EXHIBIT 99
Intier Automotive Inc. | 521 Newpark Blvd., |
PRESS RELEASE
INTIER ANNOUNCES 2003 FIRST QUARTER RESULTS
Wednesday, May 7, 2003, Newmarket, Ontario, Canada Intier Automotive Inc. (TSX: IAI.A, NASDAQ: IAIA) today reported financial results for the first quarter ended March 31, 2003. Diluted earnings per share for the first quarter ended March 31, 2003 increased 8% to $0.27 as compared to diluted earnings per share of $0.25 for the first quarter ended March 31, 2002.
All results are reported in millions of U.S. dollars, except earnings per share figures, in accordance with Canadian Generally Accepted Accounting Principles. | ||||||||||||||
THREE MONTH PERIODS ENDED MARCH 31, | ||||||||||||||
(Unaudited) | ||||||||||||||
2003 | 2002 | |||||||||||||
Sales | $ | 1,031.6 | $ | 878.9 | ||||||||||
Operating income | $ | 30.1 | $ | 28.5 | ||||||||||
Net income | $ | 13.8 | $ | 13.0 | ||||||||||
Diluted earnings per share | $ | 0.27 | $ | 0.25 | ||||||||||
Sales increased $152.7 million, or 17% to $1,031.6 million for the three month period ended March 31, 2003 compared to $878.9 million for the three month period ended March 31, 2002. Approximately $70 million, or nearly half, of this increase is due to the positive impact of foreign exchange translation related to the strengthening Canadian dollar, euro and British pound.
North American production sales grew to $575.6 million in the first quarter of 2003 compared to $521.3 million in the first quarter of 2002 as a result of the positive impact of higher production volumes, higher North American average dollar content per vehicle and the strengthening of the Canadian dollar relative to the U.S. dollar. North American light vehicle production volumes increased approximately 2% to4.2 million units for the three month period ended March 31, 2003 as compared to 4.1 million units for the three month period ended March 31, 2002. North American average dollar content per vehicle increased to $139 for the first quarter of 2003 compared to $128 for the first quarter of 2002. New products that contributed to this increase included the Company's complete seats for the Chrysler Pacifica launched during the first quarter of 2003, as well as new products launched in the second half of 2002 such as the complete seats and overhead system for the Saturn ION.
Western European production sales increased to $372.6 million for the first quarter of 2003 compared to $275.3 million for the first quarter of 2002 as a result of growth in our Western European average dollar content per vehicle and the positive impact related to the strengthening of euro and British pound relative to the U.S. dollar. Western European vehicle production volumes remained relatively flat at approximately 4.3 million units for the three month periods ended March 31, 2003 and 2002. Western European average dollar content per vehicle increased to $87 for the first quarter of 2003 compared to $64 for the first quarter of 2002. New product launches that contributed to this increase included the instrument panel, console and door panels for the new Jaguar XJ Series, door panels for the Toyota Avensis and cockpit module for the Nissan Micra.
Consolidated tooling and engineering sales for the three month period ended March 31, 2003 increased by 1% to $83.4 from $82.3 million for the three month period ended March 31, 2002.
Operating income for the first quarter of 2003 increased to $30.1 million compared to $28.5 million for the first quarter of 2002. The increase in operating income was attributable to higher gross margin related to higher production sales partially offset by customer price reductions, start-up costs associated with a number of the Company's new product launches, the adverse impact of the strengthening euro at certain under-performing operations, higher selling, general and administrative costs associated with the increase in sales and higher affiliation and social fees.
The Company continued to generate significant free cash. During the first quarter of fiscal 2003, cash generated from operations before changes in working capital was $46.2 million. An additional $46.6 million of cash was generated from working capital resulting in total cash from operating activities of $92.8 million. Investment activities during the first quarter of 2003 were $26.9 million resulting in free cash before financing activities of $65.9 million for the quarter.
Diluted earnings per share was $0.27 for the three month period ended March 31, 2003, compared to diluted earnings per share of $0.25 for the three month period ended March 31, 2002.
