ATI Reports Record Revenues of US $572.2 Million in Q4.MARKHAM, Ontario Markham (2006 Population 261,573[0]) is located in York Region, directly north of Toronto, and is part of Toronto's CMA. It is larger than many Canadian cities. Despite its qualifications regarding population, it has not had the title of city conferred upon it by the -- 2004 Revenues Up 44.1% to $2.0 Billion ATI Technologies “ATI” redirects here. For other uses, see Ati. ATI Technologies U.L.C. ATI is a major Canadian designer and supplier of graphics processing units, motherboard chipsets, and video display cards. Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ATYT ATYT ATI Technologies, Inc (stock symbol) ) (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : ATY ATY Air Textured Yarn (textile) ATY Watertown, SD, USA (Airport Code) ATY After-Tax Yield ) today announced its second consecutive record revenue quarter, driven by sales increases in both the personal computer and consumer product lines. ATI (ATI Technologies Inc., Markham Ontario, http://ati.amd.com) A leading manufacturer of graphics chips and display adapters. Founded in 1985 by K. Y. Ho, Benny Lau and Lee Lau, ATI chips and boards are widely used by OEMs. reported revenues(1) of $572.2 million for the fourth quarter of fiscal 2004 (ended August 31, 2004), a 50.3% increase over the fourth quarter a year earlier. Gross margin declined 1.8 percentage points to 33.8% over the same period of the previous year as a result of costs associated with the ramp of a number of new desktop products.Net income(2) per share was $0.24 for the quarter compared to $0.09 last year. ATI's cash position increased $40.9 million during the quarter to $548.9 million as of August 31, 2004. ATI's fiscal 2004 annual results also produced significant revenue and earnings growth over fiscal 2003.Revenues for the full 2004 fiscal year grew 44.1% to $2.0 billion.Net income for the year increased nearly six-fold Adj. 1. six-fold - having six units or components sextuple, sixfold multiple - having or involving or consisting of more than one part or entity or individual; "multiple birth"; "multiple ownership"; "made multiple copies of the speech"; "his multiple to $0.80 per share from $0.14 per share in fiscal 2003. "Our corporate strategy continues to produce returns," said David Orton Or·ton , Joe Full name John Kingsley Orton. 1933-1967. British playwright noted for his black comedies, including Entertaining Mr. Sloane (1964) and What the Butler Saw (1969). , ATI's Chief Executive Officer."Our PCI Express A high-speed peripheral interconnect from Intel introduced in 2002. Note that although sometimes abbreviated "PCX," PCI Express is not the same as "PCI-X" (see PCI-SIG and PCI-X for comparison). As a result of the confusion, "PCI-E" or "PCIe" is the accepted abbreviation. desktop product line-up line-up Noun 1. people or things assembled for a particular purpose: Christmas TV line-up 2. is the most competitive product family on the market, resulting in tremendous customer acceptance.In addition, the growth rate of our digital consumer business continues to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, the market, based on ATI's innovative products for use in cell phones and digital televisions." Outlook We expect our leadership in graphics and multimedia technologies for both digital consumer products and PCI (1) (Payment Card Industry) See PCI DSS. (2) (Peripheral Component Interconnect) The most widely used I/O bus (peripheral bus). Express-based PCs to continue driving growth for ATI in fiscal 2005.As a result, ATI currently expects revenue for the first quarter of fiscal 2005 to be in the range of $600 to $640 million. Gross margin, as a percentage of revenues, is expected to be between 33 and 34%. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the first quarter (excluding the expensing of stock options) are expected to grow between 5 and 10% relative to the fourth quarter of fiscal 2004. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , beginning with the first quarter of fiscal 2005, ATI will expense compensation costs associated with stock options granted to employees after September September: see month. 1, 2002. The charge in the first quarter of fiscal 2005 will be approximately $7.0 million. ATI continues to be optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about its outlook for fiscal 2005, but anticipates some seasonality, where the first quarter is strong, followed by a slightly weaker revenue and profit profile for the second and third quarters.The fourth quarter is expected to build off of the third quarter. MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial OF INTERIM FINANCIAL RESULTS In this Management's Discussion and Analysis (MD&A), ATI, we, us and our, mean ATI Technologies Inc. and its subsidiaries. About forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans," "intends," "anticipates," "should," "estimates," "expects," "believes," "indicates," "targeting," "suggests" and similar expressions. This MD&A and other sections of this news release contain forward-looking statements about ATI's objectives, strategies, financial condition and results. These "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements are based on current expectations and entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary various risks and uncertainties. Our actual results may materially differ from our expectations if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Therefore we cannot provide any assurance that forward-looking statements will materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. .We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.Additional information concerning risks and uncertainties affecting our business and other factors that could cause our financial results to fluctuate is contained in our filings with Canadian and U.S. securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , including our 2003 Annual Information Form and Annual Report. Any reference to "year-over-year" in this MD&A refers to a comparison of this year's fourth quarter results versus the fourth quarter of the prior year unless otherwise noted. Financial Results Analysis Revenues Fourth quarter revenues of $572.2 million grew by 50.3% from $380.7 million in the same period a year ago.The gains in the fourth quarter were largely driven by revenue increases in all of our main business lines.Desktop discrete chip revenues grew about 40% as a result of PCI Express business with OEMs and expanded sales in the add-in-board (AIB AIB n abbr (BRIT) (= Accident Investigation Bureau) → oficina de investigación de accidentes AIB n abbr (Brit) (= Accident Investigation Bureau) → ) channel. Total notebook chip revenues (integrated and discrete) increased almost 20% resulting from market growth that was partially offset by market share declines in the notebook integrated market.Handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. chip revenues more than doubled for a number of reasons -- increased demand from cell phone manufacturers, a growing number of design wins, a growing cell a device for preserving alive a minute object in water continually renewed, in a manner to permit its growth to be watched under the microscope. See also: Grow phone market overall, and the increasing proportion of the market claimed by camera phones.Our digital television revenues grew dramatically based on market growth and continued penetration of our products among top digital TV manufacturers. Gross Margin Our gross margin for the fourth quarter of fiscal 2004 was 33.8% -- down 1.8 percentage