date remaining year expense to
performance options value per vesting expense recognize threshold
outstanding option period (in '000s) (in '000s) $ 8.41 166,667 1.88
0.1 years $ 23 $ 4 8.50 889,333 1.41 1.5 years 63 350 9.49 41,667
1.66 3.4 years 3 41 10.41 266,667 2.11 1.3 years 31 146 10.50
889,333 1.41 2.3 years 54 481 11.08 218,667 2.77 0.6 years 38 97
12.41 266,666 2.11 2.2 years 26 217 13.08 218,667 2.77 1.6 years 31
193 Earnings from operations. First quarter fiscal 2012
consolidated earnings from operations were $10.5 million, compared
to earnings from operations of $8.5 million a year ago reflecting
higher revenues and gross margins, partially offset by higher
SG&A expenses. Net finance costs. Finance costs were $0.6
million in the first quarter of fiscal 2012 compared to $0.2
million a year ago. The increase in net finance costs relates to
lower cash balances and higher debt. Provision for income taxes.
For the three months ended July 3, 2011, the Company's effective
income tax rate differed from the combined Canadian basic federal
and provincial income tax rate of 27.8% primarily as a result of
losses incurred in Europe, the benefit of which was not recognized
for financial statement reporting purposes. Net income from
continuing operations. Net income from continuing operations was
$6.2 million (7 cents earnings per share basic and diluted)
compared to net income from continuing operations of $5.6 million
(6 cents earnings per share basic and diluted) for the first
quarter of fiscal 2011. Reconciliation of EBITDA to IFRS measures
(In millions of dollars) Three Months Three Months Ended Ended July
3, 2011 June 27, 2010 $ $ 10.6 EBITDA 13.6 Less: depreciation and $
$ 2.1 amortization expense 3.1 $ $ 8.5 Earnings from operations
10.5 $ $ 0.2 Less: Net finance costs 0.6 Provision for (recovery
of) 3.7 2.7 income taxes Net income from continuing $ $ 5.6
operations 6.2 Foreign Exchange Strengthening in the value of the
Canadian dollar relative to the U.S. dollar had a negative impact
on translation of the Company's revenues in the first quarter of
fiscal 2012 compared to the first quarter of fiscal 2011. ATS
follows a transaction hedging program to help mitigate the impact
of short-term foreign currency movements. This hedging activity
consists primarily of forward foreign exchange contracts used to
manage foreign currency exposure. Purchasing third-party
goods and services in U.S. dollars by Canadian operations also acts
as a partial offset to U.S. dollar exposure. The Company's forward
foreign exchange contract hedging program is intended to mitigate
movements in currency rates primarily over a four-to-six month
period. See note 13 to the interim consolidated financial
statements for details on the derivative financial instruments
outstanding at July 3, 2011. Period Average Market Exchange Rates
in CDN$ Three months ended July 3, 2011 June 27, 2010 % change U.S.
Dollar 0.9690 1.0277 -5.7% Euro 1.3941 1.3071 6.7% Discontinued
Operations: Photowatt (In millions of dollars) Three Months Three
Months Ended Ended July 3, 2011 June 27, 2010 Total Revenues $ 62.9
$ 48.8 Loss from operations (11.2) (0.1) Loss from discontinued
(11.2) (0.4) operations, net of tax Revenues Photowatt's fiscal
2012 first quarter revenues of $62.9 million were 29% higher than
in the first quarter of fiscal 2011. Fiscal 2012 revenues included
$6.6 million of revenues generated primarily from the sale of
excess raw material inventory for approximately its net book value,
compared to $7.1 million of such sales a year ago. Excluding
revenues from raw material sales, Photowatt's first quarter
revenues were 35% higher than the corresponding period a year ago.
Total megawatts ("MWs") sold increased to 14.7 MWs from 11.4 MWs in
the same period a year ago. Higher volumes were partially offset by
lower average selling prices, which declined by approximately 20%
for modules. Dampening the impact of lower module average selling
prices was an increase in systems sales to $44.0 million from $26.2
million in the corresponding period a year ago. Systems include
modules, combined with installation kits, solar power system design
and/or other value-added services. Quarter over quarter foreign
exchange rate changes positively impacted the translation of PWF
revenues, reflecting the strengthening of the Euro relative to the
Canadian dollar. Loss from Operations Photowatt fiscal 2012 first
quarter loss from operations was $11.2 million (operating margin of
negative 18%) compared to a loss from operations of $0.1 million
(operating margin of 0%) a year ago. Included in fiscal 2012 first
quarter operating loss was $6.0 million of non-cash charges related
to the write-down of inventory to its net realizable value,
following declines in market average selling prices due to changes
in European feed-in tariffs ("FIT") and excess module supply in the
European solar industry. Excluding the inventory impairment charge,
the quarter-over-quarter decrease in operating results reflected
lower average selling prices which were partially offset by the
higher MWs sold, increased system sales, and lower direct
manufacturing costs-per-watt. At PWO, production on the divisions
100 MW module manufacturing line continued to ramp-up and the
division operated at approximately breakeven. Lower operating costs
in PWF's PV Alliance joint venture were more than offset by higher
spending on costs related to the separation of Photowatt. Photowatt
Outlook Management believes that solar power is, and for the
foreseeable future will be, affected by and largely dependent on
the existence of government incentives. Announced reductions in FIT
for solar energy in Europe, and annual limits on installations
eligible for FIT in certain European countries have caused
volatility in the European solar industry. Potential project
investors are delaying investments in new projects due to the
uncertainty and volatility in that market. This is causing
increased industry inventory levels for modules, which combined
with increasing industry manufacturing capacity, particularly from
low-cost manufacturers in Asia, is expected to have a negative
impact on average selling prices per watt. In Ontario, changes to
the FIT program could have an impact on PWO's future revenues and
profitability and the value of its FIT contracts. Recent
improvements made to the regulatory approval process which allows
solar project developers with advanced project plans to obtain a
waiver of the OPA's termination rights, is expected to improve
market stability. PWO has secured conditional feed-in tariff
approvals totalling approximately 64 MWs related to large scale
renewable energy applications made by a project development joint
venture, Ontario Solar PV Fields ("OSPV") in which ATS holds a 50%
interest. OSPV will utilize a range of solar solutions including
modules manufactured by ATS in Cambridge. OSPV is in the process of
seeking necessary joint venture partner approvals and other
