ATS reports improving performance, new automation systems
bookings at $73 million to date in Q2
TSX: ATA
CAMBRIDGE, ON, Aug. 13 /CNW/ - ATS Automation Tooling Systems Inc. today
reported net earnings of $2.2 million (4 cents per share basic and diluted),
on revenues of $148.6 million for the three months ended June 30, 2003 - and
strong new automation systems order bookings of approximately $73 million in
the opening six weeks of the second quarter.
"ATS made solid operating gains in the first quarter, headlined by
significantly improved earnings compared to the last two quarters," said ATS
President and Chief Executive Officer, Klaus Woerner. "We've now kept new
automation systems bookings above $100 million for two straight quarters and
we have captured an additional $73 million in new orders in just the first six
weeks of this new quarter. This is an excellent showing in less-than-ideal
market conditions and reflects the substantial enhancements we've made to our
sales force, industry-leading automation technologies and capabilities. ATS is
now beginning to deliver returns from our established strategies and the
investments we've made in our operating groups. We intend to build on this
performance as the year progresses."
First Quarter Fiscal 2004 Financial Highlights
- Consolidated revenue was $148.6 million, up 4% from $143.4 million in
the first quarter a year ago and remained highly diversified by
industry and region.
- Cash flow from operating activities was $12.2 million, up 116%,
compared to the first quarter of last year. Cash, net of bank
indebtedness, was $75.4 million versus $82.3 million at the start of
the quarter.
- Earnings from operations were $3.8 million, a significant sequential
improvement over the $1.7 million earned in the fourth quarter of
fiscal 2003 but lower than $6.6 million in the same period of fiscal
2003.
- New automation systems order bookings were $105 million compared to
$128 million in the first quarter of fiscal 2003.
- Period end automation systems backlog stood at $158 million versus
$161 million at year-end primarily reflecting a decline in the U.S.
dollar.
- ATS Precision Components Group (PCG) successfully launched a major
power seat subassembly contract in May, which is forecast to generate
$12 million to $15 million in revenue through the remainder of fiscal
2004.
- Thermal solutions revenue increased to $3.8 million compared to
$0.7 million in the same quarter of last year.
Automation Systems Group revenue in the first quarter was $105.0 million,
compared to $106.8 million in the first quarter a year ago, primarily
reflecting the decline in the value of the U.S. dollar over the past year.
Precision Components Group delivered 14% growth in revenue in the first
quarter to $34.4 million from $30.2 million in the opening quarter of fiscal
2003. Solar Group generated revenue growth of 95% to $16.9 million, from
$8.7 million a year ago.
Compared to the first quarter of the previous year, earnings from
operations (operating earnings) were lower in each of the Company's operating
segments reflecting difficult economic conditions, the transition to new
precision components business and pricing pressure in the Company's solar
business. However, sequentially operating earnings in the first quarter of
this year were significantly improved, up 120% from the results in the fourth
quarter and 254% higher than in the third quarter of last year.
Looking Forward
---------------
"ATS entered the second quarter with a healthy and well-diversified
automation systems backlog," said Mr. Woerner. "We've now launched our major
power seat subassembly contract and in thermal products, we are on track with
our growth plans and have a growing number of assignments to keep us busy."
Mr. Woerner added that the Spheral Solar(TM) Power (SSP) initiative, the
Company's revolutionary next generation solar technology, is "also progressing
on plan."
"Our overriding objective is to build on the substantial new automation
order booking success we're having so far in the second quarter," said
Mr. Woerner, "and to take up the slack in our capacity utilization, especially
in the U.S. west coast operations that have felt the impact of the substantial
downturn in computer-electronics and semiconductor industries. To this end,
we're aggressively and strategically marketing our solutions in all our
markets and we continue to develop and introduce new automation technologies
that will help to draw out new customer orders. For example, we plan to
introduce two new lean automation technologies at our industry's most
important annual tradeshows in late September. Operationally, we expect to
benefit from this ongoing standard products initiative, which improves the
efficiency of our operations while driving higher value for our customers from
our custom turn-key automation solutions.
"Overall, we have good reasons to remain cautiously optimistic about
market conditions and bullish about our ability to continue outperforming our
industry, gaining market share and delivering substantial value from our
recent investments."
Note to Readers
The MD&A and consolidated financial statements accompanying this news
release contain detailed information of quarterly performance, financial
condition and the Company's outlook.
