UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

DOUGLAS R. GLASS, On Behalf of Himself ) Civil Action No. and All Others Similarly Situated, ) ) COMPLAINT FOR VIOLATION OF THE Plaintiff, ) FEDERAL SECURITIES LAWS ) vs. ) ) ATI TECHNOLOGIES INC., KWOK YUEN ) HO, DAVID E. ORTON and PATRICK G. ) CROWLEY, ) ) Defendants. ) ) DEMAND FOR JURY TRIAL

SUMMARY AND OVERVIEW

1. This is a securities fraud class action on behalf of all purchasers of the publicly traded securities of ATI Technologies Inc. (“ATI” or the “Company”) between October 7, 2004 and

June 23, 2005 (the “Class Period”), against ATI and certain of its officers and directors for violations of the Securities Exchange Act of 1934 (the “1934 Act”).

2. Founded in 1985, ATI is the world’s second largest chip maker and a world leader in the supply of graphics, video and multimedia products for desktop, and notebook PCs, digital televisions, cell phones and game consoles. ATI is comprised of two core business units: its PC Business (delivering technology that provides graphics performance for both desktop and workstation customers) and its Consumer Business (supplying the line of processors for cell phones, processors for the digital television market and graphics processors for the GameCube). ATI competes with larger Corp. in the stand-alone and integrated graphics chip market and with Corp. in the integrated chips market.

3. The Company has more than 2,500 employees, with headquarters in Markham,

Ontario, and offices in the Americas, Europe and Asia. ATI has research and development facilities in California, Florida, Massachusetts, Ontario and Pennsylvania and manufactures its products in

Canada and Taiwan. During its fiscal year 2004 (ended August 31, 2004) ATI reported revenues of

$2.0 billion, over 44% more than in fiscal 2003, and net income of six times its fiscal 2003 net income. The Company is a member of the Nasdaq 100 and its common shares trade on the Nasdaq under the ticker symbol ATYT and on the Toronto Stock Exchange under the ticker symbol ATY.

4. During the Class Period, defendants announced quarter after quarter of positive financial results, with each quarter promising to be better than the preceding. Following a sharp rise in the Company’s stock price following its positive October 7, 2004 guidance, on October 14, 2004 and November 9, 2004, respectively, the Company’s Chief Executive Officer (“CEO”) and its

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Chairman each announced an intent to sell 40% of their ATI stock (and/or stock options) in open market transactions. Defendants’ positive announcements forced the Company’s stock price up over

$20 per share in November and December 2004, whereby the Company’s Chairman and its CEO collectively sold or otherwise disposed of over $54 million worth of Company stock at inflated prices.

5. On June 6, 2005, ATI warned that its revenue for the third quarter 2005 (ended

May 31, 2005) would fall well below its previously announced forecast blaming higher than previously forecast sales of lower revenue products. In response, the Company’s stock price plummeted 10% to $13.68. The Company disclosed that its third quarter 2005 revenue fell approximately 5% below the low end of the Company’s own forecast last provided in March 2005.

The Company also said it expected to post a third quarter 2005 gross profit margin of approximately

29%, over 5% lower than its March 2005 forecast of 34%. ATI’s fourth quarter 2005 guidance was also slashed by 10%.

6. Thereafter, when the Company issued its actual third quarter 2005 financial results on

June 23, 2005, further lowering its fourth quarter 2005 forecast, the Company’s stock price fell another 8% to its lowest point since July 2003 on extremely high volume – seven times its average daily trading volume. Investors learned that Nvidia, the Company’s key competitor, had been able to steal half of the Company’s business in the lucrative “high end” computer market by launching a key new product called SLI () in the previous quarter. ATI reported a quarterly loss of $445,000 in the third quarter 2005 compared to its profit of $48.6 million in the third quarter 2004. Defendants further reduced fourth quarter 2005 revenue expectations by $20-

$50 million with lower gross margin projections.

7. These were the second and third major misses for the Company during the Class

Period. On December 21, 2004, the Company’s stock declined precipitously by 5.8% when

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defendants disclosed that sales for ATI’s September through November 2004 period rose only 30%, with sales coming in at the low end of their previous forecasts but well below analyst expectations based on defendants’ positive statements concerning the Company’s operations and financial status.

