MIRA INFORM REPORT
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Report Date : |
03.10.2013 |
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Tel. No. : |
1-973-691-1300 |
IDENTIFICATION DETAILS
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Name : |
RUDOLPH
TECHNOLOGIES INC |
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Registered Office : |
One Rudolph Road, P.O. Box 1000, Flanders,
NJ 07836 |
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Country : |
United States |
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Financials (as on) : |
31.12.2012 |
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Date of Incorporation : |
13.06.1996 |
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Legal Form : |
Public Parent |
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Line of Business : |
Subject engaged in the design, development, and manufacture of process
control defect inspection, metrology, and process control software systems
used by microelectronics device manufacturers. |
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No. of Employees : |
651 |
RATING & COMMENTS
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MIRAs Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet
normal commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
No complaints |
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Litigation : |
Clear |
NOTES
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Any query related to this report
can be made on e-mail: infodept@mirainform.com while quoting report
number, name and date.
ECGC Country Risk Classification List March 31st, 2013
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Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
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United
States |
A1 |
A1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
United States - ECONOMIC OVERVIEW
The US has the largest and most technologically powerful
economy in the world, with a per capita GDP of $49,800. In this market-oriented
economy, private individuals and business firms make most of the decisions, and
the federal and state governments buy needed goods and services predominantly
in the private marketplace. US business firms enjoy greater flexibility than
their counterparts in Western Europe and Japan in decisions to expand capital
plant, to lay off surplus workers, and to develop new products. At the same
time, they face higher barriers to enter their rivals' home markets than
foreign firms face entering US markets. US firms are at or near the forefront
in technological advances, especially in computers and in medical, aerospace,
and military equipment; their advantage has narrowed since the end of World War
II. The onrush of technology largely explains the gradual development of a
"two-tier labor market" in which those at the bottom lack the
education and the professional/technical skills of those at the top and, more
and more, fail to get comparable pay raises, health insurance coverage, and
other benefits. Since 1975, practically all the gains in household income have
gone to the top 20% of households. Since 1996, dividends and capital gains have
grown faster than wages or any other category of after-tax income. Imported oil
accounts for nearly 55% of US consumption. Crude oil prices doubled between
2001 and 2006, the year home prices peaked; higher gasoline prices ate into
consumers' budgets and many individuals fell behind in their mortgage payments.
Oil prices climbed another 50% between 2006 and 2008, and bank foreclosures
more than doubled in the same period. Besides dampening the housing market,
soaring oil prices caused a drop in the value of the dollar and a deterioration
in the US merchandise trade deficit, which peaked at $840 billion in 2008. The
sub-prime mortgage crisis, falling home prices, investment bank failures, tight
credit, and the global economic downturn pushed the United States into a
recession by mid-2008. GDP contracted until the third quarter of 2009, making
this the deepest and longest downturn since the Great Depression. To help
stabilize financial markets, in October 2008 the US Congress established a $700
billion Troubled Asset Relief Program (TARP). The government used some of these
funds to purchase equity in US banks and industrial corporations, much of which
had been returned to the government by early 2011. In January 2009 the US
Congress passed and President Barack OBAMA signed a bill providing an
additional $787 billion fiscal stimulus to be used over 10 years - two-thirds
on additional spending and one-third on tax cuts - to create jobs and to help
the economy recover. In 2010 and 2011, the federal budget deficit reached
nearly 9% of GDP. In 2012 the federal government reduced the growth of spending
and the deficit shrank to 7.6% of GDP. Wars in Iraq and Afghanistan required
major shifts in national resources from civilian to military purposes and
contributed to the growth of the budget deficit and public debt. Through 2011,
the direct costs of the wars totaled nearly $900 billion, according to US
government figures. US revenues from taxes and other sources are lower, as a
percentage of GDP, than those of most other countries. In March 2010, President
OBAMA signed into law the Patient Protection and Affordable Care Act, a health
insurance reform that will extend coverage to an additional 32 million American
citizens by 2016, through private health insurance for the general population
and Medicaid for the impoverished. Total spending on health care - public plus
private - rose from 9.0% of GDP in 1980 to 17.9% in 2010. In July 2010, the president
signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a law
designed to promote financial stability by protecting consumers from financial
abuses, ending taxpayer bailouts of financial firms, dealing with troubled
banks that are "too big to fail," and improving accountability and
transparency in the financial system - in particular, by requiring certain
financial derivatives to be traded in markets that are subject to government
regulation and oversight. In December 2012, the Federal Reserve Board announced
plans to purchase $85 billion per month of mortgage-backed and Treasury
securities in an effort to hold down long-term interest rates, and to keep
short term rates near zero until unemployment drops to 6.5% from the December
rate of 7.8%, or until inflation rises above 2.5%. Long-term problems include
stagnation of wages for lower-income families, inadequate investment in
deteriorating infrastructure, rapidly rising medical and pension costs of an
aging population, energy shortages, and sizable current account and budget
deficits - including significant budget shortages for state governments.
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Source : CIA |
COMPANY NAME &
ADDRESS
RUDOLPH
TECHNOLOGIES INC
One Rudolph Road,
P.O. Box 1000
Flanders, NJ 07836
United States
Tel: 973-691-1300
Fax: 973-691-4863
SYNTHESIS
Employees: 651
Company Type: Public
Parent
Corporate Family: 11 Companies
Traded: NASDAQ: RTEC
Incorporation Date: 13-Jun-1996
Auditor: Ernst & Young LLP
Credit Rating: A+ (100)
Financials in: USD (mil)
Fiscal Year End: 31-Dec-2012
Reporting Currency: US Dollar
Net Income: 43.9
Market Value: 364.9
(13-Sep-2013)
Business Description
Rudolph Technologies, Inc. is engaged in the design, development, and
manufacture of process control defect inspection, metrology, and process
control software systems used by microelectronics device manufacturers. The
Company provides yield management solutions used in both wafer processing and
final manufacturing through a family of standalone systems for macro-defect
inspection, probe card test and analysis, and transparent and opaque thin film
measurements. It markets and sells products to logic, memory, data storage and
application-specific integrated circuit (ASIC) device manufacturers. In
Inspection Systems, the Companys chip manufacturers deploy macro-defect
inspection throughout the fab to monitor key process steps. The Companys
transparent film technology uses up to four lasers operating simultaneously at
multiple angles and multiple wavelengths, providing analysis and measurement
capabilities. In April 2013, Rudolph Technologies Inc acquired the assets of
Tamar Technology. For the six months ended 30 June 2013, Rudolph Technologies
Inc revenues decreased 14% to $87.7M. Net income decreased 86% to $1.2M.
Revenues reflect South Korea segment decrease of 53% to $5.1M, Austria segment
decrease of 91% to $460K. Net income also reflects Selling, general and
administrative increase of 9% to $20.8M (expense), Research and Development
Expense increase of 4% to $19.9M (expense).
Industry
Industry Electromedical and
Control Instruments Manufacturing
ANZSIC 2006: 2419 - Other
Professional and Scientific Equipment Manufacturing
ISIC Rev 4: 2651 - Manufacture
of measuring, testing, navigating and control equipment
NACE Rev 2: 2651 - Manufacture
of instruments and appliances for measuring, testing and navigation
NAICS 2012: 333242 -
Semiconductor Machinery Manufacturing
UK SIC 2007: 2651 - Manufacture
of instruments and appliances for measuring, testing and navigation
US SIC 1987: 3823 - Industrial
Instruments for Measurement, Display, and Control of Process Variables; and Related Products
Key Executives
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Significant
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Financial Summary
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Stock Snapshot |
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ABI
Number: 886767425
1 - Profit &
Loss Item Exchange Rate: USD 1 = USD 1
2 - Balance Sheet Item Exchange Rate:
USD 1 = USD 1
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Rudolph
Technologies Inc The Strategic Initiatives report is created using technology to
extract meaningful insights from analyst reports about a company's strategic
projects and investments.
