CAMBRIDGE, ON, Nov. 4, 2015 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three and six months ended
September 27, 2015.
Second Quarter Summary
- Revenues from continuing operations were $263.7 million, 27% higher than a year ago.
Excluding PA (acquired September 1,
2014), revenues increased $9.8
million or 5% compared to the corresponding period a year
ago;
- Earnings from continuing operations were $24.4 million (9% operating margin), compared to
$14.1 million (7% operating margin)
in the second quarter of fiscal 2015. Adjusted earnings from
continuing operations1 were $31.7
million (12% margin), compared to $27.0 million (13% margin) in the second quarter
a year ago;
- EBITDA1 was $33.7
million (13% margin), compared to $22.7 million (11% margin) in the second quarter
of fiscal 2015. Excluding $1.7
million of restructuring and severance costs, second quarter
2016 EBITDA was $35.4 million (13%
margin), up from $29.8 million (14%
margin), which excluded $7.1 million
of acquisition-related costs;
- Earnings per share from continuing operations were 14 cents basic compared to 8 cents basic a year ago. Adjusted basic earnings
per share from continuing operations1 were 19 cents for the second quarters of fiscal 2016
and fiscal 2015;
- Order Bookings were $230 million,
a 6% increase from the second quarter of fiscal 2015;
- Period end Order Backlog was $589
million, 5% higher than at September
28, 2014;
- The Company's balance sheet and financial capacity to support
growth remained strong, with unutilized credit facilities of
$648 million and $2.3 million of credit available under letter of
credit facilities;
- ATS also announced it has filed and that the Toronto Stock
Exchange ("TSX") has accepted a notice by the Company of its
intention to make a normal course issuer bid ("NCIB"). See
"Normal Course Issuer Bid".
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
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Financial
Results
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In millions of
Canadian dollars, except per share data
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3 months ended
September 27,
2015
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3 months
ended
September 28,
2014
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6 months ended
September 27,
2015
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6 months
ended
September 28,
2014
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Revenues
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Continuing
Operations
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$
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263.7
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$
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207.0
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$
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518.0
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$
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397.9
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Earnings from
operations1
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Continuing
Operations
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$
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24.4
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$
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14.1
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$
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41.9
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$
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28.5
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Adjusted
earnings
from operations1
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Continuing
Operations
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$
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31.7
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$
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27.0
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$
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59.1
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$
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48.0
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EBITDA1
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Continuing
Operations
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$
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33.7
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$
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22.7
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$
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62.4
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$
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43.6
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Net
income
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Continuing
Operations
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$
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12.8
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$
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7.4
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$
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22.6
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$
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16.4
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Discontinued
Operations
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$
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––
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$
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7.1
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$
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––
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$
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14.0
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Earnings per
share
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From
continuing
operations (basic)
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$
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0.14
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$
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0.08
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$
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0.25
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$
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0.18
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From
discontinued
operations (basic)
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$
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––
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$
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0.08
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$
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––
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$
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0.15
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From
continuing
operations (diluted)
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$
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0.14
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$
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0.08
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$
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0.25
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$
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0.18
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From
discontinued
operations (diluted)
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$
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––
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$
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0.08
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$
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––
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$
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0.15
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Adjusted
earnings
per share1
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From
continuing
operations (basic)
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$
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0.19
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$
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0.19
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$
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0.37
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$
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0.34
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1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
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"Second quarter performance reflected our solid operating
foundation," said Anthony Caputo,
Chief Executive Officer. "We have a strong balance sheet and
significant financial resources available to pursue our growth
strategy."
Second Quarter Summary Continuing Operations
Fiscal
2016 second quarter revenues were 27% higher than in the
corresponding period a year ago, primarily reflecting revenues
earned by PA (acquired September 1,
2014). PA revenues for the second quarter of fiscal 2016 were
$67.4 million compared to
$20.5 million in the corresponding
period a year ago. Excluding PA, second quarter revenues increased
$9.8 million, or 5% compared to the
corresponding period a year ago. The increase in revenues reflected
foreign exchange rate changes which positively impacted the
translation of revenues earned by foreign-based subsidiaries
compared to the corresponding period a year ago, primarily
reflecting the weakening of the Canadian dollar relative to the
Euro and U.S. dollar.
Fiscal 2016 second quarter earnings from operations were
$24.4 million (9% operating margin)
compared to $14.1 million (7%
operating margin) in the second quarter of fiscal 2015.
Second quarter fiscal 2016 earnings from operations included
$1.7 million of restructuring and
severance costs and amortization expenses of $5.6 million related to amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK and sortimat. Excluding these costs, second quarter
fiscal 2016 adjusted earnings from operations were $31.7 million (12% margin), compared to adjusted
earnings from operations of $27.0
million (13% margin) a year ago. Higher adjusted earnings
from operations primarily reflected increased revenues.
Depreciation and amortization expense was $9.3 million in the second quarter of fiscal
2016, compared to $8.6 million a year
ago, primarily due to increased amortization expenses as a result
of the addition of identifiable intangible assets recorded on the
acquisition of PA in the second quarter of fiscal 2015.
EBITDA was $33.7 million (13%
EBITDA margin) compared to $22.7
million (11% EBITDA margin) in the second quarter of fiscal
2015. Excluding restructuring and severance costs, second
quarter fiscal 2016 EBITDA was $35.4
million (13% EBITDA margin). Comparably, excluding
acquisition-related costs, second quarter fiscal 2015 EBITDA was
$29.8 million (14% EBITDA
margin).
Order Bookings
Second quarter fiscal 2016 Order
Bookings were $230 million, a 6%
increase from the second quarter of fiscal 2015. Excluding
the impact of PA, Order Bookings decreased $34 million or 17% from the corresponding period
a year ago primarily reflecting the timing of customer decisions on
various larger opportunities. By customer market, lower Order
Bookings in life sciences and transportation markets were partially
offset by strength in consumer products and electronics.
Normal Course Issuer Bid
ATS today also announced that
the Toronto Stock Exchange ("TSX") has accepted a notice filed by
it of its intention to make a NCIB. Under the NCIB, ATS will have
the ability to purchase for cancellation up to a maximum of
4,600,000 common shares, representing approximately 5% of the
92,541,582 common shares that were issued and outstanding as of
October 31, 2015.
Purchases under the NCIB will be made through the facilities of
the TSX and/or alternative trading systems in accordance with
applicable regulatory requirements, during the twelve month period
commencing on November 6, 2015 and
ending on or before November 5, 2016.
The average daily trading volume of the common shares on the TSX
for the six calendar months ending October
31, 2015 is 160,087 common shares. On any trading day
ATS will not purchase more than 25% of such average daily trading
volume representing 40,021 common shares, except where such
purchases are made in accordance with available block purchase
exemptions. The common shares purchased under this NCIB will be
cancelled.
Some purchases under the NCIB may be made pursuant to an
automatic purchase plan between ATS and its broker. This plan would
enable the purchase of ATS common shares when ATS would not
ordinarily be active in the market due to internal trading blackout
periods, insider trading rules, or otherwise.
ATS believes that there are times when the market price of ATS
common shares may not reflect their underlying value and that the
purchase of shares by ATS will both provide liquidity to existing
shareholders and benefit remaining shareholders. The NCIB is viewed
by ATS management as one component of an overall capital structure
strategy and complimentary to its acquisition growth plans.
Quarterly Conference Call
ATS's quarterly conference
call begins at 10 am eastern on
Wednesday November 4 and can be
accessed live at www.atsautomation.com or on the phone by dialing
(647) 427-7450 five minutes prior. A replay of the conference will
be available on the ATS website following the call. Alternatively,
a telephone recording of the call will be available for one week
(until midnight November 11, 2015) by
dialing 416-849-0833 and entering passcode 67263624 followed
by the number sign.
About ATS
ATS is an industry-leading automation
solutions provider to many of the world's most successful
companies. ATS uses its extensive knowledge base and global
capabilities in custom automation, repeat automation, automation
products and value-added services including pre-automation and
after-sales services to address the sophisticated manufacturing
automation systems and service needs of multinational customers in
markets such as life sciences, chemicals, consumer products,
electronics, food, beverage, transportation, energy, and oil and
gas. Founded in 1978, ATS employs approximately 3,500 people at 25
manufacturing facilities and 51 offices in North America, Europe, Southeast
Asia and China.