Commenting on the first quarter results, Don Walker, the Company's President and Chief Executive Officer, stated "We are pleased with the progress that we continue to make and the on-going successful launches of our new products for our customers".
Intier Automotive's Board of Directors declared a dividend in respect of the first quarter of 2003 of US$0.10 per share on the Class A Subordinate Voting and Class B Shares payable on or after June 16, 2003 to shareholders of record on May 30, 2003. The Board also declared a dividend of US$2,812,500 on the outstanding Convertible Series 1 and 2 Preferred Shares payable on or after June 30, 2003 to holders of the Convertible Series Preferred Shares of record on May 30, 2003.
2003 OUTLOOK
For the full year, North American light vehicle production volumes are expected to decrease to approximately 15.8 million units from 16.3 million units in 2002. Western Europe production volumes are expected to decline slightly to approximately 16.1 million units compared to 16.3 million units in 2002. Full year average dollar content per vehicle is expected to be between 17% and 20% above the average dollar content per vehicle for 2002 for both North America and Europe. In North America, average dollar content per vehicle is expected to be below this range in the second quarter of 2003 and above this range in the fourth quarter of 2003. Based on these production volume estimates, product mix and foreign exchange rate assumptions and tooling and engineering sales estimates, 2003 total sales are expected to be between $4.35 billion and $4.45 billion.
Intier is a global full service supplier and integrator of automotive interior and closure components, systems and modules. It directly supplies most of the major automobile manufacturers in the world with approximately 22,000 employees at 65 manufacturing facilities, and 17 product development, engineering and testing centres in North America, Europe, Brazil, Japan and China.
Intier will hold a conference call to discuss the first quarter results and other developments on Wednesday, May 7, 2003 at 4:00 p.m. EST (Toronto Time). The number to use for this call is 1-888-313-7737. Overseas callers should use 212-346-6527. Please call in 10 minutes prior to the conference call. For anyone unable to listen to the scheduled call, the rebroadcast number will be 1-800-558-5253 and 416-626-4100 (reservation number is 21138116#). The conference call will be chaired by Don Walker, President and Chief Executive Officer and Michael McCarthy, Executive Vice-President and Chief Financial Officer.
For further information please contact Michael McCarthy, Executive Vice-President and Chief Financial Officer of Intier at (905) 830-5824. For teleconferencing questions, please call Karen Lesey at Intier at (905) 898-5200 Ext. 7042.
This press release may contain forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks, assumptions and uncertainties which may cause actual future results and performance of Intier Automotive Inc. (the "Company") to be materially different from those expressed or implied in these statements. These risks, assumptions and uncertainties include, but are not limited to: industry cyclicality, including reductions or increases in production volumes; trade and labour disruption; pricing concessions and cost absorptions; product warranty, recall and product liability costs; the Company's financial performance; changes in the economic and competitive markets in which the Company competes; relationships with OEM customers; customer price pressures; the Company's dependence on certain vehicle programs; currency exposure; energy prices; and certain other risks, assumptions and uncertainties disclosed in the Company's public filings. The Company discla ims any intention and undertakes no obligation to update or revise any forward-looking statements to reflect subsequent information, events or circumstances or otherwise.
