Ballard Issues 2001 Second Quarter Report
VANCOUVER, B.C.--Aug. 7, 2001--Ballard Power Systems today issued its report to shareholders, including financial results, for the second quarter ending June 30, 2001.All amounts are reported in Canadian dollars.
A conference call is scheduled for Tuesday, August 7, 2001 at 4:30 pm EDT (1:30 pm PDT) to review Ballard's second quarter highlights. Access to the call may be obtained by calling the operator at (416) 620-2411 before the scheduled start time. A playback version of the conference call will be available for 24 hours after the call at (416) 626-4100. The confirmation number to access the playback version is 19112282. A live webcast can be accessed from Ballard's web site at www.ballard.com. A playback of the call will also be available on Ballard's web site for two weeks.
"In the second quarter of 2001, we continued to build on our leadership position and maintained our focus on, and investment in, cost reduction, increased manufacturing capability, and testing as we prepare for the commercial launch of BALLARD(R) fuel cell products," said Kip Smith, Ballard's President and Chief Operating Officer. "I am especially pleased with our record revenues of $14.9 million for the quarter, an increase of $10.7 million over the same quarter last year. We continue to have a strong cash position as we move forward with our commercialization strategy."
In the portable business, Ballard continued to progress towards commercial introduction of BALLARD(R) fuel cells with Coleman Powermate later this year. During the quarter, 155 pre-production BALLARD(R) fuel cell portable power units were built for Coleman Powermate and five other original equipment manufacturers. The units will be used in both field trial programs and internal product development activities and are an indication of the growing interest in fuel cell products.
Ballard Generation Systems (BGS) completed the demonstration of a 10-kilowatt natural gas fuelled engineering prototype stationary fuel cell power generator. This demonstration marks the achievement of one of the stationary goals for 2001 outlined in Ballard's 2000 Annual Report. This product is targeted at high value backup power markets such as telecommunications.
Ballard's fifth 250-kilowatt stationary power generator to be field tested, sited at the Nishimachi Sewage Treatment Center in Tomakomai, Japan, has been commissioned. This field trial unit is the world's first proton exchange membrane (PEM) fuel cell system operating on anaerobic digester gas. As part of the field testing program, the remaining four 250-kilowatt stationary power generators to be shipped are undergoing various stages of final build and acceptance testing, for delivery to customers later in the year and early in 2002. The first field trial unit deployed at the Naval Surface Warfare Center - Crane Division, in Crane Indiana with the energy company Cinergy has now completed 22 months of its two year planned testing.
This test program will complete in September 2001 as planned. The learnings, which are key to Ballard's development activities, have allowed Ballard to incorporate technical and operating feedback in our product development and design programs and have enabled improvements in both processes and procedures related to manufacturing, quality assurance, and customer service.
In May Ballard announced an exclusive joint development agreement with MicroCoating Technologies to develop its proprietary Combustion Chemical Vapour Deposition process for use in the manufacture of BALLARD(R) fuel cells. This proprietary technology has the potential to decrease catalyst loading and assist in reducing costs and improving performance, while providing manufacturing flexibility.
Also in May, Ballard purchased the carbon products business unit of Textron Systems Inc. for US$12.8 million. This acquisition provides us with expertise in carbon materials engineering and automotive component manufacturing, a portfolio of intellectual property, a business unit with commercial revenues and the further capability to cut the costs of fuel cells. The business has been named Ballard Material Products and is located in Lowell, Massachusetts.
In June, Ballard expanded its relationship with UCAR's Graftech Inc. subsidiary and entered into new exclusive development and supply agreements for natural graphite-based materials and manufactured components for BALLARD(R) fuel cells and fuel cell systems. The joint collaboration will focus on the development of cost-effective graphitic materials and components, including flow field plates and gas diffusion layers, for next generation fuel cells. This relationship builds on the earlier relationship with Graftech announced in 1999.
The focus of the relationships entered into during the quarter is to support Ballard's long-term strategy of cost reduction, increased manufacturing capability with the requisite expertise, flexibility and component simplification, to reinforce Ballard's competitive advantage.
The industry continues to progress, as evidenced by Ballard's announcements this quarter and those of other players in the industry. Ballard views all investment activity in fuel cells and infrastructure to be a positive development for the whole industry.
