Here is the I/S - ive done something wrong

Here is info from Case 2.4:

154 CHAPTER 3 Sternet and Statement of Stockholders Equity Hydrogenics Corporation Case 3.4 Required: This case is a continuation of Case 2.4. W Open the financial statement analysis template that you saved from the Chapter 2 Hydrogenics Case. Click on the "Cover" tab at the bottom of the screen. Input the check figures for the Income Statement section of this page. Click on the "Income Statement" tab and input the data from the income state- ment included for Hydrogenics in this case. Be sure to input the basic earn- ings per share amounts at the bottom of the page. When you have finished inputting the data, review the income statement to make sure there are no red blocks indicating that your numbers do not match the cover sheet information check figures. Make any necessary corrections before printing out your input and the common-size income statement and growth rate analysis pages that the template automatically creates for you. Save the template on your com- puter or a disk in order to use it with subsequent problems in later chapters. (b) Using the Hydrogenics income statement, the common size-income statement, growth rate analysis sheet and the excerpts from the notes and management discussion and analysis, analyze the profitability of Hydrogenics. CHAPTER 3 Income Statement and State of Stachelders' Equity 155 HYDROGENICS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS in thousands of US dollars, except for share and per share amount 2013 13,027 4.452 3 11 (426) 2012 As Revised Revenue (note 26) (Note 2) Cost of sales (notes 14 and 15) S42,413 $ 31,697 Gross profit 30,352 26,448 Operating expenses 12,061 5,249 Selling general and administrative expenses (notes 13, 14 and 15) Research and product development expenses (notes 14, 15 and 16) 16,275 - Other (gains) losses 2,566 (5) Loss from operations 18,844 17.474 Finance income (expenses) (6,783) (12,225) Interest income 26 Interest expense (329) Foreign currency gains 517 755 Foreign currency losses (586) Other finance (losses) gains, net (note 17) (2,065) (438) Finance (loss) gain, net (2,125) (572) Loss before income taxes (8,908) (12,797) Income tax expense (note 18) Net loss for the year (8,908) (12,797) Items that will not be reclassified to net loss: Re-measurements of actuarial losses (note 2) 241 Items that will be reclassified subsequently to net loss Exchange differences on translating foreign operations 509 126 Comprehensive loss for the year $ (8,399) $ (12,430) Net loss per share Basic and diluted (note 19) 5 (1.00) 5 (174) Weighted average number of common shares outstanding (note 19) 8,592,600 7,371,908 The accompanying notes form an integral part of these consolidated financial statements. (162) 156 CHAPTERJ Stan Statement of Stockholders' Equity He Note 14. Expenses By Nature 2013 Wa set 2012 $22.923 15.217 pr Fe Rew materials and consumables ved Employee note 15 racines 1.345 Shahadunications and other corporate communications $ 22,397 21,087 1,508 515 712 606 576 1,592 549,193 Decand amortization 870 759 527 1.399 $43.927 Se SE Insan Note 15. Employee Benefits Expense Expenditures for employee benefits are as follows: 2013 2012 Salaries and wages Stock-based compensation Medical, dental and insurance Pension costs Compensation indexed to share price Other $ 15,077 631 674 108 4,223 375 $ 21,087 $ 12,811 577 506 122 771 430 $ 15,217 Note 16. Research and Product Development Expenses Research and product development expenses are recorded net of non-repayable third party program funding received or receivable. For the years ended December 31, 2013, and 2012, research and product development expenses and non-repayable program funding, which have been received or are to be received, are as follows: 2013 2012 Research and product development expenses Government research and product development funding $ 5,534 (2.968) $ 2,566 $6,073 (1,467 $4.606 2013 Management's Discussion and Analysis of Financial Condition and Results of Operations 1. Our Business A summary of our business and how we address our markets CHAPTER 3 Income Stand State of Steelers Equity 157 How We Are Organized We operate in various geographic markets and organise ourselves in two reportable segments. Our OnSite Generative business segment is based in Oevel, Belgium and develops products for industrial gas, hydrogen fueling and renewable energy storage markets. For the year ended December 31, 2013, our Onsite Generation business reported enues of $24.1 million and, at December 31, 2013, had 73 full-time employees Our Power Systems business segment is based in Mississauga, Canada, with a satellite facility in Gladbeck, Germany, and develops products for energy storage stationary and motive power applications. For the year ended December 31, 2012 our Power Systems business reported revenues of $18.3 million and, at December 31, 2013 had 62 full-time employees. OnSite Generation Our OnSite Generation business segment is based on