Decoma Announces Q2 Results for Fiscal 1998
8 April 1998
Decoma Announces Fiscal 1998 Second Quarter Results and Strategic Update
CONCORD, Ont., April 7 /CNW-PRN/ - Decoma International Inc. (TSE:DEC.A;
NASDAQ:DECAF) today announced sales and income for the second quarter and six
months ended January 31, 1998.
Three Months Six Months
Ended Ended
January 31 January 31
1998 1997 1998 1997
Sales $ 147.4 $ 110.7 $ 289.9 $ 242.2
Operating Income $ 8.9 $ 5.1 $ 16.5 $ 15.4
Net Income $ 6.5 $ 4.6 $ 12.2 $ 13.2
Sales for the second quarter and first half of fiscal 1998 were $147.4
million and $289.9 million respectively, an increase of 33% and 20% over the
comparable periods in fiscal 1997. The higher sales level reflects a 20.5%
increase in North American content per vehicle over the first six months of
fiscal 1997, a period in which North American vehicle production increased 3%
to 7.34 million vehicles.
Gross margin improved 2.9% to 25.7% in the second quarter from 22.8% in
the first quarter reflecting the impact of increased volumes as the product
launches of the first quarter began to achieve full volumes in the second
quarter. As well, Decoma continues to make operational improvements in its
recently acquired Mexican fascia operation, Decomex. These changes have
improved operating performance and have resulted in increased capacity which
has been used to manage incremental business opportunities.
Net income for the second quarter and first six months was $6.5 million
and $12.2 million respectively, compared to $4.6 and $13.2 million in the
comparable periods in fiscal 1997. This reflects a higher gross margin offset
by increased selling, general and administrative expenses and a decrease in
income from equity accounted investments.
During the first half of fiscal 1998 cash generated from operations was
$31.3 million. Net investment activities were $93.4 million, including $62.8
million in fixed assets and $27.7 million in investments, principally for the
acquisition of Decomex.
Earnings per share are not reported in this release as the company's
public offering and related capital reorganization had not been completed as
at the end of the second quarter of fiscal 1998.
The second quarter of fiscal 1998 was highlighted by Decoma's initial
public offering. Decoma successfully raised gross proceeds of $106.6 million
from the offering which was closed March 2, 1998. The Board of Directors and
management of Decoma would like to welcome all new shareholders and thank you
for choosing to invest in Decoma.
During the second quarter the company continued expansion plans required
to support future awarded business. The company's new ``state of the art''
fascia and painting facility being built in Ohio is proceeding according to
schedule. This plant, which will be operational in the Fall of 1998, will
provide the company with capacity to produce an additional 1.2 million fascias
per year. This capacity is required to meet the demand for fascias as light
trucks convert from metal bumpers to plastic fascias, concurrent with the
industry's continued outsourcing and supply base consolidation.
Management believes that its strong operational focus, strategic
positioning within the marketplace, research and development activities and
the current trends in plastic truck fascias and front and rear end modules
will result in continued growth and the enhancement of shareholder value.
Decoma designs, engineers and manufactures automotive fascias and related
components and plastic body panels and exterior appearance systems for cars
and light trucks principally for automobile manufacturers in North America,
Mexico and Europe. Decoma has approximately 4,500 employees in 11
manufacturing facilities in four countries.
DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND MAGNA'S NET INVESTMENT
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(unaudited - see note)
(Canadian dollars in thousands)
Three Months Ended Six Months Ended
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January 31 January 31
1998 1997 1998 1997
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Sales $147,388 $110,684 $289,878 $242,205
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Cost of goods sold 109,485 85,858 219,467 187,426
Depreciation and amortization 8,358 7,523 17,312 15,144
Selling, general and
administrative 14,328 8,473 24,376 15,287
Interest expense 3,676 1,729 7,088 4,521
Affiliation fees and other
charges 2,595 1,997 5,106 4,395
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Operating income 8,946 5,104 16,529 15,432
Equity income 870 1,360 2,327 3,471
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Income before income taxes and
minority interest 9,816 6,464 18,856 18,903
Income taxes 3,235 1,855 6,010 5,693
Minority interest 68 - 684 -
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Net income 6,513 4,609 12,162 13,210
Magna's net investment,
beginning of period 331,758 247,538 259,586 213,936
Net contribution by
(distribution to) Magna 29,565 (3,330) 93,710 25,316
Change in currency translation
adjustment (5,387) (1,111) (3,009) (4,756)
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Magna's net investment,
end of period $362,449 $247,706 $362,449 $247,706
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Note:
-----
These interim financial statements do not reflect the closing of the
Company's initial public offering which took place on March 2, 1998 and should
be read in conjunction with the financial statements and pro-forma
consolidated statements contained within the Company's Prospectus dated
February 20, 1998.
