TORONTO, May 13 /CNW/ - Magellan Aerospace Corporation (the "Corporation"
or "Magellan") is listed on the Toronto Stock Exchange under the symbol MAL.
The Corporation is a diversified supplier of components to the aerospace
industry. Through its network of facilities throughout North America and the
United Kingdom, Magellan supplies leading aircraft manufacturers, airlines and
defence agencies throughout the world.
Financial Results
-----------------
On May 13, 2005, the Corporation released its financial results for the
first quarter of 2005. The results are summarized as follows:
<<
-------------------------------------------------------------------------
Three Months Ended
March 31
------------------------------------------
Expressed in thousands, PERCENTAGE
except per share amounts 2005 2004 CHANGE
-------------------------------------------------------------------------
Revenues $ 144,941 $ 136,016 6.6%
Net Income (Loss) $ (1,679) $ 1,358 -223.6%
Net Income (Loss) Per Share $ (0.02) $ 0.02 -200.0%
EBITDA(x) $ 8,881 $ 13,665 -35.0%
EBITDA Per Share $ 0.10 $ 0.17 -41.2%
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This quarterly statement contains certain forward-looking statements that
reflect the current views and/or expectations of the Corporation with
respect to its performance, business and future events. Such statements
are subject to a number of risks, uncertainties and assumptions which may
cause actual results to be materially different from those expressed or
implied. The Corporation assumes no future obligation to update these
forward-looking statements.
(x) The Corporation has included certain measures in this quarterly
statement, including EBITDA, the terms for which are not defined under
Canadian generally accepted accounting principles. The Corporation
defines EBITDA as earnings before interest, taxes and depreciation and
amortization. The Corporation has included these measures, including
EBITDA, because it believes this information is used by certain investors
to assess financial performance and EBITDA is a useful supplemental
measure as it provides an indication of the results generated by the
Corporation's principal business activities prior to consideration of how
these activities are financed and how the results are taxed in various
jurisdictions. Although the Corporation believes these measures are used
by certain investors (and the Corporation has included them for this
reason), these measures are unlikely to be comparable to similarly titled
measures used by other companies.
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Management's Discussion and Analysis
------------------------------------
The first quarter of 2005 reflects improved sales and margins from the
fourth quarter of 2004. Customer demand in several key areas continues to
increase as single aisle commercial aircraft build rates at both Boeing and
Airbus continue to increase, while demand for business aircraft aeroengines
are increasing at a significant pace. Defence programs are continuing at a
steady pace, as the US government has confirmed production rates for the F-18
and F-22 aircraft and new orders were received for F-15 components. As well,
repair and overhaul activity rates show no signs of decline. Boeing announced
the cancellation of the B717 in the quarter, however, this will have no
material impact on Magellan. Bid opportunities for new work are increasing, on
both new aircraft programs such as the Boeing 787 and Airbus 350, but also on
current production models as well.
Revenues
--------
Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Canada $ 73,120 $ 69,597 $ 3,523 5.1%
United States 43,566 44,403 (837) -1.9%
United Kingdom 28,255 22,016 6,239 28.3%
-------------------------------------
Total Revenues $ 144,941 $ 136,016 $ 8,925 6.6%
-------------------------------------
Consolidated revenues for the first quarter of 2005 were $144.9 million,
an increase of $8.9 million, or 6.6%, from the first quarter of 2004. Revenues
increased by $6.2 million, or 28.3% in the United Kingdom, which reflects the
impact of expanded work scope under an Airbus contract signed in April, 2004.
Revenues declined by $0.8 million or 1.9% in the United States, while
increasing by $3.5 million or 5.1% in Canada. Average Canadian-US exchange
rates were 0.8150 in the first quarter of 2005 compared to 0.7588 in the first
quarter of 2004. On a consolidated basis, revenues were approximately
$8.0 million lower in the first quarter of 2005 than they would have been if
foreign exchange rates had remained the same as in the first quarter of 2004.
After adjusting for this impact, revenues reflect 12.5% year over year growth.
Revenues generated by commercial product sales in the first quarter of
2005 represented 68% (66% in 2004) of total revenues while defence product
sales comprised the remaining 32% (34% in 2004) of revenues.
Gross Profit
------------
Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Gross profit $ 14,455 $ 17,757 $ (3,302) -18.6%
-------------------------------------
% of revenues 10.0% 13.1%
------------------------
Gross profits of $14.5 million (10.0% of revenues) were reported for the
first quarter of 2005 compared to $17.8 million (13.1% of revenues) during the
same period in 2004. Margin percentage declined year over year due to the
effect of lower foreign exchange rates for the Canadian dollar vs. the
US dollar, a change in mix of products sold, and additional period costs to
support anticipated increased demand expected to occur throughout 2005 and
beyond. Margins have improved from the fourth quarter of 2004, due to
improving efficiencies in manufacturing processes. The Corporation is focussed
on improving profitability levels and expects that gross profit, as a
percentage of sales, will improve through the balance of 2005.
Administrative and General Expenses
-----------------------------------
Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Administrative and
general expenses $ 10,923 $ 10,247 $ 676 6.6%
Foreign exchange loss 312 166 146 88.0%
-------------------------------------
Total administrative
and general expenses $ 11,235 $ 10,413 $ 822 7.9%
------------------------
Administrative and general expenses (net of foreign exchange loss) were
$10.9 million, or 7.5% of revenues in the first quarter of 2005 compared to
$10.2 million, or 7.5% of revenues in the same period of 2004. The increase in
general and administrative expenses is due to increased sales levels. A net
foreign exchange loss of $0.3 million was incurred in the first quarter of
2005, compared to a foreign exchange loss of $0.2 million in the first quarter
of 2004.
Interest Expense
----------------
Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Interest on bank
indebtedness and long
term debt $ 3,361 $ 3,252 $ 109 3.4%
Convertible debenture
interest 1,488 1,488 - -
Accretion charge for
convertible debt 460 409 51 12.5%
Discount on sale of
accounts receivable 494 108 386 357.4%
-------------------------------------
Total interest expense $ 5,803 $ 5,257 $ 546 10.4%
-------------------------------------
Interest expense increased due to increased average interest rates on
bank indebtedness and long term debt. Discount charges increased because of a
larger volume of accounts receivables sold. Accretion charge represents the
value of the call option related to the Corporation's convertible debentures
that is expensed in the period and added to the face value of the convertible
debentures.
Provision for Income Taxes
--------------------------
Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Current income tax $ 125 $ 58 $ 67 115.5%
Future income tax (1,029) 671 (1,700) -253.3%
-------------------------------------
$ (904) $ 729 $ (1,633) -224.0%
-------------------------------------
Effective tax rate 35.0% 34.9%
------------------------
There was a recovery of income taxes of $0.9 million for the first three
months of 2005, compared to a provision for income taxes of $1.4 million for
the first three months of 2004. The minor change in effective tax rates is a
result of a changing mix of income across the different jurisdictions in which
Magellan operates.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
-----------------------------------------------------------------------
Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Net income $ (1,679) $ 1,358 $ (3,037) -223.6%
Interest 5,803 5,257 546 10.4%
Taxes (904) 729 (1,633) -224.0%
Depreciation and
amortization 5,661 6,321 (660) -10.4%
-------------------------------------
EBITDA $ 8,881 $ 13,665 $ (4,784) -35.0%
-------------------------------------
EBITDA for the first quarter of 2005 was $8.9 million, a decrease of
$4.8 million from the first quarter of 2004, due to a decline in pre-tax
income and lower depreciation. Depreciation was lower in the first quarter of
2005 than in the corresponding period in 2004 because of lower foreign
exchange rates impacting the depreciation charge for the Corporation's
US subsidiaries, and a lower capital asset base as a result of the sale
operating leaseback transaction which occurred at the end of the first quarter
of 2004.
Financial Position
------------------
The following chart outlines the significant changes in the consolidated
balance sheets of the Corporation from December 31, 2004 to March 31, 2005.
