CAMBRIDGE, ON, May 24, 2012 /CNW/ - ATS Automation Tooling Systems
Inc. ("ATS" or the "Company") today reported financial results for
the three and twelve months ended March 31, 2012 for its continuing
operations (Automation Systems Group or "ASG") and discontinued
operations ("Solar"). Financial Results In millionsof 3 months 3
months 12months 12 months Canadian ended ended ended ended dollars,
March 31, March 31, March 31, March 31, except per 2012 2011 2012
2011 sharedata Continuing $ 173.5 $ $ $ Operations 148.4 595.4
485.3 Revenues Discontinued $ 9.8 $ $ 116.2 $ Operations 49.3 216.2
EBITDA ContinuingOperations $ 19.0 $ $ 72.3 $ 17.0 46.0
ContinuingOperations $ $ $ 44.0 $ Net income 10.9 14.4 27.8 (loss)
Discontinued $ $ $ $ Operations (7.9) (93.9) (103.5) (113.3)
Earnings Fromcontinuing (loss) operations per share (basic&
diluted) $ 0.13 $ 0.17 $ 0.51 $ 0.32 From discontinued operations
(basic & diluted) $ (0.09) $ (1.08) $ (1.19) $ (1.30)
"Strong fourth quarter results in our core ASG business reflected
our approach to market, solid operating foundation and the
integration of acquired businesses," said Anthony Caputo, Chief
Executive Officer. "Most importantly, we made a very significant
strategic advancement. We turned the corner on Solar
separation and are now solely focused on our core business, which
is robust and growing. It has the demonstrated ability to engage
customers on an enterprise basis, select and integrate acquisitions
and remain resilient during macro-economic downturns. Our plan is
to continue to grow organically, expand our offering, and scale our
business through acquisitions." Fourth Quarter Summary of
Continuing Operations: ASG -- Revenues were $173.5 million, 17%
higher than in the corresponding period a year ago, and 16% higher
than the third quarter of fiscal 2012; -- Earnings from continuing
operations for the fourth quarter of fiscal 2012 were $16.1 million
(9% operating margin), an improvement over normalized fourth
quarter earnings from operations a year ago of $11.4 million (8%
operating margin - normalized to exclude $2.8 million in proceeds
received from a previously written-off note receivable) and
normalized third quarter fiscal 2012 earnings from operations of
$11.4 million (8% operating margin - normalized for a $3.0 million
gain on the sale of a facility and $3.7 million of U.S. research
and development tax credits); -- Order Bookings increased 4% to
$187 million from $179 million in the third quarter of fiscal 2012
and decreased 9% year over year from $206 million in the fourth
quarter of fiscal 2011; -- Period end Order Backlog was a record
$382 million, an increase of 2% from $376 million in the third
quarter of this fiscal year and 29% from $296 million a year ago;
-- The Company's balance sheet was strong, including cash net of
debt of $93.3 million, and the Company has unutilized credit
facilities of $51.7 million available under existing credit
facilities and another $24.1 million of credit available under
letter of credit facilities. By industrial market, revenues from
life sciences increased 3% year over year due to higher Order
Backlog entering the fourth quarter compared to a year ago, offset
by a longer performance period on certain programs. The 44%
decrease in computer-electronics revenues reflected lower market
activity compared to a year ago. Revenues generated in the energy
market decreased 39% on lower Order Backlog entering the fourth
quarter compared to a year ago, primarily reflecting solar market
activity. The 102% increase in transportation revenues primarily
reflected higher Order Backlog entering the fourth quarter compared
to a year ago on improved demand in the global automotive market.
"Other" revenues increased 22% year over year primarily due to
consumer products market activity. Order Bookings were $53 million
during the first 7 weeks of the first quarter of fiscal 2013.
Fourth Quarter Summary of Discontinued Operations - Solar: On
February 27, 2012, a subsidiary of the EDF group, the French
electricity utility, was selected by the French bankruptcy court to
purchase the assets of Photowatt International S.A.S. ("Photowatt
France" or "PWF"). The entire workforce of PWF was subsequently
transferred to the purchaser or offered to be transferred within
the purchaser's group. Effective March 1, 2012, the purchaser
assumed control over the operations of PWF. The confirmation
of a new operator for the PWF business concluded ATS's operating
support of PWF. As is customary in France, the purchaser and the
court appointed trustee were granted a period of time (ending in
June 2012) to finalize the purchase agreements relating to the PWF
assets. These agreements which will complete the transfer of the
legal ownership of those assets are still being finalized. Although
a new operator is now assuming the whole operation of the PWF
assets and all employees have been (or offered to be) transferred
to this new operator or within its group, the judicial liquidation
process could take several years to wind-up. In light of the
current situation, management does not expect to incur any
additional expenses as a result of the bankruptcy, however, until
all matters are resolved under the bankruptcy process, additional
provisions may be required. The results of PWF up to the Bankruptcy
Date are presented as discontinued operations in the consolidated
statements of income. Results of Discontinued Operations Solar
revenues in the fourth quarter of fiscal 2012 included those of
Ontario Solar only as a result of the de-consolidation of PWF
during the third quarter of fiscal 2012. Despite a 367%
year-over-year increase in Ontario Solar's revenues, fiscal 2012
fourth quarter revenues of $9.8 million were 80% lower than in the
fourth quarter of fiscal 2011 reflecting the de-consolidation of
PWF. Solar's fiscal 2012 fourth quarter loss from operations was
$8.2 million compared to a loss from operations of $93.3 million a
year ago. Ontario Solar recorded a $2.0 million loss in the fourth
quarter of fiscal 2012 on lower than expected revenues and higher
fixed costs resulting from ramping-up in anticipation of higher
demand. The total loss attributable to PWF was $6.2 million
and was mainly due to costs incurred and provisions made in respect
of the Company's obligations related to the bankruptcy
process. In the fourth quarter of fiscal 2011, Solar's loss
from operations included $70.8 million of non-cash property, plant
and equipment impairment charges, $7.1 million of non-cash charges
to write-down inventory, $2.3 million of incremental restructuring
charges, and incremental warranty costs, and bad debt write-offs.
Solar Separation ATS remains committed to the separation of its
entire Solar business from its core automation business. To
complete this goal, ATS is advancing opportunities related to its
other Solar assets. These opportunities are expected to
positively impact cash during the next six months. In this
regard, in December 2011, ATS sold an ASG-owned building in France
that formerly housed PWF module assembly. The accounting impact of
this sale was recorded under continuing operations. Regarding
Ontario Solar, ATS is conducting a formal sale process to divest
the business. The Company has received a number of non-binding
indicative offers for the Ontario Solar business and is working
with the interested parties to conclude a transaction. IFRS As of
the first quarter of fiscal 2012, 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 to IFRS. Annual Results
Materials ATS's annual Consolidated Financial Statements,
Management's Discussion and Analysis, and Annual Information Form
for the year ended March 31, 2012, are available on SEDAR at
www.sedar.com and the Company's website at www.atsautomation.com.
Quarterly Conference Call ATS's quarterly conference call begins at
10 am eastern on Thursday, May 24 and can be accessed live at
www.atsautomation.com or on the phone by dialing 416 644 3416 five
minutes prior. 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
its Ontario solar business, ATS participates in the solar energy
industry. ATS employs approximately 2,400 people at 20
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 For the Year Ended March 31, 2012 This Management's
Discussion and Analysis ("MD&A") for the year ended March 31,
2012 (fiscal 2012) is as of May 23, 2012 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 audited consolidated
financial statements of the Company for fiscal 2012 which have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") and are reported in Canadian dollars. Additional
information is contained in the Company's filings with Canadian
securities regulators, including its Annual Information Form, found
on SEDAR at www.sedar.com and on the Company's website at
www.atsautomation.com. 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 years
ending March 31, 2012 and March 31, 2011 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 years ending March
31, 2012 and March 31, 2011 is contained in the MD&A (See "ASG
Order Backlog Continuity"). COMPANY PROFILE The Company operates in
two segments: Automation Systems Group ("ASG"), the Company's
continuing operations, and Solar, which is classified as
discontinued operations. 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.
ATS also leverages its many years of experience and skills to
fulfill the specialized automation product manufacturing
requirements of customers. Through its Ontario solar business, ATS
participates in the solar energy industry. ATS employs
approximately 2,400 people at 20 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 a standalone
ASG business, monetize non-core assets and strengthen the balance
sheet); and (3) grow (both organically and through acquisition).
Solar Separation During the year ended March 31, 2011, the
Company's Board of Directors approved a plan designed to implement
the separation of Solar from ATS via a dual-track process involving
either a spinoff of the Company's combined solar businesses or a
sale of Photowatt International S.A.S. ("Photowatt France" or
"PWF") and/or the Ontario solar business ("Ontario Solar").
Discussions with parties in regards to a sale of PWF concluded
without producing an acceptable transaction. The deterioration of
economic conditions and the solar market in Europe in fiscal 2012,
increased Asian competition and lower demand for solar products
(particularly in France) severely impacted PWF. Consequently,
the Company re-examined the spinoff alternative and concluded it
was not viable. Other options in relation to PWF were also
exhausted and given the aforementioned conditions; PWF's filing for
bankruptcy became necessary. On November 8, 2011 (the "Bankruptcy
Date"), the French bankruptcy court placed PWF into a "recovery"
proceeding ("redressement judiciaire") under the supervision of a
court appointed trustee. The Company concluded that it ceased to
have the ability to exert control over PWF as of the Bankruptcy
Date. Accordingly, the Company's investment in PWF was
deconsolidated from the Company's consolidated financial statements
beginning on the Bankruptcy Date. Management reduced the
carrying value of the Company's equity investment in PWF to be
zero. The results of PWF up to the Bankruptcy Date are presented as
discontinued operations in the consolidated statements of income.