requisite approvals. OSPV's next steps include efforts to arrange
financing and ultimate project ownership. PWO will supply modules
to OSPV and recognize revenues on 50% of those modules over the
next two years. As OSPV generates revenue, through either
connection to the Ontario power grid or through sale of the
projects to third parties, PWO will recognize additional revenues
up to its proportionate 50% interest at that time. During the first
quarter of fiscal 2012, PWO signed two customer agreements for the
manufacture and supply of customer-branded modules. The first
agreement is for the supply of a minimum of 24 MWs over fiscal 2012
and 2013 and allows for the potential to increase volumes by an
additional 24 MWs over the term of the agreement. The second
agreement is for the supply of a minimum of 160 MWs over four
years, with shipments expected to begin in October 2011. The second
agreement allows for the potential to increase volumes by an
additional 160 MWs over the term of the agreement. Under the first
agreement, PWO will recognize revenue on the full value of the
modules manufactured. Under the second agreement, PWO will
recognize revenue for module manufacturing services and module
materials other than solar cells, which will be provided by the
customer. Production from the Company's 100 MW module manufacturing
line is expected to ramp up to full capacity to meet demand in
fiscal 2012. PWO has also signed agreements with developers who are
in the process of securing conditional FIT approvals for a number
of projects. PWO will provide modules and other related
services to these projects. At PWF, implementation of the
restructuring plan initiated in the fourth quarter of fiscal 2011
is underway. The restructuring plan is intended to: (i) focus on
growing system sales in France and other emerging European solar
markets with attractive FIT regimes for systems sales; (ii) reduce
manufacturing costs; and (iii) improve its global supply chain,
including subcontracting the assembly of solar modules to third
parties. Subsequent to the end of the first quarter, the
workforce reductions were completed, resulting in a one-third
reduction in PWF's workforce. Effective in the second quarter
of fiscal 2012, all internal module production has ceased and is
now subcontracted. Internal production of photovoltaic cells is in
the process of being reduced to 50 MW capacity, which will be
supplemented with the 25 MW PV Alliance cell line. While PWF
believes that the actions will allow PWF to recover
competitiveness, there is ultimately no guarantee that the
restructuring project and potential future actions will offset all
competitive challenges. PWF continues to monitor market
conditions and intends to take appropriate actions in relation to
such conditions. LIQUIDITY, CASH FLOW AND FINANCIAL RESOURCES Cash,
Leverage and Cash Flow from Continuing Operations (In millions of
dollars, except ratios) July 3, 2011 June 27, 2010 Period end cash
and cash equivalents $ 83.7 $ 117.1 Period end debt-to-equity ratio
0.02:1 0.1:1 Cash flows used in operating activities $ (25.6) $
(0.7) from continuing operations At July 3, 2011, the Company had
cash and cash equivalents of $83.7 million compared to $117.1
million at March 31, 2011. The Company's total debt-to-total-equity
ratio at July 3, 2011 was 0.02:1. At July 3, 2011, the Company had
$59.8 million of unutilized credit available under existing
operating and long-term credit facilities and another $31.8 million
available under letter of credit facilities. In the first quarter
of fiscal 2012, cash flows used in operating activities from
continuing operations was $25.6 million, compared to cash flows
used in operating activities from continuing operations of $0.7
million in the first quarter of fiscal 2011. The increase in cash
flows used in operating activities from continuing operations
related primarily to timing of investments in non-cash working
capital in a number of large customer programs primarily in the
transportation market. In the first quarter of fiscal 2012, the
Company's investment in non-cash working capital increased by $37.0
million from March 31, 2011. Accounts receivable increased 26% or
$18.4 million, due to timing on billings in certain customer
contracts. Net contracts in progress increased by 35% or $9.9
million compared to March 31, 2011. The Company actively manages
its accounts receivable and net contracts in progress balances
through billing terms on long-term contracts and by focusing on
collection efforts. Inventories increased year over year by 5% or
$0.6 million. Deposits and prepaid assets increased by 10% or
$1.8 million due primarily to an increase in prepaid assets,
partially offset by a decrease in restricted cash used to secure
letters of credit. Accounts payable and accrued liabilities
decreased 3% primarily due to timing of purchases. Provisions
decreased by $0.6 million or 7% since March 31, 2011. Capital
expenditures totalled $1.6 million in the first quarter of fiscal
2012 and primarily related to improvements and upgrades at existing
facilities. The Company's primary credit facility (the "Credit
Agreement") provides total credit facilities of up to $95.0 million
comprised of an operating credit facility of $65.0 million and a
letter of credit facility of up to $30.0 million for certain
purposes. The operating credit facility is subject to
restrictions regarding the extent to which the outstanding funds
advanced under the facility can be used to fund certain
subsidiaries of the Company. The Credit Agreement, which is secured
by the assets, including real estate, of the Company's North
American legal entities and a pledge of shares and guarantees from
certain of the Company's legal entities, is repayable in full on
April 30, 2012. As at July 3, 2011, the Company had issued letters
of credit in the amount of $5.8 million under the primary credit
facility (March 31, 2011 - $5.6 million). No other amounts were
drawn on the primary credit facility. The operating credit facility
is available in Canadian dollars by way of prime rate advances,
letters of credit for certain purposes and/or bankers' acceptances
and in U.S. dollars by way of base rate advances and/or LIBOR
advances. The interest rates applicable to the operating credit
facility are determined based on certain financial ratios. For
prime rate advances and base rate advances, the interest rate is
equal to the bank's prime rate or the bank's U.S. dollar base rate
in Canada, respectively, plus 0.90% to 1.90% until October 1, 2011
and 0.90% to 2.40% subsequently. For bankers' acceptances and
LIBOR advances, the interest rate is equal to the bankers'
acceptance fee or the LIBOR, respectively, plus 1.90% to 2.90%
until October 1, 2011 and 1.90% to 3.40% subsequently. Under the
Credit Agreement, the Company pays a fee for usage of the $30.0
million letter of credit facility which ranges from 0.80% to 1.90%.
