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CAE reports second quarter financial results for fiscal year 2013

Date : 11/08/2012 @ 7:00PM
Source : Marketwired
Stock : Cae (CAE)
Quote : 14.08  0.03 (0.21%) @ 2:00AM
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CAE reports second quarter financial results for fiscal year 2013

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(NYSE:CAE)(TSX:CAE) - CAE today reported financial results for the second quarter ended September 30, 2012. Net income attributable to equity holders was $36.5 million ($0.14 per share) this quarter, compared to $38.4 million ($0.15 per share) last year. All financial information is in Canadian dollars.

Excluding the $9.8 million pre-tax impact of restructuring, integration and acquisition costs this quarter, net income attributable to equity holders was $43.5 million ($0.17 per share). In the second quarter last year, before acquisition and integration charges of $8.4 million pre-tax, net income attributable to equity holders was $41.1 million ($0.16 per share).

Also included in this quarter's financial results were other non-recurring gains including $8.3 million pre-tax in foreign exchange gains and a $5.0 million pre-tax gain on the expiry and reversal of contingent liability related to a prior acquisition. Of these amounts, $7.7 million is attributed to Military and $5.6 million to Civil.

Revenue for the quarter was $514.4 million, 19% higher than $433.5 million last year.

"During the quarter, we recorded strong order bookings for simulators in Civil and added more long-term recurring training services in Military," said Marc Parent, CAE's President and Chief Executive Officer. "However our results were impacted in Civil training by a slower than usual summer and the ongoing integration of Oxford. In Military, we have been restructuring our European operations headquartered in Germany to adapt to lower demand, but this has not kept pace with the drop in new orders in that country. The resulting lower revenue and profit in that region during the quarter negated otherwise good performance in the rest of the business. In light of the clarity we now have about the magnitude of the expected restructuring of the German armed forces, we are undertaking additional restructuring estimated to cost $15 million to right-size our operations for current and anticipated contracts."

Looking forward, Parent added, "With very strong Military bid activity by CAE currently underway, we remain confident in the long-term growth and profitability of CAE's Military business. We have signed several multi-year services contracts this year but these translate to revenue over a longer period of time than products sales. As a result of this, and our actions underway in Europe, we now expect Military revenue to decline slightly this year. We expect Military margins to begin recovering toward the latter part of the year. In Civil, we are already experiencing a stronger performance in training as we head into the second half of the year and we expect this to continue. In civil products, with 19 simulator sales announced so far, we are tracking our expectation for sales in the mid-30s."

Summary of consolidated results


(amounts in millions, except                                                
 for operating margins)        Q2-2013  Q1-2013  Q4-2012   Q3-2012   Q2-2012
----------------------------------------------------------------------------
Revenue                     $    514.4    480.1    506.7     453.1     433.5
Operating profit(1)         $     66.9     44.8     88.7      77.5      63.9
As a % of revenue           %     13.0      9.3     17.5      17.1      14.7
Net income                  $     36.8     21.7     53.7      46.1      38.7
Net income attributable to                                                  
 equity holders of the                                                      
 Company                    $     36.5     21.3     53.2      45.6      38.4
Backlog(2)                  $  3,909.1  3,894.5  3,724.2   3,514.9   3,648.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Civil segments

Revenue for our combined Civil segments increased 36% in the second quarter to $288.0 million compared to $211.7 million last year. Second quarter operating income was $46.2 million (16.0% of revenue) compared to $42.3 million (20.0% of revenue) last year. This quarter's results include the recently acquired Oxford Aviation Academy (Oxford), which is being integrated with CAE's existing operations to realize significant ongoing cost and revenue synergies.

Civil training results were seasonally lower than usual during the summer months and were further impacted by some disruption from our ongoing integration of Oxford with our existing operations. Demand for products continued to be robust with 12 full-flight simulator orders booked in the second quarter for customers mainly in Asia. During the quarter, we also obtained training services contracts expected to generate $179.3 million in future revenue. These include a long term agreement with easyjet in Europe, making CAE its preferred training supplier, and an exclusive multi-year contract with an airline in South America.

We received $302.7 million in combined civil segment orders this quarter representing a book-to-sales ratio of 1.05x. The ratio for the trailing 12 months was 1.10x.