On February 27, 2012, a subsidiary of the EDF group, the French
electricity utility, was selected by the French bankruptcy court to
purchase the assets of PWF. The entire workforce of PWF was
subsequently transferred to the purchaser or offered to be
transferred within the purchaser's group. Effective March 1, 2012,
the purchaser assumed control over the operations of PWF. The
confirmation of a new operator for the PWF business concluded ATS's
operating support of PWF. As is customary in France, the purchaser
and the court appointed trustee were granted a period of time
(ending in June, 2012) to finalize the purchase agreements relating
to the PWF assets. These agreements, which will complete the
transfer of the legal ownership of those assets, are still being
finalized. In fiscal 2012, the Company initiated a formal sale
process for the Ontario Solar business. The Company has received a
number of non-binding indicative offers for the Ontario Solar
business and is working with the interested parties with a view to
concluding a transaction. Ontario Solar is presented as assets and
liabilities associated with discontinued operations in the
consolidated statements of financial position and as discontinued
operations in the consolidated statements of income. As a result,
ATS' continuing operations are reported as one operating segment,
ASG. Growth To further the Company's growth strategy, ASG will
continue to target providing value-based, complete automation
program solutions for customers built on differentiating
technological solutions, value of customer outcomes achieved and
global capability. The Company is also committed to growth through
acquisition and has an organizational structure, business processes
and the experience to successfully integrate companies into ASG.
Acquisition opportunities are targeted and evaluated on their
ability to bring ATS market or technology leadership, scale and/or
an opportunity brought on by the economic environment. For each of
ASG's markets, the Company has analyzed the capability value chain
and made a grow, team or acquire decision. Financially, targets are
reviewed on a number of criteria including 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 India. Sortimat's
integration into the Company's ASG segment is complete. The
Sortimat acquisition aligned with ATS's strategy of expanding its
position in the global automation market and enhancing growth
opportunities, particularly in strategic markets such as life
sciences. The Company benefits from Sortimat's products and
significant experience 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 the Company's 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, 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 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 markets. 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. ATW's integration into ASG is complete,
including the consolidation of ATW's Saginaw division into Livonia
and Dayton divisions. The application of best practices and
improvements in command and control, program management and
approach to market has led to incremental margin improvements. For
additional information on the acquisition of ATW, refer to note 6
of the consolidated financial statements. Fiscal 2013 Strategy
Overview In fiscal 2013, the Company intends to continue to execute
its value creation plan by focusing on pursuing growth in its ASG
business, continuing to deliver predictable, sustainable results
and maintaining a solid operating platform to support growth. To
achieve these objectives, management plans to focus on the
following: Strengthen ASG's business processes: To build upon the
organizational and operational strength of ASG, management intends
to continue strengthening leadership and management at all levels
of the organization. Strategies to attract and retain top
performers and to develop management and leadership capabilities
will continue to be a focus and will be implemented through
initiatives such as expatriate employment arrangements, career
development and succession planning. To help ensure a stable and
profitable operating base, the Company will continue to roll-out
and apply best practices and business processes globally to improve
program management, prevent and eliminate RED programs, reduce
costs, increase standardization and improve quality and timely
delivery. Supply chain management: To capitalize on ASG's scale and
consolidated purchasing power, management plans to continue making
improvements in supply chain management. Material cost reductions
will be sought through the Company's consolidated and growing
purchasing power. ASG's strategy involves identifying
critical and preferred suppliers with a view to improving service,
quality, payment and pricing terms. In addition, ASG will continue
to make use of its own internal supply chain by increasing internal
subcontracting with a view to maximizing factory utilization,
reducing costs and increasing the use of standardized designs and
standard products. Approach to market: In fiscal 2013, ASG will
seek to build on the momentum gained in the front-end of the
business in fiscal 2012 to support ongoing growth. ASG will
continue to target opportunities to provide value based, complete
automation program solutions for customers based on differentiating
technological solutions, value of customer outcomes achieved and
global capability. ASG's global sales and marketing group will
continue to target the development and growth of key accounts. The
Company's sales and marketing functions have been organized around
customer industries, which management believes will enable ASG to
better serve its customers and help them differentiate themselves
in their respective markets. By leveraging the Company's
diverse industry experience and geographic footprint, management
believes that the Company's sales funnel and win rate will continue
to increase and drive organic growth. Balance sheet strength: To
maintain operational and financial flexibility, the Company will
continue to manage its finances to preserve its strong balance
sheet through targeted working capital efficiencies, continued
emphasis on credit terms and appropriate funding strategies.
Automation Systems Group ASG BUSINESS OVERVIEW ASG is an
industry-leading automation solutions provider to some of the
world's largest multinational companies. ASG has expertise in
custom automation, repeat automation, automation products and
value-added services. ASG categorizes its market into five industry
groups: life sciences, computer-electronics, transportation, energy
and "other", which is primarily comprised of consumer
products. Contract values for individual automation systems
are often in excess of $1.0 million. Given the custom nature
of customer projects, contract durations vary greatly, with typical
durations ranging from six to 12 months. With broad and in-depth
knowledge across multiple industries and technical fields, ASG is
able to deliver "single source" solutions to customers that can
lower their production costs, accelerate delivery of their
products, and improve quality control. ASG's relationships with
customers can begin with planning and feasibility studies. In
situations where the customer is seeking in-depth analysis before
committing to a program, ASG conducts an analysis to verify the
economics and feasibility of different types of automation, sets
objectives for factors such as line speed and yield, assesses
production processes for manufacturability and calculates the total
cost of ownership. When a contract for an automation solution is
received, ASG often provides a number of services, including
engineering design, prototyping, process verification,
specification writing, software development, automation simulation,
equipment design and build, third-party equipment qualification,
procurement and integration, automation system installation,
product line start up, documentation, customer training and
after-installation support, maintenance and service. Following the
installation of custom automation, ASG may supply duplicate or
"repeat" automation systems to customers that leverage engineering
design completed in the original customer program. For customers
seeking complex equipment replication, ASG's Automation Products
Group ("APG") provides value engineering, supply chain management,
integration and manufacturing capabilities and other automation
products and solutions. Typically, APG solutions are either
integrated into a larger system by the customer for resale, or
delivered as a standalone machine to customers who can then resell
it. Competitive Strengths. Management believes ASG has the
following competitive strengths: Global presence, size and critical
mass: ASG's global presence and scale provides an advantage in
serving multinational customers because the markets in which the
Company operates are primarily populated by competitors with narrow
geographic and/or industrial market reach. ASG has
manufacturing operations in Canada, the United States, China,
Malaysia, Singapore, India, Germany and Switzerland. Management
believes that ASG's scale and locations provide it with competitive
advantages in winning large, multinational customer programs that
have become increasingly common in the industry. Technical skills,
capabilities and experience: Automation manufacturing is a
knowledge-based business. ASG has designed, manufactured, assembled
and serviced thousands of automation systems worldwide since 1978
and has an extensive knowledge base and accumulated design
experience. Management believes ASG's broad experience in many
different industry sectors, with many diverse technologies, along
with its talented workforce and ability to provide custom
automation, repeat automation, APG solutions and value-added
services, positions the Company well to serve complex multinational
customer programs in a variety of industry sectors. Product and
technology portfolio: Through its history of bringing thousands of
unique automation projects to market, ATS and its subsidiaries,
including Sortimat and ATW, have developed an extensive product and
technology portfolio, including manufacturing vision technologies,
numerous material handling technologies and high-accuracy, high
precision laser processing technologies. Management believes this
extensive product and technology portfolio gives the Company an
advantage in developing unique and leading solutions for customers
and maintaining cost competitiveness. Trusted customer
relationships: ASG serves some of the world's largest multinational
companies. Most of ASG's customers are repeat customers and many
have long-standing relationships with ATS, often spanning more than
a decade. Management estimates that over 90% of ASG Order Bookings
in fiscal 2012 were earned from repeat customers. Recognized name:
Management believes ATS is well known within the global automation
industry due to its long history of innovation and broad scope of
operations. With the additions of Sortimat, which specializes in
the life sciences market, and ATW, which specializes in the
transportation market, management believes that it has further
strengthened ATS's brand portfolio. Management believes that ATS's
brand names and global reputation tend to improve sales
prospecting, allowing the Company to be considered for a wide
variety of customer programs. Total solutions capabilities:
Management believes the Company gains competitive advantages
because ASG provides total turn-key solutions in automation. This
allows customers to single source their most complex projects to
ATS rather than rely on multiple equipment builders. In addition,
ASG can provide customers with other value-added services including
project financing, total cost of ownership studies and life cycle
management. OVERVIEW - OPERATING RESULTS FROM CONTINUING OPERATIONS
Results from continuing operations comprise the results of ASG and
corporate costs not directly attributable to Solar. The results of
the Solar segment are reported as discontinued operations, with
comparative periods reclassified as discontinued operations.