Under the Credit Agreement, the Company pays a standby fee on the
un-advanced portions of the amounts available for advance or
draw-down under the credit facilities at rates ranging from 0.475%
to 0.725% until October 1, 2011, and 0.475% to 0.850% subsequently.
The Credit Agreement is subject to debt leverage tests, a current
ratio test and an interest coverage test. Under the terms of
the Credit Agreement, the Company is restricted from encumbering
any assets with certain permitted exceptions. The Credit
Agreement also partially restricts the Company from repurchasing
its common shares, paying dividends and from acquiring and
disposing of certain assets. The Company is in compliance
with these covenants and restrictions. The Company has additional
credit facilities available of $12.5 million (6.6 million Euro,
41.2 million Indian Rupee and 2.0 million Swiss francs). The
total amount outstanding on these facilities is $10.2 million
(March 31, 2011 - $7.9 million), of which $6.6 million is
classified as bank indebtedness and $3.6 million is classified as
long-term debt. The interest rates applicable to the credit
facilities range from 0.0% to 8.5% per annum. A portion of
the long-term debt is secured by certain assets of the Company and
the 2.0 million Swiss Francs credit facility is secured by a letter
of credit under the primary credit facility. The Company expects to
continue increasing its investment in working capital to support
its growing backlog, particularly in the transportation market. The
Company expects that continued cash flows from operations, together
with cash and cash equivalents on hand and credit available under
operating and long-term credit facilities, will be more than
sufficient to fund its requirements for investments in working
capital and capital assets, and to fund strategic investment plans
including potential acquisitions. Significant acquisitions could
result in additional debt or equity financing requirements. During
the first quarter of fiscal 2012, 4,400 stock options were
exercised. As of August 16, 2011 the total number of shares
outstanding was 87,293,555. Discontinued Operations As at July 3,
2011, the Company's subsidiary, PWF, has credit facilities
including finance lease obligations, of $40.8 million (March 31,
2011 - $40.7 million) outstanding, of which $2.1 million would be
classified as bank indebtedness (March 31, 2011 - $0.5), $18.4
million would be classified as long-term debt (March 31, 2011 -
$19.3 million) and $20.3 million would be classified as obligations
under finance leases (March 31, 2011 - $20.8 million). Additional
credit facilities of $29.3 million (21.0 million Euro) are
available to PWF, upon meeting certain requirements. The interest
rates applicable to the credit facilities range from Euribor plus
0.5% to Euribor plus 3.35% and 4.9% per annum. Certain of the
credit facilities are secured by certain assets of PWF, and a
commitment to restrict payments to the Company and are subject to
debt leverage tests. The credit facility classified as long-term
debt requires annual payments of $5.2 million (3.8 million Euro)
and expires on October 15, 2014. The credit facilities which are
classified as bank indebtedness are subject to either annual
renewal or 60 day notification. The PV Alliance joint venture has
additional credit facilities as described in note 22 to the interim
consolidated financial statements. The PWF and PV Alliance bank
indebtedness, obligations under finance leases and long-term debt
amounts have been classified as "held for distribution to owners'"
in the interim consolidated financial statements. The Company is
considering the initial capitalization requirements of Photowatt in
the event a spinoff is pursued and various alternatives to achieve
this. The Company has the resources to capitalize Photowatt without
materially impacting ATS' overall capital resources and therefore
its ability to pursue both organic and inorganic growth in its core
business. However, the Company is actively considering a
number of options with respect to sources of capital for Photowatt.
Contractual Obligations Information on the Company's lease and
contractual obligations is detailed in the Consolidated Annual
Financial Statements and MD&A for the year ended March 31, 2011
found at www.sedar.com. The Company' off-balance sheet arrangements
consist of purchase obligations, various operating lease financing
arrangements related primarily to facilities and equipment, and
derivative financial instruments which have been entered into in
the normal course of business. The Company has initiated
discussions with certain vendors with respect to exiting certain
long-term supply contracts in its discontinued operations. No
provisions for those contracts have been recognized in the interim
consolidated financial statements. There are no other significant
off-balance sheet arrangements that management believes will have a
material effect on the results of operations or liquidity. In
accordance with industry practice, the Company is liable to the
customer for obligations relating to contract completion and timely
delivery. In the normal conduct of its operations, the Company may
provide bank guarantees as security for advances received from
customers pending delivery and contract performance. In
addition, the Company may provide bank guarantees as security on
equipment under lease and on order. At July 3, 2011, the total
value of outstanding bank guarantees available under bank guarantee
facilities was approximately $25.0 million (March 31, 2011 - $26.3
million) from continuing operations and was approximately $9.0
million (March 31, 2011 - $13.9 million) from discontinued
operations. CONSOLIDATED QUARTERLY RESULTS Results for Q1 fiscal
2011 through to Q1 fiscal 2012 are reported based on IFRS. Results
for Q2 fiscal 2010 through to Q4 fiscal 2010 are reported based on
Canadian GAAP. Results have been reclassified to present Photowatt
as discontinued operations. ($ in thousands, CDN CDN CDN except per
IFRS IFRS IFRS IFRS IFRS GAAP GAAP GAAP share Q1 Q4 Q3 Q2 Q1 Q4 Q3
Q2 amounts) 2012 2011 2011 2011 2011 2010 2010 2010 Revenues 96,441
from continuing operations $ 126,875 $ 148,389 $ 120,781 $ 114,250