points from 35.6% in the same period a year ago.The margin for our desktop discrete products declined relative to the fourth quarter of the previous year primarily due to early production costs associated with the introduction and ramp of our new PCI Express products. Gross margin for the fourth quarter of fiscal 2003 also benefited from higher margins in desktop discrete. The overall margin decline of our PC products was slightly offset by increases in our consumer products, which have margins that are typically higher than our corporate average. Our royalty income from Nintendo, and our non-recurring engineering Non-recurring engineering (NRE) refers to the one-time cost of researching, designing, and testing a new product. When budgeting for a project, NRE must be considered in order to analyze if a new product will be profitable. revenues, are reported under "Other" in our segmented reporting. Please see Note 11 to our unaudited consolidated interim financial statements for further information on our segmented reporting. Operating Expenses Selling and marketing expenses increased by 10.6% year-over-year to $30.5 million. The increase in expenses related primarily to increased staff for sales and technical sales support, an increased investment in advertising designed to improve ATI's brand awareness and to create demand in the PC market, as well as increased marketing activities to support our brands, product launches, and participation in industry trade shows. Administrative expenses were up 11.3% year-over-year to $11.7 million due to increased staffing levels to support a growing business, and incentive-based compensation. Research and development expenses increased 25.8% year-over-year to $77.1 million.This increase was largely a result of additional headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. to support broader programs in growing business areas, and increased prototyping costs - primarily in the desktop, integrated and notebook business units. These efforts have led to a number of design wins which we believe will result in continued growth in our business.Higher costs associated with licensing fees also added to the increase in R&D. Other Charges We recorded other charges totaling $0.2 million in the fourth quarter. This compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to other charges of $10.4 million for the fourth quarter last year.Last year's charges related largely to the settlement of patent litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. related to the closure of our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. R&D operations. Please see Note 8 to our unaudited consolidated interim financial statements for further information. Total Operating Expenses Our total operating expenses reflect the operating expenses detailed earlier, as well as amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . For further information on the treatment of the amortization of intangible assets, please see Note 4 to our unaudited consolidated interim financial statements. Interest and Other Income Our interest and other income was $2.8 million in the fourth quarter of 2004, compared with $0.7 million for the comparable period in fiscal 2003. Interest and other income in 2004 was derived principally from interest on our higher cash balances. Net Income Net income almost tripled to $61.2 million in the fourth quarter of 2004 from $22.3 million in the same quarter last year as a result of the significant increase in sales. Liquidity and Financial Resources Fourth quarter inventory levels were steady relative to the third quarter of 2004 at $254.9 million. Inventory is up 44.4% since the end of the last fiscal year, August 31, 2003. The increase relative to August 31, 2003 is a direct result of our substantially increased sales. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were up 55.9% to $365.6 million from the year ended August 31, 2003. Accounts payable are up 43.7% to $274.8 million from the year ended August 31, 2003. Both accounts receivable and accounts payable are within our target range for current sales levels. Deferred revenue for the fourth quarter was $29.1 million, a decrease of $0.2 million from the third quarter and down $8.5 million from the end of fiscal 2003. Deferred revenue primarily relates to payments associated with development contracts where revenue is recognized on a percentage of completion basis, but payments are made according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. contract terms. As of August 31, 2004 we had working capital of $694.7 million compared to $430.3 million at August 31, 2003.Cash flows from operations were $35.9 million in the fourth quarter.Our cash position was $548.9 million at the end of the fourth quarter, up from $350.7 million at the end of fiscal 2003.Our cash position increased mainly as a result of increased earnings throughout the fiscal year. Conference Call Information ATI Technologies Inc. will host a conference call today to discuss its financial results for the fourth quarter of its 2004 fiscal year ended August 31, 2004. To participate in the conference call, please dial 416-405-9310 ten minutes before the scheduled start of the call. No password is required. A live web cast of the conference call will be available at http://www.ati.com/companyinfo/ir/quarterlyresults.html under the Financial Information section, 2004 Conference Calls - Q4 2004. Replays of the conference call will be available through October October: see month. 14, 2004 by calling 416-695-5800.The passcode is 3098802. A web cast replay will be available at the web site noted above. About ATI Technologies ATI Technologies Inc. is a world leader in the design and manufacture of innovative 3D graphics and digital media silicon solutions. An industry pioneer since 1985, ATI is the world's foremost visual processor unit (VPU VPU Video Processing Unit VPU Vice Presidential Unit (World Bank) VPU Vicaría Pastoral Universitaria (Santiago, Chile) VPU Vulnerable Prisoner Unit (UK) ) provider and is dedicated to deliver leading-edge performance solutions for the full range of PC and Mac desktop and notebook platforms, workstation, set-top and digital television, game console See video game console. and handheld handheld: see personal digital assistant. markets. With 2004 revenues of US $2 billion, ATI has more than 2,700 employees in the Americas A·mer·i·cas , the See America. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia. ATI common shares trade on NASDAQ (ATYT) and the Toronto
Stock Exchange Toronto Stock Exchange (TSE)Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (ATY). Copyright 2004 ATI Technologies Inc. All rights reserved. ATI and ATI product and product feature names are trademarks and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. registered trademarks of ATI Technologies Inc. All other company and product names are trademarks and/or registered trademarks of their respective owners. Features, pricing, availability and specifications are subject to change without notice. For media or industry analyst support, visit our Web site at http://www.ati.com (1) All dollar amounts are in U.S. dollars unless otherwise noted. All per share amounts are stated on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis unless otherwise noted. ATI Technologies Inc. reports under Canadian generally accepted accounting principles (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). (2) Net income is reported according to Canadian GAAP. ATI is not reporting adjusted or proforma Proforma A financial projection based on assumptions. net income.