Consolidated Revenues from Continuing Operations (In millions of
dollars) Revenues by market Q4 2012 Q4 2011 Fiscal 2011 Fiscal 2012
Life sciences $ 57.0 $ $ $ 55.6 197.0 195.4 Computer-electronics
6.8 25.8 12.2 44.3 Energy 17.7 29.1 77.2 124.3 Transportation 74.0
36.7 245.9 71.5 Other 18.0 14.8 49.5 49.8 Total revenues from
continuing operations $ 173.5 $ 148.4 $ 595.4 $ 485.3 Revenues by
Q4 Fiscal installation Q4 2012 2011 2012 Fiscal 2011 location North
America $ 104.0 $ $ 321.4 $ 78.8 247.3 Europe 37.6 149.4 39.9 122.1
Asia/Other 31.9 124.6 29.7 115.9 Total revenues from continuing
operations $ 173.5 $ 148.4 $ 595.4 $ 485.3 Employees at year 2,400
end 2,271 Fourth Quarter Fourth quarter revenues were 17% higher
than in the corresponding period a year ago as a result of
increased Order Backlog entering the fourth quarter compared to a
year ago. By industrial market, revenues from life sciences
increased 3% year over year due to higher Order Backlog entering
the fourth quarter compared to a year ago, although the impact of
higher Order Backlog in life sciences was dampened by a longer
performance period on certain programs. The 44% decrease in
computer-electronics revenues reflected lower market activity
compared to a year ago. Revenues generated in the energy market
decreased 39% on lower Order Backlog entering the fourth quarter
compared to a year ago, reflecting lower activity primarily in the
solar market. The 102% increase in transportation revenues compared
to a year ago primarily reflected higher Order Backlog entering the
fourth quarter compared to a year ago, primarily on improved
activity in the global automotive market. "Other" revenues
increased 22% year over year primarily due to increased revenues in
the consumer products market. Full Year Revenues were 23% higher
than the corresponding period a year ago as a result of revenues
from ATW, improved Order Bookings and increased Order Backlog
entering the fiscal year compared to a year ago. By industrial
market, revenues from transportation increased 244% compared to a
year ago reflecting higher Order Backlog entering fiscal 2012
compared to fiscal 2011, primarily on improved activity in the
global automotive market. Revenues from life sciences increased 1%
due to increased Order Backlog entering fiscal year 2012 compared
to fiscal 2011, although the impact of higher Order Backlog in life
sciences was dampened by a longer performance period on certain
programs. The decrease of 42% in revenues from computer-electronics
reflected lower market activity in fiscal 2012 compared to a year
ago. Energy revenues decreased 38% on lower Order Backlog entering
fiscal 2012 compared fiscal 2011, reflecting lower activity
primarily in the solar market."Other" revenues decreased 1%
compared to a year ago. Year over year foreign exchange rate
changes negatively impacted the translation of ASG revenues earned
in foreign subsidiaries, reflecting the strengthening of the
Canadian dollar relative to the U.S. dollar. Consolidated Operating
Results (In millions of dollars) Q4 2012 Q4 2011 Fiscal Fiscal 2012
2011 Earnings $ 16.1 $ 14.2 $ 60.3 $ 35.5 from operations
Depreciation 2.8 12.0 10.5 and 2.9 amortization EBITDA $ 19.0 $
17.0 $ 72.3 $ 46.0 Fourth Quarter Fiscal 2012 fourth quarter
earnings from operations were $16.1 million (9% operating margin)
compared to earnings from operations of $14.2 million (10%
operating margin) in the fourth quarter of fiscal 2011. Fiscal 2011
fourth quarter earnings from operations included the benefit of
$2.8 million in proceeds received from a previously written-off
note receivable. Increased earnings from operations in the fourth
quarter of fiscal 2012 primarily reflected higher revenues earned
during the period and improved operating margins at acquired
businesses. These increases were partially offset by increased
stock-based compensation expenses, as well as increased profit
sharing expenses and employee performance incentives. Fiscal 2012
fourth quarter earnings from operations also benefitted from lower
spending on professional fees related to acquisitions, and
decreased severance and restructuring charges compared to the
corresponding period a year ago. Depreciation and amortization
expense was $2.9 million in the fourth quarter of fiscal 2012,
generally consistent with the $2.8 million expensed in the same
period a year ago. Full Year Earnings from operations were $60.3
million (10% operating margin) compared to earnings from operations
of $35.5 million (7% operating margin) in the corresponding period
a year ago. Excluding a $3.0 million gain relating to the sale of a
redundant ASG facility in France, and the benefit of $3.7 million
of previously unrecognized U.S. research and development tax
credits, both of which were recognized in the third quarter of
fiscal 2012, earnings from operations were $53.6 million (9%
operating margin). Also included in fiscal 2012 earnings from
operations was a $1.0 million charge for bad debt related to a
specific customer bankruptcy protection filing. Fiscal 2011
earnings from operations included the benefit of $2.8 million in
proceeds received from a previously written-off note receivable. On
a normalized basis, increased earnings from operations primarily
reflected higher revenues earned during the period and improved
operating margins at acquired businesses. The increase in earnings
from operations on a year-over-year basis also reflected lower
spending on professional fees related to acquisitions. Depreciation
and amortization expense was $12.0 million in fiscal 2012 compared
to $10.5 million in the same period a year ago. The increase in
fiscal 2012 depreciation and amortization primarily related to
increased amortization on the identifiable intangible assets
recorded on the acquisitions of Sortimat and ATW. ASG Order
Bookings by Quarter (In millions of dollars) Fiscal 2012 Fiscal
2011 Q1 $ 157 $ 85 Q2 165 105 Q3 179 133 Q4 187 206 Total Order
Bookings $ 688 $ 529 Fiscal 2012 Order Bookings were $688 million,
30% higher than a year ago, reflecting improved Order Bookings in
transportation following a general recovery in the automotive
market, new product launches by automotive OEMs and tier 1
suppliers and the addition of ATW's business. Improved Order
Bookings also reflected additional activity in the life sciences
market. Order Bookings in the first seven weeks of fiscal 2013 were
$53 million. ASG Order Backlog Continuity (In millions of dollars)
Q4 2012 Q4 2011 Fiscal Fiscal 2011 2012 Opening $ $ $ 296 $ 209
Order 376 215 Backlog Revenues (173) (148) (595) (485) Order 688
Bookings 187 206 529 Order Backlog (8) 23 (7) 43 adjustments1 Total
$ 382 $ 296 $ 382 $ 296 1 Order Backlog adjustments include foreign
exchange adjustments, cancellations and acquisitions. In fiscal
2011 incremental Order Backlog of $62 million was acquired in
connection with Sortimat and ATW. In the fourth quarter of fiscal
2011, incremental Order Backlog of $35 million was acquired in
connection with ATW. ASG Order Backlog by Industry (In millions of
dollars) Fiscal 2012 Fiscal 2011 Life sciences $ $ 142 86
Computer-electronics 13 12 Energy 21 49 Transportation 186 133
Other 20 16 Total $ $ 296 382 At March 31, 2012, ASG Order Backlog
was $382 million, 29% higher than at March 31, 2011. This growth
reflected increased Order Bookings due to the Company's revised
approach to market, and improved market conditions, particularly in
transportation and life sciences, and a longer performance period
for certain customer programs. ASG Outlook The general economic
environment has improved in fiscal 2012; however, uncertainty
remains, particularly with respect to the European economy due to
the Eurozone sovereign debt crisis. This has the potential to
result in tighter credit markets which could negatively impact
demand, particularly for the Company's European operations and may
cause volatility in Order Bookings. The Company has seen
improvement in certain customer markets such as transportation and
life sciences; however, many customers remain cautious in their
approach to capital investment. Customer activity in the solar
energy market has slowed, with reductions in solar feed-in-tariffs
in several markets, negatively impacting demand for solar products
and for additional solar manufacturing capacity. Despite the
uncertainty and volatility in the global economy, activity in the
Company's front-end of the business has remained strong. The
Company's sales funnel and proposal activity has continued to grow.
The Company's sales organization will continue to work to engage
with customers on enterprise-type solutions. This is expected to
improve Order Bookings over the long-term. However, this
approach to market may cause variability in Order Bookings from
quarter to quarter and lengthen the performance period and revenue
recognition for certain customer programs. At the end of
fiscal 2012, Order Backlog was at its highest level ever, which
will partially mitigate the impact of volatile Order Bookings on
revenues in the short-term. Management expects that the
implementation of its strategic initiatives to improve business
processes, leadership and supply chain management will continue to
have a positive impact on ATS operations. Management's disciplined
focus on program management, cost reductions, standardization and
quality put ATS in a strong competitive position to capitalize on
opportunities going forward and sustain performance in difficult
market conditions. The integration of both Sortimat and ATW is
complete. The consolidation of ATW's Saginaw division into
divisions in Livonia and Dayton and initiatives to improve program
management, eliminate RED programs, control costs and improve
utilization, combined with the integration into ATS's sales and
marketing processes are expected to drive continued improvements in
operating results. 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 and intends to apply
additional resources to acquisition activities going forward. The
Company's strong financial position provides a solid foundation to
pursue organic growth and the flexibility to pursue its acquisition
growth strategy. CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
& SELECTED FOURTH QUARTER AND ANNUAL INFORMATION (In millions
of dollars, except per share data) Fiscal 2012 and 2011 results are
reported under IFRS. Fiscal 2010 results are reported under
Canadian GAAP. Results have been reclassified to present Solar as
discontinued operations. Q4 2012 Q4 2011 Fiscal 2012 Fiscal 2011
Fiscal 2010 Revenues $ 173.5 $ 148.4 $ 595.4 $ 485.3 $ 374.9 Cost
of 129.7 113.6 revenues 438.7 371.9 279.9 Selling, 25.7 general and
19.8 94.5 74.9 61.0 administrative Stock-based 2.0 compensation 0.8
4.9 3.0 3.3 Gain on sale (3.0) ― of land and ― ― ― building
Earnings from $ 16.1 $ 14.2 $ $ 35.5 $ 30.7 operations 60.3 Net
finance $ 0.4 $ 0.3 $ $ $ costs 1.6 1.1 0.4 Provision for 4.8 (0.5)
(20.1) (recovery of) 14.7 6.6 income taxes Net income $ 10.9 $ 14.4
$ $ $ 50.4 from 44.0 27.8 continuing operations Loss from $ (7.9) $
(93.9) $ (103.5) $ (113.3) $ discontinued (38.2) operations, net of
tax Net income $ 3.0 $ (79.5) $ $ (85.5) $ 12.2 (loss) (59.5)
Earnings (loss) per share Basic and $ 0.13 $ 0.17 $ 0.51 $ 0.32 $
0.58 diluted- from continuing operations Basic and diluted- from $
(0.09) $ (1.08) $ (1.19) $ (1.30) $ (0.44) discontinued operations
$ 0.04 $ (0.91) $ (0.68) $ (0.98) $ 0.14 From continuing
operations: Total assets $ 532.9 $ 496.7 $ 476.6 Total cash and $
96.2 $ 117.1 $ 197.6 short-term investments Total bank $ 3.0 $ 7.9
debt ― Revenues. At $173.5 million, consolidated revenues
from continuing operations for the fiscal 2012 fourth quarter were
17% higher than for the corresponding period a year ago, which is a
result of increased Order Backlog entering the fourth quarter
compared to the corresponding period a year ago. Fiscal 2012
revenues were $595.4 million or 23% higher than a year ago as a
result of record Order Backlog entering the period combined with
additional revenues provided by ATW. Cost of revenues. At
$129.7 million, fiscal 2012 fourth quarter cost of revenues
increased over the corresponding period a year ago by $16.1 million
or 14% primarily on higher volumes. The increase in gross
margin to 25% in the fourth quarter of fiscal 2012 from 24% a year
ago reflects higher revenues and improved program management. At
$438.7 million, fiscal 2012 cost of revenues increased over the
prior year by 18% or $66.8 million primarily on higher volumes.