Quarterly Conference Call
ATS will hold its quarterly conference call at 10 am eastern time today.
To listen to a live audio webcast of the call please visit
www.atsautomation.com.
Corporate Description
ATS Automation Tooling Systems Inc. (www.atsautomation.com) is the
industry's leading designer and producer of turn-key automated manufacturing
and test systems, which are used primarily by multinational corporations
operating in a variety of industries including: automotive,
computer/electronics, healthcare, and consumer products. The Company also
makes precision components and sub-assemblies using its own custom-built
manufacturing systems, process knowledge and automation technology. ATS is
also an emerging leader in the rapidly growing market for solar energy cells
and modules. ATS employs approximately 3,500 people at 25 facilities in
Canada, the United States, Europe and Asia-Pacific. The Company's shares are
traded on The Toronto Stock Exchange under the symbol ATA.
Certain forward looking statements are made in this news release and
accompanying MD&A, including statements regarding possible future business.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties, including, without limitation, continued acceptance of ATS's
products, technologies, customer requirements and other risks detailed from
time to time in ATS's periodic reports filed with Canadian regulatory
authorities.
Management's Discussion and Analysis
This MD&A for the three months ended June 30, 2003 should be read in
conjunction with the Company's fiscal 2003 annual report and the unaudited
consolidated financial statements for the three months ended June 30, 2003.
During July, subsequent to the end of the first quarter, the Company
divested assets comprising a precision cleaning technology business for
approximately $8.7 million in cash. This business has been treated as a
discontinued operation, as specified by the CICA, and its results have been
removed from operating earnings for both the current quarter and the first
quarter of last year and the assets held for sale segregated in the balance
sheet.
Revenue
Consolidated revenue for the three months ended June 30, 2003 was
$148.6 million, 4% higher than $143.4 million a year earlier reflecting growth
in the Solar and Precision Components group revenue.
<<
Revenue by Industry
($ millions)
13 weeks ended
-------------------------------------------------------------------------
6/30/2003 6/30/2002
-------------------------------------------------------------------------
Automation Systems:
Automotive $ 44.9 $ 43.9
Computer-Electronics 39.2 37.0
Healthcare 14.2 17.6
Other 6.7 8.3
-------------------------------------------------------------------------
Subtotal 105.0 106.8
Precision Components:
Automotive 28.0 27.7
Computer-Electronics 4.7 0.7
Other 1.7 1.8
-------------------------------------------------------------------------
Subtotal 34.4 30.2
Solar: 16.9 8.7
Intersegment Elimination (7.7) (2.3)
-------------------------------------------------------------------------
Total Consolidated Revenue $ 148.6 $ 143.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Automation Systems Group (ASG) revenue growth continued to be constrained
by the weak economic conditions which have been in place for a number of
quarters. ASG revenue was $105.0 million, compared to $106.8 million in the
first quarter a year ago primarily as result of a decline in the U.S. dollar
exchange rate over the past year.
In spite of lower North American automotive unit production and the
weaker U.S. dollar, Precision Components Group (PCG) achieved revenue of
$34.4 million, $4.2 million or 14% higher than in the first quarter of fiscal
2003. The acquisition of Micro-Precision Plastics, completed in February 2003,
contributed $2.8 million to Group revenue while revenue from the Company's
thermal products initiative increased $3.1 million to $3.8 million.
Solar Group revenue, which is currently derived from Photowatt
International, increased 95% to $16.9 million versus the same period a year
ago, reflecting significantly improved market demand and the strengthening
value of the Euro versus the Canadian dollar, which increased year-over-year
revenue by approximately $1.3 million. Also, revenue was reduced in the first
quarter of last year, when Photowatt took back $3.1 million in inventory from
a customer experiencing difficulty. Photowatt began shipments in April 2003
under a substantial new solar module supply order announced in March, 2003,
with estimated total value of $31.1 million over a 12-month period.
Consolidated Revenue by Region
($ millions)
13 weeks ended
-------------------------------------------------------------------------
6/30/2003 6/30/2002
-------------------------------------------------------------------------
Canada $ 17.3 $ 17.2
United States/Mexico 84.2 86.0
Europe 36.4 21.0
Asia-Pacific 10.5 13.8
Other 0.2 5.4
-------------------------------------------------------------------------
Total $ 148.6 $ 143.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
First Quarter Earnings from Operations (Operating Earnings)
Consolidated Operating Earnings were $3.8 million (2.6% operating margin)
compared to $6.6 million (4.6% operating margin) in the first quarter of
fiscal 2003, primarily reflecting the factors discussed below.