Training & Services/Civil (TS/C)


(amounts in millions except                                                 
 operating margins, RSEU and                                                
 FFSs deployed)                  Q2-2013  Q1-2013  Q4-2012  Q3-2012  Q2-2012
----------------------------------------------------------------------------
Revenue                       $    189.1    170.9    132.3    123.0    119.1
Segment operating income      $     27.3     33.3     30.3     28.8     27.6
Operating margins             %     14.4     19.5     22.9     23.4     23.2
Backlog                       $  1,360.9  1,400.0  1,183.4  1,102.8  1,125.4
RSEU                                 187      164      142      140      139
FFS deployed                         218      216      171      170      165
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Simulation Products/Civil (SP/C)


(amounts in millions except                                                 
 operating margins)              Q2-2013  Q1-2013  Q4-2012  Q3-2012  Q2-2012
----------------------------------------------------------------------------
Revenue                       $     98.9     80.3     83.1     80.7     92.6
Segment operating income      $     18.9     14.4     14.0     13.2     14.7
Operating margins             %     19.1     17.9     16.8     16.4     15.9
Backlog                       $    385.2    361.9    351.6    366.5    340.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Military segments

Revenue for our combined Military segments decreased 2% in the second quarter to $198.1 million compared to $201.5 million last year. Operating income was $28.3 million (14.3% of revenue) for the quarter, compared to $30.2 million (15.0% of revenue) last year.

We booked orders in our products segment during the quarter for Middle-Eastern forces involving new simulators for the C295 and C-130J transport aircrafts. We also received a range of upgrade orders involving already installed simulators in the U.K. on C-130J and Lynx helicopter platforms, and in the U.S. on the KC-135 tanker aircraft simulators. In services, we received an order in Asia for long-term training on helicopter and fixed-wing aircraft and in the U.S., the Air Force exercised its option for a third year of aircrew training under the KC-135 Aircrew Training Systems program.

We received $258.9 million in combined military segment orders this quarter, representing a book-to-sales ratio of 1.31x. The ratio for the trailing 12 months was 1.07x.

Simulation Products/Military (SP/M)


(amounts in millions except                                                 
 operating margins)              Q2-2013  Q1-2013  Q4-2012  Q3-2012  Q2-2012
----------------------------------------------------------------------------
Revenue                       $    130.8    135.4    195.6    152.4    136.0
Segment operating income      $     20.9     19.5     34.6     26.9     20.9
Operating margins             %     16.0     14.4     17.7     17.7     15.4
Backlog                       $    723.1    755.6    786.0    812.7    907.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Training & Services /Military (TS/M)


(amounts in millions except                                                 
 operating margins)              Q2-2013  Q1-2013  Q4-2012  Q3-2012  Q2-2012
----------------------------------------------------------------------------
Revenue                       $     67.3     67.4     71.5     69.9     65.5
Segment operating income      $      7.4      8.9     11.0     10.0      9.3
Operating margins             %     11.0     13.2     15.4     14.3     14.2
Backlog                       $  1,439.9  1,377.0  1,403.2  1,232.9  1,274.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------

New Core Markets

Revenue in New Core Markets was $28.3 million for the quarter, up 39% from $20.3 million last year. Operating income was $2.2 million for the quarter, compared to negative $8.6 million last year.

We had continued success with the introduction of new products and sales of existing lines.

In CAE Mining, we announced a strategic partnership with Devex, a mining operations management technology company, which gives additional breadth to our solutions portfolio and exclusive distribution rights in a number of key markets globally. The market continued to be receptive to our software solutions, with sales during the quarter to major mining customers in South America, South Africa and Australia.

In CAE Healthcare, we launched the new Caesar trauma patient simulator and we prelaunched our new VIMEDIX Women's Health ultrasound simulator. During the quarter, we sold our centre management system to the U.S. Veterans Health Administration for use in 159 centres throughout the U.S. and to the U.S. Air Force in 25 medical simulation centres around the world. Additionally, we sold solutions within our range of simulator products and centre management systems to universities and teaching hospitals in the U.S., Canada, Australia and Russia.

New Core Markets (NCM)


(amounts in millions)            Q2-2013  Q1-2013 Q4-2012  Q3-2012  Q2-2012 
----------------------------------------------------------------------------
Revenue                       $     28.3     26.1    24.2     27.1     20.3 
Segment operating income                                                    
 (loss)                       $      2.2      0.7    (1.2)    (1.4)    (8.6)
Operating margins             %      7.8      2.7       -        -        - 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Additional financial highlights

Income taxes this quarter were $12.5 million representing an effective tax rate of 25%, compared to 21% last year. The tax rate was lower in the second quarter last year due to the recognition of certain tax assets.