INTIER AUTOMOTIVE INC.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in millions) | As at | As at | |||||
(Unaudited) | (Audited) | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 306.3 | $ | 241.3 | |||
Accounts receivable | 598.6 | 579.9 | |||||
Inventories | 295.5 | 261.7 | |||||
Prepaid expenses and other | 32.3 | 27.8 | |||||
Income taxes receivable | 1.4 | 5.5 | |||||
1,234.1 | 1,116.2 | ||||||
Fixed assets, net | 488.2 | 478.1 | |||||
Goodwill | 104.0 | 100.7 | |||||
Future tax assets | 74.3 | 75.5 | |||||
Other assets | 13.6 | 11.3 | |||||
$ | 1,914.2 | $ | 1,781.8 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Bank indebtedness | $ | 54.9 | $ | 48.6 | |||
Accounts payable | 755.4 | 658.0 | |||||
Accrued salaries and wages | 66.5 | 74.3 | |||||
Other accrued liabilities | 63.3 | 50.2 | |||||
Long-term debt due within one year | 4.1 | 4.2 | |||||
Series 1 Convertible Series Preferred Shares (note 9) | 107.6 | - | |||||
1,051.8 | 835.3 | ||||||
Long-term debt | 31.8 | 31.8 | |||||
Other long-term liabilities | 27.4 | 25.6 | |||||
Convertible Series Preferred Shares (note 9) | 101.6 | 206.2 | |||||
Future tax liabilities | 37.6 | 38.0 | |||||
Minority interest | 1.0 | 0.9 | |||||
Shareholders' equity: | |||||||
Convertible Series Preferred Shares (note 6) | 19.6 | 22.0 | |||||
Class A Subordinate Voting Shares (note 6) | 71.8 | 71.8 | |||||
Class B Shares (note 6) | 495.8 | 495.8 | |||||
Retained earnings | 28.2 | 17.2 | |||||
Currency translation adjustment | 47.6 | 37.2 | |||||
663.0 | 644.0 | ||||||
$ | 1,914.2 | $ | 1,781.8 | ||||
INTIER AUTOMOTIVE INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)
(U.S. dollars in millions, except per share figures and numbers of shares) | |||||||||||||||
Three month period ended March 31, | Three month period ended March 31, | ||||||||||||||
2003 | 2002 | ||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Sales | $ | 1,031.6 | $ | 878.9 | |||||||||||
Cost of goods sold | 907.9 | 771.4 | |||||||||||||
Depreciation and amortization | 23.4 | 20.7 | |||||||||||||
Selling, general and administrative | 54.4 | 44.8 | |||||||||||||
Affiliation and social fees | 15.8 | 13.5 | |||||||||||||
Operating income | 30.1 | 28.5 | |||||||||||||
Interest expense, net | 0.3 | 0.3 | |||||||||||||
Amortization of discount on Convertible Series | 3.0 | 2.8 | |||||||||||||
Equity income | (0.3) | (0.1) | |||||||||||||
Income before income taxes and minority | 27.1 | 25.5 | |||||||||||||
Income taxes | 13.2 | 12.6 | |||||||||||||
Minority interest | 0.1 | (0.1) | |||||||||||||
Net income | $ | 13.8 | $ | 13.0 | |||||||||||
Financing charge on Convertible Series | 0.4 | 0.5 | |||||||||||||
Net income attributable to Class A Subordinate | 13.4 | 12.5 | |||||||||||||
Retained earnings, beginning of period | 17.2 | 15.9 | |||||||||||||
Adjustment for change in accounting policy for | - | (35.7) | |||||||||||||
Dividends on Class A Subordinate Voting and | (2.4) | (2.4) | |||||||||||||
Retained earnings (deficit), end of period | $ | 28.2 | $ | (9.7) | |||||||||||
| |||||||||||||||
Basic | $ | 0.28 | $ | 0.26 | |||||||||||
Diluted | $ | 0.27 | $ | 0.25 | |||||||||||
Average number of Class A Subordinate Voting | |||||||||||||||
Basic | 48.2 | 48.2 | |||||||||||||
Diluted | 63.1 | 63.6 | |||||||||||||
INTIER AUTOMOTIVE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in millions) | ||||||||||||||||
Three month period ended March 31, | Three month period ended March 31, | |||||||||||||||
2003 | 2002 | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Cash provided from (used for): | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||
