CAE reports second-quarter results
06 November 2003 - 11:00AM
PR Newswire (US)
CAE reports second-quarter results TORONTO, Nov. 5
/PRNewswire-FirstCall/ -- (NYSE: CGT; TSX: CAE) - CAE today
reported earnings from continuing operations for the second quarter
(Q2) ending September 30, 2003 of C$15.1 million (or 7 cents per
share), compared to the same earnings in the first quarter and
C$23.3 million (11 cents per share) in the prior fiscal year.
Consolidated revenue for the second quarter was C$246.1 million
compared to C$242.9 million in the first quarter and C$252.3
million in the prior year, while the backlog of C$2.2 billion at
September 30 was constant with the June 30 level. The
year-over-year reduction in operating earnings was due primarily to
pricing pressures in civil aviation markets, lower margins on the
changing mix of military programs, foreign exchange impacts, and
higher pension and long- term compensation expense. Foreign
exchange impacts reduced second quarter earnings per share by two
cents relative to last year. Operating earnings increased C$3.5
million and margins improved 13% from the first quarter, with the
increase in operating earnings counterbalanced by a C$4.0 million
increase in Q2 tax expense. Year-to-date earnings from continuing
operations of C$30.2 million (14 cents per share) and revenue of
C$489.0 million compared to C$60.6 million (28 cents per share) and
C$528.1 million respectively in the prior year, with foreign
exchange impacts having reduced earnings per share by six cents
relative to the prior first half. Net earnings for the second
quarter and year- to-date were C$15.1 million (or 7 cents per
share) and C$28.3 million (or 13 cents per share) respectively.
CAE's net debt, defined as long-term debt less cash and short-term
investments, decreased by C$232.1 million to C$549.8 million during
the second quarter. Net debt has now been reduced by 40% (or
C$363.2 million) since December 31, 2002. The reduction in net debt
during the second quarter was attributable to net proceeds from an
equity issue in the amount of C$168.0 million and the receipt of
C$94.0 million from the sale and leaseback of five simulators,
offset by increases in non-cash working capital of C$12.3 million
and capital expenditures of C$33.5 million. Second-quarter capital
expenditures were C$24.3 million lower than last year, while
year-to- date capital expenditures of C$58.7 million compare to
C$130.9 million in the first half of the prior fiscal year. CAE's
President and CEO Derek H. Burney stated, "During the second
quarter, CAE achieved a major objective for the year as a whole -
the significant strengthening of our balance sheet. As expected,
our operating performance remained constrained by the severe market
pressure in the civil aviation sector and by foreign exchange
fluctuations." Business Unit Highlights Civil Simulation and
Training ("Civil") reported second-quarter operating earnings of
C$9.9 million compared to C$6.6 million in the first quarter and
C$19.9 million in the prior year period. The reduction in operating
earnings relative to the prior year is attributable primarily to
adverse equipment market conditions, foreign exchange impacts and
the accounting for additional sale and leaseback financings.
Revenue for the second quarter increased slightly from the first
quarter and 7% from the prior year to C$111.3 million. The
year-over-year increase in Q2 revenue is attributable to a 10%
increase in Q2 training revenue (20% net of foreign exchange
impacts). Training revenue year-to-date increased 15% over last
year (23% net of foreign exchange) to reach C$131.8 million,
thereby accounting for 60% of Civil's revenue in the first half of
this fiscal year compared to approximately 50% in the prior year.
Capacity utilization of Civil's installed training base of 92
simulators was 61% year-to-date, with the decline in Q2 utilization
relative to the first quarter due to seasonal factors, delays in
the Dornier 328 aircraft program and Air Canada's reduced training
needs. Civil has secured a foothold in the growing Russian aviation
market through an eight-year training agreement with Aeroflot. As
well, Civil has entered a new training joint venture with Iberia
Airlines involving a consolidation of Spanish-based assets that
could serve as the model for similar ventures with other major
airlines. Civil has won 11 of 12 competed orders for full-flight
simulators as of November 5, already matching the 11 orders secured
during the entire prior fiscal year. Among the Q2 orders was a
prototype simulator for the new Airbus A380 aircraft. The orders
secured in the first half will begin to impact on Civil's
production levels and financial performance in the second half of
the year and fiscal year 2005. Military Simulation and Training
("Military') generated second-quarter operating earnings of C$11.8
million, compared to C$12.3 million in the first quarter and C$16.2
million in the prior fiscal year. Second-quarter revenue of C$100.4
million was constant relative to the first quarter while decreasing
8% from the prior year. The year-over-year reductions in revenue
and earnings were due primarily to foreign exchange impacts and a
one-time incentive payment for early delivery included in last
year's results. Military's margins were also impacted by higher
start up costs on new projects and higher bid and proposal costs
incurred in pursuit of new opportunities. The recent committed
orders from Lockheed Martin of more than C$125 million to provide
C-130J training for the U.S. Air Force and additional contracts
from the U.S. Army Special Operations Forces with a potential value
exceeding C$110 million are evidence of new success in the key U.S.
defence market that will bolster Military's performance in the
balance of the year. Marine Controls ("Marine) generated
second-quarter operating earnings of C$5.6 million, compared to
C$4.9 million in the first quarter and C$7.2 million in the prior
year. Revenues of C$34.4 million compared to C$34.2 in the first
quarter and C$39.3 million in the prior year. The reductions in
year-over-year operating earnings and revenue are attributable
primarily to foreign exchange impacts and delays on the U.K. Astute
submarine training program. During the second quarter, Marine was
awarded new contracts by the U.S. and Indian navies. CAE is a
leading provider of integrated training solutions and advanced
simulation and controls technologies to civil aviation, military
and marine customers. The company generates annual revenues in
excess of C$1 billion and employs about 6,000 people in Canada, the
United States and around the globe. This press release includes
forward-looking statements that are based on certain assumptions
and reflects CAE's current expectations. These forward- looking
statements are subject to a number of risks and uncertainties that
could cause actual results or events to differ materially from
current expectations. Additional factors are discussed in CAE's
materials filed with the securities regulatory authorities in
Canada and the United States from time to time. CAE disclaims any
intention or obligation to update or revise any forward-looking
statements. > DATASOURCE: CAE INC. CONTACT: Arthur C. Perron,
Vice-President, Government and Media Relations, (514) 341-6780,
ext. 5370, ; Andrew Arnovitz, Director, Corporate communications
& Investor relations, (514) 734-5760, ; On the Web:
http://www.cae.com/
Copyright