Decoma announces record fiscal 2000 Q4 and year end results
20 September 2000
Decoma announces record fiscal 2000 fourth quarter and year end results
CONCORD, ON, Sept. 19 /PRNewswire/ - Decoma International Inc.
today announced its financial results for
the fourth quarter and fiscal year ended July 31, 2000.
Three Months Ended Twelve Months Ended
July 31 July 31
2000 1999 2000 1999
(millions of Canadian dollars,
except per share figures)
Sales $ 271.7 $ 221.8 $1,045.6 $ 901.4
Operating Income $ 20.0 $ 9.5 $ 84.3 $ 57.2
Net Income $ 12.5 $ 4.8 $ 59.1 $ 41.6
Fully diluted earnings per
share $ 0.23 $ 0.10 $ 1.11 $ 0.81
Weighted average number of
shares outstanding on a
fully diluted basis (millions) 59.4 59.2 59.2 59.2
Sales for the fourth quarter of fiscal 2000 rose 23% to a record $271.7
million. The increase in sales is due to a 6% rise in vehicle production and
2% growth in Decoma's content per vehicle to $49.30 compared to the same
period last year. For the twelve months ended July 31, 2000, sales rose 16% to
a record $1,045.6 million.
Tooling sales included in the above of $60.1 million and $129.2 million
for the quarter and year ended July 31, 2000 respectively, were also records
for the Company. The growth in tooling sales is a result of Decoma's increased
share of the global fascia market and the awarding of a number of new and
replacement contracts during the year.
Operating income in the fourth quarter of fiscal 2000 increased 110% to
$20.0 million compared to $9.5 million in the fourth quarter of fiscal 1999.
This improvement reflects the higher profit contribution arising from the
Company's sales growth and improved operating margins resulting from Decoma's
focus on cost reductions and production efficiencies throughout the
organization. Operating income for fiscal 2000 increased 47% to a record $84.3
million compared to $57.2 million for fiscal 1999. This improvement was
achieved despite an increase in design and engineering costs for new programs
and the launch of a significant number of new programs at Decoma's Mexican
operation and other facilities.
Equity income for the fourth quarter of fiscal 2000 was break-even
compared to $0.6 million in the fourth quarter of fiscal 1999. Equity income
was affected in the quarter by the consolidation and restructuring of various
operating facilities and the costs associated with the launch of a new
facility. Overall, equity income for fiscal 2000 was positive and increased by
$1.9 million to $10.9 million compared to $9.0 million in fiscal 1999.
Decoma's effective income tax rate for fiscal 2000 was 42% compared to
38% in fiscal 1999. The increase in the effective income tax rate is
attributed to losses at Decoma's Mexican facility that were not tax benefited
and the reversal of prior year Mexican tax losses previously benefited.
Net income for the fourth quarter of fiscal 2000 rose an impressive 160%
to $12.5 million compared to $4.8 million in the fourth quarter of fiscal
1999. Net income for fiscal 2000 increased 42% to $59.1 million compared to
$41.6 million the prior year. The improvement in fiscal 2000 net income
reflects improved operating margins resulting from the sales growth produced
in the period and the Company's focus on cost reduction and production
efficiencies.
For the fourth quarter of fiscal 2000 fully diluted earnings per share
rose 130% to $0.23 compared to $0.10 in the fourth quarter of fiscal 1999. For
the year ended July 31, 2000 fully diluted earnings per share increased 37% to
$1.11 from $0.81 in fiscal 1999.
During fiscal 2000 cash generated from operations was $117.7 million
before investing $27.4 million in non-cash working capital. During the year,
the Company invested $65.8 million in fixed assets.
On September 19, 2000 Decoma announced that its Board of Directors
declared a quarterly dividend in respect of the fourth quarter of fiscal 2000
of $0.06 per share on the Class A Subordinate Voting Shares and Class B Shares
payable on October 13, 2000 to shareholders of record on September 29, 2000.
This dividend is in addition to that paid on the 5% Convertible Series
Preferred Shares, and is in keeping with the shareholder profit participation
commitment set out in Decoma's Corporate Constitution.