Subsequent to the completion of the Company's corporate re-organization
and the closing of the Company's initial public offering, the Company's share
capital consists of 11,218,316 Class A Subordinate Voting Shares, 31,909,091
Class B Shares and 1,500,000 Convertible Series Preferred Shares.
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DECOMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(unaudited - see note)
(Canadian dollars in thousands)
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As at January 31 As at July 31
1998 1997
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ASSETS
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Current assets:
Cash $16,351 $6,556
Accounts receivable 100,515 78,338
Inventories 60,330 40,511
Income taxes receivable 216 200
Prepaid Expenses 6,350 10,093
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183,762 135,698
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Investments 34,537 33,876
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Fixed assets (net) 308,425 190,515
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Other assets 6,900 2,975
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$533,624 $363,064
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LIABILITIES AND MAGNA'S NET INVESTMENT
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Current liabilities:
Bank indebtedness $10,059 $14,718
Accounts payable 69,461 32,862
Accrued salaries and wages 17,716 12,963
Other accrued liabilities 15,414 12,739
Long-term debt due within one year 7,902 250
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120,552 73,532
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Long-term debt 17,610 15,580
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Deferred income taxes 20,439 14,366
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Minority interest 12,574 -
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Magna's net investment 362,449 259,586
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$533,624 $363,064
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Note:
-----
These interim financial statements do not reflect the closing of the
Company's initial public offering which took place on March 2, 1998 and should
be read in conjunction with the financial statements and pro-forma
consolidated statements contained within the Company's Prospectus dated
February 20, 1998.
Subsequent to the completion of the Company's corporate re-organization
and the closing of the Company's initial public offering, the Company's share
capital consists of 11,218,316 Class A Subordinate Voting Shares, 31,909,091
Class B Shares and 1,500,000 Convertible Series Preferred Shares.
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DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
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(unaudited - see note) Three Months Ended Six Months Ended
(Canadian dollars in thousands)
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January 31 January 31
1998 1997 1998 1997
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Cash provided from (used for):
OPERATING ACTIVITIES
Net Income $6,513 $4,609 $12,162 $13,210
Items not involving current
cash flows 8,699 9,138 19,179 10,013
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15,212 13,747 31,341 23,223
Changes in non-cash
working capital (3,298) (19,919) 1,341 (2,960)
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11,914 (6,172) 32,682 20,263
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INVESTMENT ACTIVITIES
Fixed asset additions (32,800) (10,990) (62,836) (20,043)
Acquisition of subsidiary
net of cash and debt assumed - - (27,741) -
Increase in investments and other (1,726) (635) (2,937) (28,304)
Proceeds from disposition
of fixed assets and other 118 25 119 362
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(34,408) (11,600) (93,395) (47,985)
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FINANCING ACTIVITIES
Increase (decrease) in
bank indebtedness 109 7,550 (4,659) 7,828
Issues of long term debt 1,269 9,444 14,864 12,521
Repayments of long term debt (13,655) (9,192) (33,407) (19,470)
Net contribution by
(distribution to) Magna 29,565 (3,330) 93,710 25,316
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17,288 4,472 70,508 26,195
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Net increase (decrease) in cash (5,206) (13,300) 9,795 (1,527)
Cash, beginning of period 21,557 20,599 6,556 8,826
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Cash, end of period $16,351 $7,299 $16,351 $7,299
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Note:
-----
These interim financial statements do not reflect the closing of the
Company's initial public offering which took place on March 2, 1998 and should
be read in conjunction with the financial statements and pro-forma
consolidated statements contained within the Company's Prospectus dated
February 20, 1998.
Subsequent to the completion of the Company's corporate re-organization
and the closing of the Company's initial public offering, the Company's share
capital consists of 11,218,316 Class A Subordinate Voting Shares, 31,909,091
Class B Shares and 1,500,000 Convertible Series Preferred Shares.
%SEDAR: 00009691E
SOURCE Decoma International Inc.