Management's Discussion and Analysis
For the Quarter
Ended September 27, 2015
This Management's Discussion and Analysis ("MD&A") for
the three and six months ended September 27,
2015 (second quarter of fiscal 2016) is as of November 3, 2015 and provides information on the
operating activities, performance and financial position of ATS
Automation Tooling Systems Inc. ("ATS" or the "Company") and should
be read in conjunction with the unaudited interim condensed
consolidated financial statements of the Company for the second
quarter of fiscal 2016 which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and are
reported in Canadian dollars. The Company assumes that the reader
of this MD&A has access to, and has read the audited
consolidated financial statements prepared in accordance with IFRS
and the MD&A of the Company for the year ended March 31, 2015 (fiscal 2015) and, accordingly,
the purpose of this document is to provide a fiscal 2016 second
quarter update to the information contained in the fiscal 2015
MD&A. 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 and Additional IFRS
Measures
Throughout this document management uses certain
non-IFRS measures to evaluate the performance of the Company. These
terms do not have any standardized meaning prescribed within IFRS
and therefore may not be comparable to similar measures presented
by other companies. The terms "operating margin", "EBITDA", "EBITDA
margin", "adjusted net income from continuing operations",
"adjusted earnings from operations", "adjusted basic earnings per
share from continuing operations", "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. Such measures should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. In addition,
management uses "earnings from operations" which is an additional
IFRS measure to evaluate the performance of the Company. Earnings
from operations is presented on the Company's consolidated
statements of income as net income from continuing operations
excluding income tax expense and net finance costs. Operating
margin is an expression of the Company's earnings from operations
as a percentage of revenues. EBITDA is defined as earnings from
operations excluding depreciation and amortization (which includes
amortization of intangible assets). EBITDA margin is an expression
of the Company's EBITDA as a percentage of revenues. Adjusted
earnings from operations is defined as earnings from operations
before items excluded from management's internal analysis of
operating results, such as amortization expense of
acquisition-related intangible assets, acquisition-related
transaction and integration costs, restructuring charges, and
certain other adjustments which would be non-recurring in nature
("adjustment items"). Adjusted basic earnings per share from
continuing operations is defined as adjusted net income from
continuing operations on a basic per share basis, where adjusted
net income from continuing operations is defined as adjusted
earnings from operations less net finance costs and income tax
expense, plus tax effects of adjustment items. Order Bookings
represent new orders for the supply of automation systems, services
and products that management believes are firm. Order Backlog is
the estimated unearned portion of revenues on customer contracts
that are in process and have not been completed at the specified
date.
Earnings from operations and EBITDA are used by the Company to
evaluate the performance of its operations. Management believes
earnings from operations is an important indicator in measuring the
performance of the Company's operations on a pre-tax basis and
without consideration as to how the Company finances its
operations. Management believes that EBITDA is an important
indicator of the Company's ability to generate operating cash flows
to fund continued investment in its operations. Management believes
that adjusted earnings from operations and adjusted basic earnings
per share from continuing operations (including adjusted net income
from continuing operations) are important measures to increase
comparability of performance between periods. The adjustment items
used by management to arrive at these metrics are not considered to
be indicative of the business's ongoing operating performance.
Order Bookings provides an indication of the Company's ability to
secure new orders for work during a specified period, while Order
Backlog provides a measure of the value of Order Bookings that have
not been completed at a specified point in time. Both Order
Bookings and Order Backlog are indicators of future revenues the
Company expects to generate based on contracts that management
believes to be firm. Management believes that ATS shareholders and
potential investors in ATS use these additional IFRS measures and
non-IFRS financial measures in making investment decisions and
measuring operational results. EBITDA should not be construed as a
substitute for net income determined in accordance with IFRS.
Adjusted earnings from operations is not necessarily indicative of
earnings from operations or cash flows from operations as
determined under IFRS and may not be comparable to similar measures
presented by other companies.
A reconciliation of (i) earnings from operations and EBITDA to
net income from continuing operations; (ii) adjusted earnings from
operations, adjusted net income from continuing operations to net
income from continuing operations; and (iii) adjusted basic
earnings per share from continuing operations to basic earnings per
share from continuing operations, in each case for the three and
six month periods ending September 27,
2015 and September 28, 2014 is
contained in this MD&A (see "Reconciliation of Non-IFRS
Measures to IFRS Measures"). A reconciliation of Order Bookings and
Order Backlog to total Company revenues for the three and six month
periods ending September 27, 2015 and
September 28, 2014 is also contained
in the MD&A (see "Order Backlog Continuity").
COMPANY PROFILE
ATS is an industry-leading automation
solutions provider to many of the world's most successful
companies. ATS uses its extensive knowledge base and global
capabilities in custom automation, repeat automation, automation
products and value-added services including pre-automation and
after-sales services to address the sophisticated manufacturing
automation systems and service needs of multinational customers in
markets such as life sciences, chemicals, consumer products,
electronics, food, beverage, transportation, energy, and oil and
gas. Founded in 1978, ATS employs approximately 3,500 people at 25
manufacturing facilities and 51 offices in North America, Europe, Southeast
Asia and China.
Value Creation Strategy
To drive value creation, the
Company is focused on its growth strategy: Grow, Expand and Scale.
The strategy is designed to leverage the strong foundation of ATS'
core automation business, continue the growth and development of
ATS and create value for all stakeholders.
Grow
To further the Company's organic growth,
ATS will continue to target providing comprehensive, value-based
programs and enterprise solutions for customers built on
differentiating technological solutions, value of customer outcomes
achieved and global capability.
Expand
The Company seeks to expand its offering
of products and services to the market. The Company intends
to build on its automation systems business to offer: engineering,
including design, modelling and simulation, and program management;
products, including contract manufacturing, automation and other
manufacturing products; and services, including pre automation,
post automation, training, life cycle material management, and
other after sales services.
Scale
The Company is committed to growth
through acquisition and management believes that the Company has
the organizational structure, business processes and experience to
successfully integrate acquired companies. Acquisition
targets are evaluated on their ability to bring ATS market or
technology leadership, scale and/or a market opportunity. For
each of ATS' 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. To date,
ATS has successfully acquired four complementary and accretive
businesses: sortimat Group ("sortimat") on June 1, 2010; Assembly & Test Worldwide
("ATW") on January 5, 2011; IWK
Verpackungstechnik and Oystar IWK USA, Inc. ("IWK") on September 30, 2013 and M+W Process Automation
GmbH and ProFocus LLC (collectively "Process Automation Solutions"
or "PA") on September 1, 2014.
OVERVIEW – OPERATING RESULTS FROM CONTINUING
OPERATIONS
Results from continuing operations comprise the
results of ATS' continuing operations and corporate costs not
directly attributable to Solar. The results of the Solar
segment are reported in discontinued operations.
Consolidated
Revenues from Continuing Operations (In millions of
dollars)
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Three Months
Ended
September
27,
2015
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Three Months
Ended
September
28,
2014
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Six
Months
Ended
September 27,
2015
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Six Months
Ended
September
28,
2014
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Revenues by
market
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Consumer products
& electronics
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$
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38.4
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$
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42.0
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$
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75.7
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$
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80.5
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Energy
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21.1
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14.5
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39.6
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26.3
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Life
sciences
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109.3
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79.9
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216.0
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158.7
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Transportation
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94.9
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70.6
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186.7
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132.4
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Total revenues
from continuing operations
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$
|
263.7
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$
|
207.0
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$
|
518.0
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$
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397.9
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Second Quarter
Fiscal 2016 second quarter revenues
were 27% higher than in the corresponding period a year ago,
primarily reflecting revenues earned by PA (acquired September 1, 2014). PA revenues for the
second quarter of fiscal 2016 were $67.4
million compared to $20.5
million in the corresponding period a year ago. Excluding
PA, second quarter revenues increased $9.8
million, or 5% compared to the corresponding period a year
ago. The increase in revenues reflected foreign exchange rate
changes which positively impacted the translation of revenues
earned by foreign-based subsidiaries compared to the corresponding
period a year ago, primarily reflecting the weakening of the
Canadian dollar relative to the Euro and U.S. dollar.
By market, fiscal 2016 second quarter revenues from consumer
products & electronics decreased 9%, primarily driven by
project timing. Revenues generated in the energy market increased
46% compared to the corresponding period a year ago, primarily due
to increased revenues in the nuclear energy market. Revenues
generated in the life sciences market increased 37% compared to the
corresponding period a year ago, primarily on revenues from
PA. Transportation revenues increased 34% compared to a year
ago primarily on revenues earned by PA.
Year-to-date
Revenues for the six months ended
September 27, 2015 were 30% higher
than in the corresponding period a year ago, primarily reflecting
revenues earned by PA. PA revenues for the six months ended
September 27, 2015 were $135.4 million compared to $20.5 million for the six months ended
September 28, 2014. Excluding PA,
revenues increased $5.2 million, or
1% from the corresponding period a year ago. The increase in
revenues reflected foreign exchange rate changes which positively
impacted the translation of revenues earned by foreign-based
subsidiaries compared to the corresponding period a year ago,
primarily reflecting the weakening of the Canadian dollar relative
to the U.S. dollar.
By market, fiscal 2016 year-to-date revenues from consumer
products & electronics decreased 6%, primarily reflecting lower
activity in the consumer products market. Revenues generated in the
energy market increased 51% compared to the corresponding period a
year ago, primarily due to increased revenues in the nuclear energy
market. Revenues generated in the life sciences market
increased 36% compared to the corresponding period a year ago,
primarily on revenues earned by PA. Transportation revenues
increased 41% compared to a year ago primarily on revenues earned
by PA and higher Order Bookings during the first quarter compared
to a year ago.