8. During the Class Period, ATI’s Chairman, KwokYuen Ho (“Ho”), was embroiled in an insider trading case with the Ontario Securities Commission (“OSC”) enforcement branch alleging that Ho and his wife, Betty Ho, received $7 million in insider trading proceeds from stock sales made in April 2000, where they are accused of having traded on material non-public inside information. On April 11, 2005, the Company agreed to settle its own liability for complicity in the insider trading suit (participating in the cover-up) by paying $900,000 in fines and agreeing to much- needed corporate governance changes, including insider trading prohibitions. But this was too little too late. Despite his knowledge that insider trading violates the investor protection laws in the U.S. and in Canada, Ho had again sold or otherwise disposed of over $43 million worth of his Company stock at inflated prices between $18 and $20 per share during November and December 2004 while in possession of material non-public adverse information concerning the Company’s operational and financial status. The Company’s CEO, David E. Orton (“Orton”), who had only assumed this position from Ho in March 2004, sold another $10 million worth of his Company stock in November and December 2004 at inflated prices, also while in possession of non-public information.

9. Following the Company’s April 11, 2005 settlement and the settlements of the other five insiders involved in the OSC case, defendants continued to mislead the investment community concerning the Company’s operations to keep ATI’s stock price inflated to prevent further scrutiny into ATI’s insider stock trading practices while the trial on the charges against Ho and his wife, who did not settle the OSC’s charges, went forward. Immediately on the heels of Ho’s and his wife’s damning testimony ending June 4, 2005, where they lost much credibility by arguing: (i) Ho was not at a sales meeting in 2000 where the Company’s dismal performance was discussed just prior to their

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stock sales; and (ii) that Mrs. Ho never discussed Company business with her husband and was unaware of negative business factors despite acknowledging she knew the blackout period had ended prior to selling stock, defendants finally began to disclose the Company’s true financial status on

June 6, 2005.

10. The true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows:

(a) The Company was selling desktop and notebook products with lower and lower profit margins;

(b) ATI’s gross margins were being weakened by high sales of its IGP (integrated graphics processor) products, which have profit margins well below the corporate average;

(c) The Company was earning lower-than-anticipated yields on certain products due to operational issues in its own packaging and test areas of its process;

(d) The Company was experiencing production/design/yield issues with its

R520 chip, the release of which was six months behind schedule;

(e) The Company was losing market share to arch-rivals Nvidia Corp. and Intel

Corp. causing downward pressure on ATI’s prices;

(f) ATI lost market share to Nvidia in the enthusiast and mainstream markets following the launch of Nvidia’s SLI (scalable link interface) in early 2005. The SLI chipset enables the use of two graphics cards instead of one in a , allowing desktop users to upgrade graphics at cheaper prices, a product ATI will not have on the market until early

August 2005;

(g) ATI lost market share to Intel in the notebook computer market, traditionally an area of strength for ATI, because as would later be revealed, Intel’s Alviso chipset offers “more than-adequate” graphics performance for many notebook computer users; and

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(h) Despite defendants’ previous statements to the contrary, a fire at one of the

Company’s primary suppliers in Taiwan was preventing the Company from receiving necessary supplies.

11. As a result of defendants’ false and misleading Class Period statements and omissions, ATI’s stock traded at inflated levels, increasing to as high as $20.66 per share on

December 3, 2004, allowing the Company’s top officers and directors to sell or otherwise dispose of more than $54 million worth of their own shares during November and December 2004 at inflated prices of between $18 and $20 per share. However, after the true status of the Company’s business performance and financial status were unveiled in June 2005, the Company’s shares plummeted, erasing over $2.2 billion in market capitalization.

JURISDICTION AND VENUE

12. The claims alleged herein arise under §§10(b) and 20(a) of the 1934 Act, 15 U.S.C.

§§78j(b) and 78t(a), and Rule 10b-5, 17 C.F.R. §240.10b-5, promulgated thereunder.

13. This Court has jurisdiction over the subject matter of this action pursuant to §27 of the 1934 Act, 15 U.S.C. §78aa, and 28 U.S.C. §1331.

14. Venue is proper in this District pursuant to §27 of the 1934 Act and 28 U.S.C.

§1391(b) and (c). The defendants transact business in this District, and many of the acts and transactions constituting the violations of law alleged herein, including the dissemination of materially false and misleading statements to the investing public, occurred in this District. ATI has a significant research facility located in this District.