To view the Consolidated Statements of Operations and Retained
Earnings please click on the following link
http://www2.cdn-news.com/database/fax/2000/ati1007.pdf
ATI TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of US dollars)
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August 31 August 31
2004 2003
(Audited)
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Assets
Current assets:
Cash and cash equivalents $ 446,808 $ 300,905
Short-term investments 102,108 49,784
Accounts receivable 365,644 234,548
Inventories 254,867 176,494
Prepayments and sundry receivables 21,873 31,753
Future income tax assets 8,076 3,772
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Total current assets 1,199,376 797,256
Capital assets 85,943 86,890
Intangible assets (Note 4) 5,558 8,811
Goodwill (Note 4) 190,095 190,095
Long-term investments 2,751 3,960
Tax credits recoverable 9,193 21,181
Future income tax assets 20,570 7,865
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Total Assets $ 1,513,486 $ 1,116,058
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 274,772 $ 191,196
Accrued liabilities 199,129 136,709
Deferred revenue 29,131 37,669
Current portion of long-term
debt (Note 6) 1,571 1,394
Future income tax liabilities 54 -
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Total current liabilities 504,657 366,968
Long-term debt (Note 6) 28,053 28,073
Future income tax liabilities 36,088 21,408
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Total liabilities 568,798 416,449
Shareholders' equity:
Share capital 638,985 582,454
Treasury stock (Note 12) (22,100) -
Contributed surplus 10,704 4,855
Retained earnings 308,825 104,026
Currency translation adjustments 8,274 8,274
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Total shareholders' equity 944,688 699,609
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Total Liabilities and
Shareholders' Equity $ 1,513,486 $ 1,116,058
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See accompanying notes to unaudited consolidated interim financial
statements. These financial statements should be read in
conjunction with the Company's most recent annual consolidated
financial statements, as at and for year ended August 31, 2003.
ATI TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of US dollars)
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31 August 31 August 31
2004 2003 2004 2003
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Cash provided by
(used in):
Operating activities:
Net income $ 61,156 $ 22,294 $ 204,799 $ 35,229
Items which do not
involve cash:
Tax credits
recoverable 6,435 (130) 11,988 (21,181)
Future income taxes (5,604) 720 (2,275) (1,802)
Stock-based
compensation 1,670 - 5,849 -
Depreciation and
amortization 6,177 6,276 26,031 34,705
Other charges (Note 8) - - - 1,400
Loss (gain) on
investments - (3,844) 1,307 (3,876)
Gain on sale of
long-lived assets
(Note 8) - - (538) -
Foreign exchange
loss (gain) 826 (93) 961 3,637
Change in non-cash
operating working
capital:
Accounts
receivable (69,018) (29,568) (131,096) (93,422)
Inventories (2,085) (40,064) (78,373) 15,627
Prepayments and
sundry receivables 7,387 (6,129) 9,880 (8,678)
Accounts payable 5,028 33,013 83,576 19,103
Accrued liabilities 24,117 46,511 61,380 87,288
Deferred revenue (215) 19,067 (8,538) 37,419
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35,874 48,053 184,951 105,449
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Financing activities:
Decrease in bank
indebtedness - - - (12,015)
Addition to
long-term debt - - - 10,709
Principal payment
on long-term debt (367) (335) (1,442) (1,064)
Settlement of swap
contract - - - (1,365)
Issuance of common
shares 11,843 14,373 56,531 20,977
Repurchase of common
shares (Note 12) - - (22,100) -
Repayment of share
purchase loans - - - 225
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11,476 14,038 32,989 17,467
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Investing activities:
Purchase of short-term
investments (102,108) - (142,015) (49,784)
Maturity of
short-term
investments - - 89,691 49,649
Additions to capital
assets (6,738) (3,667) (20,671) (16,390)
Purchase of long-term
investments - (2,460) (98) (2,460)
Proceeds from sale of
investments - 9,749 - 10,029
Proceeds from sale of
long-lived assets
(Note 8) - - 2,489 -
Acquisitions, net of
cash acquired (Note 3) - - (2,071) -
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(108,846) 3,622 (72,675) (8,956)
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Foreign exchange
gain (loss) on cash
held in foreign
currency 280 (266) 638 (181)
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Increase (decrease)
in cash and cash
equivalents (61,216) 65,447 145,903 113,779
Cash and cash
equivalents -
beginning of
period 508,024 235,458 300,905 187,126
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Cash and cash
equivalents -
end of period 446,808 300,905 $ 446,808 300,905
Short-term
investments 102,108 49,784 102,108 49,784
Cash position -
end of period $ 548,916 $ 350,689 $ 548,916 $ 350,689
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Cash position is defined as cash and cash equivalents and short-term
investments. See accompanying notes to unaudited consolidated interim
financial statements. These financial statements should be read in
conjunction with the Company's most recent annual consolidated
financial statements, as at and for year ended August 31, 2003.
