Premier Tech Continues the Integration of Chronos Richardson and the Implementation of Initiatives to Reduce the Impact of a Strong Canadian Dollar Against the US Dollar.MONTREAL Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. -- During the Annual Meeting of its shareholders held today at the Queen Elizabeth Hotel Fairmont The Queen Elizabeth (commonly called The Queen Elizabeth Hotel; French: La Reine Elizabeth) is a grand hotel in Montreal, Quebec. It was built by the Canadian National Railway, but was later sold to Canadian Pacific Hotels, now Fairmont Hotels and Resorts. , Premier Tech released its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: results for the three-month period ended August 28, 2004. MANAGEMENT'S COMMENTS ON THE COMPANY'S PERFORMANCE AND FINANCIAL POSITION Management's comments were prepared to explain the Company's operations, performance and financial position as at August 28, 2004. They compare the operating results and cash position of the first quarter ended August 28, 2004, with those of the quarter ended August 30, 2003. This analysis also compares other major elements with those of the fiscal year ended May 29, 2004. This analysis of the Company's operating results and financial position should therefore be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the audited annual financial statements for the fiscal year ended May 29, 2004, as well as the related notes and Management's Comments on the Company's performance and financial position on pages 41-88 of the Company's 2004 annual report. 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. FORECASTS AND CAUTIONARY STATEMENT Management's comments and analysis include forward-looking objectives, projections, estimates, expectations and forecasts of the Company or management. Positive or negative verbs A negative verb is a type of auxiliary with help of which negative forms of verbs are formed. The action itself has no personal endings, while the negative verb takes the inflection. such as "believes," "plans," "estimates," "expects" and "evaluates," or similar expressions, are used to identify 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. . The Company cautions readers that, by their very nature, forward-looking statements involve major risks and uncertainties such that the Company's activities or results could differ materially from those indicated, whether explicitly ex·plic·it adj. 1. a. Fully and clearly expressed; leaving nothing implied. b. Fully and clearly defined or formulated: "generalizations that are powerful, precise, and explicit" or implicitly im·plic·it adj. 1. Implied or understood though not directly expressed: an implicit agreement not to raise the touchy subject. 2. . Earnings before depreciation and amortization, scientific research expenses, interest on long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , interest and bank charges and income taxes (earnings before other items) is a measurement that has no standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. definition 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. 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 . This measurement is therefore deemed to be not 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 generally accepted accounting principles. As such, this measurement may not be comparable to similar measurements presented by other issuers. It is presented and described in this management report in order to provide shareholders and potential investors with additional information about the results of its operations. The fluctuation Fluctuation A price or interest rate change. analysis of foreign currencies against the 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 is comprised, on the one hand, of an estimate of their impact on the Company's sales and earnings before taxes and, on the other hand, of gains and losses on foreign exchange contracts and on translation of monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. accounted for in the 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 in accordance with generally accepted accounting principles. Additional information on Premier Tech is available on the Company's website at: www.premiertech.com. Filings produced by Premier Tech under its continuous disclosure obligation, in particular its quarterly and annual management reports and financial statements, its 2004 annual report, its Management Proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. Circular Circular may refer to:
SEDAR Southeast Data, Assessment, and Review at www.sedar.com. APPROVAL OF QUARTERLY FINANCIAL STATEMENTS Prior to publication, Premier Tech's financial statements were approved by the Board of Directors, on the recommendation of the audit committee. CONSOLIDATED OPERATING RESULTS Distribution of sales
Three-month period Three-month period
ended August 28, 2004 ended August 30, 2003
-------------------------------------------------------------------
In thousands Rate of In thousands Rate of
of dollars growth of dollars growth
-------------------------------------------------------------------
$ % $ %
Sales
PHL 23,593 0.4 23,502 3.7
PTP 22,316 (21.5) 28,436 175.8
ESL 8,120 (17.0) 9,789 52.2
PTE 8,991 30.4 6,893 20.8
Others (1) 5 68
-------------------------------------------------------------------
Consolidated sales 63 025 (8.2) 68 688 57.1
-------------------------------------------------------------------
(1) Includes business sectors that cannot be isolated and other
consolidated elements.
Consolidated sales for the three-month period ending August 28, 2004, reached $63 million, down 8.2% from the first quarter of the previous year, which was $68.7 million. The decline in the Company's sales can be attributed to decreased shipments from Premier Tech Packaging and Erin Erin (ĕr`ĭn, ēr`–), ancient and poetic name of Ireland. Systems during the first quarter compared with the same period of the previous year, and by the negative impact of foreign exchange fluctuations. Premier Horticulture horticulture [Lat. hortus=garden], science and art of gardening and of cultivating fruits, vegetables, flowers, and ornamental plants. Horticulture generally refers to small-scale gardening, and agriculture to the growing of field crops, usually on a large saw sales growth of 0.4%, whereas, for the business unit Premier Tech Environment, sales grew by 30.4% over the same period the previous year.
Summary of consolidated results
Three-month period Three-month period
ended August 28, 2004 ended August 30, 2003
-------------------------------------------------------------------
In thousands Percentage In thousands Percentage
of dollars of sales of dollars of sales
-------------------------------------------------------------------
$ % $ %
Sales 63,025 100.0 68,688 100.0
Operating expenses 59,359 94.2 63,672 92.7
-------------------------------------------------------------------
Earnings before
other items 3,666 5.8 5 016 7.3
-------------------------------------------------------------------
Depreciation and
amortization 2,967 4.7 2,729 4.0
Scientific research
expenses 537 0.9 277 0.4
Interest on
long-term debt 1,243 2.0 944 1.4
Interest and
bank charges 375 0.6 379 0.6
-------------------------------------------------------------------
Earnings (loss)
before income taxes (1,456) (2.3) 687 1.0
-------------------------------------------------------------------
Income taxes (43) (0.1) 371 0.5
-------------------------------------------------------------------
Net earnings (loss) (1,413) (2.2) 316 0.5
-------------------------------------------------------------------
Earnings (loss)
per share
Basic (0.09) 0.02
Diluted (0.09) 0.02
-------------------------------------------------------------------
-------------------------------------------------------------------
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. were $59.4 million, representing 94.2% of sales, compared with $63.7 million, or 92.7% of sales, for the first quarter of the previous year. Concomitantly con·com·i·tant adj. Occurring or existing concurrently; attendant. See Synonyms at contemporary. n. One that occurs or exists concurrently with another. , earnings before other items such as depreciation and amortization, scientific research expenses, interest, bank charges and income taxes fell to $3.7 million, or 5.8% of sales, for the period ended August 28, 2004, compared with $5 million, or 7.3% of sales, for the same period the previous year. Several factors contributed to the lower earnings before other items during the first quarter ended August 28, 2004, compared with the quarter ended August 30, 2003. Firstly, Premier Tech Packaging and Erin Systems posted lower sales. Secondly, the additional measures announced by Chronos In Greek mythology, Chronos (Χρόνος in Greek) in pre-Socratic philosophical works is said to be the personification of time. He emerged from the primordial Chaos. Richardson Richardson, city (1990 pop. 74,840), Dallas and Collins counties, N Tex., a suburb of Dallas; founded in the 1850s, inc. as a city 1956. Richardson manufactures telecommunications equipment, medical devices, supercomputers, computer chips, and fiber optics. 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 Erin Systems to reduce costs and
improve earnings had not yet come into effect, which contributed to
increased losses given lower sales for these business units. Thirdly,
the Company sustained the negative impact of foreign currency
fluctuation against the Canadian dollar.Other items represented $5.1 million in the first quarter, compared with $4.3 million for the first quarter of the previous year, for an increase of $0.8 million. Depreciation and amortization rose $0.2 million, as a result of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. on telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. infrastructure and computer systems in fiscal year 2004, as well as the marketing of new products developed under the MOBILISATEUR II program. Scientific research expenses, net of investment tax credits and government assistance, also grew $0.3 million over the same quarter the previous year. The increase can be primarily attributed to the Premier Horticulture business unit in the framework of its new product development program. Financial expenses were $1.6 million in the three-month period ended August 28, 2004, compared with $1.3 million during the same period the previous year. This stems principally from the increase in long-term liabilities Long-Term Liabilities Recorded on the balance sheet, a company's liabilities for leases, bond repayments and other items due in more than one year. Notes: A company's long-term liabilities are accounted for by its debt obligations to other parties which last longer than subsequent to refinancing Refinancing An extension and/or increase in amount of existing debt. in fiscal year 2004. During the three-month period ended August 28, 2004, the Company posted a loss before income taxes of $1.5 million, compared with earnings before income taxes of $0.7 million for the quarter ended August 30, 2003. Exchange rate fluctuations Exchange rate fluctuations against the Canadian dollar had a negative impact of $0.9 million on sales and of $1.3 million on earnings before taxes during the first quarter ended August 28, 2004, compared with the quarter ended August 30, 2003.