The importance of finding solutions to the fundamental changes that are affecting how energy is used and relied upon has not changed over the past few months. Although newspaper headlines about the power crisis in California have been replaced with discussion about declining energy prices, the fundamental issues have not gone away. Industry, business and consumers are all looking for practical solutions to issues concerning power quality and reliability, and utilities and power providers are looking for the new technology solutions that can deliver what existing products cannot. From government programs in the United States and Europe, to international agreements like the Kyoto Accord, to the many calls we receive looking for a power solution, the market demand for siteable, clean, reliable, and high quality power generation is clear and unabating. Ballard fuel cell products offer a solution to this growing market requirement.
To effectively respond to the markets' need for commercial fuel cell products, Ballard strengthened its senior management team with the addition of two new members. Dr. Charles Stone became Vice-President, Membrane Development and Dr. David Wilkinson became Vice-President, Research & Development.
Their combined 22 years of experience at Ballard will allow for an enhancement of the commercialization of technology through a closer alignment of membrane and research activities with commercialization efforts.
MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis covers Ballard's interim consolidated financial statements for the three and six month periods ended June 30, 2001. As well, it provides an update to the discussion and analysis contained in Ballard's 2000 Annual Report. This discussion and analysis should be read in conjunction with the "Management's Discussion & Analysis" section and the annual consolidated financial statements contained in Ballard's 2000 Annual Report.
Acquisition of Ballard Material Products Inc.
On May 25, 2001, Ballard completed the acquisition of the carbon products business unit of Textron Systems Inc. through its wholly-owned subsidiary, Ballard Material Products Inc. (BMP) for US$12.8 million, plus acquisition costs (see note 2). The business and its operating results are included in our financial results since the date of acquisition.
Results from Operations
Revenues increased during the quarter by $10.7 million or 251% from the same quarter last year. For the six-month period, year-over-year revenues increased by $12.8 million or 154%. The higher revenues result from increased purchases of fuel cells by automobile manufacturers, including the Vehicular Alliance partners, DaimlerChrysler and Ford, the sale of portable fuel cells to several original equipment manufacturers for product development and revenues from BMP.
Cost of revenues increased by $6.3 million and $9.4 million for the three and six-month periods respectively when compared to the same periods in 2000. The increases are associated with the higher revenues.
Investment income declined by $6.9 million for the quarter because of a lower average balance of cash and short-term investments, lower interest rates and foreign exchange losses attributable to the effect of a weakening U.S. dollar on Ballard's U.S. currency denominated net assets. For the six-month period, investment income increased by $0.3 million from the corresponding period as lower interest rates were more than offset by a higher average balance of cash and short-term investments.
Research and product development expenses for the quarter increased by $14.2 million, or 70% and by $21.0 million, or 56% on a year-to-date basis. The increases are due to investments in fuel cell engineering and manufacturing process development, the advanced Mark 900 fuel cells, stationary fuel cell power generators, portable fuel cells and fuel processing systems, cost reduction, testing and preparation for commercial product launch. About $5.1 million of the increase related to expenditures during the quarter that are one time in nature.
General and administrative and marketing expenses for the quarter increased by $1.2 million and $1.5 million, respectively. For the six-month period, expenses in these areas increased by $3.2 million and $2.4 million, respectively. These increases reflect costs associated with implementing the business systems processes and capabilities required to support Ballard's commercial introduction of fuel cell products.
Equity in loss of associated companies for the quarter and six-month periods increased by $1.4 million and $5.1 million respectively, when compared to the same periods in 2000. The higher losses are primarily the result of increased investment in research and development activities undertaken by XCELLSIS GmbH and Ecostar Electric Drive Systems LLC, Ballard's "associated companies".
Minority interest increased by $0.8 million and $0.3 million for the quarter and six-month periods respectively, relative to the corresponding periods last year. A higher minority interest in Ballard's subsidiary, Ballard Generation Systems Inc. (BGS), partly offset by lower net losses in BGS, was the primary reason for the increases. The minority ownership in BGS increased to 42.3% at June 30, 2001 from 35.8% at this time last year as a result of the completion of milestone investments by GPU International Inc. (GPU) and ALSTOM SA (ALSTOM).
Gain (loss) on the issuance of shares by subsidiary relates to the issuance of shares of BGS to GPU and ALSTOM.