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We have identified significant opportunities for each of our business
units: inspection, metrology, data analysis, and for our newest business,
lithography systems. While we had forecast the Advanced Packaging market to
begin to emerge in 2012 in a substantial way we have been pleasantly
surprised with the magnitude of the growth rate, which is by all measures
well above 30 percent and is projected to remain at those growth rates for
the next few years. With our acquisition of
Azores in mid-December, we strategically entered the back-end lithography
market. While this is a whole new dimension for Rudolph, as we now have
entered the process tool market, it was a natural extension -we are
intimately familiar with the lithography issues and challenges because we
surround the lithography cell with our multiple hardware and software
solutions already in use at nearly every OSAT company. We enter this process
tool lithography market with a Total Lithography System based on an
innovative but field-proven 2X stepper tightly integrated with a full suite
of existing Rudolph inspection, metrology and process control capabilities . |
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In December 2012, it acquired acquired Azores Corporation. Through
this acquisition the company entered the back-end advanced packaging
lithography market with the new JetStep Lithography System. In June 2012, the
company completed the acquisition of
NanoPhotonics GmbH, a German based manufacturer of defect measurement
equipment. This acquisition was made in line with Rudolph’s strategy to
strengthen its established presence in the high-growth advanced packaging
market. The takeover also helps the company expand its product offerings into
unpatterned wafer and mask blank inspection markets. |
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Through this acquisition the company entered the back-end advanced
packaging lithography market with the new JetStep Lithography System. In June
2012, the company completed the acquisition of NanoPhotonics GmbH, a German
based manufacturer of defect measurement equipment. This acquisition was made
in line with Rudolphs strategy to strengthen
its established presence in the high-growth advanced packaging market. The
takeover also helps the company expand its product offerings into unpatterned
wafer and mask blank inspection markets. Successful integration of this
acquisition could reap significant benefits for the company.Catering to
Volatile IndustriesAs a supplier to the global semiconductor, flat panel
display, solar and related industries, Applied Materials sales have been
cyclical due to sudden changes in customersmanufacturing capacity
requirements and spending, which depend in part on capacity utilization,
demand for customers products, inventory levels relative to demand, and
access to affordable capital . |
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USB flash drives, memory cards and related products for the storage
and transfer of data – grew at the second-fastest rate of 4.1% to $25.4
billion in 2012. According to The World Semiconductor Trade Statistics
(WSTS), the world semiconductor market is estimated to grow 4.5% to $303
billion in 2013. WSTS also anticipates the world market to grow 5.2% to $319
billion in 2014, with healthy mid single digit growth across most of
geographical regions and semiconductor product categories, supported by the
healthier economy of the world.Strategic AcquisitionsThe company continues to
view acquisitions as a key part of its growth strategy.
These acquisitions are intended to supplement Rudolph’s core growth and
strengthen its business operations. In December 2012, it acquired acquired
Azores Corporation. |
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Overview
Rudolph Technologies, Inc. (Rudolph) is a technology company that
undertakes the production and development of products and technologies which
has application in semiconductor manufacturing. It principally develops
metrology systems, inspection systems and data analysis tools. The company
leverages its R&D activities and manufacturing facilities to gain a
competitive edge over its peers. Though Rudolph has a risk associated with
competition and technological changes, inorganic growth drivers and growing
demand for semiconductor and LED markets could ensure its top line growth.
Strengths
Strong
Manufacturing Capabilities
The company has a well equipped network of manufacturing facilities,
which enabled Rudolph to offer customers an extensive selection of quality
products. Strong and efficient manufacturing capabilities of the company
enhanced its ability to compete for new business as well as improve its
profitability. Rudolph manufactures certain of its products in its
manufacturing facilities, where it undertakes assembly, final test and
calibration of components sourced from foreign and domestic suppliers.
Rudolph’s principal manufacturing abilities include electrical, optical and
mechanical assembly, testing and the management of new product transitions. It
has manufacturing facilities in Minnesota and New Jersey in the US. Strong
manufacturing capabilities ensure efficient manufacturing and sourcing
processes for the company, which helped it in reducing the time required for it
to ship products in several of the commercial markets where a short delivery
cycle for custom-manufactured products is crucial. The company also achieved
major reductions in rework on highly engineered space and defense products.
Such self-owned manufacturing facilities eliminate Rudolphs dependence on
other sources in meeting the requirement of its customers.
Focused
Research & Development Activities
Rudolph has robust research and development (R&D) capabilities. Its
R&D activities focus on improving the performance of products and
developing new technologies. The company’s research initiatives aim at
developing process control defect inspection, metrology, and process control
software systems and enhancing as well as maintaining its technological
advantage. Focused R&D capabilities enable Rudolph to overcome technical
barriers encountered in the commercialization of sophisticated data analysis
systems and software. The R&D team of the company undertook several
projects to enhance and develop various products and technologies. It employs a
number of engineering graduates who actively participate in professional and
industry technical conferences and working groups. As of December 31, 2012, the
company has exclusive licenses to more than 243 US and foreign patents with
expiry dates ranging from 2013 to 2031. It also has 101 pending regular and
provisional applications in the US and other countries. Such strong R&D
capabilities enable Rudolph to implement innovative technologies and deliver
advanced products and services that meet its customers' critical needs.
Rudolph recorded high revenue margins in 2012. The company reported
16.71% increase in total revenue in 2012 as compared to that in 2011. Revenue
growth and increased gross margin was complimented by its controlled costs. The
company’s operating cost as percentage of sales declined 84.32% in 2012 from
88.53% in 2011. Similarly, the administration cost as percentage of sales also
decreased to 18.41% in 2012 from 21.81% in 2011.As a result, the company also
reported increased returns in 2012 as compared to those in previous years. The
company's return on equity (ROE) was 16.22% at the end of fiscal year 2012,
compared to 11.37% in 2011. Its return on capital employed was 10.41% in fiscal
year ended 2012, compared to 7.75% in 2011. Also, its return on assets and
return on working capital were 11.97% and 13.33%, respectively in 2012 compared
to 8.25% and 9.16% in 2011. Increasing profitability ratios indicate the
company’s sturdy performance and its ability to deliver returns expected by
its shareholders. The decreased cost and increased returns led to overall
growth of its operating margins. The company’s operating margin increased
15.68% in 2012 from 11.47% in 2011. Its net profit margin increased 20.08% in
2012 from 13.48% in 2011. Such increasing margins due decreased operating cost
reflect strong operational efficiency of the company. The increase in
profitability could be attributed to the increase in the company's order book.
Weaknesses
The company faces issue with increasing receivables. In 2012, the
company’s account receivables increased to $57.11m from $41.04m in 2011,
indicating an increase of 34.92% in this year as compared to previous year. Its
Cash and Short Term Investments also increased by 7.84% in 2012 as compared to
2011. The rate of increase of accounts receivables is higher than rate of
increase of cash. Also the company’s account receivables accounted for 19.42%
of total current assets as compared to 16.26% in 2011. The company's ability to
receive timely payments would be key attribute to continue its operations in an
uninterrupted manner.
Reliance on limited customers could affect the company’s financial
position adversely. Though Rudolph has a wide customer base in 20 countries
across the world, it generates a major portion of its revenue from a limited
number of customers. In the fiscal year ended December 2012, the company’s
principal clients, Samsung Semiconductor Inc and Advanced Semiconductor
Engineering, Inc accounted for 10.4% and 10.1% of its total revenue. Similarly,
in 2011, Rudolph generated 13.5% and 12.1% of its total revenues from Infineon
Technologies and Samsung Semiconductor Inc respectively; and in 2010, Taiwan
Semiconductor Manufacturing Co. and Samsung Semiconductor Inc. accounted for
13.9% and 11.2% of our revenues, respectively. These figures indicate that the
company generates a significant portion of its revenue from its limited
customers, which increases the risks associated with confined customer base.
Opportunities
Rudolph has a comprehensive offering of total process control software
solutions for LED manufacturing. It provides wide range of advanced process
control solutions, all designed to improve factory profitability, including
run-to-run control, fault detection, classification and tool automation. As per
analysts, global LED market is estimated to reach $14.8 billion by 2015, in
view of the growing demand for efficient and larger electronic displays for
TVs, lighting fixtures, notebooks and mobile handsets. The global manufacturers
of LED TVs announced plans for expansion of their production facilities, which
would increase the demand for LED chips in world markets. The increasing demand
for LED will help the company market efficiently its thermal solutions for LED
products.
Positive
Outlook for Semiconductor Industry
Positive outlook for the semiconductor market could provide greater
opportunities to the company. According to The Semiconductor Industry
Association, worldwide semiconductor sales for 2012 reached $291.6 billion, the
industry’s third-highest yearly total ever but a decrease of 2.7% from the
record total of $299.5 billion set in 2011. The semiconductor market witnessed
strong demand in several market segments during 2012. Logic was the largest
semiconductor category, reaching $81.7 billion in 2012, reflecting 3.7%
increase over that in 2011. MOS microprocessors ($60.2 billion) and memory ($57
billion) rounded out the top three segments, but both lagged behind 2011 sales
totals. Optoelectronics was the fastest growing market on a yearly basis, which
rose 13.4% in 2012 to $26.2 billion. USB flash drives, memory cards and related
products for the storage and transfer of data – grew at the second-fastest
rate of 4.1% to $25.4 billion in 2012. According to The World Semiconductor
Trade Statistics (WSTS), the world semiconductor market is estimated to grow
4.5% to $303 billion in 2013. WSTS also anticipates the world market to grow
5.2% to $319 billion in 2014, with healthy mid single digit growth across most
of geographical regions and semiconductor product categories, supported by the
healthier economy of the world.
The company continues to view acquisitions as a key part of its growth
strategy. These acquisitions are intended to supplement Rudolph’s core growth
and strengthen its business operations. In December 2012, it acquired acquired
Azores Corporation. Through this acquisition the company entered the back-end
advanced packaging lithography market with the new JetStep Lithography System.
In June 2012, the company completed the acquisition of NanoPhotonics GmbH, a
German based manufacturer of defect measurement equipment. This acquisition was
made in line with Rudolph’s strategy to strengthen its established presence
in the high-growth advanced packaging market. The takeover also helps the
company expand its product offerings into unpatterned wafer and mask blank
inspection markets. Successful integration of this acquisition could reap
significant benefits for the company.