Comparative analysis of the impact of exchange rate fluctuations
(in millions of dollars)
Premier Tech Q1 2004 Q1 2003
compared with Q1 2003 compared with Q1 2002
-------------------------------------------------------------------
$ US All currencies $ US All currencies
Average rate during
the quarter 1.33 1.37
Total impact of
Canadian dollar
fluctuations against
foreign currencies on
Sales (1.5) (0.9) (2.6) (1.9)
Earnings before
income taxes (1.1) (1.3) (1.6) (0.8)
-------------------------------------------------------------------
Items included in the
impact valuation
Variance due to
gains or losses
on exchange
contracts (0.2) (0.2) 0.4 0.4
Translation
variance due to
gains or
losses on
monetary assets
and liabilities (0.2) (0.2) 0.5 1.2
-------------------------------------------------------------------
-------------------------------------------------------------------
Net earnings For the three-month period ended August 28, 2004, Premier Tech's net loss stood at $1.4 million, or $0.09 per share, compared with net earnings of $0.3 million, or $0.02 per share, for the same period the previous year. As presented in the analysis of results for fiscal year 2004, income taxes continue to represent a high percentage of earnings before income taxes since the Company does not account for future tax assets for some losses incurred by its European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. business units. SEGMENTED RESULTS The following information refers to Note 9 of the interim consolidated financial statements. Specifically, the segmented business unit earnings represent earnings before scientific research expenses, financial expenses, and income taxes. Premier Horticulture (PHL) posted sales of $23.6 million in the first quarter, for an increase of 0.4%, compared with $23.5 million for the first quarter of the previous year. This reflects an average price increase of 9% compared with the same quarter the previous year. The price increases were, however, offset by the negative impact of the Canadian dollar's appreciation against the US currency, and by a decrease in volumes shipped to 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. .
Premier Horticulture Three-month period Three-month period
ended August 28, 2004 ended August 30, 2003
--------------------------------------------------------------------
In thousands Percentage In thousands Percentage
of dollars of sales of dollars of sales
$ % $ %
--------------------------------------------------------------------
Sales 23,593 23,502
Rate of growth 0.4% 3.7%
Operating expenses 21,378 90.6 20,782 88.4
--------------------------------------------------------------------
2,215 2,720
Depreciation and
amortization 1,803 7.6 1,917 8.2
--------------------------------------------------------------------
Segmented earnings
(loss) 412 1.7 803 3.4
--------------------------------------------------------------------
--------------------------------------------------------------------
The drop in volumes occurred primarily in the professional market subsequent to the announcement of an additional average price increase of 5%, and a new surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. on transport costs associated with the rise in costs in this area. In several cases, customers delayed purchases in the hope that the price increase would not be maintained. PHL pursued its strategies for positioning in the big box sector and for the introduction of new products like PRO-MIX(R) with biofungicide; it is seeing increased shipments in the target markets. PHL's segmented earnings were $0.4 million, or 1.7% of sales, compared with $0.8 million, or 3.4% of sales, for the same period the previous year. The drop in segmented earnings is primarily a reflection of the negative impact of the appreciation of the Canadian dollar against the US currency. The appreciation of the Canadian dollar against the US currency had a $1 million negative impact on segmented earnings during the first quarter ended August 28, 2004, compared with the same quarter the previous year, as shown in the table below.
Impact of exchange rate fluctuations
(in millions of dollars)
Premier Horticulture Q1 2004 Q1 2003
compared with Q1 2003 compared with Q1 2002
---------------------------------------------------------------------
---------------------------------------------------------------------
Total impact of Canadian $ $
dollar fluctuations vs.
the American dollar on
Sales (1.2) (1.8)
Segmented earnings (loss) (1.0) (0.9)
---------------------------------------------------------------------
Items included in the impact variation
Variance due to gains or
losses on exchange contracts (0.5) 0.4
Translation variance due to
gains or losses on monetary
assets and liabilities (0.1) -
---------------------------------------------------------------------
---------------------------------------------------------------------
Note, however, that the poor weather that occurred in the summer of 2004 in Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. , Manitoba Manitoba (mănĭtō`bə), province (2001 pop. 1,119,583), 250,934 sq mi (650,930 sq km), including 39,215 sq mi (101,580 sq km) of water surface, W central Canada. and Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. , where the business unit has a large number of peat bogs under operation, will have a negative impact on operating expenses for this fiscal year in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite several initiatives designed to reduce operating expenses. The geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. and strategic distribution of PHL's bogs across Canada Across Canada was an afternoon program that formerly aired on The Weather Network. The segment ran from early 1999 until mid 2002. The show ran from 3:00PM ET until 7:00 PM ET. and the United States, the level of safety stock, as well as strategic alliances with other producers will, however, provide for sufficient supply to the markets served by the Company. Premier Tech Packaging (PTP (1) See peer-to-peer. (2) (Picture Transfer Protocol) An ISO standard for transferring photos from a digital camera to a computer or photo printer. ) sales stood at $22.3 million for the three-month period ended August 28, 2004, compared with $28.4 million during the first quarter of the previous year. The $6.1 million drop in sales stems from a temporary decline in packaging equipment shipments 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. and Europe. However, at the end of the first quarter, PTP's order book shows strong growth over the same date the previous year. This shows that the business cycle for new clients is different from that of old clients, indicating a shift in the peak equipment delivery period toward the end of the quarter rather than at the beginning of the quarter.
