C-MAC Industries Inc. Announces Record Second-Quarter Results
19 July 2000
Sales Reach $1 Billion in First Six Months
MONTREAL - C-MAC Industries Inc., a world leader in the manufacture of fully integrated electronic systems and engineering solutions, announced today the financial results for its second quarter.Second-quarter financial highlights include:
* Revenues increase by 126% over the corresponding period last year * Net earnings before goodwill amortization rise by 190 % * Net earnings before goodwill amortization per share grow by 149 %
For the second quarter ended July 1st 2000, C-MAC Industries Inc. reports consolidated revenues of $582 million. This represents an increase of $324 million, or 126 % over the corresponding period in 1999, when the Corporation generated revenues of $258 million. Net earnings grew by 171 % to $24.2 million, compared to second-quarter 1999 earnings of $8.9 million. Net earnings per share increased by 132 % to $0.36 for the second quarter of 2000, compared to $0.15 per share for the same period in 1999. Net earnings before goodwill amortization per share increased to $0.41 per share compared to $0.16 per share in the second quarter of 1999.
Cash flow from operations for the second quarter totaled $66 million, representing an increase of more than 120 % over the corresponding results of the previous year. As of July 1st, 2000, the C-MAC order book was valued at $900 million.
For the six-month period ended July 1st 2000, C-MAC generated $1.0003 billion in revenue. This represents an increase of $499 million, or 99.6 % over the corresponding period in 1999, when the Corporation generated revenues of $501.2 million. Net earnings grew by 159 % to $40.9 million, compared to $15.8 million in 1999. Net earnings per share increased by 122 % to $0.60 for the first six months of 2000, compared to $0.27 per share for the same period in 1999. Net earnings before goodwill amortization per share increased to $0.68 per share compared to $0.29 per share in 1999.
"For the first time, we have reached $1 billion in sales in six months," said Dennis Wood, Chairman and Chief Executive Officer. "I'm extremely pleased with C-MAC's performance and commitment to keep pace with the growing demands of our customer base."
KEY SECOND-QUARTER HIGHLIGHTS * In May, C-MAC announced an agreement with Hong Kong-based Wong's Electronics (Holdings) Co. Ltd. to form a joint venture operation in Mexicali, Mexico. The 50,000 square-foot facility-which was completed at the end of 1999 and began production in April-is enabling C-MAC to satisfy customer demands for low-cost manufacturing solutions in this strategic market region. * On June 20, C-MAC announced the completion of a public financing of $189,000,000, which will be used to finance working capital and to fund planned capital expenditures and the company's acquisition program.
PROVIDING READY SOLUTIONS FOR HIGH GROWTH
C-MAC's focus during the last quarter has centered on the required ramp activities to meet growing volumes from all sectors of its business, which include optical network solutions in the telecommunications sector as well as increased demand from the automotive industry. In addition to the area of manufacturing ramp activities, the Company's design expertise in the final box-build stage is receiving increased interest and demand from customers.
"Our business is growing," said Wood, "as the trend toward outsourcing continues, C-MAC intends to be there with ready solutions and a successful business model that has us working closely with our customers to understand their needs, deliver innovative solutions, and exceed expectations."
ABOUT C-MAC
C-MAC is a leading internationally diversified designer and manufacturer of integrated electronic manufacturing solutions, from components to full systems, primarily serving the communications, automotive, instrumentation, defense and aerospace equipment markets worldwide. C-MAC services also include product design, supply chain management, and assembly and testing. C-MAC, headquartered in Montreal (Quebec, Canada), employs more than 7,100 employees and operates 43 manufacturing facilities located in Belgium, Canada, China, France, Germany, India, Mexico, the United Kingdom and the United States. C-MAC's manufacturing operations are supported by six strategically located design centers in North America and Europe. C-MAC (CMS) stock is traded on The Toronto Stock Exchange.
C-MAC INDUSTRIES INC.
Consolidated Earnings and Retained Earnings
(In thousands of dollars, except earnings per share)
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Twenty-six-week Thirteen-week
period ended period ended
July 1st July 3rd July 1st July 3rd
2000 1999 2000 1999
(unau- (unau- (unau- (unau-
dited) dited) dited) dited)
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Revenue $1,000,342 $501,218 $581,898 $257,779
Operating expenses:
Cost of goods sold 831,641 416,542 483,558 213,861
Selling and adminitra-
tive 46,419 32,503 26,069 16,058
Research and development 13,420 6,702 7,682 3,194
Amortization 17,076 10,502 9,702 5,245
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908,556 466,249 527,011 238,358
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Earnings from operations 91,786 34,969 54,887 19,421
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Financial expenses 18,483 7,857 10,617 4,327
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Earnings before income
taxes, non-controlling
interest and goodwill
amortization 73,303 27,112 44,270 15,094
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Income taxes 27,020 9,613 16,582 5,495
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Non-controlling interest 190 288 (29) 50
Net earnings before goodwill
amortization 46,093 17,211 27,717 9,549
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Goodwill amortization net
of income tax 5,169 1,402 3,504 607
Net earnings 40,924 15,809 24,213 8,942
Retained earnings, at
beginning 134,879 89,707 134,879 89,707
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Retained earnings, at end $175,803 $105,516 $159,092 $98,649
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Earnings before goodwill
amortization per share $0.68 $0.29 $0.41 $0.16
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Earnings per share $0.60 $0.27 $0.36 $0.15
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Weighted average number
of outstanding common
shares 68,133 58,454 68,133 58,454
(in thousands)
C-MAC INDUSTRIES INC.