Free cash flow(3) was positive $17.7 million this quarter. The increase from last quarter was mainly attributable to favourable changes in non-cash working capital and more cash provided by operating activities. The decrease from the second quarter of fiscal 2012 was mainly attributable to unfavourable changes in non-cash working capital, partially offset by more cash provided by operating activities.

Capital expenditures totalled $44.0 million this quarter, including $33.4 million in growth capital expenditures and $10.6 million for maintenance.

Net debt(4) was $994.8 million compared with $988.9 million as at June 30, 2012.

CAE will pay a dividend of $0.05 per share effective December 31, 2012 to shareholders of record at the close of business on December 14, 2012.

Additional information

You will find a more detailed discussion of our results by segment in the Management's Discussion and Analysis (MD&A) as well as in our consolidated interim financial statements which are posted on our website at www.cae.com/Q2FY13. .

CAE's unaudited consolidated interim financial statements and management's discussion and analysis for the quarter ended September 30, 2012 have been filed with the Canadian securities commissions and are available on our website (www.cae.com) and on SEDAR (www.sedar.com). They have also been filed with the U.S. Securities and Exchange Commission and are available on their website (www.sec.gov).

Conference call Q2 FY2013

CAE will host a conference call focusing on fiscal year 2013 second quarter financial results today at 1:00 p.m. ET. The call is intended for analysts, institutional investors and the media. Participants can listen to the conference by dialling + 1 877 586 3392 or +1 416 981 9024. The conference call will also be audio webcast live for the public at www.cae.com.

CAE is a global leader in modeling, simulation and training for civil aviation and defence. The company employs approximately 8,000 people at more than 100 sites and training locations in approximately 30 countries. CAE offers civil aviation, military, and helicopter training services in more than 45 locations worldwide and trains approximately 100,000 crewmembers yearly. In addition, the CAE Oxford Aviation Academy offers training to aspiring pilot cadets in 11 CAE-operated flight schools. CAE's business is diversified, ranging from the sale of simulation products to providing comprehensive services such as training and aviation services, integrated enterprise solutions, in-service support and crew sourcing. The company applies simulation expertise and operational experience to help customers enhance safety, improve efficiency, maintain readiness and solve challenging problems. CAE is leveraging its simulation capabilities in new markets such as healthcare and mining. www.cae.com

You will find more information about the risks and uncertainties associated with our business in the MD&A section of our annual report and annual information form for the year ended March 31, 2012. These documents have been filed with the Canadian securities commissions and are available on our website (www.cae.com), on SEDAR (www.sedar.com) and a free copy is available upon request to CAE. They have also been filed with the U.S. Securities and Exchange Commission under Form 40-F and are available on EDGAR (www.sec.gov). The forward-looking statements contained in this news release represent our expectations as of November 8, 2012 and, accordingly, are subject to change after this date. We do not update or revise forward-looking information even if new information becomes available unless legislation requires us to do so. You should not place undue reliance on forward-looking statements.

Notes


1.  Operating profit is non-GAAP measure that shows us how we have performed
    before the effects of certain financing decisions and tax structures. We
    track operating profit because we believe it makes it easier to compare
    our performance with previous periods, and with companies and industries
    that do not have the same capital structure or tax laws. 

2.  Backlog is a non-GAAP measure that represents the expected value of
    orders we have received but have not yet executed. 

3.  Free cash flow is a non-GAAP measure that shows us how much cash we have
    available to build the business, repay debt and meet ongoing financial
    obligations. We use it as an indicator of our financial strength and
    liquidity. We calculate it by taking the net cash generated by our
    continuing operating activities, subtracting maintenance capital
    expenditures, other assets not related to growth and dividends paid and
    adding proceeds from disposal of property, plant and equipment. 

4.  Net debt is a non-GAAP measure we use to monitor how much debt we have
    after taking into account liquid assets such as cash and cash
    equivalents. We use it as an indicator of our overall financial
    position, and calculate it by taking our total long-term debt, including
    the current portion of long-term debt, and subtracting cash and cash
    equivalents. 