Fiscal 2012 gross margin increased to 26% from 23% in the
corresponding period a year ago. This reflected the benefit
of $3.7 million of previously unrecognized U.S. research and
development tax credits which were recorded due to improved
profitability in the Company's U.S. businesses. Excluding this
item, improved gross margin resulted from higher revenues,
decreased warranty costs and improved program management. Selling,
general and administrative ("SG&A") expenses. SG&A expenses
for the fourth quarter of fiscal 2012 increased 30% or $5.9 million
to $25.7 million compared to the corresponding period a year ago.
Increased SG&A costs reflected increased profit sharing
expenses and employee performance incentives. These increases
were offset by lower spending in the fourth quarter of fiscal 2012
on professional fees related to acquisitions and decreased
severance and restructuring charges. In fiscal 2011, fourth quarter
SG&A included the benefit of $2.8 million received in relation
to a previously written-off note receivable. Fiscal 2012 SG&A
expenses increased 26% or $19.6 million to $94.5 million compared
to a year ago. Higher SG&A costs reflected incremental spending
from acquired businesses, incremental amortization related to
identifiable intangible assets recorded on the acquisition of
Sortimat and ATW, and a $1.0 million charge for bad debt related to
a specific customer bankruptcy protection filing. These increases
were partially offset by lower professional fees on acquisition
activities. In fiscal 2011, SG&A also included the benefit of
$2.8 million received in relation to a previously written-off note
receivable. Stock-based compensation cost. For the three month
period ended March 31, 2012, stock-based compensation expense
increased to $2.0 million from $0.8 million in the corresponding
period a year ago, primarily reflecting additional expense from new
stock option grants, accelerated recognition of expenses related to
vesting of performance-based stock options and the revaluation of
deferred stock units. Fiscal 2012 stock-based compensation
expense increased to $4.9 million from $3.0 million a year earlier.
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. The stock
options vest upon the Company's stock price trading at or above a
stock price performance threshold for a specified minimum number of
trading days. 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 March 31, 2012, the following
performance-based stock options were un-vested: Weighted Stock
Grant average Current Remaining price Number of date remaining year
expense performance options value vesting expense to outstanding
per period (in recognize threshold option '000s) (in '000s) $ 9.49
41,667 $ 1.66 2.7 years $ 12 $ 32 10.41 266,667 2.11 0.5 years 124
53 10.50 889,333 1.41 1.5 years 217 318 12.41 266,666 2.11 1.4
years 103 139 13.08 218,667 2.77 0.8 years 123 100 Earnings from
operations. For the three and twelve month periods ended March 31,
2012, consolidated earnings from operations were $16.1 million and
$60.3 million respectively (operating margins of 9% and 10%
respectively), compared to earnings from operations of $14.2
million and $35.5 million a year ago (operating margins of 10% and
7% respectively). Higher earnings from operations in the fourth
quarter of fiscal 2012 reflected higher revenues and improved gross
margins, which were partially offset by higher SG&A expenses.
Higher earnings from operations for the full year in fiscal 2012
reflected higher revenues, improved gross margins, the $3.7 million
benefit of previously unrecognized U.S. research and development
tax credits and a $3.0 million gain relating to the sale of a
redundant ASG facility in France. The increase was partially
offset by higher SG&A expenses. Net finance costs. Net finance
costs were $0.4 million in the fourth quarter of fiscal 2012
compared to $0.3 million a year ago. The increase in net finance
costs is mainly attributable to a decrease in interest income on
lower cash balances. Fiscal 2012 net finance costs were $1.6
million compared to $1.1 million in the corresponding period last
year, reflecting lower cash balances and credit amendment fees, and
costs associated with the issuance of letters of credit. Provision
for income taxes. For the three months ended March 31, 2012, the
Company's effective income tax rate of 30% differed from the
combined Canadian basic federal and provincial income tax rate of
28% primarily as a result of income earned in certain jurisdictions
with a higher statutory tax rate and losses in certain
jurisdictions, the benefit of which was not recognized. For the
twelve months ended March 31, 2012, the Company's effective income
tax rate of 25% differed from the combined Canadian basic federal
and provincial income tax rate of 28% primarily as a result of
applying lower tax rates to the expected reversal of future timing
differences. Net income from continuing operations. Fourth quarter
fiscal 2012 net income from continuing operations was $10.9 million
(13 cents per share basic and diluted) compared to net income from
continuing operations of $14.4 million (17 cents per share basic
and diluted) for the fourth quarter of fiscal 2011. Net income from
continuing operations for fiscal 2012 was $44.0 million (51 cents
per share basic and diluted) compared to net income from continuing
operations of $27.8 million (32 cents per share basic and diluted)
for the corresponding period a year ago. Reconciliation of EBITDA
to IFRS measures (In millions of dollars) Fiscal2012 Fiscal Fiscal
2010 2011 EBITDA $ 72.3 $ 46.0 $ 38.7 Less: depreciation 12.0 and
amortization 10.5 8.0 expense Earnings from $ 60.3 $ 35.5 $ 30.7
operations Less: Net finance 1.6 1.1 0.4 costs Provision for 14.7
(recovery of) income 6.6 (20.1) taxes Net income from $ 44.0 $ 27.8
$ 50.4 continuing operations Q4 2012 Q4 2011 EBITDA $ 19.0 $ 17.0
Less: depreciation and amortization 2.9 2.8 expense Earnings from $
16.1 $ 14.2 operations Less: Net finance 0.4 0.3 costs Provision
for (recovery of) income 4.8 (0.5) taxes Net income from continuing
$ 10.9 $ 14.4 operations DISCONTINUED OPERATIONS: SOLAR (In
millions of dollars) Q4 Q4 2012 2011 Fiscal Fiscal 2012 2011 Total
Revenues $ 9.8 $ $ 116.2 $ 216.2 49.3 Loss (8.2) (93.3) (111.9)
fromdiscontinuedoperations (98.5) Loss from (7.9) (93.9) (103.5)
(113.3) discontinued operations, netoftax Fourth Quarter Revenues
Solar revenues in the fourth quarter of fiscal 2012 included those
of Ontario Solar only as a result of the de-consolidation of PWF
during fiscal 2012. Despite a 367% year-over-year increase in
Ontario Solar's revenues, Solar fiscal 2012 fourth quarter revenues
of $9.8 million were 80% lower than in the fourth quarter of fiscal
2011 reflecting the de-consolidation of PWF. Loss from Discontinued
Operations Solar's fiscal 2012 fourth quarter loss from operations
was $8.2 million compared to a loss from operations of $93.3
million a year ago. Ontario Solar recorded a $2.0 million loss in
the fourth quarter of fiscal 2012 on lower than expected revenues
and higher fixed costs resulting from ramping-up in anticipation of
higher demand compared to a $2.3 million loss in the fourth quarter
a year ago. The total loss attributable to PWF was $6.2 million and
was mainly due to costs incurred and provisions made in respect of
the Company's obligations related to the bankruptcy process.
In the fourth quarter of fiscal 2011, Solar's loss from operations
included: -- $70.8 million of non-cash impairment charges against
property, plant and equipment; -- $7.1 million of non-cash charges
related to the write-down of inventory to its net realizable value,
following decreases to average selling prices in the fourth quarter
of fiscal 2011 due to low enacted and expected reductions in
feed-in tariffs in the French and wider European solar markets; --
$2.3 million of incremental restructuring charges related to the
finalization of the restructuring plan at PWF, accrual for contract
related costs and related professional fees; and -- incremental
warranty costs, and bad debt write-offs related to customer claims,
disputes and customer bankruptcies, caused in part by the
moratorium imposed by the French government on the solar industry
during the fiscal fourth quarter. Loss from Discontinued
Operations, Net of Tax Solar's fourth quarter loss from operations,
net of tax, was $7.9 million compared to a loss from operations,
net of tax of $93.9 million in the corresponding period a year ago.