Balance Sheet Item Change Explanation
(Expressed in thousands
of dollars)
------------------------------------------------------------------------
Cash $ (3,853) See Consolidated Statement of
Cash Flows
Accounts receivable 21,752 Increase due to additional sales
in current quarter and timing of
collections
Inventory 4,808 Increase due to increasing demand
from customers
Capital assets (1,613) Decrease due to depreciation being
greater than capital asset
acquisitions, net of foreign
exchange rate impact
Bank indebtedness 27,958 Increase is due to increase in
working capital balances and
payments of long-term debt
Convertible debentures 460 Increase due to non-cash accretion
charge
Liquidity and Capital Resources
-------------------------------
Cash Flow from Operations Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Changes to non-cash
working capital
balances $ (26,125) $ (6,539) $ (19,586) 299.5%
-------------------------------------
Cash (used in), provided
by operating activities (22,652) 2,221 (24,873) -1,119.9%
-------------------------------------
In the quarter ended March 31, 2005, the Corporation used $22.7 million
of cash in its operations, compared to generating $2.2 million from operations
in the first quarter of 2004. This was largely due to increased accounts
receivable as a result of increased sales and the timing of receivables
collections. Inventories rose in response to increasing demand from the
Corporation's customers.
Investing Activities Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Purchases of capital
assets $ (3,457) $ (2,277) $ (1,180) 51.8%
Proceeds of disposal
of capital assets 531 15,007 (14,476) -96.5%
Increase in other assets (271) (956) 685 -71.7%
-------------------------------------
Cash used in investing
activities $ (3,197) $ 11,774 $ (14,971) -127.2%
-------------------------------------
In the first quarter of 2005, the Corporation invested $3.5 million in
capital assets to upgrade its facilities and enhance its capabilities.
Proceeds of $0.5 million were received in the first quarter of 2005 on the
sale of equipment no longer used in operations. In the first quarter of 2004,
the Corporation sold $15.0 million of capital assets at their net book value
and entered into a five-year operating lease agreement to retain their use.
Financing Activities Three Months Ended
(Expressed in thousands March 31
of dollars) 2005 2004 Change % Change
-------------------------------------------------------------------------
Increase (decrease) in
bank indebtedness $ 27,635 $ (5,983) $ 33,618 -561.9%
Repayment of long-term
debt (4,440) (4,205) (235) 5.6%
Decrease in long-term
liabilities (1,048) (4,330) 3,282 -75.8%
Issue of common shares 27 55 (28) -50.9%
-------------------------------------
Cash provided by
(used in) financing
activities $ 22,174 $ (14,463) $ 36,637 -253.3%
-------------------------------------
In the first quarter of 2005, the Corporation drew on its operating
credit in the amount of $27.6 million to fund growth in working capital. Also
in the quarter, the Corporation repaid $4.4 million of long-term debt as
scheduled.
The Corporation is in discussions with its lenders to renegotiate its
existing operating and long-term credit agreements. In conjunction with the
proposed refinancing, the Corporation's lenders have required the Corporation
to raise $20.0 million of new equity which the Corporation proposes to satisfy
by issuing $20 million of convertible preferred shares. The preferred shares
are expected to bear an 8.0% cumulative dividend, payable quarterly, and each
preferred share is expected to be convertible into 3.33 common shares of the
Corporation at the option of the holder. In addition, the preferred shares are
expected to be redeemable at the option of the Corporation and retractable,
under certain circumstances, at the option of the holder. The proceeds of the
shares will be used to repay debt and for general corporate purposes. The
Corporation had committed to its bankers to have the preferred share issue
completed by April 29, 2005 and is in default of this commitment. The
Corporation has received a waiver of this default and expects to have both the
preferred share issue as well as new credit agreements in place by May 31,
2005.
Update on Closure of Fleet Industries
-------------------------------------
Operations at Fleet Industries are at present, in a wind-up mode, and the
facility is expected to complete all operations by the end of the second
quarter of 2005. At present, no further increases to the provision for the
plant closure are expected.
Change in Accounting Policy
---------------------------
Effective January 1, 2005 the Corporation adopted the recommendation of
the CICA contained in the amended Section 3860, "Financial Instruments", which
require the Corporation to account for its convertible debentures as debt as
opposed to equity. Management has computed the impact on the Corporation's
financial statements in note 2 of the interim consolidated financial
statements.
All comments herein have incorporated the restated quarterly financial
statements resulting from the change in accounting policy as computed in
note 2.
