Magna announces results for 5-month period
9 March 1999
Magna announces results for 5-month period
AURORA, ON, March 8 /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 5-month period ended December 31, 1998.
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US DOLLARS CDN DOLLARS
FIVE MONTHS ENDED FIVE MONTHS ENDED
December 31 January 31 December 31 January 31
1998 1998 1998 1998
Sales $3,396 $2,381 $5,198 $3,644
Operating Income $ 215 $ 174 $ 329 $ 267
Net Income $ 137 $ 134 (1) $ 210 $ 207 (1)
Excl. Other Income $ 137 $ 111 $ 210 $ 171
Fully diluted
earnings per share $ 1.55 $ 1.72 $ 2.38 $ 2.63
Excl. Other Income $ 1.55 $ 1.43 $ 2.38 $ 2.19
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(1) Includes a $23 million (C$36 million) gain on the sale of the
remaining 20% interest in MST/TBCA
All results are reported in millions of U.S. and Cdn. dollars, except
per share figures.
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As previously announced, in order to more fully reflect the global nature
of its automotive business, the Company changed its fiscal year end from July
31 to December 31, commencing December 31, 1998 and changed its reporting
currency to United States dollars.
Sales for the 5-month period ended December 31, 1998 were $3.4 billion
(C$5.2 billion), a 42.6% increase over the comparable period of the prior
fiscal year. The higher sales level reflects a 19.7% and 133.3% increase in
North American and European content per vehicle respectively over the
comparable period in the prior fiscal year, a period in which North American
vehicle production increased approximately 5.3% and European vehicle
production decreased approximately 10.9%. The reduction in European vehicle
production over the comparable period is entirely the result of seasonal
differences relating to the one-month variation in the comparable period. The
increase in European sales relates principally to the recent acquisitions of
the Steyr-Daimler-Puch Group, the Ymos Automotive Group, Roltra Morse and
Paulish. Tooling sales increased to $370 million (C$567 million) which
reflects increased involvement by Magna in new programs and vehicle launches
by OEM customers.
Net income excluding other income for the 5-month period ended December
31, 1998 was $137 million (C$210 million), a 23.4% increase compared to $111
million (C$171 million) in the comparable period of the prior fiscal year. Net
income including other income for the 5-month period ended December 31, 1998
was $137 million (C$210 million) compared to $134 million (C$207 million) in
the comparable period.
Fully diluted earnings per share excluding other income for the current
5-month period increased 8.4% to $1.55 (C$2.38) compared to $1.43 (C$2.19) for
the comparable period in the prior fiscal year. Fully diluted earnings per
share including other income was $1.55 (C$2.38) for the current 5-month period
compared to $1.72 (C$2.63) for the comparable period.
During the 5-month period ended December 31, 1998, cash generated from
operations was $281 million (C$431 million). Total investment activities
during the current period were $571 million (C$872 million), including $383
million (C$585 million) in fixed assets and $188 million (C$287 million) in
investments and other assets, principally for the acquisition of the remaining
minority interest in Steyr-Daimler-Puch AG (``SDP'') and the acquisition of
Santa Anita Race Track.
The Board of Directors declared a dividend of US$0.14 per share with
respect to the Class A Subordinate Voting Shares and Class B Shares for the
2-month period ended December 31, 1998 payable on April 15, 1999 to
shareholders of record on March 31, 1999.
Magna also announced today that its Board of Directors has approved the
establishment of another company (``Ventures'') to hold all the
non-automotive-related assets (including non-automotive real estate) of Magna.
Ventures will operate separately from MI Developments Inc. (``MID'').
MID will continue to hold, develop and manage substantially all of
Magna's current and future automotive related real estate and will be 100%
owned by Magna. MID's automotive related real estate assets, which as of March
1, 1999 had a pro forma net book value of approximately US$650 million, will
be publicly or privately financed on a basis which is non-recourse to Magna.
Ventures will develop real estate for commercial and recreational
purposes and invest in entertainment and gaming businesses, including
improvements to the Santa Anita Race Track and the redevelopment of adjacent
real estate as well as the purchase and redevelopment of other racetrack
operations. As of March 1, 1999, Magna's pro forma investment in Ventures and
the pro forma net book value of Ventures was approximately US$550 million,
composed of non-automotive-related assets of approximately US$300 million and
cash of US$250 million. Ventures will have its own management team separate
from the management of Magna and MID.
The Board of Directors of Magna has also approved in principle a proposal
to establish Ventures as a separate public company by distributing a minority
equity interest in Ventures, in the form of subordinate voting shares, to
shareholders of Magna. Subject to detailed analysis of this proposal and
subsequent approval by the Board, the particulars of such distribution and the
exact structure of Ventures are expected to be announced at or before the next
annual meeting of shareholders of Magna, scheduled for May 25, 1999.
Once Ventures is established as a separate public company, it is Magna's
intention to reduce its ownership in Ventures to a minority equity position.
As market conditions permit, it is expected that this will be accomplished
through a combination of:
(i) secondary sales by Magna of its shares of Ventures, and/or
(ii) treasury share issues by Ventures, in connection with capital
markets transactions, acquisitions and/or the investment by
strategic partners in Ventures.
