TORONTO, May 11 /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 11, 2007, the Corporation released its financial results for the
first quarter of 2007. The results are summarized as follows:
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Three-months ended March 31
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(Expressed in thousands,
except per share amounts) 2007 2006 Change
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Revenues $ 144,055 $ 137,022 5.1%
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Gross Profit $ 15,249 $ 14,314 6.5%
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Net loss $ (1,747) $ (658) -
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Net loss per share $ (0.02) $ (0.01) -
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EBITDA(x) $ 9,513 $ 9,898 -3.9%
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EBITDA(x) per share $ 0.11 $ 0.11 -
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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, and non-cash charges. 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
------------------------------------
During the first quarter of 2007, the aerospace industry continued to expand in all major sectors, with growth in the civil airliner and business jet sectors having a positive impact on Magellan. In the airliner sector, production rates for single aisle, and selected twin aisle aircraft, continued to grow well above the record levels of 2000-2001, and Magellan expects this trend throughout 2007. Business jet growth remains very strong, and the resulting growth in small and mid-sized turbofan engines has stretched Magellan's capacity in some areas. More stable, but also showing promise of significant future growth for Magellan, the defence sector is highlighted by the launch of low rate initial production of the F35 Joint Strike Fighter aircraft and associated engines.
Impacting Magellan negatively in the quarter was the fact that aircraft deliveries of the A380 large aircraft program continue to be delayed, as various pre-delivery issues are resolved. However the aircraft has obtained certification from regulators, and is expected to resume deliveries by fourth quarter 2007. The value of Magellan sales delayed in the first quarter was approximately $7 million.
Magellan reached an important milestone in the first quarter when it delivered the first shipment of landing gear components for the Boeing B787 aircraft. Demand for the B787 continues to grow rapidly, with over 500 aircraft now on firm order for deliveries commencing in 2008. Magellan is involved in the landing gear and in key areas of the wing structure.
Revenue increases reflect the increases in existing in-house programs, less the A380 delayed sales and reductions in certain mature aircraft programs, with incremental gains from the new programs, such as the B787 and the F35, which are at the onset of production. The growth in in-house programs, and the introduction into production of these new programs is negatively impacting Magellan as it incurs certain start-up costs and higher levels of inventory.
Revenues
--------
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Three-months ended
March 31
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(Expressed in thousands) 2007 2006 Change
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Canada $ 64,642 $ 65,266 -1.0%
United States 48,063 43,896 9.5%
United Kingdom 31,350 27,860 12.5%
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Total Revenue $ 144,055 $ 137,022 5.1%
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Revenues for the first quarter of 2007 were $144.1 million, an increase of $7.1 million or 5.1% over the same period in 2006. The increase in revenue demonstrates the increase in the volumes of underlying shipments as the demand for aerospace components continue to remain strong.
Gross Profit
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Three-months ended
March 31
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(Expressed in thousands) 2007 2006 Change
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Gross profit $ 15,249 $ 14,314 6.5%
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Percentage of revenue 10.6% 10.4%
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Gross profit for the first quarter of 2007 was $15.3 million or 10.6% of revenues, compared to $14.3 million or 10.4% of revenues in the same period of last year. Gross profit, as a percentage of sales, was consistent in the first quarter of both 2007 and 2006. Benefits from the Corporations ongoing rejuvenation of four of its facilities have started to materialize in the quarter.
Administrative and General Expenses
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Three-months ended
March 31
(Expressed in ---------------------------------------------------
thousands) 2007 2006 Change % Change
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Administrative and
general expenses $ 11,548 $ 10,268 $ 1,280 12.5%
Foreign exchange
loss/(gain) 369 (282) 651 230.9%
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Total administrative
and general expenses $ 11,917 $ 9,986 $ 1,931 19.3%
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Percentage of revenue 8.3% 7.3%
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Total administrative and general expenses were $11.9 million in the first quarter of 2007. Included in total administration and general expenses is a foreign exchange loss of $0.4 million. Without this item, administrative and general expenses were $11.6 million (or 8.0% of revenues) in the first quarter of 2007 compared to $10.3 million (or 7.5% of revenues) in the same period in 2006. Also included in total administrative and general expenses for the quarter were legal and accounting fees of approximately $2.0 million incurred by the Corporation in relation to a detailed investigation of concerns raised by a former employee regarding the integrity of the Corporation's financial statements. The concerns were thoroughly investigated by PricewaterhouseCoopers ("PWC") who, under the direction of the Corporation's audit committee, prepared a report for the audit committee on their findings. The Corporation's legal counsel has advised the Board of Directors that PWC met with the audit committee and the Corporation's external auditors, and based on the report prepared by PWC, PWC has advised the audit committee that they have not found anything that would undermine the integrity or accuracy of the Corporation's financial statements.