Threats
Catering to
Volatile Industries
As a supplier to the global semiconductor, flat panel display, solar and
related industries, Applied Materials’s sales have been cyclical due to
sudden changes in customers manufacturing capacity requirements and spending,
which depend in part on capacity utilization, demand for customers products,
inventory levels relative to demand, and access to affordable capital. These
changes have affected the timing and amounts of customers purchases and
investments in technology, and continue to affect Applied Materials’s orders,
net sales, operating expenses, and net income. To meet the rapidly changing
demand in each of the industries it serves, Applied Materials must effectively
manage its resources and production capacity for each of its segments. If the
company is not able to adapt to changes in its business environment, its
business, financial condition and results of operations could be materially
affected
The industries in which the company operates are characterized by huge
competition. Rudolph competes with leading players such as KLA-Tencor, Camtek,
Veeco Instruments Inc. and Nikon. The company is highly exposed to
consumer-related markets, which affects its profitability due to the growing
pressure on price and demand from customers. Apart from the established players
in the developed countries, players from emerging countries too are competing
hard to garner the highest market share. Since many of its competitors have a
longer operating history, greater brand recognition, established customer and
supplier relationships and greater financial resources, it could become
difficult for Rudolph to compete with them.
The company's offerings are characterized by rapid technological
changes, which could affect its business operations. To compete effectively
with its peers, the company should continually introduce new products that meet
and exceed the customersrequirements. The introduction of products using new
technologies or the adoption of new industry standards could make existing
products, or products under development, obsolete or unmarketable. Inability to
study the evolving technological landscape may impact the companys
competitive position.
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Credit Report as
of 06/01/2013 |
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CORPORATE
FAMILY |
CORPORATE
STRUCTURE NEWS: |
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Rudolph Technologies Inc |
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Company Name |
Company Type |
Location |
Country |
Industry |
Sales |
Employees |
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Parent |
Flanders, NJ |
United States |
Electromedical and Control Instruments Manufacturing |
218.5 |
651 |
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Subsidiary |
Bloomington, MN |
United States |
Electrical Equipment and Appliances Manufacturing |
92.3 |
200 |
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Branch |
Budd Lake, NJ |
United States |
Electromedical and Control Instruments Manufacturing |
32.8 |
99 |
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Subsidiary |
's-Gravenhage, Zuid-Holland |
Netherlands |
Metals and Minerals Wholesale |
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25 |
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Branch |
Newbury Park, CA |
United States |
Consulting Services |
2.4 |
11 |
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Branch |
Richardson, TX |
United States |
Electronics Wholesale |
4.7 |
8 |
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Branch |
Bohemia, NY |
United States |
Electromedical and Control Instruments Manufacturing |
2.1 |
8 |
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Branch |
Tewksbury, MA |
United States |
Electromedical and Control Instruments Manufacturing |
2.1 |
8 |
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Branch |
Wilmington, MA |
United States |
Machinery and Equipment Manufacturing |
2.1 |
8 |
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Branch |
Snoqualmie, WA |
United States |
Electromedical and Control Instruments Manufacturing |
1.5 |
4 |
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Subsidiary |
Musselburgh |
United Kingdom |
Semiconductor and Other Electronic Component Manufacturing |
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4 |
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Rudolph
Technologies Inc
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Annual Income Statement
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Financials in: USD (mil) |
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Except for share items (millions) and per
share items (actual units) |
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|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Updated Normal |
Reclassified
Normal |
Reclassified
Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate
(Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net Sales |
218.5 |
187.2 |
195.3 |
78.7 |
131.0 |
|
Revenue |
218.5 |
187.2 |
195.3 |
78.7 |
131.0 |
|
Total Revenue |
218.5 |
187.2 |
195.3 |
78.7 |
131.0 |
|
|
|
|
|
|
|
|
Cost of Revenue |
102.8 |
86.8 |
91.4 |
49.8 |
87.4 |
|
Cost of Revenue, Total |
102.8 |
86.8 |
91.4 |
49.8 |
87.4 |
|
Gross Profit |
115.7 |
100.4 |
103.9 |
28.9 |
43.7 |
|
|
|
|
|
|
|
|
Selling/General/Administrative Expense |
40.2 |
40.8 |
38.2 |
32.7 |
36.5 |
|
Total Selling/General/Administrative Expenses |
40.2 |
40.8 |
38.2 |
32.7 |
36.5 |
|
Research & Development |
39.3 |
36.3 |
33.4 |
26.0 |
31.6 |
|
Amortization of Intangibles |
1.9 |
1.8 |
1.7 |
1.4 |
5.9 |
|
Depreciation/Amortization |
1.9 |
1.8 |
1.7 |
1.4 |
5.9 |
|
Purchased R&D Written-Off |
- |
0.0 |
0.0 |
0.0 |
0.0 |
|
Impairment-Assets Held for Use |
- |
0.0 |
0.0 |
0.0 |
227.1 |
|
Unusual Expense (Income) |
- |
0.0 |
0.0 |
0.0 |
227.1 |
|
Total Operating Expense |
184.2 |
165.7 |
164.7 |
109.9 |
388.5 |
|
|
|
|
|
|
|
|
Operating Income |
34.3 |
21.5 |
30.6 |
-31.2 |
-257.5 |
|
|
|
|
|
|
|
|
Investment Income -
Non-Operating |
0.0 |
0.8 |
-0.3 |
-0.9 |
2.5 |
|
Interest/Investment Income - Non-Operating |
0.0 |
0.8 |
-0.3 |
-0.9 |
2.5 |
|
Interest Income (Expense) - Net Non-Operating |
-4.4 |
-1.9 |
0.2 |
0.3 |
1.2 |
|
Interest Income (Expense) - Net Non-Operating Total |
-4.4 |
-1.1 |
-0.1 |
-0.7 |
3.7 |
|
Other Non-Operating Income (Expense) |
-0.5 |
- |
- |
- |
- |
|
Other, Net |
-0.5 |
- |
- |
- |
- |
|
Income Before Tax |
29.4 |
20.4 |
30.5 |
-31.9 |
-253.8 |
|
|
|
|
|
|
|
|
Total Income Tax |
-14.5 |
-4.8 |
3.5 |
-2.2 |
-4.1 |
|
Income After Tax |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Net Income Before Extraord Items |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
