Decoma announces record fiscal 2000 first quarter results
9 December 1999
Decoma announces record fiscal 2000 first quarter results
CONCORD, ON, Dec. 8 - Decoma International Inc. (TSE:DEC.A;
NASDAQ:DECAF) today announced its financial results for the first quarter of
fiscal 2000 ended October 31, 1999.
Three Months Ended
October 31
(millions of Canadian dollars,
except per share figures) 1999 1998
Sales $259.30 $211.60
Operating Income $ 22.80 $ 13.80
Net Income $ 17.70 $ 11.90
Fully diluted earnings per share $ 0.33 $ 0.23
Weighted average number of shares
outstanding on a fully diluted basis 59.2 59.2
Sales for the first quarter of fiscal 2000 were a record $259.3 million,
an increase of 22.5% compared to the first quarter of fiscal 1999. The higher
sales level reflects a 22.0% increase in North American and Mexican content
per vehicle. This increase was realized in a period during which North
American and Mexican vehicle production increased 8.0%, or approximately
347,000 units.
Tooling sales included in the above were $14.0 million for the first
quarter of fiscal 2000, compared to $25.3 million for the comparable period in
fiscal 1999. The decrease in tooling for the first quarter of fiscal 2000 is a
result of the timing of new platform launches. Decoma has a considerable
number of new programs to launch in fiscal year 2001 and the related tooling
is early in the development stage.
Operating income in the first quarter of fiscal 2000 was up 65.2% to a
record $22.8 million compared to $13.8 million in the first quarter of fiscal
1999. This improvement reflects the higher contribution due to sales growth
and improved margins offset by increases in S,G&A, depreciation, financing
costs and design and engineering costs for future programs.
Equity income in the first quarter of fiscal 2000 was $4.2 million,
compared to $3.4 million in the comparable period of fiscal 1999. This
improvement of 23.5% resulted from operational improvements at Bestop, Inc.
and strong sales and improved operational efficiencies at Decoma Exterior Trim
Inc.
Net income for the first quarter of fiscal 2000 increased 48.7%, or $5.8
million, to $17.7 million compared to $11.9 million for the first quarter of
fiscal 1999.
Fully diluted earnings per share increased by 43.5% to $0.33 per share
for the first quarter of fiscal 2000 compared to $0.23 for the comparable
period in fiscal 1999. The weighted average number of shares outstanding on a
fully diluted basis for the comparable quarters was 59.2 million.
During the first quarter of fiscal 2000 cash generated from operations
was $7.1 million after investing $18.7 million in non-cash working capital.
Investment in fixed assets during the quarter totaled $21.0 million.
Commenting on the first quarter of fiscal 2000, Al Power, President and
CEO, stated that "the strong performance demonstrated in the first quarter
reflects Decoma's focus on innovation and new technologies and the ongoing
transition from metal to plastic in a number of exterior applications within
our product lines".
On December 7, 1999 Decoma's Board of Directors declared, in addition to
the dividend on the 5% Convertible Series Preferred Shares, a quarterly
dividend in respect of the first quarter of fiscal 2000 of $0.05 per share on
the Class A Subordinate Voting Shares and Class B Shares payable on January
14, 2000 to shareholders of record on December 31, 1999. The dividend is in
keeping with the shareholder profit participation commitment set out in
Decoma's Corporate Constitution.
With respect to the "Year 2000 Issue", Decoma has completed the
remediation and validation of its manufacturing and business systems and
designated third party assessments. Decoma is now implementing contingency
plans in preparation for the change to Year 2000.
The Company believes that it has made and is making every reasonable
effort to address the Year 2000 Issue and to mitigate its potential impact on
its business. However, due to the inherent complexities involved with this
issue and the interdependent nature of the Company's business relationships,
there can be no assurance that Decoma can achieve total Year 2000 compliance
and thus guarantee the success of its efforts. Subject to the foregoing, the
Company continues to believe that the Year 2000 Issue will not have a material
adverse effect on its operating results or financial position.
