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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of December, 2003
ATI TECHNOLOGIES INC.
(Translation of Registrant’s Name into English)
1 Commerce Valley Drive East, Markham, Ontario, Canada L3T 7X6
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F Form 40-F X
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes No X
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Index is located on Page 2
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INDEX
Document | Page Number | ||
2003 Annual Report | 3 | ||
Signature Page | 68 |
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ATI TECHNOLOGIES INC. / 2003 ANNUAL REPORT
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When does vision become visionary? Sight transform into insight? Seeing go beyond believing? At ATI, we take you to a place beyond imagination with trail-blazing graphic and digital media solutions. Welcome to where your creativity and productivity can be unleashed by revolutionary technologies and forward thinking. ATI. Innovation redefined. Page 5 of 68 ATI Technologies Inc. is a world leader in the design and manufacture of innovative 3D graphics and digital media silicon solutions. An industry pioneer since 1985, ATI is the world’s foremost visual processor unit (VPU) provider and is dedicated to deliver leading-edge performance solutions for the full range of PC and Mac desktop and notebook platforms, workstation, set-top and digital television, game console and handheld markets. With 2003 revenues of approximately $1.4 billion, ATI has more than 2,200 employees in the Americas, Europe and Asia. ATI common shares trade on NASDAQ (ATYT) and the Toronto Stock Exchange (ATY).
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1.0 | 1.0 | 1.4 | (0.07) | 0.19 | 0.27 | 23.2 | 32.8 | 31.3 | ||||||||||
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01* | 02* | 03 | 01* | 02* | 03 | 01* | 02* | 03 | ||||||||||
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2 ATI 2003
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FINANCIAL highlights |
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For years ended August 31 (In millions of U.S. dollars, except per share amounts) (unaudited) | 2003 | ![]() | 2002 | 2001 | |||||||||
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STATEMENT OF OPERATIONS | ![]() | ||||||||||||
Revenues | $ | 1,385.3 | ![]() | $ | 1,015.8 | $ | 1,040.4 | ||||||
Net income (loss) | 35.2 | ![]() | (49.1 | ) | (53.8 | ) | |||||||
Net income (loss) per share | ![]() | ||||||||||||
![]() | $ | 0.15 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||
![]() | $ | 0.14 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||
Adjusted net income (loss) | 67.0 | ![]() | 48.1 | (15.8 | ) | ||||||||
Adjusted net income (loss) per share | ![]() | ||||||||||||
![]() | $ | 0.28 | ![]() | $ | 0.20 | $ | (0.07 | ) | |||||
![]() | $ | 0.27 | ![]() | $ | 0.19 | $ | (0.07 | ) | |||||
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BALANCE SHEET | ![]() | ||||||||||||
Working capital | 430.3 | ![]() | 357.8 | 321.3 | |||||||||
Total assets | 1,116.1 | ![]() | 909.4 | 845.0 | |||||||||
Shareholders’ equity | 699.6 | ![]() | 643.2 | 679.4 | |||||||||
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OTHER | ![]() | ||||||||||||
Cash flow from operations | 105.4 | ![]() | 56.9 | 101.9 | |||||||||
Current ratio | 2.17:1 | ![]() | 2.50:1 | 3.14:1 | |||||||||
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216.5 | 236.9 | 350.7 | 111.9 | 192.1 | 176.5 | 101.9 | 56.9 | 105.4 | ||||||||||
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01 | 02 | 03 | 01* | 02* | 03 | 01 | 02 | 03 | ||||||||||
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ATI 2003 3 | |
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AT A glance | |
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![]() | Market Size | ![]() | ![]() | ![]() | Projected Growth | ![]() | ![]() | ![]() | ATI Value Proposition | ![]() | ![]() | ![]() | ATI Product Line | ||||||
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Desktops | The worldwide desktop PC market is estimated to grow to 114.6 million units in 2004 (source: IDC). | ![]() | ![]() | ![]() | The worldwide desktop PC market is estimated to grow to 135.5 million units in 2007 (source: IDC). | ![]() | ![]() | ![]() | RADEON™ visual processing units (VPUs) continue to expand the visual experience by delivering unparalled performance and technology leadership at every pricepoint. | ![]() | ![]() | ![]() | RADEON™ 9800 RADEON™ 9700 RADEON™ 9600 RADEON™ 9200 | ||||||
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Notebooks | The notebook market is estimated to grow to 43.6 million units in 2004 (source: IDC). | ![]() | ![]() | ![]() | The notebook market is estimated to grow to 62.4 million units in 2007 (source: IDC). | ![]() | ![]() | ![]() | MOBILITY™ RADEON™ graphics solutions provide outstanding performance and advanced power management features. | ![]() | ![]() | ![]() | MOBILITY™ RADEON™ 9600 MOBILITY™ RADEON™ 9200 MOBILITY™ RADEON™ 9000 MOBILITY™ RADEON™ 7500 | ||||||
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Workstations | The workstation market is estimated to grow to 1.5 million units in 2004 (source: IDC). | ![]() | ![]() | ![]() | The workstation market is estimated to grow to 1.58 million units in 2007 (source: IDC). | ![]() | ![]() | ![]() | FireGL™ delivers ideal performance and enables hardware accelerated rendering for digital content creation (DCC) and computer-aided design (CAD), accelerating the production pipeline. | ![]() | ![]() | ![]() | FireGL™ T2-128 FireGL™ Z1-128 FireGL™ X1-128 FireGL™ X1-256 FireGL™ X2-256 | ||||||
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Integrated Chipsets | The market for integrated chipsets is estimated to be 112 million units in 2004 (source: Mercury Research). | ![]() | ![]() | ![]() | The market for integrated chipsets is estimated to grow to 165 million units in 2007 (source: Mercury Research). | ![]() | ![]() | ![]() | RADEON™ IGP are price-competitive solutions that deliver best-in-class graphics performance and support for advanced 3D and 2D features. | ![]() | ![]() | ![]() | RADEON™ 9100 IGP RADEON™ IGP 330/340 | ||||||
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4 ATI 2003
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![]() | Market Size | ![]() | ![]() | ![]() | Projected Growth | ![]() | ![]() | ![]() | ATI Value Proposition | ![]() | ![]() | ![]() | ATI Product Line | ||||||
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Cell Phones & PDAs | The market for worldwide mobile phones is estimated to be 486 million units in 2004, over half of which will be color (source: Display Search). | ![]() | ![]() | ![]() | The market for worldwide mobile phones is estimated to grow to 513 million units in 2007, 75% of which will be color (source: Display Search). | ![]() | ![]() | ![]() | IMAGEON™ delivers graphically advanced, power saving technology for wireless, handheld and mobile communication devices. | ![]() | ![]() | ![]() | IMAGEON™ 3200 IMAGEON™ 100 | ||||||
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Digital TV Set-top Boxes | The market is estimated to be 62.1 million units in 2004 (source: Strategy Analytics). | ![]() | ![]() | ![]() | The market is estimated to grow to 119.1 million units in 2007 (source: Strategy Analytics). | ![]() | ![]() | ![]() | XILLEON™ and THEATER™-based solutions are ideal for consumer electronics markets including digital TVs and digital set-top boxes. | ![]() | ![]() | ![]() | XILLEON™ 220 THEATER™ 310 THEATER™ 200 | ||||||
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Game Console | The market is estimated to be 29.3 million units in 2004 (source: Strategy Analytics). | ![]() | ![]() | ![]() | The market is estimated to grow to 35.8 million units in 2007 (source: Strategy Analytics). | ![]() | ![]() | ![]() | ‘Flipper’ chip is the central graphics core of Nintendo’s game console enabling software developers to create a wide variety of game titles for NINTENDO GAMECUBE. | ![]() | ![]() | ![]() | ‘Flipper’ chip for NINTENDO GAMECUBE | ||||||
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For more information, please go to ati.com | |
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TO OUR shareholders |
In 2003, we continued to expand ATI’s prospects by successfully executing our strategy. We solidified our product and technology leadership. We captured share in existing markets and entered new markets to produce growth. We strengthened our operational performance and delivered improved profitability. Our accomplishments in 2003 reconfirmed our direction, and encourage us to pick up the pace even more in 2004. K.Y. HoChairman and CEO /David E. OrtonPresident and COO 6 ATI 2003 Page 10 of 68 Our strategy is straightforward. We strive through innovation to achieve leadership in products and technologies. We then leverage our technologies to expand and create new markets. Focused execution of this strategy, combined with sustained operational excellence, produces growth and improved financial results. | ![]() |
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>>>> OUR FOCUSED GROWTH STRATEGY | |||||||||
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1 | Product & Technology | • | Consistently raise the technology, innovation and performance bar in all segments of the PC market | ||||||
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2 | Establish a Franchise in the Integrated Graphics Market | • | Bring ATI’s core visual processing expertise to the IGP market, creating an exceptional value proposition for the volume segment | ||||||
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3 | Expand in Consumer Electronics Market Segments | • | Leverage our core technology base and expertise in the PC market with products that reach beyond the PC | ||||||
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4 | Improve Operational and Financial Performance | • | Continuously enhance operational efficiencies and implement sustainable cost improvements | ||||||
ATI 2003 7 | |
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In 2003 we made great strides. |
PRODUCT LEADERSHIP In 2003, we once again achieved leadership in the PC market. Our RADEON™ 9800 led the way in the high-end enthusiast desktop PC market receiving rave reviews from customers and PC media alike. Our RADEON™ 9600 brought performance leadership to the mainstream and delivered an extreme gaming platform to this large volume segment. Our RADEON™ 9200 raised the performance bar in the value discrete segment. At the same time, we also delivered new leading products into the notebook, workstation and home media PC markets. We’ve worked hard over the past three years to achieve leadership because leadership produces our growth and drives our financial performance. Now we need to work even harder to maintain our leadership position and define new directions for visualization in our industry. This means moving quicker and anticipating better. It means responding to customer needs faster than ever. It also means aspiring to new levels of engineering and design excellence. And it means reaching out and building on partnerships with industry leaders. Today innovation takes on a new sense of urgency...at ATI we know this as innovation redefined. EXPAND INTO THE VOLUME INTEGRATED CHIPSET (IGP) MARKET In the summer of 2003, we introduced our IGP products for the desktop, including the RADEON™ 9100 IGP. We gained enthusiastic acceptance in this segment with a growing list of design wins and new channel partnerships, most notably ASUS and MSI, complementing existing ODM partnerships. DIGITAL CONSUMER MARKETS We refined our strategy in the handheld market to focus on the high-volume color and feature cell phone segment. Our strengths in display graphics, digital video, power consumption and integration have enabled us to deliver an attractive value, performance and size proposition to this fast growing market. Among the notable milestones was that Motorola selected our IMAGEON™ products for their new GSM feature phones. Volume shipments began in the fourth quarter of the fiscal year. We made similar progress in the television market in 2003 as the transition from analog to digital television began to gather momentum. Key manufacturers including Sony, Epson and Scientific Atlanta chose XILLEON™ chips to drive their new DTV products. Each is a leader in the television, projection and set-top box markets respectively. By delivering both superior visual processing horsepower and leading signal conversion technology, ATI brings a compelling one-stop value proposition to the DTV market. With design wins among many of the top TV manufacturers, we are well on our way to building another strong franchise in this fast growing market. 8 ATI 2003 Page 12 of 68 OPERATIONAL EFFECTIVENESS AND FINANCIAL PERFORMANCE Revenues increased by 36%. Gross margin increased steadily during the fiscal year ending at the top end of our target range at 35.6%. Adjusted net income per share on a diluted basis grew by 42% to $0.27. Our operational effectiveness also improved: supply chain initiatives enabled us to increase our inventory turns and a focus on improving yields and decreasing costs led to higher gross margins. Steady improvement in many financial metrics this year was the result of the relentless execution of our strategy. OUTLOOK We will enter the desktop IGP market building on our strong performance in the notebook segment of this volume market. Our RADEON™ 9100 IGP will begin volume shipments in the first quarter of fiscal 2004. We are targeting deeper penetration into high-value markets including workstations and home media PCs. We also expect our digital consumer businesses to grow. The market for color and feature phones is growing rapidly and our IMAGEON™ products are well positioned to capture a greater share of this market. In 2004, the first of a new wave of digital televisions powered by ATI’s XILLEON™ products will begin shipping. We expect to add to our growing base of design wins during the year as the transition to DTV begins to gain momentum. We will continue to deliver our products on a timely basis and hit market windows. We are ready to lead the transition to PCI Express, being the first VPU manufacturer to build and demonstrate PCI Express products. We will also continue to bring our technology and expertise to new markets—anticipating inflection points and exhaustively preparing our plan of attack. We remain ever attentive to our customers’ needs and diligent in our response. Strategic focus gives us clear direction and our sense of urgency and desire to exceed our customers’ expectations propels us forward. This combination gives us the confidence to explore new markets, develop new products and reach new customers. We have proven over the past few years that by doing these things well—we deliver results.
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K.Y. Ho (signed) | David E. Orton (signed) President and COO | ![]() |
ATI 2003 9 | |
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Management’s ABOUT FORWARD-LOOKING STATEMENTS This Annual Report and Management’s Discussion and Analysis (“MD&A”), and in particular the outlook sections of this MD&A, contain forward-looking statements about ATI’s objectives, strategies, financial condition and results. These “forward-looking” statements are based on current expectations and entail various risks and uncertainties. It must be noted that:
Risks that could cause our actual results to materially differ from our current expectations are outlined in the Risks and Uncertainties section of this MD&A. |
10 ATI 2003 |
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This MD&A comments on ATI’s operations, performance and financial condition for the three years ended August 31, 2003. The MD&A should be read in conjunction with ATI’s 2003 Consolidated Financial Statements and accompanying notes beginning on page 28 of this Annual Report. All current and historical amounts quoted in this MD&A, in the Consolidated Financial Statements and elsewhere in this Annual Report reflect the accounting change described in note 1 to the Consolidated Financial Statements. All tabular amounts are expressed in thousands of U.S. dollars except per share amounts. In this MD&A, ATI, we, us and our mean ATI Technologies Inc. and its subsidiaries. The MD&A is presented in four sections: About Our Business describes our business, strategy and outlook. Financial Results Analysis provides a detailed review of our financial performance for the past three years. It focuses on operating results as well as liquidity and capital resources. Risks and Uncertainties examines uncertainties and challenges that could affect our business. Our Accounting Policies describe our critical accounting policies and the key estimates and assumptions that management has made in the preparation of our financial statements. It also provides a description of changes in accounting standards used to prepare our financial statements. About Our Business We are dedicated to the delivery of leading-edge performance solutions for the full range of desktop and notebook personal computer (PC), workstation, digital television (DTV), set-top box, game console, color mobile phone and handheld markets. We had revenues of about $1.4 billion in fiscal 2003. In addition, more than 2,200 employees work at ATI in offices in the Americas, Europe and Asia. ATI TERMS EXPLAINED VPUs and GPUs VPUs or GPUs off-load the burden of visual processing from the computer’s microprocessor or central processing unit (CPU). In this way the dedicated VPU and CPU work in tandem to increase overall speed and performance of the PC. Though both VPU and GPU refer to the same general category, we use VPU to distinguish our more recent generations of processors beginning with the introduction of the RADEON™ 9700—the first graphic processor to enable full rendering in real time. IGPs Visual Processing Units for PCs | |
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MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) Desktop Our integrated desktop IGP addresses the value segment of the PC market. We bring speed and an excellent visual experience to the sub-$1,000 PC market. Notebook Our integrated notebook IGPs target the value category of the portable or laptop computer segment. Our products combine excellent graphic performance and low power consumption at a value price-point. Visual Processing Products for Consumer Electronics ATI has been working for several years to leverage our core technology, visual processing expertise and power management know-how in certain consumer markets. Initially we have targeted three end user markets: handheld devices, including color mobile phones; digital television, including set-top boxes; and game consoles. Color mobile phones, PDAs and handheld devices Our IMAGEON™ product line brings leading visual processing along with power saving technology and a high level of integration. Digital television including set-top boxes We are leveraging our core technology in visual processors and multimedia by designing and manufacturing component-level visual and signal processing technologies for the digital TV and set-top box markets. Our XILLEON™ and THEATER™ product lines are cost-effective and highly integrated solutions for this market. Game consoles BUSINESS STRATEGY AND 2003 PROGRESS AND ACHIEVEMENTS
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BUSINESS STRATEGY AND OBJECTIVES | 2003 ACCOMPLISHMENTS | |||
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Product and Technology Leadership Consistently raise the technology innovation and performance bar in all segments of the PC market. | We Raised the Bar Again in 2003 Leveraged high-end performance VPUs into the important mainstream and value market segments with the introduction of the RADEON™ 9600 and the RADEON™ 9200. | |||
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Establish a Franchise in the IGP Market Bring ATI’s core visual processing expertise to the IGP market that represents about 50% of graphics processor shipments today. | Captured a Leading Share We introduced a series of new IGP products culminating in the release of the RADEON™ 9100 IGP and MOBILITY™ RADEON™ 9100 IGP. Strong customer acceptance of our value/performance proposition has contributed to our successful launch in the IGP market. We partnered with key motherboard manufacturers including ASUS, Gigabyte, MSI, and PC Partner that will help us penetrate the desktop integrated market in fiscal 2004. | |||
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Expand in Consumer Electronics Market Segments Leverage our core technology base and expertise in the PC market with products that reach beyond the PC and address the DTV, handheld and game console markets. | Volume Shipments of IMAGEON™ into Achieved Broad-Based Acceptance Agreements with Game Console Manufacturers | |||
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Improve Operating and Financial Performance Continuously improve all areas of ATI’s operations to achieve and exceed our financial objectives. | Steady Improvement in Financial In 2003, we improved our inventory management controls and increased our inventory turns to 5.2 from 4.5 in 2002. |
BUSINESS OUTLOOK FOR FISCAL 2004 Although we expect growth from our existing franchises in desktop discrete, notebook discrete and notebook IGP products, we expect much of our fiscal 2004 revenue growth to come from products sold into the handheld, DTV and desktop IGP markets. Based on this outlook for the markets for our products, we expect ATI’s financial performance will improve in 2004 relative to 2003.
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MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) Financial Results Analysis During fiscal 2003, ATI reviewed its revenue recognition accounting policy as it is applied to the shipment of products to our customers. Following this review, we corrected our revenue recognition accounting policy by revising the timing of when revenue is recognized to more clearly identify the point in the shipping process when the risk and rewards of ownership have been transferred to the customer. This change and the related income tax effect have been applied retroactively. The financial statements of all prior periods presented for comparative purposes have been restated to give effect to this change. Details are provided in note 1 in the accompanying financial statements. Our financial results have been and will continue to be subject to quarterly and other fluctuations. For a discussion of factors affecting our operating results, please refer to “Risks and Uncertainties” on page 22. OPERATING RESULTS | ![]() |
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Comparison of Operating Results unaudited | 2003 | ![]() | 2002 | 2001 | |||||||||||||||
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REVENUES | $ | 1,385,293 | 100.0% | ![]() | $ | 1,015,779 | 100.0% | $ | 1,040,365 | 100.0 | % | ||||||||
Cost of goods sold | 952,001 | 68.7% | ![]() | 682,385 | 67.2% | 799,038 | 76.8 | % | |||||||||||
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Gross margin | 433,292 | 31.3% | ![]() | 333,394 | 32.8% | 241,327 | 23.2 | % | |||||||||||
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EXPENSES | ![]() | ||||||||||||||||||
![]() | 96,925 | 7.0% | ![]() | 77,920 | 7.7% | 75,594 | 7.2 | % | |||||||||||
![]() | 212,976 | 15.4% | ![]() | 164,609 | 16.2% | 149,465 | 14.4 | % | |||||||||||
![]() | 39,413 | 2.8% | ![]() | 35,662 | 3.5% | 37,261 | 3.6 | % | |||||||||||
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![]() | 10,767 | 0.8% | ![]() | 97,501 | 9.6% | 114,507 | 11.0 | % | |||||||||||
![]() | 28,724 | 2.1% | ![]() | – | 0.0% | – | 0.0 | % | |||||||||||
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388,805 | 28.1% | ![]() | 375,692 | 37.0% | 376,827 | 36.2 | % | ||||||||||||
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NET INCOME (LOSS) FROM OPERATIONS | 44,487 | 3.2% | ![]() | (42,298 | ) | (4.2% | ) | (135,500 | ) | (13.0 | %) | ||||||||
Interest and other income, net | 4,382 | 0.3% | ![]() | 732 | 0.1% | 64,131 | 6.1 | % | |||||||||||
Interest expense | (1,899 | ) | (0.1% | ) | ![]() | (659 | ) | (0.1% | ) | (1,180 | ) | (0.1 | %) | ||||||
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Income (loss) before income taxes | 46,970 | 3.4% | ![]() | (42,225 | ) | (4.2% | ) | (72,549 | ) | (7.0 | %) | ||||||||
Income taxes (recovery) | 11,741 | 0.9% | ![]() | 6,854 | 0.6% | (18,760 | ) | (1.8 | %) | ||||||||||
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NET INCOME (LOSS) | $ | 35,229 | 2.5% | ![]() | $ | (49,079 | ) | (4.8% | ) | $ | (53,789 | ) | (5.2 | %) | |||||
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NET INCOME (LOSS) PER SHARE | ![]() | ||||||||||||||||||
![]() | $ | 0.15 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||||||||
![]() | $ | 0.14 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||||||||
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ADJUSTED NET INCOME (LOSS)* | ![]() | ||||||||||||||||||
Adjusted net income (loss) | $ | 67,015 | ![]() | $ | 48,078 | $ | (15,836 | ) | |||||||||||
Adjusted net income (loss) per share | ![]() | ||||||||||||||||||
![]() | $ | 0.28 | ![]() | $ | 0.20 | $ | (0.07 | ) | |||||||||||
![]() | $ | 0.27 | ![]() | $ | 0.19 | $ | (0.07 | ) | |||||||||||
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*Please see table titled “Reconciliation of Adjusted Net Income (Loss)” included on page 18.![]() |
14 ATI 2003 | |
Page 18 of 68
Adjusted net income is a “non-GAAP financial measure” that does not have an established meaning under generally accepted accounting principles (“GAAP”), but is referred to in this Annual Report because management of ATI believes that it is indicative of our operating performance and is generally used by investors to evaluate companies in the graphics industry. Such term may not be comparable to similarly titled measures presented by other publicly traded companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. | ![]() |
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![]() ![]() ![]() ![]() ![]() | REVENUES Revenues increased by $370 million to approximately $1.4 billion in 2003. This increase was primarily a result of our strong entry into the notebook IGP market and a growing demand for our high performance desktop products. Overall growth in the notebook market also contributed to growth in discrete and integrated notebook products. Over 55% of our revenues in 2003 were generated by our desktop discrete products which was a relative decrease compared to 2002 where desktop products represented over 60% of revenues. Over 40% of revenues in 2003 were generated by our notebook products, with over 10% of our overall sales coming from our notebook IGP products—a new market segment for us. In 2002, notebook product sales represented about a third of our revenues. Notebook market growth as well as our entry into the notebook integrated market contributed to this shift in 2003. Royalties and licensing income from our Nintendo business continued to represent less than 5% of revenues in 2003, and in absolute dollars were slightly lower in 2003 relative to 2002. | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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1.0 | 1.0 | 1.4 | |||||||
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01* | 02* | 03 | |||||||
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In 2003, three customers accounted for 40% (16%, 13% and 11% respectively) of total revenues. In 2002, only one customer represented over 10% of our sales, at 21%. Our top ten customers accounted for approximately 70% of revenues in 2003 compared with 71% last year. Our revenues declined 2.4% in 2002 versus 2001 primarily as a result of the ongoing transition in ATI’s business from board sales to component sales. Unit sales volume increased in 2002, but with an increased mix of lower dollar components versus boards. | ![]() |
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![]() ![]() ![]() ![]() ![]() | Gross Margin In the remaining three quarters, however, our gross margin climbed steadily and exceeded 35% in the fourth quarter. We achieved higher margins on our board-level products, reflecting the strength of our high-end products. We also saw improvement in desktop chip margins largely due to higher margins from new products, as well as improved contribution of our consumer business. The increase in gross margin percentage was somewhat moderated by lower margins on our “embedded memory” products sold into the notebook PC market. Certain of our notebook products include third party memory. The memory is generally passed through with a limited markup. This results in reduced gross margin percentage. | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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241.3 | 333.4 | 433.3 | |||||||
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01* | 02* | 03 | |||||||
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ATI 2003 15 |
Page 19 of 68
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) | |
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![]() ![]() ![]() ![]() ![]() | EXPENSES Selling and Marketing Expenses As a percentage of revenues, our selling and marketing expenses declined to 7.0% in 2003 from 7.7% last year. Selling and marketing expenses include salaries, commissions and bonuses earned by sales and marketing personnel, direct sales costs, promotional and advertising costs, and travel and entertainment expenses. | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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262.3 | 278.2 | 349.3 | |||||||
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01* | 02* | 03 | |||||||
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The white box, or system integrator channel, is an increasingly important distribution channel for ATI and one that already contributes positively to revenue and profitability. Approximately $11.5 million of our sales and marketing expenses in the form of variable selling expenses were used in support of our pursuit of business in this channel, particularly in the Asia-Pacific region. AMI Technologies Corp. (“AMI”), our third-party sales and distribution partner in Asia-Pacific, generated increased sales and corresponding commissions in 2003. Subsequent to year-end, ATI purchased certain assets of AMI. With this acquisition, we expect to reduce our expenses associated with sales into this region in fiscal 2004. Selling and marketing expenses increased in 2002 compared to 2001 as a result of marketing | ![]() |
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![]() ![]() ![]() ![]() ![]() | Research and Development Expenses As a percentage of revenues, R&D expenses declined to 15.4% in 2003 from 16.2% last year. R&D expenses include engineering salaries, costs of development tools and software, component and board prototype costs, consulting fees, licensed technology fees and patent filing fees. Investment in R&D is a key part of our strategy to maintain product and technology leadership. It has enabled us to expand into the IGP segment and open new markets in consumer electronics. We will continue to invest in R&D in support of our strategic objectives. In 2003, our R&D expenses rose as a result of both an increase in staffing, as well as the cost of technology required to support the increasing complexity of our products, and a broader product line. Key activities contributing to our higher R&D spending in 2003 included increased investment in the following: | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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149.5 | 164.6 | 213.0 | |||||||
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01 | 02 | 03 | |||||||
R&D expenses increased by $15.1 million to $164.6 million from 2001 to 2002. This increase was attributable to the development and support of new products for the integrated chipset and consumer markets; the reflection of a full year of costs from the acquisition of the FGL Graphics division of SONICblue Ltd. in March 2001; the staffing of our 3D design teams in Marlborough, MA and Santa Clara, CA; a $1.5 million expense associated with the acquisition of NxtWave in June 2002; as well as higher product development costs, including increased prototyping costs. Administrative Expenses As a percentage of revenue, administrative expenses declined to 2.8% in 2003 from 3.5% in 2002. Administrative expenses consist of salaries and expenses of the corporate infrastructure groups, including the operations, human resources, finance, legal and information technology departments. Administrative expenses in 2003 increased $3.8 million relative to 2002 as a result of additional personnel needed to support investments in R&D and marketing, as well as the foreign exchange impact. Most of our administrative expenditures are denominated in Canadian dollars. The decrease in administrative expenses in 2002 compared to the prior year was primarily due to lower staffing levels in our board business and other areas resulting from our transition to a chip model. | ![]() | |
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Page 21 of 68
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) |
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Amortization of Intangible Assets | 2003 | ![]() | 2002 | 2001 | |||||||||
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Goodwill: | ![]() | ||||||||||||
![]() | $ | – | ![]() | $ | 73,134 | $ | 75,404 | ||||||
![]() | – | ![]() | 10,319 | – | |||||||||
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– | ![]() | 83,453 | 75,404 | ||||||||||
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Intangible assets: | ![]() | ||||||||||||
![]() | 10,767 | ![]() | 8,963 | 34,592 | |||||||||
![]() | – | ![]() | 5,085 | 4,511 | |||||||||
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10,767 | ![]() | 14,048 | 39,103 | ||||||||||
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$ | 10,767 | ![]() | $ | 97,501 | $ | 114,507 | |||||||
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Our total amortization expense fell by $86.7 million or 89.0% to $10.8 million in 2003. This decrease is the result of discontinuing amortization of goodwill in response to new accounting standards. Please see “Our Accounting Policies” in this MD&A for more information. Amortization expense totaled $97.5 million in 2002 compared to $114.5 million in 2001. The decline was the result of the completion in April 2001 of the amortization of the purchased-in-process R&D associated with the acquisition of ArtX Inc. (ArtX). This was slightly offset by the write-down of core technology and goodwill associated with the acquisitions of ArtX and Chromatic Research Inc. (Chromatic) that totaled $15.4 million during 2002. During fiscal 2002, we conducted a comprehensive review of the carrying values of core technology and goodwill arising from the acquisitions of Chromatic and ArtX and concluded that there was a permanent impairment in these values. As a result, during the year we wrote off the remaining balances of core technology and goodwill arising from the acquisition of Chromatic totaling $4.8 million, and at year-end wrote off $4.2 million of core technology and $6.4 million in goodwill related to the ArtX acquisition. Other Charges Other charges included:
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18 ATI 2003 | |
Page 22 of 68
Interest and Other Income | ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
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Interest income on cash and short-term investments | 2,802 | ![]() | 4,916 | 4,005 | |||||||||
Gains/(losses) on investments | 3,876 | ![]() | (3,355 | ) | 61,216 | ||||||||
Gains/(losses) on foreign exchange | 819 | ![]() | (444 | ) | (1,876 | ) | |||||||
Loss on disposal of fixed assets | (3,932 | ) | ![]() | (1,104 | ) | (69 | ) | ||||||
Other income | 817 | ![]() | 719 | 855 | |||||||||
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Interest and other income, net | 4,382 | ![]() | 732 | 64,131 | |||||||||
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We disposed of certain long-term investments in 2003 enabling us to realize a gain of $3.9 million. During fiscal 2002, we disposed of a portion of a long-term investment realizing a loss of $0.3 million. We then wrote down the remaining balance of this investment by $0.5 million to reflect the other-than-temporary decline in its value. The balance was then reclassified as a short-term investment as it was our intention to sell the remaining portion of this investment. In 2002, we also received an additional 107,387 shares of Broadcom Corporation, valued at $2.1 million, resulting from the release of escrowed shares pursuant to the terms of the agreement to purchase our share investment in SiByte Inc. by Broadcom in the preceding fiscal year. On August 31, 2002, the Company wrote down its total investment in Broadcom by $4.7 million to reflect the other than temporary decline in its value. Interest Expense Our interest expense relates primarily to our capital lease obligation and mortgage for the building facility located in Markham, Ontario, a joint venture in which we hold a 50% ownership. In 2002, interest expense also included our proportionate share of the interest expense related to the interim construction financing of the joint venture. Income Taxes | ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
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![]() | (Restated) | (Restated) | |||||||||||
Operating income tax expense (recovery) | 15,570 | ![]() | 10,553 | (3,422 | ) | ||||||||
Recovery of future tax liability related to intangible assets | ![]() | ||||||||||||
![]() | (1,679 | ) | ![]() | (3,547 | ) | (16,329 | ) | ||||||
Income tax expense (recovery) related to sale of investments | 6 | ![]() | (152 | ) | 991 | ||||||||
Income tax recovery related to other charges | (2,156 | ) | ![]() | _ | _ | ||||||||
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11,741 | ![]() | 6,854 | (18,760 | ) | |||||||||
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ATI’s operating tax rate, which excludes the impact of the amortization of intangible assets related to acquisitions, and the effect of the gain (loss) on investments and other special charges, was 18.9% in 2003, 18.0% in 2002 and 17.8% in 2001. ATI’s tax rate is affected by the amount of net income earned in its various operating jurisdictions. See note 12 to the Consolidated Financial Statements. |
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Page 23 of 68
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) |
Net Income (Loss) Net income rose in 2003 relative to 2002 as a result of several factors. Revenues and gross margin increased in 2003 while amortization expenses decreased significantly due to new accounting policies. Increases in operating expenses across all other functional areas in 2003 partially offset these improvements. Our net loss in 2002 was $49.1 million compared to a net loss of $53.8 million in 2001. The decrease in net loss in 2002 compared to the prior year was largely due to improved gross margins. Adjusted Net Income (Loss) Reconciliation of Adjusted Net Income (Loss) | ![]() |
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unaudited | 2003 | ![]() | 2002 | 2001 | |||||||||
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![]() | (Restated) | (Restated) | |||||||||||
Net income (loss) – GAAP basis | $ | 35,229 | ![]() | $ | (49,079 | ) | $ | (53,789 | ) | ||||
Amortization of intangible assets | 10,767 | ![]() | 97,501 | 114,507 | |||||||||
Other charges | 28,724 | ![]() | – | – | |||||||||
Loss (gain) on investments | (3,876 | ) | ![]() | 3,355 | (61,216 | ) | |||||||
Tax recovery of other charges | (2,156 | ) | ![]() | – | – | ||||||||
Net tax on sale of investments | 6 | ![]() | (152 | ) | 991 | ||||||||
Deferred tax recovery of future tax liability | (1,679 | ) | ![]() | (3,547 | ) | (16,329 | ) | ||||||
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Adjusted net income (loss) | $ | 67,015 | ![]() | $ | 48,078 | $ | (15,836 | ) | |||||
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Adjusted net income (loss) per share | ![]() | ||||||||||||
![]() | $ | 0.28 | ![]() | $ | 0.20 | $ | (0.07 | ) | |||||
![]() | $ | 0.27 | ![]() | $ | 0.19 | $ | (0.07 | ) | |||||
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Our adjusted net income rose in 2003 as a result of increased revenues and gross margin, offset by increased operating expenses, excluding amortization of intangible assets and other charges. The increase in adjusted net income for 2002 compared to the prior year was largely due to improved gross margin, offset by higher overall operating expenses, excluding amortization of intangible assets. LIQUIDITY AND CAPITAL RESOURCES 2003 Highlights and Outlook for 2004
We generated positive cash flows from operations from our net income and improvements in working capital in the period. We are targeting continuing improvement in cash flows and modestly lower inventory levels relative to sales in fiscal 2004. |
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Cash Position | ![]() |
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unaudited | 2003 | ![]() | 2002 | 2001 | |||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | (Restated) | (Restated) | |||||||||||
Net income (loss) | $ | 35,229 | ![]() | $ | (49,079 | ) | $ | (53,789 | ) | ||||
Non-cash add backs | 12,883 | ![]() | 125,620 | 56,247 | |||||||||
Working capital changes | 57,337 | ![]() | (19,599 | ) | 99,485 | ||||||||
Issue of common shares | 20,977 | ![]() | 12,495 | 4,687 | |||||||||
Bank indebtedness | (12,015 | ) | ![]() | 3,266 | 8,749 | ||||||||
Net movement in long-term debt | 9,645 | ![]() | (312 | ) | – | ||||||||
Net purchases to capital assets | (16,390 | ) | ![]() | (30,111 | ) | (31,091 | ) | ||||||
Net proceeds from sale of long-term | ![]() | ||||||||||||
![]() | 7,569 | ![]() | – | 62,561 | |||||||||
Net purchases of short-term investments | (135 | ) | ![]() | (4,649 | ) | (40,597 | ) | ||||||
Acquisitions | – | ![]() | (22,118 | ) | (9,201 | ) | |||||||
Other | (1,140 | ) | ![]() | 362 | – | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
113,960 | ![]() | 15,875 | 97,051 | ||||||||||
Foreign exchange loss | (181 | ) | ![]() | (204 | ) | (431 | ) | ||||||
Net increase in cash and cash equivalents | $ | 113,779 | ![]() | $ | 15,671 | $ | 96,620 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Cash, cash equivalents and | ![]() | ||||||||||||
![]() | $ | 350,689 | ![]() | $ | 236,927 | $ | 216,455 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Our cash position (cash, cash equivalents and short-term investments) increased 48.0% to $350.7 million in fiscal 2003 as a result of improved revenues and operational performance in 2003, as well as $37.5 million of deferred revenue that was recorded for development agreements with Microsoft Corp. and Nintendo Co. Ltd. We have access to $25.4 million in credit facilities at August 31, 2003 compared to $101.0 million at August 31, 2002. We had access to $101.0 million in credit facilities at the end of fiscal 2002 compared to $98.0 million at August 31, 2001. As at August 31, 2003, we are committed to the following minimum payments related to office premises, license and royalty agreements, building under capital lease payments and mortgage payments: | ![]() | ||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ||||
216.5 | 236.9 | 350.7 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ||||
01 | 02 | 03 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total | ![]() | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | ||||||||||||||||
![]() | ![]() ![]() | ![]() | |||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Commitment related to | |||||||||||||||||||||||
![]() | |||||||||||||||||||||||
![]() | $ | 79,451 | $ | 22,494 | $ | 20,491 | $ | 9,666 | $ | 6,207 | $ | 6,252 | $ | 14,341 | |||||||||
Commitment related to | |||||||||||||||||||||||
![]() | 26,995 | 1,784 | 1,784 | 1,784 | 1,858 | 1,962 | 17,823 | ||||||||||||||||
Commitment related to | |||||||||||||||||||||||
![]() | 16,797 | 1,493 | 1,493 | 1,493 | 1,493 | 1,493 | 9,332 | ||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() ![]() | ![]() | |||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total commitments | $ | 123,243 | $ | 25,771 | $ | 23,768 | $ | 12,943 | $ | 9,558 | $ | 9,707 | $ | 41,496 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
We believe that cash flows from operating activities, together with our cash position and borrowings | ![]() |
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Page 25 of 68
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) |
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![]() ![]() ![]() ![]() ![]() | Operating Activities – Working Capital At August 31, 2003, 93.3% of accounts receivable were less than 60 days outstanding, compared with 92.3% at August 31, 2002. We have Export Development Corporation insurance covering approximately 89.8% of our total accounts receivable at August 31, 2003 compared to 81.2% last year. Days sales in accounts receivable increased to 53 days in 2003 compared to 50 days in 2002. At August 31, 2003, one customer accounted for 18% of our accounts receivable balance. Accounts receivable increased by 19.6% to $141.1 million at August 31, 2002 compared to the prior year-end, due to slightly longer payment terms in our industry as well as greater than usual amount of product sold in the last few weeks of the fiscal year as our new product lines began to ship. | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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118.0 | 141.1 | 234.5 | |||||||
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01* | 02* | 03 | |||||||
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At August 31, 2002, 92.3% of our accounts receivable were less than 60 days outstanding, compared with 95.2% at August 31, 2001. We had Export Development Corporation insurance covering approximately 81.2% of our total accounts receivable at August 31, 2002 and 81.3% at our prior year-end. Days sales in accounts receivable increased to 50 days in 2002 compared to 38 days in 2001. At August 31, 2002, one customer accounted for 12% of our accounts receivables. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() ![]() ![]() ![]() ![]() | Inventories Inventories declined by 8.1% to $176.5 million at the end of 2003 compared to inventories at the end of fiscal 2002. Inventory levels in 2003 were in line with our target of 60 days. In 2003, we continued to implement an inventory management program to reduce inventories of raw materials, work in progress and finished goods. Inventories on hand increased significantly in the last two quarters of fiscal 2002 as we ramped up production of our new products. We also encountered a slower turn of our existing product line during this time frame. Inventories increased by $80.2 million at the end of 2002 compared to August 31, 2001 as a result of lower than expected sales in the last two quarters of the year and increased purchases to support new product introductions. | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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111.9 | 192.1 | 176.5 | |||||||
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01* | 02* | 03 | |||||||
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In 2002 accounts payable increased to $172.1 million from $79.7 million at the prior year-end as a result of the timing of payments to suppliers and increased inventory purchases for the new product lines. Accrued liabilities increased to $136.7 million in 2003 compared to $49.4 million in 2002. The increase is largely a result of the timing of payments related to sales rebates and price protection which are also a function of sales, as well as accruals related to other charges noted above, some of which were accrued in the last quarter of the year. There was no significant change in accrued liabilities in 2002 compared to 2001. Deferred Revenue This deferred revenue is associated with two development contracts, where we have recorded amounts relating to these contracts, but have not yet recognized the revenue. The revenue will be recognized as services are provided under each of the respective contracts. |
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Page 26 of 68
Cash generated from common shares issued from the exercise of stock options was $12.5 million in 2002 compared to $4.7 million in 2001. Our bank indebtedness, which arose from the short-term financing provided to the joint venture to construct our new building, declined to nil from $12.0 million in the prior year. Upon completion of the new building a long-term mortgage was obtained in 2003 by the joint venture resulting in an increase of our long-term debt obligations. Investing Activities Capital expenditures in 2002 were $30.1 million, compared to $31.1 million in fiscal 2001. The majority of these expenditures related to the construction of our new building which was completed in fiscal 2002. In 2002 capital additions included $22.4 million of additions to building-in-progress. In 2001, capital additions included building-in-progress additions of $11.5 million, representing our 50% share of the costs incurred to construct our new building that were subsequently transferred into building under capital lease. Laboratory, computer equipment and software purchases accounted for another $16.2 million in capital additions in 2001. Long-Term Investments During fiscal 2003, we disposed of all of our remaining shares in Broadcom Corp., realizing a gain of $3.8 million. In 2002 we did not make any long-term investments. SUBSEQUENT EVENT CLAIMS AND PROCEEDINGS See notes 15 and 21 of the Consolidated Financial Statements regarding other claims and proceedings affecting ATI. |
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Page 27 of 68
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) | ![]() |
Risks and Uncertainties Our reported operating results may vary from prior periods or may be adversely impacted in periods when we are undergoing a product line transition during which sales of new products must be ramped up to replace sales of our older products. These older products often come under significant pricing and margin pressure as a result of competitors’ actions in the marketplace. Should our new products, including integrated chipset products, and products for the consumer electronic device market, not offer the features and performance required by our customers or fail to achieve meaningful marketshare, our operating results will be negatively impacted. Our ability to develop new products is dependent upon our ability to obtain licenses to emerging industry technology or other intellectual property rights, which may not be readily available or available on commercially reasonable terms. As a result of any combination of these or other issues referred to below, our operating results and common share price may be subject to a significant level of volatility, particularly on a quarterly basis. Factors that have affected our operating results in the past and could affect them in the future include, among other things:
As indicated above, most of our operating expenses are relatively fixed in the short term. As a result, we may be unable to rapidly adjust our spending to compensate for any unexpected revenue shortfall, which could harm quarterly operating results. Also, our products have varying gross margins. As a result of the factors listed above, period-to-period comparisons of our operating results should not be relied upon as an indication of future performance. The results of any quarterly period are not indicative of results to be expected for a full fiscal year. Accordingly, our operating results may be below the expectations of securities analysts and investors. Our failure to meet these expectations could adversely affect the market price of our common shares. |
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Page 28 of 68
For a more complete discussion of general risks and uncertainties which apply to our business and our financial results, please see ATI’s Annual Information Form and other filings with Canadian and U.S. securities regulatory authorities. For a description of certain legal proceedings affecting ATI, please see notes 15 and 21 to the Consolidated Financial Statements. Our Accounting Policies Under GAAP, we are required to make estimates and assumptions when we account for and report assets, liabilities, revenue and expenses and disclose contingent assets and liabilities in our financial statements. We are also required to constantly evaluate the estimates and assumptions we use. We base our estimates and assumptions on historical experience and other factors that we believe are reasonable in the circumstances. Because our estimates and assumptions involve judgment and varying degrees of uncertainty, actual results could materially differ from our estimates and assumptions. We make significant estimates when determining provisions for sales returns and allowances, our allowance for doubtful accounts, our provision for inventory obsolescence, the fair value of reporting units for goodwill impairment testing, the useful lives and valuation of intangible assets, the valuation of long-term investments, restructuring charges, our worldwide income tax provision and the realization of future tax assets. We believe the following are the most critical accounting policies we follow as they rely heavily on our judgment and estimates: Revenue Recognition We record estimated sales returns and allowances, price protection, sales rebates, and other volume-based incentives at the time we recognize revenue. If our estimates of future market conditions and changing product lifecycles in the marketplace are inaccurate we may be required to materially increase customer incentive offerings, which could necessitate a further reduction of revenue. We also provide for the estimated cost of product warranties at the time of revenue recognition. If actual product warranty costs vary from our estimates we may have to record material adjustments to our warranty expense. Inventory Valuation Goodwill |
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Page 29 of 68
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONT.) | ![]() |
Income Taxes We record a valuation allowance to reduce our future tax assets to the amount of future tax benefit that is more likely than not to be realized. We consider future taxable income in our operating jurisdictions and ongoing prudent and feasible tax planning strategies in determining the need for the valuation allowance. If we were to determine that we could realize our future tax assets in excess of their recorded amounts we would record an adjustment to the future tax asset and increase income in the period the determination is made. Alternatively, if we were to determine that we could not realize all or parts of our future tax assets, we may record a material charge to income in the period the determination is made. During 2003 we have applied changes as a result of newly issued accounting standards as follows: Goodwill and Other Intangible Assets We applied the new standards and as a result reclassified $2.3 million from workforce to goodwill as of September 1, 2002 to conform to the new guidance. In addition, we allocated our existing goodwill to our reporting units and completed the transitional impairment test in the second quarter of 2003. We determined no transitional impairment existed as of September 1, 2002. Further, we completed our annual impairment test in the fourth quarter of 2003 and determined no impairment had occurred. Stock-based Compensation and Other Stock-based Payments We have applied the pro forma disclosure provisions of the new standard to awards granted on or after September 1, 2002 that are provided in note 11 to the Consolidated Financial Statements. No restatement of prior periods was required as a result of the adoption of the new standard. Disposal of Long-lived Assets and Discontinued Operations We have fully adopted the revised Section 3475 to disposal activities initiated on or after May 1, 2003; we were not impacted by this change. Section 3063 is effective for our 2004 fiscal year. We expect that the adoption of this standard will have no material impact on our financial position, results of operations or cash flows. |
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Page 30 of 68
Guarantees We have fully adopted this guideline as of March 1, 2003. The disclosures required by this standard are included in note 14 to the Consolidated Financial Statements. In addition to the standards we have applied in the year there are additional new standards that will be applied in future years as follows: Generally Accepted Accounting Principles Asset Retirement Obligations Consolidation of Variable Interest Entities |
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Page 31 of 68
QUARTERLY INFORMATION | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
unaudited | ![]() | ![]() | ![]() | ![]() | February 28 | ![]() | ![]() | May 31 | ![]() | ![]() | August 31 | ||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2002 | ![]() | 2001 | ![]() | 2003 | ![]() | 2002 | ![]() | 2003 | ![]() | 2002 | ![]() | 2003 | ![]() | 2002 | |||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
(Restated) | ![]() | (Restated) | ![]() | (Restated) | ![]() | (Restated) | ![]() | (Restated) | ![]() | (Restated) | ![]() | ![]() | (Restated) | ||||||||||||||||||
REVENUES | $ | 335,436 | ![]() | $ | 261,309 | ![]() | $ | 313,492 | ![]() | $ | 262,559 | ![]() | $ | 355,691 | ![]() | $ | 269,046 | ![]() | $ | 380,674 | ![]() | $ | 222,865 | ![]() | |||||||
Cost of goods sold | 244,251 | ![]() | 179,568 | ![]() | 222,969 | ![]() | 173,759 | ![]() | 239,590 | ![]() | 174,970 | ![]() | 245,191 | ![]() | 154,088 | ![]() | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Gross margin | 91,185 | ![]() | 81,741 | ![]() | 90,523 | ![]() | 88,800 | ![]() | 116,101 | ![]() | 94,076 | ![]() | 135,483 | ![]() | 68,777 | ![]() | |||||||||||||||
EXPENSES | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | 22,247 | ![]() | 20,546 | ![]() | 21,354 | ![]() | 19,648 | ![]() | 25,696 | ![]() | 19,493 | ![]() | 27,628 | ![]() | 18,233 | ![]() | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 48,450 | ![]() | 40,070 | ![]() | 49,528 | ![]() | 41,754 | ![]() | 53,713 | ![]() | 39,935 | ![]() | 61,285 | ![]() | 42,850 | ![]() | |||||||||||||||
![]() | 9,212 | ![]() | 8,781 | ![]() | 9,318 | ![]() | 8,357 | ![]() | 10,326 | ![]() | 9,852 | ![]() | 10,557 | ![]() | 8,672 | ![]() | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 3,165 | ![]() | 21,190 | ![]() | 3,162 | ![]() | 21,164 | ![]() | 3,169 | ![]() | 21,679 | ![]() | 1,271 | ![]() | 33,468 | ![]() | |||||||||||||||
![]() | – | ![]() | – | ![]() | 15,996 | ![]() | – | ![]() | 2,288 | ![]() | – | ![]() | 10,440 | ![]() | – | ![]() | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
83,074 | ![]() | 90,587 | ![]() | 99,358 | ![]() | 90,923 | ![]() | 95,192 | ![]() | 90,959 | ![]() | 111,181 | ![]() | 103,223 | ![]() | ||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
INCOME (LOSS) FROM | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 8,111 | ![]() | (8,846 | ) | ![]() | (8,835 | ) | ![]() | (2,123 | ) | ![]() | 20,909 | ![]() | 3,117 | ![]() | 24,302 | ![]() | (34,446 | ) | ||||||||||||
Interest and other | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 572 | ![]() | 1,729 | ![]() | 602 | ![]() | 1,343 | ![]() | (1,350 | ) | ![]() | (306 | ) | ![]() | 4,558 | ![]() | (2,034 | ) | |||||||||||||
Interest expense | (426 | ) | ![]() | (2 | ) | ![]() | (469 | ) | ![]() | (1 | ) | ![]() | (488 | ) | ![]() | (248 | ) | ![]() | (516 | ) | ![]() | (408 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income (loss) before | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 8,257 | ![]() | (7,119 | ) | ![]() | (8,702 | ) | ![]() | (781 | ) | ![]() | 19,071 | ![]() | 2,563 | ![]() | 28,344 | ![]() | (36,888 | ) | ||||||||||||
Income taxes (recovery) | 913 | ![]() | 2,047 | ![]() | 715 | ![]() | 3,187 | ![]() | 4,063 | ![]() | 3,874 | ![]() | 6,050 | ![]() | (2,254 | ) | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
NET INCOME (LOSS) | 7,344 | ![]() | (9,166 | ) | ![]() | (9,417 | ) | ![]() | (3,968 | ) | ![]() | 15,008 | ![]() | (1,311 | ) | ![]() | 22,294 | ![]() | (34,634 | ) | |||||||||||
RETAINED EARNINGS, | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 68,797 | ![]() | 117,876 | ![]() | 76,141 | ![]() | 108,710 | ![]() | 66,724 | ![]() | 104,742 | ![]() | 81,732 | ![]() | 103,431 | ![]() | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
RETAINED EARNINGS, | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | $ | 76,141 | ![]() | $ | 108,710 | ![]() | $ | 66,724 | ![]() | $ | 104,742 | ![]() | $ | 81,732 | ![]() | $ | 103,431 | ![]() | $ | 104,026 | ![]() | $ | 68,797 | ![]() | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Net income (loss) | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | $ | 0.03 | ![]() | $ | (0.04 | ) | ![]() | $ | (0.04 | ) | ![]() | $ | (0.02 | ) | ![]() | $ | 0.06 | ![]() | $ | (0.01 | ) | ![]() | $ | 0.09 | ![]() | $ | (0.15 | ) | |||
![]() | 0.03 | ![]() | (0.04 | ) | ![]() | (0.04 | ) | ![]() | (0.02 | ) | ![]() | 0.06 | ![]() | (0.01 | ) | ![]() | 0.09 | ![]() | (0.15 | ) | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
WEIGHTED AVERAGE | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 236,947 | ![]() | 232,496 | ![]() | 237,227 | ![]() | 234,154 | ![]() | 238,183 | ![]() | 236,082 | ![]() | 240,647 | ![]() | 236,848 | ![]() | |||||||||||||||
![]() | 243,298 | ![]() | 232,496 | ![]() | 237,227 | ![]() | 234,154 | ![]() | 242,539 | ![]() | 236,082 | ![]() | 249,525 | ![]() | 236,848 | ![]() | |||||||||||||||
OUTSTANDING NUMBER | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||
![]() | 236,989 | ![]() | 232,787 | ![]() | 237,297 | ![]() | 234,787 | ![]() | 239,267 | ![]() | 236,620 | ![]() | 241,742 | ![]() | 236,871 | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Page 32 of 68
MANAGEMENT’S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS Management of ATI Technologies Inc. is responsible for the integrity of the accompanying Consolidated Financial Statements and all other information in this Annual Report. The Consolidated Financial Statements have been prepared by Management in accordance with accounting principles generally accepted in Canada. The preparation of the Consolidated Financial Statements necessarily involves the use of estimates and careful judgment, particularly in those circumstances where transactions affecting a current period are dependent upon future events. All financial information presented in this Annual Report is consistent with the Consolidated Financial Statements. To discharge its responsibilities for financial reporting and safeguarding of assets, Management believes that it has established appropriate systems of internal accounting controls that provide reasonable assurance that the financial records are reliable and form a proper basis for the timely and accurate preparation of financial statements. Consistent with the concept of reasonable assurance, Management recognizes that the relative cost of maintaining these controls should not exceed their expected benefits. Management further ensures the quality of the financial records through careful selection and training of personnel and the adoption and communication of financial and other relevant policies. The Board of Directors discharges its responsibilities with respect to the Consolidated Financial Statements primarily through the activities of its Audit Committee, which is composed entirely of directors who are not employees of the Company. This committee meets quarterly with Management and at least twice annually with the Company’s independent auditors to review the Company’s reported financial performance and to discuss audit, internal control, accounting policy and financial reporting matters. The Consolidated Financial Statements were reviewed by the Audit Committee and approved by the Board of Directors. The financial statements have been audited by KPMG LLP, who were appointed by the shareholders at the last Annual General Meeting of Shareholders. Their report is presented herein. | ![]() |
K.Y. Ho (signed) | David E. Orton (signed) President and COO | Terry Nickerson (signed) Senior Vice President and CFO | ![]() |
AUDITORS’ REPORT TO THE SHAREHOLDERS We have audited the consolidated balance sheets of ATI Technologies Inc. as at August 31, 2003 and 2002 and the consolidated statements of operations and retained earnings and cash flows for each of the years in the three-year period ended August 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company as at August 31, 2003 and 2002 and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2003 in accordance with Canadian generally accepted accounting principles.
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Page 33 of 68
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Years ended August 31 (In thousands of U.S. dollars, except per share amounts) | 2003 | ![]() | 2002 | 2001 | |||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | (Restated) | (Restated) | |||||||||||
REVENUES | $ | 1,385,293 | ![]() | $ | 1,015,779 | $ | 1,040,365 | ||||||
Cost of goods sold | 952,001 | ![]() | 682,385 | 799,038 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Gross margin | 433,292 | ![]() | 333,394 | 241,327 | |||||||||
![]() | |||||||||||||
EXPENSES | ![]() | ||||||||||||
![]() | 96,925 | ![]() | 77,920 | 75,594 | |||||||||
![]() | 212,976 | ![]() | 164,609 | 149,465 | |||||||||
![]() | 39,413 | ![]() | 35,662 | 37,261 | |||||||||
![]() | ![]() | ||||||||||||
![]() | 10,767 | ![]() | 97,501 | 114,507 | |||||||||
![]() | 28,724 | ![]() | – | – | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
388,805 | ![]() | 375,692 | 376,827 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income (loss) from operations | 44,487 | ![]() | (42,298 | ) | (135,500 | ) | |||||||
Interest and other income, net (note 7) | 4,382 | ![]() | 732 | 64,131 | |||||||||
Interest expense (note 10) | (1,899 | ) | ![]() | (659 | ) | (1,180 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income (loss) before income taxes | 46,970 | ![]() | (42,225 | ) | (72,549 | ) | |||||||
Income taxes (recovery) (note 12) | 11,741 | ![]() | 6,854 | (18,760 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
NET INCOME (LOSS) | 35,229 | ![]() | (49,079 | ) | (53,789 | ) | |||||||
RETAINED EARNINGS, beginning of year | 68,797 | ![]() | 117,876 | 199,956 | |||||||||
Adjustment to opening retained earnings: | ![]() | ||||||||||||
![]() | – | ![]() | – | (2,651 | ) | ||||||||
![]() | – | ![]() | – | (25,640 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
– | ![]() | – | (28,291 | ) | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Retained earnings, end of year | $ | 104,026 | ![]() | $ | 68,797 | $ | 117,876 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | |||||||||||||
NET INCOME (LOSS) PER SHARE (note 13): | ![]() | ||||||||||||
![]() | $ | 0.15 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||
![]() | 0.14 | ![]() | (0.21 | ) | (0.23 | ) | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | |||||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES (000’s) | ![]() | ||||||||||||
![]() | 238,251 | ![]() | 234,895 | 230,880 | |||||||||
![]() | 244,353 | ![]() | 234,895 | 230,880 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
See accompanying notes to Consolidated Financial Statements. | ![]() |
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Page 34 of 68
CONSOLIDATED BALANCE SHEETS | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
August 31 (In thousands of U.S. dollars) | 2003 | ![]() | 2002 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | (Restated) | ||||||||||||
ASSETS | ![]() | ||||||||||||
Current assets: | ![]() | ||||||||||||
![]() | $ | 300,905 | ![]() | $ | 187,126 | ||||||||
![]() | 49,784 | ![]() | 49,801 | ||||||||||
![]() | 234,548 | ![]() | 141,126 | ||||||||||
![]() | 176,494 | ![]() | 192,121 | ||||||||||
![]() | 31,753 | ![]() | 21,806 | ||||||||||
![]() | 3,772 | ![]() | 3,630 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | 797,256 | ![]() | 595,610 | ||||||||||
Capital assets (note 4) | 86,890 | ![]() | 95,838 | ||||||||||
Intangible assets (note 6) | 8,811 | ![]() | 21,858 | ||||||||||
Goodwill (note 6) | 190,095 | ![]() | 187,815 | ||||||||||
Long-term investments (note 7) | 3,960 | ![]() | 7,405 | ||||||||||
Tax credits recoverable | 21,181 | ![]() | – | ||||||||||
Future income taxes (note 12) | 7,865 | ![]() | 844 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total assets | $ | 1,116,058 | ![]() | $ | 909,370 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | |||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ![]() | ||||||||||||
Current liabilities: | ![]() | ||||||||||||
![]() | $ | – | ![]() | $ | 12,015 | ||||||||
![]() | 191,196 | ![]() | 172,093 | ||||||||||
![]() | 136,709 | ![]() | 49,421 | ||||||||||
![]() | 37,669 | ![]() | 250 | ||||||||||
![]() | 1,394 | ![]() | 568 | ||||||||||
![]() | – | ![]() | 3,459 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | 366,968 | ![]() | 237,806 | ||||||||||
Long-term debt (note 10) | 28,073 | ![]() | 15,798 | ||||||||||
Future income taxes (note 12) | 21,408 | ![]() | 12,588 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total liabilities | 416,449 | ![]() | 266,192 | ||||||||||
Shareholders’ equity (note 11): | ![]() | ||||||||||||
![]() | ![]() | ||||||||||||
![]() | ![]() | ||||||||||||
![]() | ![]() | ||||||||||||
![]() | ![]() | ||||||||||||
![]() | ![]() | ||||||||||||
![]() | 582,454 | ![]() | 561,477 | ||||||||||
![]() | 4,855 | ![]() | 4,630 | ||||||||||
![]() | 104,026 | ![]() | 68,797 | ||||||||||
![]() | 8,274 | ![]() | 8,274 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | 699,609 | ![]() | 643,178 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total liabilities and shareholders’ equity | $ | 1,116,058 | ![]() | $ | 909,370 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
On behalf of the Board:
| ![]() |
K.Y. Ho (signed) | James D. Fleck (signed) Director | ![]() |
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Page 35 of 68
CONSOLIDATED STATEMENTS OF CASH FLOWS | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Years ended August 31 (In thousands of U.S. dollars) | 2003 | ![]() | 2002 | 2001 | |||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | (Restated) | (Restated) | |||||||||||
CASH PROVIDED BY (USED IN): | ![]() | ||||||||||||
Operating activities: | ![]() | ||||||||||||
![]() | $ | 35,229 | ![]() | $ | (49,079 | ) | $ | (53,789 | ) | ||||
![]() | ![]() | ||||||||||||
![]() | (21,181 | ) | ![]() | – | – | ||||||||
![]() | (1,802 | ) | ![]() | 1,223 | (18,430 | ) | |||||||
![]() | 34,705 | ![]() | 120,422 | 135,462 | |||||||||
![]() | 1,400 | ![]() | – | – | |||||||||
![]() | (3,876 | ) | ![]() | 3,355 | (61,216 | ) | |||||||
![]() | 3,637 | ![]() | 620 | 431 | |||||||||
![]() | ![]() | ||||||||||||
![]() | (93,422 | ) | ![]() | (23,109 | ) | 42,854 | |||||||
![]() | 15,627 | ![]() | (80,203 | ) | 145,670 | ||||||||
![]() | (8,678 | ) | ![]() | (678 | ) | 12,487 | |||||||
![]() | 19,103 | ![]() | 91,916 | (104,189 | ) | ||||||||
![]() | 87,288 | ![]() | 1,662 | 686 | |||||||||
![]() | 37,419 | ![]() | (104 | ) | (3,304 | ) | |||||||
![]() | – | ![]() | (9,083 | ) | 5,281 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
105,449 | ![]() | 56,942 | 101,943 | ||||||||||
Financing activities: | ![]() | ||||||||||||
![]() | (12,015 | ) | ![]() | 3,266 | 8,749 | ||||||||
![]() | 10,709 | ![]() | – | – | |||||||||
![]() | (1,064 | ) | ![]() | (312 | ) | – | |||||||
![]() | (1,365 | ) | ![]() | – | – | ||||||||
![]() | 20,977 | ![]() | 12,495 | 4,687 | |||||||||
![]() | 225 | ![]() | 362 | – | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
17,467 | ![]() | 15,811 | 13,436 | ||||||||||
Investing activities: | ![]() | ||||||||||||
![]() | (49,784 | ) | ![]() | (54,233 | ) | (45,000 | ) | ||||||
![]() | 49,649 | ![]() | 49,584 | 4,403 | |||||||||
![]() | (16,390 | ) | ![]() | (30,111 | ) | (31,091 | ) | ||||||
![]() | (2,460 | ) | ![]() | – | (2,500 | ) | |||||||
![]() | 10,029 | ![]() | – | 65,061 | |||||||||
![]() | – | ![]() | (22,118 | ) | (9,201 | ) | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
(8,956 | ) | ![]() | (56,878 | ) | (18,328 | ) | |||||||
Foreign exchange loss on cash held in foreign currency | (181 | ) | ![]() | (204 | ) | (431 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
INCREASE IN CASH AND CASH EQUIVALENTS | 113,779 | ![]() | 15,671 | 96,620 | |||||||||
CASH AND CASH EQUIVALENTS, beginning of year | 187,126 | ![]() | 171,455 | 74,835 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
CASH AND CASH EQUIVALENTS, end of year | 300,905 | ![]() | 187,126 | 171,455 | |||||||||
Short-term investments | 49,784 | ![]() | 49,801 | 45,000 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
CASH POSITION, end of year | $ | 350,689 | ![]() | $ | 236,927 | $ | 216,455 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
Supplemental cash flow information (note 19) See accompanying notes to Consolidated Financial Statements. | ![]() |
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Page 36 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The principal business activities of ATI Technologies Inc. (the “Company“) are the design, manufacture and sale of innovative 3D graphics and digital media silicon solutions. The Company markets its products to original equipment manufacturers, system builders, distributors and retailers primarily in North America, Europe and the Asia-Pacific region.
NOTE 1. (b) | ![]() |
![]() | ||||||
![]() | Asset | ![]() | Method | ![]() | Rate | ![]() |
![]() | ||||||
![]() | ||||||
![]() | ||||||
![]() | Building | ![]() | Diminishing balance | ![]() | 5% | ![]() |
![]() | Building under capital lease | ![]() | Straight line | ![]() | 15 years | ![]() |
![]() | Laboratory and computer equipment | ![]() | Diminishing balance/straight line | ![]() | 331/3%/over one to five years | ![]() |
![]() | Computer software | ![]() | Diminishing balance/straight line | ![]() | 50%/over two to three years | ![]() |
![]() | Production equipment | ![]() | Diminishing balance/straight line | ![]() | 20%/over one year | ![]() |
![]() | Office equipment | ![]() | Diminishing balance/straight line | ![]() | 20%/over three years | ![]() |
![]() | Leasehold improvements | ![]() | Straight line | ![]() | Over term of lease | ![]() |
![]() | ||||||
![]() |
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Page 37 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
In connection with Section 3062’s transitional goodwill impairment evaluation, the Company is required to assess whether goodwill is impaired as of September 1, 2002. The Company has completed the transitional goodwill impairment assessment during the second quarter of 2003 and has determined that no impairment existed as of September 1, 2002. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | (Restated) | (Restated) | |||||||||||
Net income (loss) | $ | 35,229 | ![]() | $ | (49,079 | ) | $ | (53,789 | ) | ||||
Add back goodwill amortization | – | ![]() | 74,014 | 76,284 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income before goodwill amortization | $ | 35,229 | ![]() | $ | 24,935 | $ | 22,495 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | |||||||||||||
Basic net income (loss) per share: | ![]() | ||||||||||||
![]() | $ | 0.15 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||
![]() | 0.15 | ![]() | 0.11 | 0.10 | |||||||||
Diluted net income (loss) per share: | ![]() | ||||||||||||
![]() | $ | 0.14 | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | ||||
![]() | 0.14 | ![]() | 0.10 | 0.09 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Purchased in-process research and development | 1 year | ||||||||||||
Core technology | 2 – 7 years | ||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
The Company regularly reviews the carrying values of its long-term investments. Should there be a decline in value of the Company’s long-term investments that is other than a temporary decline, the Company measures the amount of the write-down based on the fair value of the shares of the investee and charges such write-down to the consolidated statements of operations and retained earnings. |
34 ATI 2003 | |
Page 38 of 68
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| |
Page 39 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
Company has applied the pro forma disclosure provisions of the new standard to awards granted on or after September 1, 2002. No restatement of prior periods was required as a result of the adoption of the new standard. Consideration paid by employees on the exercise of stock options is recorded as share capital. See note 11 for the pro forma disclosure, as required by this standard. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | 2002 | 2001 | |||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | Revenues: | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ||
![]() | ![]() | $ | 1,021,722 | $ | 1,037,809 | ||||||||
![]() | ![]() | 1,015,779 | 1,040,365 | ||||||||||
Net loss for the year: | ![]() | ||||||||||||
![]() | ![]() | (47,465 | ) | (54,205 | ) | ||||||||
![]() | ![]() | (49,079 | ) | (53,789 | ) | ||||||||
Net loss per share: | ![]() | ||||||||||||
![]() | ![]() | ||||||||||||
![]() ![]() | ![]() | (0.20 | ) | (0.23 | ) | ||||||||
![]() ![]() | ![]() | (0.21 | ) | (0.23 | ) | ||||||||
![]() | ![]() | ||||||||||||
![]() ![]() | ![]() | (0.20 | ) | (0.23 | ) | ||||||||
![]() ![]() | ![]() | (0.21 | ) | (0.23 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
|
36 ATI 2003 | |
Page 40 of 68
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Page 41 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
The carrying amounts of cash equivalents, short-term investments, accounts receivable, sundry receivables, bank indebtedness and accounts payable and accrued liabilities approximate their fair market values because of the short-term nature of these instruments. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | ||||||||
![]() | ![]() | ![]() | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||
Raw materials | $ | 153,240 | ![]() | $ | 127,683 | |||||
Work in process | 7,110 | ![]() | 25,603 | |||||||
Finished goods | 16,144 | ![]() | 38,835 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
$ | 176,494 | ![]() | $ | 192,121 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | Cost | ![]() | Accumulated depreciation | Net book value | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Land | $ | 1,909 | ![]() | $ | – | $ | 1,909 | ||||||
Building | 13,572 | ![]() | 4,020 | 9,552 | |||||||||
Building under capital lease | 33,268 | ![]() | 3,140 | 30,128 | |||||||||
Laboratory and computer equipment | 66,350 | ![]() | 40,334 | 26,016 | |||||||||
Computer software | 23,736 | ![]() | 18,645 | 5,091 | |||||||||
Production equipment | 2,745 | ![]() | 1,551 | 1,194 | |||||||||
Office equipment | 8,835 | ![]() | 3,593 | 5,242 | |||||||||
Leasehold improvements | 10,759 | ![]() | 3,001 | 7,758 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
$ | 161,174 | ![]() | $ | 74,284 | $ | 86,890 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2002 | Cost | ![]() | Accumulated depreciation | Net book value | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Land | $ | 1,909 | ![]() | $ | – | $ | 1,909 | ||||||
Building | 8,353 | ![]() | 2,320 | 6,033 | |||||||||
Building under capital lease | 33,268 | ![]() | 924 | 32,344 | |||||||||
Laboratory and computer equipment | 77,711 | ![]() | 47,758 | 29,953 | |||||||||
Computer software | 34,645 | ![]() | 25,603 | 9,042 | |||||||||
Production equipment | 6,355 | ![]() | 3,977 | 2,378 | |||||||||
Office equipment | 8,983 | ![]() | 3,235 | 5,748 | |||||||||
Leasehold improvements | 9,591 | ![]() | 1,160 | 8,431 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
$ | 180,815 | ![]() | $ | 84,977 | $ | 95,838 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
|
38 ATI 2003 | |
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| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Net assets: | |||||||||||||
![]() | $ | 538 | |||||||||||
![]() | 899 | ||||||||||||
![]() | 59 | ||||||||||||
![]() | 5,300 | ||||||||||||
![]() | 9,200 | ||||||||||||
![]() | 4,678 | ||||||||||||
![]() | (459 | ) | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Cash consideration | $ | 20,215 | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Purchased in-process R&D | 1 year | ||||||||||||
Core technology | 2 – 5 years | ||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Inventories | $ | 3,528 | |||||||||||
Capital assets | 200 | ||||||||||||
Prepayments | 68 | ||||||||||||
Core technology | 7,473 | ||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Cash consideration | $ | 11,269 | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
|
| |
Page 43 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
NOTE 6. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | Cost | ![]() | Accumulated amortization | Net book value | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Purchased in-process R&D | $ | 56,250 | ![]() | $ | 56,250 | $ | – | ||||||
Core technology | 31,144 | ![]() | 22,333 | 8,811 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total intangible assets | $ | 87,394 | ![]() | $ | 78,583 | $ | 8,811 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Goodwill | $ | 376,788 | ![]() | $ | 186,693 | $ | 190,095 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2002 | Cost | ![]() | Accumulated amortization | Net book value | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Purchased in-process R&D | $ | 56,250 | ![]() | $ | 51,833 | $ | 4,417 | ||||||
Workforce | 4,400 | ![]() | 2,120 | 2,280 | |||||||||
Core technology | 31,144 | ![]() | 15,983 | 15,161 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total intangible assets | $ | 91,794 | ![]() | $ | 69,936 | $ | 21,858 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Goodwill | $ | 372,388 | ![]() | $ | 184,573 | $ | 187,815 | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Goodwill: | ![]() | ||||||||||||
![]() | $ | – | ![]() | $ | 73,134 | $ | 75,404 | ||||||
![]() | – | ![]() | 10,319 | – | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
– | ![]() | 83,453 | 75,404 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Intangible assets: | ![]() | ||||||||||||
![]() | 10,767 | ![]() | 8,963 | 34,592 | |||||||||
![]() | – | ![]() | 5,085 | 4,511 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
10,767 | ![]() | 14,048 | 39,103 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
$ | 10,767 | ![]() | $ | 97,501 | $ | 114,507 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
2003 | ![]() | 2002 | ||||||||||
![]() | ![]() | ![]() | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Share investments | $ | 3,960 | ![]() | ![]() | ![]() | $ | 7,405 | ![]() | ||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() |
|
40 ATI 2003 | |
Page 44 of 68
NOTE 10. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ||
Interest rate | 2003 | ![]() | 2002 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
Obligation under capital lease (a) | 6.31 | % | $ | 17,785 | ![]() | ![]() | ![]() | $ | 16,366 | ![]() | |||
Mortgage payable (b) | 6.96 | % | 11,682 | ![]() | ![]() | ![]() | – | ![]() | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | ![]() | ![]() | |||||||||||
29,467 | ![]() | ![]() | ![]() | 16,366 | ![]() | ||||||||
Less current portion | 1,394 | ![]() | ![]() | ![]() | 568 | ![]() | |||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
$ | 28,073 | ![]() | ![]() | ![]() | $ | 15,798 | ![]() | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | ![]() | ![]() |
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Page 45 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
(c) | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
Year ended August 31: | ![]() | ||||||||||
2004 | ![]() | $ | 3,277 | ||||||||
2005 | ![]() | 3,277 | |||||||||
2006 | ![]() | 3,277 | |||||||||
2007 | ![]() | 3,351 | |||||||||
2008 | ![]() | 3,455 | |||||||||
Thereafter through 2017 | ![]() | 27,155 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Total minimum lease payments | ![]() | 43,792 | |||||||||
Less amount representing interest | ![]() | 14,325 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Present value of net minimum payments on long-term debt | ![]() | 29,467 | |||||||||
Less current portion of long-term debt | ![]() | 1,394 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | $ | 28,073 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | Number | Amount | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Outstanding, August 31, 2000 | ![]() | 229,436,267 | $ | 557,044 | |||||||||
Issued for cash | ![]() | 2,767,962 | 4,687 | ||||||||||
Cancellation of shares | ![]() | (85,555 | ) | (10,514 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Outstanding, August 31, 2001 | ![]() | 232,118,674 | 551,217 | ||||||||||
Issued for cash | ![]() | 4,828,136 | 12,495 | ||||||||||
Cancellation of shares | ![]() | (76,125 | ) | (2,235 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Outstanding, August 31, 2002 | ![]() | 236,870,685 | 561,477 | ||||||||||
Issued for cash | ![]() | 4,871,428 | 20,977 | ||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Outstanding, August 31, 2003 | ![]() | 241,742,113 | $ | 582,454 | |||||||||
![]() | ![]() | ![]() |
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Page 46 of 68
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||
2003 | ![]() | 2002 | 2001 | |||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||||||||
Number of options outstanding | Weighted average price | ![]() | Number of options outstanding | Weighted average price | Number of options outstanding | Weighted average price | ||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||
Options outstanding, | ![]() | |||||||||||||||||||||
![]() | 32,813,005 | $ | 7.18 | ![]() | 29,109,372 | $ | 5.37 | 24,823,960 | $ | 5.77 | ||||||||||||
Grant of additional options | 907,550 | 4.89 | ![]() | 9,881,474 | 10.40 | 11,148,703 | 5.32 | |||||||||||||||
Cancellation of options | (1,117,276 | ) | 9.03 | ![]() | (1,349,705 | ) | 7.76 | (4,095,329 | ) | 8.31 | ||||||||||||
Exercise of options | (4,871,428 | ) | 4.10 | ![]() | (4,828,136 | ) | 2.60 | (2,767,962 | ) | 1.68 | ||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||