ASG Operating Earnings were $5.7 million versus $6.1 million in the first
quarter a year ago. This reflected lower revenue and a reduction in operating
margin, which was 5.4% versus 5.7% a year ago. ASG Operating Earnings
continued to be impacted by lower capacity utilization, particularly in its
U.S. west coast operations, and the Company's strategic decision to retain its
highly skilled workforce to further enhance the Company's competitive
advantages, market share and capabilities. ASG Operating Earnings and
operating margin were significantly higher than the third and fourth quarters
of last year due to improved operating performance and capacity utilization
primarily at the Company's Canadian facilities.
PCG Operating Earnings were $0.7 million versus $1.8 million in the first
quarter of fiscal 2003. The transition to new customer programs in thermal
products and automotive, which are expected to have a favourable future
impact, continued to hold back improvements in Operating Earnings in the
quarter. PCG Operating Earnings in the first quarter were significantly
improved over the operating loss of $0.5 million in the third quarter and
Operating Earnings of $0.4 million in the fourth quarter of fiscal 2003.
Solar Group generated Operating Earnings of $0.1 million in the first
quarter of fiscal 2004 compared to $0.5 million in the first quarter a year
ago. Weaker operating performance was due to intense price competition
primarily related to the stronger Euro and corresponding pricing advantages
for Japanese and U.S. manufacturers.
Liquidity, Cash Flow and Financial Resources
ATS continued to invest during the first quarter to support strong future
revenue and earnings growth. Long-term investments totaled $15.7 million and
included $9.9 million invested in plant and equipment and deferred development
at Spheral Solar Power, $5.1 million in other new plant and equipment, and
$0.7 million for the purchase of the non-controlling interest of a subsidiary.
Cash flows from operating activities were $12.2 million compared to
$5.6 million a year earlier. Investment in non-cash working capital decreased
by $2.5 million during the quarter, in spite of the 8% increase in quarterly
revenues compared to the preceding fourth quarter.
Cash on hand was a healthy $75.4 million, down from $82.3 million at
March 31, 2003. $3.4 million of this $6.9 million reduction was the result of
changes in exchange rates during the period. The Company's cash flow
performance and conservative financial posture continued to provide ATS with
the means to fully support its operating strategies without weakening its
financial position. The debt to equity ratio of 0.1:1 remained very strong.
Automation Systems Backlog
At June 30, 2003, automation systems order backlog was $158 million
versus $161 million at March 31, 2003. The reduction reflects the decline in
the U.S. dollar exchange rate during the first quarter. Not included in
backlog is $16.7 million of internal automation systems work being
manufactured for the SSP initiative. Order cancellations and scope reductions
totaled $5.4 million in the first quarter of this fiscal year compared with
$2.5 million a year earlier.
Automation Systems Backlog by Industry
($ millions)
6/30/2003 6/30/2002
-------------------------------------------------------------------------
Computer/Electronics $ 26.6 $ 49.2
Automotive 84.7 90.9
Healthcare 29.1 35.2
Other 17.6 13.7
-------------------------------------------------------------------------
Total $ 158.0 $ 189.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Outlook
Economic conditions are still less than ideal and the Company's current
outlook remains one of cautious optimism. Revenue and earnings in the second
or summer quarter ended September 30 are typically lower than in other
quarters, reflecting plant shutdowns and summer vacations. In addition, the
Company expects to continue to incur start-up costs for new customer programs
in Precision Components in the second quarter and continue to face intense
pricing pressure in solar markets. However management believes there are
positive signs that conditions are improving, including recent new order
booking activity.
New automation systems order bookings (Order Bookings) in the first
quarter were $105 million and $123 million in the fourth quarter of last year.
Order Bookings in the first six weeks of the second quarter were approximately
$73 million. The strong Order Booking activity to date during the second
quarter combined with the solid level of new Order Bookings activity over the
past two fiscal quarters provides evidence that demand in the Company's
automation systems markets may be improving.
In May, PCG successfully launched, on schedule, a large power seat
adjustment sub-system assignment won in May 2001. Based on the multinational
customer's forecast data, the Company expects that this program will generate
between $12 million and $15 million in revenue this fiscal year, with the
potential to increase to between $40 million and $50 million next year. PCG
also continued to prepare for the launch on other new automotive programs
scheduled for the fall of this year and management expects that, at full
volume, these will add an estimated $20 million in annual revenue.