water electrolysis technology which involves the decomposition of water into oxygen (0) and hydrogen gus (Hz) by passing in electric current through a liquid electrolyte. The resultant hydrogen gas is then captured and used for industrial gas applications, hydrogen fueling applications, and is used to store renewable and surplus energy in the form of hydrogen gas. Our HYSTAT branded electrolyzer products are based on 60 years of hydrogen experience, meet interational standards, such as ASME, CE, Rostechnadzor and UL, and are certified ISO 9001 from design to delivery. We configure our HYSTATS products for both indoor and outdoor applications and tailor our products to accommodate various hydrogen gas requirements. The worldwide market for hydrogen, which includes the merchant gas market for hydrogen, is estimated at $5 billion annually, and is served by industrial gas compa- nies as well as on-site hydrogen generated by products manufactured by companies such as ours. We believe the annual market for on-site hydrogen generation equipment is approximately $100 million to $200 million. We believe the size of the addressable market for on-site hydrogen generation equipment could more than double if energy storage and electrolysis based hydrogen fueling stations gain widespread acceptance. Our OnSite Generation products are sold to leading merchant gas companies, such as Air Liquide and Linde Gas and end-users requiring high purity hydrogen produced on site for industrial applications. We also sell and service products for progressive oil and gas companies, such as Shell Hydrogen, requiring hydrogen fueling stations for transportation applications. Recently, an increase in orders and interest for fueling stations in Europe and elsewhere, has signaled what we believe could be a major increase in the size of this market. During the past year, we have also witnessed an increase in interest and orders for our small, medium and large scale energy storage products, which also service the need for ancillary electrical power services, such as grid balancing and load profiling While this area is heavily dependent on public funding initiatives, particularly in Europe, it continues to present compelling growth opportunities. In 2009, we began to sell our products to lend ing electric power utilities to satisfy the need for renewable energy storage Power Systems Our Power Systems business segment is based on PEM fuel cell technology, which transforms chemical energy liberated during the electrochemical reaction of hydrogen R Prvi Our of an men (2011 Teca $7.6 ing ind Chi HM branded will products and mofononch testing anal-time deployments a wide ay and wer profiles. We configure our HyI'M products into woutputs ranging from 1 kilowatt to 1 megawall with ease in Mility and operating efficiency, delivered from a highly compact Web develop and deliver hydrogen generation products based on PEM which also be used to serve the energy storage markets noted above Our og markets include backup power for telecom and data centre installa mative power applications, such as buses, trucks and utility vehicles. The military Historically an early technology adopter is a specialized market for our the cell and products. The worldwide market for data centre backup power estimated to be 52 to 3 billion in the United States alone, based on a complete dis med to be in excess of $6 billion and the market for telecom backup powers Our Power Systems products are sold to leading Original Equipment Manufactur- applications for telecom installations and vehicle and other integrators for motive (OEMs, such as CommScope, Inc. ("CommScope") to provide backup power (1 pc a placement of existing products serving this market. c power direct current ("DC" and alternative current ("AC") backup. Additionally, our products are sold for prototype field tests intended to be direct replacements for tradi- biorullend-acid battery packs for motive applications. We also sell our Power Systems products to the military, aerospace and other early adopters of emerging technologies 3 Operating Results A detailed discussion of our operating results for 2013 and 2012 Highlights for 2013 compared to 2012 Revenues increased 34% to 542.4 million from 2012, primarily reflecting increased revenues in our Power Systems business unit as a result of revenue on the contract for integrated power propulsion systems for an OEM as well as delivery of the major order of fuel cell modules to our major partner, CommScope, Inc. . Gross profit increased $6.8 million to $12.1 million, or 28% of revenue, driven by improved margins from the OnSite Generation business unit and increased revenue from the Power Systems business unit. BUSINESS SEGMENT REVIEW OnSite Generation Summary Financial Analysis Thousands of US dollars Percentage Favourable (Unfavourable 2013 2012 2013 $24,078 3,681 15% 2012 2011 $27336 $19,771 3.750 4.266 14 22 0%) (11 Revenues Gross Profit Percentage of Revenues Selling General and Administrative Expenses