$ 101,838 $ 90,104 $ 78,185 $ Earnings 8,193 (loss) from operations
$ 10,527 $ 14,212 $ 7,145 $ 5,622 $ 8,492 $ 16,175 $ 2,727 $ Income
from 4,611 continuing operations $ 6,208 $ 14,576 $ 4,131 $ 3,801 $
5,603 $ 44,006 $ 1,830 $ Income from 1,401 discontinued operations,
net of tax $ (11,222) $ (32,206) $ (16,074) $ (2,913) $ (392) $
(41,922) $ 1,912 $ Net income 6,012 (loss) $ (5,014) $ (17,630) $
(11,943) $ 888 $ 5,211 $ 2,084 $ 3,742 $ Basic earnings per share
from continuing operations $ 0.07 $ 0.17 $ 0.05 $ 0.04 $ 0.06 $
0.50 $ 0.02 $ 0.05 Diluted earnings per share from continuing
operations $ 0.07 $ 0.17 $ 0.05 $ 0.04 $ 0.06 $ 0.50 $ 0.02 $ 0.05
Basic earnings (loss) per share from discontinued operations $
(0.13) $ (0.37) $ (0.18) $ (0.03) $ (0.00) $ (0.47) $ 0.02 $ 0.02
Diluted earnings (loss) per share from discontinued operations $
(0.13) $ (0.37) $ (0.18) $ (0.03) $ (0.00) $ (0.47) $ 0.02 $ 0.02
Basic 0.07 earnings (loss) per share $ (0.06) $ (0.20) $ (0.13) $
0.01 $ 0.06 $ 0.03 $ 0.04 $ Diluted 0.07 earnings (loss) per share
$ (0.06) $ (0.20) $ (0.13) $ 0.01 $ 0.06 $ 0.03 $ 0.04 $ ASG Order
Bookings $ 157,000 $ 206,000 $ 133,000 $ 105,000 $ 85,000 $ 105,000
$ 92,000 $ 71,000 ASG Order Backlog $ 328,000 $ 296,000 $ 215,000 $
208,000 $ 215,000 $ 209,000 $ 203,000 $ 197,000 Interim financial
results are not necessarily indicative of annual or longer-term
results because many of the individual markets served by the
Company tend to be cyclical in nature. General economic
trends, product life cycles and product changes may impact revenues
and operating performance. ATS typically experiences some
seasonality with its revenues and operating earnings due to summer
plant shutdowns by its customers and the annual summer shutdown at
PWF within its discontinued operations. In Photowatt, slower sales
may occur in the fiscal fourth quarter, when the weather may impair
the ability to install its products in certain geographical areas.
Significant Accounting Policies and Estimates The preparation of
consolidated financial statements in accordance with IFRS requires
management to establish accounting policies and to make estimates
and assumptions that affect both the amount and timing of reported
assets, liabilities, revenues and expenses. Estimates and
assumptions are continually evaluated and are based on historical
experience and various factors that management believes to be
reasonable under the circumstances. However, due to the nature of
estimates, actual results could differ from the estimates. Note 2
and note 3 to the interim consolidated financial statements
describe the Company's basis of accounting and significant
accounting policies respectively. The following discussion sets
forth the estimates that the Company considers as critical in
applying significant accounting policies and preparing consolidated
financial statements. Revenue Recognition and Contracts in Progress
The nature of certain ASG contracts requires the use of estimates
to quote new business and most automation systems are typically
sold on a fixed-price basis. As described in Note 3 (d) to
the interim consolidated financial statements, revenue on
construction contracts for automation systems and other long-term
contracts is recognized under the percentage of completion method
of accounting, which requires management to exercise significant
judgment in estimating the future costs of completing individual
contracts over the life of the contract. If the actual costs
incurred by the Company to complete a contract are significantly
higher than estimated, the Company's earnings may be negatively
affected. The use of estimates involves risks, since the work to be
performed requires varying degrees of technical uncertainty,
including possible development work to meet the customer's
specification, the extent of which is sometimes not determinable
until after the project has been awarded. In the event the
Company is unable to meet the defined performance specification for
a contracted automation system, it may need to redesign and rebuild
all or a portion of the system at its expense without an increase
in the selling price. Certain contracts may have provisions
that reduce the selling price if the Company fails to deliver or
complete the contract by specified dates. These provisions may
expose the Company to liabilities or adversely affect the Company's
results of operations or financial position. ASG's contracts may be
terminated by customers in the event of a default by the Company
and in some cases at the convenience of the customer. In the
event of a termination for convenience, the Company typically
negotiates a settlement reflective of the progress achieved on the
contract and/or the costs incurred to the termination date.
If a contract is cancelled, Order Backlog is reduced and production
utilization may be negatively impacted. Complete provision, which
can be significant, is made for losses on such contracts when such
losses first become known. Revisions in estimates of costs
and profits on contracts, which can also be significant, are
recorded in the accounting period in which the relevant facts
impacting the estimates become known. A portion of ASG revenue is
recognized when earned, which is generally at the time of shipment
and transfer of title to the customer, providing collection is
reasonably assured. Photowatt's revenue is generally recognized
when earned, which is normally at the time of shipment and transfer
of title to the customer, provided collection is reasonably
assured. While the Company may enter into long-term sales
contracts, many sales are made on the basis of individual orders,
as is customary in the industry. This can increase revenue
volatility because shipment volumes may vary depending on customer
demand. Valuation of Long-Lived Assets and Goodwill As described in
notes 3(h), 3(l) and 3(p) to the interim consolidated financial
statements, long-lived assets such as property, plant and equipment
and intangible assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying value may
not be recoverable. Judgment is involved in determining expected
future cash flows that will be generated by the long-lived assets.
