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Martinrea International Inc. Releases Third Quarter Results 2009
TORONTO, ONTARIO--(Marketwire - 11/10/09) - Martinrea International Inc. (TSX:MRE - News), a leader in the production of quality metal parts, assemblies and modules and fluid management systems focused primarily on the automotive sector, announced today the release of its financial results for its third quarter ended September 30, 2009. Martinrea currently employs approximately 5,000 skilled and motivated people in 32 plants in Canada, the United States, Mexico and Slovakia. All amounts in this press release are in Canadian dollars, unless otherwise stated, and all tabular amounts are in thousands of Canadian dollars, except earnings per share and number of shares.
NON-GAAP MEASURES
The Company reports its financial results in accordance with Canadian GAAP. However, the Company has included certain non-GAAP financial measures and ratios in this analysis that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to the other financial measures determined in accordance with Canadian GAAP. Non-GAAP measures referred to in the analysis include "adjusted net earnings", "adjusted net loss", "adjusted earnings per share on a basic and diluted basis" and "adjusted loss per share on a basic and diluted basis" and are defined in the Table A and B sections of this press release.
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REVENUE
---------------------------------------------------------------------------
Three months ended
----------------------------
September 30, September 30,
2009 2008 Change % Change
---------------------------------------------------------------------------
Revenue 293,786 355,481 (61,695) (17.4%)
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Third Quarter 2009 to Third Quarter 2008 comparison
Revenue for the third quarter ended September 30, 2009 has decreased by $61.7 million or 17.4% from the prior year comparables primarily due to lower volumes on North American light vehicle platforms, $44.6 million relating to the GMT 360 frame program that ended in the fourth quarter of 2008 and a decrease in tooling revenue of $8.4 million, which were partially offset by a decline of the Canadian dollar versus the U.S. dollar resulting in an improvement in the translation of U.S. dollar denominated revenues of approximately $12.1 million.
Third Quarter 2009 to Second Quarter 2009 comparison
The Company's revenue for the third quarter of 2009 of $293.8 million increased by $50.5 million or 20.8% higher than the revenue of the second quarter of 2009 of $243.3 million due to improved production volumes and the commencement in the third quarter of 2009 of the production of parts acquired from the purchase of selected assets of the Canadian SKD Automotive Group. This increase would have been further enhanced had it not been offset by the strengthening of the Canadian dollar versus the U.S. dollar which reduced revenues by $14.7 million and a decline in tooling revenue of $5.8 million.
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GROSS MARGIN
---------------------------------------------------------------------------
Three months ended
----------------------------
September 30, September 30,
2009 2008 Change % Change
---------------------------------------------------------------------------
Gross Profit 26,859 29,316 (2,457) (8.4%)
% of revenue 9.1% 8.3%
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Due to the adoption of the new CICA Handbook Section 3031, Inventories during 2008, the amortization of property, plant and equipment ("PP&E") that is directly related to production has been reclassified to cost of sales. The comparative amounts for 2008 have been reclassified to conform to the current year's presentation.
Third Quarter 2009 to Third Quarter 2008 comparison
Gross margin percentage for the third quarter of 2009 has marginally increased by 0.8% from the prior year comparables as a result of better absorption of manufacturing overheads. Excluding the impact of one-time items in the third quarter of 2009 primarily related to the closure of the Kitchener facility of $1.1 million and development costs incurred related to the SKD acquisition of $1.1 million, the gross margin for the third quarter of 2009 increased by 1.6% as compared to the same period in the prior year mainly because of better absorption of manufacturing overheads.
Third Quarter 2009 to Second Quarter 2009 comparison
Gross margin percentage of 9.1% for the third quarter of 2009 increased substantially compared to the 6.6% gross margin percentage for the second quarter of 2009 primarily due to the better absorption of manufacturing overheads driven by the Company's efficiency programs, the rationalization of operating facilities that the Company has undertaken in the past few quarters and higher production revenue.
Excluding the one time items primarily related to the closure of the Kitchener facility, curtailment gains on post employment benefits and development costs related to the SKD acquisition the gross margin percentage for the third quarter of 2009 has increased to 9.9% as compared to 6.0% in the second quarter of 2009.