15. In connection with the acts, transactions and conduct alleged herein, defendants, directly and indirectly, used the means and instrumentalities of interstate commerce, including the

United States mails and interstate telephone communications and the facilities of national securities exchanges and markets.

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THE PARTIES

16. Plaintiff Douglas R. Glass purchased ATI publicly traded securities as described in the attached certification and was damaged thereby.

17. Defendant ATI is a leader in the supply of graphics, video and multimedia products for desktop, workstation and notebook PCs, digital televisions, cell phones and game consoles.

18. Defendant Kwok Yuen Ho (“Ho”), at all relevant times, served as Chairman of the

Board of ATI. Ho, his wife Betty Ho, and five others were charged in January 2003 by the OSC with selling ATI stock while in possession of material non-public, adverse information. Ho, who founded ATI in 1985, stepped down as CEO in June 2003, following the charges. On April 11,

2005, ATI settled with regulators, agreeing to pay $900,000 in penalties and to reform the

Company’s corporate governance. The other five selling defendants settled as well. But Ho and his wife sought to make the government prove its case at a trial beginning in late May and continuing through June 4, 2005. There is no resolution yet. During the Class Period, Ho sold or otherwise disposed of 2,260,000 shares of ATI stock for over $43 million in proceeds.

19. Defendant David E. Orton (“Orton”), at all relevant times, served as President and

Chief Executive Officer of ATI. During the Class Period, Orton sold 550,000 shares of the

Company’s common stock for over $10 million in proceeds.

20. Defendant Patrick G. Crowley (“Crowley”) served as Chief Financial Officer and

Senior Vice President-Finance from January 18, 2005 through the end of the Class Period.

21. The individuals named as defendants in ¶¶18-20 are referred to herein as the

“Individual Defendants.” The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of ATI’s quarterly reports, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. Each defendant was provided with copies of the Company’s reports and press

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releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them but not to the public, each of these defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from the public and that the positive representations being made were then materially false and misleading. The Individual Defendants are liable for the false statements pleaded herein at

¶¶25-27, 29 and 32-33, as those statements were each “group-published” information, the result of the collective actions of the Individual Defendants.

SCIENTER

22. In addition to the above-described involvement, each Individual Defendant had knowledge of ATI’s problems and was motivated to conceal such problems. Defendant Ho, as

Chairman, and defendant Orton, as CEO, were responsible for the financial results and press releases issued by the Company. These in turn were based, in part, on information prepared by defendant

Crowley. Each Individual Defendant sought to demonstrate that he could lead the Company successfully and generate the growth expected by the market.

23. Defendants were motivated to engage in the fraudulent practices alleged herein in order to reap ill-gotten insider trading proceeds. Following their massive sales of stock at inflated prices in December 2004, defendants also sought to keep the Company’s stock price inflated during the trial on the insider trading case against Ho in order to prevent further scrutiny into stock sales practices at ATI.

FRAUDULENT SCHEME AND COURSE OF BUSINESS

24. Each defendant is liable for (i) making false statements, or (ii) failing to disclose adverse facts known to him about ATI. Defendants’ fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of ATI publicly traded securities was a success, as it

(i) deceived the investing public regarding ATI’s prospects and business; (ii) artificially inflated the - 7 -

price of ATI publicly traded securities; (iii) allowed defendants to arrange to sell and actually sell or otherwise dispose of in excess of $54 million worth of ATI publicly traded securities at artificially inflated prices; and (v) caused plaintiff and other members of the Class to purchase ATI publicly traded securities at inflated prices.

DEFENDANTS’ FALSE AND MISLEADING STATEMENTS ISSUED DURING THE CLASS PERIOD

25. On October 7, 2004 defendants reported “record” fourth quarter 2004 (ended

August 31, 2004) revenues of $572.2 million, a 50.3% increase over the fourth quarter 2003. The

Company’s reported gross profit margin was 33.8% and its net income per share was $0.24 for the quarter compared to $0.09 in the fourth quarter of 2003. Revenues for the full 2004 fiscal year grew

44.1% to $2.0 billion. Net income for fiscal year 2004 increased nearly six-fold to $0.80 per share from $0.14 per share in fiscal 2003. In the Company’s press release issued that day, defendant Orton provided very positive forward guidance:

“Our corporate strategy continues to produce returns,” said David Orton, ATI’s Chief Executive Officer. “Our PCI Express desktop product line-up is the most competitive product family on the market, resulting in tremendous customer acceptance. In addition, the growth rate of our digital consumer business continues to outpace the market, based on ATI’s innovative products for use in cell phones and digital televisions.”