PCG continued to increase revenue from its proprietary thermal management
device business. Subsequent to quarter end, PCG began first shipments on one
additional new thermal products program and received verbal approval on
another two programs. Management expects volumes of its thermal products to
grow as recently launched programs continue to ramp up volumes and as
shipments grow on new programs.
While volatile over the past three quarters, demand for the Company's
established Solar Group products remained strong into the second quarter.
Revenue under the major solar module contract announced in March 2003 is also
expected to increase in the second quarter as shipment volumes increase.
The Company progressed with its SSP initiative that is scheduled to
commence initial production in the spring of 2004. During the first quarter,
additional patent protection was filed for new optical design enhancements for
SSP facilitating broader distribution of initial product samples to many
potential customers. Development of the sophisticated automated workstations
that will produce SSP solar cell products also progressed and installation of
the final equipment is expected by year-end. The purpose-built manufacturing
facility, currently being constructed in Cambridge, is also progressing and is
expected to be available for occupancy near the end of September.
Overall, management believes that the Company is well positioned to
compete in the current economic environment and to benefit significantly from
improved market demand. Expanded strategic sales and marketing efforts,
initiatives in new market areas such as contract equipment manufacturing,
investments made in high-value new automation capabilities combined with the
Company's strong financial position and established strong market presence are
expected to enable the Company to generate solid growth in revenue and
earnings as demand increases.
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Statements of Earnings
(in thousands of dollars, except per share amounts - unaudited)
Thirteen weeks ended
-------------------------------------------------------------------------
June 30 June 30
2003 2002
-------------------------------------------------------------------------
(as restated
see note 3)
Revenue $ 148,583 $ 143,420
Operating costs and expenses:
Cost of revenue 118,695 113,591
Depreciation and amortization 8,173 7,060
Selling and administrative 17,930 16,163
-------------------------------------------------------------------------
144,798 136,814
-------------------------------------------------------------------------
Earnings from operations 3,785 6,606
Other expenses (income):
Interest on long-term debt 209 312
Other interest (199) (602)
-------------------------------------------------------------------------
10 (290)
-------------------------------------------------------------------------
Earnings from continuing operations
before income taxes and
non-controlling interest 3,775 6,896
Provision for income taxes 1,274 2,297
Non-controlling interest
in earnings of subsidiaries (5) 28
-------------------------------------------------------------------------
Net earnings from continuing operations 2,506 4,571
Loss from discontinued operations
net of tax (note 3) (286) (443)
-------------------------------------------------------------------------
Net earnings $ 2,220 $ 4,128
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share (note 6):
Basic - from continuing operations $ 0.04 $ 0.08
Basic - from discontinued operations - (0.01)
-------------------------------------------------------------------------
$ 0.04 $ 0.07
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Diluted - from continuing operations $ 0.04 $ 0.08
Diluted - from discontinued operations - (0.01)
-------------------------------------------------------------------------
$ 0.04 $ 0.07
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements
Consolidated Statements of Retained Earnings
(in thousands of dollars - unaudited)
Thirteen weeks ended
-------------------------------------------------------------------------
June 30 June 30
2003 2002
-------------------------------------------------------------------------
Retained earnings, beginning of period $ 201,075 $ 198,732
Net earnings 2,220 4,128
-------------------------------------------------------------------------
Retained earnings, end of period $ 203,295 $ 202,860
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Balance Sheets
(in thousands of dollars - unaudited)
-------------------------------------------------------------------------
June 30 March 31
2003 2003
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and short-term investments $ 75,417 $ 82,333
Accounts receivable 111,365 117,756
Income taxes recoverable 1,408 1,868
Costs and earnings in excess of
billings on contracts in progress 90,812 96,546
Inventories 75,911 83,099
Other 5,162 3,734
Assets held for sale (note 3) 8,650 -
-------------------------------------------------------------------------
368,725 385,336
Fixed assets 225,583 226,555
Goodwill 60,115 63,721
Intangible assets 6,463 8,949
Other assets 29,069 29,307
-------------------------------------------------------------------------
$ 689,955 $ 713,868
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 71,283 $ 73,373
Billings in excess of costs and earnings
on contracts in progress 11,371 14,585
Future income taxes 20,406 22,128
-------------------------------------------------------------------------
103,060 110,086
Long-term debt 45,505 49,754
Future income taxes 6,106 5,817
Non-controlling interest 313 1,053
Shareholders' equity:
Share capital 331,499 331,499
Retained earnings 203,295 201,075
Cumulative translation adjustment 177 14,584
-------------------------------------------------------------------------
534,971 547,158
-------------------------------------------------------------------------
