Fourth Quarter Net Income Doubles, Tesma Posts Record Results for 1999
17 September 1999
Fourth Quarter Net Income Doubles, Tesma Posts Record Results for 1999
CONCORD, ON, Sept. 16 /CNW-PRN/ - Tesma International Inc. (TSE:TSM.A;
NASDAQ:TSMA) today announced record fourth quarter sales, income and earnings
per share for the period ended July 31, 1999.
Three Months Ended Twelve Months Ended
July 31 July 31
1999 1998 1999 1998
Sales $246.2 $161.4 $893.7 $645.9
Income before income taxes $ 22.3 $ 11.0 $ 84.5 $ 50.3
Net income $ 13.7 $ 6.9 $ 52.3 $ 29.7
Fully diluted earnings per share $ 0.46 $ 0.24 $ 1.76 $ 1.05
All results are reported in millions of Canadian dollars, except per
share figures.
Tesma's sales for the fourth quarter of fiscal 1999 were $246.2 million,
an increase of 53% over the prior year. For the twelve month period, reported
sales were a record $893.7 million, an increase of 38% over the prior year.
Sales for the fourth quarter were particularly strong compared to fiscal 1998
as North American and European production volumes increased by 24% and 6%,
respectively, over the same period last year (with the North American volume
increase reflecting the negative impact of the General Motors strike in the
fourth quarter of fiscal 1998). Other factors contributing to the growth in
Tesma's sales include the launch of new products and production programs,
principally water pumps and transmission servo assemblies, as well as the
inclusion of sales generated by subsidiaries acquired in fiscal 1999.
For the fourth quarter, Tesma's income before income taxes more than
doubled to a record $22.3 million, as compared to $11.0 million reported in
the fourth quarter of fiscal 1998. Contributing to this increase were Tesma's
higher sales, the successful launch of new business and operating improvements
at various manufacturing divisions. For the twelve month period, income before
income taxes increased by 68% to $84.5 million from $50.3 million, primarily
due to the improvements noted above and the absence of the non-recurring
charge recorded in fiscal 1998.
Tesma's fully diluted earnings per share for the fourth quarter of fiscal
1999 increased 92% to $0.46 from $0.24 and, for the twelve month period, 68%
to $1.76 from $1.05 (a 41% increase over the reported amount for fiscal 1998
adjusted for the non-recurring charge).
``Fiscal 1999 was another very successful year for Tesma, continuing the
trend that started when we became a public company in 1995,'' stated Manfred
Gingl, Tesma's President and CEO. ``Since that time, our sales have grown by
over 250%, while income before taxes has increased by almost 275%. In
addition, we continue to focus on long-term growth by investing in R&D and in
training and education for our employees, which will pay dividends in the
future.''
Cash provided from operations was $27.9 million in the fourth quarter, an
increase of $12.3 million over fiscal 1998. Net investment activities for the
quarter included $15.0 million for fixed and other asset additions. For the
twelve month period, cash provided from operations was $93.6 million, with net
investment activities totalling $112.1 million, primarily for the purchase of
fixed assets required to launch new business and the acquisitions of Triam
Sterling Heights and HAC Corporation.
The Tesma Board of Directors today declared a dividend in respect of the
fourth quarter of fiscal 1999 of $0.10 per share on the Class A Subordinate
Voting and Class B shares payable on October 15, 1999 to shareholders of
record on September 30, 1999.
Tesma is a global supplier of highly engineered engine, transmission and
fueling systems and components for the automotive industry. Tesma's strong
market presence and strategy for continuing growth results from its unique
focus on Innovation, Engineering and Performance. Tesma employs over 3,700
employees in North America, Europe and Asia in 20 manufacturing facilities and
2 research centres.
This press release contains forward looking statements within the meaning
of applicable securities legislation. Such statements involve certain risks
and uncertainties which may cause actual results or objectives to be
materially different from those expressed or implied herein. These factors
include the Company's financial performance, changes in the economic and
competitive markets in which the Company competes, relationships with
customers and other factors as set out in the Company's Form 40-F for its
fiscal year ended July 31, 1998 and subsequent SEC filings.