Consolidated
Operating Results (In millions of dollars)
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Three
Months
Ended
September
27,
2015
|
Three
Months
Ended
September
28,
2014
|
Six Months
Ended
September 27,
2015
|
Six Months
Ended
September
28,
2014
|
|
|
|
|
|
Earnings from
operations
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$
|
24.4
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$
|
14.1
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$
|
41.9
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$
|
28.5
|
Amortization of
acquisition-related
intangible assets
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5.6
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5.8
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13.3
|
9.4
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Acquisition-related
transaction
costs
|
––
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7.1
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––
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10.1
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Restructuring
charges
|
1.7
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––
|
3.9
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––
|
Adjusted earnings
from operations1
|
$
|
31.7
|
$
|
27.0
|
$
|
59.1
|
$
|
48.0
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
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|
|
|
|
|
Three
Months
Ended
September
27,
2015
|
Three
Months
Ended
September
28,
2014
|
Six Months
Ended
September 27,
2015
|
Six Months
Ended
September
28,
2014
|
|
|
|
|
|
Earnings from
operations
|
$
|
24.4
|
$
|
14.1
|
$
|
41.9
|
$
|
28.5
|
Depreciation and
amortization
|
9.3
|
8.6
|
20.5
|
15.1
|
EBITDA1
|
$
|
33.7
|
$
|
22.7
|
$
|
62.4
|
$
|
43.6
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
Second Quarter
Fiscal 2016 second quarter earnings
from operations were $24.4 million
(9% operating margin) compared to $14.1
million (7% operating margin) in the second quarter of
fiscal 2015. Second quarter fiscal 2016 earnings from
operations included $1.7 million of
restructuring and severance costs and amortization expenses of
$5.6 million related to amortization
of identifiable intangible assets recorded on the acquisitions of
PA, IWK and sortimat. Excluding these costs, second quarter
fiscal 2016 adjusted earnings from operations were $31.7 million (12% margin), compared to adjusted
earnings from operations of $27.0
million (13% margin) a year ago. Higher adjusted earnings
from operations primarily reflected increased revenues.
Depreciation and amortization expense was $9.3 million in the second quarter of fiscal
2016, compared to $8.6 million a year
ago, primarily due to increased amortization expenses as a result
of the addition of identifiable intangible assets recorded on the
acquisition of PA in the second quarter of fiscal 2015.
EBITDA was $33.7 million (13%
EBITDA margin) in the second quarter of fiscal 2016 compared to
$22.7 million (11% EBITDA margin) in
the second quarter of fiscal 2015. Excluding restructuring and
severance costs, second quarter fiscal 2016 EBITDA was $35.4 million (13% EBITDA margin). Comparably,
excluding acquisition-related costs, second quarter fiscal 2015
EBITDA was $29.8 million (14% EBITDA
margin).
Year-to-date
For the six months ended September 27, 2015, earnings from operations were
$41.9 million (8% operating margin)
compared to $28.5 million (7%
operating margin) in the corresponding period a year ago. Earnings
from operations included $3.9 million
of restructuring and severance costs and amortization expenses of
$13.3 million related to amortization
of identifiable intangible assets recorded on the acquisitions of
PA, IWK, ATW and sortimat. Excluding these costs, adjusted earnings
from operations were $59.1 million
(11% operating margin), compared to adjusted earnings from
operations of $48.0 million (12%
operating margin) in the corresponding period a year ago.
Higher adjusted earnings from operations primarily reflected
increased revenues, lower employee incentive costs and other
discretionary spending reductions, which were partially offset by
higher cost of revenues due to some lower margin programs which
were bid and executed by the Company and certain programs where
costs exceeded budgets.
Depreciation and amortization expense was $20.5 million in the first six months of fiscal
2016 compared to $15.1 million a year
ago, primarily due to increased amortization expenses as a result
of the addition of identifiable intangible assets recorded on the
acquisition of PA in the second quarter of fiscal 2015.
Year to date fiscal 2016 EBITDA was $62.4
million (12% EBITDA margin) compared to $43.6 million (11% EBITDA margin) in the first
six months of fiscal 2015. Excluding restructuring and
severance costs, fiscal 2016 EBITDA was $66.3 million (13% EBITDA margin). Comparably,
excluding acquisition-related costs, fiscal 2015 year-to-date
EBITDA was $53.7 million (13% EBITDA
margin).
Order Bookings
Second quarter fiscal 2016 Order
Bookings were $230 million, a 6%
increase from the second quarter of fiscal 2015. Excluding
the impact of PA, Order Bookings decreased $34 million or 17% from the corresponding period
a year ago primarily reflecting the timing of customer decisions on
various larger opportunities. By customer market, lower Order
Bookings in life sciences and transportation markets were partially
offset by strength in consumer products and electronics.
Order Backlog
Continuity (In millions of dollars)
|
|
|
|
|
|
|
|
|
|
Three
Months
Ended
September
27,
2015
|
|
Three
Months
Ended
September
28,
2014
|
|
Six
Months
Ended
September
27,
2015
|
|
Six Months
Ended
September
28,
2014
|
Opening Order
Backlog
|
|
$
|
590
|
|
$
|
425
|
|
$
|
632
|
|
$
|
474
|
Revenues
|
|
(264)
|
|
(207)
|
|
(518)
|
|
(398)
|
Order
Bookings
|
|
230
|
|
216
|
|
452
|
|
376
|
Order Backlog
adjustments1
|
|
33
|
|
127
|
|
23
|
|
109
|
Total
|
|
$
|
589
|
|
$
|
561
|
|
$
|
589
|
|
$
|
561
|
1 Order
Backlog adjustments include foreign exchange adjustments,
cancellations and for the three and six months
ended September 27, 2015 incremental Order Backlog of $131 million
acquired with PA.
|
Order Backlog by
Industry (In millions of dollars)
|
|
|
|
|
|
|
|
|
|
As
at
|
|
|
September 27,
2015
|
|
September
28,
2014
|
Consumer products
& electronics
|
|
|
$
|
104
|
|
$
|
68
|
Energy
|
|
|
39
|
|
51
|
Life
sciences
|
|
|
244
|
|
237
|
Transportation
|
|
|
202
|
|
205
|
Total
|
|
|
$
|
589
|
|
$
|
561
|
At September 27, 2015, Order
Backlog was $589 million, 5% higher
than at September 28, 2014, primarily
reflecting foreign exchange rate changes.
Outlook
The global economic environment has continued
to show signs of volatility, and uncertainty remains. In
North America, U.S. economic
growth has improved, but remains slow, and Canada's economy remains weak. Economic growth
continues to decelerate in China
and other parts of Asia. In
Europe, markets remain weak, which
has the potential to negatively impact demand, particularly for the
Company's European operations, and may add to volatility in Order
Bookings. Overall, a prolonged or more significant downturn in an
economy where the Company operates could negatively impact Order
Bookings. Impacts on demand for the Company's products and services
may lag behind global macroeconomic trends due to the strategic
nature of the Company's programs to its customers and long lead
times on projects.
Many customers remain cautious in their approach to capital
investment; however, activity in life sciences and transportation
markets has remained strong. The Company has seen strength in
energy markets such as nuclear; however, opportunities are
irregular and the solar energy market remains weak. Activity in the
consumer products and electronics market has improved. Overall, the
funnel of opportunities has grown over the past year, particularly
with the addition of PA, and continues to be strong across all of
the Company's end customer markets.
The Company's sales organization continues to work to engage
customers on enterprise-type solutions. The Company expects that
this will provide ATS with more strategic relationships, increased
predictability, better program control and less sensitivity to
macroeconomic forces. This approach to market may cause variability
in Order Bookings from quarter to quarter and, as is already the
case, lengthen the performance period and revenue recognition for
certain customer programs. The Company expects its Order Backlog of
$589 million at the end of the second
quarter of fiscal 2016 to mitigate the impact of volatile Order
Bookings on revenues in the short term. Management expects that
approximately 40% to 45% of its Order Backlog would typically be
completed each quarter. In the third quarter of fiscal 2016,
management expects to operate at the higher end of this range.
Management's disciplined focus on program management, cost
reductions, standardization and quality is expected to put ATS in a
strong competitive position to capitalize on opportunities and
sustain performance in challenging market conditions. With the
addition of PA, the Company has undertaken a comprehensive review
of its facilities and global capacity. As a result of this review,
in the first quarter of fiscal 2016, the Company completed the
divestiture of its Swiss-based automation operations through a sale
to a third party. In the second quarter of fiscal 2016, the
Company initiated the closure of a US-based operation. Over the
first six months of the fiscal year, restructuring charges of
$3.9 million were incurred, with an
expected payback period of less than one year. Management expects
to continue to evaluate its global capacity and cost structure. The
planned sale of certain assets associated with these restructuring
activities may provide an offset to some of these costs, although
the timing of completing a potential sale is not known. Management
expects that the application of its ongoing efforts to improve ATS'
cost structure, business processes, leadership and supply chain
management will continue to have a positive impact on ATS
operations.
The Company seeks to continue to expand its position in the
global automation market organically and through acquisition. The
Company's solid foundation and strong cash flow generation
capability provide the flexibility to pursue its growth
strategy.