License and royalty fees during the six months ended June 30, 2000 were $3.1 million and represent a license fee to ALSTOM for access to ALSTOM's manufacturing technology and know-how as part of its equity investment in BGS.
Net Income reflects the result of the increased activity level and lower investment income with the net loss for the quarter ended June 30, 2001 of $41.0 million, or ($0.45) per share, compared with a net loss of $18.6 million, or ($0.21) per share, during the same period in 2000. Ballard's net loss, for the six-month period, was $63.4 million, or ($0.70) per share, compared to $33.4 million, or ($0.38) per share, in the prior year. The increased losses for the first six months of 2001 reflect the accelerated pace of research and development activities and the increase in equity in losses of associated companies. Higher spending related to the implementation of business systems and infrastructure necessary to support Ballard's commercial introduction of fuel cell products and reduced gains from issuance of shares of subsidiaries were also contributing factors.
Financial Condition
Cash and short-term investments were $692.8 million as at June 30, 2001, compared to $769.7 million at the end of 2000. Net losses, capital spending and additional investments, including the acquisition of BMP, were partly offset by the issue of share capital, including share capital issued by BGS, and lower working capital requirements.
Accounts receivable increased by $2.7 million from the beginning of the year, to $25.7 million. The increase is due to higher sales in the second quarter, and $3.4 million of accounts receivable related to the recently acquired business of BMP, partly offset by improved collections.
Inventory increased by $11.0 million from December 31, 2000 to $28.6 million on June 30, 2001. Of this increase, $4.2 million represents inventory of BMP and the remainder reflects the timing of finished product shipments and the purchase of raw materials required for planned increases in production for portable and automotive fuel cells.
Property, plant & equipment increased to $109.8 million from $86.8 million at the beginning of year. The increase reflects the BMP acquisition, accounting for $13.4 million, and capital spending, accounting for $15.6 million, partially offset by depreciation of $6.0 million. Capital spending was primarily for manufacturing process and testing equipment and facility improvements in Plant One, Ballard's initial manufacturing facility.
Intangible assets increased by $1.4 million mainly as a result of intellectual property and goodwill from the BMP acquisition, partly offset by amortization.
Investments increased by $9.7 million in the first six months of the year due to investments in Ballard's associated companies, XCELLSIS GmbH and Ecostar Electric Drive Systems LLC of $7.8 million and $1.3 million, respectively. Also during the period, investments were made in MicroCoating Technologies Inc. $8.5 million, Graftech Inc. $7.7 million and QuestAir Technologies Inc. $2.0 million. These investments were partly offset by an increase in equity loss in associated companies of $17.6 million.
Accounts payable and accrued liabilities increased by $7.2 million from the beginning of the year. BMP accounted for $4.7 million of the increase, including $2.5 million of accrued acquisition costs, and the timing of payments and general increases in activity accounted for the remainder of the change.
Allowance for warranty increased by $2.6 million to $28.7 million during the six-month period, in-line with the increase in sales.
Minority interest decreased by $2.7 million to $13.7 million during the six-month period due to the minority interest portion of BGS's losses, partially offset by an investment by ALSTOM and GPU in BGS.
Share capital increased by $27.3 million from the beginning of the year to $1,196.5 million. The increase is due to the issue of shares as consideration for investments in MicroCoating Technologies Inc. and Graftech Inc. of $6.1 million and $7.7 million, respectively, the exercise of $8.9 million of employee stock options and the exercise of $4.6 million of warrants granted to joint development partners in prior years. As at June 30, 2001, there were 90,464,663 shares issued and outstanding and options for 6,285,363 shares outstanding.
CAPITAL REQUIREMENTS, RESOURCES AND LIQUIDITY
As of June 30, 2001, Ballard had cash, cash equivalents and short-term investments aggregating $692.8 million. Ballard believes that its cash, cash equivalents and short-term investments will provide it with sufficient capital to fund its operations through to the initial commercialization of its fuel cell products. Ballard's current intention is to raise funds as required to maintain a minimum cash balance of approximately $200 million to cover its cash requirements.