Full Year Revenues Revenues for fiscal 2012 of $116.2 million were
46% lower than in fiscal 2011 as fiscal 2012 only included seven
months of PWF revenues. This decline was partially offset by
a 461% year-over-year increase in revenues at Ontario Solar. Loss
from Discontinued Operations Solar's fiscal 2012 loss from
operations was $98.5 million compared to a loss from operations of
$111.9 million a year ago. Fiscal 2012 operating losses included:
-- $24.1 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 declining demand and excess module
supply in the European solar industry; -- $24.1 million of charges
related to the termination of certain silicon and wafer supply
contracts, including non-cash asset impairment charges of $19.9
million; -- Non-cash charge of $8.8 million related to silicon
deposits which the Company did not expect to utilize; -- $3.1
million of write-downs to receivables that are not expected to be
recovered; and, -- Non-cash fixed asset and goodwill impairment
charges of $4.3 million and $5.5 million respectively to write down
assets to their expected recoverable amounts. Loss from
Discontinued Operations, Net of Tax Solar's fiscal 2012 loss from
operations, net of tax was $103.5 million compared to a loss from
operations, net of tax of $113.3 million in the corresponding
period a year ago. Solar Outlook On November 8, 2011, a hearing was
held at which time the French bankruptcy court placed PWF into a
"recovery" proceeding ("redressement judiciaire") under the
supervision of a court appointed trustee. On February 27, 2012, a
subsidiary of the EDF group, the French electricity utility, was
selected by the French bankruptcy court to purchase the assets of
PWF, and the entire workforce of PWF was subsequently transferred
to the purchaser or offered to be transferred within the
purchaser's group. Effective March 1, 2012, the purchaser assumed
control over the operations of PWF. The confirmation of a new
operator for the PWF business concluded ATS's operating support of
PWF. As is customary in France, the purchaser and the court
appointed trustee were granted a period of time (ending in June,
2012) to finalize the purchase agreements relating to the PWF
assets. These agreements, which will complete the transfer of the
legal ownership of those assets, are still being finalized.
Although a new operator is now assuming the whole operation of the
PWF assets and all employees have been (or offered to be)
transferred to this new operator or within its group, the judicial
liquidation process could take several years to wind-up. In light
of the current situation, management does not expect to incur any
additional expenses as a result of the bankruptcy, however, until
all matters are resolved under the bankruptcy process, additional
provisions may be required. The Company will record any such
provision if and when it becomes known and the Company determines
that the obligation will result in a probable outflow of economic
resources and, the Company is able to measure the obligation with
sufficient reliability. ATS remains committed to the separation of
its entire solar business from its core automation business.
To complete this goal, ATS is advancing opportunities related to
its other solar assets. These opportunities are expected to
positively impact cash during the next six months. In this
regard, in December 2011, ATS sold an ASG-owned building in France
that formerly housed PWF module assembly. The accounting impact of
this sale was recorded under continuing operations. Regarding
Ontario Solar, ATS is conducting a formal sale process to divest
the business. The Company has received a number of non-binding
indicative offers for the Ontario Solar business and is working
with the interested parties to conclude a transaction. In the
interim, the Ontario provincial government has completed its
scheduled review of the Feed-In Tariff ("FIT") Program. The Ontario
government has accepted the recommendations of the review.
Key changes going forward are expected to streamline the regulatory
approvals process, decrease FIT rates by 10% to 32% depending on
the size and location of the installation and in addition, the
government has committed to review FIT rates annually. Ontario
Solar PV Fields ("OSPV"), in which Ontario Solar holds a 50%
interest, has secured conditional FIT contracts totalling
approximately 64 MWs related to large-scale ground-mount solar
projects. OSPV is in the process of seeking approvals necessary to
begin construction on the projects. In the short-term, OSPV expects
to have a definitive agreement in place for financing and ultimate
third-party project ownership. Ontario Solar expects to supply
modules to OSPV. During the first quarter of fiscal 2012, Ontario
Solar 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. Under the first
agreement, Ontario Solar will recognize revenue on the full value
of the modules manufactured. The second agreement is for the supply
of a minimum of 160 MWs over four years and allows for the
potential to increase volumes by an additional 160 MWs over the
term of the agreement. Under the second agreement, Ontario Solar
will recognize revenue for module manufacturing services and module
materials other than solar cells, which will be provided by the
customer. Initial shipments have been deferred to the first quarter
of fiscal 2013. Ontario Solar has also signed agreements with
developers who have secured conditional FIT contracts for a number
of projects. Ontario Solar expects to provide modules and
other related services to these projects. SUMMARY OF INVESTMENTS,
LIQUIDITY, CASH FLOW AND FINANCIAL RESOURCES Investments (In
millions of dollars) Fiscal 2012 Fiscal 2011 Investments — increase
(decrease) Non-cash operating working capital $ 38.4 $ 3.2
Property, plant and equipment 4.8 9.1 Acquisition of intangible
assets 2.7 1.4 Business acquisitions — 63.8 Proceeds from disposal
of assets (8.0) (2.0) Proceeds from disposal of portfolio (2.1)
(2.3) investments Investing activities of discontinued 6.1 27.6
operations Total netinvestments $ 41.9 $ 100.8 For fiscal 2012,
investment in non-cash working capital increased by $38.4 million.
Accounts receivable increased 25% or $18.1 million, primarily due
to increased revenues and the timing of billings on certain
customer contracts. Net contracts in progress increased by 141% or
$40.1 million compared to March 31, 2011, reflecting increased
revenues and longer billing milestones on certain customer
programs. Inventories decreased year over year by 15% or $1.8
million. Excluding restricted cash, deposits and prepaid
assets increased by 15% or $1.6 million, primarily due to an
increase in deposits with suppliers. Accounts payable and accrued
liabilities increased 21% or $20.0 million since March 31, 2011,
primarily due to the timing of purchases. Provisions
increased by $0.7 million or 8% since March 31, 2011. Capital
expenditures totalled $4.8 million for fiscal 2012, primarily
related to improvements and upgrades at existing facilities and
computer hardware upgrades. Capital expenditures were $9.1 million
in fiscal 2011, as a result of the purchase of a new facility in
the U.S.A. Acquisition of intangible assets of $2.7 million in
fiscal 2012 primarily related to software acquisitions in ASG and
increased over fiscal 2011 as the Company initiated implementation
and upgrade projects for a number of key information systems. The
Company's fiscal 2011 expenditures in business acquisitions of
$63.8 million included the acquisitions of Sortimat and ATW for
$48.0 million and $15.8 million respectively. The proceeds from
disposal of assets of $8.0 million in fiscal 2012 primarily related
to the sale of a facility in Europe. The proceeds from disposal of
assets of $2.0 million in fiscal 2011 primarily related to the sale
of a facility in the U.S.A. During fiscal 2012, the Company sold a
portfolio investment for proceeds of $2.1 million. During fiscal
2011, the Company sold a portfolio investment for proceeds of $2.3
million. The Company performs impairment tests on its goodwill
balances on an annual basis or as warranted by events or
circumstances. The Company conducted its annual goodwill impairment
assessment in the fourth quarter of fiscal 2012 and has determined
there is no impairment of goodwill as of March 31, 2012 (fiscal
2011 - $nil). All of the Company's investments involve risks and
require that the Company make judgments and estimates regarding the
likelihood of recovery of the respective costs. In the event
management determines that any of the Company's investments have
become permanently impaired or recovery is no longer reasonably
assured, the value of the investment would be written down to its
estimated net realizable value as a charge against earnings.
Due to the magnitude of certain investments, such write-downs could
be material. Cash, Leverage and Cash Flow from Continuing
Operations (In millions of dollars, except ratios) Fiscal 2012
Fiscal 2011 Year-end cash and cash equivalents $ 96.2 $ 117.1
Year-end debt-to-equity ratio 0.01:1 0.02:1 Cash flows provided by
operating $ 17.8 $ 40.4 activities from continuing operations At
March 31, 2012, the Company had cash and cash equivalents of $96.2
million compared to $117.1 million at March 31, 2011. The Company's
total debt-to-total-equity ratio, excluding accumulated other
comprehensive income, at March 31, 2012 was 0.01:1. At March 31,
2012, the Company had $51.7 million of unutilized credit available
under existing credit facilities and another $24.1 million
available under letter of credit facilities. In fiscal 2012, cash
flows provided by operating activities from continuing operations
were $17.8 million ($40.4 million provided by operating activities
from continuing operations in fiscal 2011). The decrease in
cash flows provided by operating activities from continuing
operations related primarily to the timing of investments in
non-cash working capital in a number of large customer programs.
The Company and its lender have agreed to extend its primary credit
facility (the "Credit Agreement") until September 30, 2012.
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 September 30, 2012. As at March
31, 2012, the Company had issued letters of credit in the amount of
$17.0 million under the operating credit facility (March 31, 2011 -
$5.6 million) and $30.0 million under the letter of credit facility
(March 31, 2011 - $nil). 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 2.40%. For bankers' acceptances and
LIBOR advances, the interest rate is equal to the bankers'
acceptance fee or the LIBOR, respectively, plus 1.90% to 3.40%.