CONSOLIDATED
RESULTS FROM CONTINUING OPERATIONS
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
Three
Months
Ended
September
27,
2015
|
Three
Months
Ended
September
28,
2014
|
Six
Months
Ended
September 27,
2015
|
Six Months
Ended
September
28,
2014
|
Revenues
|
$
|
263.7
|
$
|
207.0
|
$
|
518.0
|
$
|
397.9
|
Cost of
revenues
|
197.2
|
150.8
|
390.5
|
287.8
|
Selling, general and
administrative
|
42.3
|
43.3
|
83.3
|
80.2
|
Stock-based
compensation
|
(0.2)
|
(1.2)
|
2.3
|
1.4
|
Earnings from
operations
|
$
|
24.4
|
$
|
14.1
|
$
|
41.9
|
$
|
28.5
|
Net finance
costs
|
$
|
7.4
|
$
|
2.3
|
$
|
11.8
|
$
|
3.2
|
Provision for income
taxes
|
4.2
|
4.4
|
7.5
|
8.9
|
Net income from
continuing operations
|
$
|
12.8
|
$
|
7.4
|
$
|
22.6
|
$
|
16.4
|
Income from
discontinued
|
|
|
|
|
|
|
|
operations, net of
tax
|
––
|
$
|
7.1
|
––
|
$
|
14.0
|
Net
income
|
$
|
12.8
|
$
|
14.5
|
$
|
22.6
|
$
|
30.4
|
Earnings per
share
|
|
|
|
|
Basic from continuing
operations
|
$
|
0.14
|
$
|
0.08
|
$
|
0.25
|
$
|
0.18
|
Basic from
discontinued operations
|
––
|
0.08
|
––
|
0.15
|
|
$
|
0.14
|
$
|
0.16
|
$
|
0.25
|
$
|
0.33
|
Diluted from
continuing operations
|
$
|
0.14
|
$
|
0.08
|
$
|
0.25
|
$
|
0.18
|
Diluted from
discontinued operations
|
––
|
0.08
|
––
|
0.15
|
|
$
|
0.14
|
$
|
0.16
|
$
|
0.25
|
$
|
0.33
|
Revenues. At $263.7
million, consolidated revenues from continuing operations
for the second quarter of fiscal 2016 were $56.7 million or 27% higher than in the
corresponding period a year ago, primarily on incremental PA
revenue. At $518.0 million,
year-to-date revenues were $120.1
million or 30% higher than in the corresponding period a
year ago, primarily on incremental PA revenues. See "Overview –
Operating Results from Continuing Operations."
Cost of revenues. At $197.2
million, second quarter fiscal 2016 cost of revenues
increased over the corresponding period a year ago by $46.4 million or 31% primarily on higher
revenues. Year-to-date cost of revenues of $390.5 million increased by $102.7 million or 36%, primarily on higher
revenues generated compared to the corresponding period.
At 25%, gross margin in the second quarter of fiscal 2016
decreased 2% from the corresponding period a year ago. Year-to-date
gross margin of 25% decreased 3% from the corresponding period a
year ago. Lower gross margins primarily reflected the addition of
PA, which has typically operated with a lower gross margin than
ATS. For PA, higher cost of sales is partially offset by lower
selling, general and administrative costs relative to revenues as
compared to ATS. In addition, lower gross margins reflected some
lower margin programs which were bid and are being executed by the
Company, and certain programs where costs have exceeded
budgets.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the second quarter of
fiscal 2016 were $42.3 million. This
included $1.7 million of
restructuring and severance costs. Excluding these costs, SG&A
expenses were $40.6 million, 12%
higher than the $36.2 million
incurred in the corresponding period last year, which was exclusive
of $7.1 million of
acquisition-related costs. Higher SG&A costs primarily
reflected the addition of PA SG&A expenses and foreign exchange
rate changes which increased the translation of reported SG&A
expenses of foreign-based subsidiaries, primarily reflecting the
weakening of the Canadian dollar relative to the Euro and U.S.
dollar.
For the six months ended September 27,
2015, SG&A expenses were $83.3
million, which included $3.9
million of restructuring and severance costs. Normalized for
these costs, year-to-date SG&A spending was $79.4 million, $9.3
million or 13% higher compared to the same period a year
ago. Higher SG&A costs primarily reflected the addition
of PA SG&A expenses and foreign exchange rate changes which
increased the translation of reported SG&A expenses of
foreign-based subsidiaries, primarily reflecting the weakening of
the Canadian dollar relative to the Euro and U.S. dollar. These
increases in SG&A expenses were partially offset by lower
employee incentive costs and discretionary spending reductions,
which are not expected to continue going forward.
Stock-based compensation. Stock-based compensation
recovery amounted to $0.2 million in
the second quarter of fiscal 2016 compared to $1.2 million of stock-based compensation recovery
in the corresponding period a year ago. For the six month period
ended September 27, 2015, stock-based
compensation expense increased to $2.3
million from $1.4 million a
year earlier. The increase in stock-based compensation costs
is attributable to higher expenses from stock options and the
revaluation of deferred stock units, share appreciation rights and
restricted share units.
Earnings from operations. For the three and six
month periods ended September 27,
2015, consolidated earnings from operations were
$24.4 million (9% operating margin)
and $41.9 million (8% operating
margin) respectively, compared to earnings from operations of
$14.1 million and $28.5 million in the corresponding periods a year
ago (operating margins of 7% in both periods). See "Overview
– Operating Results from Continuing Operations."
Net finance costs. Net finance costs were
$7.4 million in the second quarter of
fiscal 2016, $5.1 million higher than
the corresponding period a year ago. For the six months ended
September 27, 2015, finance costs
were $11.8 million compared to
$3.2 million in the corresponding
period a year ago. The increases reflected greater usage of the
Company's primary credit facility and interest on the Company's
Senior Notes, which were issued in June
2015 (see "Liquidity, Cash Flow and Financial
Resources"). The increased usage was used to finance the
acquisition of PA and to support letters of credit.
Income tax provision. For the three and six months ended
September 27, 2015, the Company's
effective income tax rate of 25%, differed from the combined
Canadian basic federal and provincial income tax rate of 27%
primarily as a result of income earned in certain jurisdictions
with different statutory tax rates. The Company expects its
effective tax rate to approximate the combined Canadian statutory
tax rate.
Net income from continuing operations. Fiscal 2016 second
quarter net income from continuing operations was $12.8 million (14
cents per share basic and diluted) compared to $7.4 million (8
cents per share basic and diluted) for the second quarter of
fiscal 2015. Adjusted basic earnings per share from
continuing operations were 19 cents
in the second quarter of fiscal 2016 compared to 19 cents for the second quarter of fiscal
2015. See "Reconciliation of Non-IFRS Measures to IFRS
Measures."
Net income from continuing operations in the six months ended
September 27, 2015, was $22.6 million (25
cents per share basic and diluted) compared to $16.4 million (18
cents per share basic and diluted) for the corresponding
period a year ago. Adjusted basic earnings per share from
continuing operations were 37 cents
in the six months ended September 27,
2015 compared to 34 cents in
the corresponding period a year ago. See "Reconciliation of
Non-IFRS Measures to IFRS Measures."
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income from continuing
operations):
|
|
|
Three Months
Ended
September 27,
2015
|
Three Months
Ended
September 28,
2014
|
EBITDA
|
|
|
$
|
33.7
|
$
|
22.7
|
Less: depreciation
and amortization expense
|
|
|
9.3
|
8.6
|
Earnings from
operations
|
|
|
$
|
24.4
|
$
|
14.1
|
Less: net finance
costs
|
|
|
7.4
|
2.3
|
Provision for income
taxes
|
|
|
4.2
|
4.4
|
Net income from
continuing operations
|
|
|
$
|
12.8
|
$
|
7.4
|
|
|
|
Six Months
Ended
September 27,
2015
|
Six Months
Ended
September 28,
2014
|
EBITDA
|
|
|
$
|
62.4
|
$
|
43.6
|
Less: depreciation
and amortization expense
|
|
|
20.5
|
15.1
|
Earnings from
operations
|
|
|
$
|
41.9
|
$
|
28.5
|
Less: net finance
costs
|
|
|
11.8
|
3.2
|
Provision for income
taxes
|
|
|
7.5
|
8.9
|
Net income from
continuing operations
|
|
|
$
|
22.6
|
$
|
16.4
|
The following table reconciles adjusted earnings from operations
and adjusted basic earnings per share from continuing operations to
the most directly comparable IFRS measure (net income from
continuing operations):
|
Three Months
Ended
September 27, 2015
|
Three Months
Ended
September 28, 2014
|
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
Earnings from
operations
|
$
|
24.4
|
$
|
─
|
$
|
24.4
|
$
|
14.1
|
$
|
─
|
$
|
14.1
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
─
|
|
5.6
|
|
5.6
|
|
─
|
|
5.8
|
|
5.8
|
Acquisition-related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
transaction
costs
|
|
─
|
|
─
|
|
─
|
|
─
|
|
7.1
|
|
7.1
|
Restructuring
charges
|
|
─
|
|
1.7
|
|
1.7
|
|
─
|
|
─
|
|
─
|
|
$
|
24.4
|
$
|
7.3
|
$
|
31.7
|
$
|
14.1
|
$
|
12.9
|
$
|
27.0
|
Less: net finance
costs
|
$
|
7.4
|
$
|
─
|
$
|
7.4
|
$
|
2.3
|
$
|
─
|
$
|
2.3
|
Income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes
|
$
|
17.0
|
$
|
7.3
|
$
|
24.3
|
$
|
11.8
|
$
|
12.9
|
$
|
24.7
|
Provision for income
taxes
|
$
|
4.2
|
$
|
─
|
$
|
4.2
|
$
|
4.4
|
$
|
─
|
$
|
4.4
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes1
|
|
─
|
|
2.3
|
|
2.3
|
|
─
|
|
2.9
|
|
2.9
|
|
$
|
4.2
|
$
|
2.3
|
$
|
6.5
|
$
|
4.4
|
$
|
2.9
|
$
|
7.3
|
Net income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
|
12.8
|
$
|
5.0
|
$
|
17.8
|
$
|
7.4
|
$
|
10.0
|
$
|
17.4
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.14
|
$
|
0.05
|
$
|
0.19
|
$
|
0.08
|
$
|
0.11
|
$
|
0.19
|
1
Adjustments to provision for income taxes relate to the income tax
effects of adjustment items that are excluded for
the purposes of calculating non-IFRS based adjusted net income from
continuing operations.