Ballard's cash funds will be used to meet its capital needs for fuel cell research and product development, stationary power generator development, the development of new applications, the purchase of manufacturing equipment for Plant One, the development of higher volume manufacturing processes, to make acquisitions of technology or capability, and to make investments in its associated and affiliated companies under Ballard's Vehicular Alliance and Ballard's Stationary Power Alliance to fund its commercialization programs. Ballard's actual funding requirements will vary depending on a variety of factors, including the progress of its research and development efforts, its relationships with strategic partners, the results of development and demonstration programs, the funding of future manufacturing plants, and the funding of its associated and subsidiary companies and its strategic investments.
RISKS & UNCERTAINTIES
Risks & uncertainties related to economic and industry factors as discussed in detail in the "Management's Discussion & Analysis" section of Ballard's 2000 Annual Report, remain substantially unchanged.
This release contains forward-looking statements reflecting Ballard's current expectations as contemplated under the Safe Harbour provisions of the US Private Securities Litigation Reform Law of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation, product development delays, changing environmental regulations, the ability to attract and retain business partners, future levels of government funding, competition from other fuel cell manufacturers, competition from other advanced power technologies, competition from existing power technologies, evolving markets for generating electricity and power for transportation vehicles, and the ability to provide the capital required for product development, operations and marketing. These factors should be considered carefully and readers should not place undue reliance on Ballard's forward-looking statements. Investors are encouraged to review the section titled "Operating Results, Capital Requirements and Risks" (pages 41 to 46) in the Management's Discussion and Analysis section of Ballard's 2000 Annual Report for a more complete discussion of factors that could affect Ballard's future performance.
Consolidated Balance Sheets
Unaudited
(Expressed in thousands of Canadian dollars, except per
share amounts)
June 30, 2001 December 31, 2000
Assets
Current assets
Cash and cash equivalents $382,533 $288,729
Short-term investments 310,288 480,944
Accounts receivable 25,738 23,054
Inventories 28,637 17,643
Prepaid expenses 834 667
---------------------------------
748,030 811,037
Property, plant and equipment 109,768 86,765
Intangible assets (note 3) 44,124 42,760
Investments (note 4) 127,100 117,370
Other long-term assets 1,590 1,700
---------------------------------
$1,030,612 $1,059,632
---------------------------------
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $36,305 $29,085
Current portion of capital
lease obligation 117 117
Deferred revenue 711 784
Allowance for warranty 28,706 26,098
---------------------------------
65,839 56,084
Capital lease obligation 130 191
Long-term deferred revenue 5,989 5,989
Minority interest 13,733 16,395
---------------------------------
85,691 78,659
Shareholders' equity
Share capital 1,196,538 1,169,231
Accumulated deficit (251,617) (188,258)
---------------------------------
944,921 980,973
---------------------------------
$1,030,612 $1,059,632
---------------------------------
Consolidated Statements of Operations and Accumulated Deficit
Unaudited (Expressed in thousands of Canadian dollars, except per
share amounts)
Three months ended Six months ended
June 30 June 30
2001 2000 2001 2000
Revenues $14,933 $4,254 $21,050 $8,276
Investment income 5,796 12,704 19,701 19,436
----------------------------------------------
20,729 16,958 40,751 27,712
Cost of revenues
and expenses
Cost of revenues 11,762 5,439 18,521 9,079
Research and product
development 34,660 20,438 58,668 37,639
General and
administrative 5,002 3,775 9,390 6,173
Marketing 2,194 706 3,671 1,242
Amortization of fuel cell
technology and goodwill 923 917 1,839 1,833
Capital taxes 124 292 228 412
----------------------------------------------
54,665 31,567 92,317 56,378
----------------------------------------------
Loss before undernoted (33,936) (14,609) (51,566) (28,666)
Equity in loss of
associated companies (9,453) (8,011) (17,553) (12,492)
Minority interest 3,339 2,504 5,199 4,893
Gain (loss) on issuance
of shares by subsidiary (489) 2,033 1,378 7,075
License and royalty fees - - - (3,138)
----------------------------------------------
