Decoma announces fiscal 1999 fourth quarter and year end results
16 September 1999
Decoma announces fiscal 1999 fourth quarter and year end results
CONCORD, ON, Sept. 15 /CNW-PRN/ - Decoma International Inc. (TSE:DEC.A;
NASDAQ:DECAF) today announced its financial results for the fourth quarter and
fiscal year ended July 31, 1999.
Three Months Ended Twelve Months Ended
July 31 July 31
(millions of Canadian dollars, 1999 1998 1999 1998
except per share figures)
Sales $221.8 $167.0 $901.4 $656.2
Operating Income $ 9.5 $ 11.5 $ 57.2 $ 46.3
Net Income $ 4.8 $ 5.9 $ 41.6 $ 29.3
Fully diluted earnings per
share $ .10 $ .09 $ .81 $ .71
Weighted average number of
shares outstanding on a
fully diluted basis (millions) 59.2 58.9 59.2 46.6
Sales for the fourth quarter and fiscal 1999 were $221.8 million and
$901.4 million respectively, an increase of 32.8% and 37.4% over the
comparable periods in fiscal 1998. Fiscal 1999 was a record year for sales for
Decoma. The higher sales level reflects a 21.5% increase in North American and
Mexican content per vehicle compared to fiscal 1998. This increase was
realized in a period during which North American and Mexican vehicle
production increased 9.3% or approximately 1.5 million units.
Tooling sales included in the above were $27.5 million for the fourth
quarter and $104.5 million for fiscal 1999, an increase of 28.5% and 85.0%
over the comparable periods of fiscal 1998. The increase in tooling sales
reflects the growth in new business awards to Decoma for future programs.
Operating income for fiscal 1999 increased 23.5% to $57.2 million
compared to $46.3 million for fiscal 1998. This improvement was achieved
despite the recognition in the fourth quarter of a non recurring start-up cost
of $2.0 million, the impact of the results from Decoma's Mexican operation, an
increase in design and engineering costs for new programs and the launch of a
significant number of new programs. For the fourth quarter of fiscal 1999
operating income was $9.5 million compared to $11.5 million in fiscal 1998.
Equity income for fiscal 1999 increased by $6.3 million to $9.0 million
compared to $2.7 million in fiscal 1998. For the fourth quarter of fiscal 1999
equity income was $.6 million compared to a loss of $.7 million in the fourth
quarter of fiscal 1998.
Net income for fiscal 1999 increased 42.0% to $41.6 million compared to
$29.3 million for fiscal 1998. The improvement in fiscal 1999 net income
reflects sales growth which resulted in increased operating income and
significantly improved equity income. For the fourth quarter of fiscal 1999
net income was down $1.1 million to $4.8 million as compared to $5.9 million
in the fourth quarter of fiscal 1998 because of program launches and new
facility construction.
Fully diluted earnings per share increased 14.1% for fiscal 1999 to $0.81
compared to $0.71 for fiscal 1998. This increase was achieved even with the
27.0% increase in the weighted average number of shares outstanding on a fully
diluted basis to 59.2 million compared to 46.6 million for the corresponding
fiscal year. For the fourth quarter of fiscal 1999 fully diluted earnings per
share were $0.10 compared to $0.09 in the fourth quarter of fiscal 1998.
During fiscal 1999 cash generated from operations was $83.3 million. Net
investment activities were $129.9 million, including $129.5 million for fixed
assets.
On September 15, 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 fourth quarter of fiscal 1999
of $0.05 per share on the Class A Subordinate Voting Shares and Class B Shares
payable on October 15, 1999 to shareholders of record on September 30, 1999.
The dividend is in keeping with the shareholder profit participation
commitment set out in Decoma's Corporate Constitution.
Commenting on fiscal 1999, Al Power, President and CEO, stated that ``we
are pleased with the financial results for fiscal 1999. They reflect the
implementation of several strategic initiatives which will continue to
contribute to our growth as the dominant player in vehicle exteriors. The
fourth quarter was particularly challenging due to the significant number of
takeover programs combined with existing launches and new facility
construction. These extraordinary launch costs are essentially now behind us
and we look forward to the positive contribution these programs will bring in
fiscal 2000''.
Decoma continues to address the ``Year 2000 Issue'' and believes that it
will not have a material adverse effect on its operating results or financial
position. Remediation and validation for manufacturing systems and business
systems were substantially completed as at March 31, 1999 and July 31, 1999
respectively. In addition, the Company has substantially completed its third
party assessments. Contingency plans addressing internal systems and third
party requirements were substantially completed as at August 31, 1999. Due to
the inherent complexities involved with this issue and the interdependent
nature of the Company's business relationships, the Company cannot guarantee
that it will not be affected by the Year 2000 Issue.