Interest Expense
----------------
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Three-months ended
March 31
(Expressed in ---------------------------------------------------
thousands) 2007 2006 Change % Change
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Interest on bank
indebtedness and
long-term debt $ 2,788 $ 2,024 $ 764 37.7%
Convertible debenture
interest 1,488 1,488 - -
Accretion charge for
convertible debt 584 573 11 1.9%
Discount on sale of
accounts receivable 814 910 (96) -10.5%
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Total interest expense $ 5,674 $ 4,995 $ 679 -13.6%
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Interest on bank indebtedness and long-term debt increased in 2007 compared to the same period in 2006 due mainly to increased debt levels in the first quarter of 2007. Discount on the sale of accounts receivable decreased due to a lower amount of receivables sold during the quarter. 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 (Recovery of) Income Taxes
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Three-months ended
March 31
(Expressed in ---------------------------------------------------
thousands) 2007 2006 Change % Change
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Provision for current
income taxes $ 90 $ 92 $ (2) -2.2%
Recovery of future
income taxes (685) (101) (584) 578.2%
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Total recovery of
income taxes $ (595) $ (9) $ (586) 651.1%
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Effective Tax Rate 25.4% 1.4%
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The Corporation recorded a recovery of income taxes of $0.6 million for the first quarter of 2007, compared to an income tax recovery of $0.09 million for the second quarter of 2006. The effective rate of recovery of income taxes was 25.4% in the first quarter of 2007 compared with 1.4% in 2006. In the first quarter of 2006, the non-deductible items had a large impact while Magellan operated near break-even levels.
EBITDA
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Three-months ended
March 31
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(Expressed in thousands) 2007 2006 Change
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Net loss for the period $ (1,747) $ (658) $ (1,089)
Interest 5,674 4,995 679
Taxes (595) (9) (586)
Stock based compensation 255 180 75
Depreciation and amortization 5,926 5,390 536
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EBITDA $ 9,513 $ 9,898 $ (385)
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EBITDA in the first quarter of 2007 was lower by $0.4 million from the first quarter of 2006 due in large part to higher administrative and general expenses. Higher revenue and better gross profit in the first quarter of 2007 compared to 2006 somewhat off-set the negative impact of the higher administrative and general expenses.
Cash Flow from Operating Activities
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Three-months ended
March 31
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(Expressed in thousands) 2007 2006 Change
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Increase in accounts receivable $ (12,609) $ (4,563) $ (8,046)
Increase in inventories (17,340) (15,957) (1,383)
Increase in prepaid expenses
and other (814) (2,727) 1,913
(Decrease)/increase in accounts
payable (3,190) 10,710 (13,900)
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Net change in non-cash working
capital items $ (33,953) $ (12,537) $ (21,416)
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Cash used in operating activities $ (29,597) $ (7,153) $ (22,444)
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In the first quarter of 2007, the Corporation used $29.6 million of cash from operations, compared to using $7.2 million of cash in the same period of 2006. Accounts receivable increased as a result of the suspension of the Corporation's five-year accounts receivable securitization program in February 2007. The increase in inventory is due to a general increase in raw materials and work-in-progress which reflects increased demand in the aerospace inventory.
Cash Flow from Investing Activities
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Three-months ended
March 31
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(Expressed in thousands) 2007 2006 Change
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Purchase of capital assets $ (7,086) $ (3,059) $ (4,027)
Proceeds from disposals of capital
assets 274 96 178
Increase in other assets (1,022) (878) (144)
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Cash used in investing activities $ (7,834) $ (3,841) $ (3,993)
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The Corporation invested $7.1 million in new equipment and improvements to its facilities to improve manufacturing capacity and enhance its capabilities for current and future programs.