During the year ended March 31, 2011, the Company recorded
impairment charges of $70.8 million related to the property, plant
and equipment of the Company's PWF division. In connection with
business acquisitions completed by the Company, management
identifies and estimates the fair value of the net assets acquired,
including certain identifiable intangible assets other than
goodwill and liabilities assumed in the acquisitions. Any excess of
the purchase price over the estimated fair value of the net assets
acquired is assigned to goodwill. Goodwill is assessed for
impairment on an annual basis or earlier if events or circumstances
suggest indicators of impairment. Valuation of Deferred Income Tax
Assets and Investment Tax Credits As described in note 3(f) to the
interim consolidated financial statements, the Company's deferred
income tax asset balance represents temporary differences between
financial reporting and tax basis of assets and liabilities
including research and development costs and incentives, property,
plant and equipment, asset impairment charges not yet deductible
and operating loss carry-forwards. The Company considers both
positive evidence and negative evidence to determine whether, based
upon the weight of that evidence, it is probably that future
taxable income will be available against which the deferred tax
assets can be utilized. Judgment is required in considering the
relative impact of negative and positive evidence. The
Company reduces deferred income tax assets and investment tax
credits to the extent that it is no longer probable that the
related tax benefit will be realized. Should the Company
determine that it is no longer probable that it will be able to
realize all or part of its deferred income tax assets in future
fiscal periods, the deferred income tax asset would be reduced,
resulting in a decrease to net income in the reporting periods in
which management makes such determinations. Provisions As described
in note 3(q) to the interim consolidated financial statements, the
Company records a provision when an obligation exists, an outflow
of economic resources required to settle the obligation is probable
and a reliable estimate can be made of the amount of the
obligation. The Company records a provision based on the best
estimate of the required economic outflow to settle the present
obligation at the balance sheet date. While management believes
these estimates are reasonable, differences in actual results or
changes in estimates could have a material impact on the
obligations and expenses reported by the Company. Accounting
Changes Standards issued but not yet effective or amended up to the
date of issuance of the Company's financial statements are listed
below. This listing is of standards and interpretations issued,
which the Company reasonably expects to be applicable at a future
date. The Company intends to adopt those standards when they become
effective. IFRS 7 Financial Instruments: Disclosures — Enhanced
Derecognition Disclosure Requirements The amendment requires
additional disclosures for financial assets that have been
transferred, but not derecognized, to enable the user of the
Company's financial statements to understand the relationship with
those assets that have not been derecognized and their associated
liabilities. In addition, the amendment requires disclosures for
continuing involvement in derecognized assets to enable the user to
evaluate the nature of, and risks associated with, the entity's
continuing involvement in those derecognized assets. The amendment
becomes effective for annual periods beginning on or after July 1,
2011. The amendment affects disclosure only and has no impact on
the Company's financial position or performance. IFRS 9 Financial
Instruments: Classification and Measurement IFRS 9 as issued
reflects the first phase of the IASB's work on the replacement of
IAS 39 and applies to classification and measurement of financial
assets and financial liabilities as defined in IAS 39. The standard
is effective for annual periods beginning on or after January 1,
2013. In subsequent phases, the IASB will address hedge accounting
and impairment of financial assets. The completion of this project
is expected over the course of calendar 2011. The adoption of the
first phase of IFRS 9 will have an impact on the classification and
measurement of financial assets, but will potentially have no
impact on classification and measurements of financial liabilities.
ATS will quantify the impact in conjunction with the other phases,
when issued. IFRS 10 - Consolidated Financial Statements This
standard will replace portions of IAS 27 Consolidated and Separate
Financial Statements and interpretation SIC-12 Consolidated -
Special Purpose Entities. This standard incorporates a single model
for consolidating all entities that are controlled and revises the
definition of when an investor controls an investee to be when it
is exposed, or has rights, to variable returns from its involvement
with the investee and has the current ability to affect those
returns through its power over the investee. Along with control,
the new standard also focuses on the concept of power, both of
which will include a use of judgment and a continuous reassessment
as facts and circumstances change. IFRS 10 is effective for annual
periods beginning on or after January 1, 2013, with early adoption
permitted. The Company is assessing the impact of IFRS 10 on its
results of operations and financial position. IFRS 11 - Joint
Arrangements This standard will replace IAS 31, Interest in Joint
Ventures. The new standard will apply to the accounting for
interest in joint arrangements where there is joint control. Joint
arrangements will be separated into joint ventures and joint
operations. The structure of the joint arrangement will no longer
be the most significant factor on classifying a joint arrangement
as either a joint operation or a joint venture. Proportionate
consolidations will be removed and replaced with equity accounting.
IFRS 11 is effective for annual periods beginning on or after
January 1, 2013, with early adoption permitted. The Company is
assessing the impact of IFRS 11 on its results of operations and
financial position. IFRS 12 - Disclosure of Interest in Other
Entities The new standard includes disclosure requirements for
subsidiaries, joint ventures and associates, as well as
unconsolidated structured entities and replaces existing disclosure
requirements. IFRS 12 is effective for annual periods beginning on
or after January 1, 2013, with early adoption permitted. The
Company is assessing the impact of IFRS 12 on its consolidated
financial statements. IFRS 13 - Fair Value Measurement The new
standard creates a single source of guidance for fair value
measurement, where fair value is required or permitted under IFRS,
by not changing how fair value is used but how it is measured. The
focus will be on an exit price. IFRS 13 is effective for annual
periods beginning on or after January 1, 2013, with early adoption
permitted. The Company is assessing the impact of IFRS 13 on its
consolidated financial statements. IAS 1 - Presentation of
Financial Statements The amendment requires financial statements to
group together items within other comprehensive income that may be
reclassified to the profit or loss section of the income statement.