Consolidated Statement of Financial Position                                
                                                                            
                                                                            
(Unaudited)                                    September 30        March 31 
(amounts in millions of Canadian dollars)              2012            2012 
----------------------------------------------------------------------------
Assets                                                                      
Cash and cash equivalents                       $     229.4     $     287.3 
Accounts receivable                                   363.1           308.4 
Contracts in progress: assets                         270.6           245.8 
Inventories                                           162.8           153.1 
Prepayments                                            53.5            47.7 
Income taxes recoverable                              115.6            95.5 
Derivative financial assets                            19.5            10.3 
----------------------------------------------------------------------------
Total current assets                            $   1,214.5     $   1,148.1 
Property, plant and equipment                       1,465.2         1,293.7 
Intangible assets                                     739.2           533.2 
Deferred tax assets                                    36.8            24.1 
Derivative financial assets                             7.2             7.2 
Other assets                                          182.0           177.4 
----------------------------------------------------------------------------
Total assets                                    $   3,644.9     $   3,183.7 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities and equity                                                      
Accounts payable and accrued liabilities        $     590.2     $     597.6 
Provisions                                             40.9            21.6 
Income taxes payable                                    9.4            10.9 
Contracts in progress: liabilities                    105.8           104.6 
Current portion of long-term debt                     220.8           136.0 
Derivative financial liabilities                       10.2            12.7 
----------------------------------------------------------------------------
Total current liabilities                       $     977.3     $     883.4 
Provisions                                              8.2             6.0 
Long-term debt                                      1,003.4           685.6 
Royalty obligations                                   154.7           161.6 
Employee benefits obligations                         150.2           114.2 
Deferred gains and other non-current                                        
 liabilities                                          183.3           186.0 
Deferred tax liabilities                              128.5            91.8 
Derivative financial liabilities                       12.0            12.9 
----------------------------------------------------------------------------
Total liabilities                               $   2,617.6     $   2,141.5 
----------------------------------------------------------------------------
Equity                                                                      
Share capital                                   $     462.5     $     454.5 
Contributed surplus                                    20.9            19.2 
Accumulated other comprehensive loss                  (41.4)           (9.8)
Retained earnings                                     563.5           558.0 
----------------------------------------------------------------------------
Equity attributable to equity holders of the                                
 Company                                        $   1,005.5     $   1,021.9 
Non-controlling interests                              21.8            20.3 
----------------------------------------------------------------------------
Total equity                                    $   1,027.3     $   1,042.2 
----------------------------------------------------------------------------
Total liabilities and equity                    $   3,644.9     $   3,183.7 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
Consolidated Income Statement                                               
                                                                            
(Unaudited)                                                                 
(amounts in millions of                                                     
 Canadian dollars,                                                          
 except per share              Three months ended          Six months ended 
 amounts)                            September 30              September 30 
                                2012         2011         2012         2011 
----------------------------------------------------------------------------
Revenue                    $   514.4    $   433.5    $   994.5    $   861.4 
Cost of sales                  370.4        296.0        691.4        584.3 
----------------------------------------------------------------------------
Gross profit               $   144.0    $   137.5    $   303.1    $   277.1 
Research and development                                                    
 expenses                       14.5         15.9         28.5         31.1 
Selling, general and                                                        
 administrative expenses        67.3         59.8        135.7        122.1 
Other (gains) losses -                                                      
 net                           (14.5)        (2.1)       (14.6)       (12.0)
Restructuring,                                                              
 integration and                                                            
 acquisition costs               9.8            -         41.8            - 
----------------------------------------------------------------------------
Operating profit           $    66.9    $    63.9    $   111.7    $   135.9 
----------------------------------------------------------------------------
Finance income                  (1.6)        (2.3)        (3.1)        (3.5)
Finance expense                 19.2         17.2         37.6         33.3 
----------------------------------------------------------------------------
Finance expense - net      $    17.6    $    14.9    $    34.5    $    29.8 
----------------------------------------------------------------------------
Earnings before income                                                      
 taxes                     $    49.3    $    49.0    $    77.2    $   106.1 
Income tax expense              12.5         10.3         18.7         23.9 
----------------------------------------------------------------------------
Net income                 $    36.8    $    38.7    $    58.5    $    82.2 
----------------------------------------------------------------------------
Attributable to:                                                            
Equity holders of the                                                       
 Company                   $    36.5    $    38.4    $    57.8    $    81.5 
Non-controlling                                                             
 interests                       0.3          0.3          0.7          0.7 
----------------------------------------------------------------------------
                           $    36.8    $    38.7    $    58.5    $    82.2 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share from                                                     
 continuing operations                                                      
 attributable to equity                                                     
 holders of the Company                                                     
Basic and diluted          $    0.14    $    0.15    $    0.22    $    0.32 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
Consolidated Statement of Comprehensive (Loss) Income                       
                                                                            
