ATI Technologies Inc. Announces Third-Quarter Results Sales Rise 65 Percent Year-Over-Year to $302 Million.TORONTO--(BUSINESS WIRE)--July 8, 1999-- 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:ATYT ATYT ATI Technologies, Inc (stock symbol) )(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 .) ATI Technologies Inc. (TSE:ATY)(Nasdaq:ATYT) the world leader in 3D graphics/video acceleration and multimedia solutions, today announced financial results for the Company's third quarter ended May 31, 1999. All financial results are expressed in US dollars. Historical US dollar financial statements for the prior four years can be found on the Company's website at www.atitech.com. Sales for the three months ended May 31, 1999 were $302.0 million, an increase of 65 percent from $182.8 million for the same period last year. Adjusted net income for the third quarter, which excludes the amortization of purchased in-process R&D and other acquired intangibles as discussed below, rose 35 percent to $35.9 million or 17 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 $26.5 million or 12 cents per share for the same period last year. All per share amounts are expressed on a fully 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. On November November: see month. 20, 1998, 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. completed the acquisition of Chromatic chromatic /chro·mat·ic/ (kro-mat´ik) 1. pertaining to color; stainable with dyes. 2. pertaining to chromatin. chro·mat·ic adj. 1. Relating to color or colors. Research, Inc. (Chromatic) a developer of system-on-a-chip System-on-a-chip or system on chip (SoC or SOC) refers to integrating all components of a computer or other electronic system into a single integrated circuit (chip). technology for approximately $70.9 million (see Note 1). As a result, the Company took a charge in the third quarter of $17.3 million or eight cents per share for the amortization of purchased in-process R&D and other acquired intangibles related to its purchase of Chromatic. Actual net income for the third quarter, including the above-mentioned A`bove´-men`tioned a. 1. Mentioned or named before; aforesaid; mentioned or named earlier in the same text (in written documents). Adj. 1. amortization of purchased in-process R&D and other acquired intangibles related to the purchase of Chromatic, was $18.6 million or nine cents per share, compared with $26.5 million or 12 cents per share for the same period last year. "ATI's third quarter results proves the Company's product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. strategy, building from our core graphics and multimedia competencies, has been successful," said K.Y. Ho, ATI's president 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. . "Our established success in desktop graphics is extending into the mobile segment, and we have already put in place many of the building blocks needed to be a leader in emerging markets such as set-top boxes 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. and consumer computing computing - computer appliances." Financial Highlights Sales in the third quarter continued to be strong, reflecting confidence in the Company's products. Design wins garnered with ATI's RAGE 128 components and boards fueled growth, as did sales of new components such as the RAGE XL and RAGE Mobility chips. Still a solid contributor, three years from its first introduction, was ATI's RAGE PRO family of products. ATI's preeminence 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 in the retail and distribution channels also was exhibited with increased sales from these channels in the quarter. Gross margins were solid at 37.0 percent for the third quarter and compare with 36.9 percent in the same quarter last year. The overall gross margin percentage can change with fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. material costs and differences in product mix. Operating costs operating costs npl → gastos mpl operacionales (excluding acquisition amortization costs of $17.3 million) in the third quarter increased 96 percent year-over-year to $63.5 million up from $32.3 million for the third quarter of fiscal 1998. This was largely due to the expected increase in R&D expenditures relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the acquisition of the Chromatic development team and increased costs related to developing additional product lines. The overall corporate tax rate remained the same at 26 percent of earnings before taxes (excluding the amortization of intangibles). Earnings after taxes, excluding amortization related costs, rose to $35.9 million or 11.9 percent of sales versus $26.5 million or 14.5 percent of sales for the corresponding quarter of 1998. During the quarter, working capital increased from $208.5 million at the end of the second quarter to $267.5 million at the end of the third quarter of fiscal 1999. Account receivable account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. balances improved by $19.7 million following improved collections during the quarter to $165.5 million. Inventory levels increased to $185.1 million to support multiple product lines. 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. ) after payments for capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) increased during the quarter by $26.4 million to $100.0 million. Operational Highlights During the quarter, ATI announced a number of design wins for its newest component, the award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" RAGE 128. Following robust demand from Apple Computer, the Company was selected to power Gateway's new Essential consumer and E4200 corporate desktops, Hewlett Hewlett may refer to: People with the surname Hewlett:
With overall performance to match the best 3D chips on the market today and unmatched support for digital video and 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 , the RAGE 128 has the best combination of features and performance among 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. . During the quarter ATI also reported that the RAGE family of components are used across the entire range of desktop computers made by eMachines (eMachines, Inc., Irvine, CA, www.emachines.com) A manufacturer of PCs founded in 1998 and backed by Korean PC manufacturer TriGem Computer, monitor maker Korea Data Systems and other investors. eMachines targeted the consumer market with its first models in the sub-$500 range. Inc. In the latest market study from Mercury Research ATI vaulted into the number three position in mobile graphics. During the first quarter of calendar 1999 ATI more than doubled its 1998 market share in the laptop Same as laptop computer. laptop - portable computer market, reaching 15 percent in this rapidly growing segment. Driving towards the number one spot, ATI reported a long list of contracts with Apple, Compaq (Compaq Computer Corporation, Houston, TX, www.compaq.com) Compaq was the leading PC manufacturer when it was acquired by HP in 2002. Founded in 1982 by Rod Canion, Jim Harris and Bill Murto, one year later the company shipped 53,000 PC-compatible COMPAQ Portables, resulting in $111 , Dell, Fujistu and Gateway for notebooks. Illustrating success in multiple market segments, ATI also earned the highest market share of graphics and video cards sold through the U.S. distribution channels, ever reported. During the quarter, ATI announced several new products. The RAGE 128 PRO 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 unveiled the next generation of components that combines architectural enhancements with higher clock frequencies to achieve a 50 percent improvement in 3D performance. Also announced was the Company's Set-Top Box II reference design, a platform from which consumer electronics OEMs can develop low-cost, high performance set-top boxes. The Set-Top Wonder II is a complete design including RISC RISC in full Reduced Instruction Set Computing Computer architecture that uses a limited number of instructions. RISC became popular in microprocessors in the 1980s. CPU CPU in full central processing unit Principal component of a digital computer, composed of a control unit, an instruction-decoding unit, and an arithmetic-logic unit. , memory, graphics, modem, audio, I/O (Input/Output) The transfer of data between the CPU and a peripheral device. Every transfer is an output from one device and an input to another. See PC input/output. I/O - Input/Output , drivers and sample applications. ATI won the largest set-top design contract 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. with General Instruments based on the performance of our first-generation first-gen·er·a·tion adj. 1. Of or relating to a person who has left one country and settled in another. 2. Of or relating to a person or persons whose parents are immigrants. 3. Set-Top Wonder reference design. 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 A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software 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 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 1,700 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. For other ATI news releases visit our web site at http://www.atitech.com. Copyright (C) ATI Technologies Inc., 1999. 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. -0-
ATI TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Thousands of US dollars, except per share amounts
Three months ended
May 31
1999 1998
---------------------------------------------------------------
(unaudited))
Sales $302,039 100.0 $182,758 100.0
percent percent
Cost of goods sold 190,153 63.0 115,394 63.1
percent percent
---------------------------------------------------------------
111,886 37.0 67,364 36.9
percent percent
---------------------------------------------------------------
Expenses
Selling and
marketing 28,076 9.3 16,555 9.1
percent percent
Research and
development 27,703 9.2 10,931 6.0
percent percent
Administrative 7,750 2.6 4,843 2.6
percent percent
Amortization of
intangible assets 17,320 5.7 percent - -
---------------------------------------------------------------
80,849 26.8 32,329 17.7
percent percent
---------------------------------------------------------------
Income from operations 31,037 10.2 35,035 19.2
percent percent
Interest and other
income 223 0.1 799 0.4
percent percent
Interest expense (42) - (32) -
---------------------------------------------------------------
Income before income
taxes 31,218 10.3 35,802 19.6
percent percent
Income taxes 12,640 4.2 9,308 5.1
percent percent
---------------------------------------------------------------
Net income $18,578 6.1 $26,494 14.5
percent percent
Retained
earnings-beginning
of period $240,451 $112,819
---------------------------------------------------------------
Retained
earnings-end of
period $259,029 $139,313
===============================================================
Net income per share
Basic $0.09 $0.13
Fully diluted $0.09 $0.12
===============================================================
Weighted average number
of shares (000's)
Basic 202,485 196,893
Fully diluted 220,786 215,912
Outstanding number of
shares at the end of
the quarter (000's) 202,951 197,927
===============================================================
See accompanying notes to consolidated financial statements
ADJUSTED NET INCOME
(Thousands of US dollars,
except per share amounts)
Adjusted net
income (1) $35,898 $26,494
Adjusted net income
per share
Basic $0.18 $0.13
Fully diluted $0.17 $0.12
===============================================================
(1) Adjusted net income excludes the after-tax effect of
amortization of purchased in-process R&D and other acquired
intangibles related to the acquisition of Chromatic Research, Inc.