Outlook

We expect our leadership in graphics and multimedia technologies for both digital consumer products and PCI Express-based PCs to continue driving growth for ATI in fiscal 2005. As a result, ATI currently expects revenue for the first quarter of fiscal 2005 to be in the range of $600 to $640 million. Gross margin, as a percentage of revenues, is expected to be between 33 and 34%. Operating expenses in the first quarter (excluding the expensing of stock options) are expected to grow between 5 and 10% relative to the fourth quarter of fiscal 2004.

26. On October 14, 2004, defendants issued a press release stating that Orton intended to sell 40% of his common stock in ATI:

ATI Technologies Inc. announced today that David Orton, President and CEO of ATI, has advised the company that he intends to enter into a new trading plan to sell a portion of his holdings of shares of the company. The trading plan is identical in - 8 -

concept to the one Mr. Orton announced almost a year ago, in November 2003. Under the terms of the trading plan, which will comply with the requirements of the U.S. Securities and Exchange Commission’s Rule 10b5-1, Mr. Orton anticipates selling up to 40% of his common shares and options, subject to market conditions.

27. On November 9, 2004, the Company issued a press release stating that defendant Ho too intended to sell 40% of his common stock in ATI:

ATI Technologies Inc. announced today that K.Y. Ho, Chairman of ATI, has advised the company that he has entered into a trading plan to sell up to approximately 40% of his personal holdings of shares of the company, subject to market conditions.

The trading plan is identical in concept to plans previously announced by the company. Under this plan, Mr. Ho’s shares may be sold over a specified time period ending no later than June 30, 2005 in accordance with pre-determined parameters, including a minimum selling price based on the current market price and with limits on the maximum number of shares that may be sold per week

28. Ho beneficially owned 4.69 million shares of ATI stock as of May 2004, with a market value of approximately $85 million. An ATI spokesperson explained that Ho’s “personal worth is tied up in ATI and he feels it is time to start spreading it out.”

29. In order to continue to prime the market for these stock sales, once again on

December 21, 2004, defendants reported revenue increases in the Company’s first quarter 2005

(ended November 30, 2004), stating that the Company’s quarterly revenues grew 30.7% to

$613.9 million from $469.7 million in the first quarter of fiscal 2004 as a result of sales increases in both the personal computer and digital consumer product lines, that its gross margin percentage was

34.2%, and that its net income and net income per share (including compensation costs associated with stock options) were $63.7 million and $0.25 per share, respectively, up from $47.4 million and

$0.19 per share in the first quarter 2004. Defendants also reported that compensation costs associated with stock options in the first quarter of fiscal 2005 were $8.0 million. According to defendants, ATI’s reported net income and net income per share excluding compensation costs associated with stock options were $71.4 million and $0.28, respectively. Though the Company’s financial results technically fell within the low range of defendants’ October 2004 guidance, they

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missed analyst expectations of $627 million based on the Company’s prior positive statements.

Orton told Bloomberg News that the Company, whose chips are made by contractors, “couldn’t keep up with demand.” The market punished the Company’s stock price driving it down. But, defendants’ positive statements concerning the second quarter 2005, then well underway, satisfied the market’s concerns enough to retain a significant portion of the stock price inflation:

“We continue to demonstrate our technology and industry leadership through innovation, execution and customer focus,” said David Orton, ATI’s Chief Executive Officer. “This has translated into the sustained financial and operational performance we have seen over the past several quarters. Looking ahead, we believe we will continue to grow our business by helping consumers to create, connect and communicate in new ways - whether it’s bringing 3D and camera features to mobile phones or high definition content to home PCs.”

Outlook

Looking forward, we expect our leadership in graphics and multimedia technologies to continue to drive growth for ATI. Despite seasonal weakness in our consumer and game console businesses, we expect our revenues in the second quarter to be similar to the first quarter within a range of plus or minus $20 million - led by growth in PC graphics. We expect gross margin in the second quarter to be approximately the same as the first quarter of fiscal 2005 as improved PC margins should offset seasonal weakness of our consumer products and game console businesses.

30. On March 23, 2005, defendants settled ATI’s liability with Canadian regulators for its complicity in attempting to conceal the Hos’ and others’ insider trading.