Options outstanding, end of year | 27,731,851 | 8.31 | ![]() | 32,813,005 | 7.18 | 29,109,372 | 5.37 | |||||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||
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Exercisable, end of year | 15,727,485 | $ | 8.35 | ![]() | 12,608,053 | $ | 6.54 | 9,960,010 | $ | 4.77 | ||||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||||||||
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| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Price range | ![]() | Number of options outstanding | Weighted average life (years) | Weighted average price | Number of options exercisable | Weighted average price | ||||||||||
![]() | ![]() ![]() | ![]() | ||||||||||||||
![]() | ![]() | ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
$ 0.09 – $ 0.93 | 2,697,554 | 6.15 | $ | 0.32 | 2,275,191 | $ | 0.32 | |||||||||
$ 3.94 – $ 5.87 | 7,691,866 | 4.72 | 4.99 | 3,477,156 | 5.04 | |||||||||||
$ 6.14 – $ 9.21 | 7,634,869 | 4.23 | 7.91 | 4,359,216 | 8.52 | |||||||||||
$ 9.56 – $13.89 | 4,723,508 | 4.06 | 11.79 | 2,588,895 | 11.45 | |||||||||||
$14.75 – $16.88 | 4,984,054 | 3.90 | 15.11 | 3,057,027 | 15.25 | |||||||||||
![]() | ![]() | ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
27,731,851 | 4.47 | $ | 8.31 | 15,727,485 | $ | 8.35 | ||||||||||
![]() | ![]() | ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Page 47 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Net income, as reported | ![]() | $ | 35,299 | ||||||||
Pro forma adjustment for stock-based compensation | ![]() | (525 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Pro forma net income | ![]() | $ | 34,704 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Pro forma net income per share: | ![]() | ||||||||||
![]() | ![]() | $ | 0.15 | ||||||||
![]() | ![]() | 0.14 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Risk-free interest rate | ![]() | 3.1 | % | ||||||||
Dividend yield | ![]() | 0.0 | % | ||||||||
Volatility factor of the expected market price of the Company’s common shares | ![]() | 71.1 | % | ||||||||
Weighted average expected life of the options | ![]() | 4.2 years | ![]() | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Income (loss) before income taxes: | ![]() | ![]() | |||||||||||
![]() | $ | 2,081 | ![]() | ![]() | $ | 978 | ![]() | $ | (14,393 | ) | |||
![]() | 44,889 | ![]() | ![]() | (43,203 | ) | (58,156 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income (loss) before income taxes | $ | 46,970 | ![]() | ![]() | $ | (42,225 | ) | $ | (72,549 | ) | |||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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44 ATI 2003 | |
Page 48 of 68
| ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Current: | ![]() | ![]() | |||||||||||
![]() | $ | 9,572 | ![]() | ![]() | $ | (875 | )![]() | $ | – | ||||
![]() | 3,971 | ![]() | ![]() | 6,506 | (330 | ) | |||||||
Future: | ![]() | ![]() | |||||||||||
![]() | 2,234 | ![]() | ![]() | 4,747 | ![]() | (4,202 | ) | ||||||
![]() | (4,036 | ) | ![]() | ![]() | (3,524 | ) | (14,228 | ) | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income tax expense (recovery) | $ | 11,741 | ![]() | ![]() | $ | 6,854 | $ | (18,760 | ) | ||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
| ![]() |
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2003 | ![]() | 2002 | |||||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
FUTURE INCOME TAXES | ![]() | ![]() | ![]() | ![]() | |||||||||
Assets: | ![]() | ![]() | ![]() | ![]() | |||||||||
![]() | $ | 981 | ![]() | ![]() | ![]() | $ | 913 | ![]() | |||||
![]() | 5,111 | ![]() | ![]() | ![]() | 6,639 | ![]() | |||||||
![]() | 40,490 | ![]() | ![]() | ![]() | 37,007 | ![]() | |||||||
![]() | 4,650 | ![]() | ![]() | ![]() | 201 | ![]() | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | 51,232 | ![]() | ![]() | ![]() | 44,760 | ![]() | |||||||
![]() | (39,595 | )![]() | ![]() | ![]() | (40,286 | ) | |||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | 11,637 | ![]() | ![]() | ![]() | 4,474 | ![]() | |||||||
Liabilities: | ![]() | ![]() | ![]() | ![]() | |||||||||
![]() | 9,323 | ![]() | ![]() | ![]() | 7,370 | ![]() | |||||||
![]() | 11,241 | ![]() | ![]() | ![]() | 6,154 | ![]() | |||||||
![]() | 844 | ![]() | ![]() | ![]() | 2,523 | ![]() | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | 21,408 | ![]() | ![]() | ![]() | 16,047 | ![]() | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
$ | (9,771 | )![]() | ![]() | ![]() | $ | (11,573 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Income (loss) before income taxes | $ | 46,970 | ![]() | ![]() | $ | (42,225 | ) | $ | (72,549 | ) | |||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Income taxes (recovery) at Canadian rates | $ | 17,379 | ![]() | ![]() | $ | (16,641 | ) | $ | (30,920 | ) | |||
Reduction of Canadian taxes applicable to | ![]() | ![]() | |||||||||||
![]() | (83 | ) | ![]() | ![]() | (54 | )![]() | 1,067 | ||||||
Tax effect of: | ![]() | ![]() | |||||||||||
![]() | – | ![]() | ![]() | 31,696 | 32,248 | ||||||||
![]() | (2,076 | ) | ![]() | ![]() | (1,733 | )![]() | (1,696 | ) | |||||
![]() | – | ![]() | ![]() | 1,022 | (26,487 | ) | |||||||
![]() | (7,238 | ) | ![]() | ![]() | (4,421 | ) | 100 | ||||||
![]() | ![]() | ![]() | |||||||||||
![]() | (691 | ) | ![]() | ![]() | (4,501 | ) | 13,942 | ||||||
![]() | 4,450 | ![]() | ![]() | 1,486 | (7,014 | ) | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
$ | 11,741 | ![]() | ![]() | $ | 6,854 | $ | (18,760 | ) | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
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Page 49 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.) Years ended August 31, 2003, 2002 and 2001 (Tabular amounts in thousands of U.S. dollars, except per share amounts)
| ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Net income (loss) | $ | 35,299 | ![]() | ![]() | $ | (49,079 | ) | $ | (53,789 | ) | |||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Weighted average number of common shares outstanding (000’s): | ![]() | ![]() | |||||||||||
![]() | 238,251 | ![]() | ![]() | 234,895 | 230,880 | ||||||||
![]() | 6,102 | ![]() | ![]() | – | ![]() | – | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | 244,353 | ![]() | ![]() | 234,895 | 230,880 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Net income (loss) per share: | ![]() | ![]() | |||||||||||
![]() | $ | 0.15 | ![]() | ![]() | $ | (0.21 | ) | $ | (0.23 | ) | |||
![]() | 0.14 | ![]() | ![]() | (0.21 | )![]() | (0.23 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
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46 ATI 2003 | |
Page 50 of 68
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Settlement of class action lawsuits (a) | ![]() | $ | 4,670 | ||||||||
Regulatory matters (b) | ![]() | 5,828 | |||||||||
Restructuring charge – European operations (c) | ![]() | 6,542 | |||||||||
Lease exit charge (d) | ![]() | 2,684 | |||||||||
Settlement of patent litigation with Cirrus Logic, Inc. (e) | ![]() | 9,000 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | $ | 28,724 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
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During the fourth quarter of fiscal 2003, the Company received $3.3 million from its insurer as its contribution towards the settlement. The Company has incurred external charges in connection with the matter totaling $5.8 million during the year ended August 31, 2003. | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Provision | ![]() | $ | 5,142 | ||||||||
Cash payments | ![]() | (896 | ) | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Balance, August 31, 2003 | ![]() | $ | 4,246 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Page 51 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Exit and other costs | ![]() | $ | 1,365 | ||||||||
Asset impairment (non-cash) | ![]() | 1,400 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | $ | 2,765 | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Revenues: | ![]() | ![]() | |||||||||||
![]() | $ | 20,065 | ![]() | ![]() | $ | 15,441 | $ | 23,380 | |||||
![]() | 258,545 | ![]() | ![]() | 290,575 | 325,742 | ||||||||
![]() | 113,193 | ![]() | ![]() | 154,712 | ![]() | 253,974 | |||||||
![]() | 993,490 | ![]() | ![]() | 555,051 | 437,269 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Consolidated revenues | $ | 1,385,293 | ![]() | ![]() | $ | 1,015,779 | $ | 1,040,365 | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
48 ATI 2003 | |
Page 52 of 68
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Revenues: | ![]() | ![]() | |||||||||||
![]() | $ | 962,735 | ![]() | ![]() | $ | 537,756 | $ | 477,164 | |||||
![]() | 397,533 | ![]() | ![]() | 450,008 | 554,528 | ||||||||
![]() | 25,025 | ![]() | ![]() | 28,015 | ![]() | 8,673 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Consolidated revenues | $ | 1,385,293 | ![]() | ![]() | $ | 1,015,779 | $ | 1,040,365 | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Capital and intangible assets and goodwill: | ![]() | ![]() | |||||||||||
![]() | $ | 74,332 | ![]() | ![]() | $ | 78,842 | $ | 54,162 | |||||
![]() | 208,764 | ![]() | ![]() | 220,811 | 297,417 | ||||||||
![]() | 2,277 | ![]() | ![]() | 4,644 | ![]() | 5,071 | |||||||
![]() | 423 | ![]() | ![]() | 1,214 | 706 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Consolidated capital and intangible assets and goodwill | $ | 285,796 | ![]() | ![]() | $ | 305,511 | $ | 357,356 | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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| ![]() |
Year ending August 31: | Office premises | License and royalty agreements | ![]() | Total | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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2004 | $ | 6,128 | $ | 16,366 | ![]() | $ | 22,494 | ||||
2005 | 6,766 | 13,725 | ![]() | 20,491 | |||||||
2006 | 6,847 | 2,819 | ![]() | 9,666 | |||||||
2007 | 6,207 | – | ![]() | 6,207 | |||||||
2008 | 6,252 | – | ![]() | 6,252 | |||||||
2009 and thereafter | 14,341 | – | ![]() | 14,341 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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| ![]() |
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2003 | ![]() | 2002 | ||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | Condensed balance sheet information: | ![]() | ![]() | ![]() | ![]() | ![]() | ||||
![]() | $ | 1,548 | ![]() | $ | 391 | |||||
![]() | – | ![]() | (12,015 | ) | ||||||
![]() | (941 | ) | ![]() | (474 | ) | |||||
![]() | (10,969 | ) | ![]() | – | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Condensed cash flows: | ![]() | |||||||||
![]() | $ | (989 | ) | ![]() | $ | 3,266 | ||||
![]() | – | ![]() | (2,806 | ) | ||||||
![]() | 1,127 | ![]() | 93 | |||||||
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Page 53 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
| ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Supplemental cash flow information: | ![]() | ![]() | |||||||||||
![]() | $ | 1,739 | ![]() | ![]() | $ | 573 | $ | 1,180 | |||||
![]() | 2,902 | ![]() | ![]() | 4,889 | 3,507 | ||||||||
![]() | 2,127 | ![]() | ![]() | 893 | ![]() | 1,500 | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Net income (loss) in accordance with Canadian GAAP | $ | 35,229 | ![]() | ![]() | $ | (49,079 | ) | $ | (53,789 | ) | |||
Write-off of purchased in-process R&D (a)(i) | – | ![]() | ![]() | (5,300 | ) | – | |||||||
Amortization of purchased in-process R&D (a)(i) | 4,417 | ![]() | ![]() | 883 | ![]() | 30,151 | |||||||
Goodwill amortization difference (a)(ii) | – | ![]() | ![]() | 7,941 | ![]() | 7,326 | |||||||
Stock compensation expenses (a)(iii), (a)(iv) | (25,486 | ) | ![]() | ![]() | 997 | ![]() | (1,694 | ) | |||||
Tax effect of stock options exercised (a)(vi) | (2,083 | ) | ![]() | ![]() | (1,868 | )![]() | (346 | ) | |||||
Loss on hedging transaction (a)(v) | 94 | ![]() | ![]() | (1,365 | )![]() | – | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Net income (loss) in accordance with U.S. GAAP | $ | 12,171 | ![]() | ![]() | $ | (47,791 | ) | $ | (18,352 | ) | |||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Net Income (loss) per share in accordance with U.S. GAAP: | ![]() | ![]() | |||||||||||
![]() | $ | 0.05 | ![]() | ![]() | $ | (0.20 | ) | $ | (0.08 | ) | |||
![]() | 0.05 | ![]() | ![]() | (0.20 | ) | (0.08 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Weighted average number of shares (000’s) | ![]() | ![]() | |||||||||||
![]() | 238,251 | ![]() | ![]() | 234,895 | 230,880 | ||||||||
![]() | 244,353 | ![]() | ![]() | 234,895 | 230,880 | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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50 ATI 2003 | |
Page 54 of 68
| ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Net income (loss) in accordance with U.S. GAAP, | ![]() | ![]() | |||||||||||
![]() | $ | 12,171 | ![]() | ![]() | $ | (47,791 | ) | $ | (18,352 | ) | |||
Stock compensation (a)(iii) | 25,486 | ![]() | ![]() | (997 | ) | 1,694 | |||||||