Research and Product Development Expenses Seyment Income (Loss) 3,308 3,455 817 356) 611 (139 6 131 B) (178) CHAPTER 3 Income Statement and statement of stock Equity 159 Revenues for 2013 were $24.1 million, a decrease of $3.3 million or over hun previous year, primarily reflecting decreased order bookings at December 31, 2017 on of anticipated sales orders for the period and therefore delays in project.com (2012 - 5189 million), substantially all of which are anticipated to be delivered and $7.6 million of 38% over the previous year, primarily reflecting increased order books ings at December 31, 2011 in our OnSite generation business unit driven by growth in industrial, fueling and renewable energy markets in the prior year, partially offset by Gross Profit was $3.7 million (15% of revenues) in 2013, compared to $3.8 million (14% of revenues) in 2012. Despite margin improvements previously reported and positive progress regarding product cost reductions through supply chain man agement and product design innovation, these benefits continue to be offset by the shortfall in revenue for the year ended December 31, 2013, which results in under applied production capacity. Gross profit was $3.8 million (14% of revenues) in 2012, compared to $4.3 million (22% of revenues) in 2011, primarily reflecting competitive strategic pricing - accelerating the demonstration phase of a new market Selling, General and Administrative ("SGGA") Expenses for 2013 were 53.2 million, a decrease of less than $0.1 million. SG&A expenses for 2012 were $3.3 million, a decrease of 0.1 million, primarily reflecting a weakening of the Euro relative to the USD. Power Systems Summary Financial Analysis Thousands of US dollars 2013 2012 $4.361 1.44 Percentage Favourable (Unfavourable) 2011 2013 2012 $4147 330% 5% 1.301 470% 13% 31% $18,335 8.380 Revenues Gross Profit Percentage of Revenues Selling. General and Administrative Expenses Research and Development Expenses Segment Gain (Loss) 37 4,201 1,722 2,992 2,157 (545) 06) (77) 55% 140 16.134) Revenues for 2013 were $18.3 million, an increase of $14.0 million or 320.com pared to 2012 as a result of revenues eamed on the contract for integrated power propulsion systems for an OEM, as well as delivery of the major order of fuel cell modules to our strategic partnet. CommScope, Inc. At December 31, 2013, we had $2.5 million (2012 - $41.1 million) of confirmed orders for Power Systems products and services Revenues for 2012 were S4 million, an increase of 0.2 million or compared to 2011 reflecting variations in timing of orders and product deliveries. At December 31, 2012, we had 41.1 million (2011-$1.9 million) of confirmed onders for Power Systems products and services the millions of compared to 51.5 million Whave higher sous mans Cross profit for 2012 w 1 min won the flecting a higher proportion of custom 1.3 million of revenues in the previous WaMcher protion of custom projects, which generally have highero S Ror 2013 were $4.2 million, an increase of $0.4 million or 11 to the previous year primarily reflecting increased marketing efforts and hier war activity associated with commercial activities. SG&A expenses for 2012 mi 87 of onders received in the year, an increase of $0.8 million or and to the previous year primarily reflecting increased marketing efforts and a higher level of activity associated with commercial activities as well as higher compensations arising from improved business performance. 10 Outlook The our business in 2014 Current Market Environment We are experiencing a willingness on the part of utilities and regulatory agencies to increase spending in the growing problem areas related to energy storage and grid stabilization. We also continue to witness governments in many jurisdictions show- ing a willingness to increase spending on alternative energy projects for the same purpose. We believe we are well positioned to benefit from government initiatives in Canada, the European Union and the United States, which we expect will positively impact our business. Recently, an increase in interest in our power-to-gas application and orders for energy storage and fueling stations in Europe and other geographies has signaled what we believe could be a significant increase in opportunities in the markets we serve. In addition, our agreement with CommScope lays the foundation for a strategie relationship dedicated to penetrating the large and growing market for telecom, AC. and DC backup power systems. We have already worked closely with CommScope in India, North America and Europe, and both companies see strong potential demand for power modules that address opportunities within the significantly growing backup power markets around the globe. In that vein, we are developing a broader range of products at various power levels, aiming for more attractive solutions and better economies of scale for our customers. In addition, over the past few years, the Corporation has taken significant steps to reduce operating