|
|
Six Months
Ended September 27, 2015
|
Six
Months Ended
September 28, 2014
|
|
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
Earnings from
operations
|
$
|
41.9
|
$
|
─
|
$
|
41.9
|
$
|
28.5
|
$
|
─
|
$
|
28.5
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
─
|
|
13.3
|
|
13.3
|
|
─
|
|
9.4
|
|
9.4
|
Acquisition-related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
transaction
costs
|
|
─
|
|
─
|
|
─
|
|
─
|
|
10.1
|
|
10.1
|
Restructuring
charges
|
|
─
|
|
3.9
|
|
3.9
|
|
─
|
|
─
|
|
─
|
|
$
|
41.9
|
$
|
17.2
|
$
|
59.1
|
$
|
28.5
|
$
|
19.5
|
$
|
48.0
|
Less: net finance
costs
|
$
|
11.8
|
$
|
─
|
$
|
11.8
|
$
|
3.2
|
$
|
─
|
$
|
3.2
|
Income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes
|
$
|
30.1
|
$
|
17.2
|
$
|
47.3
|
$
|
25.3
|
$
|
19.5
|
$
|
44.8
|
Provision for income
taxes
|
$
|
7.5
|
$
|
─
|
$
|
7.5
|
$
|
8.9
|
$
|
─
|
$
|
8.9
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes1
|
|
─
|
|
5.3
|
|
5.3
|
|
─
|
|
4.6
|
|
4.6
|
|
$
|
7.5
|
$
|
5.3
|
$
|
12.8
|
$
|
8.9
|
$
|
4.6
|
$
|
13.5
|
Net income from
continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
|
22.6
|
$
|
11.9
|
$
|
34.5
|
$
|
16.4
|
$
|
14.9
|
$
|
31.3
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.25
|
$
|
0.12
|
$
|
0.37
|
$
|
0.18
|
$
|
0.16
|
$
|
0.34
|
1
Adjustments to provision for income taxes relate to the income tax
effects of adjustment items that are excluded for
the purposes of calculating non-IFRS based adjusted net income from
continuing operations.
|
Liquidity, Cash
Flow and Financial Resources (In millions of dollars,
except ratios)
|
|
|
|
|
|
|
|
As
at
|
|
September
27,
2015
|
March 31,
2015
|
Cash and cash
equivalents
|
|
$
|
97.1
|
$
|
106.1
|
Debt-to-equity
ratio
|
|
0.58:1
|
0.54:1
|
|
|
|
|
For the three months
ended
|
|
September
27,
2015
|
September
28,
2014
|
Cash flows provided
by (used in) operating activities from continuing
operations
|
|
$
|
(20.3)
|
$
|
17.4
|
At September 27, 2015, the Company
had cash and cash equivalents of $97.1
million compared to $106.1
million at March 31, 2015. At
September 28, 2015, the Company's
debt-to-total equity ratio was 0.58:1.
At September 27, 2015, the Company
had $648 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $2.3 million available under letter of credit
facilities.
In the three months ended September 27,
2015, cash flows used in operating activities from
continuing operations were $20.3
million ($17.4 million
provided by operating activities in the corresponding period a year
ago). In the six months ended September 27,
2015, cash flows used in operating activities from
continuing operations were $29.5
million ($6.7 million provided
by operating activities in the corresponding period a year ago).
The decrease in operating cash flows related primarily to the
timing of investments in non-cash working capital in certain
customer programs.
In the second quarter of fiscal 2016, the Company's investment
in non-cash working capital increased by $41.8 million from June
28, 2015. On a year-to-date basis, investment in
non-cash working capital increased by $68.6
million. Accounts receivable increased 30% or
$43.5 million compared to
March 31, 2015 due to timing of
billings on certain customer contracts. Net contracts in progress
increased 19% or $22.0 million
compared to March 31, 2015. The
Company actively manages its accounts receivable and net contracts
in progress balances through billing terms on long-term contracts,
collection efforts and supplier payment terms. Inventories
increased 13% or $5.6 million due to
the timing of inventory purchases. Deposits and prepaid assets
increased 25% or $3.6 million
compared to March 31, 2015 due to the
timing of program execution. Accounts payable and accrued
liabilities increased 2% or $4.0
million compared to March 31,
2015.
Capital expenditures totalled $5.4
million in the first half of fiscal 2016, primarily related
to computer hardware.
Intangible assets expenditures totalled $2.8 million in the first half of fiscal 2016,
primarily related to computer software and internal development
projects.
During the first quarter of fiscal 2016, the Company completed a
private placement of US$250 million
aggregate principal amount of senior notes (the "Senior Notes").
Transaction fees of $7.2 million were
deferred and will be amortized over the term of the Senior Notes.
The Senior Notes are unsecured, were issued at par, bear interest
at a rate of 6.50% per annum and mature on June 15, 2023. ATS used the majority of net
proceeds from the Senior Notes to repay amounts outstanding under
its senior secured credit facility, with the balance to be used for
general corporate purposes. The Company may redeem the Senior
Notes, in whole at any time or in part from time to time, at
specified redemption prices and subject to certain conditions
required by the Senior Notes. If the Company experiences a change
of control, the Company may be required to repurchase the Senior
Notes, in whole or in part, at a purchase price equal to 101% of
the aggregate principal amount of the Senior Notes, plus accrued
and unpaid interest, if any, to, but not including, the redemption
date. The Senior Notes contain customary covenants that restrict,
subject to certain exceptions and thresholds, some of the
activities of the Company and its subsidiaries, including the
Company's ability to dispose of assets, incur additional debt, pay
dividends, create liens, make investments, and engage in specified
transactions with affiliates. Subject to certain exceptions,
the Notes will be guaranteed by each of the subsidiaries of the
Company that is a borrower or has guaranteed obligations under the
Credit Facility.
The Company's senior secured credit facility (the "Credit
Facility") provides a four-year committed revolving credit facility
of $750.0 million. The Credit
Facility is secured by (i) the Company's assets, including real
estate; (ii) assets, including certain real estate, of certain of
the Company's North American subsidiaries; and (iii) a pledge of
shares of certain of the Company's non-North American subsidiaries.
Certain of the Company's subsidiaries also provide guarantees under
the Credit Facility. At September 27,
2015, the Company had utilized $102.3
million under the Credit Facility by way of letters of
credit (March 31, 2015 - $290.0 million classified as long-term debt and
$85.0 million by way of letters of
credit). The Credit Facility matures on August 29, 2018.
The Credit Facility is available in Canadian dollars by way of
prime rate advances and/or bankers' acceptances, in U.S. dollars by
way of base rate advances and/or LIBOR advances, in Swiss francs,
Euros and British pounds sterling by way of LIBOR advances and by
way of letters of credit for certain purposes in Canadian dollars,
U.S. dollars and Euros. The interest rates applicable to the
Credit Facility are determined based on a debt to EBITDA ratio as
defined in the Credit Facility. 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 a margin ranging
from 0.45% to 2.00%. For bankers' acceptances and LIBOR
advances, the interest rate is equal to the bankers' acceptance fee
or the LIBOR, respectively, plus a margin that varies from 1.45% to
3.00%. The Company pays a fee for usage of financial letters of
credit which ranges from 1.45% to 3.00% and a fee for usage of
non-financial letters of credit which ranges from 0.97% to 2.00%.
The Company pays a standby fee on the unadvanced portions of the
amounts available for advance or draw-down under the Credit
Facility at rates ranging from 0.29% to 0.68%.