ATI TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2004
(Unaudited)
The principal business activities of ATI Technologies Inc. (the "Company") are the design, manufacture and sale of innovative 3D graphics and digital media silicon solutions.The Company markets its products to original equipment manufacturers, system builders  This article's grammar usage needs improvement. Please edit this article in accordance with Wikipedia's . ,
distributors and retailers primarily in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe and the
Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). region.1. SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited financial statements are prepared in accordance with Canadian generally accepted accounting principles for interim financial statements.Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. to include only the notes related to elements which have significantly changed in the interim period. As a result, these interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge do not contain all disclosures required to be included in the annual financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements and notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. for the year ended August 31, 2003. These consolidated condensed financial statements are prepared following accounting policies consistent with the Company's audited annual consolidated financial statements and notes thereto for the year ended August 31, 2003, except for the following accounting policy adopted during the fiscal quarter ended May 31, 2004: (a) The Company adopted CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. No. 13, "Hedging Relationships", for its derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . Commencing in the third quarter of fiscal 2004, the Company engaged in activities to purchase certain derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments, principally forward foreign exchange contracts ("Forwards"), to manage its foreign currency exposures. The Company's policy is not to utilize derivative financial instruments for trading or speculative purposes. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. to specific assets and liabilities on the balance sheet or to specific firm commitments or anticipated transactions.The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The Company purchases Forwards to hedge anticipated Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents expenses pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to its operations in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of .These instruments are not recognized in the consolidated financial statements at inception.Foreign exchange gains and losses on these contracts are deferred off-balance sheet and recognized as an adjustment to the operating expenses when the operating expenses are incurred. Realized and unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. or losses associated with derivative instruments, which have been terminated or cease to be effective prior to maturity, are deferred under other current, or non-current, assets or liabilities on the balance sheet and recognized in income in the period in which the underlying hedged transaction is recognized.In the event a designated hedged item is sold, extinguished ex·tin·guish tr.v. ex·tin·guished, ex·tin·guish·ing, ex·tin·guish·es 1. To put out (a fire, for example); quench. 2. To put an end to (hopes, for example); destroy. See Synonyms at abolish. 3. or matures prior to the termination of the related derivative instrument Noun 1. derivative instrument - a financial instrument whose value is based on another security derivative legal document, legal instrument, official document, instrument - (law) a document that states some contractual relationship or grants some right , any realized or unrealized gain or loss on such derivative instrument is recognized in income. The financial information included herein reflects all adjustments (consisting only of normal recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. adjustments), which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. 2. FINANCIAL INSTRUMENTS The Company enters into Forwards to hedge its foreign currency exposure on expenses incurred for its Canadian operations.The Forwards obligate obligate /ob·li·gate/ (ob´li-gat) pertaining to or characterized by the ability to survive only in a particular environment or to assume only a particular role, as an obligate anaerobe. the Company to sell US dollars for Canadian dollars in the future at predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: exchange rates and are matched with anticipated future operating expenses in Canada.The Forwards do not subject the Company to risk from exchange rate movements because gains and losses on such contracts offset losses and gains on exposures being hedged.The counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. to the Forwards are multinational commercial banks and, therefore, the credit risk of counterparty Counterparty The other participant, including intermediaries, in a swap or contract. non-performance is low. During the fourth quarter fiscal 2004, the Company purchased Forwards to buy $35.0 million Canadian dollars in the next three months at an average exchange rate of 1.3793.All of the Forwards have become favourable to the Company since their inception and have a fair value of $1.3 million at August 31, 2004. 3. ACQUISITIONS On September 2, 2003, the Company acquired certain assets located in Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan and China from AMI Technologies Corp., its exclusive sales organization for Taiwan and China since 1992, for consideration of $3.1 million.The purchase price was allocated to the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. acquired, including intangible assets of $2.9 million, based on their relative fair values at the date of acquisition.The useful life of the intangible assets acquired is approximately one year. 4. GOODWILL AND INTANGIBLE ASSETS The net book values of goodwill and intangible assets at August 31, 2004 and August 31, 2003 are as follows:
(Thousands of US dollars)
---------------------------------------------------------------------
Cost Accumulated Net book Net book
amortization value value
August 31, 2004 August 31, 2003
---------------------------------------------------------------------
Purchased in-process
R & D $ 56,250 $ 56,250 $ - $ -
Core technology 23,670 18,112 5,558 8,811
Other 2,862 2,862 - -
---------------------------------------------------------------------
Total intangible
assets $ 82,782 $ 77,224 $ 5,558 $ 8,811
---------------------------------------------------------------------
---------------------------------------------------------------------
Goodwill $ 376,788 $ 186,693 $ 190,095 $ 190,095
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization expense related to intangible assets amounted to $1.5 million and $6.1 million for the three months and twelve months ended August 31, 2004 respectively (2003 - $1.3 million and $10.8 million). During the fourth quarter of fiscal 2004, the Company performed its annual goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. test in accordance with the CICA Handbook
This article is about reference works. For the subnotebook computer, see .
