Precision Components Group revenue more than doubled from $20.2 million in the first quarter of fiscal 1998 to $40.6 million. During the most recent quarter, ATS started to recognise revenue from a major micro-electronics contract awarded a year ago and this contract contributed approximately half of the increase in Precision Components Group revenue during the period.

Automation Systems Group revenue grew 12 per cent to $68.5 million. This increase was achieved even while the company utilized a significant portion of its Automation Systems Group resources to design and produce the additional manufacturing systems requiredfor the company's Precision Components Group.

In addition, the company derived a significantly lower amount of revenue than normal as a result of reduced integration of third party equipment into its automation systems during the quarter. This reduction in third party equipment integrated into automation systems is expected to be temporary as such revenue may often vary from quarter to quarter depending on the status and nature of customer orders.

Order bookings for automation systems in the quarter were up 44 per cent to $89.2million from $62.1 million in fiscal 1998's first quarter.

Operating income for the first quarter of fiscal 1999 increased 21 per cent to $13.2 million from $10.9 million, reflecting revenue growth.

Operating margin in the first quarter was very strong at 12.1 per cent. While lower than the record operating margin of 13.4 per cent reported for the first quarter of fiscal 1998, it compares very favourably with the operating margin of 11.4 per cent reported for all of fiscal1998.

The change in first quarter operating margin reflects the increased proportion of consolidated revenue derived from the Precision Components Group with its lower margins as well as higher depreciation, research and development expenditures and selling and administrative expenses.

The company's use of significant resources within its Automation Systems Group to design and manufacture automation systems for use in the Precision Components Group, as previously noted, also negatively impacted operating margins in this quarter. However, as expected, operating margin continued to track in line with the company's target range of 11 to 12 per cent.

Net earnings for the first quarter of fiscal 1999 increased 34 per cent to $8.3million (15 cents basic and fully diluted), compared to $6.2 million (12 cents basic and fully diluted) in the comparable first quarter a year ago.

Automation Systems Group order backlog at June 27, 1998 was $114.4 million, a 22 per cent increase over the backlog of $93.7 millionat March 31, 1998. Not included in the backlog is approximately $13 million of automation systems work for the Precision Components Group which will be completed during the current fiscal year. Automation Systems order backlog was $132.2 million at June 28, 1997.

Both of our business Groups are progressing well and are on target,'' said ATS president and chief executive officer Klaus Woerner. The Precision Components Group has begun to see the benefits from our microelectronics contract and we expect these revenues to continue to expand.

The Automation Systems Group is also on track with the backlog at a healthy and manageable level and our quotation activity is also strong. Overall, we are continuing to benefit from our depth and range of technical capability and from our strategy which has positioned ATS to secure business in diverse markets and industries.''

Compared to fiscal 1998's first quarter, revenue by region:

- Increased 6 per cent in the company's largest market, the US and Mexico, to$56.3 million;

- Grew 73 per cent in Europe to $24.3 million;

- Expanded 175 per cent in the Pacific Rim to $15.1 million, primarily the result of shipments made into the region under the Company's microelectronics contract;

- Increased 50 per cent in Canada to $13.4 million compared to fiscal 1998's first quarter, revenue by sector:

- Expanded 41 per cent in computer, semiconductor and electronics sector, which accounted for 47 per cent, or $52.0 million, of consolidated revenue;

- Increased 23% in the automotive sector to $46.7 million, or 43 per cent of total revenue;

- Increased 61% in other emerging industries.

In terms of financial condition, at June 27, 1998 ATS had $16 million of cash and short-term investments and the company's balance sheet was very strong with a ratio of debt to equity of 0.16 to 1.

We have had a very solid start to the 1999 fiscal year,'' said Woerner.We expect to continue to build on the progress achieved in both of our businessGroups. We are confident about our business and our core markets and we are committed to achieving the goals we have set for this year.''

ATS will hold an annual and special meeting of shareholders at 4PM on Thursday, August 13, 1998 in Kitchener, Ontario.