$ 689,955 $ 713,868
See accompanying notes to interim consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Statements of Cash Flows
(in thousands of dollars - unaudited)
Thirteen weeks ended
-------------------------------------------------------------------------
June 30 June 30
2003 2002
-------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 2,220 $ 4,128
Items not involving cash 7,494 5,077
-------------------------------------------------------------------------
Cash flow from operations 9,714 9,205
Change in non-cash operating working capital 2,456 (3,583)
-------------------------------------------------------------------------
12,170 5,622
Cash flows from investing activities:
Acquisition of interest in subsidiary (note 4) (650) -
Acquisition of fixed assets (12,333) (2,664)
Investments and other (2,764) (4,108)
-------------------------------------------------------------------------
(15,747) (6,772)
Cash flows from financing activities:
Bank indebtedness - 353
Issuance of common shares - 806
Other 13 362
-------------------------------------------------------------------------
13 1,521
-------------------------------------------------------------------------
Effect of exchange rate changes on
cash and short-term investments (3,352) (903)
-------------------------------------------------------------------------
Decrease in cash and short-term investments (6,916) (532)
Cash and short-term investments,
beginning of period 82,333 113,281
-------------------------------------------------------------------------
Cash and short-term investments,
end of period $ 75,417 $ 112,749
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplementary information:
Cash income taxes paid $ 1,907 $ 2,360
Cash interest paid $ 196 $ 376
See accompanying notes to interim consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Notes to Interim Consolidated Financial Statements
(tabular amounts in thousands, except per share amounts - unaudited
-------------------------------------------------------------------------
1. Significant accounting policies:
(a) The accompanying unaudited interim consolidated financial
statements are prepared in accordance with accounting principles
generally accepted in Canada and the accounting policies are
consistent with those described in the annual consolidated financial
statements for the year ended March 31, 2003 except as described in
note 2. The unaudited interim consolidated financial statements
presented in this interim report do not conform in all respects to the
requirements of generally accepted accounting principles for annual
financial statements and should be read in conjunction with the
audited consolidated financial statements in the Company's fiscal 2003
Annual Report.
(b) Contract revenue in the Automation Systems segment is recognized
using the percentage of completion method. The degree of completion is
determined based on costs incurred, excluding costs that are not
representative of progress to completion, as a percentage of total
costs anticipated for each contract. Incentive awards, claims or
penalty provisions are recognized when such amounts can reasonably be
determined. Complete provision is made for losses on contracts in
progress when such losses first become known. Revisions in cost and
profit estimates, which can be significant, are reflected in the
accounting period in which the relevant facts become known.
2. Accounting policy changes:
(a) Effective April 1, 2003, the Company adopted the new Canadian
Institute of Chartered Accountants ("CICA") recommendations related to
the determination of long-lived asset impairment as well as
recognition, measurement and disclosure of any impairment. The
adoption of the new recommendations had no material impact on the
Company's interim consolidated financial statements for the thirteen
weeks ended June 30, 2003.
(b) Effective April 1, 2003, the Company adopted the new CICA
recommendations that establish standards for the recognition,
measurement, presentation and disclosure of the disposal of long-lived
assets and for the presentation and disclosure of discontinued
operations. The Company has followed the new recommendations in
accounting for the assets held for sale and discontinued operations as
described further in note 3. Other than the matter described in
note 3, the adoption of the new recommendations had no material impact
on the Company's interim consolidated financial statements for the
thirteen weeks ended June 30, 2003.
3. Discontinued operations, assets held for sale and subsequent event:
During the thirteen weeks ended June 30, 2003, the Company committed
to a plan to sell the intellectual property and key operating assets
of its subsidiary, Eco-Snow Systems Inc ("Eco-Snow"). Accordingly, the
results of operations and financial position of Eco-Snow have been
segregated and presented separately as discontinued operations and
assets held for sale in the accompanying interim consolidated
financial statements. The results of the discontinued operations were
as follows:
Thirteen weeks ended
----------------------------------------------------------------------
June 30 June 30
2003 2002
----------------------------------------------------------------------
Revenue $ 963 $ 241
Loss from operations $ (477) $ (739)
Income tax recovery 191 296
----------------------------------------------------------------------
Loss from discontinued operations $ (286) $ (443)
----------------------------------------------------------------------
----------------------------------------------------------------------
Subsequent to June 30, 2003, the Company announced the completion of
the sale of the Eco-Snow intellectual property and key operating
assets for US$6.4 million. The transaction is not expected to have a
material impact on earnings for the 13 weeks ended September 30, 2003.