Cash Flow from Financing Activities
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Three-months ended
March 31
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(Expressed in thousands) 2007 2006 Change
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Increase in bank indebtedness $ 19,808 $ 8,720 $ 11,088
Increase/(decrease) of long-term
debt 14,406 (117) 14,523
Increase in long-term liabilities 687 75 612
Dividends on Preference Shares (400) - (400)
Issuance of Common Shares 18 14 4
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Cash provided by financing
activities $ 34,519 $ 8,692 $ 25,827
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The Corporation renewed its operating credit facility, on March 30, 2007, with its existing lenders. Under the terms of the renewed agreement, the maximum amount available under the operating credit facility was increased by $20 million to $175 million with a maturity date of May 24, 2008. The facility is extendable for unlimited one-year renewal periods and continues to be fully guaranteed by the Chairman of the Board of the Corporation.
On March 30, 2007, the Corporation borrowed $15 million by way of a secured promissory note from a corporation with a common director. This note is due July 1, 2008 and bears interest at a rate of 9% per annum. The note is collateralized and subordinated to the bank credit facility.
Changes in Accounting Policies
------------------------------
Effective January 1, 2007, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Sections 1530 Comprehensive Income, Section 3855 Financial Instruments - Recognition and Measurement and Section 3865 Hedges. The adoption of these new standards resulted in changes in the accounting for financial instruments and hedges, as well as the recognition of certain transition adjustments. As provided under the standards, the comparative interim consolidated financial statements have not been restated, except for the presentation of translation gains or losses on self-sustaining foreign operations.
The adoption of these Sections is done retroactively without restatement of the consolidated financial statements of prior periods. The effect of these changes in accounting policies on net income for the first quarter of fiscal 2007 is not significant.
The reader is referred to Note 2 in the accompanying unaudited consolidated financial statements for the period ended March 31, 2007 for further details regarding the adoption of these standards.
Controls and Procedures
-----------------------
Based on the current Canadian Securities Administrators ("CSA") rules under Multilateral Instrument 52-109, the Chief Executive Officer and Chief Financial Officer (or individuals performing similar functions as a chief executive officer or chief financial officer) are required to certify as at March 31, 2007 that they are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting.
No changes were made in the Corporation's internal control over financial reporting during the Corporation's most recent interim period, that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.
Outlook
-------
Magellan is hopeful that the improved revenues and gross margins achieved in the first quarter will continue throughout 2007 as increasing demand in several key sectors is converted to higher production levels. Major plant rejuvenation projects will be completed in the second quarter of 2007, bringing increased efficiencies. In addition, strategic sourcing, growing rapidly in emerging market areas as well as locally, should reduce Magellan's average costs, and attract more business to Magellan facilities from key customers.
The Boeing 787 will hopefully continue its outstanding success in the marketplace, and the first aircraft will be rolled out in the third quarter. Production rates will continue to ramp up over the next two years, and Magellan's participation in wing and landing gear components will generate significant revenue opportunities for the Corporation. The F35 Joint Strike Fighter program, supported in the production phase by all partner nations, will experience year-on-year increases in production rates through the next several years. Magellan's successful participation in both airframe and engine development and production activities will refresh and upgrade the Corporation's manufacturing technology, and generate annual increases in revenue through the foreseeable future. Finally, continued growth and strength in the business jet and helicopter sectors will provide Magellan with increased business in components ranging from castings to engines, structural elements and specialty equipment.
