Magna Announces First Quarter Results And Decoma Initial Public Offering
4 December 1997
Magna Announces First Quarter Results And Decoma Initial Public Offering
AURORA, Ont., Dec. 4 /CNW-PRN/ - Magna International Inc. (TSE:MG.A,
MG.B; ME:MG.A; NYSE:MGA) today reported sales, profits and earnings per share
for the first quarter ended October 31, 1997.
<<
FISCAL 1998 - FIRST QUARTER
Three Months Ended
October 31
1997 1996
Sales $ 2084.3 $ 1836.7
Income before income
taxes and minority
interest $ 147.3 $ 167.5
Net Income $ 95.1(1) $ 104.8
Fully diluted earnings
per share $ 1.22 $ 1.37
Excluding unusual charge $ 1.27 -
(1) Includes an unusual charge, net of tax and minority interest,
of $3.7 million relating to the settlement of a Tesma lawsuit.
>>
All results are reported in millions of Canadian dollars, except per
share figures.
Sales for the first quarter of fiscal 1998 were $2.08 billion, a 13%
increase over the first quarter sales of the prior fiscal year. The higher
sales levels reflect a 12% increase in North American content per vehicle over
the comparable period in fiscal 1997, a period in which North American vehicle
production increased approximately 4% to 3.9 million vehicles. Tooling sales
increased 39% to $269 million, which reflects increased involvement by Magna
in new programs and vehicle launches by OEM customers in fiscal 1998.
Net income for the first quarter was $95.1 million compared to $104.8
million in the first quarter of fiscal 1997. Fully diluted earnings per share
were $1.22 per share in the first quarter compared to $1.37 for the first
quarter of the prior fiscal year. Excluding the charge for the Tesma
settlement, fully diluted earnings per share were $1.27 for the first quarter
of fiscal 1998. Net income and fully diluted earnings per share were
significantly impacted by the slow launch of the newly redesigned Chrysler LH
mid-size vehicles and the settlement of a lawsuit in Tesma International Inc.,
a subsidiary of the Company.
During the quarter, cash generated from operations was $167.1 million
compared to $164.9 million in the prior fiscal year. Net investment
activities were $296 million, including $246.5 million invested in fixed
assets.
The Board of Directors approved a dividend increase of 10% to $0.33 per
share with respect to the Class A Subordinate Voting Shares and Class B
Shares. This dividend was declared for the quarter ended October 31, 1997
payable on January 15, 1998 to shareholders of record on December 31, 1997.
Magna also announced today that its Decoma International Inc.
(``Decoma'') subsidiary has filed a preliminary prospectus with the securities
regulators in the Provinces of Canada and a registration statement with the
Securities and Exchange Commission in the United States, for an initial public
offering of Class A Subordinate Voting Shares of Decoma. Magna will retain
control of Decoma.
Magna believes that the creation of Decoma as a separate public company
will:
. Create long-term value for the shareholders of both Magna and Decoma
. Enable Decoma to focus more fully on the application of Magna's
operating principles and policies which have been the cornerstone of
Magna's past growth and success
. Enable Decoma to attract, retain and motivate entrepreneurial
managers and employees who will be rewarded through direct
participation in Decoma's success
Over the past several years, Magna has increasingly focused its product
strategy and believes that it will have to commit an increasingly large amount
of Magna's capital resources to achieve the status of a complete vehicle
systems integrator.
The establishment of Decoma as a separate public company, led by a
management team under the direction of Alan J. Power, will facilitate access
to public capital markets. This will enable it to take advantage of product
opportunities created by industry trends, including increased outsourcing by
OEM's, a reduction in the OEM supplier base and increased globalization of the
automotive industry.
The issue is being underwritten in Canada by Nesbitt Burns Inc. and RBC
Dominion Securities Inc. and in the United States by Prudential Securities
Inc. Offers of shares may be made in the United States by registered broker-
dealers. The offering will be made by means of a prospectus only.
Decoma is the largest North American Tier 1 supplier of automotive
fascias (bumper covers) and related components, assemblies and modules and a
leading supplier of plastic body panels and exterior appearance systems for
cars and light trucks. It designs, engineers and manufactures those products
principally for North American and foreign based automotive original equipment
manufacturers (``OEM''). Decoma represented approximately 7% of Magna's
consolidated sales in fiscal 1997.
Existing employees of Decoma and Magna shareholders will have a priority
period up to December 31, 1997 within which to indicate their interest in
subscribing for the offered shares.
Magna announced that it has concluded the previously disclosed
acquisition of all of the plastics exterior and interior component operations
of Ymos AG. Ymos' projected calendar 1997 sales are approximately Cdn $275
million and it currently employs approximately 1,500 people in three
manufacturing facilities in Germany and one in Belgium.
Magna, one of the most diversified automotive suppliers in the world,
designs, develops and manufactures automotive systems, assemblies and
components primarily for sale to original equipment manufacturers of cars and
light trucks in North America, Mexico and Europe. Magna's products include
exterior decorative systems, interior products including seating systems,
instrument, door and other panels, stamped and welded metal parts and
assemblies, sunroofs, electro-mechanical devices and assemblies, various
engine, powertrain and fueling and cooling components, and a variety of
plastic parts, including body panels and fascias.