5. CREDIT FACILITIES credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities The Company maintains committed operating credit facilities aggregating $43.0 million with a single financial institution.There are no borrowings outstanding under these facilities.
6. LONG-TERM DEBT
(Thousands of US dollars)
---------------------------------------------------------------------
Interest August 31 August 31
rate 2004 2003
---------------------------------------------------------------------
Obligation under capital
lease (i) 6.31% $ 18,049 $ 17,785
Mortgage payable (ii) 6.96% 11,575 11,682
---------------------------------------------------------------------
29,624 29,467
Less : Current portion 1,571 1,394
---------------------------------------------------------------------
Long-term portion $ 28,053 $ 28,073
---------------------------------------------------------------------
---------------------------------------------------------------------
(i) Obligation under capital lease: The Company's obligation under capital lease represents the lease on the building facility occupied by the Company in Markham, Ontario ("Building Facility").The capital lease is denominated in Canadian dollars.As at August 31, 2004, the remaining amount outstanding on the capital lease was $18.0 million (Cdn. $23.7 million). (ii) Mortgage payable: On September 10, 2002, Commerce Valley Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. Holding Inc. ("CVRH CVRH Canadian Valley Regional Hospital (Yukon, OK) "), a joint venture in which the Company has a 50 per cent ownership interest, entered into a mortgage agreement with a lender to finance the Building Facility.The Company's proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of the mortgage as at August 31, 2004 amounted to $11.6 million (Cdn. $15.2 million).The mortgage has a repayment term of 12 years and is denominated in Canadian dollars. 7. GUARANTEE The Company and other owners of CVRH have jointly and severally Jointly and Severally 1. A legal term describing a partnership in which individual decisions are bound to all parties involved and thus undivided. 2. A term used in underwriting syndicates to refer to the distinct responsibility of individual companies to sell a certain provided a guarantee for the mortgage payment of the Building Facility.In the event that CVRH is unable to meet the underlying mortgage payment to the lender, the Company and other owners of CVRH will be jointly and severally responsible under this guarantee. In addition, the Company posted a letter of credit in the amount of $2.3 million (Cdn. $3.0 million) in favour of CVRH.CVRH has assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. this letter of credit to the exclusive benefit of the lender as additional security of the mortgage.The letter of credit has a term of 5 years and will expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. on November November: see month. 5, 2007.In the event of a lease default by the Company, the proceeds of the letter of credit will be paid to the lender.
8. OTHER CHARGES (RECOVERIES)
Other charges (recoveries) include the following items:
(Thousands of US dollars)
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
---------------------------------------------------------------------
Settlement of class
action lawsuits (i) $ - $ (3,330) $ - $ 4,670
Regulatory matters (ii) 342 728 1,885 5,828
Restructuring charge
(recovery) - European
operations (iii) (187) 3,777 (725) 6,542
Lease exit charge
(recovery) (iv) 265 (1,464) 2,684
Settlement of patent
litigation with Cirrus
Logic, Inc. (v) 9,000 - 9,000
---------------------------------------------------------------------
Total $ 155 $ 10,440 $ (304) $ 28,724
---------------------------------------------------------------------
---------------------------------------------------------------------
(i) Settlement of class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax : On February February: see month. 7, 2003, the Company announced that it had reached an agreement for the full and complete settlement of all remaining claims alleged in the shareholder class action lawsuits filed in May 2001 in the United States District Court for the Eastern District of Pennsylvania The United States District Court for the Eastern District of Pennsylvania is one of the original 13 federal judiciary districts created by the Judiciary Act of 1789. It originally sat in Independence Hall in Philadelphia as the United States District Court for the District of for a cash payment of $8.0 million.This litigation relates to alleged misrepresentations and omissions made by the Company and certain directors and officers during a period preceding its May 2000 earnings warning.The terms of the Stipulation An agreement between attorneys that concerns business before a court and is designed to simplify or shorten litigation and save costs. During the course of a civil lawsuit, criminal proceeding, or any other type of litigation, the opposing attorneys may come to an agreement and Agreement of Settlement received final court approval on April 28, 2003 and included no admission of liability or wrongdoing wrong·do·er n. One who does wrong, especially morally or ethically. wrong  do by the Company or other
defendants.No party timely appealed from the Court's order.During the fourth quarter of fiscal 2003, the Company received $3.3 million from its insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. as its contribution towards the settlement. (ii) Regulatory matters: In January 2003, the Company announced that Staff of the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. ("OSC O.S.C. n. short for Order to Show Cause. (See: Order to Show Cause) ") had filed a Notice of Hearing and Statement of Allegations ("Notice") in relation to the Company and others. The Notice alleged that the Company failed to disclose information concerning the shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in revenues and earnings that occurred in the third quarter of fiscal 2000, as required by the listing rules of the Toronto Stock Exchange. The Notice also alleged that the Company made a misleading statement to Staff of the OSC in August 2000 regarding the events leading up to the disclosure on May 24, 2000 of the shortfall.Seven individuals were also named in the Notice. The Notice alleged that six of these individuals, including K.Y. Ho, the then Chairman and Chief Executive Officer of the Company, engaged in insider trading contrary to the Securities Act. The hearing originally set for February - March 2004 has been rescheduled to October - November 2004. (iii) Restructuring charge (recovery) - European operations: The following table details the activity through the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). liabilities accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. :