and product costs, streamline its operations and consolidated financial position. At December 31, 2013, we maintain an order backlog of $57.0 mil- tion (December 31, 2012 - 560.0 million) spread across numerous geographical regions However, as a global corporation, we are subject to the risks arising from adverse changes in global economic conditions. Economic conditions in leading and emerging economies have been, and remain, unpredictable. This could result in our current or years, there is a threat of reduced sales of our products, longer sales cydes, slower potential customers delaying or reducing purchases. As we have witnessed in recent adoption of new technologies and increased price competition. ro G H A Clear D E Hydrogenics Corporation (HYGS / NASDAQ) Edit Annual Consolidated Income Statement Amounts Rounded to: Thousands fexcept per share amounts) Results for the Years Ending Dec 31, 2013 Dec 31, 2012 3 42.413 $ 30,352 12,061 15,275 2,566 31.697 26,448 5,249 13.027 4.452 8 10 11 12 13 15 16 17 18 Net sales Less: Cost of goods sold Gross profit Sales, general and administrative Research and development (R&D) Restructuring, impairment, and amortization Purchased in process R&D Other operating expenses Total operating expenses Operating profit (loss) Other income (expenses), net excluding interest expense Earings (los) before interest and taxes Interest expense Earings (oss) before taxes Provision for (benefit from) income taxes Eamings (loss) after taxes Extraordinary tomis, net Discontinued operations, net Cumulative effect of changes in accounting peinciples, net Other after-tax income foss), net 817 3 19,661 17.600) 11 (7.589) 426 (8,015) 517 (8,532) 611 (5) 18.085 (12,830) 26 (12.810) 329 (13,139) 755 (13,894) 19 20 21 22 23 24 25 26 28 509 (162) 241 126 (586) (8.185) 5 29 Net profit (los) Basic comings per common share 31 33 Ratios A Balance Sheet Income Statement Cash Flow Cover Balance Sheet Rendime 2007 & Later MacBook Air Net_inve... H C Hydrogenics Corporation (HYGS/NASDAQ) Annual Consolidated Balance Sheet 10 Store Totalcan and shot Acco In Current Other 13.00 1,034 1.68 11 12 14 15 17 18 10 20 21 2.70 31.640 11. 16.204 1.14 6715 54.607 107 socio 1300 Lengte 5. 100 5021 TOY 23 24 25 27 28 Omer Other . 1.10 40.00 70 41,077 $ 21155 5.25 5.556 3.162 20 LIANTES 30 Out 31 32 Short 33 Current portion of long-term 34 35 Income ble 37 . 38 To be 39 Long-term 40 Decores pel Order 43 Other 44 45 13 22,520 2,200 17.601 26.054 1.288 7.305 1.896 23.00 8,576 1,652 37,570 351.261 345,351) 341.500 (136,443 40 STOCKHOLDERS' EQUITY Preferred to 48 40 Domodo poden Pangsacced) 50 Tayo Acceder correios) 53 Other 54 55 Tweety 02491 6,561 4. 40 GTO 3 Rendime 2007 & Later Cover Balance Sheet Income Statement Cash Flow MacBook esc 80 DO 000 Template-FinStatement_v10_1_2010r2 AutoSave A BESU Insert Draw Formulas Review View Tell me Home Data Page Layout A A Wrap Text BE Merge Center Conditie Format Paste F38 C O Ei shehar man Curry - Cure US Sandales po THE 2013 Type DO NOT . nh Dieser Ener ARRERAS CS Total Duro 200 9220 Gros Own OOTD 13 hos AV Home 2007 La Cover nance sheet Incorrent Cash Flow 90 888 90 esc 2 S 4 & 7 3 5 6 8 Temple AutoSave OFF BE SU Data Review View Tell me Formulas Insert Draw Page Layout Home A A 2 Wrap Text th Merge & Cente Paste G61 D B Hydrogenics Corporation (HYGS/NASDAQ) Annual Common Size Balance Sheet 02 6 23 Others, net 24 Other deferred take 26 Others 27 Total assets Results as of Dec 31, 2013 Dec 31, 2012 0.3% 0.0% 0.0% 3.5% 18% 100.0% 100.0 7.8% 0.0% 0.0% 13.9% 0.0% 28 BITES 29 rent bien 30 Accounts payable 31 Short-term debit 32 Current portion of long-term dett 33 Accredite 34 Income taxes payable 36 Other current abilities 37 Total current liabiti 38 Long-term debt 39 Deferred income taxes payable 40 Other deferred liabilities 42 Othelbit 43 Total abilities 12.8% 0.0% 0.0% 7.6% 0.0% 42.0% 522% 3.1% 0.0% 20.5% 3.9% 89.7% 562 5.8% 0.0% 18.2% 84.6% 0.0% 0.0% 44 Minority interest 0.0% 877.9% (1) 0.0% (0.6%) 0.0% 15.4% 0.0% 815 5% (00.4% 0.0% 11.8% 0.0% 103% 100.0% 100.0% 45 CKHOLDERS' EQUITY 46 Preferred stock 47 Common stock, per value plus additional paid in capital 48 Retained earnings (accumulated deficit) 49 Treasury stock 50 Accumulated other comprehensive income (ons) 52 Other stockholders' equity 53 Total stockholders equity 54 Total abilities and stockholders' equity 56 67 58 69 60 61 02 03 54 65 66 Template-Finstal AutoSave BEU. Data Review View Tell me Formulas Home Insert Draw Page Layout Wrap Text A A Merge & Center Paste Al H C Hydrogenics Corporation (HYGS/NASDAQ) Annual Como se income statemen ests for the Year Ending Dec 1.200 9000 100.0% 71.8 254 est of goods Groep 10 DON 19 00 40:49 16. 41 1 14.0 0.01 1. 