Premier Tech Packaging Three-month period Three-month period
ended August 28, 2004 ended August 30, 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
In thousands Percentage In thousands Percentage
of dollars of sales of dollars of sales
---------------------------------------------------------------------
$ % $ %
Sales 22,316 28,436
Rate of growth (21.5%) 175.8%
Operating expenses 21,742 97.4 26,689 93.9
---------------------------------------------------------------------
574 1,747
Depreciation and
amortization 814 3.6 646 2.3
---------------------------------------------------------------------
Segmented earnings (loss) (240) (1.1) 1 101 3.9
---------------------------------------------------------------------
---------------------------------------------------------------------
In the first quarter, PTP posted a segmented loss of $0.2 million, compared with segmented earnings of $1.1 million for the first quarter of the previous year. The drop in segmented earnings is primarily due to the decline in sales. During the first quarter ended August 28, 2004, exchange rate fluctuations had, overall, a minor impact on PTP's results for the quarter, compared with the same period the previous year. Moreover, Chronos Richardson's German operations continue to generate sizeable losses. Chronos Richardson Europe, which combines Chronos Richardson's German, English 1. English - (Obsolete) The source code for a program, which may be in any language, as opposed to the linkable or executable binary produced from it by a compiler. The idea behind the term is that to a real hacker, a program written in his favourite programming language is , Italian and French operations, posted a segmented loss of $1 million in the first quarter, compared with a segmented loss of $0.1 million for the same period the previous year. The business unit has identified new measures to reduce the costs associated with its operations in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , but these measures are still not fully implemented. In the months to come, PTP's priority will thus be to continue implementing these specific elements so as to improve the profitability of Chronos Richardson's operations in Germany. Erin Systems (ESL (1) An earlier family of client/server development tools for Windows and OS/2 from Ardent Software (formerly VMARK). It was originally developed by Easel Corporation, which was acquired by VMARK. ) achieved sales of $8.1 million during the first quarter, a decline of $1.7 million from the $9.8 million in sales posted during the same period the previous year. The drop in sales reflects a substantial decrease in European sales; sales for the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market have increased. The decline is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a delay in setting up the dealer network as well as heightened competition in the European market. In the first quarter, ESL suffered a $1.2 million loss on segmented earnings, compared with a loss of $0.5 million on segmented earnings for the first quarter of the previous year. The increase in the loss stems primarily from weaker sales and a rise in operating expenses tied to new product marketing and increases in steel prices. Exchange rate fluctuations also had a negative impact of $0.2 million on segmented earnings compared with the same period the previous year.
Erin Systems Three-month period Three-month period
ended August 28, 2004 ended August 30, 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
In thousands Percentage In thousands Percentage
of dollars of sales of dollars of sales
---------------------------------------------------------------------
$ % $ %
Sales 8,120 9,789
Rate of growth (17.0%) 52.2%
Operating expenses 9,244 113.8 10,227 104.5
---------------------------------------------------------------------
(1 124) (438)
Depreciation and
amortization 83 1.0 109 1.1
---------------------------------------------------------------------
Segmented earnings (loss) (1,207) (14.9) (547) (5.6)
---------------------------------------------------------------------
---------------------------------------------------------------------
As discussed in the 2004 annual report, the technology transfer agreement with Hartl, a strategic partner, has not yet been ratified rat·i·fy tr.v. rat·i·fied, rat·i·fy·ing, rat·i·fies To approve and give formal sanction to; confirm. See Synonyms at approve. . ESL is still in the process of assessing and prioritizing expansion and modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, work on the Caraquet plant so as to boost the competitiveness of the equipment ESL manufactures, and eventually produce mobile crushing crushing deaths of newborn animals, especially those in litters, caused by the mother lying on them accidentally. Contributed to by weakness of the neonate or awkward accommodation. A problem in piglets and puppies. Called also overlying. equipment. Segmented earnings will thus continue to be lower for the coming months, due to the delay in these strategic projects. Premier Tech Environment (PTE PTE The ISO 4217 currency code for the Portugese Escudo. ) posted sales of $9 million in the first quarter, for an increase of 30.4%, compared with $6.9 million dollars during the first quarter of the previous year. The sharp growth in sales derives, on the one hand, from new technologies developed in the framework of research, development and innovation (RD&I) programs and by the addition of Eco Process and, on the other hand, from substantial growth in US sales of Ecoflo(R) Biofilters as well as an increase in sub-contracting of parts manufactured by Premier Tech Composites (PTCo PTCo Pemberton Tramway Company Pty Ltd (Australia) ).
Premier Tech
Environment Three-month period Three-month period
ended August 28, 2004(1) ended August 30, 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
In thousands Percentage In thousands Percentage
of dollars of sales of dollars of sales
---------------------------------------------------------------------
$ % $ %
Sales 8,991 6,893
Rate of growth 30.4% 20.8%
Operating expenses 7 459 83.0 5 887 85.4
---------------------------------------------------------------------
1,532 1,006
Depreciation and
amortization 132 1.5 101 1.5
---------------------------------------------------------------------
Segmented earnings (loss) 1,400 15.6 905 13.1
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Includes Eco Process operations acquired in April, 2004.
PTE's segmented earnings stood at $1.4 million, compared with $0.9 million for the first quarter of the previous year. The 56% gain can be attributed primarily to higher sales. Moreover, the arrival of new competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in some of Canada's markets had a negative impact on the sales of Ecoflo(R) Biofilters, which were flat this quarter compared with the same quarter of the previous year. At the same time, PTE's development in France is progressing normally, and will remain attractive for the years to come. Other sectors As part of its operations, Premier Tech operates the business unit Premier Tech Biotechnologies (PTB PTB Physikalisch Technische Bundesanstalt (Germany) PTB Partido Trabalhista Brasileiro (Brazilian Labor Party) PTB Phosphotyrosine-Binding PTB Powers That Be PTB Power Tab ), which remains under development. PTB's segmented earnings show a loss included under "Others" in the segmented information.
SUMMARY OF RECENT QUARTERLY RESULTS
(in thousands of dollars, except per share amounts)
---------------------------------------------------------------------
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
Aug. May Feb. Nov. Aug. May March Nov.