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SELLING, GENERAL & ADMINISTRATIVE ("SG&A")
---------------------------------------------------------------------------
Three months ended
----------------------------
September 30, September 30,
2009 2008 Change % Change
---------------------------------------------------------------------------
Selling, general &
administrative 17,949 22,358 (4,409) (19.7%)
% of revenue 6.1% 6.3%
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Third Quarter 2009 to Third Quarter 2008 comparison
SG&A expenses for the third quarter of 2009 decreased by $4.4 million as compared to the third quarter of 2008 primarily due to staff reductions to realign the Company's operations in line with decreasing revenue. On a percentage of revenues basis SG&A expenses were comparable to the third quarter of the prior year. Management continues to monitor, manage and rationalize these expenses.
Third Quarter 2009 to Second Quarter 2009 comparison
SG&A expenses for the third quarter of 2009 of $17.9 million were comparable to expenses incurred of $17.6 million in the second quarter of 2009. As a percentage of revenue, SG&A expenses decreased from 7.2% to 6.1% primarily because of an increase in revenues.
ADJUSTMENTS TO NET INCOME
As a result of the economic recession in North America that has caused significant production reduction by customers and a number of industry-related developments and risks and the continued rationalization of the Company's manufacturing facilities, the Company has recorded a number of unusual items and other items primarily during the fourth quarter of 2008 and the first nine months of 2009. The Company believes that it is useful to set out in detail these unusual and other items as they are non-recurring and thus the Company's financial results for the quarter ended September 30, 2009 may not be indicative of future results.
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TABLE A
-------
-------
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Three months ended
--------------------
September September
30, 2009 30, 2008 Change
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NET EARNINGS (PER CANADIAN GAAP) (A) 717 4,188 (3,471)
Add back - Unusual Items
Employee Related Severance Costs (1) 439 - 439
Other Restructuring Costs (2) 803 - 803
Restructuring Costs - Kitchener period
costs recorded as cost of sales (2) 1,114 - 1,114
Restructuring Costs - Kitchener period
costs recorded as SG&A expenses (2) 104 - 104
Add back - Other Items:
Development Costs (4) 1,131 - 1,131
------------------------------
TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX 3,591 - 3,591
Tax impact of above items (1,221) - (1,221)
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TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) 2,370 - 2,370
ADJUSTED NET EARNINGS (NON CANADIAN
GAAP) (A+B) 3,087 4,188 (1,101)
Number of Shares Outstanding - Basic ('000) 83,326 71,826
Adjusted Basic Earnings Per Share 0.04 0.06
Number of Shares Outstanding - Diluted ('000) 84,014 72,469
Adjusted Diluted Earnings Per Share 0.04 0.06
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TABLE B
-------
-------
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Three months ended
--------------------
September September
30, 2009 30, 2008 Change
---------------------------------------------------------------------------
NET EARNINGS (LOSS) (PER CANADIAN GAAP) (A) 717 (8,505) 9,222
Add back - Unusual Items
Employee Related Severance Costs (1) 439 6,447 (6,008)
Other Restructuring Costs (2) 803 721 82
Restructuring Costs - Kitchener period
costs recorded as cost of sales (2) 1,114 1,557 (443)
Restructuring Costs - Kitchener period
costs recorded as SG&A expenses (2) 104 99 5
Add back - Other Items:
Post employment benefit curtailment gain (3) - (3,700) 3,700
Developmental Costs (4) 1,131 622 509
------------------------------
TOTAL UNUSUAL AND OTHER ITEMS BEFORE TAX 3,591 5,746 (2,155)
------------------------------
Tax Impact of above items (1,221) (1,982) 761
------------------------------
TOTAL UNUSUAL AND OTHER ITEMS AFTER TAX (B) 2,370 3,764 (1,394)
ADJUSTED NET EARNINGS (LOSS) (NON CANADIAN
GAAP) (A+B) 3,087 (4,741) 7,828
Number of Shares Outstanding - Basic ('000) 83,326 72,465
Adjusted Basic Earnings (Loss) Per Share 0.04 (0.07)
Number of Shares Outstanding - Diluted ('000) 84,014 73,074
Adjusted Diluted Earnings (Loss) Per Share 0.04 (0.07)
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(1) Employee Related Severance Costs
In the third quarter of 2009, the Company incurred an additional severance expense of $0.4 million associated with the efficiency programs that have been initiated to realign the Company's operations which is reflected in Table A and B above. Also, in the second quarter of 2009, the Company negotiated a buy-down and a buyout agreement with employees of its Shelbyville division and incurred a settlement amount of $8.4 million to restructure the future salary and benefits of the employees. The agreement reduced the future salary and benefits of the employees and also provided a buy-out opportunity to the employees. This expense was partially offset by a reversal of a severance accrual associated with the Kitchener facility resulting in a net expense of employee-related severance costs at $6.4 million as indicated above in Table B.