(Unaudited)                                                       Six months
(amounts in millions of          Three months ended                    ended
 Canadian dollars)                     September 30             September 30
                                   2012        2011        2012        2011 
----------------------------------------------------------------------------
Net income                     $   36.8    $   38.7    $   58.5    $   82.2 
----------------------------------------------------------------------------
Foreign currency translation                                                
Net currency translation                                                    
 difference on the                                                          
 translation of financial                                                   
 statements of foreign                                                      
 operations                    $  (41.3)   $   59.4    $  (38.4)   $   58.5 
Net gains (losses) on                                                       
 certain long-term debt                                                     
 denominated in foreign                                                     
 currency and designated as                                                 
 hedges of net investments                                                  
 in foreign operations              9.7       (12.3)        7.2       (11.5)
Income taxes                       (1.3)        1.9        (1.3)        1.9 
----------------------------------------------------------------------------
                               $  (32.9)   $   49.0    $  (32.5)   $   48.9 
----------------------------------------------------------------------------
Net changes in cash flow                                                    
 hedges                                                                     
Effective portion of changes                                                
 in fair value of cash flow                                                 
 hedges                        $   14.0    $  (25.9)   $    9.2    $  (27.9)
Net change in fair value of                                                 
 cash flow hedges                                                           
 transferred to net income                                                  
 or to related non-financial                                                
 assets or liabilities             (6.3)       (2.1)       (7.7)       (6.6)
Income taxes                       (2.0)        7.6        (0.6)        8.9 
----------------------------------------------------------------------------
                               $    5.7    $  (20.4)   $    0.9    $  (25.6)
----------------------------------------------------------------------------
Defined benefit plan                                                        
 actuarial losses                                                           
Defined benefit plan                                                        
 actuarial losses              $  (33.6)   $  (42.1)   $  (39.6)   $  (44.8)
Income taxes                        9.0        11.7        10.6        12.4 
----------------------------------------------------------------------------
                               $  (24.6)   $  (30.4)   $  (29.0)   $  (32.4)
----------------------------------------------------------------------------
Other comprehensive loss       $  (51.8)   $   (1.8)   $  (60.6)   $   (9.1)
----------------------------------------------------------------------------
Total comprehensive (loss)                                                  
 income                        $  (15.0)   $   36.9    $   (2.1)   $   73.1 
----------------------------------------------------------------------------
Attributable to:                                                            
Equity holders of the                                                       
 Company                       $  (15.2)   $   36.4    $   (2.8)   $   72.2 
Non-controlling interests           0.2         0.5         0.7         0.9 
----------------------------------------------------------------------------
                               $  (15.0)   $   36.9    $   (2.1)   $   73.1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
Consolidated Statement of Changes in Equity                                 
                                                                            