The Credit Facility is subject to a debt to EBITDA test and an
interest coverage test. Under the terms of the Credit
Facility, the Company is restricted from encumbering any assets
with certain permitted exceptions. The Credit Facility also
limits advances to subsidiaries and partially restricts the Company
from repurchasing its common shares and paying dividends. At
September 27, 2015, all of the
covenants were met.
The Company has additional credit facilities available of
$8.7 million (1.6 million Euro, 200.0
million Indian Rupees, 60.3 million
Thai Baht and 0.7 million Czech Koruna). The total
amount outstanding on these facilities at September 27, 2015 was $8.6 million, of which $2.2 million was classified as bank indebtedness
(March 31, 2015 - $1.7 million) and $6.4
million was classified as long-term debt (March 31, 2015 - $4.9
million). The interest rates applicable to the credit
facilities range from 1.66% to 10.25% per annum. A portion of the
long-term debt is secured by certain assets of the Company.
The 200.0 million Indian Rupees
credit facilities are secured by letters of credit under the Credit
Facility.
Over the long-term, the Company generally expects to continue
increasing its investment in non-cash working capital to support
the growth of its business, with fluctuations on a
quarter-over-quarter basis. In the near term, the Company is
seeking to reduce its investment in non-cash working capital back
to a level below 15% of annualized revenues. 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 non-cash 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. The Company
expects to continue to use leverage to support its growth
strategy.
Contractual Obligations
(In millions of dollars)
The minimum operating lease payments (related primarily to
facilities and equipment) and purchase obligations are as
follows:
|
|
|
|
|
Operating
leases
|
|
|
|
Purchase
obligations
|
Less than one
year
|
|
|
|
$
|
10.1
|
|
|
$
|
68.8
|
One – two
years
|
|
|
|
|
8.3
|
|
|
|
1.0
|
Two – three
years
|
|
|
|
|
5.7
|
|
|
|
0.2
|
Three – four
years
|
|
|
|
|
4.8
|
|
|
|
0.1
|
Four – five
years
|
|
|
|
|
4.6
|
|
|
|
0.1
|
Due in over five
years
|
|
|
|
|
5.3
|
|
|
|
––
|
|
|
|
|
$
|
38.8
|
|
|
$
|
70.2
|
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 provides bank guarantees for
post-retirement obligations and may provide bank guarantees as
security on equipment under lease and on order. At
September 27, 2015, the total value
of outstanding bank guarantees was approximately $134.7 million (March 31,
2015 - $118.0 million).
In the normal course of operations, the Company is party to a
number of lawsuits, claims and contingencies. Although it is
possible that liabilities may be incurred in instances for which no
accruals have been made, the Company does not believe that the
ultimate outcome of these matters will have a material impact on
its consolidated financial position.
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 10 of the
interim condensed 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 market or
geographic region represents significant credit risk. Credit risk
concentration with respect to trade receivables is mitigated as the
Company primarily serves large, multinational customers and through
insurance.
During the first six months of fiscal 2016, 901,917 stock
options were exercised. At November 3,
2015 the total number of shares outstanding was
92,541,582 and there were 4,040,366 stock options
outstanding to acquire common shares of the Company.
RELATED-PARTY TRANSACTIONS
The Company has entered
into an agreement with a shareholder, Mason Capital Management, LLC
("Mason Capital"), pursuant to which Mason Capital has agreed to
provide ATS with ongoing strategic and capital markets advisory
services for an annual fee of U.S. $0.5
million. As part of the agreement, members of the
Company's board of directors who are associated with Mason Capital
have waived any fees to which they may have otherwise been entitled
for serving as members of the board of directors or as members of
any committee of the board of directors.
There were no other significant related-party transactions in
the first half of fiscal 2016.
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 and through its
investments in its foreign-based subsidiaries.
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 10 to the interim
condensed consolidated financial statements for details on the
derivative financial instruments outstanding at September 27, 2015.
In addition, from time to time, the Company may hedge the
foreign exchange risk arising from intercompany loans, net
investments in foreign-based subsidiaries and committed
acquisitions through the use of forward foreign exchange contracts
or other non-derivative financial instruments. The Company uses
hedging as a risk management tool, not to speculate.
Period average exchange rates in CDN$
|
|
Three months
ended
|
|
|
|
Six months
ended
|
|
|
|
|
September
27,
2015
|
|
September
28,2014
|
|
% change
|
|
September
27,
2015
|
|
September
28, 2014
|
|
% change
|
U.S.
Dollar
|
|
1.3071
|
|
1.0888
|
|
20.0%
|
|
1.2679
|
|
1.0894
|
|
16.4%
|
Euro
|
|
1.4547
|
|
1.4424
|
|
0.9%
|
|
1.4073
|
|
1.4686
|
|
(4.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
QUARTERLY RESULTS
|
|
|
|
|
|
(In millions of
dollars, except
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
per share
amounts)
|
2016
|
2016
|
2015
|
2015
|
2015
|
2015
|
2014
|
2014
|
|
|
|
|
|
|
|
|
|
Revenues from
continuing
|
|
|
|
|
|
|
|
|
operations
|
$
|
263.7
|
$
|
254.3
|
$
|
289.4
|
$
|
248.8
|
$
|
207.0
|
$
|
190.9
|
$
|
200.7
|
$
|
178.0
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
24.4
|
$
|
17.5
|
$
|
22.6
|
$
|
15.9
|
$
|
14.1
|
$
|
14.4
|
$
|
17.2
|
$
|
16.7
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from
|
|
|
|
|
|
|
|
|
operations
|
$
|
31.7
|
$
|
27.4
|
$
|
34.7
|
$
|
27.2
|
$
|
27.0
|
$
|
21.1
|
$
|
22.2
|
$
|
20.5
|
|
|
|
|
|
|
|
|
|
Income from
continuing
|
|
|
|
|
|
|
|
|
operations
|
$
|
12.8
|
$
|
9.8
|
$
|
13.9
|
$
|
8.6
|
$
|
7.4
|
$
|
9.0
|
$
|
11.7
|
$
|
18.8
|
|
|
|
|
|
|
|
|
|
Income (loss)
from
|
|
|
|
|
|
|
|
|
discontinued
operations
|
$
|
―
|
$
|
―
|
$
|
2.2
|
$
|
(0.0)
|
$
|
7.1
|
$
|
6.9
|
$
|
(0.4)
|
$
|
(0.3)
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
12.8
|
$
|
9.8
|
$
|
16.1
|
$
|
8.6
|
$
|
14.5
|
$
|
15.9
|
$
|
11.3
|
$
|
18.5
|
Basic earnings per
share from
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
|
0.14
|
$
|
0.11
|
$
|
0.15
|
$
|
0.09
|
$
|
0.08
|
$
|
0.10
|
$
|
0.13
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per
|
|
|
|
|
|
|
|
|
share from
continuing
|
|
|
|
|
|
|
|
|
operations
|
$
|
0.19
|
$
|
0.18
|
$
|
0.24
|
$
|
0.18
|
$
|
0.19
|
$
|
0.15
|
$
|
0.17
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
|
|
|
|
|
|
|
|
from discontinued
operations
|
$
|
―
|
$
|
―
|
$
|
0.03
|
$
|
(0.00)
|
$
|
0.08
|
$
|
0.08
|
$
|
(0.01)
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.14
|
$
|
0.11
|
$
|
0.18
|
$
|
0.09
|
$
|
0.16
|
$
|
0.18
|
$
|
0.12
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
from continuing
operations
|
$
|
0.14
|
$
|
0.11
|
$
|
0.15
|
$
|
0.09
|
$
|
0.08
|
$
|
0.10
|
$
|
0.13
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per
|
|
|
|
|
|
|
|
|
share from
discontinued
|
|
|
|
|
|
|
|
|
operations
|
$
|
―
|
$
|
―
|
$
|
0.03
|
$
|
(0.00)
|
$
|
0.08
|
$
|
0.07
|
$
|
(0.01)
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.14
|
$
|
0.11
|
$
|
0.18
|
$
|
0.09
|
$
|
0.16
|
$
|
0.17
|
$
|
0.12
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
Order
Bookings
|
$
|
230.0
|
$
|
222.0
|
$
|
317.0
|
$
|
287.0
|
$
|
216.0
|
$
|
160.0
|
$
|
197.0
|
$
|
237.0
|
|
|
|
|
|
|
|
|
|
Order
Backlog
|
$
|
589.0
|
$
|
590.0
|
$
|
632.0
|
$
|
602.0
|
$
|
561.0
|
$
|
425.0
|
$
|
474.0
|
$
|
467.0
|
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 Order Bookings, revenues and
earnings from operations due to summer plant shutdowns by its
customers. Operating performance quarter to quarter may also be
affected by the timing of revenue recognition on large programs in
Order Backlog, which is impacted by such factors as customer
delivery schedules, the timing of third-party content and by the
timing of acquisitions.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The
preparation of the Company's consolidated financial statements
requires management to make estimates, judgments and assumptions
that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets and
liabilities at the end of the reporting period. Uncertainty about
these estimates, judgments and assumptions could result in outcomes
that require a material adjustment to the carrying amount of the
asset or liability affected in future periods.