Outlook
-------
Magellan continues to look to the future with guarded optimism. While
commercial airline results continue to be tempered by high fuel costs, many
airlines are reporting higher utilization of equipment, better load factors
and stronger yields. Significant orders for new aircraft have also recently
been placed. Magellan expects the growth that it is experiencing to date in
2005 will continue over the next two years. The current strong demand for
business jet engines is also expected to be sustained as well, with mid-size
and micro-jets leading the way. Defence opportunities appear to be stable,
with no reduction expected in the short-term. As these increases in sales take
effect, Magellan hopes to see this growth reflected in its financial returns.
On behalf of the Board
(signed) (signed)
N. Murray Edwards Richard A. Neill
Chairman President and Chief Executive Officer
May 13, 2005
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(unaudited)
(expressed in thousands of dollars, Three months ended
except per share amounts) March 31
2005 2004
------ ------
(restated)
Revenues $ 144,941 $ 136,016
Cost of revenues 130,486 118,259
------------- -------------
Gross profit 14,455 17,757
------------- -------------
Administrative and general expenses 11,235 10,413
Interest 5,803 5,257
------------- -------------
17,038 15,670
------------- -------------
Income (loss) before income taxes (2,583) 2,087
(Recovery of) provision for income taxes
- Current 125 58
- Future (1,029) 671
------------- -------------
(904) 729
------------- -------------
Net income (loss) for the period $ (1,679) $ 1,358
------------- -------------
Retained earnings, beginning of the period 115,105 122,853
Retained earnings, end of period $ 113,426 $ 124,211
------------- -------------
------------- -------------
Income (loss) per common share
Basic $ (0.02) $ 0.02
------------- -------------
------------- -------------
Diluted $ (0.02) $ 0.01
------------- -------------
------------- -------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31 December 31
(expressed in thousands of dollars) 2005 2004
------ ------
(restated)
ASSETS
Current
Cash $ 5,195 $ 9,048
Accounts receivable, net 92,726 70,974
Inventories 274,543 269,735
Prepaid expenses and other 8,188 8,113
Future income tax asset 9,601 7,104
------------- -------------
Total current assets 390,253 364,974
------------- -------------
Capital assets 273,111 274,724
Other 42,403 42,486
Future income tax assets 40,531 42,318
------------- -------------
$ 746,298 $ 724,502
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness (note 3) $ 95,986 $ 68,028
Accounts payable and accrued charges 114,536 114,327
Current portion of long-term debt 44,379 48,335
------------- -------------
Total current liabilities 254,901 230,690
------------- -------------
Long-term debt 11,551 11,856
Future income tax liabilities 82,303 82,457
Convertible debentures 64,055 63,595
Other long-term liabilities 31,887 32,926
Shareholders' equity
Capital stock (note 4) 213,989 213,962
Contributed surplus 294 234
Other paid in capital 9,505 9,505
Retained earnings 113,426 115,105
Foreign exchange translation (note 7) (35,613) (35,828)
------------- -------------
Total shareholders' equity 301,601 302,978
------------- -------------
$ 746,298 $ 724,502
------------- -------------
------------- -------------
MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended
(expressed in thousands of dollars) March 31
2005 2004
------ ------
(restated)
OPERATING ACTIVITIES
Income (loss) for the period $ (1,679) $ 1,358
Add (deduct) items not affecting cash
Depreciation and amortization 5,661 6,321
Stock Option charges 60 -
Accretion of convertible debenture 460 410
Future income taxes (recoveries) (1,029) 671
------------- -------------
3,473 8,760
Net change in non-cash working capital items
relating to operating activities (26,125) (6,539)
------------- -------------
Cash (used in) provided by operating
activities (22,652) 2,221
------------- -------------
INVESTING ACTIVITIES
Purchase of capital assets (3,457) (2,277)
Proceeds from disposal of capital assets 531 15,007
Increase in other assets (271) (956)
------------- -------------
Cash (used in) provided by investing
activities (3,197) 11,774
------------- -------------
FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness 27,635 (5,983)
Repayment of long-term debt (4,440) (4,205)
Decrease in long-term liabilities (1,048) (4,330)
Issue of common shares 27 55
------------- -------------
Cash provided by (used in) financing
activities 22,174 (14,463)
------------- -------------
Effect of exchange rate changes on cash (178) 470
------------- -------------
(Increase) decrease in cash (3,853) 2
Cash, beginning of period 9,048 3,888
------------- -------------
Cash, end of period $ 5,195 $ 3,890
------------- -------------
------------- -------------
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(expressed in thousands of dollars except share and per share data)
1. ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared by the Corporation in accordance with accounting principles
generally accepted in Canada on a basis consistent with those followed in
the most recent audited consolidated financial statements except for the
changes identified in note 2, Change in Accounting Policy, below. These
unaudited consolidated financial statements do not include all the
information and footnotes required by generally accepted accounting
principles for annual financial statements and therefore should be read
in conjunction with the audited consolidated financial statements and
notes included in the Corporation's Annual Report for the year ended
December 31, 2004. The Corporation's external auditors have not reviewed
these financial statements.
2. CHANGE IN ACCOUNTING POLICY
The principal amount of the Corporation's outstanding convertible
debentures of $70 million due on January 31, 2008 was previously
classified as an equity instrument due to the Corporation's ability to
settle principal and interest payments by the issuance of common shares.
In accordance with the amended standard under CICA 3860, the Corporation
has presented the liability component of its convertible debentures as
long-term debt and the equity component as other paid in capital. The
liability represents the present value of the principal payment of the
debentures and the equity component represents the fair value of the
holder's conversion feature. The stated interest payments and accretion
expense from adjusting the time value of the principal of the debentures
over time are recorded as interest expense in the statement of
operations.
The following table represents the changes to the Corporation's financial
statements for the three month period ending March 31, 2004 by applying
the recommendation retroactively:
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended March 31, 2004
Originally As
Reported Restated
Administrative and general expenses $ 10,311 $ 10,413
------------- -------------
Interest 3,360 5,257
------------- -------------
Income before income taxes $ 4,086 $ 2,087
Provision for income taxes 1,451 729
------------- -------------
Net income for the period $ 2,635 $ 1,358
------------- -------------
Retained earnings, beginning of the period 122,853 122,853
Interest and accretion (1,277) -
------------- -------------
Retained earnings, end of the period $ 124,211 $ 124,211
------------- -------------
CONSOLIDATED BALANCE SHEET
As at December 31, 2004
Originally As
Reported Restated
Other assets $ 41,254 $ 42,486
------------- -------------
Future tax liabilities 2,345 82,457
------------- -------------
Convertible debentures as debt - 63,595
------------- -------------
Other paid in capital - 9,505
------------- -------------
Convertible debentures as equity $ 71,980 $ -
------------- -------------
The following table represents the impact to the Corporation's financial
statements for the three month period ending March 31, 2005.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended March 31, 2005
Without
Change in
Accounting
As Reported Policy
Administrative and general expenses $ 11,235 $ 11,132
------------- -------------
Interest 5,803 3,855
------------- -------------
Loss before income taxes $ (2,583) $ (532)
Provision for income taxes (904) (339)
------------- -------------
Loss for the period $ (1,679) $ (193)
------------- -------------
Retained earnings, beginning of the period 122,853 115,105
Interest and accretion - (1,486)
------------- -------------
Retained earnings, end of the period $ 113,426 $ 113,426
------------- -------------
3. BANK INDEBTEDNESS
Bank indebtedness as at March 31, 2005 of $95,986 (December 31, 2004 -
$68,028) is payable on demand and bears interest at the bankers'
acceptance or LIBOR rates, plus 1.75% to 4.50% (4.50% as at March 31,
2005). Included in the amount outstanding at March 31, 2005 is US$42,537
(December 31, 2004 - US$52,537). The total amount of the operating line
available to the Corporation is $103,215. A fixed and floating charge
debenture on certain of the Corporations assets is pledged as collateral
for the operating loans and the bank term loan.
The Corporation is in discussions with its lenders to renegotiate its
existing operating and long-term credit agreements. In conjunction with
the proposed refinancing, the Corporation's lenders have required the
Corporation to raise $20.0 million of new equity which the Corporation
proposes to satisfy by issuing $20 million of convertible preferred
shares. The preferred shares are expected to bear an 8.0% cumulative
dividend, payable quarterly, and each preferred share are expected to be
convertible into 3.33 common shares of the Corporation at the option of
the holder. In addition, the preferred shares are expected to be
redeemable at the option of the Corporation and retractable, under
certain circumstances, at the option of the holder. The proceeds of the
shares will be used to repay debt and for general corporate purposes. The
Corporation had committed to its bankers to have the preferred share
issue completed by April 29, 2005 and is in default of this commitment.