(Unaudited)                    Attributable to equity holders of the Company
                    --------------------------------------------------------
six months ended                                                            
 September 30, 2012                                                         
 (amounts in                                                                
 millions of                                                    Accumulated 
 Canadian dollars,                      Common                        other 
 except number of      Number of        shares   Contributed  comprehensive 
 shares)                  shares  Stated value       surplus  (loss) income 
----------------------------------------------------------------------------
Balances, beginning                                                         
 of period           258,266,295 $       454.5 $        19.2  $        (9.8)
Net income                     -             -             -              - 
Other comprehensive                                                         
 (loss) income:                                                             
 Foreign currency                                                           
  translation                  -             -             -          (32.5)
 Net changes in cash                                                        
  flow hedges                  -             -             -            0.9 
 Defined benefit                                                            
  plan actuarial                                                            
  losses                       -             -             -              - 
----------------------------------------------------------------------------
Total comprehensive                                                         
 loss                          - $           - $           -  $       (31.6)
Stock options                                                               
 exercised               233,425           2.0             -              - 
Optional cash                                                               
 purchase                    612             -             -              - 
Stock dividends          543,516           5.4             -              - 
Transfer upon                                                               
 exercise of stock                                                          
 options                       -           0.6          (0.6)             - 
Share-based payments           -             -           2.3              - 
Additions to non-                                                           
 controlling                                                                
 interests                     -             -             -              - 
Dividends                      -             -             -              - 
----------------------------------------------------------------------------
Balances, end of                                                            
 period              259,043,848 $       462.5 $        20.9  $       (41.4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                         Attributable to equity                            
(Unaudited)              holders of the Company                            
                    ----------------------------                           
six months ended                                                           
 September 30, 2012                                                        
 (amounts in                                                               
 millions of                                                               
 Canadian dollars,                                        Non-             
 except number of         Retained                 controlling       Total 
 shares)                  earnings        Total      interests      equity 
---------------------------------------------------------------------------
Balances, beginning                                                        
 of period           $       558.0  $   1,021.9  $        20.3 $   1,042.2 
Net income                    57.8         57.8            0.7        58.5 
Other comprehensive                                                        
 (loss) income:                                                            
 Foreign currency                                                          
  translation                    -        (32.5)             -       (32.5)
 Net changes in cash                                                       
  flow hedges                    -          0.9              -         0.9 
 Defined benefit                                                           
  plan actuarial                                                           
  losses                     (29.0)       (29.0)             -       (29.0)
---------------------------------------------------------------------------
Total comprehensive                                                        
 loss                $        28.8  $      (2.8) $         0.7 $      (2.1)
Stock options                                                              
 exercised                       -          2.0              -         2.0 
Optional cash                                                              
 purchase                        -            -              -           - 
Stock dividends               (5.4)           -              -           - 
Transfer upon                                                              
 exercise of stock                                                         
 options                         -            -              -           - 
Share-based payments             -          2.3              -         2.3 
Additions to non-                                                          
 controlling                                                               
 interests                       -            -            0.8         0.8 
Dividends                    (17.9)       (17.9)             -       (17.9)
---------------------------------------------------------------------------
Balances, end of                                                           
 period              $       563.5  $   1,005.5  $        21.8 $   1,027.3 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                                                            
                                                                            
(Unaudited)                    Attributable to equity holders of the Company
                   ---------------------------------------------------------
six months ended                                                            
 September 30, 2011                                                         
 (amounts in                                                                
 millions of                                                    Accumulated 
 Canadian dollars,                     Common                         other 
 except number of     Number of        shares   Contributed   comprehensive 
 shares)                 shares  Stated value       surplus   (loss) income 
----------------------------------------------------------------------------
Balances, beginning                                                         
 of period          256,964,756 $       440.7 $        17.1  $         (9.8)
Net income                    -             -             -               - 
Other comprehensive                                                         
 income (loss):                                                             
 Foreign currency                                                           
  translation                 -             -             -            48.7 
 Net changes in                                                             
  cash flow hedges            -             -             -           (25.6)
 Defined benefit                                                            
  plan actuarial                                                            
  losses                      -             -             -               - 
----------------------------------------------------------------------------
Total comprehensive                                                         
 income                       - $           - $           -  $         23.1 
Stock options                                                               
 exercised              270,750           2.0             -               - 
Optional cash                                                               
 purchase                   495             -             -               - 
Stock dividends         322,776           3.6             -               - 
Transfer upon                                                               
 exercise of stock                                                          
 options                      -           0.7          (0.7)              - 
Share-based                                                                 
 payments                     -             -           2.2               - 
Dividends                     -             -             -               - 
----------------------------------------------------------------------------
Balances, end of                                                            
 period             257,558,777 $       447.0 $        18.6  $         13.3 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            

                                                                          
                                                                          