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 and Europe. Decoma has approximately 5,300 employees in 13
manufacturing and engineering facilities in Canada, The United States, Mexico,
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 July 31 As at July 31
1999 1998
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ASSETS
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Current assets:
Cash and cash equivalents $ 67,811 $ 94,808
Accounts receivable 112,943 101,314
Inventories 70,878 70,259
Prepaid expenses and other 8,398 8,706
Accounts receivable from related companies 3,101 2,712
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263,131 277,799
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Investments 41,335 34,300
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Fixed assets (net) 405,377 359,597
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Other assets 9,962 10,198
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$719,805 $681,894
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 29,487 $ 28,373
Accounts payable 80,170 74,663
Accrued salaries and wages 22,642 12,294
Other accrued liabilities 25,909 21,153
Income taxes payable 9,342 3,260
Long-term debt due within one year 13,722 13,729
Debt due to Magna within one year 14,096 27,515
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195,368 180,987
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Long-term debt 26,764 1,782
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Long-term debt due to Magna 39,304 75,360
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Deferred income taxes 18,563 23,553
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Convertible Series Preferred Shares 137,922 132,283
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Minority interest 14,136 13,151
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Shareholders' equity:
Convertible Series Preferred Shares 14,800 19,462
Class A Subordinate Voting Shares 103,661 103,661
Class B Shares 95,303 95,303
Retained earnings 56,600 24,704
Currency translation adjustment 17,384 11,648
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287,748 254,778
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$719,805 $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)
(Canadian dollars in thousands, Three Months Twelve Months
except per share figures) Ended Ended
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July 31 July 31
1999 1998 1999 1998
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Sales $221,840 $167,010 $901,427 $656,175
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Cost of goods sold 176,906 133,310 720,031 504,153
Depreciation and amortization 11,744 9,526 40,479 36,165
Selling, general and
administrative 16,033 9,167 60,170 47,005
Interest (net) 891 (780) 411 7,187
Amortization of discount on
Convertible Series
Preferred Shares 1,432 1,374 5,639 3,631
Affiliation fees and other
charges 3,371 2,941 14,771 11,763
Non-recurring start-up costs 2,012 - 2,728 -
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Operating income 9,451 11,472 57,198 46,271
Equity income 629 (657) 9,003 2,745
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Income before income taxes
and minority interest 10,080 10,815 66,201 49,016
Income taxes 5,528 5,055 25,432 18,448
Minority interest (278) (90) (865) 1,261
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Net income 4,830 5,850 41,634 29,307
Dividends on Convertible
Series Preferred
Shares (net of return
of capital) (691) (1,114) (2,838) (1,114)
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Net income attributable to
Class A Subordinate
Voting Shares and Class B Shares 4,139 4,736 38,796 28,193
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Retained earnings, beginning
of period 54,617 21,261 24,704 54,444
Dividends on Class A Subordinate
Voting Shares and Class B
Shares (2,156) (1,293) (6,900) (1,293)
Magna's net investment,
beginning of period - - - 196,250
Net distribution to Magna - - - (252,890)
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Magna's net investment, end
of period - - - -
Retained earnings, end of
period $ 56,600 $ 24,704 $ 56,600 $ 24,704
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Earnings per Class A Subordinate
Voting Share or Class B Share
Basic $0.10 $0.09 $0.90 $0.77
Fully diluted $0.10 $0.09 $0.81 $0.71
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Average number of Class A
Subordinate Voting Shares
and Class B Shares outstanding
(in millions)
Basic 43.1 43.1 43.1 36.6
Fully diluted 59.2 58.9 59.2 46.6
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DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(Canadian dollars in thousands) Three Months Ended Twelve Months Ended
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July 31 July 31
(restated(x)) (restated(x))
1999 1998 1999 1998
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Cash provided from (used for):
OPERATING ACTIVITIES
Net Income $ 4,830 $ 5,850 $ 41,634 $ 29,307
Items not involving current
cash flows 19,290 6,224 41,636 44,342
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24,120 12,074 83,270 73,649
Changes in non-cash working
capital 1,299 3,322 10,470 (5,460)
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25,419 15,396 93,740 68,189
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INVESTMENT ACTIVITIES
Fixed asset additions (36,795) (27,997) (129,541) (124,027)
Acquisition of subsidiary net
of cash and debt assumed - - - (27,741)
Decrease (increase) in
investments and other 903 (5,147) (1,317) (6,235)
Proceeds from sale of subsidiary 296 - 296 -
Proceeds from disposition of
fixed assets and other 363 4 618 141
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(35,233) (33,140) (129,944) (157,862)
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FINANCING ACTIVITIES
Issuance of Class A Subordinate
Voting Shares (net) - - - 103,661
(Decrease) increase in debt
due to Magna (2,402) (21,290) (27,795) 99,010
(Decrease) increase in bank
indebtedness (7,172) 24,281 27,629 13,655
Issues of long term debt 13,052 7,641 39,831 24,471
Repayments of long term debt - (9,001) (14,999) (53,015)
Net distribution to Magna - - - (7,587)
Dividends on Class A Subordinate
Voting Shares and Class B
Shares (2,156) (1,293) (6,900) (1,293)
Dividends on Convertible Series
Preferred Shares (1,875) (3,000) (7,500) (3,000)
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(553) (2,662) 10,266 175,902
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Effect of exchange rate changes
on cash and cash equivalents 860 1,542 (1,059) 2,023
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Net (decrease) increase in cash
and cash equivalents during the
period (9,507) (18,864) (26,997) 88,252
Cash and cash equivalents,
beginning of period 77,318 113,672 94,808 6,556
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Cash and cash equivalents,
end of period $ 67,811 $ 94,808 $ 67,811 $ 94,808
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(x) Note: The Consolidated Statements of Cash Flows for the three and
twelve months ended July 31, 1998 have been restated to reflect the
retroactive adoption of the CICA's revised guidelines for cash flow
statements.