Magna has over 39,000 employees in 134 manufacturing operations and 27
product development and engineering centres in 11 countries.
A registration statement and/or prospectus relating to the issue of the
Decoma Class A Shares has been filed with the regulatory authorities referred
to above but has not yet become effective. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This communication shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities law of
any such jurisdiction. Copies of the preliminary prospectus may be obtained
from Nesbitt Burns Inc. at First Canadian Place, Floor B2, Toronto, Ontario,
or from any of the other underwriters referred to above.
<<
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS THREE MONTHS ENDED
OF INCOME AND RETAINED ---------------------------
EARNINGS October 31 October 31
(Unaudited) 1997 1996
(Canadian dollars in millions, ---- ----
except per share figures)
Sales $2,084.3 $1,836.7
----------------------------------------------------------------------
Cost of goods sold 1,730.5 1,507.2
Depreciation and amortization 65.8 55.9
Selling, general and
administrative 147.6 117.3
Interest income (0.7) (4.8)
Equity income (6.2) (6.4)
----------------------------------------------------------------------
Income before income taxes and
minority interest 147.3 167.5
Income taxes 50.1 56.5
Minority interest 2.1 6.2
----------------------------------------------------------------------
Net income 95.1 104.8
Retained earnings,
beginning of period 1,302.3 798.3
Accretion of other paid-in capital (5.1) (4.7)
Dividends on Class A Subordinate
Voting Shares and Class B Shares (21.4) (18.4)
----------------------------------------------------------------------
Retained earnings, end of period $1,370.9 $ 880.0
----------------------------------------------------------------------
----------------------------------------------------------------------
Earnings per Class A Subordinate
Voting Share or Class B Share:
Basic $ 1.26 $ 1.44
Fully diluted $ 1.22 $ 1.37
----------------------------------------------------------------------
----------------------------------------------------------------------
Cash dividends paid per Class A
Subordinate Voting Share or
Class B Share $ 0.30 $ 0.27
----------------------------------------------------------------------
----------------------------------------------------------------------
Average number of Class A
Subordinate Voting Shares and
Class B Shares outstanding
during the period (in millions):
Basic 71.2 69.6
Fully diluted 80.1 78.5
----------------------------------------------------------------------
----------------------------------------------------------------------
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS THREE MONTHS ENDED
OF CASH FLOWS ---------------------------
(Unaudited) October 31 October 31
(Canadian dollars in millions) 1997 1996
---- ----
Cash provided from (used for):
OPERATING ACTIVITIES
Net income $ 95.1 $ 104.8
Items not involving current
cash flows 72.0 60.1
-------------------------------------------------------------------------
167.1 164.9
Changes in non-cash working capital (210.6) 12.9
-------------------------------------------------------------------------
(43.5) 177.8
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INVESTMENT ACTIVITIES
Fixed asset additions (246.5) (173.4)
Purchase of subsidiaries (32.5) (183.0)
Increase in investments and other (17.0) (7.0)
Proceeds from disposition of
fixed assets and other 2.1 14.7
-------------------------------------------------------------------------
(293.9) (348.7)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Net issue of debt 137.5 26.6
Repayment of debentures' interest
obligation (8.2) (7.4)
Issues of Class A Subordinate
Voting Shares 0.2
Conversion of convertible subordinated
debentures (0.1)
Dividends paid to minority interests (0.6) (0.7)
Dividends (21.4) (18.4)
-------------------------------------------------------------------------
107.4 0.1
-------------------------------------------------------------------------
Net decrease in cash (230.0) (170.8)
Cash, beginning of period 878.8 1,089.8
-------------------------------------------------------------------------
Cash, end of period 648.8 $ 919.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Canadian dollars in millions)
OCTOBER 31 JULY 31
1997 1997
---------- -------
ASSETS
Current assets:
Cash $ 648.8 $ 878.8
Accounts receivable 1,469.2 1,165.0
Inventories 701.4 669.3
Prepaid expenses and other 46.3 34.9
------------------------------------------------------------------------
2,865.7 2,748.0
------------------------------------------------------------------------
Investments 108.2 99.9
Fixed assets (net) 2,382.8 2,071.1
Goodwill 302.8 297.8
Other assets 126.8 111.9
------------------------------------------------------------------------
$5,786.3 $5,328.7
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 176.2 $ 30.3
Accounts payable and other accruals 1,657.5 1,535.8
Long-term debt due within one year 22.3 14.2
------------------------------------------------------------------------
1,856.0 1,580.3
------------------------------------------------------------------------
Long-term debt 100.6 80.8
Debentures' interest obligation 162.0 168.1
Deferred income taxes 118.1 120.0
Minority interest 126.8 113.5
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Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Shares
(issued: 70,086,446; July 31, 1997 - 70,084,554) 1,568.2 1,568.0
Class B Shares
(convertible into Class A Subordinate
Voting Shares)
(issued: 1,098,309) 1.3 1.3
Other paid-in capital 464.9 457.8
Retained earnings 1,370.9 1,302.3
Currency translation adjustment 17.5 (63.4)
------------------------------------------------------------------------
3,422.8 3,266.0
------------------------------------------------------------------------
$5,786.3 $5,328.7
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SOURCE Magna International Inc.