Net income | $ | 13.8 | $ | 13.0 | ||||||||||||
Items not involving current cash flows | 32.4 | 28.8 | ||||||||||||||
46.2 | 41.8 | |||||||||||||||
Change in non-cash working capital | 46.6 | 2.5 | ||||||||||||||
92.8 | 44.3 | |||||||||||||||
INVESTMENT ACTIVITIES | ||||||||||||||||
Fixed asset additions | (23.9) | (24.5) | ||||||||||||||
Increase in investments and other assets | (3.1) | (0.3) | ||||||||||||||
Proceeds from disposition of fixed assets | 0.1 | 1.7 | ||||||||||||||
(26.9) | (23.1) | |||||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||
Increase (decrease) in bank indebtedness | 3.8 | (8.4) | ||||||||||||||
(Repayments) issues of long-term debt and other long-term liabilities | (1.0) | 1.0 | ||||||||||||||
Dividends on Class A Subordinate Voting and | (2.4) | (2.4) | ||||||||||||||
Dividends on Convertible Series Preferred Shares | (2.8) | (2.8) | ||||||||||||||
(2.4) | (12.6) | |||||||||||||||
Effect of exchange rate changes on cash and | 1.5 | (0.6) | ||||||||||||||
Net increase in cash and cash equivalents during | 65.0 | 8.0 | ||||||||||||||
Cash and cash equivalents, beginning of period | 241.3 | 77.1 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 306.3 | $ | 85.1 | ||||||||||||
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in U.S. dollars unless otherwise noted and all tabular amounts in millions, except per share figures and number of shares)
(All amounts as at March 31, 2003 and for the three month periods ended March 31, 2003 and 2002 are unaudited).
1. | BASIS OF PRESENTATION |
| |
| |
|
2. | CYCLICALITY |
|
3. | USE OF ESTIMATES |
| |
4. | CHANGE IN ACCOUNTING POLICY FOR GOODWILL |
|
5. | CONTINGENCIES |
| |
| |
|
6. | CAPITAL STOCK |
| |
| |
|
Authorized | Issued | ||
Convertible Series Preferred Shares |
|
| |
Preferred Shares, issuable in series | Unlimited | - | |
Class A Subordinate Voting Shares | Unlimited | 5,481,191 | |
Class B Shares |
|
| |
Maximum Number of Shares | |
|
Number of Shares | ||
|
| |
Class B Shares outstanding as at March 31, 2003 | 42,751,938 | |
Options to purchase Class A Subordinate Voting Shares | 3,095,000 | |
Convertible Series Preferred Shares, convertible at $15.09 per share | 14,910,537 | |
66,238,666 | ||
The number of shares reserved to be issued for stock options is 5,995,000 Class A Subordinate Voting Shares of which 2,780,000 are reserved but unoptioned at March 31, 2003. The total number of shares issued from exercised stock options, from the inception date of the plan, is 5,000. The total number of options to purchase Class A Subordinate Voting Shares that have been cancelled, from the inception of the plan, is 131,000. The total number of options to purchase Class A Subordinate Voting Shares that have expired, from the inception of the plan, is 4,000. |
7. | STOCK-BASED COMPENSATION | |
(a) | Information concerning the Company's Incentive Stock Option Plan is included in note 14 "Capital Stock" of the 2002 audited consolidated financial statements included in the Company's 2002 Annual Report. The following is a continuity schedule of options outstanding: |
Canadian dollar options | |||||
Number | Weighted average exercise price | Options exercisable | |||
Outstanding at December 31, 2002 | 1,720,000 | Cdn.$ | 21.92 | 641,000 | |
Cancelled | (10,000) | Cdn.$ | 21.00 | (4,000) | |
Outstanding at March 31, 2003 | 1,710,000 | Cdn.$ | 21.92 | 637,000 | |
U.S. dollar options | |||||
Number | Weighted average exercise price | Options exercisable | |||
Outstanding at December 31, 2002 | 1,435,000 | U.S.$ | 14.38 | 587,000 | |
Cancelled | (20,000) | U.S.$ | 13.70 | (8,000) | |