(signed) (signed)
Richard A. Neill James S. Butyniec
Vice Chairman President and Chief Operating Officer
May 11, 2007
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MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(unaudited)
(Expressed in thousands of Three-months ended
dollars, except per share March 31
amounts) -------------------------
2007 2006
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Revenues $ 144,055 $ 137,022
Cost of revenues 128,806 122,708
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Gross profit 15,249 14,314
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Administrative and general expenses 11,917 9,986
Interest 5,674 4,995
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17,591 14,981
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Loss before income taxes (2,342) (667)
Provision for (recovery of) income taxes
- Current 90 92
- Future (685) (101)
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(595) (9)
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Net loss for the period (1,747) (658)
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Retained earnings, beginning of period 98,039 107,019
Dividends on preference shares (400) -
Net loss for the period (1,747) (658)
Retained earnings, end of period $ 95,892 $ 106,361
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Loss per common share
Basic $ (0.02) $ (0.01)
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Diluted $ (0.02) $ (0.01)
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MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(unaudited)
(Expressed in thousands of Three-months ended
dollars, except per share March 31
amounts) -------------------------
2007 2006
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Net loss $ (1,747) $ (658)
Other comprehensive loss:
Unrealized (loss) gain on translation of
financial statements of self-sustaining
foreign operations (1,151) 870
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Comprehensive income (loss) $ (2,898) $ 212
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See accompanying notes
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MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
As at As at
March 31 December 31
(Expressed in thousands of dollars) 2007 2006
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ASSETS
Current
Cash $ 7,215 $ 9,896
Accounts receivable 70,297 58,066
Inventories (note 3) 292,496 276,462
Prepaid expenses and other 11,150 10,396
Future income tax assets 5,896 5,914
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Total current assets 387,054 360,734
Capital assets 265,082 265,078
Other 53,244 52,680
Future income tax assets 6,074 5,829
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Total assets $ 711,454 $ 684,321
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness (note 4) $ 161,296 $ 142,457
Accounts payable and accrued charges 125,148 128,066
Convertible debentures 68,014 -
Current portion of long-term debt 1,835 2,039
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Total current liabilities 356,293 272,562
Long-term debt 30,456 15,902
Future income tax liabilities 19,414 20,785
Convertible debentures - 67,430
Other long-term liabilities 3,422 2,748
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Total liabilities 409,585 379,427
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Shareholders' equity
Capital stock (note 5) 234,189 234,171
Contributed surplus 2,054 1,799
Other paid in capital 11,100 11,100
Retained earnings 95,892 98,039
Accumulated other comprehensive loss (note 8) (41,366) (40,215)
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Total shareholders' equity 301,869 304,894
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Total liabilities and shareholders' equity $ 711,454 $ 684,321
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See accompanying notes
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MAGELLAN AEROSPACE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three-months ended
March 31
-------------------------
(Expressed in thousands of dollars) 2007 2006
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OPERATING ACTIVITIES
Loss for the period $ (1,747) $ (658)
Add (deduct) items not affecting cash
Depreciation and amortization 5,926 5,390
Net loss on sale of capital asset 23 -
Stock based compensation 255 180
Accretion of convertible debentures 584 573
Future income taxes recoveries (685) (101)
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4,356 5,384
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Net change in non-cash working capital items
relating to operating activities (33,953) (12,537)
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Cash used by operating activities (29,597) (7,153)
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INVESTING ACTIVITIES
Purchase of capital assets (7,086) (3,059)
Proceeds from disposal of capital assets 274 96
Increase in other assets (1,022) (878)
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Cash used in investing activities (7,834) (3,841)
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FINANCING ACTIVITIES
Increase in bank indebtedness 19,808 8,720
Increase (decrease) of long-term debt 14,406 (117)
Increase in long-term liabilities 687 75
Issuance of Common Shares 18 14
Dividends on Preference Shares (400) -
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Cash provided by financing activities 34,519 8,692
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Effect of exchange rate changes on cash 231 (22)
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Net decrease in cash during the year (2,681) (2,324)
Cash, beginning of period 9,896 7,426
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Cash, end of period $ 7,215 $ 5,102
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See accompanying notes
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 un-audited 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. 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, 2006. The Corporation's external auditors have not reviewed
these financial statements.