Al Power, President and CEO, commented: "We are very proud of our record
performance in the fourth quarter and in fiscal 2000. As a result of our sales
growth and profit improvements, we have the critical mass and financial
strength necessary to continue to capitalize on the significant growth
opportunities available in our marketplace."
Decoma's Special Committee of independent directors continues to review
the previously announced proposed global exteriors transaction with Magna
International Inc. The proposed transaction would more than double the
Company's sales and would solidify Decoma as a premier worldwide supplier of
exterior products and components to the global automotive industry.
On August 4, 2000, Decoma's Board of Directors approved the change of the
Company's year end from July 31 to December 31. In addition, commencing with
the new fiscal year ending December 31, 2001, the Board of Directors has also
approved the change in the Company's financial reporting currency to U.S.
Dollars. These changes reflect the increasing global nature of Decoma's
business and will enable the Company's financial performance to be compared
more readily to that of its peer group within the automotive parts supply
industry.
Decoma will hold a conference call to discuss its fourth quarter and year-
end results on Wednesday, September 20, 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.
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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
July 31, 2000 July 31, 1999
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ASSETS
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Current assets:
Cash and cash equivalents $ 50,702 $ 67,811
Accounts receivable 115,339 112,943
Inventories 83,429 70,878
Prepaid expenses and other 7,405 8,398
Accounts receivable from related
companies 3,006 3,101
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259,881 263,131
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Investments 50,264 41,335
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Fixed assets, net 412,561 405,377
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Other assets 10,198 9,962
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$ 732,904 $ 719,805
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Bank indebtedness $ 20,821 $ 29,487
Accounts payable 76,781 80,170
Accrued salaries and wages 24,264 22,642
Other accrued liabilities 22,912 25,909
Income taxes payable 401 9,342
Long-term debt due within one year 831 13,722
Debt due to Magna within one year 40,280 14,096
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186,290 195,368
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Long-term debt 35,511 26,764
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Long-term debt due to Magna - 39,304
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Deferred income taxes 29,700 18,563
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Convertible Series Preferred Shares 143,802 137,922
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Minority interest 10,365 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) 9,939 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 103,994 56,600
Currency translation adjustment 14,339 17,384
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327,236 287,748
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$ 732,904 $ 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 Twelve Months Ended
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July 31 July 31
2000 1999 2000 1999
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Sales $ 271,711 $ 221,840 $1,045,615 $ 901,427
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Cost of goods sold 215,381 176,906 818,927 720,031
Depreciation and
amortization 13,840 11,744 53,304 40,479
Selling, general and
administrative 15,342 16,033 60,544 60,170
Interest expense, net 1,201 891 5,670 411
Amortization of discount on
Convertible Series
Preferred Shares 1,493 1,432 5,880 5,639
Affiliation fees and other
charges 4,434 3,371 17,023 14,771
Non-recurring start-up costs - 2,012 - 2,728
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Operating income 20,020 9,451 84,267 57,198
Equity income (24) 629 10,873 9,003
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Income before income taxes
and minority interest 19,996 10,080 95,140 66,201
Income taxes 7,921 5,528 39,752 25,432
Minority interest (409) (278) (3,701) (865)
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Net income 12,484 4,830 59,089 41,634
Dividends on Convertible
Series Preferred Shares,
net of return of capital (641) (691) (2,639) (2,838)
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Net income attributable to
Class A Subordinate Voting
Shares and Class B Shares 11,843 4,139 56,450 38,796
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Retained earnings, beginning
of period 94,739 54,617 56,600 24,704
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (2,588) (2,156) (9,056) (6,900)
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Retained earnings, end
of period $ 103,994 $ 56,600 $ 103,994 $ 56,600
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Earnings per Class A
Subordinate Voting Share
or Class B Share
Basic $0.28 $0.10 $1.31 $0.90
Fully diluted $0.23 $0.10 $1.11 $0.81