Cancelled | (30,000) | U.S.$ | 16.40 | (6,000) | |
Outstanding at March 31, 2003 | 1,385,000 | U.S.$ | 14.35 | 573,000 | |
|
|
|
Three month periods ended March 31, | |||
2003 | 2002 | ||
Risk free interest rate | - | 5.27% | |
Expected dividend yield | - | 1.20% | |
Expected volatility | - | 26% | |
Expected time until exercise | - | 5 years | |
For the three month period ending March 31, 2003 no options were granted under the Company's Incentive Stock Option Plan. | |
|
|
Three month periods ended March 31, | |||||
2003 | 2002 | ||||
Pro forma net income attributable to Class A Subordinate | $ | 13.3 | $ | 12.4 | |
Pro forma earnings per Class A Subordinate Voting or | |||||
Basic | $ | 0.28 | $ | 0.26 | |
Diluted | $ | 0.26 | $ | 0.25 | |
The weighted average fair value of options granted subsequent to January 1, 2002 and outstanding during the three month period ending March 31, 2003 was $5.63 per option. The weighted average fair value of the 60,000 options granted during the three month period ending March 31, 2002 was $4.66 per option. |
8. | EARNINGS PER SHARE |
|
Three month period ended March 31, 2003 | Three month period ended March 31, 2002 | ||||||
Basic earnings per Class A Subordinate Voting | |||||||
Net income attributable to Class A Subordinate |
| 13.4 |
| 12.5 | |||
Average number of Class A Subordinate Voting | 48.2 | 48.2 | |||||
Basic earnings per Class A Subordinate Voting or |
| 0.28 |
| 0.26 | |||
Diluted earnings per Class A Subordinate | |||||||
Net income attributable to Class A Subordinate |
|
|
| 12.5 | |||
Adjustments (net of related tax effects): | |||||||
Amortization of discount on Convertible Series | 3.0 | 2.8 | |||||
Financing charge on Convertible Series | 0.4 | 0.5 | |||||
$ | 16.8 | $ | 15.8 | ||||
Average number of Class A Subordinate Voting |
|
| |||||
Convertible Series Preferred Shares | 14.9 | 14.9 | |||||
Stock options | - | 0.5 | |||||
63.1 | 63.6 | ||||||
Diluted earnings per Class A Subordinate Voting or |
|
|
| 0.25 | |||
For the three month period ending March 31, 2003, diluted earnings per Class A Subordinate Voting or Class B Share exclude the 3.1 million Class A Subordinate Voting Shares issuable under the Company's Incentive Stock Option Plan as such options were not in the money during the period. | |
9. | CONVERTIBLE SERIES PREFERRED SHARES |
| |
| |
|
10. | SEGMENTED INFORMATION |
|
Three month period ended | Three month period ended March 31, 2002 | ||||||||||||
| Operating income |
|
| Operating income |
| ||||||||
Interior Systems | |||||||||||||
North America | $ | 427.7 | $ | 12.6 | $ | 230.2 | $ | 423.9 | $ | 23.5 | $ | 198.2 | |
Europe | 367.8 | 2.7 | 160.2 | 264.6 | 0.5 | 146.4 | |||||||
Closures Systems | 236.9 | 14.6 | 97.2 | 190.8 | 6.9 | 80.9 | |||||||
Corporate, other and |
| 0.2 | 0.6 |
|
| 0.2 | |||||||
Total reportable segments | $ | 1,031.6 | $ | 30.1 | 488.2 | $ | 878.9 | $ | 28.5 | 425.7 | |||
Current assets | 1,234.1 | 958.8 | |||||||||||
Goodwill, future tax and other | 191.9 | 235.6 | |||||||||||
Consolidated total assets | $ | 1,914.2 | $ | 1,620.1 | |||||||||
Effective January 2003, the Company's Closures operations underwent an organizational structure change, effectively changing management's reporting and assessment of operating results for resource allocation decisions and performance assessment to be on a global basis. Consistent with these changes in the Company's business operations, the Closures segment, beginning January 2003 is reported on a global basis. All comparative period amounts have been restated to conform with the current period's presentation. |