28, 29, 28, 29, 30, 31, 1, 30,
2004 2004 2004 2003 2003 2003 2003 2002
---------------------------------------------------------------------
$ $ $ $ $ $ $ $
Sales 63,025 94,656 62,886 73,421 68,688 89,726 55,523 49,757
Net
earnings
(loss) (1,413) 2 247 (1,678) 784 316 1,312 (797) 2,264
Earnings
(loss)
per share
Basic (0.09) 0.14 (0.11) 0.05 0.02 0.08 (0.05) 0.14
Diluted (0.09) 0.14 (0.11) 0.05 0.02 0.08 (0.05) 0.14
---------------------------------------------------------------------
---------------------------------------------------------------------
CASH, FINANCING AND COMMITMENTS Financial position Premier Tech's consolidated assets as at August 28, 2004, stood at $214.7 million, compared with $219.7 million at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. on May 29, 2004, or a drop of $5 million primarily tied to a decrease in the cash balance and the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of Premier Horticulture's operations, which have an impact on 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 and inventories. Accounts receivable stood at $57.9 million at August 28, 2004, $16.9 million less than the $74.8 million posted on May 29, 2004. This results primarily from the receipt of accounts receivable extended in some PHL deferred payment programs. Total value of inventory net of advances and progress billings Billings, city (1990 pop. 81,151), seat of Yellowstone co., S Mont., on the Yellowstone River, in a valley surrounded by seven mountain ranges; inc. as a city 1885. was $74 million as at August 28, 2004, compared with $59.2 million as at May 29, 2004. The $14.8 million increase is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. primarily from PHL, coinciding co·in·cide intr.v. co·in·cid·ed, co·in·cid·ing, co·in·cides 1. To occupy the same relative position or the same area in space. 2. To happen at the same time or during the same period. 3. with the sphagnum sphagnum (sfăg`nəm) or peat moss, any species of the large and widely distributed genus Sphagnum, economically the most valuable moss. peat moss peat moss: see sphagnum. peat moss or sphagnum moss Any of more than 160 species of plants that make up the bryophyte genus Sphagnum, which grow in dense clumps around ponds, in swamps and bogs, on moist, acid cliffs, and on harvest (tool, networking) Harvest - A highly scalable, customisable system for discovering resources on the Internet. Version: 1.3. http://tardis.ed.ac.uk/harvest/. season. Accounts payable and accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. reached $52.9 million as at August 28, 2004, compared with $62.7 million as at May 29, 2004. The $9.8 million decrease stems from repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of an amount of $2.4 million due to a factoring firm at the end of fiscal year 2004 as well as from the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. of some business units' operations during the summer holiday period. Advances and progress billings in excess of related manufacturing costs stood at $10.5 million as at August 28, 2004, compared with $6.3 million as at May 29, 2004. The $4.2 million increase reflects the sharp growth in PTP's order book. Long-term debt stood at $46.7 million as at August 28, 2004, a drop of $1.4 million compared with $48.1 million at the end of fiscal year 2004, resulting from repayments scheduled under the terms of financing. Cash flows Cash used for operating activities reached $4.2 million for the first quarter ended August 28, 2004, compared with $7.1 million for the first quarter of the previous year. Cash generated by operating activities before the net variation of non-cash working capital items during the first quarter was $1 million during the first quarter, compared with $3.4 million during the first quarter of the previous year, a $2.3 million difference resulting from a drop in Premier Tech's net earnings. Non-cash working capital items have used cash flows of $5.3 million since the start of the fiscal year. This reflects the two items discussed in the financial position, i.e. the seasonal variations of Premier Horticulture's business cycle, offset in part by the increase in advances and progress billings in excess of related manufacturing costs associated with PTP's order book. Cash flows used by investment activities total $2 million since the start of this fiscal year. This amount primarily reflects acquisition of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) in the framework of the MOBILISATEUR II program and investments to replace obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. equipment. Cash flow provided by financing activities reached $2.5 million during the first quarter ended August 28, 2004. The Company made the planned $1.4 million in payments on long-term debt, while operating credits rose by $3.7 million.
CASH FLOWS
(in millions of dollars)
Three-month period Three-month period
ended August 28, ended August 30,
2004 2003
--------------------------------------------------------------------
$ $
Cash from operating
activities before the following 1.0 3.4
Net change in non-cash
working capital items (5.2) (10.5)
--------------------------------------------------------------------
Cash used by operating activities (4.2) (7.1)
Cash used by investment activities (2.1) (1.8)
Cash provided by financing activities 2.5 11.2
--------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents (3.8) 2.3
--------------------------------------------------------------------
--------------------------------------------------------------------
Financing and commitments Bank loans totalled $24.5 million as at August 28, 2004. The Company has at its disposal additional North American borrowing capacity of $17 million with accounts receivable and inventory acting as security. The Company respected the financial ratios of its operating credit agreement. The Company also respected the financial ratios of its long-term debt covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the as at August 28, 2004, given the modifications obtained by its principal lenders. Management also intends, on a timely basis, to seek and obtain further modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. ratio requirements from its secured lenders as necessary to comply with such modified ratio requirements by May 28, 2005. Management currently has no reason to believe that such modifications will not be obtained. Should it be unable to obtain the necessary ratio requirement modifications, the Company will likely have to obtain appropriate waivers from its secured lenders and consider alternate alternate /al·ter·nate/ (awl´ter-nit) 1. following in turns. 2. pertaining to every other one in a series. 3. occurring in place of another; acting as a substitute. sources of funding. Additional information on bank loans and long-term debt appears in Notes 6 and 7 of the interim consolidated financial statements. The following table summarizes Premier Tech's future payment obligations for long-term debt and other commitments with regard to leasing contracts and other obligations as at August 28, 2004.
Contractual obligations as at August 28, 2004
(in thousands of dollars)
Commitments per period
---------------------------------------------------------------------
Total Less than 1 year 1 to 3 years 4 to 5 years
---------------------------------------------------------------------
$ $ $ $
Long-term debt 51,419 5,158 10,916 12,395
Capital lease 688 287 395 6
Operating
lease 10,642 4,479 4,279 1,884
Total
contractual
obligations 62,749 9,924 15,590 14,285
---------------------------------------------------------------------
---------------------------------------------------------------------
Dividends Rather than pay dividends, the Company's policy is to reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. its earnings in its growth. RISKS AND UNCERTAINTIES Credit agreements The credit agreements negotiated by the Company include financial obligations that it may not be able to meet in the future. As discussed in the "Financing and commitments" section, management intends, on a timely basis, to seek and obtain modified ratio requirements from its secured lenders as necessary to comply with the modified ratio requirements to be respected by May 28, 2005. Management currently has no reason to believe that such ratio requirement modifications will not be obtained. However, there is no assurance such modifications will be obtained. The Company would therefore be in default and forced to negotiate new conditions or, at the request of financial partners, repay its loans and find new sources of financing. Failure to meet the financial obligations outlined in the credit agreements could thus have a major negative impact on the Company. Exchange rates Close to 50% of the Company's sales are in the United States, with 30% in other international markets; this means that approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 80% of sales are conducted in foreign currencies. Consequently, the Company is exposed to the uncertainties normally associated 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. exchange rates and uses financial instruments to cover the risk related to future cash flows. However, there is no certainty CERTAINTY, UNCERTAINTY, contracts. In matters of obligation, a thing is certain, when its essence, quality, and quantity, are described, distinctly set forth, Dig. 12, 1, 6. It is uncertain, when the description is not that of one individual object, but designates only the kind. Louis. that the instruments used by the Company to cover these risks are sufficient. Interest rate Interest rate levels and fluctuations can have a direct impact on the Company's profitability. Climatic conditions Climatic conditions can also affect Premier Horticulture's production costs, sale prices and profitability; Premier Horticulture accounts for 43.3% of the Company's total sales. Peat production and sales can vary with weather conditions. For example, since peat must be harvested during dry weather (April to October October: see month. ), frequent or abnormal abnormal /ab·nor·mal/ (ab-nor´mal) not normal; contrary to the usual structure, position, condition, behavior, or rule. abnormal, adj precipitation precipitation, in chemistry precipitation, in chemistry, a process in which a solid is separated from a suspension, sol, or solution. In a suspension such as sand in water the solid spontaneously precipitates (settles out) on standing. can delay harvesting har·vest n. 1. The act or process of gathering a crop. 2. a. The crop that ripens or is gathered in a season. b. The amount or measure of the crop gathered in a season. c. or reduce yield. A particularly abundant harvest for the industry as a whole can reduce the selling price of peat products; adverse weather conditions during the selling season, particularly rainy rain·y adj. rain·i·er, rain·i·est Characterized by, full of, or bringing rain. rain  i·ness n.Adj. weather on spring weekends, can have a negative impact on demand and consequently on the Company's financial return. However, Premier Horticulture's relative share of consolidated sales has gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. declined in recent