Magna Announces Record 1999 Fourth Quarter and Fiscal Year Results
22 February 2000
Magna Announces Record 1999 Fourth Quarter and Fiscal Year Results
AURORA, ON, Feb. 21 - Magna International Inc. (TSE: MG.A,
MG.B; NYSE: MGA) today reported record sales, profits and earnings per share
for the fourth quarter and fiscal year ended December 31, 1999.
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YEARS ENDED THREE MONTHS ENDED
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December 31, January 31, December 31, January 31,
1999 1999 1999 1999
---- ---- ---- ----
Sales $9,359 $7,419 $2,563 $2,210
Net Income $ 430 $ 352(1) $ 125 $ 77
Excl. Other Income $ 430 $ 342 $ 125 $ 77
Fully diluted earnings $ 4.75 $ 4.06 $ 1.34 $ 0.88
per share
Excl. Other Income $ 4.75 $ 3.95 $ 1.34 $ 0.88
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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 year ended January 31,
1999 has been presented. Commencing with the first quarter ending March 31,
2000, calendar quarter comparative data will be presented.
Sales for the fourth quarter and fiscal year ended December 31, 1999 were
$2.6 billion, and $9.4 billion respectively, an increase of approximately 16%
and 26% over the comparable fiscal periods ended January 31, 1999. The higher
sales level in fiscal 1999 reflects a 14% and 23% increase in North American
and European content per vehicle, respectively, over the comparable fiscal
year, a period in which North American and European vehicle production
increased approximately 6.5% and 5.7% respectively. Tooling and other sales
increased by 30% to $1.0 billion in fiscal 1999.
Net income for the fourth quarter and fiscal 1999 were $125 million and
$430 million respectively, compared to $77 million and $352 million
respectively in the comparable fiscal periods.
Fully diluted earnings per share set records for the Company at $1.34 and
$4.75 for the fourth quarter and fiscal 1999 respectively, representing
increases of 52% and 17% respectively over the comparable fiscal periods.
During fiscal 1999, cash generated from operations was $829 million.
Total investment activities during the year were $1.1 billion, including $873
million in fixed assets and $260 million in investments and other assets,
principally for the acquisition of the 40% minority interest in Magna
Automobiltechnik AG (``MATAG'') which enhances Magna's position as the premier
metal forming company in both Europe and globally, and the acquisitions of
Gulfstream Park and Golden Gate Fields by Magna Entertainment Corp. (``MEC''),
formerly called MI Entertainment Corp., Magna's non-automotive group.
Magna recently announced that regulatory approvals have been obtained
from the U.S. and Canadian Securities Commissions which permit Magna to
proceed with its previously announced plans to transform MEC into a public
company by distributing approximately 20% of MEC's Class A Subordinate Voting
Stock to Magna's shareholders. The distribution will take place on March 10,
2000 by way of a special stock dividend. The dividend record date will be
February 25, 2000.
Magna also recently announced that its Board of Directors had declared
its regular quarterly dividend with respect to its outstanding Class A
Subordinate Voting Shares and Class B Shares for the fiscal quarter ended
December 31, 1999. The dividend of $0.30 per share, an increase from $0.25 per
share is payable concurrently with the special stock dividend on March 10,
2000 to shareholders of record on February 25, 2000.
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 58,000 employees in 174 manufacturing operations and 31
product development and engineering centres in 18 countries.
Magna will hold a conference call to discuss the fourth quarter and year
end results on Tuesday, February 22 at 10:30 a.m. EST. The number to use for
this call is 1-877-330-4535. Please call in 10 minutes prior. The number for
overseas callers is 1-416-641-6353. The conference call will be chaired by
Graham Orr, Executive Vice-President, Corporate Development. For further
information, please contact Graham Orr at 905-726-7099.
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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Twelve months ended Three months ended
December January December January
31, 31, 31, 31,
1999 1999 1999 1999
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Sales
Automotive $9,260 $7,405 $2,535 $2,196
Magna Entertainment Corp. 99 14 28 14
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9,359 7,419 2,563 2,210
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Automotive costs and expenses
Cost of goods sold 7,622 6,128 2,068 1,846
Depreciation and amortization 354 267 93 85
Selling, general and
administrative 607 497 166 152
Interest expense (income), net 16 (6) 11 (2)
Equity income (17) (15) (4) (2)
Magna Entertainment Corp.
