Decoma Announces Fiscal 2000 Third Quarter Results
8 June 2000
Decoma Announces Fiscal 2000 Third Quarter Results
CONCORD, ON - Decoma International Inc. today announced its financial
results for the third quarter and first nine months of fiscal 2000 ended April
30, 2000.
Three Months Ended Nine Months Ended
April 30 April 30
2000 1999 2000 1999
(millions of Canadian
dollars, except per
share figures)
Sales $269.0 $240.3 $773.9 $679.6
Operating Income $ 24.5 $ 18.1 $ 64.2 $ 47.7
Net Income $ 16.0 $ 13.4 $ 46.6 $ 36.8
Fully diluted earnings per
share $ 0.30 $ 0.25 $ 0.88 $ 0.70
Average number of shares
outstanding on a fully
diluted basis (millions) 59.2 59.2 59.2 59.2
Financial results for Decoma's third quarter of fiscal 2000 demonstrate
continued strong growth, operating and financial performance. Sales for the
third quarter and the first nine months of fiscal 2000 were a record $269.0
million and $773.9 million respectively, an increase of 12% and 14% over the
comparable periods of fiscal 1999. The higher sales level in the third quarter
reflects an 11% increase in Decoma's North American content per vehicle. The
increased sales in the first nine months of the year were realized in a period
during which North American vehicle production, including Mexico, increased 5%
or approximately 700,000 units.
Tooling sales included in the above were $30.1 million for the third
quarter and $69.1 million year-to-date in fiscal 2000 compared to $26.7
million in the third quarter and $77.0 million for the first nine months of
fiscal 1999.
Operating income in the third quarter of fiscal 2000 was up 35% to a
record $24.5 million compared to $18.1 million in the third quarter of fiscal
1999. This improvement reflects the higher contribution due to sales growth
and improved margins in our plants in Canada and the United States, partially
offset by increases in launch costs at our Mexican facility. Operating income
also increased 35% to $64.2 million for the first nine months of the year
compared to the same period in fiscal 1999. Operating income as a percentage
of sales for the quarter was 9% compared to 8% for the comparable period of
fiscal 1999.
Equity income in the third quarter of fiscal 2000 increased 38% to $4.0
million from $2.9 million in the third quarter of fiscal 1999. Equity income
was $10.9 million for the first nine months of the year compared to $8.4
million for the first nine months of fiscal 1999.
Decoma's effective income tax rate at the end of the third quarter of
fiscal 2000 was 51% compared to 38% for the comparable period in fiscal 1999.
The increase in the effective income tax rate is attributable to losses at our
Mexican facility that were not tax effected and the reversal of the benefit of
Mexican losses previously tax effected. On a year-to-date basis, the effective
tax rate was 42% compared to 36% in fiscal 1999.
Net income for the third quarter of fiscal 2000 increased 19% from $13.4
million in fiscal 1999 to $16.0 million. On a year-to-date basis for fiscal
2000 net income increased 27% to $46.6 million compared to $36.8 million for
the first nine months of fiscal 1999.
Fully diluted earnings per share increased by 20% to $0.30 per share for
the third quarter of fiscal 2000 compared to $0.25 for the comparable period
in fiscal 1999. On a year-to-date basis, fully diluted earnings per share were
$0.88 versus $0.70 in the comparable period of fiscal 1999.
During the third quarter of fiscal 2000, cash generated from operations
was $25.7 million after investing $6.7 million in non-cash working capital.
Investment in fixed assets during the quarter totaled $14.8 million. Year-to-
date cash generated from operations after non-cash working capital was $47.3
million for fiscal 2000 compared to $68.3 million for fiscal 1999. A
significant amount has been invested in tooling inventory in fiscal 2000 to
support a number of new program launches scheduled for fiscal 2001.
Commenting on the third quarter of fiscal 2000, Al Power, President and
CEO, stated that "Decoma has continued to show strong growth and improving
operational results for fiscal 2000. Our Norplas facility in Ohio has
completed one of the most successful new facility launches in Decoma's history
and we look forward to an equally successful launch of our new facility in
Halewood, England to supply the new Jaguar small car program".
On June 8, 2000, 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 third quarter of fiscal 2000 of $0.06 per share, an increase
of 20%, on the Class A Subordinate Voting Shares and Class B Shares payable on
July 14, 2000 to shareholders of record on June 30, 2000.
Decoma will hold a conference call to discuss its third quarter results
on Friday, June 9, 2000 at 9:30 a.m. EST. The dial-in numbers for the
conference call are (416) 641-6448 and (877) 331-7860 for out of town callers
with call-in required 10 minutes prior to the start of the conference call.
The conference call will be chaired by S. Randall Smallbone, Vice President,
Finance and CFO. Attending the conference call will be Alan J. Power,
President and CEO along with other members of senior management. The
conference call will be recorded and copies of the recording will be made
available by request. The conference call will also be available by live
webcast at http://www.newswire.ca/webcast/ and will be available for a period of 30
days.
Decoma designs, engineers and manufactures automotive fascias and related
components, plastic body panels and exterior appearance systems for cars and
light trucks, principally for automobile manufacturers in Canada, the United
States, Mexico and Europe. Decoma has approximately 5,800 employees in 14
manufacturing and engineering operations in Canada, the United States, Mexico,
Belgium and England.
This press release contains "forward looking statements" within the
meaning of applicable securities legislation. Such statements involve
important risks and uncertainties that may cause actual results or anticipated
events to be materially different from those expressed or implied herein.
These factors include, but are not limited to, industry cyclicality, changes
in the economic and competitive environments in which Decoma operates and
Decoma's dependence on certain vehicle programs and major OEM customer
relationships. In this regard, readers are referred to the Company's Form 20-F
for its fiscal year ended July 31, 1999, and subsequent SEC filings.
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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 As at
April 30 July 31
2000 1999
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ASSETS
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Current assets:
Cash and cash equivalents $ 36,856 $ 67,811
Accounts receivable 128,520 112,943
Inventories 96,786 70,878
Prepaid expenses and other 8,160 8,398
Accounts receivable from related companies 5,665 3,101
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275,987 263,131
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Investments 50,780 41,335
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Fixed assets, net 416,164 405,377
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Other assets 10,399 9,962
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$753,330 $719,805
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 33,830 $ 29,487
Accounts payable 83,544 80,170
Accrued salaries and wages 22,051 22,642
Other accrued liabilities 32,375 25,909
Income taxes payable 8,672 9,342
Long-term debt due within one year 817 13,722
Debt due to Magna within one year 16,883 14,096
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198,172 195,368
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Long-term debt 30,777 26,764
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Long-term debt due to Magna 27,910 39,304
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Deferred income taxes 22,057 18,563
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Convertible Series Preferred Shares 142,309 137,922
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Minority interest 10,828 14,136
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Shareholders' equity:
Convertible Series Preferred Shares
(convertible into Class A Subordinate
Voting Shares)
(authorized: 1,500,000, issued:
1,500,000) 11,173 14,800
Class A Subordinate Voting Shares
(authorized: unlimited, issued: 11,218,316) 103,661 103,661
Class B Shares
(convertible into Class A
Subordinate Voting Shares)
(authorized: unlimited, issued 31,909,091) 95,303 95,303
Retained earnings 94,739 56,600
Currency translation adjustment 16,401 17,384
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321,277 287,748
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$753,330 $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)
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Three Months Ended Nine Months Ended
April 30 April 30
2000 1999(x) 2000 1999(x)
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Sales $269,043 $240,304 $773,904 $679,587
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Cost of goods sold 207,732 192,147 603,546 543,125
Depreciation and amortization 13,604 10,085 39,464 28,735
Selling, general
and administrative 15,974 14,091 45,202 44,137
Interest expense, net 1,406 (57) 4,469 (480)
Amortization of discount
on Convertible Series
Preferred Shares 1,478 1,417 4,387 4,207
Affiliation fees
and other charges 4,344 4,049 12,589 11,400
Non-recurring start-up costs - 499 - 716
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Operating income 24,505 18,073 64,247 47,747
Equity income 4,046 2,892 10,897 8,374
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Income before income taxes
and minority interest 28,551 20,965 75,144 56,121
Income taxes 14,544 8,000 31,831 19,904
Minority interest (2,010) (477) (3,292) (587)
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Net income 16,017 13,442 46,605 36,804
Dividends on Convertible
Series Preferred Shares
(net of return of capital) (653) (704) (1,998) (2,147)
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 15,364 12,738 44,607 34,657
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Retained earnings,
beginning of period 81,531 44,035 56,600 24,704
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (2,156) (2,156) (6,468) (4,744)
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Retained earnings,
end of period $ 94,739 $ 54,617 $ 94,739 $ 54,617
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Earnings per Class A
Subordinate Voting Share
or Class B Share
Basic $0.36 $0.29 $1.03 $0.80
Fully diluted $0.30 $0.25 $0.88 $0.70
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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 43.1
Fully diluted 59.2 59.2 59.2 59.2
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(x) Note: Certain comparative figures have been reclassified to conform
with the financial statement presentation adopted for the
current year.
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DECOMA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(Canadian dollars in thousands)
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Three Months Ended Nine Months Ended
April 30 April 30
2000 1999 2000 1999
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Cash provided from (used for):
OPERATING ACTIVITIES
Net Income $ 16,017 $ 13,442 $ 46,605 $ 36,804
Items not involving current
cash flows 16,370 5,007 35,817 22,346
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32,387 18,449 82,422 59,150
Changes in non-cash working
capital (6,729) 8,488 (35,073) 9,171
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25,658 26,937 47,349 68,321
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INVESTMENT ACTIVITIES
Fixed asset additions (14,775) (35,954) (53,834) (92,746)
(Increase) decrease in
investments and other (3,022) 1,988 (2,310) (2,220)
Proceeds from disposition
of fixed assets and other 225 189 263 255
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(17,572) (33,777) (55,881) (94,711)
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FINANCING ACTIVITIES
Decrease in debt due to Magna (835) (1,529) (8,230) (25,393)
(Decrease) increase in bank
indebtedness (6,380) 9,697 4,343 34,801
Issues of long term debt 1,846 8,739 26,118 26,779
Repayments of long term debt (245) - (32,151) (14,999)
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (2,156) (2,156) (6,468) (4,744)
Dividends on Convertible
Series Preferred Shares (1,875) (1,875) (5,625) (5,625)
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(9,645) 12,876 (22,013) 10,819
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Effect of exchange rate
changes on cash and cash
equivalents 679 (469) (410) (1,919)
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Net (decrease) increase in
cash and cash equivalents
during the period (880) 5,567 (30,955) (17,490)
Cash and cash equivalents,
beginning of period 37,736 71,751 67,811 94,808
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Cash and cash equivalents,
end of period $ 36,856 $ 77,318 $ 36,856 $ 77,318
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