The Company based its assumptions on information available when
the consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control
of the Company. Such changes are reflected in the estimates as they
occur. There have been no material changes to the critical
accounting estimates as described in the Company's fiscal 2015
MD&A.
ACCOUNTING STANDARDS CHANGE
IAS 19 – Employee
Benefits
Effective April 1,
2015, the Company adopted the amendments to IAS 19 –
Employee Benefits. The amendments require an
entity to consider contributions from employees or third parties
when accounting for defined benefit plans. When the contributions
are linked to service, they should be attributed to periods of
service as a negative benefit. These amendments clarify that, if
the amount of the contributions is independent of the number of
years of service, an entity is permitted to recognize such
contributions as a reduction in the service cost in the period in
which the service is rendered, instead of allocating the
contributions to the periods of service.
The application of the amendments to IAS 19 had no impact on the
interim condensed consolidated financial statements of the
Company.
CONTROLS AND PROCEDURES
The Chief Executive Officer
("CEO") and the Chief Financial Officer ("CFO") are responsible for
establishing and maintaining disclosure controls and procedures and
internal controls over financial reporting for the Company.
The control framework used in the design of disclosure controls and
procedures and internal control over financial reporting is the
"Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission
("COSO").
Management, including the CEO and CFO, does not expect that the
Company's disclosure controls or internal controls over financial
reporting will prevent or detect all errors and all fraud or will
be effective under all potential future conditions. A control
system is subject to inherent limitations and, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the control system's objectives will be met.
During the three and six months ended September 27, 2015, there have been no changes in
the design of 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.
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 may 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' 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 next phase of the
Company's strategy: grow, expand, and scale; potential impact of
general economic environment, including impact on demand and Order
Bookings; impacts on demand for Company's products potentially
lagging global macroeconomic trends; activity in the market
segments that the Company serves; the engagement with customers on
enterprise solutions providing ATS with more strategic
relationships, increased predictability, better program control and
less sensitivity to macroeconomic forces; the expected impact of
the sales organization's approach to market on Order Bookings,
performance period, and timing of revenue recognition; the
Company's Order Backlog mitigating the impact of volatility in
Order Bookings; the rate of completion of Order Backlog and
expectations in that regard for the third quarter of fiscal 2016;
management's expectations in relation to the impact of management
focus and strategic initiatives on ATS operations; expectation to
continue to evaluate measures to re-balance global capacity and
improve cost structure and expected payback period of measures
previously taken; impact of planned sale of certain assets; the
Company's strategy to expand organically and through acquisition;
the Company's expectations with respect to employee incentive costs
and discretionary spending; the Company's expectation with respect
to effective tax rate; Company's expectation to continue to
increase its investment in working capital; expectation in relation
to meeting funding requirements for investments; and expectation to
use increased leverage to support growth strategy. The risks
and uncertainties that may affect forward-looking statements
include, among others: impact of the global economy; 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; failure or delays associated with new customer
programs; potential for greater negative impact associated with any
non-performance related to large enterprise programs; variations in
the amount of Order Backlog completed in any given quarter; in the
third quarter of 2016, completion of an amount of Order Backlog
other than as expected; that customers are more difficult to engage
than expected; that strategic initiatives are delayed, not
completed, or do not have intended positive impact; that measures
to re-balance global capacity and improve cost structure are
delayed or that charges are greater than expected and/or that the
payback is not realized as quickly as anticipated; that proceeds
from planned sale of assets is other than expected; inability to
successfully expand organically or through acquisition, due to an
inability to grow expertise, personnel, and/or facilities at
required rates or to identify, negotiate and conclude one or more
acquisitions; or to raise, through debt or equity, or otherwise
have available, required capital; that acquisitions made are not
integrated as quickly or effectively as planned or expected and, as
a result, anticipated benefits and synergies are not realized; that
the effective tax rate is other than expected, due to reasons
including income spread among jurisdictions being other than
anticipated; that one or more customers, or other entities 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'
filings with Canadian provincial securities
regulators. Forward-looking statements are based on
management's current plans, estimates, projections, beliefs and
opinions, and other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Financial Position (in
thousands of Canadian dollars - unaudited)
|
|
|
|
|
As
at
|
Note
|
September
27 2015
|
March 31
2015
|
|
|
|
|
ASSETS
|
12
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
$
|
97,105
|
$
|
106,052
|
Accounts
receivable
|
|
188,844
|
145,342
|
Costs and earnings in
excess of billings
|
|
|
|
|
on contracts in
progress
|
6
|
223,508
|
192,813
|
Inventories
|
6
|
47,705
|
42,079
|
Deposits, prepaids
and other assets
|
7
|
18,376
|
14,731
|
|
|
575,538
|
501,017
|
Assets held for
sale
|
5
|
––
|
4,221
|
|
|
575,538
|
505,238
|
Non-current
assets
|
|
|
|
Property, plant and
equipment
|
8
|
88,028
|
83,901
|
Investment
property
|
|
4,252
|
3,880
|
Goodwill
|
|
437,204
|
405,881
|
Intangible
assets
|
9
|
190,282
|
183,610
|
Deferred income tax
assets
|
|
2,767
|
5,057
|
Investment tax credit
receivable
|
|
39,446
|
33,107
|
|
|
761,979
|
715,436
|
Total
assets
|
|
$
|
1,337,517
|
$
|
1,220,674
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Bank
indebtedness
|
12
|
$
|
2,218
|
$
|
1,731
|
Accounts payable and
accrued liabilities
|
|
204,899
|
200,871
|
Provisions
|
11
|
12,202
|
10,419
|
Billings in excess of
costs and earnings
|
|
|
|
|
on contracts in
progress
|
6
|
84,706
|
76,031
|
Current portion of
long-term debt
|
12
|
4,371
|
3,372
|
|
|
308,396
|
292,424
|
Liabilities directly
associated with assets held for sale
|
5
|
––
|
5,717
|
|
|
308,396
|
298,141
|
Non-current
liabilities
|
|
|
|
Employee
benefits
|
|
26,794
|
24,777
|
Long-term
debt
|
12
|
323,311
|
286,154
|
Deferred income tax
liabilities
|
|
39,831
|
40,870
|
|
|
389,936
|
351,801
|
Total
liabilities
|
|
$
|
698,332
|
$
|
649,942
|
|
|
|
|
Commitments and
Contingencies
|
12, 16
|
|
|
|
|
|
|
EQUITY
|
|
|
|
Share
capital
|
13
|
$
|
528,415
|
$
|
519,118
|
Contributed
surplus
|
|
13,522
|
14,420
|
Accumulated other
comprehensive income
|
|
70,822
|
33,434
|
Retained
earnings
|
|
26,240
|
3,590
|
Equity attributable
to shareholders
|
|
638,999
|
570,562
|
Non-controlling
interests
|
|
186
|
170
|
Total
equity
|
|
639,185
|
570,732
|
Total liabilities
and equity
|
|
$
|
1,337,517
|
$
|
1,220,674
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Interim Consolidated Statements of
Income (in thousands of Canadian dollars, except per share
amounts - unaudited)
|
|
|
|
|
|
|
Three months
ended
|
Six months
ended
|
|
Note
|
September 27
2015
|
September 28
2014
|
September 27
2015
|
September 28
2014
|
Revenues
|
|
|
|
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
|
158,984
|
$
|
156,695
|
$
|
310,434
|
$
|
317,885
|
|
Sale of
goods
|
|
|
20,061
|
|
12,203
|
|
40,450
|
|
26,616
|
|
Services
rendered
|
|
|
84,663
|
|
38,132
|
|
167,088
|
|
53,408
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
263,708
|
|
207,030
|
|
517,972
|
|
397,909