Consolidated Balance Sheets
(In thousands of dollars)
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July 1 st Dec. 31 st
2000 1999
(unaudited) (audited)
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ASSETS
Current assets:
Cash and cash equivalents $435,468 $269,262
Trade receivables 376,890 249,728
Income taxes receivable 3,677 2,303
Inventories 370,088 190,853
Future income taxes 17,461 14,623
Prepaid expenses 10,177 6,582
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1,213,761 733,351
Capital assets 255,946 188,030
Goodwill, net of accumulated amortization 376,218 230,540
Other assets 16,776 10,526
Future income taxes 12,684 7,545
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$1,875,385 $1,169,992
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $323,640 $108,489
Accounts payable and
accrued liabilities 392,937 273,414
Income taxes payable 30,891 22,336
Future income taxes 11 23
Current portion of long-term debt 6,988 4,205
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754,467 408,467
Long-term debt 334,899 209,156
Other liabilities 8,416 13,194
Future income taxes 12,795 9,629
Non-controlling interest 2,490 2,295
Shareholders' Equity
Share capital 582,345 391,696
Retained earnings 175,803 134,879
Cumulative translation adjustments 4,170 676
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762,318 527,251
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$1,875,385 $1,169,992
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C-MAC INDUSTRIES INC.
Consolidated Statement of Cash Flows
(In thousands of dollars)
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Twenty-six-week
period ended
July 1 st July 3 rd
2000 1999
(unaudited) (unaudited)
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Cash flows from operating activities:
Net earnings $40,924 $15,809
Adjustments to reconcile
net earnings to cash provided
by operating activities:
Capital asset amortization 16,303 9,836
Goodwill amortization 6,068 2,013
Other asset amortization 1,275 859
Future income taxes 1,508 1,376
Non controlling Interest 190 288
Others 16 (280)
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Cash flows from operations 66,284 29,901
Net Change in operating assets and
liabilities net of acquisitions (150,770) (43,353)
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Cash provided by operating activities (84,486) (13,452)
Cash flows from financing activities:
Increase in bank indebtedness 194,952 7,968
Increase in long-term debt 156,032 52,188
Repayment of long-term debt (41,345) (17,655)
Issuance of common shares 183,776 389
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Cash flows from financing activities 493,415 42,890
Cash flows from investing activities:
Business acquisitions (169,649) (19,083)
Additions to capital assets (60,208) (13,570)
Other (16,759) (1,101)
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Cash flows from investing activities (246,616) (33,754)
Impact of changes in exchanges rates 3,893 (5,811)
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Net change in cash and cash equivalents 166,206 (10,127)
Cash and cash equivalents,
beginning of year 269,262 147,665
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Cash and cash equivalents, end of year $435,468 $137,538
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Supplemental cash flow information:
Cash paid during the period:
Interest $18,839 $6,146
Income taxes 20,528 4,701
Cash received during the period:
Interest 6,669 3,222
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Segmented information:
The Company's operations fall into one dominant industry segment,
the electronic manufacturing services industry (EMS). The Company
monitors enterprise-wide performance based on operating income.
Accounting policies relating to each geographic operating segment
are identical to those used for the purposes of the consolidated
financial statements. Intersegment sales are made at values which
approximate those prevailing in the markets serviced.
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Twenty-six-week
period ended
July 1 st July 3 rd
2000 1999
(unaudited) (unaudited)
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Geographical Activities
Revenue:
Canada $509,052 $118,415
United States of America 511,075 334,467
Europe 240,321 104,398
Asia 4,800 5,631
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1,265,248 562,911
Elimination of intersegment transfers (271,295) (64,754)
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Unallocated items 6,389 3,061
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Total revenue $1,000,342 $501,218
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Earnings from operations:
Canada $47,457 $14,103
United States of America 34,504 17,731
Europe 16,149 3,756
Asia (188) 615
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97,922 36,205
Elimination of intersegment transfers (12,525) (4,297)
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Unallocated items 6,389 3,061
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Total earnings from operations: $91,786 $34,969
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Segmented information
July 1 st December 31st
2000 1999
(unaudited) (audited)
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Assets:
Canada $625,328 $453,760
United States of America 947,189 433,124
Europe 284,061 269,314
Asia 18,807 13,794
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Total assets $1,875,385 $1,169,992
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Change in accounting policies:
The company has adopted the new income tax accounting standard
Section 3465 and has applied the provisions of the standard
retroactively to January 1, 1993. The cumulative effect on
consolidated balance sheets of this change of accounting for income
taxes as of January 1, 2000 and as January 1, 1999 as are follows:
2000 1999
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Reduction of capitals assets $2,818 $2,812
Increase to goodwill 2,416 2,416
Increase in share capital 3,422 3,422
Increase to future income tax assets,
formerly the deferred income tax assets 3,824 3,824
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The consolidated financials statements for the six months ended
July 3, 1999 have been restated to comply with the provisions of
Section 3465. The impact of applying Section 3465 on net income and
earnings per share for the six months ended July 3, 1999 has been
minimal.