31. In order to prevent the Company’s stock price from bottoming-out in connection with the announcement of ATI’s fine to the OSC, on March 24, 2005, the Company advised that it would be repurchasing and canceling up to 24.7 million of its common shares, representing approximately

10% of the “public float” as of March 17, 2005. Defendants also disclosed that the purchases would commence on or about Wednesday, March 30, 2005, and would terminate on or before Wednesday,

March 29, 2006.

32. On March 24, 2005, the Company announced a 31% increase in revenues and a 20% improvement in net income for the second quarter of fiscal 2005 as compared to the second quarter

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of 2004. Defendants explained that quarterly revenues grew $145 million to $608 million relative to the second quarter of fiscal 2004, as a result of strong sales in both the personal computer and digital consumer segments. The Company’s reported gross margin percentage was 34.2% for the second quarter 2005, and net income and net income per share were $57 million and $0.22, respectively.

Stock-based compensation costs in the second quarter of fiscal 2005 rose to $10.3 million.

Defendants explained that net income and net income per share excluding these costs and related taxes would have been $66 million and $0.25, respectively, as compared with $50 million or $0.20 in the second quarter of fiscal 2004. Once again, defendants issued very positive guidance for the

Company’s third quarter 2005 (ending May 31, 2005), then one-third complete, stating:

For the third quarter, we anticipate a slight increase in our consumer business and a seasonal decline in our PC business, which is expected to result in revenues of $560 to $600 million. Gross margin percentage is expected to remain approximately the same as the second quarter. Operating expenses, excluding stock-based compensation costs, are expected to increase by about 5% sequentially as we continue to invest in research and development to create a foundation for long-term growth.

Looking into the fourth quarter, we expect our consumer business to nearly double revenues from third quarter levels, and expect the PC business to be better than seasonal due to growth in integrated and new products.

33. On March 29, 2005, the Company issued a press release disclosing that:

A panel of the Ontario Securities Commission (OSC) has approved a settlement agreement between Staff of the Commission and ATI Technologies Inc. relating to allegations that in 2000 the company did not make timely disclosure of a shortfall in earnings and made a misleading statement to staff of the OSC in the context of an investigation by Staff.

Terms of the settlement include an agreement for ATI to pay CDN $900,000 in costs and settlement payments. ATI also agreed to provide a letter of comfort confirming its practices and procedures related to trading and corporate governance.

34. On March 30, 2005, to prevent the Company’s stock price from declining on the news that the Hos’ conduct may have implicated the Company, defendants caused ATI to repurchase the

24.7 million shares on the open market, expending over $250 million to do so.

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35. On April 11, 2005, the Company’s former investor relations officer and his wife settled the OSC’s insider trading charges for $1.5 million in fines.

THE TRUTH BEGINS TO BE REVEALED

36. On June 6, 2005, the Company issued a press release announcing it had badly missed its own third quarter 2005 financial projections and that it would not make its fiscal 2005 projections:

ATI Technologies Inc. today announced that revenues for the third quarter of fiscal 2005 are expected to be about $530 million, approximately 5% below the low end of the revenue range provided on March 24, 2005. Gross margin is expected to be approximately 29%. Operating expenses, excluding the costs associated with stock-based compensation, are expected to be about $143 million.

Broad-based demand for our products led to unit growth of approximately 5% in our overall PC business despite the typical seasonal weakness seen in the third quarter relative to the second quarter. While we believe end-user demand remains stable, a product mix shift in the quarter towards the lower end of the desktop and notebook discrete market caused revenues to come in below expectations. Our desktop IGP business exceeded expectations, growing dramatically in the quarter. Revenues from our consumer business - which includes DTV and handset - were within expectations.

The product mix shift towards the lower end of the desktop and notebook discrete market contributed to a decline in gross margin for the quarter. In addition, gross margin was impacted by our desktop IGP products, which have margins that are well below the corporate average. Lower than anticipated yields on certain products due to operational issues in the packaging and test area of the manufacturing process, also negatively impacted gross margin.

Looking into the fourth quarter of fiscal 2005 and into fiscal 2006, we continue to see opportunities for growth. Based on our traction in the high growth markets of DTV and handset, our expanding footprint in desktop IGP, as well as continued strength in our core PC discrete market, we expect revenues for the fourth quarter of fiscal 2005 to be about $600 million.