Nine months ended
May 31
1999 1998
(unaudited)
Sales $926,607 100.0 $532,542 100.0
percent percent
Cost of goods sold 585,582 63.2 335,022 62.9
percent percent
341,025 36.8 197,520 37.1
percent percent
---------------------------------------------------------------
Expenses
Selling and
marketing 77,556 8.4 46,115 8.7
percent percent
Research and
development 71,308 7.7 30,043 5.6
percent percent
Administrative 22,792 2.5 13,307 2.5
percent percent
Amortization of
intangible assets 36,565 3.9 - -
percent
---------------------------------------------------------------
208,221 22.5 89,465 16.8
percent percent
---------------------------------------------------------------
Income from
operations 132,804 14.3 108,055 20.3
percent percent
Interest and other
income 2,511 0.3 2,418 0.4
percent percent
Interest expense (330) - (58) -
---------------------------------------------------------------
Income before income
taxes 134,985 14.6 110,415 20.7
percent percent
Income taxes 44,623 4.8 32,438 6.1
percent percent
---------------------------------------------------------------
Net income $90,362 9.8 $77,977 14.6
percent percent
Retained earnings-
beginning of
period $168,667 $61,336
---------------------------------------------------------------
Retained earnings-
end of period $259,029 $139,313
===============================================================
Net income per share
Basic $0.45 $0.40
Fully diluted $0.42 $0.37
===============================================================
Weighted average number
of shares (000's)
Basic 200,951 195,734
Fully diluted 219,728 214,970
Outstanding number of
shares at the end of
the quarter (000's) 202,951 197,927
===============================================================
See accompanying notes to consolidated financial statements
ADJUSTED NET INCOME
(Thousands of US dollars, except per share amounts)
Adjusted net
income (1) $126,927 $77,977
Adjusted net income per share
Basic $0.63 $0.40
Fully diluted $0.58 $0.37
===============================================================
(1) Adjusted net income excludes the after-tax effect of
amortization of purchased in-process R&D and other acquired
intangibles related to the acquisition of Chromatic Research, Inc.
ATI TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of US dollars)
May 31 August 31
---------------------------------------------------------------
1999 1998 1998
---------------------------------------------------------------
(unaudited) (audited)
Assets
Current Assets
Cash and cash equivalents $90,012 $20,679 $4,716
Short-term investments 10,000 39,192 39,192
Accounts receivable 165,461 120,335 150,256
Inventories 185,126 90,839 110,340
Prepayments and sundry
receivables 17,070 5,650 12,267
---------------------------------------------------------------
Total current assets 467,669 276,695 316,771
Capital assets 53,693 32,241 35,282
Intangible assets 34,304 - -
Long-term investments 6,375 28,407 28,528
---------------------------------------------------------------
Total assets $562,041 $337,343 $380,581
===============================================================
Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness $ - $10,859 $ -
Accounts payable 112,379 68,857 73,139
Accrued liabilities 59,360 13,713 24,328
Income taxes payable 28,393 23,812 29,604
---------------------------------------------------------------
Total current liabilities 200,132 117,241 127,071
Deferred income taxes 6,800 3,633 5,417
Shareholders' equity
Share capital 87,806 77,156 79,426
Retained earnings 259,029 139,313 168,667
Currency translation
adjustment 8,274 - -
---------------------------------------------------------------
Total shareholders' equity 355,109 216,469 248,093
---------------------------------------------------------------
Total liabilities and
shareholders' equity $562,041 $337,343 $380,581
===============================================================
See accompanying notes to consolidated financial statements