2. CHANGE IN ACCOUNTING POLICY
The Corporation adopted the Canadian Institute of Chartered Accountants
(CICA) Handbook Section 3855, Financial instruments - Recognition and
Measurement: Section 3865, Hedges: Section 1530, Comprehensive Income and
Section 3861, Financial Instruments - Disclosure and Presentation on
January 1, 2007. The adoption of these new standards resulted in changes
in the accounting for financial instruments and hedges. The comparative
interim consolidated financial statements have not been restated, except
for the presentation of translation gains or losses on self-sustaining
foreign operations. The principal changes in the accounting for financial
instruments and hedges due to the adoption of these accounting standards
are described below.
a) Comprehensive Income
Comprehensive income is composed of the Company's net income and other
comprehensive income. Other comprehensive income includes unrealized
exchange gains and losses on translation of self-sustaining foreign
operations.
b) Financial Assets and Financial Liabilities
Under the new standards, all financial instruments are classified into
one of the following five categories: held for trading, held-to-maturity
investments, loans and receivables, available-for-sale financial assets
or other financial liabilities. All financial instruments, including
derivatives, are included on the consolidated statement of financial
position and are measured at fair value except for loans and receivables,
held-to-maturity investments and other financial liabilities, which are
measured at amortized, cost. Held for trading financial investments are
subsequently measured at fair value and all gains and losses are included
in net income in the period in which they arise. Available-for-sale
financial instruments are subsequently measured at fair value with
revaluation gains and losses included in other comprehensive income until
the instrument is derecognized or impaired.
As a result of the adoption of these standards, the Company has
classified its cash and cash equivalents as held-for-trading. Accounts
receivable are classified as loans and receivables. Accounts payable and
long-term debt have been classified as other financial liabilities, all
of which are measured at amortized cost.
c) Derivatives and Hedges
Derivatives
-----------
All derivative instruments, including embedded derivatives, are recorded
in the statement of financial position at fair value unless exempted from
derivative treatment as a normal purchase and sale. All changes in their
fair value are recorded in income unless cash flow hedge accounting is
used, in which case changes in fair value are recorded in other
comprehensive income. The Company has elected to apply this accounting
treatment for all embedded derivatives in host contracts entered into on
or after January 1, 2007. The impact of the change in the accounting
policy related to embedded derivatives was not material.
Hedge Accounting
----------------
At the inception of a hedging relationship, the Company documents the
relationship between the hedging instrument and the hedged item, as well
as the risk management objectives and strategy for undertaking various
hedge transactions. This process includes linking all derivatives to
specific assets and liabilities on the consolidated statement of
financial position or to specific firm commitments or forecasted
transactions. The Company also assesses, both at the inception of the
hedge and on an ongoing basis, whether the derivatives that are used are
effective in offsetting changes in fair values or cash flows of hedged
items.
Under the previous standards, derivatives that met the requirements for
hedge accounting were generally accounted for on an accrual basis. Under
the new standards, all derivatives are recorded at fair value.
As at March 31, 2007 the Corporation's derivative contracts were not
designated as hedges and as a result are recorded on the Consolidated
Balance Sheets at their fair value. Any change in the fair value during
the period are reported in foreign exchange in the Consolidated Statement
of Operations.
The adoption of these Sections is done retroactively without restatement
of the consolidated financial statements of prior periods. The effect of
these changes in accounting policies on net income for the first quarter
of fiscal 2007 is not significant.
3. INVENTORIES
Due to the long-term contractual periods of the Corporation's contracts,
the Corporation may be in negotiation with its customers over amendments
to pricing or other terms. Management's assessment of the recoverability
of amounts capitalized in inventory may be based on judgements with
respect to the outcome of these negotiations. If the negotiations are not
successful or the final terms differ from what the Corporation expects,
the Corporation may be required to record a loss provision on this
contract. The amount of such provision, if any, cannot be reasonably
estimated until such amendments are finalized.
4. BANK INDEBTEDNESS
The Corporation has an operating credit facility of $175,000 with a
syndicate of banks. Bank indebtedness as at March 31, 2007 of $161,296
(December 31, 2006 - $142,457) is payable on demand and bears interest at
the bankers' acceptance or LIBOR rates, plus 0.875% (5.8% at March 31,
2007). Included in the amount outstanding at March 31, 2007 is US$85,806
(December 31, 2006 - US$82,325). At March 31, 2007, the Corporation had
drawn $161,296 under the operating credit and had issued letters of
credit totalling $1,963 such that $11,741 was unused and available. A
fixed and floating charge debenture on certain of the Corporation's
assets is pledged as collateral for the operating loan. The credit
facility is fully guaranteed by the Chairman of the Board of Directors.