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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 59.4 59.2 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 Twelve Months Ended
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July 31 July 31
2000 1999 2000 1999
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Cash provided from
(used for):
OPERATING ACTIVITIES
Net Income $ 12,484 $ 4,830 $ 59,089 $ 41,634
Items not involving
current cash flows 22,747 19,290 58,564 41,636
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35,231 24,120 117,653 83,270
Changes in non-cash
working capital 7,670 1,299 (27,403) 10,470
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42,901 25,419 90,250 93,740
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INVESTING ACTIVITIES
Fixed asset additions (11,935) (36,795) (65,769) (129,541)
(Increase) decrease in
investments and other (782) 903 (3,092) (1,317)
Proceeds from sale of
subsidiary - 296 - 296
Proceeds from disposition
of fixed assets and other 20 363 283 618
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(12,697) (35,233) (68,578) (129,944)
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FINANCING ACTIVITIES
Decrease in debt due to
Magna (3,797) (2,402) (12,027) (27,795)
(Decrease) increase in bank
indebtedness (13,009) (7,172) (8,666) 27,629
Issues of long term debt 5,065 13,052 31,183 39,831
Repayments of long term debt (211) - (32,362) (14,999)
Dividends on Class A
Subordinate Voting Shares
and Class B Shares (2,588) (2,156) (9,056) (6,900)
Dividends on Convertible
Series Preferred Shares (1,875) (1,875) (7,500) (7,500)
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(16,415) (553) (38,428) 10,266
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Effect of exchange rate
changes on cash and cash
equivalents 57 860 (353) (1,059)
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Net increase (decrease) in
cash and cash equivalents
during the period 13,846 (9,507) (17,109) (26,997)
Cash and cash equivalents,
beginning of period 36,856 77,318 67,811 94,808
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Cash and cash equivalents,
end of period $ 50,702 $ 67,811 $ 50,702 $ 67,811
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DECOMA INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(Unaudited)
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July 31, 2000
1. Segmented Information
The following table shows certain information with respect to the
Company's segmented results of operations:
(Canadian dollars in thousands):
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July 31, 2000
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Directly Jointly Corporate
Controlled Controlled & Other (i) Total
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Sales $ 712,175 $ 367,321 $ (33,881) $1,045,615
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Income before income
taxes and minority
interest $ 65,799 $ 26,763 $ 2,578 $ 95,140
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Total Assets $ 425,951 $ 210,801 $ 96,152 $ 732,904
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July 31, 1999
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Directly Jointly Corporate
Controlled Controlled & Other (i) Total
Sales $ 604,397 $ 318,470 $ (21,440) $ 901,427
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Income (loss) before
income taxes and
minority interest $ 44,035 $ 22,850 $ (684) $ 66,201
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Total Assets $ 445,379 $ 196,319 $ 78,107 $ 719,805
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(i) Included in Corporate and Other income before income taxes and
minority interest for the year ended July 31, 2000 is equity
income of $10.9 million (1999: $9.0 million). Also included in
Corporate and Other income before income taxes and minority
interest are intercompany fees and interest charged to the other
segments.
2. Capital Stock
Class and Series of Outstanding Securities
The Company's share structure has remained consistent with that
in place as at July 31, 1999. For details concerning the nature
of the Company's securities, please refer to Note 10 "Convertible
Series Preferred Shares" and Note 11 "Capital Stock" of the
Company's 1999 Annual Report.
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DECOMA INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(Unaudited)
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Options and Convertible Securities
The following table presents the maximum number of shares that would
be outstanding if all of the outstanding options and Convertible
Series Preferred Shares issued and outstanding as at July 31, 2000
were exercised or converted:
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Number of
Shares
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Class A Subordinate Voting Shares outstanding as at
July 31, 2000 11,218,316
Class B Shares outstanding as at July 31, 2000 31,909,091
Options to purchase Class A Subordinate Voting Shares 1,426,250
Convertible Series Preferred Shares, convertible at
$10.07 per share 14,895,729
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59,449,386
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The maximum number of shares reserved to be issued for stock options is
4,100,000 Class A Subordinate Voting Shares. The number of reserved but
unoptioned shares as at July 31, 2000 is 2,673,750.