2.09 SIIN 13 15 16 17 18 RAD Othering Tring experts Operating profil er nog stepena Es) restando 17 90 TV 04 10 20 21 22 23 24 25 26 28 Emil Stores Poltron income Lashes ry Derson, Curive to changes Other 201 0.01 24 2 0.0 O 0.45 29 N NM Effect 30 32 33 34 55 30 37 Readine 2007 & Later Cover Balance Sheet Income Statement Cash Flow 154 CHAPTER 3 Sternet and Statement of Stockholders Equity Hydrogenics Corporation Case 3.4 Required: This case is a continuation of Case 2.4. W Open the financial statement analysis template that you saved from the Chapter 2 Hydrogenics Case. Click on the "Cover" tab at the bottom of the screen. Input the check figures for the Income Statement section of this page. Click on the "Income Statement" tab and input the data from the income state- ment included for Hydrogenics in this case. Be sure to input the basic earn- ings per share amounts at the bottom of the page. When you have finished inputting the data, review the income statement to make sure there are no red blocks indicating that your numbers do not match the cover sheet information check figures. Make any necessary corrections before printing out your input and the common-size income statement and growth rate analysis pages that the template automatically creates for you. Save the template on your com- puter or a disk in order to use it with subsequent problems in later chapters. (b) Using the Hydrogenics income statement, the common size-income statement, growth rate analysis sheet and the excerpts from the notes and management discussion and analysis, analyze the profitability of Hydrogenics. CHAPTER 3 Income Statement and State of Stachelders' Equity 155 HYDROGENICS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS in thousands of US dollars, except for share and per share amount 2013 13,027 4.452 3 11 (426) 2012 As Revised Revenue (note 26) (Note 2) Cost of sales (notes 14 and 15) S42,413 $ 31,697 Gross profit 30,352 26,448 Operating expenses 12,061 5,249 Selling general and administrative expenses (notes 13, 14 and 15) Research and product development expenses (notes 14, 15 and 16) 16,275 - Other (gains) losses 2,566 (5) Loss from operations 18,844 17.474 Finance income (expenses) (6,783) (12,225) Interest income 26 Interest expense (329) Foreign currency gains 517 755 Foreign currency losses (586) Other finance (losses) gains, net (note 17) (2,065) (438) Finance (loss) gain, net (2,125) (572) Loss before income taxes (8,908) (12,797) Income tax expense (note 18) Net loss for the year (8,908) (12,797) Items that will not be reclassified to net loss: Re-measurements of actuarial losses (note 2) 241 Items that will be reclassified subsequently to net loss Exchange differences on translating foreign operations 509 126 Comprehensive loss for the year $ (8,399) $ (12,430) Net loss per share Basic and diluted (note 19) 5 (1.00) 5 (174) Weighted average number of common shares outstanding (note 19) 8,592,600 7,371,908 The accompanying notes form an integral part of these consolidated financial statements. (162) 156 CHAPTERJ Stan Statement of Stockholders' Equity He Note 14. Expenses By Nature 2013 Wa set 2012 $22.923 15.217 pr Fe Rew materials and consumables ved Employee note 15 racines 1.345 Shahadunications and other corporate communications $ 22,397 21,087 1,508 515 712 606 576 1,592 549,193 Decand amortization 870 759 527 1.399 $43.927 Se SE Insan Note 15. Employee Benefits Expense Expenditures for employee benefits are as follows: 2013 2012 Salaries and wages Stock-based compensation Medical, dental and insurance Pension costs Compensation indexed to share price Other $ 15,077 631 674 108 4,223 375 $ 21,087 $ 12,811 577 506 122 771 430 $ 15,217 Note 16. Research and Product Development Expenses Research and product development expenses are recorded net of non-repayable third party program funding received or receivable. For the years ended December 31, 2013, and 2012, research and product development expenses and non-repayable program funding, which have been received or are to be received, are as follows: 2013 2012 Research and product development expenses Government research and product development funding $ 5,534 (2.968) $ 2,566 $6,073 (1,467 $4.606 2013 Management's Discussion and Analysis of Financial Condition and Results of Operations 1. Our Business A summary of our business and how we address our markets CHAPTER 3 Income Stand State of Steelers Equity 157 How We Are Organized We operate in various geographic markets and organise ourselves in two reportable segments. Our OnSite Generative business segment is based in Oevel, Belgium and develops products for industrial gas, hydrogen fueling and renewable energy storage markets. For the year ended December 31, 2013, our Onsite Generation business reported enues of $24.1 million and, at December 31, 2013, had 73 full-time employees Our Power Systems business segment is based in Mississauga, Canada, with a satellite facility in Gladbeck, Germany, and develops products for energy storage stationary and motive power applications. For the year ended December 31, 2012 our Power Systems business reported revenues of $18.3 million and, at December 31, 2013 had 62 full-time employees. OnSite Generation Our OnSite Generation business segment is based on water electrolysis technology which