years due to the Company's 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. in other business sectors, thereby reducing the potential impact of this risk factor. General business factors The Company is exposed to a number of external business risks, in particular the general economic situation, government policies restricting re·strict tr.v. re·strict·ed, re·strict·ing, re·stricts To keep or confine within limits. See Synonyms at limit. [Latin restringere, restrict- : re-, imports and exports, volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. fuel prices - which impact freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or costs and plastics - and environmental laws and regulations. Competition The Company operates in an environment where competition comes from both big and small businesses, 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 , as well as in the United States and Europe. The moves and strategies adopted by its main competitors can have an effect on the Company's results. Operational risks The Company realizes that in order to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. its commitment as a socially and environmentally responsible enterprise, it must ensure that its efforts to grow and remain profitable reflect its responsibilities for environmental stewardship The integration and application of environmental values into the military mission in order to sustain readiness, improve quality of life, strengthen civil relations, and preserve valuable natural resources. and other ecological ecological emanating from or pertaining to ecology. ecological biome see biome. ecological climax the state of balance in an ecosystem when its inhabitants have established their permanent relationships with each issues. However, the Company is subject to a number of laws and regulations. Changes to government policies and regulations may require changes to some of the Company's operations or even forbid for·bid tr.v. for·bade or for·bad , for·bid·den or for·bid, for·bid·ding, for·bids 1. To command (someone) not to do something: I forbid you to go. 2. some of its processes, and thus have an impact on the Company. Premier Tech leases its Canadian peat lands from provincial Provincial has several meanings and may refer to:
The Company has concluded several collective agreements with different expiry dates expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m with certain team members in its various business units. If the Company is unable to renew its collective agreements at bargaining time, the resulting work stoppages or labour disputes could hurt the Company's activities. Generally speaking, the Company makes maintaining good relations with its staff a high priority, and the Company believes it has been successful in achieving this goal. Although the Company does not believe it is exposed to a high credit risk given the regular review of its customers' financial condition and its diversified diversified (di·verˑ·s customer base, both from the perspective of market diversity and the geographical ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge spread of sales, it is still exposed to credit risk on the accounts receivable of its customers. The Company makes substantial investments in research, development and innovation under its MOBILISATEUR II program. However, since the new products developed are not always as commercially successful as hoped, this can have a negative impact on the Company's performance. Other risks and uncertainties that could affect the Company's operations and performance include: the risks associated with contract execution, legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. and product liability, including obligations and costs related to defective defective adj. not being capable of fulfilling its function, ranging from a deed of land to a piece of equipment. (See: defect, defective title) products. The Company continues to adopt policies and provisions to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·gation n. these risks,
such as maintaining all-risk insurance covering all aspects of its
operations and internal control processes. However, there is no
certainty that such insurance coverage and controls will be sufficient
to cover these risks.CRITICAL ACCOUNTING ESTIMATES Premier Tech draws up its interim consolidated financial statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), and follows the policies and accounting methods used for its most recent annual financial statements, except for stock valuation. Variations in purchase price and variations in volume or capacity cost that the Company had forecast and plans to absorb absorb To offset sell orders or a new security offering with buy orders. prior to the close of the fiscal year are deferred to the end of the interim period as an item of inventory book value. The impacts of unplanned or unexpected purchase price or volume variations are recorded at the end of the interim period using the methods used at the end of the year. Preparing interim consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported asset and liability amounts, the presentation of assets and contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. as at the date of the financial statement, as well as the revenues and expenses reported for the period covered. The principle accounting policies and methods are described in Note 2 of the consolidated financial statements for 2004, and in Note 2 of the interim consolidated financial statements for the period ended August 28, 2004. The Company periodically reviews its estimates and assumptions on the basis of past experience and other pertinent PERTINENT, evidence. Those facts which tend to prove the allegations of the party offering them, are called pertinent; those which have no such tendency are called impertinent, 8 Toull. n. 22. By pertinent is also meant that which belongs. Willes, 319. factors. Actual results may differ considerably from these estimates and assumptions. The judgments, assumptions and estimates used in preparing the interim consolidated financial statements affect some critical accounting policies. These appear on page 62 of management's comments on performance and financial position in the Company's 2004 annual report. The interim consolidated financial statements do not contain all the information required for annual consolidated financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements for the fiscal year ended May 29, 2004. CHANGES TO ACCOUNTING POLICIES Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. relationships On May 30, 2004, the Company prospectively adopted the new Accounting Standards Board The role of the Accounting Standards Board (ASB) is to issue accounting standards in the United Kingdom. It is recognised for that purpose under the Companies Act 1985. It took over the task of setting accounting standards from the Accounting Standards Committee (ASC) in 1990. (AcSB AcSB Accounting Standards Board (Canada) ACSB Anglo-Chinese School Barker Road (Singapore) ACSB Amplitude Companded Side Band ACSB Amplitude Companded Single Side Band ) accounting guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. for "Hedging Relationships" (AcG-13) and the Emerging Issues Committee (EIC EIC Editor-In-Chief EIC Euro Info Centre (DIN) EIC Earned Income Credit EIC Excellence in Cities (UK) EIC Enterprise Interaction Center (Interactive Intelligence) ) guidelines for "Accounting for Trading, Speculative Speculative Securities that involve a high level of risk. speculative Of or relating to an asset or a group of assets with uncertain returns. The greater the degree of uncertainty the more speculative the asset. or Non-Hedging Derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. Financial Instruments" (EIC-128). Overall, the adoption of these new guidelines has little effect on the Company's interim consolidated financial statements for the three-month period ended August 28, 2004. Premier Horticulture, Erin Systems and Premier Tech Environment use derivative financial instruments representing US$33.4 million as at August 28, 2004, in accordance with the standards allowing accounting for hedging purposes. There is thus no effect on these reportable segments. However, use of derivative financial instruments for the reportable segment Premier Tech Packaging does not comply with accounting criteria criteria (krītēr´ē  ),n. for hedging such that these derivative financial instruments are deemed to be held for non-hedging purposes. Given this situation, the Company posted an unrealized $175 000 gain on forward exchange contracts taken out for Premier Tech Packaging as at August 28, 2004, representing an amount of US$7.4 million. Asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. On May 30, 2004, the Company prospectively adopted the new 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 policy released in section 3110, entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Asset Retirement Obligations." This standard deals with the recognition and measurement of liabilities stemming stemming - stemmer from legal obligations associated with the retirement of property, plant and equipment. Under this standard, these obligations are initially measured at fair value, then are subsequently adjusted to reflect the accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of discount as well as any changes to underlying future cash flows. The asset retirement cost is added to the cost of the assets in question, then amortized to income in subsequent years. The changes to the section 3110 accounting standards apply primarily to the Premier Horticulture segment and have little impact on the Company's interim consolidated financial statements. This business unit is a leader in its industry for peat bog rehabilitation rehabilitation: see physical therapy. and reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. . For many years, Premier Horticulture has been involved in research programs, and regularly carries out rehabilitation and reclamation work on its sites by absorbing ab·sorb tr.v. ab·sorbed, ab·sorb·ing, ab·sorbs 1. To take (something) in through or as through pores or interstices. 2. To occupy the full attention, interest, or time of; engross. the costs in its results. The Company thus deems the new accounting policy to have no impact on results for the first quarter and the previous year. However, the new accounting policy also requires adjustment of the balance sheet 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. to recognize the future liability related to retiring peat bogs and amortization of the cost to previous results. Given this approach, the Company's retained earnings were adjusted by an amount of $639 000 as at May 31, 2003. Related party transactions During the quarter ended August 28, 2004, management fees in the amount of $1.7 million ($1.6 million for the quarter ended August 30, 2003), including remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. of administrative personnel, travel expenses and payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. service charges, were paid to a company controlled by shareholders who are also part of the Company's management.
