Magna announces first quarter results
14 May 1999
Magna announces first quarter results
AURORA, ON, May 14 /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 first quarter ended March 31, 1999.
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THREE MONTHS ENDED
March 31, April 30,
1999 1998
Sales $2,231 $1,609
Net Income $ 109 $ 109 (1)
Excl. Other Income $ 109 $ 99
Fully diluted earnings per share $1.22 $1.33
Excl. Other Income $1.22 $1.20
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(1) Includes a $10 million gain on the issue of shares by Decoma
All results are reported in millions of U.S. 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, effective December 31, 1998 and changed its reporting
currency to United States dollars. Consistent with Canadian securities
legislation, comparative data for the three months ended April 30, 1998 has
been presented as this period coincides with the Company's previously reported
quarter end prior to the year end change.
Sales for the first quarter ended March 31, 1999 were $2.2 billion, a
38.7% increase over the comparable period ended April 30, 1998. The higher
sales level reflects a 19.0% and 67.3% increase in North American and European
content per vehicle respectively over the comparable period ended April 30,
1998, a period in which North American vehicle production increased
approximately 3.4% and European vehicle production increased approximately
7.4%. The increase in European sales relates principally to the recent
acquisition of the Steyr-Daimler-Puch Group. Tooling and other sales increased
by 50% to $213 million.
Net income for the first quarter ended March 31, 1999 was $109 million
(including $6 million of non-automotive income relating principally to Santa
Anita Race Track operations) compared to $99 million in the comparable quarter
ended April 30, 1998 (excluding a $10 million gain on the issue of shares by
Decoma).
Fully diluted earnings per share for the first quarter ended March 31,
1999 was $1.22 (which included fully diluted earnings per share of $.07 from
the non-automotive operations) compared to $1.20 for the comparable period
ended April 30, 1998 (excluding fully diluted earnings per share relating to
the gain on the sale of shares by Decoma).
During the first quarter ended March 31, 1999 cash generated from
operations was $199 million. Total investment activities during the current
quarter were $228 million, including $216 million in fixed assets and $12
million in investments and other assets.
The Board of Directors declared a dividend of $0.25 per share with
respect to the Class A Subordinate Voting Shares and Class B Shares for the
quarter ended March 31, 1999 payable on June 15, 1999 to shareholders of
record on May 31, 1999. This represents a dividend increase of 16%.
Magna recently announced the formation of MagnaWorks, a joint venture
with Magellan Corp., a subsidiary of Orbital Sciences Corp. .
MagnaWorks, owned 70% by Magna and 30% by Magellan, will design and integrate
custom, state-of-the-art vehicle navigation and information systems for
original equipment manufacturers of passenger and commercial vehicles in North
America and Europe. Don Walker, Magna's President and C.E.O., stated
``MagnaWorks combines Magellan's advanced navigation and positioning
technology with Magna's total system integration capability. It gives us an
outstanding electronic technology platform upon which to build future
information and entertainment systems. This is part of Magna's continuing
drive to demonstrate innovation to our customers''.
As previously announced, the Board of Directors approved the
establishment of Ventures to hold all of the non-automotive related assets
(including non-automotive real estate) of Magna. A special committee of the
Board of Directors continues to review the proposal to establish Ventures as a
separate public company and the alternatives available to achieve this,
including the distribution of a minority equity interest in Ventures to the
shareholders of Magna. Subject to the completion of this review and subsequent
consideration and approval by the Board, the particulars of the structure of
Ventures and proposed timing and method of distribution are expected to be
announced at the Annual Meeting of Shareholders of Magna scheduled for May 25,
1999.