(2) Other Restructuring Costs
In response to the significant decline in volumes in 2008, lower future forecasted volumes and to realign its operations, the Company undertook certain initiatives to prepare for a profitable and sustainable future. In so doing, certain restructuring costs of $2.0 million and $2.4 million were expensed during the third and second quarter of 2009 respectively in addition to the $6.2 million expensed during the first quarter of 2009. These initiatives include strict cost reduction measures across the entire organization, consolidation of certain facilities, closing of the facility in Kitchener, the rationalization of excess capacity at certain facilities by moving equipment and programs between facilities and other cash preservation measures.
It is anticipated that the Company will incur total restructuring costs of $70.0 to $72.0 million (combining this Item 2 with "Employee Related Severance Costs" in Item 1 above) of which $50.2 million was expensed during 2008 and $18.7 million expensed during the nine months of 2009 as outlined in note 7 of the interim consolidated financial statements for the third quarter of 2009. It is anticipated that the remaining amounts of $1.1 to $3.1 million will be expensed during the fourth quarter of 2009 as some costs did not meet the recognition criteria stipulated by Canadian GAAP for expense recognition in 2008 or the first three quarters of 2009.
As at September 30, 2009, $1.2 million of the total restructuring and employee related severance costs recorded in the fourth quarter of 2008 and the first three quarters of 2009 were included in accounts payable and accrued liabilities.
(3) Post employment benefit curtailment gain
The Company recognized a curtailment gain of $3.7 million in the second quarter of 2009 as a result of the restructuring of benefits of the employees of its Shelbyville division and continuing restructuring at its Windsor division leading to curtailment of future benefits under the OPEB plan.
(4) Development costs
Development costs in the nature of product testing, employee training and other operational inefficiencies during the product launch period are expensed in accordance with Canadian GAAP and the Company's accounting policies. The Company incurred approximately $1.1 million and $0.6 million in the third and second quarters of 2009 respectively in relation to development costs for takeover business from SKD.
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NET EARNINGS
---------------------------------------------------------------------------
Three months ended
----------------------------
September 30, September 30,
2009 2008 Change % Change
---------------------------------------------------------------------------
Net earnings 717 4,188 (3,471) (82.9%)
Earnings per common
share
Basic 0.01 0.06
Diluted 0.01 0.06
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Third Quarter 2009 to Third Quarter 2008 comparison
The decrease in net earnings from the prior year is primarily attributable to a 17.4% decline in revenues as a result of a general downturn in automotive industry sales and reduced production volumes on North American light vehicle platforms generally, and one time charges recorded in the third quarter of 2009 as discussed in Table A. Excluding the impact of one time costs, the adjusted net earnings for the third quarter of 2009 would have been $3.1 million or $0.04 adjusted earnings per share as compared to $4.2 million or $0.06 adjusted earnings per share during the same period in the prior year, primarily due to the reduction in production volumes as already discussed in the revenue section above.
Third Quarter 2009 to Second Quarter 2009 comparison
Net earnings for the third quarter of 2009 were $0.7 million or $0.01 per share on a basic and fully diluted basis as compared to a net loss in the second quarter of 2009 of $8.5 million or $0.12 loss per share on a basic and fully diluted basis. The increase in net earnings in the third quarter of 2009 as compared to the second quarter of 2009 is primarily attributable to lower one time charges in the third quarter of 2009 as compared to the second quarter of 2009 and as a consequence of a 20.8% increase in revenues. Excluding the impact of one time costs as discussed in Table B, the adjusted net earnings would have been $3.1 million or $0.04 adjusted earnings per share as compared to adjusted net loss of $4.7 million or $0.07 adjusted loss per share. The increase in adjusted earnings in the third quarter of 2009 as compared to the second quarter of 2009 was mainly the result of a 20.8% increase in revenues and improved gross margin percentage as discussed in the revenue and gross margin sections above.