ATI will report its fiscal 2005 third quarter financial and operating results on June 23, 2005. We will provide additional information, including a more detailed quarterly review and outlook, during our regularly scheduled conference call on that date.

(Footnote omitted.)

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37. ATI traditionally registers 90% of its sales in the PC market – providing graphics chips installed directly into a computer . However, it has been attempting to increase its presence in the consumer market – graphics and multimedia products for handheld communication devices, digital televisions, cell phone and game consoles.

38. ATI said revenues from DTV and handset communicators during the third quarter

2005 were “within expectations.” However, the Company admitted sales fell well below previous guidance in the so-called “discrete market” for graphics cards that consumers can install into a desktop or laptop computer – the kinds of cards gamers purchase to improve the speed at which graphics are processed, resulting in a clearer, smoother picture.

39. On this news, the Company’s shares plummeted approximately 10% on extremely high volume of more than 29 million shares, trading down from $15.26 per share (at the close of trading on June 3, 2005) to close at $13.68 per share on June 6, 2005, and resumed their free-fall on

June 7, 2005, closing at $13 per share. Thereafter the Company’s stock ratings were cut by numerous analysts, including Paradigm, Frazier McKenzie, RBC, Moors & Cabot, National Bank

Financial, UBS Warburg, GMP, TD Waterhouse, Desjardins, Needam, Sprott and BMO.

40. On June 23, 2005, the Company again shocked the market by issuing a press release disclosing that in fact the Company had actually experienced a $445,000 loss in the third quarter

2005 where it had a $48.6 million profit in the third quarter 2004. The Company’s press release entitled “ATI Reports Third Quarter Results” issued that day also stated in relevant part:

Outlook

For the fourth quarter, we anticipate revenues in the range of $550- 580 million. This range has been adjusted down from the preliminary guidance announced on June 6, 2005, due to a more conservative expectation on the ramp of new products in the fourth quarter. Gross margin percentage is expected to be in the range of 29-30%, but is largely dependent on the final product mix for the quarter.

* * *

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Gross margin percentage for the third quarter of fiscal 2005 was 29.1%, down from 35.1% for the same period a year ago and 34.2% in the second quarter of fiscal 2005. Gross margin percentage for the first nine months of fiscal 2005 was 32.6%, down from 35.1% for the same period last year.

During the third quarter, we experienced an overall mix shift in our company product lines as well as some operational issues in the packaging and test area of the manufacturing process, both of which caused our gross margins to decline relative to the same period last year and to the previous quarter. Gross margins in our core desktop discrete business remained strong while notebook discrete margins were somewhat weaker due to the transition from higher-margin AGP products to PCI Express products. Gross margin was also negatively impacted by the increased sales and accelerated ramp of desktop integrated which currently have margins that are well below the corporate average. Lower than anticipated yields on certain products due to an accelerated production schedule also negatively impacted gross margin.

Year-to-date gross margin percentage declined for the reasons above, as well as production costs associated with the introduction and ramp of PCI Express products earlier in the year.

41. On this news, the Company’s stock price fell another 8% from a closing price of

$12.78 per share on the evening of June 22, 2005 to a close of $11.80 on June 23, 2005 on approximately 27 million shares traded.

42. The true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows:

(a) The Company was selling desktop and notebook products with lower and lower profit margins;

(b) ATI’s gross margins were being weakened by high sales of its IGP (integrated graphics processor) products, which have profit margins well below the corporate average;

(c) The Company was earning lower-than-anticipated yields on certain products due to operational issues in its own packaging and test areas of its manufacturing process;

(d) The Company was experiencing production/design/yield issues with its

R520 chip, the release of which was six months behind schedule;

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(e) The Company was losing market share to arch-rivals Nvidia Corp. and Intel

Corp. causing downward pressure on ATI’s prices;

(f) ATI lost market share to Nvidia in the enthusiast and mainstream markets following the launch of Nvidia’s SLI (scalable link interface) chipset in early 2005. The SLI chipset enables the use of two graphics cards instead of one in a desktop computer, allowing desktop users to upgrade graphics at cheaper prices, a product ATI will not have on the market until early

August 2005;

(g) ATI lost market share to Intel in the notebook computer market, traditionally an area of strength for ATI, because as would later be revealed, Intel’s Alviso chipset offers “more than-adequate” graphics performance for many notebook computer users; and

(h) Despite defendants’ previous statements to the contrary, a fire at one of the

Company’s primary suppliers in Taiwan was preventing the Company from receiving necessary supplies.

