Tesma Announces Fiscal 1998 Second Quarter Results and Strategic Update
9 March 1998
Tesma Announces Fiscal 1998 Second Quarter Results and Strategic Update
CONCORD, Ont., March 9 /CNW-PRN/ - Tesma International Inc. (TSE:TSM.A;
NASDAQ:TSMAF) today announced second quarter and six months sales, income and
earnings per share for the period ended January 31, 1998.
Three Months Ended Six Months Ended
January 31 January 31
1998 1997 1998 1997
Sales $149.4 $118.0 $302.8 $254.3
Operating income $ 13.3 $ 10.9 $ 29.5 $ 22.8
Net income $ 8.0 $ 6.0 $ 11.5 $ 12.7
Basic earnings
per share $ 0.32 $ 0.30 $ 0.45 $ 0.65
Basic earnings
per share
(excluding
non-recurring
item) - - $ 0.70 $ 0.65
Fully diluted
earnings per
share $ 0.29 $ 0.26 $ 0.42 $ 0.56
Fully diluted
earnings per share
(excluding
non-recurring
item) - - $ 0.62 $ 0.56
All results are reported in millions of Canadian dollars, except per share
figures. The six month results for fiscal 1998 include a non-recurring
provision of $9.1 million related to the Company's previously disclosed patent
litigation settlement.
Tesma sales for the first six months of fiscal 1998 were a record $302.8
million, an increase of 19% over the prior year. Principle factors
contributing to this growth were Tesma's increased North American and European
content per vehicle and the sales generated by subsidiaries acquired during
the past twelve months. For the second quarter, reported sales of $149.4
million increased by 27% over the prior year.
Operating income increased 29% to $29.5 million for the six month period
compared to a year ago. For the quarter, Tesma's operating income was $13.3
million, an improvement of 22% or $2.4 million over the second quarter of
fiscal 1997. Higher sales and improved operating performance at several
divisions have resulted in better capacity utilization. These improvements
were partially offset by production inefficiencies resulting from unscheduled
customer shutdowns, as well as costs incurred to execute the Company's
strategic plan.
Tesma's fully diluted earnings per share increased 12% to $0.29 from $0.26
for the second quarter of fiscal 1998 and, excluding the non-recurring item,
11% to $0.62 from $0.56 for the six month period.
Cash provided from operations was $23.4 million for the six month period,
an improvement of $2.1 million over fiscal 1997. Net investment activities in
the second quarter totalled $18.3 million for fixed and other asset additions,
including the purchase of two subsidiaries. Net investment activities for the
six months ended January 31, 1998 have aggregated $41.6 million compared to
$24.1 million in fiscal 1997.
``Tesma's reported results reflect the investment and reorganization
activities undertaken to implement our long-term strategic plan'' Manfred
Gingl, President and CEO, said. ``These activities have included the
acquisition of Eralmetall, reported in fiscal 1997, the acquisition of Hughes
Manufacturing, Inc. effective January 1, 1998, the acquisition of the
remaining 50% of ATM Aluminium Technique Moselle S.a.r.l., the consolidation
of the Company's five pulley plants into three, and the establishment of a
dedicated manufacturing facility for our one and two piece flexplate (starter
gear) business. Although Eralmetall and the consolidation of our plants have
impacted current earnings negatively, our strategy is progressing as planned,
and these changes are expected to result in operating improvements in the near
future.''
On March 6, 1998, the Tesma Board of Directors declared, in addition to
the quarterly dividend on the 6.5% Convertible Series Preferred Shares, a
quarterly dividend in respect of the second quarter of fiscal 1998 of $0.05
per share on the Class A Subordinate Voting and Class B Shares payable on
April 15, 1998 to shareholders of record on March 31, 1998.
Tesma is a global supplier of highly engineered powertrain, fueling and
cooling systems and components for the automotive industry. Tesma's strong
market presence and strategy for continuing growth results from its unique
focus on Innovation, Engineering and Performance. Tesma employs over 2,850
employees in 19 manufacturing facilities in North America and Europe.
TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Canadian dollars in thousands, except
per share figures) (Unaudited)
THREE MONTHS SIX MONTHS
ENDED ENDED
January 31 January 31
1998 1997 1998 1997
Sales $149,390 $118,020 $302,819 $254,326
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Cost of goods sold 116,041 89,283 234,568 195,111
Depreciation and amortization 5,958 4,408 11,386 8,762
Selling, general and
administration 11,701 9,693 22,996 20,311
Interest (net) 29 47 (177) 119
Amortization of discount on
Convertible Series Preferred
Shares 334 779 665 1,548
Affiliation fees and other
charges 1,985 2,877 3,911 5,668
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Operating income 13,342 10,933 29,470 22,807
Litigation settlement - - 9,132 -
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Income before income taxes 13,342 10,933 20,338 22,807
Income taxes 5,305 4,925 8,830 10,076
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Net income for the period 8,037 6,008 11,508 12,731
Dividends on Convertible Series
Preferred Shares (net of return
of capital) (593) (467) (1,172) (942)
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 7,444 5,541 10,336 11,789
Retained earnings, beginning
of period 57,471 40,303 55,721 34,952
Dividends on Class A Subordinate
Voting Shares and
Class B Shares (1,146) (902) (2,288) (1,799)
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Retained earnings,
end of period 63,769 $44,942 $63,769 $ 44,942
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Earnings per Class A Subordinate
Voting Share or Class B Share
Basic $0.32 $0.30 $0.45 $0.65
Fully diluted $0.29 $0.26 $0.42 $0.56
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----------------------------------------------------------------------
Average number of Class A
Subordinate Voting Shares and
Class B Shares outstanding
(in millions)
Basic 22.9 18.1 22.8 18.0
Fully diluted 30.0 26.2 30.0 25.8
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars in thousands)
(Unaudited)
THREE SIX MONTHS
MONTHS ENDED ENDED
January 31 January 31
1998 1997 1998 1997
CASH PROVIDED FROM (USED FOR):
OPERATING ACTIVITIES
Net income $8,037 $ 6,008 $11,508 $12,731
Items not involving current
cash flows 7,444 4,192 11,880 8,581
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15,481 10,200 23,388 21,312
Changes in non-cash working
capital (1,088) (1,547) (3,661) (11,314)
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14,393 8,653 19,727 9,998
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INVESTMENT ACTIVITIES
Fixed asset additions (11,553) (11,601) (34,687) (23,564)
Purchase of subsidiaries (8,271) - (8,271) -
Increase in investments and
other (2,641) (634) (3,225) (1,002)
Proceeds from disposition of
fixed assets and other 1,106 98 1,479 460
Cash acquired on acquisition of
subsidiaries 3,108 - 3,108 -
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(18,251) (12,137) (41,596) (24,106)
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FINANCING ACTIVITIES
Repayment of notes receivable
from employees 120 139 249 276
Decrease in bank indebtedness (12) (494) (621) (184)
Issues of long-term debt 1,745 326 2,307 329
Repayments of long-term debt (2,337) (882) (3,726) (1,213)
Issuance of Class A Subordinate
Voting Shares 1,108 - 1,108 1,687
Dividends on Class A Subordinate
Voting Shares and Class B Shares(1,146) (902) (2,288) (1,799)
Dividends on Convertible Series
Preferred Shares (967) (1,147) (1,877) (2,294)
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(1,489) (2,960) (4,848) (3,198)
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Decrease in cash during the
period (5,347) (6,444) (26,717) (17,306)
Cash, beginning of period 54,440 24,402 75,810 35,264
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Cash, end of period $49,093 $17,958 $49,093 $17,958
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TESMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Canadian dollars in thousands)
(Unaudited)
As at As at
January 31, July 31,
1998 1997
ASSETS
Current
Cash $49,093 $ 75,810
Accounts receivable 88,768 74,039
Inventories 53,088 42,918
Prepaid expenses and other 8,008 6,895
Income taxes receivable - 1,420
Accounts receivable from related companies 1,647 1,638
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200,604 202,720
Investments 1,047 1,141
Fixed assets 165,994 138,442
Other assets 12,913 7,192
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$380,558 $349,495
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 7,781 $ 7,469
Accounts payable 36,263 35,118
Accrued salaries and wages 15,367 14,448
Other accrued liabilities 37,835 20,314
Income taxes payable 972 -
Accounts payable to related companies 1,935 2,061
Long-term debt due within one year 3,601 4,549
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103,754 83,959
Long-term debt 14,411 13,358
Deferred income taxes 19,339 20,050
Convertible Series Preferred Shares 57,863 57,197
SHAREHOLDERS' EQUITY
Convertible Series Preferred Shares 1,892 2,596
Class A Subordinate Voting Shares 117,521 116,413
Class B Shares 2,583 2,583
Retained earnings 63,769 55,721
Currency translation adjustment (574) (2,382)
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185,191 174,931
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$380,558 $349,495
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SOURCE Tesma International Inc.