CAPITAL EXPENDITURES
Third Quarter 2009 to Third Quarter 2008 comparison
In the third quarter of 2009, capital expenditures decreased by $7.6 million to $10.1 million from $17.7 million in the third quarter of 2008. The capital expenditures incurred in the third quarter of 2009 are attributable to program capital for new and existing programs and approximately $1.1 million relating to the final integration and installation costs of certain assets acquired from SKD.
Third Quarter 2009 to Second Quarter 2009 comparison
Capital expenditures decreased by $9.7 million from $19.8 million in the second quarter of 2009 as compared to $10.1 million in the third quarter of 2009 primarily due to the inclusion of the SKD related equipment acquisition of approximately $11.1 million in the second quarter of 2009.
Fred Jaekel, Martinrea's Chief Executive Officer, stated: "We have come through the most difficult period in the North American automotive industry that I can remember, but things are improving. I am very pleased that production numbers in our third quarter increased from the two previous quarters, and that has resulted in a return to profitability for our company. Our operating earnings were up nicely from the second quarter, even though July remained a very slow month for us. Volumes were low from Chrysler, which exited bankruptcy at the beginning of July but took time to ramp up, and from GM, which emerged from bankruptcy protection at the beginning of August. We experienced low revenues in July, with a ramp up in the quarter commencing in August and continuing through September. The production volumes for the industry as a whole are still, I believe, lower than the long term replacement rate for vehicles in North America, and we will continue to see some improvement in volumes over time. The rate of increase may be slow, but I think it will show a steady growth."
"We have had a very successful three months in terms of new business awards," Mr. Jaekel continued. "Since we released our second quarter results, we have won a total of approximately $70 million in new business, based upon anticipated annual revenues-this in addition to the new business awards and takeover awards announced earlier this year, as well as the takeover business achieved through our acquisition of SKD's plants in Mexico and the United States and the takeover business associated with SKD's Canadian assets. Included in this total is an order from Volkswagen of $5.7 million for incremental metal work; new work from Honda for its MDX totalling $1.4 million; new hot stamping work for the Nissan Pathfinder program approximating $9.9 million; welded assemblies for GM on the Buick Regal program of approximately $11 million; rear cross members for the GM Alpha program of approximately $12.8 million; our first awards from Fiat, which include fuel fillers and control arms for the Fiat 500 program in Mexico of approximately $6.7 million; fuel fillers for Hyundai on its Sonata program of approximately $3.2 million; new metallic work on the Chrysler 300C program of approximately $7.7 million; some non automotive work for Lennox in producing flat and radius panels of approximately $9.4 million; and some other miscellaneous work. We have also won some work since quarter end that will be announced in our next release but the most important thing we are seeing is that our quoting pipeline is very robust these days. We are quoting a lot of new business - from both our traditional and more recent customers, as our customer base is broadening. We are also seeing good activity in all areas of our business and in all geographic locations. We continue to focus on filling our capacity with new business and takeover business."
Nick Orlando, Martinrea's President and CFO, stated: "We had to make many adjustments to our operations earlier in the year to aggressively deal with the lower volumes and other stresses of our industry. Those adjustments lowered our operating costs substantially, and allowed us to generate positive cash flow from operations in our second quarter. In our third quarter we have been focusing on the ramp up of our operations, which has caused us to spend some cash on working capital, but we are now profitable and have improved our cash flow from operations. While we continued to have some one-time adjustments in the quarter to deal with restructuring costs, these adjustments were anticipated, and most of our restructuring costs have now been taken to account. However, we will continue to make adjustments where necessary to improve our operations or our long term competitive position. We also spent approximately $1.1 million in the quarter to ramp up SKD related work we acquired through our acquisition of SKD assets from bankruptcy, which we expensed in the quarter. The third quarter of 2009 was also impacted by a foreign exchange loss of approximately $1.9 million after tax ($0.02 per share) as a result of an approximate 6% appreciation of the Canadian dollar versus the U.S. dollar during the third quarter of 2009 on the working capital of our Canadian divisions. As for our fourth quarter, while we do not give guidance, we do anticipate revenue in the fourth quarter to be higher than revenue in the third quarter so long as current production schedules to the end of the year remain in place. Operational cash flow, gross margin, and profitability should grow if, as and when revenues increase."