involves the decomposition of water into oxygen (0) and hydrogen gus (Hz) by passing in electric current through a liquid electrolyte. The resultant hydrogen gas is then captured and used for industrial gas applications, hydrogen fueling applications, and is used to store renewable and surplus energy in the form of hydrogen gas. Our HYSTAT branded electrolyzer products are based on 60 years of hydrogen experience, meet interational standards, such as ASME, CE, Rostechnadzor and UL, and are certified ISO 9001 from design to delivery. We configure our HYSTATS products for both indoor and outdoor applications and tailor our products to accommodate various hydrogen gas requirements. The worldwide market for hydrogen, which includes the merchant gas market for hydrogen, is estimated at $5 billion annually, and is served by industrial gas compa- nies as well as on-site hydrogen generated by products manufactured by companies such as ours. We believe the annual market for on-site hydrogen generation equipment is approximately $100 million to $200 million. We believe the size of the addressable market for on-site hydrogen generation equipment could more than double if energy storage and electrolysis based hydrogen fueling stations gain widespread acceptance. Our OnSite Generation products are sold to leading merchant gas companies, such as Air Liquide and Linde Gas and end-users requiring high purity hydrogen produced on site for industrial applications. We also sell and service products for progressive oil and gas companies, such as Shell Hydrogen, requiring hydrogen fueling stations for transportation applications. Recently, an increase in orders and interest for fueling stations in Europe and elsewhere, has signaled what we believe could be a major increase in the size of this market. During the past year, we have also witnessed an increase in interest and orders for our small, medium and large scale energy storage products, which also service the need for ancillary electrical power services, such as grid balancing and load profiling While this area is heavily dependent on public funding initiatives, particularly in Europe, it continues to present compelling growth opportunities. In 2009, we began to sell our products to lend ing electric power utilities to satisfy the need for renewable energy storage Power Systems Our Power Systems business segment is based on PEM fuel cell technology, which transforms chemical energy liberated during the electrochemical reaction of hydrogen R Prvi Our of an men (2011 Teca $7.6 ing ind Chi HM branded will products and mofononch testing anal-time deployments a wide ay and wer profiles. We configure our HyI'M products into woutputs ranging from 1 kilowatt to 1 megawall with ease in Mility and operating efficiency, delivered from a highly compact Web develop and deliver hydrogen generation products based on PEM which also be used to serve the energy storage markets noted above Our og markets include backup power for telecom and data centre installa mative power applications, such as buses, trucks and utility vehicles. The military Historically an early technology adopter is a specialized market for our the cell and products. The worldwide market for data centre backup power estimated to be 52 to 3 billion in the United States alone, based on a complete dis med to be in excess of $6 billion and the market for telecom backup powers Our Power Systems products are sold to leading Original Equipment Manufactur- applications for telecom installations and vehicle and other integrators for motive (OEMs, such as CommScope, Inc. ("CommScope") to provide backup power (1 pc a placement of existing products serving this market. c power direct current ("DC" and alternative current ("AC") backup. Additionally, our products are sold for prototype field tests intended to be direct replacements for tradi- biorullend-acid battery packs for motive applications. We also sell our Power Systems products to the military, aerospace and other early adopters of emerging technologies 3 Operating Results A detailed discussion of our operating results for 2013 and 2012 Highlights for 2013 compared to 2012 Revenues increased 34% to 542.4 million from 2012, primarily reflecting increased revenues in our Power Systems business unit as a result of revenue on the contract for integrated power propulsion systems for an OEM as well as delivery of the major order of fuel cell modules to our major partner, CommScope, Inc. . Gross profit increased $6.8 million to $12.1 million, or 28% of revenue, driven by improved margins from the OnSite Generation business unit and increased revenue from the Power Systems business unit. BUSINESS SEGMENT REVIEW OnSite Generation Summary Financial Analysis Thousands of US dollars Percentage Favourable (Unfavourable 2013 2012 2013 $24,078 3,681 15% 2012 2011 $27336 $19,771 3.750 4.266 14 22 0%) (11 Revenues Gross Profit Percentage of Revenues Selling General and Administrative Expenses Research and Product Development