Decoma announces fiscal 1999 second quarter results
12 March 1999
Decoma announces fiscal 1999 second quarter results
CONCORD, ON, March 11 /CNW-PRN/ - Decoma International Inc. (TSE: DEC.A;
NASDAQ: DECAF) today announced its financial results for the second quarter
and first six months of fiscal 1999 ended January 31, 1999.
Three Months Ended Six Months Ended
January 31 January 31
1999 1998 1999 1998
(millions of Canadian dollars,
except per share figures)
Sales $227.7 $147.4 $439.3 $289.9
Operating Income $ 15.9 $ 8.9 $ 29.7 $ 16.5
Net Income $ 11.5 $ 6.5 $ 23.4 $ 12.2
Fully diluted earnings per
share $ 0.22 N/A $ 0.45 N/A
Sales for the second quarter and the first half of fiscal 1999 were $227.7
million and $439.3 million respectively, an increase of approximately 54.5%
and 51.5% over the comparable periods of fiscal 1998. The higher sales level
in the second quarter reflects a 35.2% increase in Decoma's North American and
Mexican content per vehicle over the comparable period of fiscal 1998, a
period in which vehicle production increased approximately 7.4% to 4.1 million
vehicles.
Tooling sales included in the above were $25.0 million for the second
quarter and $50.3 million year to date, an increase of 220.5% and 174.9% over
the comparable periods of fiscal 1998. The increase in tooling sales reflects
new business awarded to Decoma for future programs.
Operating income for the second quarter of fiscal 1999 increased
approximately 78.7% to $15.9 million compared to $8.9 million in the second
quarter of fiscal 1998. This improvement is the result of higher sales due to
increased market penetration,improved operating performance and favourable
product mix. Operating income increased 80.0% to $29.7 million for the first
half of the year compared to a year ago.
Equity income for the second quarter of fiscal 1999 increased to $2.1
million from $0.9 million in the second quarter of fiscal 1998. This
improvement reflects higher sales and improved operating performance at
Decoma's equity investment operations. Equity income was $5.5 million for the
first half of the year compared to $2.3 million for the first half of 1998.
Net income for the second quarter and first six months of fiscal 1999 was
$11.5 million and $23.4 million respectively compared to $6.5 million and
$12.2 million in the comparable periods in fiscal 1998. These improvements
reflect the higher sales, operating income and equity income.
Fully diluted earnings per share were $0.22 for the second quarter of
fiscal 1999. The fully diluted average number of shares outstanding for the
second quarter of fiscal 1999 was 59.2 million.
During the first half of fiscal 1999 cash generated from operations was
$41.4 million. Net investment activities were $60.9 million, including $56.8
million in fixed assets.
On March 11, 1999 Decoma announced that its Board of Directors declared,
in addition to the dividend on the 5% Convertible Series Preferred Shares, a
quarterly dividend in respect of the second quarter of fiscal 1999 of $0.05
per share on the Class A Subordinate Voting and Class B Shares payable on
April 15, 1999 to shareholders of record on March 31, 1999. The $0.05 dividend
represents an increase of 66.7% over the dividend of $0.03 per share paid in
the first quarter of fiscal 1999. The dividend is in keeping with the
shareholder profit participation commitment set out in Decoma's Corporate
Constitution.
Commenting on the second quarter results for Decoma, Mr. Alan Power,
President and Chief Executive Officer of Decoma noted that the modernization
and expansion strategies that Decoma embarked upon several years ago are
having a positive impact on Decoma's financial results and have resulted in
future opportunities with Decoma's customers.
Mr. Power also announced the appointment of Mr. Frank Macher to Decoma's
Board of Directors. Mr. Macher has replaced Mr. Karlheinz Muhr who recently
resigned to pursue other commitments. Mr. Macher brings over 30 years of
automotive experience to the Decoma Board of Directors and is expected to be a
valuable member of the Board. Most recently Mr. Macher was President of ITT
Automotive. Prior to his position at ITT he was Vice President and General
Manager of Ford's Automotive Components Division which is now known as Visteon
Automotive Systems. Mr. Macher is intimately familiar with Decoma's products
and previously served on the Board of Decoma's Conix joint venture with Ford.
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, Europe and Brazil. Decoma has approximately 4,900 employees in 14
manufacturing and engineering facilities in Canada, The United States, Mexico,
Brazil, Belgium and England.