Rob Wildeboer, Martinrea's Executive Chairman, stated: "This industry needs strong suppliers, and we believe that the automotive crisis of the past year has illustrated that very clearly. We are here to help our customers as best as we can, and we did that even as the entire industry restructured, as two of our customers went through a bankruptcy process, and as much of the supply base went through tremendous stress. We helped customers with takeover business, with an acquisition of a troubled and bankrupt supplier in SKD, and in working very hard with governments to address the issues facing us all if the automotive industry imploded. We at Martinrea want to thank our customers and our people for their great efforts and support over the past few months. We also believe that our governments were very helpful in reacting to the automotive crisis, providing needed backing to OEMs and helping to ensure that the supply base did not collapse. Especially important to us was the fact that many efforts were taken to ensure we were paid our receivables on a timely basis, and we are pleased to report that we were paid substantially all of our receivables. As we emerge from the worst of the automotive recession and hopefully move to an automotive recovery, even if it is a slow one, we now look forward to a renewal of growth in revenues and profits. The future looks good. We have a strong balance sheet, strengthened and made more flexible by our equity issue in June and amendments to our credit facility in the third quarter to fully revolving credit lines. We have the financial strength to win new mandates, to take over business and, if appropriate, to make complementary acquisitions. Meanwhile, we will focus on continuing to improve our operations and serving our growing number of customers to the best of our abilities."
The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".
This press release contains forward-looking statements within the meaning of applicable Canadian Securities laws including statements relating to: the Company's efficiency programs, capacity utilization, continuous improvement, and rationalization of operating facilities; automotive industry outlook and future vehicle production; plant closures, asset transfers and sales, the timing and quantum of severance and termination benefit obligations; future restructuring efforts, acquisition opportunities; the Company's expectations with respect to future levels of revenues, cash flow, gross margin and profitability; new business awards; automotive industry consolidation; and the Company's pursuit of its business strategies. The words "expect", "anticipate", "estimate", "may", "will", "should", "intend", "believe", "plan" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances. Many factors could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, those risks and uncertainties as set out under the heading "Risks and Uncertainties" in the Company's Management Discussion and Analysis dated November 10, 2009 and those risks and uncertainties as set forth in the Company's Annual Information Form and other public filings which can be found at www.sedar.com. Actual results may differ materially from those currently anticipated. Except as required by law, the Company has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These factors should be considered carefully, and readers should not place undue reliance on the Company's forward-looking statements.
A conference call to discuss those results will be held on Wednesday, November 11, 2009 at 8:00 a.m. (Toronto time) which can be accessed by dialing (416) 340-8018 or toll free (866) 223-7781. Please call 10 minutes prior to the start of the conference call.
If you have any teleconferencing questions, please call Andre La Rosa at (416) 749-0314.
There will also be a rebroadcast of the call available by dialing (416) 695-5800 or toll free number (800) 408-3053 (conference id - 1543855#). The rebroadcast will be available until November 25, 2009.
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MARTINREA INTERNATIONAL INC.
Interim Consolidated Balance Sheets
As at September 30, 2009 (unaudited) with comparative figures for
December 31, 2008 (in thousands of dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
September 30, December 31,
2009 2008
---------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 2,691 $ 60,965
Accounts receivable 215,241 213,575
Other receivables 7,759 7,637
Income taxes recoverable 7,004 16,035
Inventories (note 3) 135,731 132,084
Prepaid expenses and deposits 5,225 5,131
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373,651 435,427
Future income tax assets 67,290 55,651
Property, plant and equipment (note 4) 403,589 428,979
Intangible assets (note 5) 19,845 20,502
Other long term assets (note 6) 108,534 116,239
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$ 972,909 $ 1,056,798
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 191,698 $ 228,553
Current portion of long-term debt (note 8) 14,966 20,428
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206,664 248,981
Long-term debt (note 8) 76,403 101,364
Pension and other post-retirement benefits 150,282 165,367
Future income tax liabilities 25,885 22,789
Non-controlling interest 1,001 1,218
Shareholders' equity:
Share capital (note 9) 683,057 629,052
Notes receivable for share capital (note 9) (2,700) (2,700)
Contributed surplus (note 10) 36,567 34,478
Accumulated other comprehensive loss (54,149) (13,212)
Accumulated deficit (150,101) (130,539)
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512,674 517,079
Guarantees (note 14)
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$ 972,909 $ 1,056,798
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See accompanying notes to interim consolidated financial statements.