Loss before income
taxes (40,539) (18,083) (62,542) (32,328)
Income taxes 424 535 817 1,032
----------------------------------------------
Net loss for period (40,963) (18,618) (63,359) (33,360)
Accumulated deficit,
beginning of period (210,654) (117,267) (188,258) (102,525)
----------------------------------------------
Accumulated deficit,
end of period ($251,617) ($135,885) ($251,617) ($135,885)
----------------------------------------------
Net loss per share ($0.45) ($0.21) ($0.70) ($0.38)
----------------------------------------------
Weighted average number
of common shares
outstanding 90,309,080 88,295,621 89,887,871 86,886,063
----------------------------------------------
Consolidated Statements of Cash Flows
Unaudited (Expressed in thousands of Canadian dollars, except per
share amounts)
Three months ended Six months ended
June 30 June 30
2001 2000 2001 2000
Cash provided by (used for):
Operating activities:
Net loss for period ($40,963) ($18,618) ($63,359) ($33,360)
Items not affecting
cash:
Gain (loss) on issuance
of shares by
subsidiary 489 (2,033) (1,378) (7,075)
Depreciaton and
amortization 4,046 3,212 7,872 6,262
License received on
issuance of shares
of subsidiary - - - 3,138
Equity in loss of
associated companies 9,453 8,011 17,553 12,492
Minority interest (3,339) (2,504) (5,199) (4,893)
----------------------------------------------
(30,314) (11,932) (44,511) (23,436)
Changes in non-cash working capital:
Accounts receivable (1,248) 10,197 264 14,802
Inventories (1,262) (7,675) (6,585) (11,454)
Prepaid expenses 19 (49) (167) (135)
Accounts payable and
accrued liabilities 11,331 635 6,296 (3,858)
Deferred revenue (160) 679 (73) 729
Allowance for warranty 1,776 (1,757) 2,608 (1,903)
----------------------------------------------
10,456 2,030 2,343 (1,819)
----------------------------------------------
(19,858) (9,902) (42,168) (25,255)
Investing activities:
Net decrease (increase)
in short-term
investments 36,122 (192,949) 170,656 (202,336)
Additions to property,
plant and equipment (9,532) (7,695) (15,555) (12,121)
Investments (9,609) (18,900) (13,491) (18,900)
Acquisition of
other companies (22,949) - (22,949) -
Other long-term assets 110 - 110 (350)
----------------------------------------------
(5,858) (219,544) 118,771 (233,707)
Financing activities:
Net proceeds on issuance
of share capital 4,639 5,172 13,515 496,553
Proceeds on issuance
of shares by subsidiary - 3,705 3,747 9,560
Capital lease obligation (31) (29) (61) (57)
----------------------------------------------
4,608 8,848 17,201 506,056
----------------------------------------------
Increase (decrease)
in cash and cash
equivalents (21,108) (220,598) 93,804 247,094
Cash and cash equivalents,
beginning of period 403,641 554,154 288,729 86,462
----------------------------------------------
Cash and cash equivalents,
end of period $382,533 $333,556 $382,533 $333,556
----------------------------------------------
Notes to Consolidated Financial Statements
Unaudited (Expressed in thousands of Canadian dollars)
1. Basis of Presentation
The accompanying financial information reflects the same accounting policies and methods of application as Ballard's fiscal 2000 Annual report. The accompanying financial information does not include all disclosure required under generally accepted accounting principles because certain information included in Ballard's fiscal 2000 Annual report has not been included in this report. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Ballard's Annual Report.
During the first quarter, Ballard retroactively adopted the Canadian Institute of Chartered Accountants new recommendations on earnings per share calculations. Under these recommendations, diluted earnings per share under Canadian GAAP is calculated using the treasury share method which is consistent with the calculation under U.S. GAAP for diluted earnings per share. As a result of adopting this recommendation, there is no impact on current or prior period figures.
2. Acquisition of Ballard Material Products, Inc.
On May 25, 2001, Ballard purchased the carbon products business of Textron Systems for US$12.8 million (CDN$19.7) cash, plus estimated acquisition costs of $3.2 million. The purchase price allocation has been assigned to the specific assets acquired and liabilities assumed based on estimates and is subject to revision. The estimated goodwill of approximately $1.6 million is being amortized on a straight-line basis over 20 years.
The acquisition has been accounted for using the purchase method of accounting and the results of operations have been included in the financial statements since the acquisition date.