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 unadvanced portions of the amounts available for advance or
draw-down under the credit facilities at rates ranging from 0.475%
to 0.850%. 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 limits advances to subsidiaries and partially
restricts the Company from repurchasing its common shares, paying
dividends and from acquiring and disposing of certain assets. The
Company has additional credit facilities available of $9.9 million
(6.1 million Euro, 33.0 million Indian Rupees and 1.0 million Swiss
francs). The total amount outstanding on these facilities is
$3.0 million (March 31, 2011 - $7.9 million), of which $0.4 million
is classified as bank indebtedness and $2.5 million is classified
as long-term debt. The interest rates applicable to the
credit facilities range from 2.8% to 14.8% per annum. A
portion of the long-term debt is secured by certain assets of the
Company. The 1.0 million Swiss Francs and the 33.0 million Indian
Rupees credit facilities are secured by letters of credit under the
primary credit facility. The Company expects to continue increasing
its investment in working capital to support its growing Order
Backlog. 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 sufficient to fund its requirements for investments in
working capital and capital assets, and to fund strategic
investment plans including some potential acquisitions. Significant
acquisitions could result in additional debt or equity financing
requirements. Contractual Obligations (in thousands of dollars) The
minimum operating lease payments related primarily to facilities
and equipment, purchase obligations and other obligations are as
follows: From continuing operations: Operating Purchase Leases
Obligations Due within one year $ 51,085 $ 3,232 Due in one to five
years 8,457 514 Due in over five years 3,925 ― $ 51,599 15,614 $
From discontinued operations: Purchase Obligations Due within one $
1,023 year The Company's off-balance sheet arrangements consist of
purchase obligations, and various operating lease financing
arrangements related primarily to facilities and equipment, which
have been entered into in the normal course of business. The
Company's purchase obligations consist primarily of materials
purchase commitments. In accordance with industry practice, the
Company is liable to customers 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
March 31, 2012, the total value of outstanding bank guarantees
available under credit facilities was approximately $57.4 million
(March 31, 2011 - $31.9 million) from continuing operations and was
$nil (March 31, 2011 - $13.9 million) from discontinued operations.
The Company is exposed to credit risk on derivative financial
instruments arising from the potential for counterparties to
default on their contractual obligations to the Company. The
Company minimizes this risk by limiting counterparties to major
financial institutions and monitoring their creditworthiness. The
Company's credit exposure to forward foreign exchange contracts is
the current replacement value of contracts that are in a gain
position. For further information related to the Company's
use of derivative financial instruments refer to note 14 of the
consolidated financial statements. The Company is also
exposed to credit risk from its customers. Substantially all of the
Company's trade accounts receivable are due from customers in a
variety of industries and, as such, are subject to normal credit
risks from their respective industries. The Company regularly
monitors customers for changes in credit risk. The Company
does not believe that any single industry or geographic region
represents significant credit risk. Credit risk concentration
with respect to trade receivables is mitigated by the Company's
client base being primarily large, multinational customers and
through insurance purchased by the Company. During fiscal 2012,
150,600 stock options were exercised. As of May 23, 2012 the total
number of shares outstanding was 87,439,755 and there were
7,292,488 stock options outstanding to acquire common shares of the
Company. Related Party Transactions There were no significant
related party transactions in fiscal 2012. See note 27 to the
consolidated financial statements for further details on related
party disclosure. FOREIGN EXCHANGE The Company is exposed to
foreign exchange risk as a result of transactions in currencies
other than its functional currency of the Canadian dollar.
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 fiscal 2012 compared to the corresponding period of
fiscal 2011. The Company's Canadian operations generate significant
revenues in major foreign currencies, primarily U.S. dollars, which
exceed the natural hedge provided by purchases of goods and
services in those currencies. In order to manage a portion of
this net foreign currency exposure, the Company has entered into
forward foreign exchange contracts. The timing and amount of these
forward foreign exchange contract requirements are estimated based
on existing customer contracts on hand or anticipated, current
conditions in the Company's markets and the Company's past
experience. Certain of the Company's foreign subsidiaries
will also enter into forward foreign exchange contracts to hedge
identified balance sheet, revenue and purchase exposures. 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 14 to the consolidated financial
statements for details on the derivative financial instruments
outstanding at March 31, 2012. In addition, from time to time, the
Company enters forward foreign exchange contracts to manage the
foreign exchange risk arising from certain inter-company loans and
net investments in certain self-sustaining subsidiaries. The
Company uses hedging as a risk management tool, not to speculate.
Yearend actual exchange Period average exchangerates rates in CDN$
inCDN$ March31, March 31, March 31, March 31, 2012 2011 % change
2012 2011 % change U.S. Dollar 0.9975 0.9696 0.9938 1.0173 (2.3)%
2.9% Euro 1.3304 1.3743 1.3676 1.3427 1.9% (3.2)% CONSOLIDATED
QUARTERLY RESULTS Results have been reclassified to present Solar
as discontinued operations. ($ in Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 millions,
2012 2012 2012 2012 2011 2011 2011 2011 except per share amounts)
Revenues $ $ 149.1 $ $ $ $ $ $ 101.8 from 173.5 145.9 126.9 148.4
120.8 114.3 continuing operations Earnings $ $ $ $ $ $ $ $ from
16.1 20.4 13.3 10.5 14.2 6.1 6.6 8.5 operations Income from $ $ $ $
$ $ $ $ continuing 10.9 17.6 9.3 6.2 14.4 3.0 4.8 5.6 operations
Loss from $ $ $ $ $ $ $ $ discontinued (7.9) (8.0) (76.4) (11.2)
(93.9) (16.1) (2.9) (0.4) operations, net of tax Net income $ $ $ $
$ $ $ $ (loss) 3.0 9.6 (67.1) (5.0) (79.5) (13.1) 1.9 5.2 Basic and
$ $ $ $ $ $ 0.03 $ $ diluted 0.13 0.20 0.11 0.07 0.17 0.05 0.06
earnings per share from continuing operations Basic and diluted
loss per share $ (0.09) $ (0.09) $ (0.87) $ (0.13) $ (1.08) $
(0.18) $ (0.04) $ (0.00) from discontinued operations Basic and $
0.04 $ $ $ $ $ $ $ diluted 0.11 (0.76) (0.06) (0.91) (0.15) 0.01
0.06 earnings (loss) per share ASG Order $ $ $ $ $ $ 133.0 $ $
Bookings 187.0 179.0 165.0 157.0 206.0 105.0 85.0 ASG Order $ $
376.0 $ $ $ $ 215.0 $ $ Backlog 382.0 363.0 328.0 296.0 208.0 215.0
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. CRITICAL ACCOUNTING ESTIMATES
Note 3 to the consolidated financial statements describes the basis
of accounting and the Company's significant accounting policies.
Revenue recognition and contracts in progress The nature of ASG
contracts requires the use of estimates to quote new business and
most automation systems are typically sold on a fixed-price
basis. Revenues on construction contracts and other long-term
contracts are recognized on a percentage of completion basis as
outlined in note 3(d) "Construction Contracts" of the consolidated
financial statements. In applying the accounting policy on
construction contracts, judgment is required in determining the
estimated costs to complete a contract. These cost estimates
are reviewed at each reporting period and by their nature may give
rise to income volatility. 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 involve 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
or, in some cases, for the convenience of the customer. In
the event of a termination for convenience, the Company typically
negotiates a payment provision 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, provided
collection is reasonably assured. Income taxes Deferred tax assets,
disclosed in note 19 of the consolidated financial statements, are
recognized to the extent that it is probable that taxable income
will be available against which the losses can be utilized.