Pro forma adjustment for SFAS 123 | (16,700 | ) | ![]() | ![]() | (17,000 | )![]() | (14,100 | ) | |||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Pro forma net income (loss) | $ | 20,957 | ![]() | ![]() | $ | (65,788 | ) | $ | (30,758 | ) | |||
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Pro forma net income (loss) per share: | ![]() | ![]() | |||||||||||
![]() | $ | 0.09 | ![]() | ![]() | $ | (0.28 | ) | $ | (0.13 | ) | |||
![]() | 0.09 | ![]() | ![]() | (0.28 | ) | (0.13 | ) | ||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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Page 55 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
| ![]() |
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2003 | ![]() | 2002 | 2001 | ||||||||||
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Risk-free interest rate | 3.1 | % | ![]() | ![]() | 3.5 | % | 4.0 | % | |||||
Volatility factor | 71.1 | % | ![]() | ![]() | 73.0 | % | 50.0 | % | |||||
Weighted average expected life | 4.2 years | ![]() | ![]() | 4.0 years | 2.5 years | ||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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For the purposes of reporting under U.S. GAAP, the tax benefit associated with deductible stock option compensation is treated as an increase in share capital. For reporting under Canadian GAAP, if compensation costs are not recorded, the income tax benefit is treated as a reduction to the income tax provision. | ![]() |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() | ||||||||||||||||||||
2003 | ![]() | ![]() | ![]() | 2002 | ||||||||||||||||
![]() | ![]() | |||||||||||||||||||
![]() | ![]() | ![]() | ||||||||||||||||||
![]() | U.S. GAAP | ![]() | ![]() | Canadian GAAP | ![]() | Difference | ![]() | U.S. GAAP | Canadian GAAP | Difference | ||||||||||
![]() | ![]() | |||||||||||||||||||
![]() | ![]() | ![]() | ||||||||||||||||||
![]() | (Restated) | (Restated) | ||||||||||||||||||
Assets: | ||||||||||||||||||||
![]() | ||||||||||||||||||||
![]() ![]() | $ | 30,482 | $ | 31,753 | $ | (1,271 | ) | $ | 21,806 | $ | 21,806 | $ | – | |||||||
![]() | 8,811 | 8,811 | – | 17,441 | 21,858 | (4,417 | ) | |||||||||||||
![]() | 170,367 | 190,095 | (19,728 | ) | 168,087 | 187,815 | (19,728 | ) | ||||||||||||
Liabilities and | ||||||||||||||||||||
![]() | ||||||||||||||||||||
![]() | 136,709 | 136,709 | – | 50,786 | 49,421 | 1,365 | ||||||||||||||
![]() | 563,461 | 582,454 | (18,993 | ) | 540,401 | 561,477 | (21,076 | ) | ||||||||||||
![]() | 31,038 | 4,855 | 26,183 | 5,327 | 4,630 | 697 | ||||||||||||||
![]() | 103,320 | 104,026 | (706 | ) | 91,149 | 68,797 | 22,352 | |||||||||||||
![]() | ||||||||||||||||||||
![]() ![]() | (19,209 | ) | 8,274 | (27,483 | ) | (19,209 | ) | 8,274 | (27,483 | ) | ||||||||||
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Although the adoption of proportionate consolidation has no impact on net income or shareholders’ equity, it does increase assets, liabilities, revenues, expenses and cash flow from operations from those amounts otherwise reported under U.S. GAAP. This is not reflected in the table of certain balance sheet items disclosed above. |
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Page 56 of 68
| ![]() |
(1) | As at August 31, 2003, the consolidated accounts receivable provision for returns and doubtful accounts was approximately $12.3 million (2002 – $7.9 million). | ![]() | |
(2) | As at August 31, 2003, sales rebate payable represents 17% of total consolidated current liabilities (2002 – 7%). | ||
(3) | For the year ended August 31, 2003, the net foreign exchange gain was approximately $0.8 million (2002 – loss of $0.4 million; 2001 – loss of $1.9 million). |
FASB Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (“SFAS 130”), requires disclosure of comprehensive income, which includes reported net income adjusted for other comprehensive income. Other comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The following table presents comprehensive income (loss) and its components: | ![]() |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
2003 | ![]() | 2002 | 2001 | ||||||||||
![]() | ![]() | ![]() | |||||||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
![]() | ![]() | (Restated) | (Restated) | ||||||||||
Net income (loss) in accordance with U.S. GAAP | $ | 12,171 | ![]() | ![]() | $ | (47,791 | ) | $ | (18,352 | ) | |||
Other comprehensive income (loss), net of tax: | ![]() | ![]() | |||||||||||
![]() | – | ![]() | ![]() | – | (4,159 | ) | |||||||
![]() | – | ![]() | ![]() | 510 | ![]() | (510 | ) | ||||||
![]() | – | ![]() | ![]() | 439 | ![]() | – | |||||||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
Comprehensive income (loss) | $ | 12,171 | ![]() | ![]() | $ | (46,842 | ) | $ | (23,021 | ) | |||
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
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![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() |
(1) | U.S. GAAP requires investments in marketable securities available for sale to be recorded at market value and all unrealized holding gains and losses reflected in shareholders’ equity. Under Canadian GAAP, long-term investments are carried at historical cost with losses in value being recognized in income only when the loss in value is other than temporary and increases in value being recognized only when realized. | ![]() | |
(2) | During fiscal 2001, CVRH, the joint venture in which the Company has 50% ownership, entered into an interest rate swap contract (note 18), which was designated as a cash flow hedge for the interest rate risk applicable to its expected future mortgage requirement. Under Canadian GAAP, the hedging instrument is treated as an off-balance sheet item until it closes. Under U.S. GAAP, hedging instruments must be measured at fair value. The unrealized gain or loss arising from changes in fair value of the interest rate swap contract is recognized in other comprehensive income to the extent it is effective; the ineffective portion, if any, is reported in income currently. In the third quarter of fiscal 2002, the interest rate swap was deemed ineffective and reported in income since the actual closing date of the financing differed from the period covered by the interest rate swap. |
(c) ![]() (i) ![]() |
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Page 57 of 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
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54 ATI 2003 | |
Page 58 of 68
DIRECTORS AND OFFICERS | ![]() |
BOARD OF DIRECTORS | ![]() | EXECUTIVE MANAGEMENT | ![]() | |
![]() | ![]() | ![]() | ![]() | ![]() |
James D. Fleck1, 2, 3 Chairman, Fleck Management Services Ltd. K.Y. Ho Chairman & Chief Executive Officer, ATI Technologies Inc. Alan D. Horn1 Vice President, Finance & Chief Financial Officer, Rogers Communications Inc. Paul Russo 2 Chairman, President & Chief Executive Officer, Silicon Optix Inc. John E. Caldwell1, 2, 3 Company Director Robert A. Young1 Chairman, IRT, Inc. Ronald Chwang3 Chairman and President, Acer Technology Ventures, America
1 Member of the Audit Committee | K.Y. Ho Chairman & Chief Executive Officer David Orton President & Chief Operating Officer Terry Nickerson Senior Vice President, Finance & Chief Financial Officer Michel Cadieux Senior Vice President, Corporate Services Adrian Hartog Senior Vice President & General Manager, Consumer Business Unit Rick Bergman Senior Vice President, Marketing & General Manager, Desktop Business Unit Rick Hegberg Senior Vice President, Worldwide Sales Phil Eisler Vice President & General Manager, Integrated and Notebook Business Unit Henry Quan Vice President, Corporate Development Gilbert Christie Vice President, Board Operations Jim Seto Vice President, ASIC Engineering Operations | Louise Cragg Vice President, Information Technology Jason Peterson Vice President, Finance Bryan Robb Vice President & General Counsel Dean Blain Corporate Secretary Geoff Phillips Vice President & General Manager, DTV Business Raymond Li Vice President, PC ASIC Engineering Ben Bar-Haim Vice President, PC Software Engineering Dave Rolston Vice President, Engineering, ATI Research Silicon Valley Inc. Greg Buchner Vice President, Engineering, ATI Research Silicon Valley Inc. Robert Feldstein Vice President, Engineering, ATI Research Inc. |
CORPORATE INFORMATION | ![]() |
ANNUAL MEETING OF SHAREHOLDERS The Annual Meeting of Shareholders will be held on Tuesday, January 27, 2004 at 2:00 p.m. at The Carlu, 444 Yonge Street, 7th Floor, Toronto, Ontario M5B 2H4. All shareholders are invited to attend. LISTING OF COMMON SHARES The common shares of the Company are listed on the Toronto Stock Exchange under the stock symbol “ATY” and the Nasdaq stock market under the symbol “ATYT.” | ![]() | AUDITORS
| ![]() | BANKERS HSBC Bank Canada 1940 Eglinton Avenue East Scarborough, Ontario Canada M1L 4R2 TRANSFER AGENT AND REGISTRAR CIBC Mellon Trust Company 320 Bay Street 6th Floor Toronto, Ontario Canada M5H 4A6 Tel: (416) 643-5500 Toll free: 1-800-387-0825 |
![]() | ![]() | ![]() | ![]() | ![]() |
Copyright 2003, ATI Technologies Inc. All Rights Reserved. ATI and ATI’s product names are trademarks and/or registered trademarks of ATI Technologies Inc. All other Company and/or product names are trademarks and/or registered trademarks of their respective owners.
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Page 59 of 68
![]() | ![]() | ![]() | ![]() | ![]() |
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ATI Technologies Inc. 1 Commerce Valley Drive East Markham, Ontario Canada L3T 7X6 T 905.882.2600 F 905.882.2620 visit our website at www.ati.com
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Page 60 of 68
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Page 61 of 68
AT play | |
Saving the world or destroying the galaxy. Battling monsters or winning the race. Challenging your mind or your best friend. Whatever your game, we make it brilliantly real with vibrant cinematic visualization and games with immersive visual effects that fly at screaming warp speed. Let’s play. |
THE MOMENTUM CONTINUES DURING FISCAL 2003, AS ATI REDEFINES INNOVATION AND CHALLENGES THE BOUNDARIES |
AT work | |
Ready to create what’s never been seen before?
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Page 62 of 68
ON YOUR lap | |
Go where you’ve never been before on your laptop PC. Create dazzling visual presentations, unleash the visual spectacle of your favorite movies and thrill to 3D games with eye-popping, real-time, cinematic quality graphics. All with longer lasting battery power. With ATI inside, you’re out there! |
OF WHAT’S POSSIBLE IN VISUALIZATION TECHNOLOGY. OUR QUEST TO ENABLE THE ULTIMATE VISUAL EXPERIENCE IS |
IN YOUR living room | |
We’re putting the real in reality shows. See the future
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Page 63 of 68
IN-YOUR-face | |
Multimedia is transforming. And ATI is revolutionizing how you experience it with customizable TV, DVD, audio and video editing tools, in-your-face picture quality that’s out of this world and breathtaking 3D graphic performance that delivers breakneck action and thrills. Go for it! |
MAKING REMARKABLE PROGRESS AS WE MAKE BREAKTHROUGHS IN BOTH ESTABLISHED AND NEW MARKETS. |
IN YOUR hand | |
The world is in the palm of your hand like never
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Page 64 of 68
Desktop / Workstation |
![]() | ![]() | ![]() | ![]() |
Desktop ATI’s family of RADEON™ products optimizes performance and delivers visually stunning 2D and 3D performances that are out of this world. | Workstation
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Page 65 of 68
Integrated / DTV—Set-top box |
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Integrated Flexible and scalable integrated graphics processors are the perfect foundation for corporate and consumer PCs in the value segment. | DTV—Set-top box
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Page 66 of 68
Mobile / Game Console |
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Mobile MOBILITY™ RADEON™ products will move you with unprecedented 3D processing power, longer-lasting battery life and irresistible graphics. | Game Console
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Page 67 of 68
Handheld / Apple / Multimedia |
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Handheld Revolutionary IMAGEON™ products deliver graphically advanced, power saving technology for wireless, handheld and mobile communication devices. | Apple
| Multimedia Experience the wonder of entertainment products featuring our ALL-IN-WONDER® customizable TV, DVD, audio and video editing tools. |
Page 68 of 68
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ATI TECHNOLOGIES INC. | |||
Date: December 18, 2003 | By: //Terry Nickerson// | ||
Name: Terry Nickerson | |||
Title: Senior Vice President, Finance and | |||
Chief Financial Officer |