The amendment reaffirms existing requirements that items in other
comprehensive income and profit or loss should be presented as
either a single statement or two consecutive statements. The
amendment requires tax associated with items presented before tax
to be shown separately for each of the two groups of other
comprehensive income items (without changing the option to present
items of other comprehensive income either before tax or net of
tax). IAS 1 is effective for annual periods beginning on or after
July 1, 2012, with early adoption permitted. The Company is
assessing the impact of IAS 1 on its consolidated financial
statements. IAS 12 - Income Taxes — Recovery of Underlying Assets
The amendment clarified the determination of deferred tax in
investment property measured at fair value. The amendment
introduces a rebuttable presumption that deferred tax on investment
property measured using the fair value model in IAS 40 should be
determined on the basis that its carrying amount will be recovered
through sale. Furthermore, it introduces the requirement to
calculate deferred tax on non-depreciable assets that are measured
using the revaluation model in IAS 16, always be measured on the
sale basis of the asset. The amendment becomes effective for annual
periods beginning on or after January 1, 2012. The Company is
assessing the impact of IAS 12 on its consolidated financial
statements. IAS 19 - Employee Benefits The amendment eliminates the
option to defer the recognition of gains and losses, known as the
'corridor method', requires remeasurements to be presented in other
comprehensive income, and enhances the disclosure requirements for
defined benefit plans. The amendment becomes effective for annual
periods beginning on or after January 1, 2013. The Company is
assessing the impact of IAS 19 on its consolidated financial
statements. CONTROLS AND PROCEDURES The Chief Executive Officer
("CEO") and the Chief Financial Officer ("CFO") are responsible for
establishing and maintaining disclosure controls and procedures and
internal controls over financial reporting for the Company. The
control framework used in the design of disclosure controls and
procedures and internal control over financial reporting is the
internal control integrated framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
Management, including the CEO and CFO, does not expect that the
Company's disclosure controls or internal controls over financial
reporting will prevent or detect all errors and all fraud or will
be effective under all potential future conditions. A control
system is subject to inherent limitations and, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the control systems objectives will be met. During
the three months ended July 3, 2011, other than as noted below,
there have been no changes in the Company's internal controls over
financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company's internal
controls over financial reporting. ATS acquired the Sortimat Group
on June 1, 2010. Management has completed its review of the design
of disclosure controls and internal controls over financial
reporting and implemented certain improvements to the control
structure. ATS acquired the ATW group on January 5, 2011.
Management has not yet completed its assessment of the design or
operating effectiveness of ATW's disclosure controls and procedures
and the procedures and internal controls over financial
reporting. The following summary financial information
pertains to the acquisition that was included in ATS's Consolidated
Interim Financial Statements for the period ended July 3, 2011.
___________________________________ |(millions of dollars) |ATW
(1)| |___________________________|_______| |Revenue | 16.7 |
|___________________________|_______| |Net income (loss) | 0.6 |
|___________________________|_______| |Current assets (2) | 32.1 |
|___________________________|_______| |Non-current assets (2) | 8.7
| |___________________________|_______| |Current liabilities (2) |
18.8 | |___________________________|_______| |Non-current
liabilities (2)| 5.1 | |___________________________|_______|
1 Results for the first fiscal quarter
ended July 3, 2011 2 Balance sheet as
at July 3, 2011 Note to Readers: Forward-Looking Statements This
news release and management's discussion and analysis of financial
conditions, and results of operations of ATS contains certain
statements that constitute forward-looking information within the
meaning of applicable securities laws ("forward-looking
statements"). Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of ATS, or
developments in ATS's business or in its industry, to differ
materially from the anticipated results, performance, achievements
or developments expressed or implied by such forward-looking
statements. Forward-looking statements include all disclosure
regarding possible events, conditions or results of operations that
is based on assumptions about future economic conditions and
courses of action. Forward-looking statements may also
include, without limitation, any statement relating to future
events, conditions or circumstances. ATS cautions you not to place
undue reliance upon any such forward-looking statements, which
speak only as of the date they are made. Forward-looking
statements relate to, among other things: a potential spinoff of
Photowatt or sale of PWF; management's belief that a spinoff would
provide a number of benefits to ATS shareholders and both of its
automation and solar businesses, including enhanced market
understanding, greater focus, and improved value creation; expected
confirmation of appointments for CEO and board for spinoff entity;
structure of potential spinoff; timing of potential spinoff;
capitalization of Photowatt in spinoff scenario and the Company's
resources to capitalize Photowatt; the ASG growth strategy; review
and pursuit of acquisition opportunities; management's belief that
increased capital spending will continue to lag the general
economic recovery; management's expectation that its ASG strategic
initiatives will have a positive impact on operations; impact of
Sortimat and ATW acquisitions on performance and operating margins;
plans to expand the Company's position in the global automation
market organically and through acquisition; dependence of
solar power on the existence of government incentives; expectation
that increased solar industry inventory due to reductions in
European FIT, combined with increased industry capacity, will
further negatively impact average selling prices per watt;
potential for changes to Ontario FIT program to have impact on
PWO's future revenues and profitability and expected impact of
recent changes to the regulatory approval process in Ontario; PWO
securing conditional FIT approvals totaling approximately 64 MWs