Magna will not make any further investment in Ventures prior to its
becoming a public company. At such time, Magna will undertake in a legally
binding form that it will not, for a period of 7 years, without the prior
consent of the holders of the majority of Magna's Class A Subordinate Voting
Shares:
(i) make debt or equity investments in Ventures or any of its
subsidiaries, or otherwise give financial assistance to Ventures or
any of its subsidiaries, or
(ii) invest in any non-automotive related businesses or assets other than
through its investments in Ventures.
During the period of Magna's ownership of all the equity of Ventures, all
expenditures or commitments by Ventures that individually exceed US$10 million
or in the aggregate exceed US$25 million will require the approval of the
Board of Directors of Magna.
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, South America and the Asia Pacific. 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 51,000 employees in 162 manufacturing operations and 29
product development and engineering centres in 18 countries.
MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
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(Unaudited)
(dollars in millions,
except per share figures) U.S. Dollars Cdn Dollars
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Five months ended Five months ended
December January December January
31, 31, 31, 31,
1998 1998 1998 1998
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Sales $3,396 $2,381 $5,198 $3,644
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Cost of goods sold 2,833 1,970 4,337 3,016
Depreciation and amortization 126 76 193 116
Selling, general and administrative 229 166 351 254
Interest (income) expense, net (1) 1 (2) 1
Equity income (6) (6) (10) (10)
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Operating income 215 174 329 267
Other income 25 38
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Income before income taxes and
minority interest 215 199 329 305
Income taxes 73 62 112 94
Minority interest 5 3 7 4
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Net income 137 134 210 207
Retained earnings, beginning
of period 1,108 870 1,698 1,327
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1,245 1,004 1,908 1,534
Accretion of other paid-in capital (10) (6) (16) (9)
Dividends on Class A Subordinate
Voting Shares and Class B Shares (33) (29) (52) (44)
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Retained earnings, end of period $1,202 $ 969 $1,840 $1,481
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Earnings per Class A Subordinate
Voting Share or Class B Share:
Basic $1.62 $ 1.82 $2.48 $2.78
Fully diluted $1.55 $ 1.72 $2.38 $2.63
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Cash dividends paid per Class A
Subordinate Voting Share or
Class B Share $0.22 $ 0.41 $0.33 $0.63
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Average number of Class A
Subordinate Voting Shares
and Class B Shares outstanding
during the period (in millions):
Basic 78.4 71.2 78.4 71.2
Fully diluted 91.3 80.2 91.3 80.2
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MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(dollars in millions) U.S. Dollars Cdn Dollars
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Five months ended Five months ended
December January December January
31, 31, 31, 31,
1998 1998 1998 1998
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Cash provided from (used for):
OPERATING ACTIVITIES
Net income $137 $134 $210 $207
Items not involving current
cash flows 144 52 221 78
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281 186 431 285
Changes in non-cash working capital (97) (135) (149) (206)
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184 51 282 79
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INVESTMENT ACTIVITIES
Fixed asset additions (383) (265) (585) (406)
Purchase of subsidiaries (145) (99) (221) (152)
Increase in investments and other (43) (29) (66) (45)
Proceeds from disposition of
investments and other 24 107 35 166
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(547) (286) (837) (437)
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FINANCING ACTIVITIES
Issues of debt 209 114 320 174
Issues of shares by subsidiaries 1 1
Repayments of debt (15) (5) (23) (7)
Repayments of debentures'
interest obligation (12) (7) (19) (11)
Dividends paid to minority interests (1) (1) (1)
Dividends (17) (29) (26) (45)
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164 74 251 111
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Effect of exchange rate changes on
cash and cash equivalents 16 10 24 15
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Net decrease in cash and cash
equivalents during the period (183) (151) (280) (232)
Cash and cash equivalents,
beginning of period 667 449 1,020 688
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Cash and cash equivalents,
end of period $484 $298 $740 $456
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MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(Undaudited)
(dollars in millions) U.S. Dollars Cdn Dollars
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December July December July
31, 31, 31, 31,
1998 1998 1998 1998
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ASSETS
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Current assets:
Cash and cash equivalents $ 484 $ 667 $ 740 $1,020
Accounts receivable 1,452 1,177 2,222 1,802
Inventories 681 715 1,042 1,095
Prepaid expenses and other 54 49 83 75
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2,671 2,608 4,087 3,992
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Investments 106 97 162 148
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Fixed assets, net 2,873 2,442 4,397 3,738
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Goodwill, net 306 304 469 465
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Other assets 209 182 319 278
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$6,165 $5,633 $9,434 $8,621
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 262 $ 151 $ 401 $ 232
Accounts payable 1,281 1,166 1,959 1,786
Accrued salaries and wages 237 227 363 347
Other accrued liabilities 333 255 510 390
Income taxes payable 41 47 63 71
Long-term debt due within one year 42 46 64 70
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2,196 1,892 3,360 2,896
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Long-term debt 205 136 315 209
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Debentures' interest obligation 181 192 276 294
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Future tax liabilities 55 59 84 90
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Minority interest 117 123 179 187
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Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Shares
(issued: December 31, 1998 -
77,256,183; July 31,
1998 - 77,253,520) 1,430 1,430 2,189 2,188
Class B Shares
(convertible into Class A
Subordinate Voting Shares)
(issued: December 31, 1998 -
1,098,109; July 31, 1998 -
1,098,309) 1 1 1 1
Other paid-in capital 599 585 917 895
Retained earnings 1,202 1,108 1,840 1,698
Currency translation adjustment 179 107 273 163
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3,411 3,231 5,220 4,945
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$6,165 $5,633 $9,434 $8,621
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