(Thousands of US dollars)
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
---------------------------------------------------------------------
Balance, beginning
of period $ 778 $ 1,127 $ 4,246 $ -
Provision (recovery) (187) 3,777 (187) 5,142
Cash payments (573) (658) (4,041) (896)
---------------------------------------------------------------------
Balance, end of period $ 18 $ 4,246 $ 18 $ 4,246
---------------------------------------------------------------------
---------------------------------------------------------------------
(a) During the second quarter of fiscal 2003, the Company announced the closure of ATI Technologies (Europe) Limited ("ATEL"), its subsidiary in Dublin, Ireland and recorded a pre-tax charge of $2.8 million. The charge included a $1.4 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the building facility, to estimated fair value less cost to sell. The Company completed the major components of the exit plan for ATEL in July 2003. During the first quarter of fiscal 2004, the Company was able to sell the building facility at a higher price than originally estimated resulting in a recovery of $0.5 million from the restructuring charge.The Company also paid out the remaining cash portion of the restructuring charge of $0.5 million during the same quarter. (b) During the fourth quarter of fiscal 2003, the Company decided to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: the operations of ATI Research GmbH, its FireGL product division located in Starnberg, Germany, in order to consolidate its research and development activities. As a result, the Company recorded a pre-tax charge of $3.8 million for the quarter pertaining to the closure of ATI Research GmbH. During the fourth quarter of fiscal 2004, the Company recovered $0.2 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the restructuring charge of ATI Research GmbH. During the three months and twelve months ended August 31, 2004, the Company made cash payments of $0.6 million and $3.5 million respectively relating to the pre-tax charge setup See BIOS setup and install program. in the fourth quarter of fiscal 2003.The Company completed the major components of its exit plan for ATI Research GmbH in December 2003.The remaining balance relates to unpaid facility costs and legal fees. (iv) Lease exit charge (recovery): During the second quarter of fiscal 2003, the Company determined that it would exit the two leased properties located in Markham, Ontario.As a result, the Company recognized the fair value of the future net costs related to the leases in the amount of $2.4 million as a charge for the second quarter. During the fourth quarter of fiscal 2003, the Company recorded an additional charge of $0.3 million related to the exit costs of the above-mentioned lease properties due to a change in estimate of the fair value of the future net costs. During the second quarter of fiscal 2004, the Company determined that it would re-occupy one of the two leased properties due to an expansion of business.This resulted in a reduction of the previously accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. exit charge liability in the amount of $0.6 million for the quarter. During the third quarter of fiscal 2004, the Company determined that it would re-occupy the remaining leased property resulting in a reductionof the previously accrued exit charge liability of $0.9 million. (v) Settlement of patent litigation with Cirrus Logic (company) Cirrus Logic - A manufacturer of integrated circuits including the Advanced RISC Machine and display interface processors and cards for use as Windows accelerators (requiring dedicated driver software). http://cirrus.com/. , Inc.: Subsequent to the year end of fiscal 2003, the Company and Cirrus announced that they had entered into a cross-license agreement and had settled all outstanding litigation between the Companies related to certain patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. lawsuits. Under the settlement agreement, all outstanding claims and counterclaims in the lawsuits between the Company and Cirrus were dismissed.In connection with the settlement, Cirrus would transfer to the Company a portion of its patent portfolio relating to the former graphics products group of its PC products division, a business that Cirrus exited several years ago, for a cash payment of $9.0 million from the Company. 9. NET INCOME PER SHARE The following table presents a reconciliation of the numerators and denominators used in the calculations of the basic and diluted net income per share:
(Thousands of US dollars, except per share amounts)
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
---------------------------------------------------------------------
Net income $ 61,156 $ 22,294 $ 204,799 $ 35,229
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average
number of common
shares outstanding
(000's):
Basic 247,699 240,647 245,257 238,251
Effect of dilutive
securities 9,150 8,878 9,835 6,102
---------------------------------------------------------------------
Diluted 256,849 249,525 255,092 244,353
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per share
Basic $ 0.25 $ 0.09 $ 0.84 $ 0.15
Diluted $ 0.24 $ 0.09 $ 0.80 $ 0.14
---------------------------------------------------------------------
---------------------------------------------------------------------
Certain options that are anti-dilutive were excluded from the
calculation.
10. SUPPLEMENTAL CASH FLOW INFORMATION
(Thousands of US dollars)
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
---------------------------------------------------------------------
Cash paid for:
Interest $ 472 $ 485 $ 1,946 $ 1,739
Income taxes 187 296 1,653 2,127
Interest received $ 1,409 $ 610 $ 4,358 $ 2,902
---------------------------------------------------------------------
---------------------------------------------------------------------
11. SEGMENTED INFORMATION The Company operates in one primary operating segment, that being the design, manufacture and sale of innovative 3D graphics and digital media silicon solutions. The following tables provide revenues by geographic area and by product, as well as capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) , intangible assets and goodwill by geographic area.The breakdown in revenues by geographic area in the following table is based on customer and royalty payer location, whereas the breakdown in capital assets, intangible assets and goodwill is based on physical location.
(Thousands of US dollars)
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
---------------------------------------------------------------------
Revenues:
Canada $ 4,990 $ 5,076 $ 22,439 $ 20,065
United States 82,212 55,615 257,542 258,545
Europe 17,332 21,800 95,287 113,193
Asia-Pacific 467,684 298,183 1,621,449 993,490
---------------------------------------------------------------------
Consolidated
revenues $ 572,218 $ 380,674 $ 1,996,717 $ 1,385,293
---------------------------------------------------------------------
---------------------------------------------------------------------
Product revenues:
Components $ 449,391 $ 299,428 $ 1,581,413 $ 962,735
Boards 111,905 77,682 364,335 397,533
Others 10,922 3,564 50,969 25,025
---------------------------------------------------------------------
Consolidated
revenues $ 572,218 $ 380,674 $ 1,996,717 $ 1,385,293
---------------------------------------------------------------------
---------------------------------------------------------------------
Capital assets,
intangible assets
and goodwill:
Canada $ 73,863 $ 74,332
United States 206,147 208,764
Europe 165 2,277
Asia-Pacific 1,421 423
---------------------------------------------------------------------
Consolidated capital
assets, intangible
assets and goodwill $ 281,596 $ 285,796
---------------------------------------------------------------------
---------------------------------------------------------------------
12. STOCK-BASED COMPENSATION (i) Stock options For stock options granted to employees after September 1, 2002, had the Company determined compensation costs based on the "fair value" of the stock options at grant dates consistent with the method prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). under CICA Handbook Section 3870, the Company's net income per share would have been reported as the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma amounts indicated below:
(Thousands of US dollars, except per share amount)
--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Net income for the period,
as reported $ 61,156 $ 22,294 $ 204,799 $ 35,229
Pro forma adjustment for
stock-based compensation (6,100) (205) (13,318) (525)
--------------------------------------------------------------------
Pro forma net income $ 55,056 $ 22,089 $ 191,481 $ 34,704
--------------------------------------------------------------------
--------------------------------------------------------------------
Pro forma net income
per share:
Basic $ 0.22 $ 0.09 $ 0.78 $ 0.15
Diluted $ 0.21 $ 0.09 $ 0.75 $ 0.14
--------------------------------------------------------------------
--------------------------------------------------------------------
The weighted average estimated fair values at the date of grant for the stock options granted for the three months and twelve months ended August 31, 2004 were $9.20 and $8.96 per share respectively. No options were issued during the three months ended August 31, 2003 and the weighted average estimated fair value of the stock options granted for the twelve months ended August 31, 2003 was $2.65 per share. The "fair value" of each option granted was estimated on the date of the grant using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following assumptions:
--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2003 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Risk-free interest rate 3.4% - 3.7% 3.1%
Dividend yield 0.0% - 0.0% 0.0%
Volatility factor of the
expected market price of
the Company's common shares 67.8% - 69.2% 71.1%
Weighted average expected
life of the options 4.1 years - 4.2 years 4.2 years
--------------------------------------------------------------------
--------------------------------------------------------------------
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense on a straight line basis over the options' vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period. (ii) Restricted share units During the first quarter of fiscal 2004, the Company adopted a plan to grant restricted share units ("RSUs") as part of its overall stock-based compensation plan.Under this plan, certain employees will receive an award in the form of an RSU RSU Restricted Stock Unit RSU Rogers State University (Claremore, Oklahoma) RSU Rifiuti Solidi Urbani (Italiano) RSU Rappresentanza Sindacale Unitaria (Italian Group of Unions) .Each RSU entitles the holder to receive one common share on the vesting date of the RSUs. The RSUs vest on each anniversary of the grant in equal one-third instalments over a vesting period of three years.Stock-based compensation, representing the underlying value of $14.17 per common share of the Company at the date of grant of the RSUs, is being recognized evenly over the three-year vesting period.On the vesting dates, the RSUs are settled by the delivery of common shares of the Company to the participants except for the participants residing outside of North America who will receive cash equivalent market value of the shares.Grants of RSUs to participants residing outside of North America are accounted for using variable plan accounting whereby the value of the RSUs and its related amortization are adjusted based on the underlying value of the Company's common shares at the end of each fiscal quarter.As at August 31, 2004, there were 1,514,450 RSUs awarded and outstanding of which none were vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) . The issuance of RSUs replaced the annual grant of options for the 2003 calendar year. In addition, a one-time cash payment of $7.8 million was also awarded to the non-executive employees who were eligible for the RSU plan during the first quarter of fiscal 2004. The full amount of the cash payment was expensed in the first quarter.The total expenses by functional areas incurred for the three months and twelve months ended August 31, 2004 pertaining to the cash payment and amortization of RSUs are as follows:
(Thousands of US dollars)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months ended Twelve months ended
August 31, 2004 August 31, 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Selling and marketing $ 256 $ 2,064
Research and development 1,207 10,454
Administrative 200 1,685
---------------------------------------------------------------------
$ 1,663 $ 14,203
---------------------------------------------------------------------
---------------------------------------------------------------------
During 2004, the Company advanced $22.1 million to the trustee of the RSU plan to enable the trustee to purchase the Company's common shares in the open market.At August 31, 2004 1,467,304 shares are being held by the trustee in order to deliver such shares to the participants on the vesting of the RSUs. The cost of the purchase of these shares is classified as treasury stock and presented as a reduction of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. in the Company's consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . (iii) Deferred share units During the second quarter of fiscal 2004, the Company established a plan to grant deferred share units ("DSUs") to its non-management directors.Under this plan, the directors will receive DSUs, in addition to cash payments, as part of their annual compensation package.A DSU 1. (communications) DSU - Data Service Unit. 2. DSU - Disk Subsystem Unit (Artecon). 3. (humour) DSU - Dwarf Storage Unit. is a unit equivalent in value to one common share of the Company based on the five-day average trading price Trading price The price at which a security is currently selling. of the Company's common shares on the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. (the "Weighted Average Price") immediately prior to the date on which the value of the DSU is determined.DSUs may be redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. following termination of Board service, and prior to the end of the year following departure from the Board based on the Weighted Average Price at the time of redemption.Alternatively, a director may elect to receive RSUs in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. DSUs provided the market value of his holdings in the Company's common stock equity is greater than $350,000.As at August 31, 2004, there were 92,082 DSUs outstanding of which 75,155 were vested. As of the date of the grant, the fair value of the DSUs outstanding, being the fair market value of the Company's common shares at that date, will be recorded as a liability on the Company's balance sheet and will be amortized over the one year vesting period of the DSU.The value of the DSU liability will be adjusted to reflect changes in the market value of the Company's common shares. The expenses for this quarter and the twelve months ended August 31, 2004 relating to DSUs granted to the directors for services rendered were $0.03 million and $1.2 million respectively. 13. U.S. GAAP The following table reconciles the net income as reported on the consolidated statements of operations and retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. prepared in accordance with Canadian GAAP to the consolidated net income (loss) that would have been reported had the financial statements been prepared in accordance with U.S. GAAP:
(Thousands of US dollars, except per share amounts)
--------------------------------------------------------------------
--------------------------------------------------------------------
Three months ended Twelve months ended
August 31 August 31
2004 2003 2004 2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Net income in accordance
with Canadian GAAP $ 61,156 $ 22,294 $ 204,799 $ 35,229
Tax effect of stock
options exercised (2,253) (1,704) (7,291) (2,083)
Loss on hedging
transactions 28 28 112 94
Amortization of
purchased in-process
research and development - 442 - 4,417
Stock compensation
expenses (i), (ii) (925) (21,879) (9,579) (25,486)
Restructuring charges not
yet incurred - (270) - -
--------------------------------------------------------------------
--------------------------------------------------------------------
Net income (loss) in
accordance with U.S.
GAAP $ 58,006 $ (1,089) $ 188,041 $ 12,171
--------------------------------------------------------------------
--------------------------------------------------------------------
Net income (loss) per share:
Basic $ 0.23 $ (0.00) $ 0.77 $ 0.05
Diluted $ 0.23 $ (0.00) $ 0.74 $ 0.05
--------------------------------------------------------------------
--------------------------------------------------------------------
Weighted average number of
shares (000's):
Basic 247,699 240,647 245,257 238,251
Diluted 256,849 240,647 255,092 244,353
--------------------------------------------------------------------
--------------------------------------------------------------------
(i) Under U.S. GAAP, options granted after January 18, 2001 with an exercise price denominated in a currency other than the currency of the primary economic environment of either the employer or the employee, should be accounted for under the variable accounting method. Under Canadian GAAP, there is no equivalent requirement. There were no such options granted after February 28, 2002. (ii) Under U.S. GAAP, the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. of the stock options issued under an incentive plan entered into in July 2002 is calculated as the increase in the Company's stock price between the grant date and the date on which all the conditions of the specified business arrangement were determined to have been met. The compensation expense is recognized over the vesting period of the options. Under Canadian GAAP, there is no equivalent requirement. 14. SUBSEQUENT EVENT (i) On September 1, 2004, the Company acquired certain assets of RT&C International, its sales organization for South Korea, for cash consideration of $2.6 million, plus acquisition related costs. (ii) In September 2004, ATI signed an agreement to purchase the shares of a company for cash consideration of up to $3.6 million, plus acquisition related costs. The company, a high technology embedded Inserted into. See embedded system. solutions provider, is located in India. The acquisition is subject to regulatory approval and is expected to close by October 31, 2004. |
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