Net Income |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Income Available to Common Excl Extraord Items |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Income Available to Common Incl Extraord Items |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Basic/Primary Weighted Average Shares |
32.2 |
31.7 |
31.3 |
30.9 |
30.6 |
|
Basic EPS Excl Extraord Items |
1.36 |
0.79 |
0.86 |
-0.96 |
-8.16 |
|
Basic/Primary EPS Incl Extraord Items |
1.36 |
0.79 |
0.86 |
-0.96 |
-8.16 |
|
Dilution Adjustment |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Diluted Net Income |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
Diluted Weighted Average Shares |
32.9 |
32.3 |
31.5 |
30.9 |
30.6 |
|
Diluted EPS Excl Extraord Items |
1.34 |
0.78 |
0.86 |
-0.96 |
-8.16 |
|
Diluted EPS Incl Extraord Items |
1.34 |
0.78 |
0.86 |
-0.96 |
-8.16 |
|
Dividends per Share - Common Stock Primary Issue |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
Dividends per Share - Common Stock Issue 2 |
- |
0.00 |
0.00 |
0.00 |
0.00 |
|
Dividends per Share - Common Stock Issue 3 |
- |
0.00 |
0.00 |
0.00 |
0.00 |
|
Gross Dividends - Common Stock |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Interest Expense, Supplemental |
- |
2.1 |
- |
- |
- |
|
Depreciation, Supplemental |
3.7 |
4.2 |
3.7 |
6.8 |
4.5 |
|
Total Special Items |
- |
8.4 |
3.9 |
12.0 |
227.1 |
|
Normalized Income Before Tax |
29.4 |
28.8 |
34.4 |
-19.9 |
-26.7 |
|
|
|
|
|
|
|
|
Effect of Special Items on Income Taxes |
- |
2.9 |
0.5 |
4.2 |
79.5 |
|
Inc Tax Ex Impact of Sp Items |
-14.5 |
-1.9 |
4.0 |
2.0 |
75.4 |
|
Normalized Income After Tax |
43.9 |
30.7 |
30.5 |
-21.8 |
-102.1 |
|
|
|
|
|
|
|
|
Normalized Inc. Avail to Com. |
43.9 |
30.7 |
30.5 |
-21.8 |
-102.1 |
|
|
|
|
|
|
|
|
Basic Normalized EPS |
1.36 |
0.97 |
0.97 |
-0.71 |
-3.33 |
|
Diluted Normalized EPS |
1.34 |
0.95 |
0.97 |
-0.71 |
-3.33 |
|
Amort of Intangibles, Supplemental |
2.2 |
1.8 |
1.7 |
1.4 |
5.9 |
|
Rental Expenses |
3.3 |
3.3 |
3.0 |
2.8 |
3.0 |
|
Research & Development Exp, Supplemental |
39.3 |
36.3 |
33.4 |
26.0 |
31.6 |
|
Normalized EBIT |
34.3 |
29.9 |
34.5 |
-19.2 |
-30.4 |
|
Normalized EBITDA |
40.2 |
35.8 |
40.0 |
-11.1 |
-20.0 |
|
Current Tax - Domestic |
3.2 |
1.7 |
0.7 |
-2.6 |
-4.0 |
|
Current Tax - Foreign |
2.9 |
2.1 |
2.8 |
0.2 |
-1.7 |
|
Current Tax - Local |
0.3 |
0.3 |
0.1 |
0.0 |
0.0 |
|
Current Tax - Total |
6.4 |
4.2 |
3.7 |
-2.5 |
-5.6 |
|
Deferred Tax - Domestic |
-18.0 |
-8.0 |
0.0 |
0.2 |
-3.2 |
|
Deferred Tax - Foreign |
0.0 |
-0.2 |
0.0 |
0.0 |
0.1 |
|
Deferred Tax - Local |
-2.8 |
-0.8 |
-0.2 |
0.0 |
0.6 |
|
Deferred Tax - Total |
-20.8 |
-9.0 |
-0.2 |
0.2 |
-2.4 |
|
Income Tax - Total |
-14.5 |
-4.8 |
3.5 |
-2.2 |
-8.1 |
|
Defined Contribution Expense - Domestic |
0.8 |
0.8 |
0.8 |
0.3 |
0.9 |
|
Total Pension Expense |
0.8 |
0.8 |
0.8 |
0.3 |
0.9 |
|
|
|
Annual Balance
Sheet |
|
Financials
in: USD (mil) |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Reclassified
Normal |
Updated Normal |
Updated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst & Young
LLP |
Ernst &
Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Cash & Equivalents |
104.3 |
96.7 |
71.1 |
57.8 |
67.7 |
|
Short Term Investments |
65.0 |
70.9 |
0.6 |
3.1 |
10.5 |
|
Cash and Short Term Investments |
169.2 |
167.6 |
71.7 |
60.9 |
78.3 |
|
Accounts Receivable -
Trade, Gross |
57.7 |
41.3 |
59.1 |
35.9 |
22.4 |
|
Provision for Doubtful
Accounts |
-0.6 |
-0.3 |
-0.3 |
-0.6 |
-0.7 |
|
Trade Accounts Receivable - Net |
57.1 |
41.0 |
58.8 |
35.3 |
21.8 |
|
Other Receivables |
0.0 |
1.7 |
1.1 |
3.5 |
4.7 |
|
Total Receivables, Net |
57.1 |
42.8 |
60.0 |
38.8 |
26.5 |
|
Inventories - Finished Goods |
15.9 |
11.2 |
13.3 |
11.6 |
18.1 |
|
Inventories - Work In Progress |
15.9 |
11.2 |
13.5 |
14.6 |
15.2 |
|
Inventories - Raw Materials |
31.6 |
27.2 |
25.6 |
19.3 |
23.8 |
|
Total Inventory |
63.4 |
49.5 |
52.3 |
45.5 |
57.1 |
|
Prepaid Expenses |
4.3 |
3.3 |
2.5 |
1.1 |
1.6 |
|
Deferred Income Tax - Current Asset |
- |
- |
- |
- |
0.0 |
|
Other Current Assets, Total |
- |
- |
- |
- |
0.0 |
|
Total Current Assets |
294.1 |
263.1 |
186.5 |
146.4 |
163.4 |
|
|
|
|
|
|
|
|
Buildings |
6.8 |
6.3 |
6.3 |
6.1 |
7.0 |
|
Land/Improvements |
5.0 |
5.0 |
5.0 |
4.9 |
4.9 |
|
Machinery/Equipment |
26.6 |
23.9 |
21.9 |
19.5 |
22.9 |
|
Other
Property/Plant/Equipment |
3.4 |
3.4 |
2.9 |
2.7 |
2.7 |
|
Property/Plant/Equipment - Gross |
41.8 |
38.6 |
36.2 |
33.2 |
37.5 |
|
Accumulated Depreciation |
-29.9 |
-26.0 |
-22.5 |
-20.4 |
-18.5 |
|
Property/Plant/Equipment - Net |
11.9 |
12.5 |
13.7 |
12.8 |
19.1 |
|
Goodwill, Net |
11.4 |
4.5 |
4.5 |
3.3 |
0.0 |
|
Intangibles - Gross |
72.0 |
65.6 |
65.6 |
65.2 |
62.6 |
|
Accumulated Intangible Amortization |
-59.7 |
-57.8 |
-56.1 |
-54.3 |
-53.0 |
|
Intangibles, Net |
12.6 |
8.4 |
10.5 |
12.1 |
11.4 |
|
Deferred Income Tax - Long Term Asset |
34.6 |
12.2 |
3.2 |
3.1 |
2.9 |
|
Other Long Term Assets |
1.9 |
5.2 |
0.7 |
0.5 |
0.6 |
|
Other Long Term Assets, Total |
36.5 |
17.4 |
3.9 |
3.6 |
3.5 |
|
Total Assets |
366.4 |
305.9 |
219.1 |
178.2 |
197.4 |
|
|
|
|
|
|
|
|
Accounts Payable |
3.9 |
4.4 |
7.9 |
5.7 |
2.4 |
|
Accrued Expenses |
14.0 |
10.6 |
5.2 |
3.4 |
3.0 |
|
Notes Payable/Short Term Debt |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Customer Advances |
11.2 |
7.3 |
8.7 |
6.9 |
4.4 |
|
Income Taxes Payable |
1.8 |
- |
- |
- |
- |
|
Other Current Liabilities |
6.1 |
6.4 |
5.1 |
3.6 |
6.0 |
|
Other Current liabilities, Total |
19.1 |
13.8 |
13.8 |
10.5 |
10.4 |
|
Total Current Liabilities |
37.0 |
28.9 |
26.8 |
19.6 |
15.8 |
|
|
|
|
|
|
|
|
Long Term Debt |
49.0 |
46.5 |
0.0 |
- |
- |
|
Total Long Term Debt |
49.0 |
46.5 |
0.0 |
0.0 |
0.0 |
|
Total Debt |
49.0 |
46.5 |
0.0 |
0.0 |
0.0 |
|
|
|
|
|
|
|
|
Deferred Income Tax - LT Liability |
7.7 |
- |
- |
- |
0.0 |
|
Deferred Income Tax |
7.7 |
- |
- |
- |
0.0 |
|
Other Long Term Liabilities |
2.2 |
8.8 |
7.2 |
7.5 |
5.6 |
|
Other Liabilities, Total |
2.2 |
8.8 |
7.2 |
7.5 |
5.6 |
|
Total Liabilities |
95.9 |
84.1 |
34.0 |
27.1 |
21.3 |
|
|
|
|
|
|
|
|
Common Stock |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Common Stock |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Additional Paid-In Capital |
410.0 |
405.5 |
393.5 |
387.5 |
383.5 |
|
Retained Earnings (Accumulated Deficit) |
-138.4 |
-182.3 |
-207.5 |
-234.5 |
-204.9 |
|
Other Comprehensive Income |
-1.1 |
-1.5 |
-0.9 |
-1.8 |
-2.5 |
|
Other Equity, Total |
-1.1 |
-1.5 |
-0.9 |
-1.8 |
-2.5 |
|
Total Equity |
270.5 |
221.8 |
185.0 |
151.1 |
176.1 |
|
|
|
|
|
|
|
|
Total Liabilities & Shareholders’ Equity |
366.4 |
305.9 |
219.1 |
178.2 |
197.4 |
|
|
|
|
|
|
|
|
Shares Outstanding - Common Stock Primary
Issue |
32.4 |
31.9 |
31.4 |
31.0 |
30.7 |
|
Total Common Shares Outstanding |
32.4 |
31.9 |
31.4 |
31.0 |
30.7 |
|
Treasury Shares - Common Stock Primary Issue |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Employees |
651 |
564 |
550 |
497 |
536 |
|
Number of Common Shareholders |
6,248 |
4,560 |
5,129 |
5,723 |
4,913 |
|
Accumulated Intangible Amort, Suppl. |
59.7 |
57.8 |
56.1 |
20.1 |
18.8 |
|
Deferred Revenue - Current |
11.2 |
7.3 |
8.7 |
6.9 |
4.4 |
|
Total Long Term Debt, Supplemental |
69.0 |
71.2 |
- |
- |
- |
|
Long Term Debt Maturing within 1 Year |
2.3 |
2.2 |
- |
- |
- |
|
Long Term Debt Maturing in Year 2 |
2.3 |
3.4 |
- |
- |
- |
|
Long Term Debt Maturing in Year 3 |
2.3 |
3.4 |
- |
- |
- |
|
Long Term Debt Maturing in Year 4 |
31.1 |
31.1 |
- |
- |
- |
|
Long Term Debt Maturing in Year 5 |
31.1 |
31.1 |
- |
- |
- |
|
Long Term Debt Maturing in 2-3 Years |
4.5 |
6.8 |
- |
- |
- |
|
Long Term Debt Maturing in 4-5 Years |
62.3 |
62.3 |
- |
- |
- |
|
Long Term Debt Matur. in Year 6 & Beyond |
0.0 |
0.0 |
- |
- |
- |
|
Total Operating Leases, Supplemental |
15.8 |
15.8 |
12.4 |
13.3 |
15.2 |
|
Operating Lease Payments Due in Year 1 |
3.4 |
2.9 |
2.9 |
2.8 |
2.7 |
|
Operating Lease Payments Due in Year 2 |
2.3 |
2.5 |
2.2 |
2.3 |
2.4 |
|
Operating Lease Payments Due in Year 3 |
3.2 |
2.6 |
1.7 |
1.7 |
2.1 |
|
Operating Lease Payments Due in Year 4 |
2.1 |
2.6 |
1.7 |
1.5 |
1.6 |
|
Operating Lease Payments Due in Year 5 |
2.0 |
1.6 |
1.7 |
1.5 |
1.5 |
|
Operating Lease Pymts. Due in 2-3 Years |
5.5 |
5.1 |
3.8 |
4.0 |
4.5 |
|
Operating Lease Pymts. Due in 4-5 Years |
4.1 |
4.2 |
3.4 |
2.9 |
3.1 |
|
Oper. Lse. Pymts. Due in Year 6 & Beyond |
2.7 |
3.6 |
2.2 |
3.5 |
5.0 |
|
|
|
Annual Cash
Flows |
|
Financials
in: USD (mil) |
|
|
|
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Updated Normal |
Updated Normal |
Updated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate
(Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net Income/Starting Line |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
Depreciation |
3.7 |
4.2 |
3.7 |
6.8 |
4.5 |
|
Depreciation/Depletion |
3.7 |
4.2 |
3.7 |
6.8 |
4.5 |
|
Amortization of Intangibles |
2.2 |
2.1 |
2.1 |
1.9 |
7.2 |
|
Amortization |
2.2 |
2.1 |
2.1 |
1.9 |
7.2 |
|
Deferred Taxes |
-20.8 |
-9.0 |
-0.2 |
-0.2 |
-2.4 |
|
Unusual Items |
0.0 |
0.0 |
0.0 |
0.0 |
227.2 |
|
Purchased R&D |
- |
- |
- |
0.0 |
0.0 |
|
Other Non-Cash Items |
10.5 |
6.4 |
4.5 |
9.4 |
15.4 |
|
Non-Cash Items |
10.5 |
6.4 |
4.5 |
9.4 |
242.6 |
|
Accounts Receivable |
-11.2 |
17.4 |
-21.8 |
-12.2 |
27.1 |
|
Inventories |
-6.7 |
0.0 |
-5.6 |
6.9 |
-4.3 |
|
Prepaid Expenses |
-1.4 |
-4.4 |
0.6 |
0.7 |
0.8 |
|
Accounts Payable |
-2.7 |
-3.4 |
2.2 |
3.2 |
-5.6 |
|
Accrued Expenses |
1.7 |
1.1 |
2.7 |
-1.2 |
-2.5 |
|
Taxes Payable |
- |
- |
- |
0.0 |
0.0 |
|
Other Liabilities |
3.0 |
5.9 |
1.1 |
2.4 |
-2.4 |
|
Changes in Working Capital |
-17.4 |
16.6 |
-20.8 |
-0.2 |
13.2 |
|
Cash from Operating Activities |
22.1 |
45.4 |
16.3 |
-12.1 |
15.4 |
|
|
|
|
|
|
|
|
Purchase of Fixed Assets |
-2.4 |
-1.6 |
-4.4 |
-0.6 |
-3.0 |
|
Purchase/Acquisition of Intangibles |
- |
- |
0.0 |
0.0 |
0.0 |
|
Capital Expenditures |
-2.4 |
-1.6 |
-4.4 |
-0.6 |
-3.0 |
|
Acquisition of Business |
-18.6 |
0.0 |
-0.8 |
-5.0 |
-8.5 |
|
Sale/Maturity of Investment |
102.4 |
11.4 |
10.3 |
19.4 |
21.3 |
|
Purchase of Investments |
-96.3 |
-81.0 |
-7.8 |
-12.2 |
-15.5 |
|
Other Investing Cash Flow Items, Total |
-12.5 |
-69.6 |
1.6 |
2.3 |
-2.7 |
|
Cash from Investing Activities |
-14.9 |
-71.2 |
-2.8 |
1.7 |
-5.7 |
|
|
|
|
|
|
|
|
Other Financing Cash Flow |
0.2 |
0.5 |
0.2 |
0.0 |
0.0 |
|
Financing Cash Flow Items |
0.2 |
0.5 |
0.2 |
0.0 |
0.0 |
|
Sale/Issuance of
Common |
0.3 |
0.3 |
0.3 |
0.2 |
0.2 |
|
Common Stock, Net |
0.3 |
0.3 |
0.3 |
0.2 |
0.2 |
|
Warrants Converted |
0.0 |
7.0 |
0.0 |
0.0 |
- |
|
Issuance (Retirement) of Stock, Net |
0.3 |
7.3 |
0.3 |
0.2 |
0.2 |
|
Long Term Debt Issued |
0.0 |
57.7 |
0.0 |
0.0 |
- |
|
Long Term Debt
Reduction |
0.0 |
-14.5 |
0.0 |
0.0 |
- |
|
Long Term Debt, Net |
0.0 |
43.2 |
0.0 |
0.0 |
- |
|
Issuance (Retirement) of Debt, Net |
0.0 |
43.2 |
0.0 |
0.0 |
- |
|
Cash from Financing Activities |
0.5 |
51.0 |
0.5 |
0.2 |
0.2 |
|
|
|
|
|
|
|
|
Foreign Exchange Effects |
0.0 |
0.3 |
-0.8 |
0.3 |
0.4 |
|
Net Change in Cash |
7.6 |
25.6 |
13.3 |
-9.9 |
10.3 |
|
|
|
|
|
|
|
|
Net Cash - Beginning Balance |
96.7 |
71.1 |
57.8 |
67.7 |
57.4 |
|
Net Cash - Ending Balance |
104.3 |
96.7 |
71.1 |
57.8 |
67.7 |
|
Cash Interest Paid |
2.2 |
- |
- |
- |
- |
|
Cash Taxes Paid |
2.4 |
2.5 |
0.9 |
-3.1 |
1.9 |
Annual Income Statement
|
Financials in: USD (mil) |
|
|
Except for share items (millions) and per
share items (actual units) |
|
|
|
|
|
|
|
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Updated Normal |
Reclassified
Normal |
Reclassified
Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate
(Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Revenues |
218.5 |
187.2 |
195.3 |
78.7 |
131.0 |
|
Total Revenue |
218.5 |
187.2 |
195.3 |
78.7 |
131.0 |
|
|
|
|
|
|
|
|
Cost of Revenues |
102.8 |
86.8 |
91.4 |
49.8 |
87.4 |
|
Research and development |
39.3 |
36.3 |
33.4 |
26.0 |
31.6 |
|
Selling, general and administrative |
40.2 |
40.8 |
38.2 |
32.7 |
36.5 |
|
Amortization |
1.9 |
1.8 |
1.7 |
1.4 |
5.9 |
|
In-process research and development |
- |
0.0 |
0.0 |
0.0 |
0.0 |
|
Impairment charge for goodwill and ident |
- |
0.0 |
0.0 |
0.0 |
227.1 |
|
Total Operating Expense |
184.2 |
165.7 |
164.7 |
109.9 |
388.5 |
|
|
|
|
|
|
|
|
Interest expense, net |
-4.4 |
-1.9 |
0.2 |
0.3 |
1.2 |
|
Foreign currency exchange gains (losses) |
- |
0.8 |
-0.3 |
-0.9 |
2.5 |
|
Other income (expense)) |
-0.5 |
- |
- |
- |
- |
|
Realized Losses on Sale of Marketable |
0.0 |
0.0 |
0.0 |
0.0 |
-0.1 |
|
Net Income Before Taxes |
29.4 |
20.4 |
30.5 |
-31.9 |
-253.8 |
|
|
|
|
|
|
|
|
Provision for Income Taxes |
-14.5 |
-4.8 |
3.5 |
-2.2 |
-4.1 |
|
Net Income After Taxes |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Net Income Before Extra. Items |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
Net Income |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Income Available to Com Excl ExtraOrd |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Income Available to Com Incl ExtraOrd |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
|
|
|
|
|
|
|
Basic Weighted Average Shares |
32.2 |
31.7 |
31.3 |
30.9 |
30.6 |
|
Basic EPS Excluding ExtraOrdinary Items |
1.36 |
0.79 |
0.86 |
-0.96 |
-8.16 |
|
Basic EPS Including ExtraOrdinary Items |
1.36 |
0.79 |
0.86 |
-0.96 |
-8.16 |
|
Dilution Adjustment |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Diluted Net Income |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
Diluted Weighted Average Shares |
32.9 |
32.3 |
31.5 |
30.9 |
30.6 |
|
Diluted EPS Excluding ExtraOrd Items |
1.34 |
0.78 |
0.86 |
-0.96 |
-8.16 |
|
Diluted EPS Including ExtraOrd Items |
1.34 |
0.78 |
0.86 |
-0.96 |
-8.16 |
|
DPS-Ordinary Shares |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
DPS-Ordinary Shares |
- |
0.00 |
0.00 |
0.00 |
0.00 |
|
DPS-Ordinary Shares |
- |
0.00 |
0.00 |
0.00 |
0.00 |
|
Gross Dividends - Common Stock |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Normalized Income Before Taxes |
29.4 |
28.8 |
34.4 |
-19.9 |
-26.7 |
|
|
|
|
|
|
|
|
Inc Tax Ex Impact of Sp Items |
-14.5 |
-1.9 |
4.0 |
2.0 |
75.4 |
|
Normalized Income After Taxes |
43.9 |
30.7 |
30.5 |
-21.8 |
-102.1 |
|
|
|
|
|
|
|
|
Normalized Inc. Avail to Com. |
43.9 |
30.7 |
30.5 |
-21.8 |
-102.1 |
|
|
|
|
|
|
|
|
Basic Normalized EPS |
1.36 |
0.97 |
0.97 |
-0.71 |
-3.33 |
|
Diluted Normalized EPS |
1.34 |
0.95 |
0.97 |
-0.71 |
-3.33 |
|
Research and development |
39.3 |
36.3 |
33.4 |
26.0 |
31.6 |
|
Interest Expense |
- |
2.1 |
- |
- |
- |
|
BC - Depreciation of Intangible Assets |
2.2 |
1.8 |
1.7 |
1.4 |
5.9 |
|
Rental Expense |
3.3 |
3.3 |
3.0 |
2.8 |
3.0 |
|
BC - Depreciation of Fixed Assets |
3.7 |
4.2 |
3.7 |
6.8 |
4.5 |
|
Current Tax - Federal |
3.2 |
- |
- |
- |
- |
|
Current Tax - Federal |
- |
1.7 |
0.7 |
-2.6 |
-4.0 |
|
Current Tax - State |
0.3 |
- |
- |
- |
- |
|
Current Tax - State |
- |
0.3 |
0.1 |
0.0 |
0.0 |
|
Current Tax - Foreign |
2.9 |
- |
- |
- |
- |
|
Current Tax - Foreign |
- |
2.1 |
2.8 |
0.2 |
-1.7 |
|
Current Tax - Total |
6.4 |
4.2 |
3.7 |
-2.5 |
-5.6 |
|
Deferred Tax - Federal |
-18.0 |
- |
- |
- |
- |
|
Deferred Tax - Federal |
- |
-8.0 |
0.0 |
0.2 |
-3.2 |
|
Deferred Tax - Sate |
-2.8 |
- |
- |
- |
- |
|
Deferred Tax - State |
- |
-0.8 |
-0.2 |
0.0 |
0.6 |
|
Deferred Tax - Foreign |
0.0 |
- |
- |
- |
- |
|
Deferred Tax- Foreign |
- |
-0.2 |
0.0 |
0.0 |
0.1 |
|
Deferred Tax - Total |
-20.8 |
-9.0 |
-0.2 |
0.2 |
-2.4 |
|
Income Tax - Total |
-14.5 |
-4.8 |
3.5 |
-2.2 |
-8.1 |
|
401(k) Savings Plan |
0.8 |
0.8 |
0.8 |
0.3 |
0.9 |
|
Total Pension Expense |
0.8 |
0.8 |
0.8 |
0.3 |
0.9 |
|
|
|
Annual Balance
Sheet |
|
Financials
in: USD (mil) |
|
|
|
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Reclassified
Normal |
Updated Normal |
Updated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
104.3 |
96.7 |
71.1 |
57.8 |
67.7 |
|
Marketable securities |
65.0 |
70.9 |
0.6 |
3.1 |
10.5 |
|
Debtors Gross |
57.7 |
41.3 |
59.1 |
35.9 |
22.4 |
|
Allowance for Doubtful Account |
-0.6 |
-0.3 |
-0.3 |
-0.6 |
-0.7 |
|
Raw Materials |
31.6 |
27.2 |
25.6 |
19.3 |
23.8 |
|
Work-in-Process |
15.9 |
11.2 |
13.5 |
14.6 |
15.2 |
|
Finished Goods |
15.9 |
11.2 |
13.3 |
11.6 |
18.1 |
|
Income taxes receivable |
0.0 |
1.7 |
1.1 |
3.5 |
4.7 |
|
Prepaid expenses and other current asset |
4.3 |
3.3 |
2.5 |
1.1 |
1.6 |
|
Deferred Taxes |
- |
- |
- |
- |
0.0 |
|
Total Current Assets |
294.1 |
263.1 |
186.5 |
146.4 |
163.4 |
|
|
|
|
|
|
|
|
Land and Buildings |
5.0 |
5.0 |
5.0 |
4.9 |
4.9 |
|
Machinery and Equipment |
18.8 |
17.5 |
15.5 |
13.4 |
16.6 |
|
Furniture and Fixtures |
3.4 |
3.4 |
2.9 |
2.7 |
2.7 |
|
Computer and Equipment |
7.8 |
6.4 |
6.4 |
6.1 |
6.3 |
|
Leasehold Improvements |
6.8 |
6.3 |
6.3 |
6.1 |
7.0 |
|
Depreciation |
-29.9 |
-26.0 |
-22.5 |
-20.4 |
-18.5 |
|
Goodwill |
11.4 |
4.5 |
4.5 |
3.3 |
0.0 |
|
Developed technology |
59.0 |
53.8 |
53.8 |
53.4 |
51.2 |
|
Customer relationships |
8.7 |
7.4 |
7.4 |
7.4 |
7.3 |
|
Trade names |
4.4 |
4.4 |
4.4 |
4.3 |
4.1 |
|
Acc Amort Developed Technology |
-49.4 |
- |
- |
- |
- |
|
Acc Amort Customer relationships |
-7.1 |
- |
- |
- |
- |
|
Acc Amort Tradenames |
-3.2 |
- |
- |
- |
- |
|
Accumulated Amortization of Intangibles |
- |
-57.8 |
-56.1 |
-20.1 |
-18.8 |
|
Impairment |
- |
- |
- |
-34.2 |
-34.2 |
|
Deferred income taxes |
34.6 |
12.2 |
3.2 |
3.1 |
2.9 |
|
Capitalized Software |
- |
0.6 |
0.9 |
1.2 |
1.8 |
|
Other Other assets |
1.9 |
5.2 |
0.7 |
0.5 |
0.6 |
|
Capitalized Software, Net |
0.2 |
- |
- |
- |
- |
|
Total Assets |
366.4 |
305.9 |
219.1 |
178.2 |
197.4 |
|
|
|
|
|
|
|
|
Accounts payable |
3.9 |
4.4 |
7.9 |
5.7 |
2.4 |
|
Litigation Accruals |
4.3 |
- |
- |
- |
- |
|
Payroll and related expenses |
9.0 |
5.7 |
4.7 |
3.2 |
2.8 |
|
Other Other current liabilities |
4.1 |
- |
- |
- |
- |
|
Warranty |
2.0 |
1.4 |
1.7 |
0.7 |
1.8 |
|
Deferred Revenue |
11.2 |
7.3 |
8.7 |
6.9 |
4.4 |
|
Litigation accrual |
- |
4.3 |
0.0 |
- |
- |
|
Other current liabilities |
- |
5.0 |
3.4 |
2.9 |
4.2 |
|
Royalties |
0.8 |
0.7 |
0.5 |
0.2 |
0.2 |
|
Income tax payable |
1.8 |
- |
- |
- |
- |
|
Total Current Liabilities |
37.0 |
28.9 |
26.8 |
19.6 |
15.8 |
|
|
|
|
|
|
|
|
Convertible senior notes |
49.0 |
46.5 |
0.0 |
- |
- |
|
Total Long Term Debt |
49.0 |
46.5 |
0.0 |
- |
- |
|
|
|
|
|
|
|
|
Unrecognized tax benefits |
7.7 |
- |
- |
- |
0.0 |
|
Other Other non-current liabilities |
2.2 |
8.8 |
7.2 |
7.5 |
5.6 |
|
Total Liabilities |
95.9 |
84.1 |
34.0 |
27.1 |
21.3 |
|
|
|
|
|
|
|
|
Common stock, |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Additional paid-in capital |
410.0 |
405.5 |
393.5 |
387.5 |
383.5 |
|
Other Comp. Inc. |
-1.1 |
-1.5 |
-0.9 |
-1.8 |
-2.5 |
|
Accumulated deficit |
-138.4 |
-182.3 |
-207.5 |
-234.5 |
-204.9 |
|
Total Equity |
270.5 |
221.8 |
185.0 |
151.1 |
176.1 |
|
|
|
|
|
|
|
|
Total Liabilities & Shareholders' Equity |
366.4 |
305.9 |
219.1 |
178.2 |
197.4 |
|
|
|
|
|
|
|
|
S/O-Ordinary Shares |
32.4 |
31.9 |
31.4 |
31.0 |
30.7 |
|
Total Common Shares Outstanding |
32.4 |
31.9 |
31.4 |
31.0 |
30.7 |
|
T/S-Ordinary Shares |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Deferred Revenue - Current |
11.2 |
7.3 |
8.7 |
6.9 |
4.4 |
|
Acc Amort Developed Technology |
49.4 |
- |
- |
- |
- |
|
Acc Amort Customer relationships |
7.1 |
- |
- |
- |
- |
|
Acc Amort Tradenames |
3.2 |
- |
- |
- |
- |
|
Intangible Amortization |
- |
57.8 |
56.1 |
20.1 |
18.8 |
|
Full-Time Employees |
651 |
564 |
550 |
497 |
536 |
|
Number of Common Shareholders |
6,248 |
4,560 |
5,129 |
5,723 |
4,913 |
|
Long Term Debt Maturing within 1 Year |
2.3 |
2.2 |
- |
- |
- |
|
Long Term Debt Maturing within1- 3 |
4.5 |
6.8 |
- |
- |
- |
|
Long Term Debt Maturing within 1-5 |
62.3 |
62.3 |
- |
- |
- |
|
Total Long Term Debt, Supplemental |
69.0 |
71.2 |
- |
- |
- |
|
Operating Leases Maturing within 1 Year |
3.4 |
2.9 |
2.9 |
2.8 |
2.7 |
|
Operating Leases Maturing within 2 Years |
2.3 |
2.5 |
2.2 |
2.3 |
2.4 |
|
Operating Leases Maturing within 3 Years |
3.2 |
2.6 |
1.7 |
1.7 |
2.1 |
|
Operating Leases Maturing within 4 Years |
2.1 |
2.6 |
1.7 |
1.5 |
1.6 |
|