4. Acquisition:
During the thirteen weeks ended June 30, 2003, the outstanding equity
of an automation systems subsidiary was purchased for cash
consideration of $650,000. The acquisition was accounted for using the
purchase method. The fair value of the assets and liabilities acquired
were approximately equal to the consideration paid.
5. Stock-based compensation:
In accordance with CICA recommendations, the following pro forma
disclosures present the compensation cost for the Company's stock
option plan had compensation cost been determined and recorded in the
statement of earnings and the earnings per share based on the fair
value at the grant date of the options awarded on or after
April 1, 2002.
Thirteen weeks ended
----------------------------------------------------------------------
June 30 June 30
2003 2002
----------------------------------------------------------------------
Net earnings:
as reported $ 2,220 $ 4,128
pro forma $ 1,946 $ 3,912
----------------------------------------------------------------------
Earning per share:
Basic - as reported $ 0.04 $ 0.07
- pro forma $ 0.03 $ 0.06
Diluted - as reported $ 0.04 $ 0.07
- pro forma $ 0.03 $ 0.06
----------------------------------------------------------------------
----------------------------------------------------------------------
In the pro forma results above, the fair values of the Company's stock
option grants were estimated using the Black-Scholes option pricing
model with the following assumptions:
Thirteen weeks ended
----------------------------------------------------------------------
June 30 June 30
2003 2002
----------------------------------------------------------------------
Risk-free interest rate 4.4% 5.4%
Dividend yield 0.0% 0.0%
Expected life 5 years 6 years
Expected volatility 38% 42%
----------------------------------------------------------------------
----------------------------------------------------------------------
The estimated compensation cost of the options granted is amortized
over the five year vesting period of the options. During the thirteen
weeks ended June 30, 2003, 430,000 options (2002 - 471,495) were
granted at an average exercise price of $8.60 (2002 - $18.61). The
weighted average value per option as calculated by the Black-Scholes
model, using the above assumptions is $3.47 (2002-$9.11) each.
6. Weighted average number of shares:
Weighted average number of shares used in the computation of earnings
per share is as follows:
Thirteen weeks ended
----------------------------------------------------------------------
June 30 June 30
2003 2002
----------------------------------------------------------------------
Basic 60,571 60,378
Diluted 60,892 61,114
----------------------------------------------------------------------
----------------------------------------------------------------------
7. Segmented disclosure:
The Company evaluates performance based on three reportable segments:
Automation Systems, Precision Components and Solar. The Automation
Systems segment produces custom-engineered turn-key automated
manufacturing and test systems. The Precision Components segment is a
high volume manufacturer of plastic and metal components and
sub-assemblies. The Solar segment is a high volume manufacturer of
photovoltaic products and includes the Company's investment in
Spheral Solar(TM) Technology.
The Company accounts for inter-segment revenue at current market
rates, negotiated between the segments.
Thirteen weeks ended
----------------------------------------------------------------------
June 30 June 30
2003 2002
Revenue
Automation Systems $ 104,966 $ 106,788
Precision Components 34,386 30,238
Solar 16,916 8,673
Elimination of inter-segment revenue (7,685) (2,279)
----------------------------------------------------------------------
Consolidated $ 148,583 $ 143,420
----------------------------------------------------------------------
Earnings from operations
Automation Systems $ 5,710 $ 6,070
Precision Components 668 1,791
Solar 84 504
Inter-segment elimination and other
corporate expenses (2,677) (1,759)
----------------------------------------------------------------------
Consolidated $ 3,785 $ 6,606
----------------------------------------------------------------------
8. Cyclical nature of the business:
Interim financial results are not necessarily indicative of annual or
longer term results, because many of the individual markets served by
the Company tend to be cyclical in nature. General economic trends,
product life cycles and product changes may impact Automation Systems
bookings, Precision Components and Solar volumes, and the Company's
earnings in any of its markets.
%SEDAR: 00002017E
-30-
For further information: Ron Jutras, Executive Vice President and Chief Financial Officer, (519) 653-6500