ATI TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Thousands of US dollars)
Three months Nine months
ended ended
May 31 May 31
---------------------------------------------------------------
1999 1998 1999 1998
---------------------------------------------------------------
(unaudited) (unaudited)
Cash provided by
(used in):
Operating
activities:
Net income $18,578 $26,494 $90,362 $77,977
Add items not
affecting
working capital:
Deferred income
taxes 1,100 1,403 1,383 447
Depreciation 3,697 1,900 9,289 4,684
Amortization of
intangible
assets 17,320 - 36,565 -
Net changes in
non-cash working
capital
balances relating
to operations:
Accounts
receivable 19,676 (12,030) (14,002) (47,850)
Inventories (66,774) (8,715) (71,458) (64,334)
Prepayments
and sundry
receivables (310) 572 (4,366) (1,780)
Accounts payable 7,386 (13,978) 9,454 33,465
Accrued
liabilities 6,278 1,444 16,858 2,442
Income taxes
payable 1,169 4,675 (1,211) 19,025
---------------------------------------------------------------
8,120 1,765 72,874 24,076
---------------------------------------------------------------
Financing activities:
Increase in bank
indebtedness - 1,768 - 10,859
Issuance of common
shares 2,545 3,480 8,380 7,215
---------------------------------------------------------------
2,545 5,248 8,380 18,074
---------------------------------------------------------------
Investing activities:
Maturity (purchase)
of short-term
investments (10,000) (39,192) 29,192 (39,192)
Additions to
capital
assets (9,616) (7,531) (24,865) (17,116)
Additions to
long-term
investments (625) (5,901) (750) (10,895)
Sale of long-term
investment 26,014 - 26,014 -
Acquisition, net of
cash acquired
of $2,039 (Note 1) - - (25,549) -
---------------------------------------------------------------
5,773 (52,624) 4,042 (67,203)
---------------------------------------------------------------
Increase/(Decrease)
in cash 16,438 (45,611) 85,296 (25,053)
Cash and Cash
Equivalents
- beginning of
period 73,574 66,290 4,716 45,732
---------------------------------------------------------------
Cash and Cash
Equivalents
- end of period $90,012 $20,679 $90,012 $20,679
Short-term
investments 10,000 39,192 10,000 39,192
Bank indebtedness - (10,859) - (10,859)
---------------------------------------------------------------
Cash position
- end of period $100,012 $49,012 $100,012 $49,012
===============================================================
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
May 31, 1999
(unaudited)
1. Acquisition
On November 20, 1998, the Company acquired all of the issued and
outstanding shares of Chromatic Research, Inc. ("Chromatic"). The
acquisition has been accounted for by the purchase method, whereby the
results of operations of Chromatic are included in the Company's
results from November 20, 1998.
The total investment of $70.9 million, consisting of $27.6
million for 100 percent of the outstanding shares and net liabilities
assumed of $43.3 million, has been allocated to purchased in-process
research and development of $49.3 million, identifiable intangible
assets consisting of core technology and workforce of $8.4 million and
goodwill of $13.2 million. The total investment for the acquisition is
subject to adjustment, expected to be finalized by the end of 1999.
Any adjustments will be reflected in the allocation described above.
Purchased in-process research and development is being charged to
operations over a nine month period on a straight line basis,
principally to reflect the technological uncertainty of
system-on-a-chip technology, the rapid pace of change of similar
semiconductor technologies and the need for further significant
research and development expenditures to bring Chromatic's products to
commercial availability. Identifiable intangible assets are being
amortized on a straight line basis over periods ranging from five to
seven years. Goodwill is being amortized over a period of seven years
on a straight line basis.