On behalf of the Board:
"Fred Jaekel" Director
-----------------------------------------------
"Robert Wildeboer" Director
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MARTINREA INTERNATIONAL INC.
Interim Consolidated Statements of Operations
Three and nine months ended September 30, 2009 and 2008 (unaudited)
(in thousands of dollars, except per share amounts)
---------------------------------------------------------------------------
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Three months ended Nine months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------
Sales $ 293,786 $ 355,481 $ 742,175 $ 1,200,169
Cost of sales (excluding
amortization of property,
plant and equipment) 255,077 314,555 660,077 1,056,854
Amortization of property,
plant and equipment
(production) (note 4) 11,850 11,610 35,507 30,782
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Total cost of sales 266,927 326,165 695,584 1,087,636
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Gross profit 26,859 29,316 46,591 112,533
Expenses:
Selling, general and
administrative 17,949 22,358 52,444 67,637
Foreign exchange loss (gain) 2,741 (1,233) 5,705 (1,580)
Amortization of property,
plant and equipment
(non-production) (note 4) 738 1,112 2,079 2,424
Amortization of intangible
assets (note 5) 1,279 1,099 3,527 3,294
Restructuring costs (note 7) 1,242 - 12,807 -
Interest on long term debt 1,373 1,488 3,773 5,344
Other interest expense
(income), net 147 (539) 38 (1,898)
Loss (gain) on disposal of
property, plant and
equipment 60 (332) (4,029) (322)
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25,529 23,953 76,344 74,899
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Earnings before income taxes
and non-controlling interest 1,330 5,363 (29,753) 37,634
Income taxes (recovery):
Current 2,316 3,433 1,872 12,037
Future (1,657) (2,229) (11,845) 170
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659 1,204 (9,973) 12,207
Earnings (loss) before
non-controlling interest 671 4,159 (19,780) 25,427
Non-controlling interest (46) (29) (218) (5)
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Net earnings (loss) $ 717 $ 4,188 $ (19,562) $ 25,432
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Earnings (loss) per common
share (note 11)
Basic $ 0.01 $ 0.06 $ (0.26) $ 0.35
Diluted $ 0.01 $ 0.06 $ (0.26) $ 0.35
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See accompanying notes to interim consolidated financial statements.
MARTINREA INTERNATIONAL INC.
Interim Consolidated Statements of Comprehensive Income (Loss)
Three and nine months ended September 30, 2009 and 2008 (unaudited)
(in thousands of dollars)
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Three months ended Nine months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------
Net earnings (loss) $ 717 $ 4,188 $ (19,562) $ 25,432
Other comprehensive income,
net of tax:
Unrealized gain (loss) on
translation of financial
statements of
self-sustaining operations (23,387) 4,222 (40,937) 11,033
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Other comprehensive income (23,387) 4,222 (40,937) 11,033
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Comprehensive income (loss) $ (22,670) $ 8,410 $ (60,499) $ 36,465
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See accompanying notes to interim consolidated financial statements.
MARTINREA INTERNATIONAL INC.
