Magna announces second quarter results
12 August 1999
Magna announces second quarter results
AURORA, ON, Aug. 11 /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 second quarter ended June 30, 1999.
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SIX MONTHS ENDED THREE MONTHS ENDED
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June 30, July 31, June 30, July 31,
1999 1998 1999 1998
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Sales $4,555 $3,227 $2,324 $1,618
Net Income $ 225 $ 178 (1) $ 116 $ 69
Excl. Other Income $ 225 $ 168 $ 116 $ 69
Fully diluted
earnings per share $ 2.52 $ 2.13 $ 1.30 $ 0.80
Excl. Other Income $ 2.52 $ 2.00 $ 1.30 $ 0.80
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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 and six months ended July
31, 1998 has been presented as these periods coincide with the Company's
previously reported quarters prior to the year end change.
The quarter and year to date comparative data includes the impact of the
North American OEM shut-down in July 1998 and the impact of the General Motors
8 week strike in the quarter ended July 31, 1998.
Sales for the second quarter and first half of fiscal 1999 were a record
$2.3 billion, and $4.6 billion respectively, an increase of approximately 44%
and 41% over the comparable periods ended July 31, 1998. The higher sales
level in the second quarter reflects a 15% and 21% increase in North American
and European content per vehicle, respectively, over the comparable period
ended July 31, 1998, a period in which North American vehicle production
increased approximately 40%, due in part to the July 1998 shutdown and the
General Motors strike in fiscal 1998. European vehicle production increased
approximately 8% over the same period. Tooling and other sales increased by 6%
to $221 million.
Net income for the second quarter was a record $116 million compared to
$69 million in the comparable quarter ended July 31, 1998.
Fully diluted earnings per share for the second quarter was $1.30
compared to $0.80 for the comparable period ended July 31, 1998.
During the second quarter, cash generated from operations was $208
million. Total investment activities during the current quarter were $229
million, including $210 million in fixed assets and $19 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 June 30, 1999 payable on September 15, 1999 to shareholders of
record on August 31, 1999.
Last month, the Company announced that MI Venture Inc. (``Ventures''),
its non-automotive group, had entered into a definitive agreement for the
purchase of Gulfstream Park Racing Association Inc. (``Gulfstream Park'').
Closing is anticipated in the third quarter of 1999, which will result in the
spin-off of Ventures occurring December 15, 1999, the Company's next dividend
payment date, subject to regulatory consents and approvals.
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 54,000 employees in 164 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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Six months Three months
ended ended
June July June July
30, 31, 30, 31,
1999 1998 1999 1998
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Sales $4,555 $3,227 $2,324 $1,618
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Cost of goods sold 3,756 2,649 1,914 1,342
Depreciation and amortization 171 111 87 62
Selling, general and
administrative 291 214 143 111
Interest income, net (3) (1)
Equity income (9) (8) (4) (4)
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Operating income - automotive 346 264 184 108
Operating income (loss) -
non-automotive 10 (2)
Other income 10
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Income before income taxes and
minority interest 356 274 182 108
Income taxes 122 91 62 37
Minority interest 9 5 4 2
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Net income 225 178 116 69
Retained earnings, beginning of
period 1,202 969 1,294 1,057
Accretion of other paid-in
capital (13) (15) (7) (9)
Dividends on Class A Subordinate
Voting Shares and Class B Shares (31) (32) (20) (17)
Cumulative adjustment for change
in accounting policy (note (v)) 8 8
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Retained earnings, end of period $1,383 $1,108 $1,383 $1,108
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Earnings per Class A Subordinate
Voting Share or Class B Share:
Basic $2.70 $2.30 $1.39 $0.83
Fully diluted $2.52 $2.13 $1.30 $0.80
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Cash dividends paid per Class A
Subordinate Voting Share
or Class B Share $0.61 $0.43 $0.39 $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 72.6 78.5 74.1
Fully diluted 91.5 87.2 91.7 88.8
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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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Six months Three months
ended ended
June July June July
30, 31, 30, 31,
1999 1998 1999 1998
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Cash provided from (used for):
OPERATING ACTIVITIES
Net income $225 $178 $116 $69
Items not involving current
cash flows 182 124 92 61
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407 302 208 130
Changes in non-cash working capital (62) 103 12 (54)
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345 405 220 76
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INVESTMENT ACTIVITIES
Fixed asset additions (426) (333) (210) (164)
Purchase of subsidiaries (12) (307) (6) (256)
Increase in investments and other (19) (68) (13) (43)
Proceeds from disposition of
investments and other 86 64 47 42
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(371) (644) (182) (421)
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FINANCING ACTIVITIES
Net issue (repayment) of debt 133 (96) 61 6
Repayments of debentures'
interest obligation (14) (8) (7) (2)
Issue of convertible
subordinated debentures 435
Issues of Class A Subordinate
Voting Shares 260 259
Issues of shares by subsidiaries 28 1
Dividends paid to minority interests (1) (1) (1)
Dividends (48) (32) (31) (17)
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70 586 23 246
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Effect of exchange rate changes
on cash and cash equivalents (15) 21 (6) 20
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Net increase (decrease) in cash and
cash equivalents during the period 29 368 55 (79)
Cash and cash equivalents, beginning
of period 484 299 458 746
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Cash and cash equivalents,
end of period $513 $667 $513 $667
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MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(Unaudited)
(United States dollars in millions)
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June 30, December 31,
1999 1998
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ASSETS
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Current assets:
Cash and cash equivalents $ 513 $ 484
Accounts receivable 1,497 1,452
Inventories 677 681
Prepaid expenses and other 49 54
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2,736 2,671
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Investments 82 106
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Fixed assets, net 3,081 2,873
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Goodwill, net 279 306
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Other assets 207 209
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$6,385 $6,165
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 351 $ 262
Accounts payable and other accruals 1,916 1,892
Long-term debt due within one year 26 42
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2,293 2,196
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Long-term debt 245 205
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Debentures' interest obligation 167 181
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Future tax liabilities 39 55
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Minority interest 102 117
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Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Shares
(issued: 77,436,130; 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 618 599
Retained earnings 1,383 1,202
Currency translation adjustment 97 179
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3,539 3,411
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$6,385 $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 and six
months ended July 31, 1998 has been presented as the periods
coincide 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 amounts for the three and six months
ended June 30, 1999 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 June
30, 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 revenues and expenses before
income taxes of the Company's non-automotive businesses were $20
million and $22 million, respectively, for the three months ended
June 30, 1999 and $62 million and $52 million, respectively, for
the six months ended June 30, 1999.
(iv) The comparative consolidated statements of cash flows for the three
and six months ended July 31, 1998 have been restated to separately
disclose the effect of exchange rate changes on cash and cash
equivalents and to exclude certain non-cash investing and financing
transactions as required by new accounting recommendations issued
by The Canadian Institute of Chartered Accountants.
(v) In the year ended July 31, 1998, the Company adopted the liability
method of tax allocation for accounting for income taxes. The
consolidated financial statements for periods prior to the year
ended July 31, 1998 were not restated. The cumulative effect of
adopting these recommendations was a reduction in future tax
liabilities and an increase in retained earnings of $8 million.
There was no material impact on net income for any of the periods
presented herein.