ATI Technologies Inc. Announces Strong Second Quarter Results; Company Earns Net Income of $51.1 Million in Quarter.Business Editors, High Tech Writers TORONTO--(BUSINESS WIRE)--April 6, 2000 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. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :ATY ATY Air Textured Yarn (textile) ATY Watertown, SD, USA (Airport Code) ATY After-Tax Yield , Nasdaq:ATYT ATYT ATI Technologies, Inc (stock symbol) ) the preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae semiconductor supplier of 3D graphics, video acceleration and multimedia solutions to PCs and e-appliances, today announced strong financial results for the Company's second quarter ended February 29, 2000. For the second quarter of fiscal 2000 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. earned $51.1 million in total net income. Sales for the three months ended February 29, 2000 were $380.1 million, an increase of 28% from $297.2 million for the same period last year. Actual net income for the second quarter was $51.1 million or 24 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared with $21.7 million or ten cents Ten Cents has several meanings:
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. Adjusted net income for the second quarter, which excludes the amortization of acquired intangibles and the gain on sale of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments as discussed below, rose 15% to $44.8 million or 21 cents per share compared with $39.0 million or 18 cents per share for the same period last year. The Company generally amortizes goodwill and other intangibles, other than in-process research and development, resulting from its acquisitions over a five- to seven-year period. For the quarter these amounts totaled $887 thousand or less than one cent per share. In addition, in the second quarter the Company recorded a gain on sale of long-term investments of $10.7 million or three cents per share on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. . To accurately reflect ongoing operations on a normalized basis, these amounts have been excluded from adjusted net income and adjusted net income per share. "Our second quarter places ATI solidly on track with corporate plans, with strong sales of our newer products including the RAGE 128 PRO and RAGE MOBILITY families," said K.Y. Ho, ATI's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "With such healthy results and our initial success in e-appliances we are well on the way to becoming the leading semiconductor supplier of both PCs and consumer electronics devices." Subsequent to the quarter end ATI completed the acquisition of ArtX, Inc. of Palo Alto, California “Palo Alto” redirects here. For other uses, see Palo Alto (disambiguation). Palo Alto (IPA: /ˌpæloʊˈʔæltoʊ/, from Spanish: palo: "stick" and alto: "high", i.e. , a leading developer of high-performance graphics for both PCs and consumer appliances. "We are well on our way to integrating our product portfolios and leveraging ATI's infrastructure into solid sales of the Company's products," said Dave Orton, ATI's new President and COO (Cell Of Origin) See mobile positioning. . "The merger of ArtX and ATI's unique strengths will result in a broad, high-performance portfolio of products unmatched in the industry." Financial Highlights Sales in the quarter was illustrative il·lus·tra·tive adj. Acting or serving as an illustration. il·lus  tra·tive·ly adv.Adj. 1. of good demand for the entire breadth of ATI's product line-up: both on the desktop and in the mobile segments. In particular, RAGE 128 PRO and RAGE MOBILITY chips and boards comprised a greater proportion of the Company's sales this quarter. As expected, gross margins declined to 33.2 percent of sales in the second quarter compared with 34.1 percent in the first quarter of fiscal 2000. Gross margins decreased as a result of changing product mix, competitive conditions and rising material costs. Total operating costs operating costs npl → gastos mpl operacionales (excluding acquisition amortization costs of $887 thousand) in the second quarter decreased year-over-year as a percentage of sales, to 18.9 % or $71.7 million compared with 19.2% or $57.1 million for the second quarter of fiscal 1999. Operating efficiencies contributed to these results. Including the gain on sale of investments and excluding acquisition amortization related costs, earnings after taxes rose to $52.0 million or 13.7% of sales versus $39.0 million or 13.1% of sales for the corresponding quarter of 1999. For the second quarter, the Company's cash position (defined as cash and cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments less bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. ) increased by $41.0 million after operating, financing and investing activities, to stand at $143.5 million at February 29, 2000. During the quarter, working capital increased from $340.1 million at the end of the first quarter to $402.8 million at the end of the second quarter of fiscal 2000. Inventory balances increased slightly during the quarter to $213.0 million, while 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 decreased to $233.9 million. Days sales in accounts receivable decreased to 32 days in the second quarter from 46 days in the first quarter of 2000. Operational Highlights During the quarter ATI passed several important industry milestones, including claiming the top spot as the world's leading supplier of 2D, 3D and video integrated graphics Refers to having the video display circuitry of a computer contained directly on the motherboard rather than on a separate plug-in card (the display adapter). Integrated graphics typically share memory with the CPU (see shared video memory) and provide a more economical alternative to the chips to the mobile market. On the desktop side, ATI continued with strong sales of its RAGE 128 PRO accelerator accelerator: see particle accelerator. (1) A key combination such as Alt-G or Ctrl-Shift H that is used to activate a task. (2) An incubator that expects to develop the company considerably faster than normal. See incubator. , with design wins with most of the top 10 PC OEMs. ATI, with such partners as Microsoft, General Instruments and Texas Instruments See TI. (company) Texas Instruments - (TI) A US electronics company. A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. , also demonstrated its leadership in the emerging DTV (Digital TeleVision) Transmitting TV using digital signals. The major DTV standards are ATSC (North America), DVB (Europe) and ISDB (Japan). All three use MPEG-2 video compression and Dolby Digital audio compression. DVB and ISDB also include MPEG audio compression. market, profiling an inexpensive prototype add-in board that will bring all the benefits of the digital TV revolution to PC owners. ATI's leadership in the Set-Top market was bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. with the announcement of the ATI RAGE The ATI RAGE is a series of graphics chipsets offering GUI 2D acceleration, video acceleration, and 3D acceleration. It is the successor to the Mach series of 2D accelerators. HDTV (High Definition TV) A set of digital television (DTV) standards that offer the highest resolution and sharpest picture. Although some HDTV sets are available in standard (rather square) screen sizes, the overwhelming majority of sets are wide screen, which eliminates and SDTV (Standard Definition TV) A set of digital television (DTV) standards with 480 lines of resolution. All SDTV formats are interlaced, and SDTV pictures are not as sharp as progressive scan EDTV or HDTV (Enhanced Definition or High Definition). SDTV Vs. (for European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets) integrated graphics and video chips and set the stage to become a leading supplier for the huge game console See video game console. market with its acquisition of ArtX, Inc. of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , supplier of graphics technology to Nintendo. The ArtX acquisition also enabled ATI to leap frog frog, common name for an amphibian of the order Anura. Frogs are found all over the world, except in Antarctica. They require moisture and usually live in quiet freshwater or in the woods. into the lead in the integrated value segment, introducing an ArtX-developed 128-bit chip, the first of its kind that combines the 3D chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). (called North Bridge) with the graphics engine. The recognition of ATI as the world's mobile graphics leader followed announcements of design wins for such popular notebooks as the Dell Latitude Dell's Latitude laptop brand is specifically targeted at the business market which means that standardized parts are used throughout the line and are available for several years for support purposes, as opposed to the Dell Inspiron which is aimed at the consumer market and whose , Compaq Prosignia, Sharp, the Gateway Solo 9300, the Toshiba Satellite The Toshiba Satellite is Toshiba's flagship line of consumer-grade notebook computers. Models in the Satellite family vary greatly, from entry-level models to full-fledged Media center class notebooks. , NEC's LaVie S The Lavie was a French automobile manufactured in Paris around 1904. The company produced a few 6cv twin-cylinder voiturettes; one is reported to surive. Reference David Burgess Wise, The New Illustrated Encyclopedia of Automobiles. , the Apple PowerBook and Acer's Travelmate during the quarter. Desktop wins for ATI's high performance RAGE 128 PRO chips and boards included such widely-distributed models as the Dell Dimension Dell Dimension is a line of home desktop computers manufactured by Dell, Inc. As of June 2007, Dell no longer makes the Dimension line other than for business and in non American markets. The high-end Dimension 9200 (XPS 410 in the Amercian market) is still manufactured. XPS (1) See XML Paper Specification. (2) A brand name for certain models of Inspiron laptops from Dell. Series consumer systems, Apple's Mac G4, Gateway's E-4400 AGP (Accelerated Graphics Port) A high-speed 32-bit port from Intel for attaching a display adapter to a PC. It provides a direct connection between the card and memory, and only one AGP slot is on the motherboard. 4X high performance system and Sony's VAIO (Video Audio Integrated Operation) Sony's trade name for its desktop and laptop PCs. In mid-1998, Sony introduced its 505G series of subnotebooks that were the first in ultra-thin Pentium portables. slimtop multimedia computer. ATI's prominence prominence /prom·i·nence/ (prom´i-nins) a protrusion or projection. frontonasal prominence in the DTV market (with 48 million household in the US alone expected to tune into digital TV over the next five years) was the highlight of one of the most important cable TV events -- the Western (Cable) Show. ATI's prototype DTV tuner An electronic part of a radio or TV that locks on to a selected carrier frequency (station, channel) and filters out the audio and video signals for amplification and display. board was used in demonstrations by Microsoft, General Instruments, Texas Instruments and Criterian Software. ATI's low-cost solution will allow people to enjoy the image quality and interactivity benefits of DTV, without having to buy expensive digital TVs and receivers. Following ATI's previous announcement of a three-year agreement with General Instruments to provide the graphics for its Set Top boxes, ATI sustained continued interest in its Set-Top program when it introduced the ATI RAGE HDTV (high definition) and SDTV (standard definition) graphics chips specifically for the Set-Top market. ATI's leadership in the Set-Top market was highlighted in the quarter with the announcement that Sony had selected ATI graphics for its digital Set-Top box The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. , slated for the populous pop·u·lous adj. Containing many people or inhabitants; having a large population. [Middle English, from Latin popul New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of market. ATI's momentum into the non-PC platform and e-appliance markets got a tremendous boost with acquisition of ArtX, Inc. ATI will fold its considerable graphics and video expertise into the ArtX development efforts for the next generation Nintendo console. The acquisition also enabled ATI to bring to market immediately the S1-370 TL integrated Northbridge graphics chip set, aimed at the value PC market. The chip brings 128-bit computing computing - computer and T&L (transform and lighting feature), once the exclusive domain of high-end graphics chips, to the vast low-end market In the USA, as well as in most developed countries, the low-end market consists of lower-priced products suitable for customers who are not willing or able to spend large amounts of money. In developing countries, some low-end products may be considered high-end or even luxury items. . Another milestone in the e-appliance arena for ATI was the announcement of an agreement with Vestel, one of the largest TV manufacturers in Europe. Part of the announcement introduced the first product from the partnership, a Vestel TV with integrated ATI graphics and video technology -- a TV that will allow users to watch TV, access the Web, send an email and join the e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. revolution with a single appliance. This press release contains 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. that involve risks and uncertainties. Actual results may be materially different from those contained in such forward-looking statements. The markets for the Company's products are characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by rapidly changing technology, evolving industry standards, frequent new product introductions, emerging competitors and significant price competition. In the event that the Company is unsuccessful in identifying, developing, manufacturing or marketing new products or enhancing its existing products or maintaining its historic prices or margins, its operating results will be adversely affected. Additional information concerning factors that could cause actual results to materially differ from those in such forward-looking statements is contained in the Company's filings with 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 . About ATI ATI Technologies Inc., the world's largest supplier of 3D graphics and multimedia technology, designs, manufactures and markets innovative and award-winning multimedia solutions and graphics components for the personal computer, set-top box and consumer electronics appliance markets. An ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9002 company, ATI is the world's leading supplier of video and 2D/3D graphics accelerators A display adapter that performs a specialized set of graphics functions to render an image on screen. Today, all display adapters provide basic rendering functions in hardware, but many have graphics processing units (GPUs) that are sophisticated computers. to OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and and retail customers. Founded in l985, ATI employs more than 1,800 people at headquarters in Thornhill, Ontario Thornhill (2006 population 106,394) is an upscale community in Ontario, Canada, directly north of Toronto. It is considered the most affluent of Toronto suburbs. It straddles two municipalities, the city of Vaughan having the portion west of Yonge Street and the town of Markham , and in offices in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Germany, France, the United Kingdom, Ireland, Barbados, Malaysia, Japan and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. . ATI is a public company whose shares trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and NASDAQ. Replays of the company's conference call reviewing the year-end results will be available at approximately 12:00 pm EST EST electroshock therapy. EST abbr. electroshock therapy by calling 416/695-5800, passcode number 374874. For other ATI news releases visit our web site at http://www.ati.com. Copyright(C) ATI Technologies Inc., 2000. All company and/or product names are trademarks and/or registered trademarks of their respective manufacturers. Features, pricing, availability and specifications are subject to change without notice.
ATI TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of US dollars, except per share amounts)
Three months ended
February 29 February 28
2000 1999
----------------------------------------------------------------------
(unaudited)
Sales $380,060 100.0% $297,180 100.0%
Cost of goods sold 253,734 66.8% 187,996 63.3%
----------------------------------------------------------------------
126,326 33.2% 109,184 36.7%
Expenses
Selling and marketing 36,476 9.6% 23,385 7.9%
Research and development 28,429 7.5% 25,863 8.7%
Administrative 6,758 1.8% 7,870 2.6%
Amortization of intangible
assets 887 0.2% 17,320 5.8%
----------------------------------------------------------------------
72,550 19.1% 74,438 25.0%
----------------------------------------------------------------------
Income from operations 53,776 14.1% 34,746 11.7%
Interest and other income 1,380 0.4% 867 0.2%
Gain on sale of long-term
investments 10,666 2.8% - -
Interest expense (17) - (206) -
----------------------------------------------------------------------
Income before income taxes 65,805 17.3% 35,407 11.9%
Income taxes 14,725 3.9% 13,709 4.6%
----------------------------------------------------------------------
Net income $51,080 13.4% $21,698 7.3%
----------------------------------------------------------------------
----------------------------------------------------------------------
Net income per share
Basic $0.25 $0.11
Fully diluted $0.24 $0.10
----------------------------------------------------------------------
----------------------------------------------------------------------
Weighted average number of
shares (000's)
Basic 205,249 200,967
Fully diluted 221,899 220,682
Outstanding number of shares at
the end of the quarter
(000's) 206,046 201,711
----------------------------------------------------------------------
----------------------------------------------------------------------
Six months ended
February 29 February 28
2000 1999
----------------------------------------------------------------------
(unaudited)
Sales $793,587 100% $624,568 100%
Cost of goods sold 526,397 66.3% 395,429 63.3%
----------------------------------------------------------------------
267,190 33.7% 229,139 36.7%
Expenses
Selling and marketing 72,827 9.2% 49,480 7.9%
Research and development 57,955 7.3% 43,605 7.0%
Administrative 13,957 1.8% 15,042 2.4%
Amortization of
intangible assets 1,774 0.2% 19,245 3.1%
----------------------------------------------------------------------
146,513 18.5% 127,372 20.4%
----------------------------------------------------------------------
Income from operations 120,677 15.2% 101,767 16.3%
Interest and other income 2,569 0.3% 2,288 0.3%
Gain on sale of long-term
investments 10,666 1.4% - -
Interest expense (49) - (288) -
----------------------------------------------------------------------
Income before income taxes 133,863 16.9% 103,767 16.6%
Income taxes 29,203 3.7% 31,983 5.1%
----------------------------------------------------------------------
Net income $104,660 13.2% $71,784 11.5%
----------------------------------------------------------------------
----------------------------------------------------------------------
Net income per share
Basic $0.51 $0.36
Fully diluted $0.48 $0.33
----------------------------------------------------------------------
Weighted average number
of shares (000's)
Basic 205,083 200,184
Fully diluted 222,315 219,089
Outstanding number of shares
at the end of the quarter
(000's) 206,046 201,711
----------------------------------------------------------------------
----------------------------------------------------------------------
See accompanying notes to consolidated financial statements
ADJUSTED NET INCOME AND ADJUSTED NET INCOME PER SHARE
(Thousands of US dollars, except per share amounts)
Three month ended Six month ended
Adjusted net income (1) $44,821 $39,018 $99,288 $91,029
Adjusted net income per share
Basic $0.22 $0.19 $0.48 $0.45
Fully diluted $0.21 $0.18 $0.46 $0.42
----------------------------------------------------------------------
----------------------------------------------------------------------
(1) Adjusted net income excludes the after tax impact of the
amortization of intangible assets related to the acquisition of
Chromatic Research, Inc. and the gain on sale of long-term
investments.
ATI TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of US dollars)
February 29 February 28
2000 1999
----------------------------------------------------------------------
(unaudited)
Assets
Current Assets
Cash and cash equivalents $143,477 $73,890
Accounts receivable 233,947 185,137
Inventories 213,008 118,352
Prepayments and sundry receivables 23,541 16,760
----------------------------------------------------------------------
Total current assets 613,973 394,139
Capital assets 63,415 47,774
Intangible assets 17,034 51,624
Long-term investments 8,143 31,764
----------------------------------------------------------------------
Total assets $702,565 $525,301
----------------------------------------------------------------------
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness $ - $ 316
Accounts payable 140,380 104,993
Accrued liabilities 42,766 53,082
Income taxes payable 28,011 27,224
----------------------------------------------------------------------
Total current liabilities 211,157 185,615
Deferred income taxes 10,100 5,700
Shareholders' Equity
Share capital 99,084 85,261
Retained earnings 373,950 240,451
Currency translation adjustment 8,274 8,274
----------------------------------------------------------------------
Total shareholders' equity 481,308 333,986
----------------------------------------------------------------------
Total liabilities and shareholders'
equity $702,565 $525,301
----------------------------------------------------------------------
----------------------------------------------------------------------
Subsequent Event (note 4)
See accompanying notes to consolidated financial statements
ATI TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of US dollars)
Three months ended Six months ended
February 29 February 28 February 29 February 28
2000 1999 2000 1999
----------------------------------------------------------------------
(unaudited) (unaudited)
Cash provided by (used in):
Operating activities:
Net income $51,080 $21,698 $104,660 $71,784
Add items not affecting
working capital:
Deferred income taxes 4,300 - 5,700 283
Depreciation 4,872 3,138 9,103 5,592
Amortization of
intangible assets 887 17,320 1,774 19,245
Gain on sale of
long-term investments (10,666) - (10,666) -
Foreign exchange gain (11) (143) (1) (991)
Net changes in non-cash working capital balances relating to
operations:
Accounts receivable 27,487 (20,388) (55,402) (33,678)
Inventories (989) (3,294) (22,103) (4,684)
Prepayments and sundry
receivables (5,859) (3,027) (7,889) (4,056)
Accounts payable (29,134) (32,328) 37,283 2,068
Accrued liabilities (12,366) 6,833 (10,071) 10,580
Income taxes payable (863) (313) (2,267) (2,380)
----------------------------------------------------------------------
28,738 (10,504) 50,121 63,763
----------------------------------------------------------------------
Financing activities:
Increase in bank indebtedness - (1,966) - 316
Issuance of common shares 6,181 5,275 6,728 5,835
Common shares purchased
for cancellation - - (6,929) -
----------------------------------------------------------------------
6,181 3,309 (201) 6,151
----------------------------------------------------------------------
Investing activities:
Maturity of short-term
investments - - 10,000 39,192
Additions to capital
assets (8,970) (9,870) (16,934) (15,249)
Investment in other assets - (125) - (125)
Proceeds from sale of
long-term investments 15,023 - 15,023 -
Acquisitions, net of cash
acquired $2,039 - - - (25,549)
----------------------------------------------------------------------
6,053 (9,995) 8,089 (1,731)
----------------------------------------------------------------------
Foreign exchange gain on
cash held in foreign
currency 11 143 1 991
Increase (decrease)
in cash 40,983 (17,047) 58,010 69,174
Cash and cash equivalents
- beginning of period 102,494 90,937 85,467 4,716
----------------------------------------------------------------------
Cash and cash equivalents
- end of period 143,477 73,890 $143,477 $73,890
Bank indebtedness - (316) - (316)
----------------------------------------------------------------------
Cash position
- end of period $143,477 $73,574 $143,477 $73,574
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash position is defined as cash and cash equivalents and short-term
investments, net of bank indebtedness. See accompanying notes to
consolidated financial statements.
ATI TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 29, 2000
(unaudited)
1. ADJUSTED NET INCOME AND ADJUSTED NET INCOME PER SHARE
The table below presents adjusted net income and adjusted net income
per share, which excludes the after-tax effect of the gain on sale of
long-term investments and amortization of purchased in-process
research and development and other acquired intangibles related to the
acquisition of Chromatic Research, Inc.
Three months ended Six months ended
February 29 February 28 February 29 February 28
2000 1999 2000 1999
(Thousands of US dollars,
except per share amounts)
----------------------------------------------------------------------
(unaudited) (unaudited)
Net income $ 51,080 $ 21,698 $ 104,660 $ 71,784
Gain on sale of
long-term investments (10,666) - (10,666) -
Amortization of intangible
assets 887 17,320 1,774 19,245
Net tax impact of above
adjustments 3,520 - 3,520 -
----------------------------------------------------------------------
Adjusted net income $ 44,821 $ 39,018 $ 99,288 $ 91,029
----------------------------------------------------------------------
----------------------------------------------------------------------
Adjusted net income per share
Basic $0.22 $0.19 $0.48 $0.45
Fully diluted $0.21 $0.18 $0.46 $0.42
----------------------------------------------------------------------
----------------------------------------------------------------------
2. SEGMENTED INFORMATION
The Company operates in one operating segment, that being the design,
manufacture and sale of graphics and multimedia products for personal
computers and e-appliances.
The following table provides sales by geographic area and by product:
Three months ended Six months ended
February 29 February 28 February 29 February 28
2000 1999 2000 1999
(Thousands of US dollars)
----------------------------------------------------------------------
Sales:
Canada $ 11,219 $ 7,931 $ 26,290 $ 18,525
United States 135,213 96,448 253,757 207,802
Europe 111,737 112,867 270,725 238,593
Asia-Pacific 121,891 79,934 242,815 159,648
----------------------------------------------------------------------
Consolidated sales $ 380,060 $ 297,180 $ 793,587 $ 624,568
----------------------------------------------------------------------
----------------------------------------------------------------------
Product sales:
Components $ 157,425 $ 94,786 $ 282,422 $ 208,038
Boards 222,635 202,394 511,165 416,530
----------------------------------------------------------------------
Consolidated sales $ 380,060 $ 297,180 $ 793,587 $ 624,568
----------------------------------------------------------------------
----------------------------------------------------------------------
3. U.S. GAAP
The following table reconciles the net income as reported on the
consolidated statements of operations prepared in accordance with
Canadian GAAP to the consolidated net income that would have been
reported had the financial statements been prepared in accordance with
U.S. GAAP:
Three months ended Six months ended
February 29 February 28 February 29 February 28
2000 1999 2000 1999
(Thousands of US dollars,
except per share amounts)
----------------------------------------------------------------------
(unaudited) (unaudited)
Net income in accordance
with Canadian GAAP $ 51,080 $ 21,698 $ 104,660 $ 71,784
Adjustment to deferred
income taxes (45) 30 20 (170)
Effect of deferral accounting
related to foreign exchange
contracts (430) - (430) 1,460
Tax effect of stock options
exercised (1,600) - (1,600) -
Write-off of purchased
in-process research and
development (note a) - - - (49,300)
Amortization of purchased
in-process research and
development (note a) - 16,433 - 18,259
----------------------------------------------------------------------
Net income in accordance
with U.S. GAAP $ 49,005 $ 38,161 $ 102,650 $ 42,033
----------------------------------------------------------------------
----------------------------------------------------------------------
Net income per share
Basic $0.24 $0.19 $0.50 $0.21
Diluted $0.23 $0.18 $0.48 $0.20
----------------------------------------------------------------------
Weighted average number
of shares (000's):
Basic 205,249 200,967 205,083 200,184
Diluted 213,315 213,569 212,940 211,105
----------------------------------------------------------------------
(a) Under Canadian GAAP, purchased in-process research and development
is amortized over its estimated useful life and asset recoverability
is reviewed on an ongoing basis. Under U.S. GAAP, purchased in-process
research and development acquired by the Company is written off at the
time of acquisition.
4. SUBSEQUENT EVENT On April 4, 2000 the Company acquired all of the issued and outstanding shares and options of ArtX, Inc. ("ArtX"), a privately-held company based in Palo Alto, California, which designs and develops graphics solutions for high-performance PCs and e-appliances. The acquisition resulted in the issue of approximately 21.5 million common shares and 7.0 million options of the Company. The aggregate purchase price is expected to be approximately $450 million based on the closing price of the Company's shares around the date of closing. Furthermore, an additional 4.1 million common shares are issuable to former ArtX shareholders should ArtX achieve certain milestones in the future. The acquisition will be accounted for using the purchase method and accordingly, the purchase price will be allocated to the fair value of 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. The estimated allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the purchase price will be to net tangible assets Net Tangible Assets Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents and trademarks, less all liabilities and the par value of preferred stock. Also known as "net asset value" or "book value". of $7 million, acquired core technology of $15 million, purchased in-process research and development of $51 million, and goodwill of $377 million. This allocation is subject to adjustment and expected to be finalized See finalization. by the end of fiscal year 2000. Purchased in-process research and development will be charged to operations over a one-year period on a straight-line basis 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. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and will be immediately charged to operations in accordance with U.S. GAAP. Acquired core technology and goodwill will be amortized over a five-year period for both Canadian and U.S. GAAP purposes. |
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