An annual fee of 0.10% of the guaranteed amount or $175 (2006 - $155) is
paid in consideration for the guarantee.
5. CAPITAL STOCK
The following table summarizes information on share capital and related
matters as at March 31, 2007:
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Outstanding Exercisable
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Common Shares 90,842,675
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Common Share stock options 5,349,600 1,140,600
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Preference Shares 2,000,000
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The weighted average number of Common Shares outstanding during the
three-month period ended March 31, 2007 was 90,837,037.
6. 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 that remain to be granted
under this plan is 1,103. Options are granted at an exercise price equal
to the market price of the Corporation's common shares at the time of
granting. Options normally have a life of five years with vesting at 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. Compensation expense recorded during the
three-month period ended March 31, 2007 was $255 (March 31, 2006 - $180).
In the three-month period ended March 31, 2007, there were 1,430,000
stock options granted at an exercise price of $3.20. The fair value of
these options was $1.57.
The fair value of stock options is estimated at the date of grant using
the Black-Scholes pricing model with the following weighted average
assumptions:
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Risk-free interest rate 4.0%
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Expected volatility 46%
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Expected life of the options 5 years
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Expected dividend yield 0%
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The Black-Scholes option pricing model used by the Corporation to
determine fair values was developed for use in estimating the fair value
of freely traded options, which are fully transferable and have no
vesting restrictions. The Corporation's employee stock options are not
transferable, cannot be traded and are subject to vesting restrictions
and exercise restrictions under the Corporation's blackout policy, which
would tend to reduce the fair value of the Corporation's stock options.
Changes to the subjective input assumptions used in the model can cause a
significant variation in the estimate of the fair value of the options
7. 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.
Capital assets are based on the country in which they are located.
Domestic and foreign capital assets consist of:
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As at March 31, 2007
--------------------------------------------
Canada US UK Total
--------------------------------------------
Capital assets $ 120,383 $ 122,516 $ 22,183 $ 265,082
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As at December 31, 2006
--------------------------------------------
Canada US UK Total
--------------------------------------------
Capital assets $ 122,082 $ 120,553 $ 22,443 $ 265,078
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Revenue is attributable to countries based on the location of the
customers. Domestic and foreign revenues consist of:
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Three months ended March 31
--------------------------------------------
2007
--------------------------------------------
Canada US UK Total
--------------------------------------------
Revenue
Domestic $ 23,447 $ 41,832 $ 30,755 $ 96,034
Export 41,195 6,231 595 48,021
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Total revenue $ 64,642 $ 48,063 $ 31,350 $ 144,055
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Three months ended March 31
--------------------------------------------
2006
--------------------------------------------
Canada US UK Total
--------------------------------------------
Revenue
Domestic $ 23,333 $ 35,280 $ 26,795 $ 85,408
Export 41,933 8,616 1,065 51,614
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Total revenue $ 65,266 $ 43,896 $ 27,860 $ 137,022
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The major customers for the Corporation for the three-month period ended
March 31 are as follows:
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Three-months ended March 31
--------------------------------
2007 2006
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Major Customers
Canadian operations
- Number of customers 3 4
- Percentage of total Canadian revenue 35% 47%
US operations
- Number of customers 2 3
- Percentage of total US revenue 51% 60%
UK operations
- Number of customers 1 1
- Percentage of total UK revenue 79% 85%
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8. ACCUMULATED OTHER COMPREHENSIVE LOSS
Other comprehensive loss includes foreign currency translation gains and
losses, which arise on the translation to Canadian dollars of assets and
liabilities of the Corporation's self-sustaining foreign operations. An
unrealized currency translation loss of $1,151 resulted in the
three-month period ended March 31, 2007 (March 31, 2006 - gain of $870).
This is reflected in the consolidated balance sheets and has no impact
on net income.
9. SUPPLEMENTARY INFORMATION
Foreign exchange loss on the conversion of foreign currency denominated
working capital balances and debt for the three-month period ended
March 31, 2007 was $369 (March 31, 2006 - gain of $282).