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 14
manufacturing and engineering operations in Canada, The United States, Mexico,
Belgium and England.
For further information please contact S. Randall Smallbone, Vice
President, Finance and Chief Financial Officer of Decoma at (905) 669-2888.
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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 October As at July 31
1999 1999
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ASSETS
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Current assets:
Cash and cash equivalents $ 32,126 $ 67,811
Accounts receivable 139,522 112,943
Inventories 92,336 70,878
Prepaid expenses and other 8,995 8,398
Accounts receivable from related companies 3,789 3,101
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276,768 263,131
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Investments 45,500 41,335
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Fixed assets (net) 406,031 405,377
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Other assets 8,811 9,962
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$737,110 $719,805
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 2,592 $ 29,487
Accounts payable 101,690 80,170
Accrued salaries and wages 21,171 22,642
Other accrued liabilities 36,315 25,909
Income taxes payable 9,516 9,342
Long-term debt due within one year 27,430 13,722
Debt due to Magna within one year 12,707 14,096
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211,421 195,368
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Long-term debt 26,856 26,764
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Long-term debt due to Magna 34,578 39,304
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Deferred income taxes 17,340 18,563
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Convertible Series Preferred Shares 139,369 137,922
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Minority interest 13,429 14,136
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Shareholders' equity:
Convertible Series Preferred Shares 13,604 14,800
Class A Subordinate Voting Shares 103,661 103,661
Class B Shares 95,303 95,303
Retained earnings 71,447 56,600
Currency translation adjustment 10,102 17,384
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294,117 287,748
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$737,110 $719,805
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DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
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(Unaudited)
(Canadian dollars in thousands,
except per share figures) Three Months Ended
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October 31
1999 1998
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Sales $259,264 $211,576
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Cost of goods sold 201,299 169,539
Depreciation and amortization 12,906 9,006
Selling, general and administrative 15,140 14,537
Interest expense, net 1,412 (236)
Amortization of discount on Convertible
Series Preferred Shares 1,447 1,388
Affiliation fees and other charges 4,309 3,527
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Operating income 22,751 13,815
Equity income 4,165 3,402
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Income before income taxes and minority
interest 26,916 17,217
Income taxes 9,534 5,354
Minority interest (300) (34)
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Net income 17,682 11,897
Dividends on Convertible Series Preferred
Shares (net of return of capital) (679) (728)
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Net income attributable to Class A
Subordinate Voting Shares and Class B
Shares 17,003 11,169
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Retained earnings, beginning of period 56,600 24,704
Dividends on Class A Subordinate Voting
Shares and Class B Shares (2,156) (1,294)
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Retained earnings, end of period $71,447 $34,579
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Earnings per Class A Subordinate Voting
Share or Class B Share
Basic $0.39 $0.26
Fully diluted $0.33 $0.23
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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
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October 31
1999 1998
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Cash provided from (used for):
OPERATING ACTIVITIES
Net Income $ 17,682 $ 11,897
Items not involving current cash flows 8,156 6,563
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25,838 18,460
Changes in non-cash working capital (18,693) (17,041)
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7,145 1,419
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INVESTMENT ACTIVITIES
Fixed asset additions (21,021) (23,422)
Decrease (increase) in investments and
other 481 (931)
Proceeds from disposition of fixed assets
and other 23 12
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(20,517) (24,341)
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FINANCING ACTIVITIES
Decrease in debt due to Magna (5,092) (25,258)
(Decrease) increase in bank indebtedness (26,895) 30,760
Issues of long term debt 14,547 12,655
Repayments of long term debt - (12,177)
Dividends on Class A Subordinate Voting
Shares and Class B Shares (2,156) (1,294)
Dividends on Convertible Series Preferred
Shares (1,875) (1,875)
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(21,471) 2,811
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Effect of exchange rate changes on cash and
cash equivalents (842) 478
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Net decrease in cash and cash equivalents
during the period (35,685) (19,633)
Cash and cash equivalents, beginning of
period 67,811 94,808
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Cash and cash equivalents, end of period $ 32,126 $ 75,175
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