MI Developments Inc. (``MID'') will continue to hold substantially all of
Magna's current and future automotive real estate and will be 100% owned by
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 Asia. 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 and navigation
systems; 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)
(United States dollars in millions,
except per share figures)
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Three months ended
March 31, April 30,
1999 1998
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Sales $2,231 $1,609
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Cost of goods sold 1,842 1,307
Depreciation and amortization 84 49
Selling, general and administrative 148 103
Interest income, net (2)
Equity income (5) (4)
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Operating income - automotive 162 156
Operating income - non-automotive 12
Other income 10
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Income before income taxes and
minority interest 174 166
Income taxes 60 54
Minority interest 5 3
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Net income 109 109
Retained earnings, beginning of period 1,202 969
Accretion of other paid-in capital (6) (6)
Dividends on Class A Subordinate
Voting Shares and Class B Shares (11) (15)
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Retained earnings, end of period $1,294 $1,057
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Earnings per Class A Subordinate
Voting Share or Class B Share:
Basic $1.31 $1.47
Fully diluted $1.22 $1.33
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Cash dividends paid per Class A
Subordinate Voting Share or Class B Share $0.22 $0.22
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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
Fully diluted 91.3 85.7
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MAGNA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(United States dollars in millions)
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Three months ended
March 31, April 30,
1999 1998
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Cash provided from (used for):
OPERATING ACTIVITIES
Net income $109 $109
Items not involving current cash flows 90 63
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199 172
Changes in non-cash working capital (74) 157
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125 329
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INVESTMENT ACTIVITIES
Fixed asset additions (216) (169)
Purchase of subsidiaries (6) (51)
Increase in investments and other (6) (25)
Proceeds from disposition of
investments and other 39 22
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(189) (223)
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FINANCING ACTIVITIES
Net issue (repayment) of debt 72 (102)
Repayments of debentures' interest obligation (7) (6)
Issue of convertible subordinated debentures 435
Issues of shares by subsidiaries 27
Issues of Class A Subordinate Voting Shares 1
Dividends paid to minority interests (1)
Dividends (17) (15)
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47 340
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Effect of exchange rate changes on cash
and cash equivalents (9) 1
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Net (decrease) increase in cash and
cash equivalents during the period (26) 447
Cash and cash equivalents, beginning
of period 484 299
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Cash and cash equivalents, end of period $458 $746
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MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(Unaudited)
(United States dollars in millions)
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March 31, December 31,
1999 1998
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ASSETS
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Current assets:
Cash and cash equivalents $ 458 $ 484
Accounts receivable 1,528 1,452
Inventories 651 681
Prepaid expenses and other 49 54
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2,686 2,671
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Investments 104 106
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Fixed assets, net 2,996 2,873
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Goodwill, net 284 306
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Other assets 193 209
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$6,263 $6,165
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 340 $ 262
Accounts payable and other accruals 1,884 1,892
Long-term debt due within one year 33 42
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2,257 2,196
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Long-term debt 206 205
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Debentures' interest obligation 173 181
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Future tax liabilities 45 55
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Minority interest 121 117
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Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Shares
(issued: 77,426,914; December 31, 1998 -
77,256,183) 1,440 1,430
Class B Shares
(convertible into Class A Subordinate
Voting Shares) (issued: 1,098,109) 1 1
Other paid-in capital 608 599
Retained earnings 1,294 1,202
Currency translation adjustment 118 179
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3,461 3,411
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$6,263 $6,165
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Notes:
(i) The Company changed its fiscal year end from July 31 to
December 31, effective December 31, 1998. Consistent with
Canadian securities legislation, comparative data for the three
months ended April 30, 1998 has been presented as this period
coincides with the Company's previously reported quarter end prior
to the year end change.
(ii) Effective December 31, 1998, the Company changed its reporting
currency to U.S. dollars. In accordance with accounting
principles generally accepted in Canada, the comparative amounts
have been restated in U.S. dollars using the December 31, 1998
exchange rate of Cdn$1.5305 per US$1.00. All current period
amounts have been translated to U.S. dollars using the current
rate method which uses the average exchange rate during the period
to translate revenues, expenses and cash flows and the March 31,
1999 exchange rate to translate assets and liabilities.
(iii) The revenues and expenses before income taxes of the Company's
non-automotive businesses, which consist principally of the
revenues and expenses from the Santa Anita race track acquired in
December 1998, have been presented as a single line item on the
consolidated statement of income. The current period's revenues
and expenses before income taxes of the Company's non-automotive
businesses were $42 million and $30 million respectively.