Tesma Announces Fiscal 1998 Year End and Q4 Results
18 September 1998
Tesma Announces Fiscal 1998 Year End and Fourth Quarter Results
CONCORD, Ont., Sept. 18 /CNW-PRN/ - Tesma International Inc. (TSE:TSM.A;
NASDAQ:TSMAF) today announced its fourth quarter and year end sales, income
and earnings per share for the period ended July 31, 1998.
Three Months Ended Year Ended
July 31 July 31
1998 1997 1998 1997
Sales $161.4 $146.3 $645.9 $551.5
Operating income $ 11.0 $ 9.5 $ 59.5 $ 45.7
Net income $ 6.9 $ 5.7 $ 29.7 $ 26.5
Fully diluted
earnings
per share $ 0.24 $ 0.23 $ 1.05 $ 1.13
Fully diluted
earnings per share
(excluding
non-recurring item) $ 1.25 $ 1.13
Weighted average
number of shares
outstanding on a
fully diluted basis 30.0 28.6 30.0 26.6
All results are reported in millions of Canadian dollars, except per
share figures. The results for fiscal 1998 include a non-recurring provision
of $9.1 million reported in the first quarter of 1998 related to the Company's
previously disclosed patent litigation settlement.
Tesma's sales for the fourth quarter of fiscal 1998 were $161.4 million,
an increase of 10% over the prior year despite a two-month strike at General
Motors which caused North American vehicle production volumes to decline by
11% in the quarter versus a year earlier. For the year, reported sales were a
record $645.9 million, an increase of 17% over the prior year. Principal
factors contributing to this growth were Tesma's increased North American and
European content per vehicle, higher tooling sales and the sales generated by
recently acquired subsidiaries.
For the fourth quarter, Tesma's operating income was $11.0 million, an
improvement of 16% or $1.5 million over the fourth quarter of fiscal 1997.
Higher sales and improved operating performance at Tesma's European divisions
have resulted in better capacity utilization offsetting some of the negative
impact that the GM strike had on the Company's North American divisions. For
the year, operating income increased 30% from $45.7 million to $59.5 million.
Tesma's fully diluted earnings per share increased 4% to $0.24 from $0.23
for the fourth quarter of fiscal 1998 and, excluding the litigation
settlement, 11% to $1.25 from $1.13 for the year, despite a 13% increase in
the average number of shares outstanding.
Cash provided from operations was $15.6 million in the fourth quarter, a
decline of $0.6 million over fiscal 1997. Net investment activities totalled
$18.6 million in the quarter for fixed and other asset additions. For the year
ended July 31, 1998, cash provided from operations was $58.3 million, with net
investment activities totalling $73.9 million.
``Tesma is pleased with its fourth quarter results given the challenges
presented in the face of the prolonged strike at General Motors. The strike
resulted in a reduction in our rate of sales growth to less than 11% for the
quarter, and impacted fully diluted earnings per share by approximately
$0.07,'' Tony Dobranowski, Executive Vice President and Chief Financial
Officer said, ``The fact we were able to increase both sales and profits
under these circumstances reinforces our strategy of the past 3 years to
become a global supplier to the automotive industry and reduce our dependence
on any one customer or market.''