Significant management judgment is required to determine the amount
of deferred tax assets that can be recognized based upon the likely
timing and level of future taxable income together with future tax
planning strategies. If the assessment of the Company's ability to
utilize the deferred tax asset changes, the Company would be
required to recognize more or fewer of the deferred tax assets
which would increase or decrease income tax expense in the period
in which this is determined. The Company establishes
provisions based on reasonable estimates for possible consequences
of audits by the tax authorities of the respective countries in
which it operates. The amount of such provisions is based on
various factors, such as experience of previous taxation audits and
differing interpretations of tax regulations by the taxable entity
and the respective tax authority. These provisions for
uncertain tax positions are made using the best estimate of the
amount expected to be paid based on a qualitative assessment of all
the relevant factors. The Company reviews the adequacy of
these provisions at each quarter. However, it is possible that at
some future date an additional liability could result from audits
by the taxation authorities. Where the final tax outcome of
these matters is different from the amount initially recorded, such
differences will affect the tax provisions in the period in which
such determination is made. Share-based payment transactions The
Company measures the cost of transactions with employees by
reference to the fair value of the equity instruments at the date
at which they are granted. Estimating fair value for share-based
payment transactions requires the determination of the most
appropriate valuation model, which is dependent on the terms and
conditions of the grant. This estimate also requires determining
the most appropriate inputs to the valuation model including the
expected life of the share option, weighted average risk-free
interest rate, volatility and dividend yield and making assumptions
about them. The assumptions and models used for estimating fair
value for share-based payment transactions are disclosed in note 20
of the consolidated financial statements. Impairment of
non-financial assets Impairment exists when the carrying value of
an asset or cash generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs to sell and its
value in use. The calculations involve significant estimates and
assumptions. Items estimated include cash flows, discount
rates and assumptions on revenue growth rates. These
estimates could effect the Company's future results if the current
estimates of future performance and fair values change. As
described in note 13 of the consolidated financial statements,
goodwill is assessed for impairment on an annual basis. The Company
performed its annual impairment test of goodwill as at March 31,
2012 and has determined there is no impairment (March 31, 2011 -
$nil). Provisions As described in note 3(q) of the 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. Pensions The cost of defined benefit pension plans and the
present value of the pension obligations are determined using
actuarial valuations. An actuarial valuation involves making
various assumptions that may differ from actual developments in the
future. These include the determination of the discount rate,
future salary increases, mortality rates and future pension
increases. Due to the complexity of the valuation, the underlying
assumptions and its long-term nature, a defined benefit obligation
is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date. In determining the
appropriate discount rate, management considers the interest rates
of corporate bonds in the respective currency, with extrapolated
maturities corresponding to the expected duration of the defined
benefit obligation. The mortality rate is based on publicly
available mortality tables for the specific country. Future salary
increases and pension increases are based on expected future
inflation rates for the respective country. Further details about
the assumptions used are provided in note 16 of the consolidated
financial statements. 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 were the first financial statements of the
Company to be presented on an IFRS basis. Comparative data for all
periods subsequent to March 31, 2010 have 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 are the first annual
financial statements that comply with IFRS and these annual
consolidated financial statements were prepared as described in
note 2 to the 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. Classification of Solar as "Discontinued Operations" IFRS
requires that an evaluation be 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 determined that under IFRS, the planned separation of Solar
met the criteria of non-current assets associated with discontinued
operations as of March 31, 2011 and therefore reclassified this
disposal group as "associated with discontinued operations" as of
March 31, 2011 and reclassified Solar's operating results as
"discontinued operations" for the current and comparative periods
presented in the 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 that reduced net income by
$4.9 million for the year ended March 31, 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 have been applied. Revenues
previously recognized using completed contract revenue recognition
that are required to be recognized under percentage-of-completion
accounting under IFRS have been adjusted along with the
corresponding cost of revenues and inventory impacts. As a result,
under IFRS, the Company adjusted revenues and cost of revenues
recognized, which decreased net income by $0.9 million for the year
ended March 31, 2011 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 include 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 decreased income tax expenses, which increased
net income by $1.1 million for the year ended March 31, 2011,
compared to previously reported results under Canadian GAAP. For a
full description of all IFRS differences, refer to note 28 of the
consolidated financial statements. ACCOUNTING STANDARDS CHANGES
Standards issued but not yet effective or amended up to the date of
issuance of the Company's consolidated 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 these 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 fiscal periods beginning on or after July 1,
2011. The amendment affects disclosure only and has no impact on
the Company's financial position or results of operations. 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 fiscal periods beginning on or after
January 1, 2015. In subsequent phases, the IASB will address
hedge accounting and impairment of financial assets. 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 measurement 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 fiscal periods beginning on or after January 1,
2013, with early adoption permitted. The Company is assessing the
impact of IFRS 10 on its financial position and results of
operations. 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. IFRS 11 is effective for fiscal periods beginning on
or after January 1, 2013, with early adoption permitted. The
Company is assessing the impact of IFRS 11 on its financial
position and results of operations. 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 fiscal periods
beginning on or after January 1, 2013, with early adoption
permitted. The Company is assessing the impact of IFRS 12 on its
financial position and results of operations. 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 fiscal periods beginning on or after January 1, 2013,
with early adoption permitted. The Company is assessing the impact
of IFRS 13 on its financial position and results of operations. 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 consolidated statements of income. 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 fiscal periods beginning on or after July 1, 2012,
with early adoption permitted. The Company is assessing the impact
of IAS 1 on its financial position and results of operations. IAS
19 - Employee Benefits The amendment eliminates the option to defer
the recognition of gains and losses, known as the 'corridor
method', requires re-measurements to be presented in other
comprehensive income, and enhances the disclosure requirements for
defined benefit plans. The standard also requires that the discount
rate used to determine the defined benefit obligation should also
be used to calculate the expected return on plan assets by
introducing a net interest approach, which replaces the expected
return on plan assets and interest costs on the on the defined
benefit obligation, with a single net interest component determined
by multiplying the net defined benefit liability or asset by the
discount rate used to determine the defined benefit obligation. The
amendment becomes effective for fiscal periods beginning on or
after January 1, 2013. The Company is assessing the impact of IAS
19 on its financial position and results of operations. 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. Disclosure
controls and procedures An evaluation of the design of and
operating effectiveness of the Company's disclosure controls and
procedures was conducted as of March 31, 2012 under the supervision
of the CEO and CFO as required by CSA National Instrument 52-109 -
Certification of Disclosure in Issuers' Annual and Interim Filings.
The evaluation included documentation, review, enquiries and other
procedures considered appropriate in the circumstances. Based on
that evaluation, the CEO and the CFO have concluded that the
Company's disclosure controls and procedures are effective to
provide reasonable assurance that information relating to the
Company and its consolidated subsidiaries that is required to be
disclosed in reports filed under provincial and territorial
securities legislation is recorded, processed, summarized and
reported to senior management, including the CEO and the CFO, so
that appropriate decisions can be made by them regarding required
disclosure within the time periods specified in the provincial and
territorial securities legislation. Internal control over financial
reporting CSA National Instrument 52-109 requires the CEO and CFO
to certify that they are responsible for establishing and
maintaining internal control over financial reporting for the
Company, that those internal controls have been designed and are
effective in providing reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements in accordance with the Company's GAAP. 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. The CEO and CFO
have, using the framework and criteria established in "Internal
Control - Integrated Framework" issued by the Committee of
Sponsoring Organizations of the Treadway Commission, evaluated the
design and operating effectiveness of the Company's internal
controls over financial reporting and concluded that, as of March
31, 2012, internal controls over financial reporting were effective
to provide reasonable assurance that information related to
consolidated results and decisions to be made based on those
results were appropriate. During the year ended March 31,
2012, 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 assessment of the design and operating effectiveness
of disclosure controls and internal controls over financial
reporting and implemented certain improvements to the control
structure. ATS acquired ATW on January 5, 2011. Management
has completed its assessment of the design and operating
effectiveness of disclosure controls and internal controls over
financial reporting and implemented certain improvements to the
control structure. OTHER MAJOR CONSIDERATIONS AND RISK FACTORS Any
investment in ATS will be subject to risks inherent to ATS's
business. The following risk factors are discussed in the Company's
Annual Information Form, which may be found on SEDAR at
www.sedar.com. -- Market volatility; -- Strategy execution risks;
-- Competition risk; -- Automation systems pricing and revenue mix
risk; -- First-time program and production risks; -- Cyclicality;
-- Foreign exchange risk; -- International business risks; --
Pricing, quality, delivery and volume risk; -- Product failure
risks; -- Availability of raw materials and other manufacturing
inputs; -- Customer risks; -- New product market acceptance,
obsolescence, and commercialization risk; -- Liquidity and access
to capital markets; -- Expansion risks; -- Availability of human
resources and dependence on key personnel; -- Intellectual property
protection risks; -- Risk of infringement of third parties'
intellectual property rights; -- Internal controls; -- Income and
other taxes and uncertain tax liabilities; -- Variations in
quarterly results; -- Share price volatility; -- Litigation; --