The cost of acquisition based on management's preliminary estimate has been allocated to the acquired assets as follows:
Acquisition Cost
Purchase price (U.S. $12.8 million) $ 19,712
Estimated acquisition costs 3,237
--------
$22,949
--------
Purchase Price Allocation
Accounts receivable $2,948
Inventories 4,409
Property, plant & equipment 13,481
Intangible assets 3,035
Accounts payable and accrued liabilities (924)
--------
$22,949
--------
3. Intangible assets
June 30, 2000 December 31, 2001
Fuel cell technology acquired $ 42,400 $ 42,760
Goodwill 1,724 -
----------------------------
$ 44,124 $ 42,760
----------------------------
4. Investments
During the first quarter of 2001 Ballard made an additional investment of $2.0 million in cash in QuestAir Technologies Inc. representing its proportionate share of a financing made by QuestAir. Ballard's ownership is approximately 10%.
Ballard also made additional cash investments of $7.8 million in cash in XCELLSIS GmbH ("XCELLSIS") and $1.3 million in cash in Ecostar Electric Drive Systems LLC ("Ecostar"), representing Ballard's proportionate share of financing of Ballard's associated companies by those company's shareholders. Ballard's equity interests in XCELLSIS and Ecostar continues to be 26.7% and 20.9% respectively.
In May 2001, Ballard entered into a collaboration, license and supply agreement with MicroCoating Technologies, Inc. ("MicroCoating") that included Ballard acquiring approximately three percent of the equity of MicroCoating on a fully diluted basis in exchange for US$7.0 million. The purchase was funded through issuance of 88,963 of common shares of Ballard valued at US$4.0(CDN$6.1 million), and US$1.5 million in cash (CDN$2.4 million). A remaining cash payment of US$1.5 million will be paid upon completion of certain performance milestones by MicroCoating.
In June 2001, Ballard entered into a development and collaboration agreement with Graftech Inc. ("Graftech") that include Ballard acquiring 2.5% ownership interest of Graftech for US$5.0 million (CDN$7.7 million). The purchase was funded through the issuance of 92,685 of common shares of Ballard.
5. Share Capital
During the first quarter of 2001, 540,000 warrants were exercised upon payment of $8.54 per warrant.
As part of Ballard's share option plan, 1,814,700 options were issued during the first two quarters of 2001. At June 30, 2001 there were 6,285,363 options outstanding.
6. Segmented financial information
Fuel Fuel Cell Carbon
Cells Systems Products Total
Three months ended June 30, 2001
Total revenues for
reportable segments $ 12,233 $ 1,236 $ 2,566 $ 16,035
Elimination of
intersegment revenues (681) - (421) (1,102)
-------------------------------------------
Total revenues to
external customers $ 11,552 $ 1,236 $ 2,145 $ 14,933
-------------------------------------------
Segment income (loss)
for period $ (31,694)$ (7,245)$ 254 $ (38,685)
-------------------------------------------
Identifiable assets $ 831,109 $ 173,749 $ 25,754 $1,030,612
-------------------------------------------
Reconciliation of net loss for period
Segment loss for period $ (38,685)
Investment income 5,796
Gain (loss) on issuance of shares by subsidiary (489)
Equity in loss of associated companies (9,453)
Amortization of fuel cell technology and goodwill (923)
Minority interest 3,339
Capital taxes (124)
----------
Loss before income taxes $ (40,539)
----------
Fuel Fuel Cell Carbon
Cells Systems Products Total
Three months ended June 30, 2000
Revenues $ 2,711 $ 1,543 $ - $ 4,254
-------------------------------------------
Segment loss for
the period $ (19,245)$ (6,859)$ - $ (26,104)
-------------------------------------------
Identifiable assets $ 918,041 $ 158,922 $ - $1,076,963
-------------------------------------------
Reconciliation of net loss for period
Segment loss for period $ (26,104)
Investment income 12,704
Gain (loss) on issuance of shares by subsidiary 2,033
Equity in loss of associated companies (8,011)
Amortization of fuel cell technology and goodwill (917)
Minority interest 2,504
License received on issuance of shares of subsidiary -
Capital taxes (292)
----------
Loss before income taxes $ (18,083)
----------
Fuel Fuel Cell Carbon
Cells Systems Products Total
Six months ended June 30, 2001
Total revenues for
reportable segments $ 17,107 $ 2,547 $ 2,566 $ 22,220
Elimination of
intersegment revenues (749) - (421) (1,170)
-------------------------------------------
Total revenues to
external customers $ 16,358 $ 2,547 $ 2,145 $ 21,050
-------------------------------------------