SHARE DATA
Issued and outstanding as at August 28, 2004 Issued
---------------------------------------------------------------------
Class A subordinated shares 15,315,195
Class B multiple voting shares (1) 849,500
---------------------------------------------------------------------
Shares in stock option plan outstanding as at August 28, 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Shares in stock option plan 1,303,775
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Ten votes each, convertible at the bearer's request to a Class A
subordinated share.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(unaudited)
(in thousands of dollars, except for amounts per share)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three-month periods ended
August 28 August 30
2004 2003
---------------------------------------------------------------------
$ $
SALES 63,025 68,688
---------------------------------------------------------------------
Earnings before the following items (Note 3) 3,666 5,016
---------------------------------------------------------------------
Depreciation and amortization (Note 4) 2,967 2,729
Scientific research expenses, net of
investment tax credits and government
assistance of $502 ($467 in 2003) 537 277
Interest on long-term debt 1,243 944
Interest and bank charges 375 379
---------------------------------------------------------------------
5,122 4,329
---------------------------------------------------------------------
Earnings (loss) before taxes (1,456) 687
Income taxes
Current 93 253
Future (136) 118
---------------------------------------------------------------------
(43) 371
---------------------------------------------------------------------
NET EARNINGS (LOSS) (1,413) 316
Retained earnings, beginning of period 22,237 20,568
---------------------------------------------------------------------
Retained earnings, end of period 20,824 20,884
---------------------------------------------------------------------
Earnings (loss) per share
Basic (0.09) 0.02
Diluted (0.09) 0.02
---------------------------------------------------------------------
Weighted average number of outstanding shares
Class A subordinated voting 15,314,952 15,314,795
Class B multiple voting 849,743 849,900
---------------------------------------------------------------------
16,164,695 16,164,695
---------------------------------------------------------------------
---------------------------------------------------------------------
The accompanying notes are an integral part of these interim
consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands of dollars)
Three-month periods ended
--------------------------------------------------------------------
August 28 August 30
2004 2003
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $
OPERATING ACTIVITIES
Net earnings (loss) (1,413) 316
Items not affecting cash
Depreciation and amortization 2,967 2,729
Gain on disposal of property, plant
and equipment (2) (36)
Future income taxes (136) 118
Unrealized foreign exchange loss (gain) (593) 114
Imputed interest 254 182
--------------------------------------------------------------------
1,077 3,423
Net change in non-cash working capital items
related to operations (5,247) (10,508)
--------------------------------------------------------------------
Cash used for operating activities (4,170) (7,085)
--------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions of property, plant and equipment (1,455) (1,296)
Proceeds from disposal of property, plant
and equipment 9 58
Acquisitions of intangible assets (9) (32)
Acquisitions of goodwill and other assets (1,674) (1,402)
Government assistance and investment tax credits 1,005 860
--------------------------------------------------------------------
Cash used for investing activities (2,124) (1,812)
--------------------------------------------------------------------
FINANCING ACTIVITIES
Change in bank loans 3,748 11,601
Proceeds from long-term debt 0 9
Repayment of long-term debt (1,378) (372)
Increase in other long-term liabilities 108 (45)
--------------------------------------------------------------------
Cash provided by financing activities 2,478 11,193
--------------------------------------------------------------------
Net variance in cash (3,816) 2,296
Cash, beginning of period 6,931 363
--------------------------------------------------------------------
Cash, end of period 3,115 2,659
--------------------------------------------------------------------
Supplemental disclosures
Interest paid 1,227 1,109
Income taxes paid 904 1,010
--------------------------------------------------------------------
--------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands of dollars)
--------------------------------------------------------------------
August 28 May 29 August 30
2004 2004 2003
--------------------------------------------------------------------
$ $ $
ASSETS
Current assets
Cash 3,115 6,931 2,659
Accounts receivable 57,936 74,770 60,410
Income taxes recoverable 2,616 1,089 7
Inventory 74,036 59,176 71,700
Prepaid expenses 3,205 3,340 3,669
Future income taxes 197 197 187
--------------------------------------------------------------------
Total current assets 141,105 145,503 138,632
Investment tax credits recoverable 5,251 4,955 5,604
Investment, at cost 0 0 25
Property, plant and equipment 54,327 55,342 53,094
Intangible assets 5,487 5,594 5,409
Goodwill 756 676 765
Other assets (Note 5) 5,598 5,397 2,651
Future income taxes 2,213 2,213 2,672
--------------------------------------------------------------------
214,737 219,680 208,852
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank loans (Note 6) 24,470 21,315 31,850
Accounts payable and
accrued liabilities 52,909 62,711 56,738
Advances and progress billings
in excess of related costs 10,501 6,254 5,151
Current portion of long-term
debt (Note 7) 5,445 5,407 7,202
--------------------------------------------------------------------
Total current liabilities 93,325 95,687 100,941
Long-term debt (Note 7) 46,662 48,078 36,515
Other long-term liabilities 18,224 17,862 14,729
Future income taxes 4,816 4,872 4,553
Non-controlling interest 133 191 477
--------------------------------------------------------------------
163,160 166,690 157,215
--------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 22,736 22,736 22,736
Contributed surplus 8,017 8,017 8,017
Retained earnings 20,824 22,237 20,884
--------------------------------------------------------------------
51,577 52,990 51,637
--------------------------------------------------------------------
214,737 219,680 208,852
--------------------------------------------------------------------
--------------------------------------------------------------------
The accompanying notes are an integral part of these interim
consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (in thousands of dollars, except for amounts per share) 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS The interim consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles (GAAP) applicable to interim consolidated financial statements and follow the same accounting policies and methods in their application as the most recent annual consolidated financial statements, with the exception of inventory valuation. Price variances The materials price variance (Vmp) is computed as follows: Vmp = (Actual Unit Cost - Standard Unit Cost) * Actual Quantity Purchased or Vmp = (Actual Quantity Purchased * Actual Unit Cost) - (Actual Quantity Purchased * Standard Unit Cost). , volume variances, and capacity cost variances that the Company planned and anticipates absorbing before fiscal year-end have been deferred to the end of the interim period as a portion of the inventory's carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. . Unplanned or unexpected price/volume variances have been accounted for at the end of the interim period 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. the same methods used at the end of the fiscal year. The interim consolidated financial statements do not include all disclosures required for annual consolidated financial statements and should be read in conjunction with the most recent annual audited financial statements for the fiscal year ended May 29, 2004. 2. CHANGES IN ACCOUNTING POLICIES Hedging relationships In December December: see month. 2001, the Accounting Standards Board (AcSB) issued the 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. (AcG-13) "Hedging Relationships", as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . In June June: see month. 2002, the Emerging Issues Committee (EIC) issued "Accounting for Trading, Speculative or Non-Hedging Derivative Financial Instruments" (EIC-128). AcG-13 establishes the criteria for identification, designation DESIGNATION, wills. The expression used by a testator, instead of the name of the person or the thing he is desirous to name; for example, a legacy to. the eldest son of such a person, would be a designation of the legatee. Vide 1 Rop. Leg. ch. 2. 2. , documentation, and effectiveness of hedging relationships for the purpose of applying hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). . EIC-128 establishes that a freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. derivative financial instrument that gives rise to a financial asset or financial liability and is entered into for trading or speculative purposes, or that does not qualify for hedge accounting under AcG-13, should be recognized on the balance sheets and measured at fair value, with changes in fair value recognized in income of the period. The Corporation adopted both AcG-13 and EIC-128 effective May 30, 2004. The adoption of the new recommendations had an impact with the recognition of an unrealized foreign exchange gain on foreign exchange contracts for a specific business unit as their hedging strategy does not qualify for hedge accounting under AcG-13. This unrealized foreign exchange gain is included in the consolidated statements of earnings. For the other business units, the adoption of the new recommendations had no impact on the interim consolidated financial statements. Asset retirement obligations In March 2003, the CICA published section 3110 "Asset Retirement Obligations".The new standard deals with the recognition and measurement of liabilities ensuing en·sue intr.v. en·sued, en·su·ing, en·sues 1. To follow as a consequence or result. See Synonyms at follow. 2. To take place subsequently. from any legal obligations linked to asset retirement.Under this standard, these obligations are initially measured at fair value, then are subsequently adjusted to reflect the accretion of discount as well as any changes to underlying future cash flows.The asset retirement cost is adjusted to the cost of the assets in question and amortized to income in subsequent years.Effective May 30, 2004, the Company retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adopted this section. The impact on the consolidated statements of earnings for the three-month periods ended August 28, 2004, and August 30, 2003, was negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . . At May 31, 2003, this resulted in: - an increase of $0.187 million in property, plant and equipment - a decrease of $0.147 million in accounts payable and accruals - an increase of $1.259 million in other long-term liabilities Other Long-Term Liabilities A balance sheet item that includes obligations that do not currently require interest payments. Notes: This would include items such as remaining leases, future employee benefits and deferred taxes. - a decrease of $0.287 million in future income tax liabilities - a decrease of $0.639 million in retained earnings 3. RELATED PARTY TRANSACTIONS During the fiscal year, management fees in the amount of $1,704,800 in August 2004 ($1,556,320 in August 2003), including remuneration of administrative personnel, travel expenses and payroll service charges, were paid to a company controlled by shareholders who are also part of the Company's management. These transactions were accounted for at exchange value.
4. DEPRECIATION AND AMORTIZATION
August 28, August 30,
2004 2003
$ $
--------------------------------------------------------------------
Depreciation of property, plant and equipment 2,445 2,366
Amortization of depreciable intangible assets 116 159
Amortization of other assets 406 204
--------------------------------------------------------------------
2,967 2,729
--------------------------------------------------------------------
5. OTHER ASSETS
August 28, May 29,
Net carrying amount 2004 2004
--------------------------------------------------------------------
$ $
Deferred development costs 3,763 3,348
Deferred financing costs 381 377
Other assets 1,454 1,672
--------------------------------------------------------------------
5,598 5,397
--------------------------------------------------------------------
During the fiscal year, the Company deferred development costs in
the amount of $638,111 ($2,429,339 in May 2004), and recognized
investment tax credits and government assistance for an amount of
$986 869 ($4,273,596 in May 2004).
6. BANK LOANS
As at August 28, 2004, the Company and its subsidiaries had
authorized bank loan facilities totalling $43 409 715 ($8 000 000 US,
$31 400 000 CA and 950 000 euros), bearing interest at either the
Canadian prime rate plus 1.25%, the U.S. prime rate plus 0.25% to
1.25%, the LIBOR rate plus 2% or bankers' acceptance rate plus 2%.
All bank loans are renewable annually. These loans are subject to a
percentage of the value of accounts receivable and inventory, which
are used to secure the loans.
As at August 28, 2004, bank loans were as follows:
August 28, May 29,
2004 2004
--------------------------------------------------------------------
$ $
LIBOR loans ($7 100 000 US in August 2004;
$7 700 000 US in May 2004), 9,330 10,489
effective rate of 3.82% in August 2004
(3.45% in May 2004)
US prime rate loans ($0 US in August 2004;
$1 000 000 US in May 2004), 0 1,362
effective rate of 5.11% in May 2004
European prime rate loans (827 032 euros in
August 2004; 496 138 euros in May 2004), 1,303 827
effective rate of 9.02% in August 2004
(9.06% in May 2004)
Canadian prime rate loans, 13,837 8,637
effective rate of 5.18% in August 2004
(5.17% in May 2004)
--------------------------------------------------------------------
24,470 21,315
--------------------------------------------------------------------
Relating to these credit facilities, the Company issued letters of
credit and indemnity amounting to $422 800 ($469 131 in May 2004).
Also, in the normal course of its business for its subsidiary
Chronos Richardson, the Company has an authorized credit facility
of $10 000 000 to issue letters of indemnity that first have to
be guaranteed by a governmental agency. As at August 28, 2004,
$8 294 135 of this facility were used ($4 427 089 in May 2004).