Operating Leases Maturing within 5 Years |
2.0 |
1.6 |
1.7 |
1.5 |
1.5 |
|
Operating Leases Maturing Thereafter |
2.7 |
3.6 |
2.2 |
3.5 |
5.0 |
|
Total Operating Leases, Supplemental |
15.8 |
15.8 |
12.4 |
13.3 |
15.2 |
|
|
|
Annual Cash
Flows |
|
Financials
in: USD (mil) |
|
|
31-Dec-2012 |
31-Dec-2011 |
31-Dec-2010 |
31-Dec-2009 |
31-Dec-2008 |
|
Period Length |
12 Months |
12 Months |
12 Months |
12 Months |
12 Months |
|
UpdateType/Date |
Updated Normal |
Updated Normal |
Updated Normal |
Updated Normal |
Updated Normal |
|
Filed Currency |
USD |
USD |
USD |
USD |
USD |
|
Exchange Rate
(Period Average) |
1 |
1 |
1 |
1 |
1 |
|
Auditor |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
Ernst &
Young LLP |
|
Auditor Opinion |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
|
|
|
|
|
|
|
|
Net Income |
43.9 |
25.2 |
27.0 |
-29.6 |
-249.7 |
|
Depreciation |
3.7 |
4.2 |
3.7 |
6.8 |
4.5 |
|
Impairment of goodwill and identifiable |
- |
- |
0.0 |
0.0 |
227.1 |
|
Amortization of convertible note discoun |
2.7 |
1.1 |
0.0 |
0.0 |
- |
|
Amort./Intagbles |
2.2 |
2.1 |
2.1 |
1.9 |
7.2 |
|
In-process research and development |
- |
- |
- |
0.0 |
0.0 |
|
Stock Based Compensation |
4.0 |
4.8 |
5.4 |
3.8 |
3.4 |
|
Net (gain) loss on sale of marketable se |
0.0 |
0.0 |
0.0 |
0.0 |
0.1 |
|
Foreign Exchange Gain / Loss |
0.5 |
-0.8 |
0.3 |
0.8 |
-2.5 |
|
Provosion doubtful |
3.3 |
1.3 |
-1.2 |
4.8 |
14.6 |
|
Deferred Taxes |
-20.8 |
-9.0 |
-0.2 |
-0.2 |
-2.4 |
|
Accounts Receivable |
-14.7 |
18.0 |
-24.1 |
-13.2 |
31.3 |
|
Income taxes receivable |
3.5 |
-0.5 |
2.3 |
1.0 |
-4.2 |
|
Inventories |
-6.7 |
0.0 |
-5.6 |
6.9 |
-4.3 |
|
Prepaid/Other |
-1.4 |
-4.4 |
0.6 |
0.7 |
0.8 |
|
Accounts Payable |
-2.7 |
-3.4 |
2.2 |
3.2 |
-5.6 |
|
Accrued Liabs. |
1.7 |
1.1 |
2.7 |
-1.2 |
-2.5 |
|
Taxes Payable |
- |
- |
- |
0.0 |
0.0 |
|
Deferred Revenues |
3.6 |
-1.3 |
0.9 |
1.6 |
-1.6 |
|
Other Liabilities |
-1.0 |
5.7 |
0.8 |
-1.3 |
-1.5 |
|
Other Non-Current Liabilities |
0.3 |
1.5 |
-0.6 |
2.0 |
0.6 |
|
Cash from Operating Activities |
22.1 |
45.4 |
16.3 |
-12.1 |
15.4 |
|
|
|
|
|
|
|
|
Purchase of business |
-18.6 |
0.0 |
-0.8 |
-5.0 |
-8.5 |
|
Decrease in Marketabtle Securities |
102.4 |
11.4 |
10.3 |
19.4 |
21.3 |
|
Purchase./ST Investment |
-96.3 |
-81.0 |
-7.8 |
-12.2 |
-15.5 |
|
Capital Expenditures |
-2.4 |
-1.6 |
-4.4 |
-0.6 |
-3.0 |
|
Capitalized Software |
- |
- |
0.0 |
0.0 |
0.0 |
|
Cash from Investing Activities |
-14.9 |
-71.2 |
-2.8 |
1.7 |
-5.7 |
|
|
|
|
|
|
|
|
Net proceeds from issuance of convertibl |
0.0 |
57.7 |
0.0 |
0.0 |
- |
|
Proceeds from sale of warrant |
0.0 |
7.0 |
0.0 |
0.0 |
- |
|
Purchase of convertible note hedge |
0.0 |
-14.5 |
0.0 |
0.0 |
- |
|
Issuance of shares through share-based c |
0.3 |
0.3 |
0.3 |
0.2 |
0.2 |
|
Tax benefit for sale of shares through s |
0.2 |
0.5 |
0.2 |
0.0 |
0.0 |
|
Cash from Financing Activities |
0.5 |
51.0 |
0.5 |
0.2 |
0.2 |
|
|
|
|
|
|
|
|
Foreign Exchange Effects |
0.0 |
0.3 |
-0.8 |
0.3 |
0.4 |
|
Net Change in Cash |
7.6 |
25.6 |
13.3 |
-9.9 |
10.3 |
|
|
|
|
|
|
|
|
Net Cash - Beginning Balance |
96.7 |
71.1 |
57.8 |
67.7 |
57.4 |
|
Net Cash - Ending Balance |
104.3 |
96.7 |
71.1 |
57.8 |
67.7 |
|
Cash Interest Paid |
2.2 |
- |
- |
- |
- |
|
Cash Taxes Paid |
2.4 |
2.5 |
0.9 |
-3.1 |
1.9 |
Financial Health
|
Financials in: USD (mil) |
|
|
Except for share items (millions) and per
share items (actual units) |
|
|
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Financials in: USD (mil) |
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Except for share items (millions) and per
share items (actual units) |
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Standard
& Poors
|
United
States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks,
Rising Debt Burden; Outlook Negative |
|
Publication
date: 05-Aug-2011 20:13:14 EST |
We have lowered our long-term
sovereign credit rating on the United States of America to 'AA+' from 'AAA' and
affirmed the 'A-1+' short-term rating.
We have also removed both the short- and long-term ratings
from CreditWatch negative.
The downgrade reflects our opinion that the fiscal
consolidation plan that Congress and the Administration recently agreed to
falls short of what, in our view, would be necessary to stabilize the
government's medium-term debt dynamics.
More broadly, the downgrade reflects our view that the
effectiveness, stability, and predictability of American policymaking and
political institutions have weakened at a time of ongoing fiscal and economic
challenges to a degree more than we envisioned when we assigned a negative
outlook to the rating on April 18, 2011.
Since then, we have changed our view of the difficulties in
bridging the gulf between the political parties over fiscal policy, which makes
us pessimistic about the capacity of Congress and the Administration to be able
to leverage their agreement this week into a broader fiscal consolidation plan
that stabilizes the government's debt dynamics any time soon.
The outlook on the long-term rating is negative. We could
lower the long-term rating to 'AA' within the next two years if we see that
less reduction in spending than agreed to, higher interest rates, or new fiscal
pressures during the period result in a higher general government debt
trajectory than we currently assume in our base case.
TORONTO (Standard &
Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services said today that it
lowered its long-term sovereign credit rating on the United States of America
to 'AA+' from 'AAA'. Standard & Poor's also said that the outlook on the
long-term rating is negative. At the same time, Standard & Poor's affirmed
its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's
removed both ratings from CreditWatch, where they were placed on July 14, 2011,
with negative implications.
The
transfer and convertibility (T&C) assessment of the U.S.--our assessment of
the likelihood of official interference in the ability of U.S.-based public-
and private-sector issuers to secure foreign exchange for
debt service--remains
'AAA'.
We lowered our long-term
rating on the U.S. because we believe that the prolonged controversy over
raising the statutory debt ceiling and the related fiscal policy debate
indicate that further near-term progress containing the growth in public
spending, especially on entitlements, or on reaching an agreement on raising
revenues is less likely than we previously assumed and will remain a
contentious and fitful process. We also believe that the fiscal consolidation
plan that Congress and the Administration agreed to this week falls short of
the amount that we believe is necessary to stabilize the general government
debt burden by the middle of the decade.
