MARKHAM, Ontario—(BUSINESS WIRE)—Oct. 6, 2005— ATI Technologies Inc. (NASDAQ: ATYT)(TSX:ATY) today announced financial results for the fourth quarter and fiscal year ended August 31, 2005. These results are in line with the preliminary results announced on August 29, 2005.
Revenues(1) for the fourth quarter were $470 million, a $60
million decline relative to the third quarter of fiscal 2005. Gross
margin percentage was 9.0% including a $67 million inventory
write-down taken in the quarter. Excluding this write-down, gross
margin was 23.3%. Net loss for the quarter was $104 million ($0.41
per diluted share). Stock-based compensation costs(2) in the quarter
totaled $11.2 million. Excluding the inventory write-down of $67
million and stock-based compensation costs and related taxes, the net
loss for the quarter was $29 million or $0.12 per share.
Revenues for fiscal 2005 rose 11% to $2.22 billion. Gross margin
was 27.6%. Net income for the year was $17 million ($0.07 per diluted
share) versus $205 million ($0.80 per diluted share) in 2004.
Stock-based compensation costs in fiscal 2005 totaled $42.5 million
as compared with $7.6 million last year. Excluding the inventory
write-down and stock-based compensation costs and related taxes, net
income for the year was $119 million or $0.46 per share.
"We are entering fiscal 2006 with new products and an intense
focus on operational and financial performance," said David Orton,
ATI's Chief Executive Officer. "We've delivered top-to-bottom
technology and performance leadership with the 90 nm Radeon(R) X1000
series. We are aggressively implementing concrete programs in the
areas of delivery performance, product cost improvements and
operational efficiencies. Our new products and operational programs
position us well for the future."
- Announced the Radeon X1000 family, built using the cutting-edge
90 nanometer semiconductor fabrication technology, delivering
superior performance and image quality.
- Began volume shipments of Radeon(R) Xpress 200 Crossfire Edition
chipsets supporting multi-GPU capability. Featured in a review
by the enthusiast website,
www.anandtech.com, the Radeon
Xpress 200 CrossFire Edition was deemed, "the best overclocker
on the market," and "one of the most enthusiast-friendly
chipsets ever produced by any manufacturer."
- Introduced Avivo(TM), a suite of hardware and software
technologies that takes video capture and display quality to
new levels. Consumers watching videos or editing photographs
on their PCs will benefit from Avivo enabling 64 times as many
colors as other computers.
- Introduced highly integrated new versions of the Theater and
Xilleon chipsets for the digital television market. These new
processors reinforce ATI's position as an industry leader and
provide DTV manufacturers with a cost-effective option to
comply with approaching FCC mandate deadlines.
- Achieved recent high-profile Imageon design wins including the
new fully featured S75 and SL75 multimedia phones from
Siemens, as well as the Motorola ROKR E1 "iTunes" phone.
First quarter of fiscal 2006 revenues are expected to increase by
approximately 15% relative to the fourth quarter of fiscal 2005 due
to growth in desktop discrete, chipset and handheld businesses. Gross
margin percentage is expected to recover significantly to about 29%
based on the introduction of a new desktop product family, continued
improvements in chipset margins and the contribution of royalty
income from our game console business. Operating expenses, excluding
stock-based compensation costs, are expected to increase 2 - 3%
relative to the fourth quarter of fiscal 2005.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL RESULTS
This is management's discussion and analysis of financial
condition and the results of operations (MD&A) that comments on ATI's
operations, financial condition and cash flows for the three months
ended August 31, 2005 compared to the three months ended August 31,
2004. This MD&A should be read in conjunction with the attached
unaudited interim consolidated financial statements for the period
ended August 31, 2005, the annual MD&A contained in the 2004 Annual
Report and the audited consolidated financial statements for the year
ended August 31, 2004.
In this MD&A, ATI, we, us and our mean ATI Technologies Inc. and
Important Information Regarding Forward-looking Statements
Forward-looking statements look into the future and provide an
opinion as to the effect of certain events and trends on the
business. Forward-looking statements may include words such as
"plans," "intends," "anticipates," "should," "estimates," "expects,"
"believes," "indicates," "targeting," "suggests" and similar
This MD&A and other sections of this release (in particular, the
section entitled "Outlook") contain forward-looking statements about
ATI's objectives, strategies, financial condition and results. These
forward-looking statements are based on current expectations and
various factors and assumptions and entail various risks and
It is important to note that:
- unless otherwise indicated, forward-looking statements describe
our expectations as of October 6, 2005;
- our actual results may differ materially from our expectations
if known and unknown risks or uncertainties affect our
business, or if our estimates or assumptions prove inaccurate;
- we cannot provide any assurance that forward-looking statements
will materialize; and
- we assume no obligation to update or revise any forward-looking
statement, whether as a result of new information, future
events or any other reason.
Material factors that could cause our actual results to differ
materially from the forward-looking statements in this release
include, but are not limited to: unexpected variations in market
growth and demand for new GPU products and technologies, potential
constraints on our ability to develop, launch and ramp new products
on a timely basis, manufacturing considerations, competition,
industry cyclicality and seasonality, dependence on third-parties for
manufacturing, critical industry transitions and other risks detailed
in our regulatory filings.
Additional information concerning risks and uncertainties
affecting our business and other factors that could cause our
financial results to fluctuate is contained in our filings with
Canadian and U.S. securities regulatory authorities, including our
2004 Annual Information Form and 2004 Annual Report filed on SEDAR at
RESULTS OF OPERATIONS
Fourth quarter revenues declined $60 million or 11% to $470
million as compared to the previous quarter, due to lower sales in
the PC segment. The PC segment accounted for approximately 80% of
quarterly revenues while the Consumer segment accounted for
approximately 20% of revenues.
PC revenue fell 18% from the third quarter of fiscal 2005 to $377
million. The primary factor behind the decline was lower sales of
performance and enthusiast desktop products in the Add-in-Board (AIB)
and retail channels. The combination of lower volumes and reductions
in average selling price (ASP) to stimulate demand, led to the
decline in revenues. The decline in revenues was partially offset by
stronger sales of desktop integrated products. Overall PC units were
Desktop integrated revenue increased nearly 90% from the third
quarter of fiscal 2005. Continued market penetration and significant
OEM design wins for the Radeon Xpress 200 series for the AMD and
Intel platforms accounted for the increase.
While notebook discrete revenue was down sequentially, notebook
integrated revenue increased approximately 60% reflecting the
continued trend towards the use of integrated chipsets for notebook
graphics as well as increased market share in this segment.