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DECOMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(Unaudited)
(Canadian dollars in thousands)
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As at January 31 As at July 31
1999 1998
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ASSETS
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Current assets:
Cash $ 71,751 $ 94,808
Accounts receivable 135,008 101,314
Inventories 69,950 70,259
Prepaid expenses and other 9,380 8,706
Accounts receivable from
related companies - 2,712
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286,089 277,799
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Investments 39,091 34,300
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Fixed assets (net) 395,774 359,597
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Other assets 13,549 10,198
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$734,503 $681,894
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 53,477 $ 28,373
Accounts payable 88,435 74,663
Accrued salaries and wages 19,316 12,294
Other accrued liabilities 27,041 21,153
Income taxes payable 7,691 3,260
Accounts payable to related companies 917 -
Long-term debt due within one year 598 13,729
Debt due to Magna within one year 3,651 27,515
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201,126 180,987
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Long-term debt 18,040 1,782
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Long-term debt due to Magna 74,198 75,360
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Deferred income taxes 17,851 23,553
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Convertible Series Preferred Shares 135,073 132,283
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Minority interest 13,041 13,151
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Shareholders' equity:
Convertible Series Preferred Shares 17,156 19,462
Class A Subordinate Voting Shares 103,661 103,661
Class B Shares 95,303 95,303
Retained earnings 44,035 24,704
Currency translation adjustment 15,019 11,648
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275,174 254,778
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$734,503 $681,894
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DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME, RETAINED EARNINGS AND MAGNA'S NET
INVESTMENT
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(Unaudited) Three Months Six Months
(Canadian dollars in Ended Ended
thousands, except per
share figures)
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January 31 January 31
1999 1998 1999 1998
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Sales $ 227,707 $ 147,388 $ 439,283 $ 219,878
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Cost of goods sold 181,439 109,485 350,978 219,467
Depreciation and
amortization 9,644 8,358 18,650 17,312
Selling, general and
administrative 15,726 14,328 30,263 24,376
Interest expense (net) (187) 3,676 (423) 7,088
Amortization of discount
on Convertible
Series Preferred Shares 1,402 - 2,790 -
Affiliation fees and other
charges 3,824 2,595 7,351 5,106
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Operating income 15,859 8,946 29,674 16,529
Equity income 2,080 870 5,482 2,327
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Income before income taxes
and minority interest 17,939 9,816 35,156 18,856
Income taxes 6,550 3,235 11,904 6,010
Minority interest (76) 68 (110) 684
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Net income 11,465 6,513 23,362 12,162
Dividends on Convertible
Series Preferred Shares
(net of return of capital) (715) - (1,443) -
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 10,750 6,513 21,919 12,162
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Retained earnings,
beginning of period 34,579 - 24,704 -
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (1,294) - (2,588) -
Magna's net investment,
beginning of period - 331,758 - 259,586
Net contribution by Magna - 29,565 - 93,710
Change in currency
translation adjustment - (5,387) - (3,009)
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Magna's net investment, end
of period - $362,449 - $362,449
Retained earnings, end of
period $ 44,035 - $ 44,035 -
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Earnings per Class A
Subordinate Voting
Share or Class B Share
Basic $ 0.25 - $ 0.51 -
Fully diluted $ 0.22 - $ 0.45 -
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Average number of Class A
Subordinate Voting Shares
and Class B Shares
outstanding (in millions)
Basic 43.1 - 43.1 -
Fully diluted 59.2 - 59.2 -
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DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(Canadian dollars
in thousands) Three Months Ended Six Months Ended
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January 31 January 31
(restated(x)) (restated(x))
1999 1998 1999 1998
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Cash provided from (used for):
OPERATING ACTIVITIES
Net Income $ 11,465 $ 6,513 $ 23,362 $ 12,162
Items not involving
current cash flows 10,776 8,273 17,339 18,463
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22,241 14,786 40,701 30,625
Changes in non-cash
working capital 17,724 (3,298) 683 1,341
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39,965 11,488 41,384 31,966
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INVESTMENT ACTIVITIES
Fixed asset additions (33,370) (32,800) (56,792) (62,836)
Acquisition of subsidiary
net of cash and debt
assumed - - - (27,741)
Increase in investments
and other (3,277) (1,726) (4,208) (2,937)
Proceeds from disposition
of fixed assets and
other 54 118 66 119
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(36,593) (34,408) (60,934) (93,395)
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FINANCING ACTIVITIES
Increase (decrease) in
debt due to Magna 1,394 - (23,864) -
Increase (decrease) in
bank indebtedness (5,656) 109 25,104 (4,659)
Issues of long term debt 11,952 1,269 18,040 14,864
Repayments of long term
debt (9,389) (13,655) (14,999) (33,407)
Net contribution by Magna - 29,565 - 93,710
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (1,294) - (2,588) -
Dividends on Convertible
Series Preferred Shares (1,875) - (3,750) -
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(4,868) 17,288 (2,057) 70,508
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Effect of exchange rate
changes on cash (1,928) 426 (1,450) 716
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Net (decrease) increase
in cash (3,424) (5,206) (23,057) 9,795
Cash, beginning of period 75,175 21,557 94,808 6,556
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Cash, end of period $ 71,751 $ 16,351 $ 71,751 $ 16,351
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(x) Note: The Consolidated Statement of Cash Flow for the three and
six months ended January 31, 1998 have been restated to reflect
the retroactive adoption of the CICA's revised guidelines for cash
flow statements.