7 - LONG-TERM DEBT
Current August 28, May 29,
Portion 2004 2004
$ $ $
--------------------------------------------------------------------
Term loan, initial amount of
$50 000 000 at either fixed rate
advances varying from 8.10% to 9.02%
or variable rate advances varying
from the prime rate of plus 0.25% to
3.25% or at bankers' acceptances,
repayable in monthly instalments of
$417 333, plus interest, effective
rate of 6.75% as at August 28, 2004
(5.82% as at May 29, 2004), maturing
in December 2014 (a) 5,008 47,990 49,245
Loan repayable in variable monthly
instalments beginning in November 2004,
bearing interest at maximum rate of
6.55% as of November 2003 (b) and
of 5.6% as of September 2004, maturing
in November 2008 150 3,429 3,429
Notes payable, secured by certain
fixed assets, rate varying from 6.13%
to 14.25%, repayable in total monthly
instalments of $27 475, principal and
interest, maturing on various dates
from 2004 to 2008 287 688 811
--------------------------------------------------------------------
5,445 52,107 53,485
Current portion 5,445 5,407
--------------------------------------------------------------------
46,662 48,078
--------------------------------------------------------------------
(a) All the Company's assets are given, directly or indirectly, as security for the long-term debt and the bank loans. In accordance with the terms of the loan agreement, the Company is also subject to certain covenants with regard to the maintenance of financial ratios. Those covenants were met as at August 28, 2004, following ratio requirement modifications obtained from its secured lenders.Management also believes that it is likely that the Company will not be able to meet certain financial ratio covenants under the terms of its existing loan agreements between now and May 28, 2005. Management intends, on a timely basis, to seek and obtain modified financial ratio requirements from its secured lenders as necessary to enable the Company to comply with such modified ratio requirements between now and May 28, 2005. Management has currently no reason to believe that such ratio requirement modifications will not be obtained. However, there can be no assurance that they will be obtained. Should it be unable to obtain the necessary ratio requirement modifications, the Company would likely have to obtain appropriate waivers from its secured lenders and consider alternate sources of funding. (b) The effective interest rate for this loan will be determined according to the number of jobs created as of November November: see month. 2005, but may not exceed 6.55% per annum Per annum Yearly. . 8. STOCK OPTION PLAN During the fiscal year ended May 31, 2003, the Company granted 332 500 options for the purchase of Class A subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. to certain of its officers and team members. The weighted average grant date fair value of options granted during this period amounted to $1.10 per option. The fair value of each option granted was determined using the Black and Scholes Scholes(/skowlz/ or /šowlz/) could refer to the following places: United Kingdom:
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 and the following weighted average assumptions: Risk-free interest rate 4.71% Expected life 7 years Expected volatility in the market price of the shares 23.5% Expected dividend yield 0.0% During the fiscal year ended May 31, 2003, the Company has elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to account for its stock option plan as capital transactions. If the stock option plan had been accounted for based on the fair value method, 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 net income and pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share for the three-month period ended August 28, 2004, would have been as follows:
August 28, August 30,
2004 2003
---------------------------------------------------------------------
As reported Pro forma As reported Pro forma
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
--------------------------------------------------------------------
Net earnings (loss) (1,413) (1,400) 316 291
Earnings (loss) per share
Basic (0.09) (0.09) 0.02 0.02
Diluted (0.09) (0.09) 0.02 0.02
--------------------------------------------------------------------
The pro forma figures do not take into account the effect of stock
options granted prior to June 2, 2002.
9. SEGMENTED INFORMATION
---------------------------------------------------------------------
Information pertaining to segmented earnings for the three-month
periods ended August 28, 2004, and August 30, 2003
---------------------------------------------------------------------
CONSOLIDATED PHL PTP
AMOUNTS
2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
$ $ $ $ $ $
Revenue from
Sales to
customers 63,025 68,688 23,567 23,500 21,986 28,356
Inter-segment
sales 0 0 26 2 330 80
---------------------------------------------------------------------
63,025 68,688 23,593 23,502 22,316 28,436
---------------------------------------------------------------------
Earnings (loss)
before the
following items 3,666 5,016 2,215 2,720 574 1,747
---------------------------------------------------------------------
Depreciation and
amortization 2,967 2,729 1,803 1,917 814 646
---------------------------------------------------------------------
Segmented earnings
(loss) 699 2,287 412 803 (240) 1,101
---------------------------------------------------------------------
Scientific research
expenses 537 277
Financial expenses 1,618 1,323
---------------------------------------------------------------------
2,155 1,600
---------------------------------------------------------------------
Earnings (loss)
before taxes (1,456) 687
Income taxes (43) 371
---------------------------------------------------------------------
Net earnings
(loss) (1,413) 316
---------------------------------------------------------------------
---------------------------------------------------------------------
--------------------------------------------------------------------
ESL PTE OTHER(a)
2004 2003 2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $ $ $
Revenue from
Sales to
customers 8,099 9,762 8,971 6,882 402 188
Inter-segment
sales 21 27 20 11 (397) (120)
---------------------------------------------------------------------
8,120 9,789 8,991 6,893 5 68
---------------------------------------------------------------------
Earnings (loss)
before the
following items (1,124) (438) 1,532 1,006 469 (19)
---------------------------------------------------------------------
Depreciation and
amortization 83 109 132 101 135 (44)
---------------------------------------------------------------------
Segmented earnings
(loss) (1,207) (547) 1,400 905 334 25
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Segmented balance sheets information for the three-month periods
ended August 28, 2004, and August 30, 2003
---------------------------------------------------------------------
CONSOLIDATED PHL PTP
AMOUNTS
2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
$ $ $ $ $ $
Total assets 214,737 208,852 97,813 103,694 66,038 63,583
Acquisitions of
fixed assets 1,455 1,296 898 613 405 353
---------------------------------------------------------------------
---------------------------------------------------------------------
ESL PTE OTHER(a)
2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------
$ $ $ $ $ $
Total assets 29,943 27,788 17,499 13,138 3,444 649
Acquisitions of
fixed assets 7 6 92 9 53 315
---------------------------------------------------------------------
(a) Includes the other business units, whose sales represent less
than 10% of the total sales figure, and other consolidation
items.
10. COMPARATIVE FIGURES
Certain figures in the prior-year interim consolidated financial
statements have been reclassified to conform to the presentation
adopted in 2004.
Profile For more than 80 years, Premier Tech has been building its know-how know-how n. The knowledge and skill required to do something correctly. See Synonyms at art1. know-how Noun Informal the ability to do something that is difficult or technical and reputation on the various technology-oriented opportunities offered by sphagnum peat moss, an abundant natural resource in Canada. Its eleven business units, which operate in five areas (Packaging, Environment, Horticulture, Industrial and Life Sciences (have the mission to become technological and commercial leaders in their respective fields of expertise. Buoyed by a multidisciplinary mul·ti·dis·ci·pli·nar·y adj. Of, relating to, or making use of several disciplines at once: a multidisciplinary approach to teaching. team of over 1 600 people based in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , Europe and Asia, Premier Tech is building on the development of its personnel, research, development and innovation, the introduction of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: products and proactive management of its business units' manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . Its strategic approach is supported by ongoing worldwide market development efforts. Premier Tech shares are listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. , in Canada, under the symbol PTL PTL Praise The Lord PTL Preterm Labor PTL Parent Teacher League PTL Pedro the Lion (band) PTL Pass The Loot PTL Photovoltaic Testing Laboratory (Arizona State University) .A. Premier Tech (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :PTL.A) |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion