Magna Announces 1998 Fourth Quarter and Fiscal Year Results
21 September 1998
Magna Announces 1998 Fourth Quarter and Fiscal Year Results
AURORA, Ont., Sept. 21 /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 fourth quarter and fiscal year ended July 31, 1998.
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Years Ended Three Months Ended
July 31 July 31
1998 1997 1998 1997
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Sales 9190.8 7691.8 2475.9 1971.4
Operating Income 710.1 659.9 163.8 159.2
Net Income 506.2(1) 603.4(2) 104.4 142.0(3)
Excl. Other Income 454.5 426.3 104.4 103.6
Fully diluted earnings
per share 6.22 7.74 1.22 1.80
Excl. Other Income 5.59 5.50 1.22 1.32
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(1) Includes a $15.9 million gain on the issue of shares by Decoma and a
$35.8 million gain on the sale of the remaining 20% interest in
MST/TBCA
(2) Includes an aggregate $177.1 million gain on the sale of an 80%
interest in MST and TBCA and on the issue/sale of shares by
Tesma/Magna
(3) Includes a $38.4 million gain on the issue/sale of shares by
Tesma/Magna
All results are reported in millions of Canadian dollars, except per
share figures.
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Sales for the fourth quarter and fiscal 1998 were $2.48 billion and $9.19
billion respectively, representing increases of 25.6% and 19.5% over the
comparable periods in fiscal 1997. The higher sales levels for fiscal 1998
reflect a 13.5% and 40.7% increase in North American and European content per
vehicle respectively over fiscal 1997, a period in which North American
vehicle production of 14.3 million vehicles was essentially unchanged from the
prior year and in which European vehicle production increased 5.1% to 14.2
million vehicles.
Net income for fiscal 1998 was $454.5 million compared to $426.3 million
in fiscal 1997, excluding the gains relating to the sale of MST/TBCA, the
issue of shares by Decoma and Tesma and the sale of Tesma shares by the
Company.
Excluding the gains, fully diluted earnings per share for the fourth
quarter and fiscal 1998 were $1.22 and $5.59 per share respectively compared
to $1.32 and $5.50 per share for the comparable periods in fiscal 1997. The
General Motors 8 week strike in the fourth quarter of fiscal 1998 had a
significant adverse impact on operating results and fully diluted earnings per
share. The strike, which ended in early August 1998, is not expected to
adversely impact earnings in the first quarter of fiscal 1999.
During fiscal 1998, cash generated from operations was $815.7 million.
Total investment activities during fiscal 1998 were $1.88 billion, including
$1.01 billion in fixed assets and $720.8 million in investments, principally
for the acquisitions of the Steyr-Daimler-Puch Group, the Ymos Automotive
Group, Triam, Roltra Morse, Decomex and Paulisch.
The Board of Directors declared a dividend of $0.33 per share with
respect to the Class A Subordinate Voting Shares and Class B Shares for the
quarter ended July 31, 1998 payable on October 15, 1998 to shareholders of
record on September 30, 1998.
Magna also announced that, in order to acquire the approximate 5% of the
outstanding common shares of Steyr-Daimler-Puch AG (``SDP'') which it does not
currently own, it has obtained shareholder approval for and is taking the
other steps necessary to obtain effective ownership of 100% of SDP. This
process is expected to be completed by the end of October 1998.
The Board of Directors also authorized management to continue to examine
placing the real estate and other non-automotive assets of the Company in a
separate holding company with a view to spinning out the equity in such
company to existing shareholders. The spin-out would be effected by way of a
plan of arrangement or other appropriate means to form a separately traded
public Company. The details of any such spin-out will be presented to the
Board for consideration prior to the end of October.
In addition, the Company announced that in order to more fully reflect
the global nature of its automotive supply business the Board of Directors
today approved a change in the Company's fiscal year-end to December 31,
commencing December 31, 1998, subject to confirmation by the shareholders at
the Annual Shareholders Meeting scheduled for December 10, 1998, as well as a
change in reporting currency of the Company's financial results. Commencing
with the fiscal period ending December 31, 1998, financial results will be
reported in United States dollars.
Magna, one of the most diversified automotive suppliers in the world,
designs, develops and manufactures automotive systems, assemblies and
components, and engineers and assembles complete vehicles, primarily for sale
to original equipment manufacturers of cars and light trucks in North America,
Europe, Mexico, and South America. Magna's products include: exterior
decorative systems; interior products including complete seats, instrument and
door panel systems and sound insulation; stamped and welded metal parts and
assemblies; sunroofs; electro-mechanical devices and assemblies; a variety of
plastic parts, including body panels and fascias through Decoma International
Inc.; various engine, powertrain and fueling and cooling components through
Tesma International Inc.; and a variety of drivetrain components and complete
vehicle engineering and assembly through the Steyr-Daimler-Puch Group.
Magna has over 49,000 employees in 155 manufacturing operations and 30
product development and engineering centres in 16 countries.