The Tesma Board of Directors today declared a quarterly dividend in
respect of the fourth quarter of fiscal 1998 of $0.07 per share on the Class A
Subordinate Voting and Class B shares payable on October 15, 1998 to
shareholders of record on September 30, 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 3,000
employees in 20 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 ENDED YEAR ENDED
July 31 July 31
1998 1997 1998 1997
Sales $161,364 $146,310 $645,894 $551,518
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Cost of goods
sold 126,948 116,052 502,164 428,151
Depreciation and
amortization 6,396 5,220 23,676 19,058
Selling, general
and administrative 14,922 12,323 51,299 43,609
Interest (net) (245) (67) (356) 335
Amortization of
discount on Convertible
Series Preferred Shares 228 716 1,232 3,052
Affiliation fees
and other charges 2,087 2,575 8,415 11,596
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Income before litigation
settlement and
income taxes 11,028 9,491 59,464 45,717
Litigation settlement - - 9,132 -
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Income before income
taxes 11,028 9,491 50,332 45,717
Income taxes 4,155 3,757 20,678 19,239
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Net income for the
period 6,873 5,734 29,654 26,478
Dividends on Convertible
Series Preferred
Shares (net of return
of capital) (1,115) (463) (2,876) (1,864)
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Net income attributable
to Class A Subordinate
Voting Shares and
Class B Shares 5,758 5,271 26,778 24,614
Retained earnings,
beginning of period 73,321 51,591 55,721 34,953
Dividends on Class A
Subordinate Voting
Shares and Class B
Shares (1,994) (1,141) (5,414) (3,846)
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Retained earnings,
end of period $77,085 $55,721 $77,085 $55,721
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Earnings per Class A
Subordinate Voting
Share or Class B Share
Basic $0.24 $0.24 $1.14 $1.31
Fully diluted $0.24 $0.23 $1.05 $1.13
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Average number of Class A
Subordinate Voting Shares
and Class B Shares
outstanding (in millions)
Basic 25.1 21.1 23.4 18.8
Fully diluted 30.0 28.6 30.0 26.6
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars in thousands) (Unaudited)
THREE MONTHS ENDED YEAR ENDED
July 31 July 31
1998 1997 1998 1997
CASH PROVIDED FROM (USED FOR):
OPERATING ACTIVITIES
Net income $6,873 $ 5,734 $29,654 $26,478
Items not involving
current cash flows 8,700 10,461 28,656 26,815
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15,573 16,195 58,310 53,293
Changes in non-cash
working capital 6,747 (6,700) (5,096) (22,386)
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22,320 9,495 53,214 30,907
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INVESTING ACTIVITIES
Fixed asset additions (17,471) (12,746) (64,960) (48,052)
Purchase of subsidiaries - - (7,947) (2,584)
Increase in investments
and other (1,483) (273) (5,636) (1,802)
Proceeds from disposition
of fixed assets
and other 361 1,155 1,979 2,620
Cash acquired on
acquisition of
subsidiaries - - 2,665 35
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(18,593) (11,864) (73,899) (49,783)
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FINANCING ACTIVITIES
Repayment of notes
receivable from
employees (13) 137 242 543
Increase (decrease)
in bank indebtedness (3,115) 1,653 (1,467) (104)
Issues of long-term
debt 81 239 2,388 1,915
Repayments of long-term
debt (1,843) (1,494) (5,928) (3,300)
Conversion of Convertible
Series Preferred
Shares (58,429) (9,910) (58,429) (9,910)
Issuance of Class A
Subordinate Voting
Shares 59,216 77,049 61,899 78,799
Dividends on Class A
Subordinate Voting
Shares and Class B
Shares (1,994) (1,141) (5,414) (3,846)
Dividends on Convertible
Series Preferred
Shares (1,575) (1,234) (4,418) (4,675)
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(7,672) 65,299 (11,127) 59,422
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Increase (decrease)
in cash during
the period (3,945) 62,930 (31,812) 40,546
Cash, beginning
of period 47,943 12,880 75,810 35,264
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Cash, end of period $43,998 $75,810 $43,998 $75,810
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TESMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Canadian dollars in thousands)
(Unaudited)
As at As at
July 31, 1998 July 31, 1997
ASSETS
Cash $ 43,998 $ 75,810
Accounts receivable 90,340 75,677
Inventories 57,991 42,918
Prepaid expenses and other 5,857 6,895
Income taxes receivable - 1,420
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198,186 202,720
Fixed assets 186,583 138,442
Other assets 14,562 8,333
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$399,331 $349,495
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 6,002 $ 7,469
Accounts payable 43,897 37,179
Accrued salaries and wages 16,054 14,448
Other accrued liabilities 32,015 20,314
Income taxes payable 310 -
Long-term debt due within one year 4,036 4,549
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102,314 83,959
Long-term debt 14,019 13,358
Deferred income taxes 21,525 20,050
Convertible Series Preferred Shares - 57,197
SHAREHOLDERS' EQUITY
Convertible Series Preferred Shares - 2,596
Class A Subordinate Voting Shares 179,367 116,413
Class B Shares 2,583 2,583
Retained earnings 77,085 55,721
Currency translation adjustment 2,438 (2,382)
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261,473 174,931
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$399,331 $349,495
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SOURCE Tesma International Inc.