LOSS CAUSATION/ECONOMIC LOSS

43. During the Class Period, as detailed herein, defendants engaged in a scheme to deceive the market and a course of conduct that artificially inflated ATI’s stock price and operated as a fraud or deceit on Class Period purchasers of ATI stock by misrepresenting the Company’s operating success and future business prospects. Defendants achieved this façade of success, growth and strong future business prospects by blatantly misrepresenting the selling success of the

Company’s products and its internal operations. Later, however, when defendants’ prior misrepresentations and fraudulent conduct were disclosed and became apparent to the market, ATI stock fell precipitously as the prior artificial inflation came out of ATI’s stock price. As a result of their purchases of ATI stock during the Class Period, plaintiff and other members of the Class suffered economic loss, i.e., damages, under the U.S. federal securities laws.

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44. During the Class Period, defendants presented a misleading picture of ATI’s business and growth prospects. Thus, instead of truthfully disclosing during the Class Period that ATI’s sales chain was not as healthy as represented, defendants caused ATI to falsely forecast revenues, earnings and profit margins.

45. These false claims of strong future results and the success of the Company’s efforts to grow revenues and maintain market share caused and maintained the artificial inflation in ATI’s stock price throughout the Class Period and until the truth was revealed to the market.

46. Defendants’ false and misleading statements had the intended effect and caused ATI stock to trade at artificially inflated levels throughout the Class Period, permitting insiders to sell or otherwise dispose of over $54 million worth of their own ATI stock at inflated prices.

47. On December 21, 2004, defendants were forced to partially reveal the Company’s declining operational and financial status but made further misstatements in order to prevent investors from learning and reacting to the truth about the Company’s predicament. On June 6,

2005, defendants were forced to publicly disclose that ATI would materially miss its own third quarter 2005 guidance and would have to decrease its fiscal 2005 projections. As investors and the market became aware that ATI’s actual business prospects were poorer than represented, which had been obfuscated by defendants, more of the prior artificial inflation came out of ATI’s stock price, damaging investors. When the Company finally announced a third quarter 2005 loss and further reduced fourth quarter 2005 earnings guidance on June 23, 2005, the Company’s stock price precipitously declined another 8%.

48. As a direct result of defendants’ admissions and the public revelations regarding the truth about ATI’s previous representations and its actual business prospects going forward, ATI’s stock price fell over 5% on December 21, 2004, from $20.21 to $19.04 per share on over 16 million shares traded and by over 10% on June 6, 2005, on very high volume of 29 million shares, falling

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from $15.26 (at the close of trading on June 3, 2005) to close at $13.68 per share on June 6, 2005, a drop of $6.53 per share from its December 21, 2004 price of $20.21 per share. The stock continued to drop to below $13 per share on June 7, 2005, on more than 22 million shares volume, as the market digested the news. Finally, the stock dropped approximately 8% on June 23, 2005, from a close of $12.78 per share on June 22, 2005 to $11.80 per share on June 23, 2005, on approximately

27 million shares traded. These drops removed the inflation from ATI’s stock price, causing real economic loss to investors who had purchased the stock during the Class Period. In sum, as the truth about defendants’ fraud and ATI’s business performance was revealed, the Company’s stock price plummeted, the artificial inflation came out of the stock and plaintiff and other members of the Class were damaged, suffering economic losses of at least $8.41 per share.

49. The 5% decline in ATI’s stock price on December 21, 2004, the 10% decline in ATI’s stock price on June 6-7, 2005 and the 8% drop in ATI’s stock price on June 23, 2005 were direct results of the nature and extent of defendants’ fraud finally being revealed to investors and the market. The timing and magnitude of ATI’s stock price declines negate any inference that the loss suffered by plaintiff and other Class members was caused by changed market conditions, macroeconomic or industry factors or Company specific facts unrelated to the defendants’ fraudulent conduct. During the same period in which ATI’s stock price fell approximately 41% from $20.21 as a result of defendants’ fraud being revealed, the Standard & Poor’s 500 securities index was up. The economic loss, i.e., damages, suffered by plaintiff and other members of the Class was a direct result of defendants’ fraudulent scheme to artificially inflate ATI’s stock price and the subsequent significant decline in the value of ATI’s stock when defendants’ prior misrepresentations and other fraudulent conduct was revealed.