related to applications made by OSPV; utilization by OSPV of a
range of solar solutions including modules manufactured by ATS;
OSPV joint venture and other approvals required; OSPV's efforts to
arrange financing and ultimate project ownership; expected timing
of revenue recognition on various PWO initiatives; timing of ramp
up of production to full production on 100 MW module line; PWO
agreements with developers in the process of securing conditional
FIT approvals; expectation that PWO will provide modules and
other related services to these projects; intended outcomes
of PWF restructuring plan; reduction in cell manufacturing capacity
at PWF; PWF's intention to take appropriate actions in response to
market conditions; foreign exchange hedging; expectation that
continued cash flows from operations, together with cash and
short-term investments on hand and credit available under operating
and long-term credit facilities, will be sufficient to fund
requirements for investments; seasonality of revenues; and
accounting standards changes. The risks and uncertainties that may
affect forward-looking statements include, among others: general
market performance including capital market conditions and
availability and cost of credit; economic market conditions;
foreign currency and exchange risk; the relative strength of the
Canadian dollar; performance of the market sectors that ATS serves;
impact of factors such as increased pricing pressure and possible
margin compression; impact of the global economy, conditions in the
solar and capital markets, Photowatt performance, the regulatory
and tax environment, availability of credit facilities, and
unexpected delays and issues, on the timing, form and structure of
contemplated separation, the dual track process, and the
capitalization requirements of Photowatt; that other capitalization
alternatives are not available in a spinoff scenario; that the
anticipated benefits of separation are not realized; potential
delays in finalizing board and CEO positions for the spinoff; that
strategic initiatives within ASG and targeted initiatives at
Sortimat and ATW do not have intended positive impact and/or take
longer than expected; inability to successfully expand organically
or through acquisition, due to an inability to grow expertise,
personnel, and/or facilities at required rates or to identify,
negotiate and conclude one or more acquisitions; uncertainty of
outcome of Ontario election and policies implemented following such
election; the availability and possible reduction or elimination of
government subsidies and incentives for solar products in various
jurisdictions, including France and Ontario; ability of ATS and
OSPV to acquire the needed expertise and financing necessary to
effectively develop Ontario solar projects; the financial
attractiveness of, and demand for, those solar projects; the
success of developers with whom ATS has signed agreements in
obtaining FIT contracts and ultimately developing the projects; the
potential for the ramp up to full production of the 100 MW module
line will be hindered or delayed due to an inability to procure
necessary permits, approvals, materials, equipment, and staff on a
timely basis; ability to obtain necessary government and other
certifications and approvals for solar projects in a timely
fashion; that one or both of the customer agreements signed by PWO
is terminated or impaired as a result of a cancellation or material
change in the FIT program in Ontario and as a result contemplated
minimum amounts to be supplied are not supplied with resulting
impacts on revenue and profitability; that PWF's market strategy is
unsuccessful in differentiating it and penetrating the markets it
is targeting; that PWF's restructuring plan is not fully achieved
and/or does not generate the desired results; that unexpected
problems arise with the new module assembly outsourcing
arrangements; that one or more customers, or other persons with
which the Company has contracted, experience insolvency or
bankruptcy with resulting costs or losses to the Company;
political, labour or supplier disruptions in manufacturing and
supply of silicon; the development of superior or alternative
technologies to those developed by ATS; the success of competitors
with greater capital and resources in exploiting their technology;
market risk for developing technologies; risks relating to legal
proceedings to which ATS is or may becomes a party; exposure to
product liability claims of Photowatt; risks associated with
greater than anticipated tax liabilities or expenses; potential for
adoption of new accounting policies to have unanticipated impacts;
and other risks detailed from time to time in ATS's filings with
Canadian provincial securities regulators. Forward-looking
statements are based on management's current plans, estimates,
projections, beliefs and opinions, and other than as required by
applicable securities laws, ATS does not undertake any obligation
to update forward-looking statements should assumptions related to
these plans, estimates, projections, beliefs and opinions change.
ATS AUTOMATION TOOLING SYSTEMS INC. Interim Consolidated Statements
of Financial Position (in thousands of Canadian dollars -
unaudited) July 3 March 31 April 1 As at Note 2011 2011 2010 ASSETS
Current assets Cash and cash $ 83,715 $ 117,119 $ 211,786
equivalents Accounts 90,412 72,045 85,938 receivable Costs and
earnings 8 in excess of billing on 74,064 57,399 44,786 contracts
in progress Inventories 8 12,616 12,043 73,576 Deposits and 9
20,464 18,677 26,482 prepaid assets 281,271 277,283 442,568 Assets
classified 7 as held for 228,876 216,913 -- distribution to owners
510,147 494,196 442,568 Non-current assets Property, plant 10
86,542 86,417 160,547 and equipment Investment 11 3,986 3,917 3,910
property Goodwill 59,316 58,447 34,350 Intangible assets 12 30,100
31,136 5,411 Deferred income 16,448 16,839 23,686 tax assets
Investment tax credit 20,807 20,749 20,878 receivable Portfolio 13
-- 1,958 3,602 investments Other assets 14 -- -- 33,380 217,199
219,463 285,764 Total assets $ 727,346 $ 713,659 $ 728,332
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Bank
indebtedness 16 $ 6,628 $ 4,274 $ 26,034 Accounts payable and
accrued 13 89,934 93,115 91,809 liabilities Provisions 15 8,389
9,002 11,279 Billings in excess of costs and earnings on 8 35,764
29,015 31,544 contracts in progress Current portion of 16 213 259
10,830 long-term debt Current portion of obligations under 16 -- --
4,393 finance leases 140,928 135,665 175,889 Liabilities directly
associated with assets classified 7 145,504 134,342 -- as held for
distribution to owners 286,432 270,007 175,889 Non-current
liabilities Provisions 15 66 162 4,160 Employee benefits 5,685
5,333 4,105 Long-term debt 16 3,371 3,322 4,420 Obligations under
16 -- -- 18,418 finance leases 9,122 8,817 31,103 Total liabilities