Expenses Seyment Income (Loss) 3,308 3,455 817 356) 611 (139 6 131 B) (178) CHAPTER 3 Income Statement and statement of stock Equity 159 Revenues for 2013 were $24.1 million, a decrease of $3.3 million or over hun previous year, primarily reflecting decreased order bookings at December 31, 2017 on of anticipated sales orders for the period and therefore delays in project.com (2012 - 5189 million), substantially all of which are anticipated to be delivered and $7.6 million of 38% over the previous year, primarily reflecting increased order books ings at December 31, 2011 in our OnSite generation business unit driven by growth in industrial, fueling and renewable energy markets in the prior year, partially offset by Gross Profit was $3.7 million (15% of revenues) in 2013, compared to $3.8 million (14% of revenues) in 2012. Despite margin improvements previously reported and positive progress regarding product cost reductions through supply chain man agement and product design innovation, these benefits continue to be offset by the shortfall in revenue for the year ended December 31, 2013, which results in under applied production capacity. Gross profit was $3.8 million (14% of revenues) in 2012, compared to $4.3 million (22% of revenues) in 2011, primarily reflecting competitive strategic pricing - accelerating the demonstration phase of a new market Selling, General and Administrative ("SGGA") Expenses for 2013 were 53.2 million, a decrease of less than $0.1 million. SG&A expenses for 2012 were $3.3 million, a decrease of 0.1 million, primarily reflecting a weakening of the Euro relative to the USD. Power Systems Summary Financial Analysis Thousands of US dollars 2013 2012 $4.361 1.44 Percentage Favourable (Unfavourable) 2011 2013 2012 $4147 330% 5% 1.301 470% 13% 31% $18,335 8.380 Revenues Gross Profit Percentage of Revenues Selling. General and Administrative Expenses Research and Development Expenses Segment Gain (Loss) 37 4,201 1,722 2,992 2,157 (545) 06) (77) 55% 140 16.134) Revenues for 2013 were $18.3 million, an increase of $14.0 million or 320.com pared to 2012 as a result of revenues eamed on the contract for integrated power propulsion systems for an OEM, as well as delivery of the major order of fuel cell modules to our strategic partnet. CommScope, Inc. At December 31, 2013, we had $2.5 million (2012 - $41.1 million) of confirmed orders for Power Systems products and services Revenues for 2012 were S4 million, an increase of 0.2 million or compared to 2011 reflecting variations in timing of orders and product deliveries. At December 31, 2012, we had 41.1 million (2011-$1.9 million) of confirmed onders for Power Systems products and services the millions of compared to 51.5 million Whave higher sous mans Cross profit for 2012 w 1 min won the flecting a higher proportion of custom 1.3 million of revenues in the previous WaMcher protion of custom projects, which generally have highero S Ror 2013 were $4.2 million, an increase of $0.4 million or 11 to the previous year primarily reflecting increased marketing efforts and hier war activity associated with commercial activities. SG&A expenses for 2012 mi 87 of onders received in the year, an increase of $0.8 million or and to the previous year primarily reflecting increased marketing efforts and a higher level of activity associated with commercial activities as well as higher compensations arising from improved business performance. 10 Outlook The our business in 2014 Current Market Environment We are experiencing a willingness on the part of utilities and regulatory agencies to increase spending in the growing problem areas related to energy storage and grid stabilization. We also continue to witness governments in many jurisdictions show- ing a willingness to increase spending on alternative energy projects for the same purpose. We believe we are well positioned to benefit from government initiatives in Canada, the European Union and the United States, which we expect will positively impact our business. Recently, an increase in interest in our power-to-gas application and orders for energy storage and fueling stations in Europe and other geographies has signaled what we believe could be a significant increase in opportunities in the markets we serve. In addition, our agreement with CommScope lays the foundation for a strategie relationship dedicated to penetrating the large and growing market for telecom, AC. and DC backup power systems. We have already worked closely with CommScope in India, North America and Europe, and both companies see strong potential demand for power modules that address opportunities within the significantly growing backup power markets around the globe. In that vein, we are developing a broader range of products at various power levels, aiming for more attractive solutions and better economies of scale for our customers. In addition, over the past few years, the Corporation has taken significant steps to reduce operating and product costs, streamline its