The Corporation has received a waiver of this default and expects to have
both the preferred share issue as well as new credit agreements in place
by May 31, 2005.
4. CAPITAL STOCK
The following table summarizes information on share capital and related
matters as at March 31, 2005:
Outstanding Exercisable
-------------------------------------------------------------------------
Common shares 90,746,736
Common shares stock options 2,546,500 1,131,900
The weighted average number of common shares outstanding during the three
months ended March 31, 2005 was 90,743,838.
5. STOCK-BASED COMPENSATION PLAN
The Corporation has an incentive stock option plan, which provides for
the granting of options for the benefit of employees and directors. The
maximum number of options for common shares remaining to be granted under
this plan was 2,794,203. Options are granted at an exercise price that
will be the market price of the Corporation's common shares at the time
of granting. Options normally have a life of five years with vesting of
20% at the end of the first, second, third, fourth and fifth years from
the date of the grant. In addition, certain business unit income tests
must be met in order for the option holder's entitlement to fully vest.
The Corporation accounts for stock options issued after January 1, 2003
using the fair value method, which gives rise to compensation expense.
There were no stock options issued for the three month periods ending
March 31, 2005 and March 31, 2004.
The Corporation accounts for stock options issued before January 1, 2003
using the intrinsic value method, which does not give rise to
compensation expense. Under Canadian generally accepted accounting
principles, the Corporation is required to disclose compensation expense
for the stock option plan as if the Corporation had elected the fair
value method at the grant date.
For purposes of pro-forma disclosures, The Corporation's net income
(loss) attributable to its common shares and basic and diluted earnings
(loss) per common share would have been:
Three months ended
March 31
2005 2004
-------------------------------------------------------------------------
Net income (loss) $ (1,679) $ 1,358
Less: Pro forma compensation expense (62) (62)
-------------------------------------------------------------------------
Pro forma net income (loss) $ (1,741) $ 1,296
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Pro forma income (loss) per common share
Basic $ (0.02) $ 0.02
Diluted $ (0.02) $ 0.01
-------------------------------------------------------------------------
6. SEGMENTED INFORMATION
The Corporation is organized and managed as a single business segment
being aerospace and the Corporation is viewed as a single operating
segment by the chief operating decision maker for the purposes of
resource allocations and assessing performance.
Domestic and foreign operations consist of the following:
Three months ended March 31
2005 2004
------------------------------- -------------------------------
Canada USA UK Total Canada USA UK Total
$ $ $ $ $ $ $ $
-------------------------------------------------------------------------
Revenue
Domestic 25,357 34,987 26,715 87,059 25,097 39,384 19,611 84,092
Export 47,763 8,579 1,540 57,882 44,500 5,019 2,405 51,924
-------------------------------------------------------------------------
Total
revenue 73,120 43,566 28,255 144,941 69,597 44,403 22,016 136,016
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital
assets 126,119 135,899 11,093 273,111 130,334 152,631 215 283,180
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenue is attributed to countries based on the location of the customers
and capital assets are based on the country in which they are located.
Three months ended
March 31
2005 2004
-------------------------------------------------------------------------
Major Customers
Canadian operations
Number of customers 3 3
Percentage of total Canadian revenue 32% 34%
U.S. operations
Number of customers 3 3
Percentage of total U.S. revenue 55% 70%
U.K. operations
Number of customers 1 1
Percentage of total U.K. revenue 77% 46%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
7. FOREIGN EXCHANGE TRANSLATION
Unrealized translation adjustments, which arise on the translation to
Canadian dollars of assets and liabilities of the Corporation's self-
sustaining foreign operations, resulted in an unrealized currency
translation gain of $215 for the period ending March 31, 2005 (2003 - a
loss of $2,310), which is reflected as foreign exchange translation on
the consolidated balance sheets and has no impact on net income. The
unrealized gain resulted from the weakening of the Canadian dollar
against the U.S. dollar and the U.K. Pound Sterling.
8. SUPPLEMENTARY INFORMATION
Foreign exchange loss (on the conversion of foreign currency denominated
working capital balances and debt) for the three months ended March 31,
2005 was $312 (2004 - $166).
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