$ 295,554 $ 278,824 $ 206,992 Shareholders' equity Share capital 17
$ 481,937 $ 481,908 $ 481,848 Contributed 15,227 14,298 11,749
surplus Accumulated other comprehensive (597) (1,610) 2,061 income
(loss) Retained earnings (64,553) (59,537) 25,682 (deficit) Equity
attributable to 432,014 435,059 521,340 shareholders
Non-controlling (222) (224) -- interests Total shareholders'
431,792 434,835 521,340 equity Total liabilities and shareholders'
$ 727,346 $ 713,659 $ 728,332 equity ATS AUTOMATION TOOLING SYSTEMS
INC. Interim Consolidated Statements of Income (Loss) (in thousands
of Canadian dollars, except per share amounts - unaudited) July 3
June 27 For the three months ended Note 2011 2010 Revenues Revenues
from construction contracts $ 115,078 $ 91,162 Sale of goods 5,835
5,941 Services rendered 5,962 4,734 Total revenues 126,875 101,837
Operating costs and expenses Cost of revenues 8 92,338 76,888
Selling, general and administrative 22,874 15,905 Stock-based
compensation 19 1,136 552 Earnings from operations 10,527 8,492 Net
finance costs 23 601 154 Income from continuing operations 9,926
8,338 before income taxes Income tax expense 18 3,718 2,735 Income
from continuing operations 6,208 5,603 Loss from discontinued
operations, net 7 (11,222) (392) of tax Net income (loss) $ (5,014)
$ 5,211 Attributable to Shareholders $ (5,016) $ 5,211
Non-controlling interests 2 -- $ (5,014) $ 5,211 Earnings (loss)
per share 24 Basic and diluted - from continuing $ 0.07 $ 0.06
operations Basic and diluted - from discontinued 7 (0.13) 0.00
operations $ (0.06) $ 0.06 ATS AUTOMATION TOOLING SYSTEMS
INC. Interim Consolidated Statements of Comprehensive Loss (in
thousands of dollars - unaudited) July 3 June 27 For the three
months ended 2011 2010 Net income (loss) $ (5,014) $ 5,211 Other
comprehensive income (loss): Currency translation adjustment (net
of income taxes 2011 - $nil, 2010 - $nil) 1,217 (6,857) Net
unrealized gain on available for sale financial assets (net of
income taxes 2011 - $nil, 2010 -- 528 - $nil) Net unrealized gain
(loss) on derivative financial instruments designated as cash flow
hedges (net of income taxes 2011 - $47, 2010 - $215) 171 (380) Gain
transferred to net income (loss) for derivatives designated as cash
flow hedges (net of income taxes 2011 - $193, 2010 - $357) (533)
(773) Net gains (losses) on hedges of net investments in foreign
operations (net of income taxes 2011 - $nil, 2010 158 (506) - $nil)
Other comprehensive income (loss) 1,013 (7,988) Comprehensive loss
$ (4,001) $ (2,777) Attributable to Shareholders $ (4,003) $
(2,777) Non-controlling interests 2 -- $ (4,001) $ (2,777)
ATS AUTOMATION TOOLING SYSTEMS INC. Interim Consolidated Statements
of Changes in Shareholders' Equity (in thousands of Canadian
dollars - unaudited) Three months ended July 3, 2011 Total Foreign
Available accumulated currency for sale other Non- Total Share
Contributed Retained translation Cash flow financial Employee
comprehensive controlling shareholders' capital surplus deficit
adjustments hedges assets benefits income (loss) interests equity
Balance, at $ 481,908 $ 14,298 $ (59,537) $ (2,767) $ 1,279 $ -- $
(122) $ (1,610) $ (224) $ 434,835 March 31, 2011 Net loss -- --
(5,016) -- -- -- -- -- -- (5,016) Other comprehensive -- -- --
1,375 (362) -- -- 1,013 -- 1,013 income Non-controlling -- -- -- --
-- -- -- -- 2 2 interests Stock-based -- 939 -- -- -- -- -- -- --
939 compensation Exercise of 29 (10) -- -- -- -- -- -- -- 19 stock
options Balance, at $ 481,937 $ 15,227 $ (64,553) $ (1,392) $ 917 $
-- $ (122) $ (597) $ (222) $ 431,792 July 3, 2011 Three months
ended June 27, 2010 Total Foreign Available accumulated currency
for sale other Non- Total Share Contributed Retained translation
Cash flow financial Employee comprehensive controlling
shareholders' capital surplus earnings adjustments hedges assets
benefits income (loss) interests equity Balance, at $ 481,848 $
11,749 $ 25,682 $ -- $ 2,061 $ -- $ -- $ 2,061 $ -- $ 521,340 April
1, 2010 Net income -- -- 5,211 -- -- -- -- -- -- 5,211 Other
comprehensive -- -- -- (7,363) (1,153) 528 -- (7,988) -- (7,988)
loss Non-controlling -- -- -- -- -- -- -- -- (55) (55) interests
Stock-based -- 644 -- -- -- -- -- -- -- 644 compensation Exercise
of 5 (2) -- -- -- -- -- -- -- 3 stock options Balance, at $ 481,853
$ 12,391 $ 30,893 $ (7,363) $ 908 $ 528 $ -- $ (5,927) $ (55) $
519,155 June 27, 2010 ATS AUTOMATION TOOLING SYSTEMS INC.
Interim Consolidated Statements of Cash Flows (in thousands of
Canadian dollars - unaudited) July 3 June 27 Three months ended
Note 2011 2010 Operating activities: Income from continuing $ 6,208
$ 5,603 operations Items not involving cash Depreciation of
property, 1,816 1,492 plant and equipment Amortization of
intangible 1,291 638 assets Deferred income taxes 1,129 1,492 Other
items not involving (154) (108) cash Stock-based compensation 19
1,136 552 Gain on disposal of property, plant and (7) (224)
equipment $ 11,419 $ 9,445 Change in non-cash operating (37,043)
(8,750) working capital Cash flows provided by (used in) operating
activities of discontinued operations 7 (11,873) 4,525 Cash flows
provided by (used $ (37,497) $ 5,220 in) operating activities
Investing activities: Acquisition of property, $ (1,652) $ (5,345)
plant and equipment Acquisition of intangible (418) (63) assets
Business acquisition 6 -- (47,977) Proceeds from disposal of
property, plant and 513 498 equipment Proceeds on sale of portfolio
2,054 -- investments Cash flows used in investing activities of
discontinued 7 (1,867) (9,338) operations Cash flows used in
investing $ (1,370) $ (62,225) activities Financing activities:
Restricted cash 9 1,301 (1,476) Bank indebtedness 16 2,430 (222)
Repayment of long-term debt 16 (41) -- Issuance of common shares 19
19 3 Cash flows provided by (used in) financing activities of 7
2,932 (911) discontinued operations Cash flows provided by (used $
6,641 $ (2,606) in) financing activities Effect of exchange rate
changes on cash and cash 134 277 equivalents Decrease in cash and
cash (32,092) (59,334) equivalents Cash and cash equivalents,
124,268 211,786 beginning of period Cash and cash equivalents, $
92,176 $ 152,452 end of period Attributable to Cash and cash
equivalents - $ 83,715 $ 152,452 continuing operations Cash and
cash equivalents - held for distribution to 8,461 -- owners $
92,176 $ 152,452 Supplemental information Cash income taxes paid by
$ 446 $ 361 continuing operations Cash interest paid by $ 77 $ 51
continuing operations Cash interest paid by $ 493 $ 358
discontinued operations To view
this news release in HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/August2011/17/c4276.html
p Maria Perrella, Chief Financial Officerbr/ Carl Galloway,
Vice-President, Treasurerbr/ 519 653-6500 /p
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