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
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(Unaudited)
(Canadian dollars in millions,
except per share figures) YEARS ENDED THREE MONTHS ENDED
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JULY 31 JULY 31
1998 1997 1998 1997
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Sales $9,190.8 $7,691.8 $2,475.9 $1,971.4
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Cost of goods sold 7,582.5 6,366.2 2,053.5 1,640.2
Depreciation and
amortization 306.2 232.1 95.5 61.7
Selling, general and
administrative 618.1 481.7 169.5 121.3
Interest income, net (2.9) (16.5) (1.0) (3.5)
Equity income (23.2) (31.6) (5.4) (7.5)
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Operating income 710.1 659.9 163.8 159.2
Other income 54.2 189.6 40.9
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Income before income taxes
and minority interest 764.3 849.5 163.8 200.1
Income taxes 245.7 232.5 56.1 55.4
Minority interest 12.4 13.6 3.3 2.7
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Net income 506.2 603.4 104.4 142.0
Retained earnings,
beginning of period 1,302.3 798.3 1,617.1 1,186.7
Accretion of other
paid-in capital (28.8) (19.5) (10.1) (5.1)
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (93.4) (79.9) (25.1) (21.3)
Cumulative adjustment
for change in
accounting policy 11.5 11.5
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Retained earnings,
end of period $1,697.8 $1,302.3 $1,697.8 $1,302.3
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Earnings per Class A
Subordinate Voting
Share or Class B Share:
Basic $ 6.65 $ 8.30 $ 1.27 $ 1.92
Fully diluted $ 6.22 $ 7.74 $ 1.22 $ 1.80
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Cash dividends paid
per Class A Subordinate
Voting Share or
Class B Share $ 1.29 $ 1.14 $ 0.33 $ 0.30
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Average number of
Class A Subordinate
Voting Shares and
Class B Shares
outstanding
during the period
(in millions):
Basic 71.9 70.4 74.1 71.2
Fully diluted 83.7 79.3 88.8 80.1
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MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(Canadian dollars in millions) YEARS ENDED THREE MONTHS ENDED
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JULY 31 JULY 31
1998 1997 1998 1997
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Cash provided from (used for):
OPERATING ACTIVITIES
Net income $ 506.2 $ 603.4 $ 104.4 $ 142.0
Items not involving
current cash flows 309.5 86.5 93.1 45.8
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815.7 689.9 197.5 187.8
Changes in non-cash
working capital (109.8) (5.7) (52.1) 37.1
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705.9 684.2 145.4 224.9
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INVESTMENT ACTIVITIES
Fixed asset additions (1,007.3) (722.5) (250.6) (248.3)
Purchase of subsidiaries (720.8) (466.8) (458.7) (119.9)
Increase in investments
and other (153.9) (49.6) (65.4) (23.0)
Proceeds from disposition
of investments and other 264.6 401.7 64.9 24.2
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(1,617.4) (837.2) (709.8) (367.0)
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FINANCING ACTIVITIES
Net (repayment) issue
of debt (2.7) (121.9) 8.2 (63.0)
Repayment of debentures'
interest obligation (22.7) (20.3) (2.9) (2.6)
Issues of Class A
Subordinate Voting
Shares 615.4 104.9 613.5
Issue of convertible
subordinated
debentures 665.5
Issue of shares by
subsidiaries 43.1 68.8 0.8 68.8
Conversion of convertible
subordinated debentures (150.0) (149.5)
Dividends paid to
minority interests (2.9) (9.6) (1.1) (0.5)
Dividends (93.4) (79.9) (25.1) (21.3)
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1,052.3 (58.0) 443.9 (18.6)
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Net increase (decrease)
in cash and cash
equivalents 140.8 (211.0) (120.5) (160.7)
Cash and cash equivalents,
beginning of period 878.8 1,089.8 1,140.1 1,039.5
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Cash and cash equivalents,
end of period $1,019.6 $ 878.8 $1,019.6 $ 878.8
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MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(Unaudited)
(Canadian dollars in millions)
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JULY 31 JULY 31
1998 1997
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ASSETS
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Current assets:
Cash and cash equivalents $1,019.6 $ 878.8
Accounts receivable 1,801.9 1,165.0
Inventories 1,094.7 669.3
Prepaid expenses and other 75.6 34.9
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3,991.8 2,748.0
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Investments 147.9 99.9
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Fixed assets, net 3,737.9 2,071.1
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Goodwill, net 464.6 297.8
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Other assets 278.5 111.9
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$8,620.7 $5,328.7
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 231.8 $ 30.3
Accounts payable and other accruals 2,594.1 1,535.8
Long-term debt due within one year 69.8 14.2
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2,895.7 1,580.3
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Long-term debt 208.7 80.8
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Debentures' interest obligation 293.7 168.1
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Future tax liabilities 89.7 120.0
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Minority interest 187.5 113.5
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Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Shares
(issued: 1998 - 77,253,520; 1997
- 70,084,554) 2,188.2 1,568.0
Class B Shares
(convertible into Class A Subordinate
Voting Shares)
(issued: 1998 and 1997 - 1,098,309) 1.3 1.3
Other paid-in capital 894.7 457.8
Retained earnings 1,697.8 1,302.3
Currency translation adjustment 163.4 (63.4)
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4,945.4 3,266.0
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$8,620.7 $5,328.7
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SOURCE Magna International Inc.