ATI TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999
(unaudited)
2. 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:
(Thousands of US dollars,
except per share amounts)
Three months ended Nine months ended
May 31 May 31
1999 1998 1999 1998
----------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net income in
accordance with
Canadian GAAP $18,578 $26,494 $90,362 $77,977
Adjustment to
deferred income
taxes (100) 20 (270) 60
Effect of deferral
accounting related to
foreign exchange
contracts - (581) 1,460 (840)
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 - 34,692 -
Foreign exchange
translation
difference between
Canadian and U.S. GAAP - 2,584 - 8,194
---------------------------------------------------------------
Net income in
accordance with
U.S. GAAP $34,911 $28,517 $76,944 $85,391
---------------------------------------------------------------
Net income per share
Basic $0.17 $0.14 $0.38 $0.44
Diluted $0.16 $0.14 $0.36 $0.41
---------------------------------------------------------------
Weighted average number of shares (000's):
Basic 202,485 196,893 200,951 195,734
Diluted 213,990 209,684 211,351 206,377
===============================================================
-0- (a) Under 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). , 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. YEAR 2000 READINESS ATI's Annual Report for the year ended August 31, 1998 included a status report regarding the "Year 2000 problem Year 2000 problem, Y2K problem, or millennium bug, in computer science, a design flaw in the hardware or software of a computer that caused erroneous results when working with dates beyond Dec. 31, 1999. ". The Year 2000 problem can apply to any computer or date-sensitive device. Current operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. (hardware and software) could fail, because they are unable to handle the numerals "00" (representing the Year 2000) within their processing logic. This issue presents a risk for the Company from unforeseen problems arising from its own computer or operating systems, and from unforeseen problems arising from systems at third parties with whom the Company maintains a significant relationship. Failure of the Company's systems or of those of such third parties to be Year 2000 compliant a. 1. (Computers) having dates fully and properly represented, and not susceptible to failure due to the year 2000 bug. could result in material interruptions in the manufacturing and distribution of the Company's products and thereby have a material adverse impact on the financial condition and results of operations of the Company. The Company's Year 2000 Steering Committee steer·ing committee n. A committee that sets agendas and schedules of business, as for a legislative body or other assemblage. steering committee Noun is overseeing the efforts of the Company with respect to achieving and maintaining Year 2000 compliance. The Company has met the corporate target of achieving Year 2000 compliance for all critical systems by June 30, 1999. In a few cases, items not required for the manufacturing and distribution of the Company's products will be updated or replaced in the third calendar quarter of 1999. For the remainder of 1999 the Company will monitor the Year 2000 readiness of the Company's systems and operations. The Company established Year 2000 coordinators for each key function and operating location. The coordinators create local awareness of the importance of Year 2000 compliance. They insure Insure can mean:
The Company's IT function is responsible for the Company's worldwide computer network (hardware and software) and other communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. . The computer network and communications systems are currently Year 2000 compliant. In conjunction with the rapid growth in the Company's business volumes, the Company successfully installed a new, Year 2000 compliant, enterprise wide ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. (Enterprise Resource Planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. ) and financial system in May of 1999. The Company's pre-existing major processing systems had previously been updated and are also Year 2000 compliant. Management has identified contingency plans A plan involving suitable backups, immediate actions and longer term measures for responding to computer emergencies such as attacks or accidental disasters. Contingency plans are part of business resumption planning. , intended to permit a rapid return to normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of , should the Company experience any Year 2000 failures in its internal systems or operations. As part of the Company's Year 2000 contingency contingency n. an event that might not occur. planning, the pre-existing systems (above) are available, should any Year 2000 problems occur with the new ERP and financial system. Similarly, where practicable practicable adj. when something can be done or performed. , the IT function maintains back-up equipment to replace any failing units in the Company's computer network. ATI also relies on the Year 2000 readiness of its customers and suppliers. The Company is actively involved in a continuing dialogue with its major customers, regarding their preparedness pre·par·ed·ness n. The state of being prepared, especially military readiness for combat. Noun 1. preparedness - the state of having been made ready or prepared for use or action (especially military action); "putting them for the Year 2000. The Company is also working with its suppliers, to assess whether their operations and the products and services they provide to the Company are, or will be, Year 2000 compliant. The focus of this effort is on the key wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. , assembly, and test and board suppliers. In most cases, these suppliers also selected June 30, 1999 as their target date for achieving Year 2000 compliance. The Company conducted in depth reviews, to determine that its suppliers have taken appropriate steps to remediate re·me·di·a·tion n. The act or process of correcting a fault or deficiency: remediation of a learning disability. re·me their potential Year 2000 problems and to develop contingency plans, designed to provide assured sources of supply to the Company. As there can be no absolute assurance that all third party systems and operations have been converted successfully, management has implemented procedures, including the development of contingency plans, to limit the Company's exposure to any third party failure to be Year 2000 ready. Contingency plans include alternate sources of supply for all inputs to the Company's manufacturing process. However, as is noted above, third party failure, including the failure of the Company's or a third party's contingency plans, remains a possibility and could have a material adverse impact on the Company's operations and financial condition. Based on reviews and testing of its products, the Company believes its products are Year 2000 compliant and will not, therefore, expose the Company to material Year 2000 related liabilities. New products are reviewed on a continuing basis, for compliance with Year 2000 requirements. The Company's Year 2000 readiness activities are being accomplished mainly with existing resources. Incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. expenditures to achieve Year 2000 readiness incurred to date, and those estimated for the remainder of 1999, are not expected to be material to the Company's operating results. Year 2000 expenditures are charged to expenses, or capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. , when they are incurred, based on the Company's normal accounting policies. |
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