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FIRST CLAIM FOR RELIEF

For Violation of §10(b) of the 1934 Act and Rule 10b-5 Against All Defendants

50. Plaintiff incorporates ¶¶1-49 by reference.

51. During the Class Period, defendants disseminated or approved the false statements specified above, which they knew or deliberately disregarded were misleading in that they contained misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

52. Defendants violated §10(b) of the 1934 Act and Rule 10b-5 in that they:

(a) Employed devices, schemes, and artifices to defraud;

(b) Made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

(c) Engaged in acts, practices, and a course of business that operated as a fraud or deceit upon plaintiff and others similarly situated in connection with their purchases of ATI publicly traded securities during the Class Period.

53. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for ATI publicly traded securities. Plaintiff and the

Class would not have purchased ATI publicly traded securities at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by defendants’ misleading statements.

54. As a direct and proximate result of these defendants’ wrongful conduct, plaintiff and the other members of the Class suffered damages in connection with their purchases of ATI publicly traded securities stock during the Class Period.

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SECOND CLAIM FOR RELIEF

For Violation of §20(a) of the 1934 Act Against All Defendants

55. Plaintiff incorporates ¶¶1-54 by reference.

56. The Individual Defendants acted as controlling persons of ATI within the meaning of

§20(a) of the 1934 Act. By reason of their positions as officers and/or directors of ATI, and their ownership of ATI stock, the Individual Defendants had the power and authority to cause ATI to engage in the wrongful conduct complained of herein. ATI controlled each of the Individual

Defendants and all of its employees. By reason of such conduct, the Individual Defendants and ATI are liable pursuant to §20(a) of the 1934 Act.

CLASS ACTION ALLEGATIONS

57. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all persons who purchased ATI publicly traded securities on the open market during the Class Period (the “Class”). Excluded from the Class are defendants.

58. The members of the Class are so numerous that joinder of all members is impracticable. The disposition of their claims in a class action will provide substantial benefits to the parties and the Court. ATI had more than 252 million shares of stock outstanding, owned by hundreds if not thousands of persons.

59. There is a well-defined community of interest in the questions of law and fact involved in this case. Questions of law and fact common to the members of the Class which predominate over questions which may affect individual Class members include:

(a) Whether the 1934 Act was violated by defendants;

(b) Whether defendants omitted and/or misrepresented material facts;

(c) Whether defendants’ statements omitted material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading;

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(d) Whether defendants knew or deliberately disregarded that their statements were false and misleading;

(e) Whether the prices of ATI publicly traded securities were artificially inflated; and

(f) The extent of damage sustained by Class members and the appropriate measure of damages.

60. Plaintiff’s claims are typical of those of the Class because plaintiff and the Class sustained damages from defendants’ wrongful conduct.

61. Plaintiff will adequately protect the interests of the Class and has retained counsel who are experienced in class action securities litigation. Plaintiff has no interests which conflict with those of the Class.

62. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

PRAYER FOR RELIEF

WHEREFORE, plaintiff prays for judgment as follows:

A. Declaring this action to be a proper class action pursuant to FRCP 23;

B. Awarding plaintiff and the members of the Class damages, including interest;

C. Awarding plaintiff reasonable costs, including attorneys’ fees; and

D. Awarding such equitable/injunctive or other relief as the Court may deem just and proper.

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JURY DEMAND

Plaintiff demands a trial by jury.

DATED: August 18, 2005 LAW OFFICES BERNARD M. GROSS, P.C. DEBORAH R. GROSS

DEBORAH R. GROSS

100 Penn Square East, Suite 450 Juniper and Market Streets Philadelphia, PA 19107 Telephone: 215/561-3600 215/561-3000 (fax)

LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP WILLIAM S. LERACH DARREN J. ROBBINS MARY K. BLASY 401 B Street, Suite 1600 San Diego, CA 92101-4297 Telephone: 619/231-1058 619/231-7423 (fax)

LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP SAMUEL H. RUDMAN 200 Broadhollow Road, Suite 406 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax)

LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP JONATHAN STEIN 197 S. Federal Highway, Suite 200 Boca Raton, FL 33432 Telephone: 561/750-3000 561/750-3364 (fax)

Attorneys for Plaintiff

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