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
197,200
|
|
150,750
|
|
390,501
|
287,822
|
|
Selling, general and
administrative
|
|
|
42,300
|
|
43,316
|
|
83,251
|
80,253
|
|
Stock-based
compensation
|
15
|
|
(190)
|
|
(1,157)
|
|
2,354
|
|
1,357
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
|
24,398
|
|
14,121
|
|
41,866
|
|
28,477
|
|
|
|
|
|
|
|
|
|
Net finance
costs
|
18
|
|
7,424
|
|
2,279
|
|
11,770
|
|
3,157
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
|
|
|
|
|
|
|
|
before income
taxes
|
|
|
16,974
|
|
11,842
|
|
30,096
|
|
25,320
|
Income tax
expense
|
14
|
|
4,156
|
|
4,430
|
|
7,430
|
|
8,926
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
12,818
|
|
7,412
|
|
22,666
|
|
16,394
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
|
––
|
|
7,070
|
|
––
|
|
13,983
|
Net
income
|
$
|
12,818
|
$
|
14,482
|
$
|
22,666
|
$
|
30,377
|
|
|
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
|
Shareholders
|
$
|
12,811
|
$
|
14,463
|
$
|
22,650
|
$
|
30,321
|
Non-controlling
interests
|
|
7
|
|
19
|
|
16
|
|
56
|
|
$
|
12,818
|
$
|
14,482
|
$
|
22,666
|
$
|
30,377
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
attributable to
shareholders
|
19
|
|
|
|
|
|
|
|
|
Basic – from
continuing operations
|
$
|
0.14
|
$
|
0.08
|
$
|
0.25
|
$
|
0.18
|
Basic – from
discontinued operations
|
|
––
|
|
0.08
|
|
––
|
|
0.15
|
|
$
|
0.14
|
$
|
0.16
|
$
|
0.25
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
attributable to
shareholders
|
19
|
|
|
|
|
|
|
|
|
Diluted – from
continuing operations
|
$
|
0.14
|
$
|
0.08
|
$
|
0.25
|
$
|
0.18
|
Diluted – from
discontinued operations
|
|
––
|
|
0.08
|
|
––
|
|
0.15
|
|
$
|
0.14
|
$
|
0.16
|
$
|
0.25
|
$
|
0.33
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Interim Consolidated Statements of
Comprehensive Income (in thousands of Canadian dollars -
unaudited)
|
|
|
|
|
|
|
Three months
ended
|
Six months
ended
|
|
September 27
2015
|
September 28
2014
|
September 27
2015
|
September 28
2014
|
Net
income
|
$
|
12,818
|
$
|
14,482
|
$
|
22,666
|
$
|
30,377
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment
(net of income
taxes of $nil)
|
|
41,451
|
|
(2,890)
|
|
36,775
|
|
(18,122)
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss on derivative
financial
instruments designated as
|
|
|
|
|
|
|
|
|
|
cash flow
hedges
|
|
(1,544)
|
|
(1,706)
|
|
(963)
|
|
(1,054)
|
|
Tax impact
|
|
389
|
|
427
|
|
227
|
|
266
|
|
|
|
|
|
|
|
|
|
|
Loss transferred to net income
for
derivatives designated as
|
|
|
|
|
|
|
|
|
|
cash flow
hedges
|
|
660
|
|
158
|
|
1,801
|
|
520
|
|
Tax impact
|
|
(160)
|
|
(40)
|
|
(452)
|
|
(132)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
40,796
|
|
(4,051)
|
|
37,388
|
|
(18,522)
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
53,614
|
$
|
10,431
|
$
|
60,054
|
$
|
11,855
|
|
|
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
|
Shareholders
|
$
|
53,607
|
$
|
10,412
|
$
|
60,038
|
$
|
11,799
|
Non-controlling
interests
|
|
7
|
|
19
|
|
16
|
|
56
|
|
$
|
53,614
|
$
|
10,431
|
$
|
60,054
|
$
|
11,855
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Changes in Equity (in
thousands of Canadian dollars - unaudited)
|
|
Six months ended
September 27, 2015
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Retained
earnings
|
Currency
translation
adjustments
|
Cash flow
hedges
|
Total
accumulated
other
comprehensive
income
|
Non-
controlling
interests
|
Total
equity
|
Balance, at March
31, 2015
|
$
|
519,118
|
$
|
14,420
|
$
|
3,590
|
$
|
35,702
|
$
|
(2,268)
|
$
|
33,434
|
$
|
170
|
$
|
570,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
––
|
|
––
|
|
22,650
|
|
––
|
|
––
|
|
––
|
|
16
|
|
22,666
|
Other comprehensive
income
|
|
––
|
|
––
|
|
––
|
|
36,775
|
|
613
|
|
37,388
|
|
––
|
|
37,388
|
Total comprehensive
income
|
|
––
|
|
––
|
|
22,650
|
|
36,775
|
|
613
|
|
37,388
|
|
16
|
|
60,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
1,432
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,432
|
Exercise of stock
options
|
|
9,297
|
|
(2,330)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
6,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at
September 27, 2015
|
$
|
528,415
|
$
|
13,522
|
$
|
26,240
|
$
|
72,477
|
$
|
(1,655)
|
$
|
70,822
|
$
|
186
|
$
|
639,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
September 28, 2014
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Retained
earnings
(deficit)
|
Currency
translation
adjustments
|
Cash flow
hedges
|
Total
accumulated
other
comprehensive
income
|
Non-
controlling
interests
|
Total
equity
|
Balance, at March 31,
2014
|
$
|
510,725
|
$
|
15,025
|
$
|
(44,311)
|
$
|
36,616
|
$
|
(646)
|
$
|
35,970
|
$
|
129
|
$
|
517,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
––
|
|
––
|
|
30,321
|
|
––
|
|
––
|
|
––
|
|
56
|
|
30,377
|
Other comprehensive
loss
|
|
––
|
|
––
|
|
––
|
|
(18,122)
|
|
(400)
|
|
(18,522)
|
|
––
|
|
(18,522)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
30,321
|
|
(18,122)
|
|
(400)
|
|
(18,522)
|
|
56
|
|
11,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
319
|
|
319
|
Stock-based
compensation
|
|
––
|
|
861
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
861
|
Exercise of stock
options
|
|
1,796
|
|
(541)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at September
28, 2014
|
$
|
512,521
|
$
|
15,345
|
$
|
(13,990)
|
$
|
18,494
|
$
|
(1,046)
|
$
|
17,448
|
$
|
504
|
$
|
531,828
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Cash Flow (in thousands
of Canadian dollars - unaudited)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
September
27
|
September
28
|
September
27
|
September
28
|
|
Note
|
|
2015
|
2014
|
2015
|
2014
|
Operating
activities:
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
12,818
|
$
|
7,412
|
$
|
22,666
|
$
|
16,394
|
Items not involving
cash
|
|
|
|
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
2,454
|
|
1,890
|
|
4,759
|
|
3,824
|
|
Amortization of
intangible assets
|
|
|
6,844
|
|
6,747
|
|
15,687
|
|
11,293
|
|
Deferred income
taxes
|
14
|
|
2,820
|
|
(2,241)
|
|
1,176
|
|
(2,088)
|
|
Other items not
involving cash
|
|
|
(2,135)
|
|
(1,133)
|
|
(6,489)
|
|
(2,775)
|
|
Stock-based
compensation
|
15
|
|
(190)
|
|
(1,157)
|
|
2,354
|
|
1,357
|
|
Loss (gain) on disposal of property, plant
and equipment
|
|
|
(1,081)
|
|
100
|
|
(1,085)
|
|
(323)
|
|
|
$
|
21,530
|
$
|
11,618
|
$
|
39,068
|
$
|
27,682
|
Change in non-cash
operating working capital
|
|
|
(41,783)
|
|
5,748
|
|
(68,583)
|
|
(21,001)
|
Cash flows used in operating activities
of
discontinued
operations
|
|
|
––
|
|
(204)
|
|
––
|
(3,028)
|
Cash flows provided
by (used in)
operating
activities
|
|
$
|
(20,253)
|
$
|
17,162
|
$
|
(29,515)
|
$
|
3,653
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
8
|
$
|
(2,640)
|
$
|
(1,611)
|
$
|
(5,408)
|
$
|
(4,285)
|
Acquisition of
intangible assets
|
9
|
|
(1,669)
|
|
(936)
|
|
(2,763)
|
|
(2,775)
|
Business acquisition,
net of cash acquired
|
|
|
––
|
|
(352,864)
|
|
––
|
|
(352,864)
|
Proceeds from disposal of property,
plant and equipment
|
|
|
1,767
|
|
231
|
|
1,801
|
|
8,760
|
Proceeds from sale of
subsidiary
|
5
|
|
––
|
|
––
|
|
2,274
|
|
––
|
Cash flows provided by investing
activities
of
discontinued operations
|
|
|
––
|
|
––
|
|
––
|
|
13,643
|
Cash flows used in
investing activities
|
|
$
|
(2,542)
|
$
|
(355,180)
|
$
|
(4,096)
|
$
|
(337,521)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
7
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
(67)
|
Bank
indebtedness
|
|
|
333
|
|
6
|
|
587
|
|
(107)
|
Repayment of
long-term debt
|
|
|
(713)
|
|
(15,047)
|
|
(290,768)
|
|
(15,119)
|
Proceeds from
long-term debt
|
|
|
40
|
|
366,619
|
|
302,557
|
|
367,351
|
Issuance of common
shares
|
|
|
228
|
|
40
|
|
6,967
|
|
1,255
|
Cash flows provided
by (used in)
financing
activities
|
|
$
|
(112)
|
$
|
351,618
|
$
|
19,343
|
$
|
353,313
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash
and cash
equivalents
|
|
|
6,920
|
|
1,490
|
|
4,847
|
(1,215)
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
(15,987)
|
|
15,090
|
|
(9,421)
|
|
18,230
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of year
|
|
|
113,092
|
|
81,754
|
|
106,526
|
|
78,614
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of year
|
|
$
|
97,105
|
$
|
96,844
|
$
|
97,105
|
$
|
96,844
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
|
|
|
|
Cash income taxes
paid by continuing operations
|
|
$
|
2,654
|
$
|
2,374
|
$
|
6,252
|
$
|
4,282
|
Cash interest paid by
continuing operations
|
|
$
|
10
|
$
|
2,093
|
$
|
3,438
|
$
|
2,743
|
SOURCE ATS Automation Tooling Systems Inc.