operations and consolidated financial position. At December 31, 2013, we maintain an order backlog of $57.0 mil- tion (December 31, 2012 - 560.0 million) spread across numerous geographical regions However, as a global corporation, we are subject to the risks arising from adverse changes in global economic conditions. Economic conditions in leading and emerging economies have been, and remain, unpredictable. This could result in our current or years, there is a threat of reduced sales of our products, longer sales cydes, slower potential customers delaying or reducing purchases. As we have witnessed in recent adoption of new technologies and increased price competition. ro G H A Clear D E Hydrogenics Corporation (HYGS / NASDAQ) Edit Annual Consolidated Income Statement Amounts Rounded to: Thousands fexcept per share amounts) Results for the Years Ending Dec 31, 2013 Dec 31, 2012 3 42.413 $ 30,352 12,061 15,275 2,566 31.697 26,448 5,249 13.027 4.452 8 10 11 12 13 15 16 17 18 Net sales Less: Cost of goods sold Gross profit Sales, general and administrative Research and development (R&D) Restructuring, impairment, and amortization Purchased in process R&D Other operating expenses Total operating expenses Operating profit (loss) Other income (expenses), net excluding interest expense Earings (los) before interest and taxes Interest expense Earings (oss) before taxes Provision for (benefit from) income taxes Eamings (loss) after taxes Extraordinary tomis, net Discontinued operations, net Cumulative effect of changes in accounting peinciples, net Other after-tax income foss), net 817 3 19,661 17.600) 11 (7.589) 426 (8,015) 517 (8,532) 611 (5) 18.085 (12,830) 26 (12.810) 329 (13,139) 755 (13,894) 19 20 21 22 23 24 25 26 28 509 (162) 241 126 (586) (8.185) 5 29 Net profit (los) Basic comings per common share 31 33 Ratios A Balance Sheet Income Statement Cash Flow Cover Balance Sheet Rendime 2007 & Later MacBook Air Net_inve... H C Hydrogenics Corporation (HYGS/NASDAQ) Annual Consolidated Balance Sheet 10 Store Totalcan and shot Acco In Current Other 13.00 1,034 1.68 11 12 14 15 17 18 10 20 21 2.70 31.640 11. 16.204 1.14 6715 54.607 107 socio 1300 Lengte 5. 100 5021 TOY 23 24 25 27 28 Omer Other . 1.10 40.00 70 41,077 $ 21155 5.25 5.556 3.162 20 LIANTES 30 Out 31 32 Short 33 Current portion of long-term 34 35 Income ble 37 . 38 To be 39 Long-term 40 Decores pel Order 43 Other 44 45 13 22,520 2,200 17.601 26.054 1.288 7.305 1.896 23.00 8,576 1,652 37,570 351.261 345,351) 341.500 (136,443 40 STOCKHOLDERS' EQUITY Preferred to 48 40 Domodo poden Pangsacced) 50 Tayo Acceder correios) 53 Other 54 55 Tweety 02491 6,561 4. 40 GTO 3 Rendime 2007 & Later Cover Balance Sheet Income Statement Cash Flow MacBook esc 80 DO 000 Template-FinStatement_v10_1_2010r2 AutoSave A BESU Insert Draw Formulas Review View Tell me Home Data Page Layout A A Wrap Text BE Merge Center Conditie Format Paste F38 C O Ei shehar man Curry - Cure US Sandales po THE 2013 Type DO NOT . nh Dieser Ener ARRERAS CS Total Duro 200 9220 Gros Own OOTD 13 hos AV Home 2007 La Cover nance sheet Incorrent Cash Flow 90 888 90 esc 2 S 4 & 7 3 5 6 8 Temple AutoSave OFF BE SU Data Review View Tell me Formulas Insert Draw Page Layout Home A A 2 Wrap Text th Merge & Cente Paste G61 D B Hydrogenics Corporation (HYGS/NASDAQ) Annual Common Size Balance Sheet 02 6 23 Others, net 24 Other deferred take 26 Others 27 Total assets Results as of Dec 31, 2013 Dec 31, 2012 0.3% 0.0% 0.0% 3.5% 18% 100.0% 100.0 7.8% 0.0% 0.0% 13.9% 0.0% 28 BITES 29 rent bien 30 Accounts payable 31 Short-term debit 32 Current portion of long-term dett 33 Accredite 34 Income taxes payable 36 Other current abilities 37 Total current liabiti 38 Long-term debt 39 Deferred income taxes payable 40 Other deferred liabilities 42 Othelbit 43 Total abilities 12.8% 0.0% 0.0% 7.6% 0.0% 42.0% 522% 3.1% 0.0% 20.5% 3.9% 89.7% 562 5.8% 0.0% 18.2% 84.6% 0.0% 0.0% 44 Minority interest 0.0% 877.9% (1) 0.0% (0.6%) 0.0% 15.4% 0.0% 815 5% (00.4% 0.0% 11.8% 0.0% 103% 100.0% 100.0% 45 CKHOLDERS' EQUITY 46 Preferred stock 47 Common stock, per value plus additional paid in capital 48 Retained earnings (accumulated deficit) 49 Treasury stock 50 Accumulated other comprehensive income (ons) 52 Other stockholders' equity 53 Total stockholders equity 54 Total abilities and stockholders' equity 56 67 58 69 60 61 02 03 54 65 66 Template-Finstal AutoSave BEU. Data Review View Tell me Formulas Home Insert Draw Page Layout Wrap Text A A Merge & Center Paste Al H C Hydrogenics Corporation (HYGS/NASDAQ) Annual Como se income statemen ests for the Year Ending Dec 1.200 9000 100.0% 71.8 254 est of goods Groep 10 DON 19 00 40:49 16. 41 1 14.0 0.01 1. 2.09 SIIN 13 15 16 17 18 RAD Othering Tring experts Operating profil er nog stepena Es) restando 17 90 TV 04 10 20 21 22 23 24 25 26 28 Emil Stores Poltron income Lashes ry Derson, Curive to changes Other 201 0.01 24 2 0.0 O 0.45 29 N NM Effect 30 32 33 34 55 30 37 Readine 2007 & Later Cover Balance Sheet Income Statement Cash Flow