Interim Consolidated Statements of Changes in Shareholders' Equity
As at September 30, 2009 (unaudited) with comparative figures for
December 31, 2008 (in thousands of dollars)
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Notes
receivable for Contributed
Share capital share capital Surplus
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Balance, January 1,
2008 $ 629,052 $ (2,700) $ 29,337
Change in accounting
policy (note 1 and 3) - - -
-----------------------------------------------
As restated, January
1, 2008 629,052 (2,700) 29,337
Net loss for the year - - -
Compensation expense
related to stock
options - - 5,141
Other comprehensive
income - - -
-----------------------------------------------
Balance, December 31,
2008 $ 629,052 $ (2,700) $ 34,478
Net loss for the
period - - -
Share issue in
private placement
(net of share 54,005 - -
issue costs of $2,486
and future tax
recovery of $716)
Compensation expense
related to stock
options - - 2,089
Other comprehensive
income - - -
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Balance, September
30, 2009 $ 683,057 $ (2,700) $ 36,567
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Retained
Accumulated earnings
other comprehensive (Accumulated
income (loss) deficit) Total
----------------------------------------------------------------------------
Balance, January 1,
2008 $ (65,277) $ 131,054 $ 721,466
Change in accounting
policy (note 1 and 3) - (505) (505)
--------------------------------------------------
As restated, January
1, 2008 (65,277) 130,549 720,961
Net loss for the year - (261,088) (261,088)
Compensation expense
related to stock options - - 5,141
Other comprehensive income 52,065 - 52,065
--------------------------------------------------
Balance, December 31, 2008 $ (13,212) $ (130,539) $ 517,079
Net loss for the period - (19,562) (19,562)
Share issue in
private placement
(net of share - - 54,005
issue costs of $2,486
and future tax
recovery of $716)
Compensation expense
related to stock options - - 2,089
Other comprehensive income (40,937) - (40,937)
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Balance, September
30, 2009 $ (54,149) $ (150,101) $ 512,674
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See accompanying notes to interim consolidated financial statements.
MARTINREA INTERNATIONAL INC.
Interim Consolidated Statements of Cash Flows
Three and nine months ended September 30, 2009 and 2008 (unaudited)
(in thousands of dollars)
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Three months ended Nine months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
---------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net earnings (loss) $ 717 $ 4,188 $ (19,562) $ 25,432
Items not involving cash:
Amortization of property,
plant and equipment (note 4) 12,588 12,722 37,586 33,206
Amortization of intangible
assets (note 5) 1,279 1,099 3,527 3,294
Amortization of deferred
financing costs - 108 - 322
Future income taxes (1,657) (2,229) (11,845) 170
Non-controlling interest (46) (29) (218) (5)
Loss (gain) on disposal of
property, plant and
equipment 60 (332) (4,029) (322)
Stock-based compensation 953 2,051 2,089 4,032
Pension and other post
employment benefits 2,268 1,934 4,776 5,801
Contribution made to pension
and other post employment
benefits (2,631) (4,723) (8,899) (13,955)
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13,531 14,789 3,425 57,975
Changes in non-cash
working capital items:
Accounts receivable (62,291) 23,680 (15,765) 41,672
Other receivables 1,571 (3,214) (632) 12,505
Inventories (8,311) (19,482) (8,452) (2,169)
Prepaid expenses and
deposits 684 (2,517) (94) (2,857)
Accounts payable and
accrued liabilities 27,432 (5,524) (36,118) (65,292)
Income taxes recoverable 8,271 (1,075) 12,699 (15,346)
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(19,113) 6,657 (44,937) 26,488
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Financing activities:
Issue of share capital (net
of share issuance costs) - - 54,005 -
Increase in long-term debt 11,800 15,000 29,503 16,263
Repayment of long-term debt (5,242) (4,778) (58,436) (13,402)
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6,558 10,222 25,072 2,861
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Investing activities:
Acquisition of SKD (note 2) - - (4,267) -
Purchase of property, plant
and equipment (10,148) (17,699) (34,840) (42,479)
Proceeds on disposal of
property, plant and equipment 9 758 5,342 1,070
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(10,139) (16,941) (33,765) (41,409)
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Effect of exchange rate
changes on cash and cash
equivalents (1,145) 1,240 (4,644) 1,190
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Increase (decrease) in cash
and cash equivalents (23,839) 1,178 (58,274) (10,870)
Cash and cash equivalents,
beginning of period 26,530 35,960 60,965 48,008
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Cash and cash equivalents,
end of period $ 2,691 $ 37,138 $ 2,691 $ 37,138
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Supplemental cash flow
information:
Cash paid for interest,
net $ 1,112 $ 936 $ 3,226 $ 3,677
Cash paid (received) for
income taxes, net $ (2,723) $ 438 $ (5,382) $ 29,500
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See accompanying notes to interim consolidated financial statements.
Contact:
Contacts:
Martinrea International Inc.
Nick Orlando
President and Chief Financial Officer
(416) 749-0314
(905) 264-2937 (FAX)
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