TESMA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Canadian dollars in thousands)
(Unaudited)
As at As at
July 31, 1999 July 31, 1998
ASSETS
Cash $ 78,582 $ 43,998
Accounts receivable 134,395 90,340
Inventories 76,043 57,991
Prepaid expenses and other 9,813 5,857
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298,833 198,186
Fixed assets 276,297 186,583
Other assets 32,173 14,562
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$607,303 $399,331
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 30,618 $ 6,002
Accounts payable 78,654 43,897
Accrued salaries and wages 25,108 16,054
Other accrued liabilities 41,854 32,015
Income taxes payable 5,673 310
Long-term debt due within one year 10,029 4,036
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191,936 102,314
Long-term debt 82,340 14,019
Deferred income taxes 29,538 21,525
SHAREHOLDERS' EQUITY
Class A Subordinate Voting Shares 180,265 179,367
Class B Shares 2,583 2,583
Retained earnings 120,595 77,085
Currency translation adjustment 46 2,438
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303,489 261,473
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$607,303 $399,331
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Canadian dollars in thousands)
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
July 31 July 31
1999 1998 1999 1998
Sales $246,157 $161,364 $893,671 $645,894
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Cost of goods sold 191,613 126,948 694,567 502,164
Depreciation and amortization 10,128 6,396 35,391 23,676
Selling, general and
administrative 18,622 14,922 65,720 51,299
Interest (net) 485 (245) 2,295 (356)
Amortization of discount on
Convertible Series Preferred
Shares - 228 - 1,232
Affiliation fees and other
charges 3,036 2,087 11,213 8,415
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Income before litigation
settlement and income taxes 22,273 11,028 84,485 59,464
Litigation settlement - - - 9,132
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Income before income taxes 22,273 11,028 84,485 50,332
Income taxes 8,546 4,155 32,151 20,678
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Net income for the period 13,727 6,873 52,334 29,654
Dividends on Convertible
Series Preferred Shares (net
of return of capital) - (1,115) - (2,876)
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 13,727 5,758 52,334 26,778
Retained earnings, beginning
of period 109,705 73,321 77,085 55,721
Dividends on Class A
Subordinate Voting Shares and
Class B Shares (2,837) (1,994) (8,824) (5,414)
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Retained earnings, end of
period $120,595 $ 77,085 $120,595 $ 77,085
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Earnings per Class A
Subordinate Voting Share or
Class B Share
Basic $0.48 $0.24 $1.83 $1.14
Fully diluted $0.46 $0.24 $1.76 $1.05
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Average number of Class A
Subordinate Voting Shares and
Class B Shares outstanding
(in millions)
Basic 28.6 25.1 28.5 23.4
Fully diluted 30.1 30.0 30.1 30.0
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TESMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars in thousands)
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
July 31 July 31
1999 1998 1999 1998
CASH PROVIDED FROM (USED FOR):
OPERATING ACTIVITIES
Net income $ 13,727 $ 6,873 $ 52,334 $ 29,654
Items not involving current
cash flows 14,128 8,700 41,274 28,656
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27,855 15,573 93,608 58,310
Changes in non-cash working
capital 10,887 6,083 170 (6,355)
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38,742 21,656 93,778 51,955
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INVESTING ACTIVITIES
Fixed asset additions (14,980) (17,471) (67,455) (64,960)
Purchase of subsidiaries 177 - (44,608) (7,947)
Increase in other assets (531) (1,483) (5,126) (5,636)
Proceeds from disposition of
fixed and other assets 318 361 1,198 1,979
Cash acquired on purchase of
subsidiaries - - 3,863 2,665
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(15,016) (18,593) (112,128) (73,899)
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FINANCING ACTIVITIES
Repayment of notes receivable
from employees - (13) - 242
Increase (decrease) in bank
indebtedness (16,919) (3,115) 14,616 (1,467)
Issues of long-term debt 60,653 81 64,657 2,388
Repayments of long-term debt (4,799) (1,843) (17,650) (5,928)
Issuance of Class A
Subordinate Voting Shares 636 787 898 3,470
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (2,837) (1,994) (8,824) (5,414)
Dividends on Convertible
Series Preferred Shares - (1,575) - (4,418)
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36,734 (7,672) 53,697 (11,127)
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Effect of exchange rate
changes on cash 529 664 (763) 1,259
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Net increase (decrease) in
cash during the period 60,989 (3,945) 34,584 (31,812)
Cash, beginning of period 17,593 47,943 43,998 75,810
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Cash, end of period $ 78,582 $ 43,998 $ 78,582 $ 43,998
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(x) Note: The Consolidated Statements of Cash Flows for the three and
twelve month periods ended July 31, 1998 have been restated to reflect
the retroactive adoption of the CICA's revised guidelines for cash flow
statements.