Segment income (loss)
for period $ (57,010)$ (12,444)$ 254 $ (69,200)
-------------------------------------------
Identifiable assets $ 831,109 $ 173,749 $ 25,754 $1,030,612
-------------------------------------------
Reconciliation of net loss for period
Segment loss for period $ (69,200)
Investment income 19,701
Gain (loss) on issuance of shares by subsidiary 1,378
Equity in loss of associated companies (17,553)
Amortization of fuel cell technology and goodwill (1,839)
Minority interest 5,199
Capital taxes (228)
----------
Loss before income taxes $ (62,542)
----------
Fuel Fuel Cell Carbon
Cells Systems Products Total
Six months ended June 30, 2000
Revenues $ 5,781 $ 2,495 $ - $ 8,276
-------------------------------------------
Segment loss for
the period $ (34,879)$ (10,978)$ - $ (45,857)
-------------------------------------------
Identifiable assets $ 918,041 $ 158,922 $ - $1,076,963
-------------------------------------------
Reconciliation of net loss for period
Segment loss for period $ (45,857)
Investment income 19,436
Gain (loss) on issuance of shares by subsidiary 7,075
Equity in loss of associated companies (12,492)
Amortization of fuel cell technology and goodwill (1,833)
Minority interest 4,893
License received on issuance of shares of subsidiary (3,138)
Capital taxes (412)
----------
Loss before income taxes $ (32,328)
----------
Ballard's three reportable segments, fuel cells, fuel cell systems and carbon products, represent strategic business units that offer different products to different markets and require the use of different technologies in their manufacture and development.
Fuel cell operations comprise the development, manufacture and marketing of proton exchange membrane fuel cells. Fuel cell systems comprise the development, manufacture and marketing of fuel cell systems that incorporate a fuel cell to provide power for applications such as transportation engines, stationary power plants, portable power systems, and marine power systems. Carbon products comprise the development, manufacture and marketing of carbon materials for automotive and fuel cell applications.
7. Supplemental disclosure of cash flow information
Three months ended Six months ended
June 30 June 30
2001 2000 2001 2000
Interest paid $ 11 $ 8 $ 19 $ 16
Income taxes paid $ 177 $ 821 $ 623 $ 1,029
Non-cash financing
and investing activities
Issuance of shares by
subsidiary for licence
received $ - $ - $ - $ 3,138
Common shares issued for
long-term investments $ 13,792 $ - $ 13,792 $ -
8. Financial Instruments
Ballard enters into forward exchange contracts to manage exposure to currency rate fluctuations. The purpose of Ballard's foreign currency hedging activities is to minimize the effect of exchange rate fluctuations on business decisions and the resulting uncertainty on future financial results.
Over the next seven months Ballard has forward contracts to purchase 19,038,491 EUR. At June 30, 2001, Ballard would have to pay $2.4 million to settle its outstanding forward exchange contracts. As these forward exchange contracts qualify for accounting as hedges, gains or losses are deferred and recognized in the same period and in the same financial statement category as the gains or losses on the corresponding hedged transactions.
Ballard Power Systems is recognized as the world leader in developing, manufacturing and marketing zero-emission proton exchange membrane fuel cells for use in transportation, electricity generation and portable power products. Ballard Power Systems' proprietary fuel cell technology is enabling automobile, electrical equipment and portable power product manufacturers to develop environmentally clean products for sale. The fundamental component of these end-user products is the BALLARD(R) fuel cell that combines hydrogen (which can be obtained from methanol, natural gas, petroleum or renewable sources) and oxygen (from air) without combustion to generate electricity. Ballard is partnering with strong, world-leading companies, including DaimlerChrysler, Ford, GPU, ALSTOM and EBARA, to commercialize BALLARD(R) fuel cells. Ballard has also supplied fuel cells to Honda, Nissan, Volkswagen, Yamaha, Cinergy, Coleman Powermate and Matsushita Electric Works, among others.
Ballard's Common shares are listed on The Toronto Stock Exchange under the trading symbol "BLD" and on the Nasdaq National Market System under the symbol "BLDP". Ballard, the Ballard logo and Power to Change the World are registered trademarks of Ballard Power Systems Inc.