Legislative compliance; -- International Financial Reporting
Standards; -- Dependence on performance of Subsidiaries. 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: the Company's three-phase strategic plan;
finalization of purchase agreements related to the purchase by an
EDF subsidiary of the assets of PWF; working towards concluding a
transaction for the sale of the Ontario Solar business; the
Company's growth strategy; commitment in respect of acquisitions;
the Company's value creation plan, including the strengthening of
business processes, supply chain management, approach to market,
and preservation of balance sheet strength; potential impact of
global economic environment, including impact on credit markets and
Order Bookings; Company's approach to market and expected impact on
order bookings; management's expectations in relation to the impact
of strategic initiatives on ATS operations; expected impact of
management's focus on program management, cost reductions,
standardization and quality; expected impact of initiatives at
Sortimat and ATW; management's intention to apply additional
resources to acquisition activities; separation of solar business;
expected positive impact of opportunities related to other solar
assets; sale process for Ontario Solar; expected impact of FIT
program changes; OSPV securing conditional FIT approvals totalling
approximately 64 MWs related to ground mount solar projects;
OSPV seeking required approvals; OSPV expectation to have a
definitive agreement in place for financing and ultimate
third-party ownership of certain projects; Ontario Solar
expectation to supply modules to OSPV; two customer agreements
signed by Ontario Solar in first quarter and expected quantities to
be supplied thereunder and timing of initial shipments; Ontario
Solar agreements with developers who have secured conditional FIT
approvals; expectation that Ontario Solar will provide modules
and other related services to these projects; Company's
expectation to continue to increase its investment in working
capital; foreign exchange hedging; expectation 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 sufficient to fund requirements for
investments; and accounting standards changes. The risks and
uncertainties that may affect forward-looking statements include,
among others: impact of the global economy and the Eurozone
sovereign debt crisis; general market performance including capital
market conditions and availability and cost of credit; performance
of the market sectors that ATS serves; foreign currency and
exchange risk; the relative strength of the Canadian dollar; impact
of factors such as increased pricing pressure and possible margin
compression; the regulatory and tax environment; inability of PWF
bankruptcy trustee and EDF subsidiary to conclude purchase
agreements; that the sale process for Ontario Solar fails to
generate an acceptable transaction due to market, regulatory, or
other factors; unexpected delays and issues, on the timing, form
and structure of the solar separation; 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; that
strategic initiatives within ASG and targeted initiatives at
Sortimat and ATW do not have intended positive impact and/or take
longer than expected; the financial attractiveness of, and demand
for, the solar projects being developed by Ontario Solar; that OSPV
is unable to reach a definitive agreement with an ultimate owner of
the projects or is delayed in that regard; ability to obtain
necessary government and other certifications and approvals for
solar projects in a timely fashion; supplier, customer, employee,
government and media reaction to PWF bankruptcy proceedings; labour
disruptions; that expenditures associated with the PWF bankruptcy
exceed current estimates and/or proceeds from sale of other solar
assets are less than currently expected; that one or both of the
customer agreements signed by Ontario Solar 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; the success of developers with whom
Ontario Solar has signed agreements in ultimately developing the
projects; that one or more customers, or other persons with which
the Company has contracted, experience insolvency or bankruptcy
with resulting delays, costs or losses to the Company; political,
labour or supplier disruptions; 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 become a party;
exposure to product liability claims; risks associated with greater
than anticipated tax liabilities or expenses; 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. Consolidated Statements of
Financial Position (in thousands of Canadian dollars) March 31
March 31 April 1 As at Note 2012 2011 2010 ASSETS Current assets
Cash and cash equivalents $ 96,229 $ 117,119 $ 211,786 Accounts
receivable 90,151 72,045 85,938 Costs and earnings in excess of
billings on contracts in progress 8 112,486 57,399 44,786
Inventories 8 10,278 12,043 73,576 Deposits, prepaids and other 9
12,474 18,677 26,482 assets 321,618 277,283 442,568 Assets
associated with 7 35,746 216,913 - discontinued operations 357,364
494,196 442,568 Non-current assets Property, plant and equipment 10
78,880 86,417 160,547 Investment property 11 3,792 3,917 3,910
Goodwill 13 58,320 58,447 34,350 Intangible assets 12 28,641 31,136
5,411 Deferred income tax assets 19 15,544 16,839 23,686 Investment
tax credit receivable 19 26,087 20,749 20,878 Portfolio investments
14 - 1,958 3,602 Other assets 9 - - 33,380 211,264 219,463 285,764
Total assets $ 568,628 $ 713,659 $ 728,332 LIABILITIES AND EQUITY
Current liabilities Bank indebtedness 17 $ 434 $ 4,274 $ 26,034
Accounts payable and accrued 113,133 93,115 91,809 liabilities
Provisions 15 9,696 9,002 11,279 Billings in excess of costs and
earnings on contracts in progress 8 44,016 29,015 31,544 Current
portion of long-term debt 17 263 259 10,830 Current portion of
obligations 17 - - 4,393 under finance leases 167,542 135,665
175,889 Liabilities associated with 7 9,969 134,342 - discontinued
operations 177,511 270,007 175,889 Non-current liabilities
Provisions 15 - 162 4,160 Employee benefits 16 6,340 5,333 4,105
Long-term debt 17 2,262 3,322 4,420 Obligations under finance
leases 17 - - 18,418 Deferred income tax liability 19 1,063 - -
9,665 8,817 31,103 Total liabilities $ 187,176 $ 278,824 $ 206,992
EQUITY Share capital 18 $ 483,099 $ 481,908 $ 481,848 Contributed
surplus 17,868 14,298 11,749 Accumulated other comprehensive (383)
(1,488) 2,061 income (loss) Retained earnings (deficit) (119,210)
(59,659) 25,682 Equity attributable to 381,374 435,059 521,340
shareholders Non-controlling interests 78 (224) - Total equity
381,452 434,835 521,340 Total liabilities and equity $ 568,628 $
713,659 $ 728,332 ATS AUTOMATION TOOLING SYSTEMS INC. Consolidated
Statements of Income (in thousands of Canadian dollars, except per
share amounts) Years ended March 31 Note 2012 2011 Revenues
Revenues from construction contracts $ 544,052 $ 417,892 Sale of
goods 22,019 36,600 Services rendered 29,291 30,767 Total revenues
595,362 485,259 Operating costs and expenses Cost of revenues
438,728 371,908 Selling, general and administrative 94,516 74,890
Stock-based compensation 20 4,857 2,980 Gain on sale of land and
building (2,989) - Earnings from operations 60,250 35,481 Net
finance costs 24 1,565 1,057 Income from continuing operations
before income taxes 58,685 34,424 Income tax expense 19 14,670
6,565 Income from continuing operations 44,015 27,859 Loss from
discontinued operations, net of tax 7 (103,521) (113,302) Net loss
$ (59,506) $ (85,443) Attributable to Shareholders $ (59,588) $
(85,276) Non-controlling interests 82 (167) $ (59,506) $ (85,443)
Earnings (loss) per share attributable to 25 shareholders Basic and
diluted - from continuing $ 0.51 $ 0.32 operations Basic and
diluted - from discontinued 7 (1.19) (1.30) operations $ (0.68) $
(0.98) ATS AUTOMATION TOOLING SYSTEMS INC. Consolidated Statements
of Comprehensive Income (in thousands of Canadian dollars) Years
ended March 31 2012 2011 Net loss $ (59,506) $ (85,443) Other
comprehensive income (loss): Currency translation adjustment (net
of income 911 (2,853) taxes of $nil) Deconsolidation of
subsidiaries currency translation adjustment (net of income taxes
of $nil) 1,227 - Net unrealized gain (loss) on derivative financial
instruments designated as cash flow (2,005) 2,365 hedges Tax impact
536 (469) Loss (gain) transferred to net loss for derivatives
designated as cash flow hedges 478 (3,643) Tax impact (112) 965
Actuarial losses on defined benefit pension (284) (162) plans Tax
impact 82 40 Net gain on hedges of net investments in foreign
operations (net of income taxes of $nil) 70 87 Other comprehensive
income (loss) 903 (3,670) Comprehensive loss $ (58,603) $ (89,113)
Attributable to Shareholders $ (58,685) $ (88,946) Non-controlling
interests 82 (167) $ (58,603) $ (89,113) ATS AUTOMATION TOOLING
SYSTEMS INC. Consolidated Statements of Changes inEquity (in
thousands of Canadian dollars) Year ended March 31, 2012 Total
accumulated Retained Currency other Non- Share Contributed earnings
translation Cash comprehensive controlling Total flow capital
surplus (deficit) adjustments hedges income interests equity
Balance, at $ 481,908 $ 14,298 $ (59,659) $ (2,767) $ 1,279 $
(1,488) $ (224) $ 434,835 March 31,2011 Net income - - (59,588) - -
- 82 (59,506) (loss) Other - - (202) 2,208 (1,103) 1,105 - 903
comprehensive income (loss) Total - - (59,790) 2,208 (1,103) 1,105
82 (58,603) comprehensive income (loss) Non-controlling - - 239 - -
- 220 459 interests Stock-based - 3,951 - - - - - 3,951
compensation Exercise of 1,191 (381) - - - - - 810 stock options
Balance, at $ 483,099 $ 17,868 $ (119,210) $ (559) $ 176 $ (383) $
78 $ 381,452 March 31, 2012 Year ended March 31, 2011 Total Foreign
accumulated Retained currency other Non- Share Contributed earnings
translation Cash comprehensive controlling Total flow capital
surplus (deficit) adjustments hedges income interests equity
Balance, at $ 481,848 $ 11,749 $ 25,682 $ - $ 2,061 $ 2,061 $ - $
521,340 April 1, 2010 Net loss - - (85,276) - - - (167) (85,443)
Other - - (122) (2,767) (782) (3,549) - (3,671) comprehensive loss
Total - - (85,398) (2,767) (782) (3,549) (167) (89,114)
comprehensive loss Non-controlling - - 57 - - - (57) - interests
Stock-based - 2,568 - - - - - 2,568 compensation Exercise of 60
(19) - - - - - 41 stock options Balance, at $ 481,908 $ 14,298 $
(59,659) $ (2,767) $ 1,279 $ (1,488) $ (224) $ 434,835 March 31,
2011 ATS AUTOMATION TOOLING SYSTEMS INC. Consolidated Statements of
Cash Flows (in thousands of Canadian dollars) Years ended March 31
Note 2012 2011 Operating activities: Income from continuing
operations $ 44,015 $ 27,859 Items not involving cash Depreciation
of property, plant and 6,632 6,489 equipment Amortization of
intangible assets 5,330 3,984 Accrued employee benefits 805 2,014
Deferred income taxes 2,982 2,462 Other items not involving cash
(5,338) (1,310) Stock-based compensation 20 4,857 2,980 Gain on
disposal of property, plant and (2,989) (139) equipment Gain on
sale of portfolio investment (96) (665) $ 56,198 $ 43,674 Change in
non-cash operating working capital (38,396) (3,230) Cash flows used
in operating activities of discontinued operations 7 (43,830)
(1,812) Cash flows provided by (used in) operating $ (26,028) $
38,632 activities Investing activities: Acquisition of property,
plant and equipment $ (4,806) $ (9,106) Acquisition of intangible
assets (2,708) (1,408) Business acquisition 6 - (63,830) Proceeds
from disposal of property, plant 8,003 2,043 and equipment Proceeds
on sale of portfolio investments 2,054 2,309 Cash flows used in
investing activities of 7 (6,057) (27,615) discontinued operations
Cash flows used in investing activities $ (3,514) $ (97,607)
Financing activities: Restricted cash 9 7,438 (9,471) Bank
indebtedness (3,659) (3,416) Repayment of long-term debt (479)
(194) Issuance of common shares 810 41 Cash flows used in financing
activities of 7 (3,857) (14,398) discontinued operations Cash flows
provided by (used in) financing $ 253 $ (27,438) activities Effect
of exchange rate changes on cash and 1,713 (1,105) cash equivalents
Decrease in cash and cash equivalents (27,576) (87,518) Cash and
cash equivalents, beginning of 124,268 211,786 period Cash and cash
equivalents, end of period $ 96,692 $ 124,268 Attributable to Cash
and cash equivalents - continuing $ 96,229 $ 117,119 operations
Cash and cash equivalents - associated with 463 7,149 discontinued
operations $ 96,692 $ 124,268 Supplemental information Cash income
taxes paid by continuing $ 5,929 $ 3,820 operations Cash interest
paid by continuing operations $ 545 $ 316 Cash interest paid by
discontinued $ 958 $ 1,313 operations ATS Automation
Tooling Systems Inc. CONTACT: Maria Perrella, Chief Financial
OfficerCarl Galloway, Vice-President, Treasurer519 653-6500
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