Our lowering of the
rating was prompted by our view on the rising public debt burden and our
perception of greater policymaking uncertainty, consistent with our criteria
(see "Sovereign Government Rating Methodology and
Assumptions ," June 30, 2011,
especially Paragraphs 36-41). Nevertheless, we view the U.S. federal
government's other economic, external, and monetary credit attributes, which
form the basis for the sovereign rating, as broadly unchanged.
We have taken the ratings
off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment
of 2011 has removed any perceived immediate threat of payment default posed by
delays to raising the government's debt ceiling. In addition, we believe that
the act provides sufficient clarity to allow us to evaluate the likely course
of U.S. fiscal policy for the next few years.
The
political brinksmanship of recent months highlights what we see as America's
governance and policymaking becoming less stable, less effective, and less
predictable than what we previously believed. The statutory debt ceiling and
the threat of default have become political bargaining chips in the debate over
fiscal policy. Despite this year's wide-ranging debate, in our view, the
differences between political parties have proven to be extraordinarily
difficult to bridge, and, as we see it, the resulting agreement fell well short
of the comprehensive fiscal consolidation program that some proponents had
envisaged until quite recently. Republicans and Democrats have only been able
to agree to relatively modest savings on discretionary spending while
delegating to the Select Committee decisions on more comprehensive measures. It
appears that for now, new revenues have dropped down on the menu of policy
options. In addition, the plan envisions only minor policy changes on Medicare
and little change in other entitlements,
the containment of which
we and most other independent observers regard as key to long-term fiscal
sustainability.
Our opinion is that
elected officials remain wary of tackling the structural issues required to
effectively address the rising U.S. public debt burden in a manner consistent
with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and
Assumptions," June 30, 2011, especially
Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal
policy weakens the government's ability to manage public finances and diverts
attention from the debate over how to achieve more balanced and dynamic
economic growth in an era of fiscal stringency and private-sector deleveraging
(ibid). A new political consensus might (or might not) emerge after the 2012
elections, but we believe that by then, the government debt burden will likely
be higher, the needed medium-term fiscal adjustment potentially greater, and
the inflection point on the U.S. population's demographics and other
age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely
Cost Even More Green, Now,"
June 21, 2011).
Standard & Poor's
takes no position on the mix of spending and revenue measures that Congress and
the Administration might conclude is appropriate for putting the U.S.'s
finances on a sustainable footing.
The act calls for as much
as $2.4 trillion of reductions in expenditure growth over the 10 years through
2021. These cuts will be implemented in two steps: the $917 billion agreed to
initially, followed by an additional $1.5 trillion that the newly formed
Congressional Joint Select Committee on Deficit Reduction is supposed to
recommend by November 2011. The act contains no measures to raise taxes or
otherwise enhance revenues, though the committee could recommend them.
The act further provides
that if Congress does not enact the committee's recommendations, cuts of $1.2
trillion will be implemented over the same time period. The reductions would
mainly affect outlays for civilian discretionary spending, defense, and
Medicare. We understand that this fall-back mechanism is designed to encourage
Congress to embrace a more balanced mix of expenditure savings, as the
committee might recommend.
We note that in a letter
to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated
total budgetary savings under the act to be at least $2.1 trillion over the
next 10 years relative to its baseline assumptions. In updating our own fiscal
projections, with certain modifications outlined below, we have relied on the
CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to
include the CBO assumptions contained in its Aug. 1 letter to Congress. In
general, the CBO's "Alternate Fiscal Scenario" assumes a continuation
of recent Congressional action overriding existing law.
We view the act's
measures as a step toward fiscal consolidation. However, this is within the
framework of a legislative mechanism that leaves open the details of what is
finally agreed to until the end of 2011, and Congress and the Administration
could modify any agreement in the future. Even assuming that at least $2.1
trillion of the spending reductions the act envisages are implemented, we
maintain our view that the U.S. net general government debt burden (all levels
of government combined, excluding liquid financial assets) will likely continue
to grow. Under our revised base case fiscal scenario--which we consider to be
consistent with a 'AA+' long-term rating and a negative outlook--we now project
that net general government debt would rise from an estimated 74% of GDP by the
end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of
sovereign indebtedness is high in relation to those of peer credits and, as
noted, would continue to rise under the act's revised policy settings.
Compared with previous
projections, our revised base case scenario now assumes that the 2001 and 2003
tax cuts, due to expire by the end of 2012, remain in place. We have changed
our assumption on this because the majority of Republicans in Congress continue
to resist any measure that would raise revenues, a position we believe Congress
reinforced by passing the act. Key macroeconomic assumptions in the base case
scenario include trend real GDP growth of 3% and consumer price inflation near
2% annually over the decade.
Our revised upside
scenario--which, other things being equal, we view as consistent with the
outlook on the 'AA+' long-term rating being revised to stable--retains these
same macroeconomic assumptions. In addition, it incorporates $950 billion of
new revenues on the assumption that the 2001 and 2003 tax cuts for high earners
lapse from 2013 onwards, as the Administration is advocating. In this scenario,
we project that the net general government debt would rise from an estimated 74%
of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.
Our revised downside
scenario--which, other things being equal, we view as being consistent with a
possible further downgrade to a 'AA' long-term rating--features less-favorable
macroeconomic assumptions, as outlined below and also assumes that the second
round of spending cuts (at least $1.2 trillion) that the act calls for does not
occur. This scenario also assumes somewhat higher nominal interest rates for
U.S. Treasuries. We still believe that the role of the U.S. dollar as the key
reserve currency confers a government funding advantage, one that could change
only slowly over time, and that Fed policy might lean toward continued loose
monetary policy at a time of fiscal tightening. Nonetheless, it is possible
that interest rates could rise if investors re-price relative risks. As a
result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in
10-year bond yields relative to the base and upside cases from 2013 onwards. In
this scenario, we project the net public debt burden would rise from 74% of GDP
in 2011 to 90% in 2015 and to 101% by 2021.
Our revised scenarios
also take into account the significant negative revisions to historical GDP
data that the Bureau of Economic Analysis announced on July 29. From our
perspective, the effect of these revisions underscores two related points when
evaluating the likely debt trajectory of the U.S. government. First, the
revisions show that the recent recession was deeper than previously assumed, so
the GDP this year is lower than previously thought in both nominal and real
terms. Consequently, the debt burden is slightly higher. Second, the revised
data highlight the sub-par path of the current economic recovery when compared
with rebounds following previous post-war recessions. We believe the sluggish
pace of the current economic recovery could be consistent with the experiences
of countries that have had financial crises in which the slow process of debt
deleveraging in the private sector leads to a persistent drag on demand. As a
result, our downside case scenario assumes relatively modest real trend GDP
growth of 2.5% and inflation of near 1.5% annually going forward.
When comparing the U.S.
to sovereigns with 'AAA' long-term ratings that we view as relevant
peers--Canada, France, Germany, and the U.K.--we also observe, based on our
base case scenarios for each, that the trajectory of the U.S.'s net public debt
is diverging from the others. Including the U.S., we estimate that these five
sovereigns will have net general government debt to GDP ratios this year
ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%.
By 2015, we project that their net public debt to GDP ratios will range between
30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at
79%. However, in contrast with the U.S., we project that the net public debt
burdens of these other sovereigns will begin to decline, either before or by
2015.
Standard & Poor's
transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment
reflects our view of the likelihood of the sovereign restricting other public
and private issuers' access to foreign exchange needed to meet debt service.
Although in our view the credit standing of the U.S. government has
deteriorated modestly, we see little indication that official interference of
this kind is entering onto the policy agenda of either Congress or the
Administration. Consequently, we continue to view this risk as being highly
remote.
The outlook on the
long-term rating is negative. As our downside alternate fiscal scenario
illustrates, a higher public debt trajectory than we currently assume could
lead us to lower the long-term rating again. On the other hand, as our upside
scenario highlights, if the recommendations of the Congressional Joint Select
Committee on Deficit Reduction--independently or coupled with other
initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high
earners--lead to fiscal consolidation measures beyond the minimum mandated, and
we believe they are likely to slow the deterioration of the government's debt
dynamics, the long-term rating could stabilize at 'AA+'.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian
Rupees |
|
US Dollar |
1 |
Rs.62.35 |
|
UK Pound |
1 |
Rs.101.20 |
|
Euro |
1 |
Rs.84.53 |
INFORMATION DETAILS
|
Report
Prepared by : |
NLM |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the
strongest capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for
credit transaction. It has above average (strong) capability for payment of
interest and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy.
General unfavourable factors will not cause fatal effect. Satisfactory
capability for payment of interest and principal sums |
Fairly
Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet
normal commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and
principal sums in default or expected to be in default upon maturity |
Limited
with full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be
exercised |
Credit
not recommended |
|
-- |
NB |
New
Business |
-- |
This score serves as a reference to assess SCs
credit risk and to set the amount of credit to be extended. It is calculated
from a composite of weighted scores obtained from each of the major sections of
this report. The assessed factors and their relative weights (as indicated
through %) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit
history (10%) Market
trend (10%) Operational
size (10%)