                        Attributable to equity                            
(Unaudited)             holders of the Company                            
                   ----------------------------                           
six months ended                                                          
 September 30, 2011                                                       
 (amounts in                                                              
 millions of                                                              
 Canadian dollars,                                       Non-             
 except number of        Retained                 controlling       Total 
 shares)                 earnings        Total      interests      equity 
--------------------------------------------------------------------------
Balances, beginning                                                       
 of period          $       466.4  $     914.4  $        18.5 $     932.9 
Net income                   81.5         81.5            0.7        82.2 
Other comprehensive                                                       
 income (loss):                                                           
 Foreign currency                                                         
  translation                   -         48.7            0.2        48.9 
 Net changes in                                                           
  cash flow hedges              -        (25.6)             -       (25.6)
 Defined benefit                                                          
  plan actuarial                                                          
  losses                    (32.4)       (32.4)             -       (32.4)
--------------------------------------------------------------------------
Total comprehensive                                                       
 income             $        49.1  $      72.2  $         0.9 $      73.1 
Stock options                                                             
 exercised                      -          2.0              -         2.0 
Optional cash                                                             
 purchase                       -            -              -           - 
Stock dividends              (3.6)           -              -           - 
Transfer upon                                                             
 exercise of stock                                                        
 options                        -            -              -           - 
Share-based                                                               
 payments                       -          2.2              -         2.2 
Dividends                   (17.0)       (17.0)             -       (17.0)
--------------------------------------------------------------------------
Balances, end of                                                          
 period             $       494.9  $     973.8  $        19.4 $     993.2 
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                          
The total of retained earnings and accumulated other comprehensive (loss)   
income for the six months ended September 30, 2012 was $522.1 million (2011 
- $508.2 million).                                                          
                                                                            
                                                                            
                                                                            
Consolidated Statement of Cash Flows                                        
                                                                            
(Unaudited)                                                                 
six months ended September 30                                               
(amounts in millions of Canadian dollars)                  2012        2011 
----------------------------------------------------------------------------
Operating activities                                                        
 Net income                                          $     58.5  $     82.2 
 Adjustments to reconcile net income to cash flows                          
 from operating activities:                                                 
  Depreciation of property, plant and equipment            52.7        44.6 
  Amortization of intangible and other assets              20.9        14.5 
  Financing cost amortization                               0.9         0.8 
  Deferred income taxes                                    15.1        13.6 
  Investment tax credits                                  (11.2)       (8.4)
  Share-based payments                                     (0.3)        0.5 
  Defined benefit pension plans                            (3.1)       (4.5)
  Amortization of other non-current liabilities            (7.0)       (4.9)
  Other                                                    (0.2)       (4.3)
Changes in non-cash working capital                      (154.9)      (92.7)
----------------------------------------------------------------------------
Net cash (used in) provided by operating activities  $    (28.6) $     41.4 
----------------------------------------------------------------------------
Investing activities                                                        
Business combinations, net of cash and cash                                 
 equivalents acquired                                $   (264.4) $   (126.1)
Joint ventures, net of cash and cash equivalents                            
 acquired                                                     -       (26.8)
Capital expenditures for property, plant and                                
 equipment                                                (90.5)      (77.2)
Proceeds from disposal of property, plant and                               
 equipment                                                    -        27.2 
Capitalized development costs                             (24.0)      (18.7)
Enterprise resource planning (ERP) and other                                
 software                                                 (10.1)       (8.5)
Other                                                      (1.0)       (0.5)
----------------------------------------------------------------------------
Net cash used in investing activities                $   (390.0) $   (230.6)
----------------------------------------------------------------------------
Financing activities                                                        
Net borrowing under revolving unsecured credit                              
 facilities                                          $    229.9  $     14.2 
Net effect of current financial assets program            (21.9)       (7.7)
Proceeds from long-term debt, net of transaction                            
 costs                                                    336.6       170.5 
Repayment of long-term debt                              (154.7)      (16.7)
Repayment of finance lease                                 (7.6)      (11.1)
Dividends paid                                            (17.9)      (17.0)
Common stock issuance                                       2.0         2.0 
Other                                                      (1.5)       (0.6)
----------------------------------------------------------------------------
Net cash provided by financing activities            $    364.9  $    133.6 
----------------------------------------------------------------------------
Net decrease in cash and cash equivalents            $    (53.7) $    (55.6)
Cash and cash equivalents, beginning of period            287.3       276.4 
Effect of foreign exchange rate changes on cash and                         
 cash equivalents                                          (4.2)        6.3 
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Cash and cash equivalents, end of period             $    229.4  $    227.1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplemental information:                                                   
  Dividends received                                 $      2.0  $      2.8 
  Interest paid                                            28.0        21.8 
  Interest received                                         2.4         2.2 
  Income taxes paid                                        15.5        21.0 
----------------------------------------------------------------------------
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Contacts: Investor relations: Andrew Arnovitz, Vice President Investor Relations and Strategy (514) 734-5760andrew.arnovitz@cae.com Media: Nathalie Bourque, Vice President, Public Affairs and Global Communications (514) 734-5788nathalie.bourque@cae.com



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