costs and expenses 95 10 31 10
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Operating income - automotive 678 534 201 117
Operating income (loss) - Magna
Entertainment Corp. 4 4 (3) 4
Other income - 10 - -
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Income before income taxes
and minority interest 682 548 198 121
Income taxes 233 184 67 41
Minority interest 19 12 6 3
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Net Income $ 430 $ 352 $ 125 $ 77
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Financing charges on Preferred
Securities and other paid-in
capital $ (31) $ (27) $ (10) $ (6)
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Net income available to Class A
Subordinate Voting and Class B
Shareholders 399 325 115 71
Retained earnings, beginning of
period 1,202 969 1,436 1,182
Dividends on Class A Subordinate
Voting and Class B Shares (70) (65) (20) (16)
Cumulative adjustment for change
in accounting policy (note (iii)) - 8 - -
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Retained earnings, end of period $1,531 $1,237 $1,531 $1,237
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Earnings per Class A Subordinate
Voting or Class B Share:
Basic $ 5.08 $ 4.30 $ 1.46 $ 0.91
Fully diluted $ 4.75 $ 4.06 $ 1.34 $ 0.88
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Cash dividends paid per Class A
Subordinate Voting or Class B
Share $ 1.11 $ 0.87 $ 0.25 $ 0.22
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Average number of Class A
Subordinate Voting and Class B
Shares outstanding during the
period (in millions):
Basic 78.5 75.5 78.5 78.4
Fully diluted 91.8 89.3 92.5 91.3
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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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Twelve months ended Three months ended
December January December January
31, 31, 31, 31,
1999 1999 1999 1999
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Cash provided from (used for):
OPERATING ACTIVITIES
Net income $ 430 $ 352 $ 125 $ 77
Items not involving current
cash flows 399 291 130 80
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829 643 255 157
Changes in non-cash working capital (79) (9) 82 103
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750 634 337 260
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INVESTMENT ACTIVITIES
Fixed asset additions (873) (785) (227) (272)
Purchase of subsidiaries (211) (458) (72) (127)
Increase in investments and other (49) (115) (21) (24)
Proceeds from disposition of
investments and other 146 89 38 4
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(987) (1,269) (282) (419)
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FINANCING ACTIVITIES
Net issue of debt 144 92 65 120
Issues of subordinated debentures
(note (iv)) 104 435 - -
Issue of Preferred Securities
(note (iv)) 274 - - -
Issue of Class A Subordinate
Voting Shares - 260 - -
Issues of shares by subsidiaries 1 28 1 -
Repayments of debentures'
interest obligation (30) (20) (8) -
Preferred Securities distribution (3) - (3) -
Dividends paid to minority interests (3) (3) (1) (1)
Dividends (87) (66) (20) (17)
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400 726 34 102
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Effect of exchange rate changes
on cash and cash equivalents (15) 38 (8) (5)
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Net increase (decrease) in cash and
cash equivalents during the period 148 129 81 (62)
Cash and cash equivalents, beginning
of period 484 299 551 490
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Cash and cash equivalents,
end of period $ 632 $ 428 $ 632 $ 428
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MAGNA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
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(Unaudited)
(United States dollars in millions)
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December 31, December 31,
1999 1998
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ASSETS
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Current assets:
Cash and cash equivalents $ 632 $ 484
Accounts receivable 1,584 1,452
Inventories 672 681
Prepaid expenses and other 46 54
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2,934 2,671
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Investments 89 106
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Fixed assets, net 3,543 2,873
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Goodwill, net 267 306
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Future tax assets 113 68
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Other assets 272 209
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$7,218 $6,233
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 339 $ 262
Accounts payable and other accruals 1,862 1,803
Long-term debt due within one year 70 42
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2,271 2,107
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Long-term debt 253 205
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Debentures' interest obligation (note (iv)) 208 181
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Other long term liabilities 85 89
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Future tax liabilities 253 123
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Minority interest 124 117
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Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Shares
(issued: 77,438,465; December 31, 1998
- 77,256,183) 1,441 1,430
Class B Shares
(convertible into Class A Subordinate
Voting Shares) (issued: 1,097,909;
December 31, 1998 - 1,098,109) 1 1
Preferred Securities (note (iv)) 277 -
Other paid-in capital (note (iv)) 689 599
Retained earnings 1,531 1,202
Currency translation adjustment 85 179
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4,024 3,411
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$7,218 $6,233
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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 twelve
months ended January 31, 1999 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 (``Canadian GAAP''),
results up to December 31, 1998 have been restated in U.S.
dollars using the December 31, 1998 exchange rate of Cdn$1.5305
per US$1.00. Results subsequent to December 31, 1998 have been
translated using the current rate method which uses the average
exchange rate during the period to translate revenues, expenses
and cash flows and the balance sheet date rate to translate
assets and liabilities.
(iii) In the comparative period, the Company adopted the liability
method of tax allocation for accounting for income taxes. 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.
(iv) During the year ended December 31, 1999 the Company issued
Cdn$165 million of 8.65% series A preferred securities and US$170
million of 8.875% series B preferred securities (collectively,
the ``Preferred Securities''). Under Canadian GAAP, the Preferred
Securities are included in shareholders' equity and financing
charges on the Preferred Securities are accrued over time and
charged directly to retained earnings.
Also during the year ended December 31, 1999 the Company issued
Euro 100 million of 7.08% subordinated debentures. Under
Canadian GAAP, the Euro subordinated debentures are recorded as
components of debt (under Debentures' interest obligation) and
equity (under Other paid-in capital). The interest cost
associated with the Euro subordinated debentures is presented in
part as Interest expense and in part as a charge directly to
retained earnings.
(v) The revenues and expenses of the Company's recently established
non-automotive group, Magna Entertainment Corp. (``MEC''), have
been separately presented in the consolidated statement of income
from January 1, 1999. Prior to January 1, 1999, MEC revenues and
expenses were not significant.