Onex Corporation
TSX : OCX

Onex Corporation

February 28, 2008 16:00 ET

Onex 2007 Results

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2008) - Onex Corporation (TSX:OCX) -

All amounts in Canadian dollars unless otherwise stated

- Revenues rise 26%

- Operating earnings up 49%

- Cash flow from operations up 60%

- 2007 was an outstanding year for Onex Corporation in acquiring and building industry-leading businesses. Realizations during the year with certain of our businesses demonstrated the significant value created. We also continued to build third-party capital under management with new asset classes.
Highlights of the Year:

- Onex Partners completed five significant acquisitions and investments - Tube City IMS, Hawker Beechcraft, Carestream Health, Allison Transmission and Husky Injection Molding Systems. Onex Partners invested $2.8 billion of equity in these transactions, of which Onex' share was $1.0 billion.

- Several Onex operating companies completed acquisitions to grow their businesses. In particular, ClientLogic's acquisition of and merger with SITEL Corporation tripled the size of that business.

- Skilled Healthcare completed an initial public offering of shares at almost double Onex' original cost. Onex sold some shares in that offering, realizing proceeds of $43 million, including a carried interest.

- Onex realized $361 million of proceeds, including a carried interest, on the sale of a portion of its shares of Spirit AeroSystems in an offering priced at approximately 10 times Onex' original cost per share.

- ONCAP sold WIS and CMC Electronics for more than five times its invested capital in 2007. Onex' proceeds on these sales was $225 million.

- Onex grew its alternative asset management business with the establishment of Onex Credit Partners, a distressed credit investing platform with US$350 million of assets under management. Onex is a 50% General Partner in that business.

- Onex repurchased approximately 4.7 million Subordinate Voting Shares during 2007 and up to the end of January 2008 at an average price of $33.16 per share for a total cost of $157 million.

Gerald W. Schwartz, President and Chief Executive Officer of Onex Corporation said, "It was an excellent year for Onex. We acquired several new businesses, each being a leader in its industry. Most of our companies also achieved good growth during 2007. The initial public offering of Skilled Healthcare and the sale of some of our shares in Spirit AeroSystems' secondary offering in 2007 showed the meaningful growth in value of those businesses.

"As we enter 2008, we will continue to look for new opportunities that will grow the long-term value for shareholders and partners. Part of this growth in value will come from expanding our alternative asset management business. We have been working towards a first closing of our third large-cap fund, Onex Partners III, currently anticipated to be $4.5 billion, and are exploring raising third-party capital for Onex Real Estate Partners and Onex Credit Partners."

Onex' consolidated financial results for the year and fourth quarter ended December 31, 2007 were as follows:

Full-year results:

- Revenues grew 26%, or $4.8 billion, to $23.4 billion in 2007.

- Operating earnings for 2007 were $1.7 billion, up 49% from $1.1 billion in 2006.

- Earnings from continuing operations totalled $109 million ($0.85 per share) in 2007 compared to $256 million ($1.93 per share) in 2006.

- Cash flow from operations was $1.4 billion, up 60% from $858 million in 2006.

- Assets grew to $26.2 billion at December 31, 2007, up from $22.6 billion at December 31, 2006, and cash at the parent company was approximately $700 million.

- Shareholders' equity was $1.7 billion at December 31, 2007.

Fourth-quarter results:

- Revenues were $6.0 billion, up $1.0 billion from the fourth quarter of 2006.

- Operating earnings grew 48% to $464 million in the fourth quarter of 2007 from $313 million for the same quarter last year.

- A loss from continuing operations of $10 million ($0.08 per share) was reported in the quarter compared to earnings from continuing operations of $211 million ($1.64 per share) for same quarter last year. Included in the 2006 fourth-quarter earnings from continuing operations was a pre-tax gain of $343 million recorded by Onex on the sale of shares in Spirit AeroSystems' initial public offering.

The increase in Onex' consolidated revenues and operating earnings for 2007 over 2006 was primarily from the acquisitions of Tube City IMS in January 2007, Carestream Health in April 2007, the inclusion of a full year of results for The Warranty Group, acquired in November 2006, as well as Sitel Worldwide's (formerly ClientLogic) purchase of and merger with SITEL Corporation, in January 2007.

Operating earnings as referred to in this press release are a non-GAAP measure. See Onex' Management's Discussion and Analysis for the definition and the reconciliation to the consolidated statements of earnings.

Attached are the Consolidated Balance Sheets, Statements of Earnings, Statements of Shareholders' Equity and Comprehensive Earnings and Statements of Cash Flows for the years ended December 31, 2007 and 2006. The complete financial statements, including Onex' Management's Discussion and Analysis of the results are posted on Onex' website, www.onex.com under the Investor Information section and are also available on SEDAR.

Onex makes private equity investments through the Onex Partners and ONCAP families of funds. Onex also manages alternative asset platforms focused on Real Estate and Distressed Credit. Through its Funds, Onex generates annual management fee income from third parties and is also entitled to a carried interest on $4.4 billion of that capital. In addition, Onex invests its own $4.1 billion of capital in both direct investments and as a Limited Partner in its Funds. Onex' businesses generate annual revenues of $33 billion, have assets of $38 billion and employ 237,000 people worldwide. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX. For more information on Onex, visit its website at www.onex.com. The company's security filings can also be accessed at www.sedar.com.

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Onex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

At 4:30 p.m. today, Onex will webcast a live conference call to review the Company's Fiscal 2007 Results in listen-only mode on its website, www.onex.com.



Consolidated Balance Sheets

As at December 31 (in millions of dollars) 2007 2006
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Assets
Current assets
Cash and short-term investments $ 2,462 $ 2,944
Marketable securities 813 1,129
Accounts receivable 3,463 2,586
Inventories 2,539 2,345
Other current assets 1,461 1,694
Current assets held by discontinued operations - 139
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10,738 10,837
Property, plant and equipment 3,489 2,899
Investments 3,203 1,822
Other long-term assets 2,634 2,894
Intangible assets 2,692 1,036
Goodwill 3,443 2,696
Long-lived assets held by discontinued operations - 394
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$ 26,199 $ 22,578
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 4,938 $ 4,066
Current portion of long-term debt, without recourse
to Onex 176 43
Current portion of obligations under capital leases,
without recourse to Onex 104 35
Current portion of warranty reserves and unearned premiums 1,544 2,246
Current liabilities held by discontinued operations - 96
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6,762 6,486
Long-term debt of operating companies, without recourse
to Onex 6,159 3,798
Long-term portion of obligations under capital leases of
operating companies, without recourse to Onex 26 70
Long-term portion of warranty reserves and unearned
premiums 2,364 2,623
Other liabilities 1,663 1,818
Future income taxes 1,373 1,050
Long-term liabilities held by discontinued operations - 324
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18,347 16,169
Non-controlling interests 6,149 4,594
Shareholders' equity 1,703 1,815
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$ 26,199 $ 22,578
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Consolidated Statements of Earnings

Year ended December 31 (in millions of dollars except
per share data) 2007 2006
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Revenues $ 23,433 $ 18,620
Cost of sales (19,186) (16,161)
Selling, general and administrative expenses (2,163) (1,087)
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Earnings Before the Undernoted Items 2,084 1,372
Amortization of property, plant and equipment (535) (370)
Amortization of intangible assets and deferred charges (409) (91)
Interest expense of operating companies (537) (339)
Interest income 125 122
Earnings (loss) from equity-accounted investments (44) 25
Foreign exchange gains (loss) (118) 22
Stock-based compensation (150) (634)
Other income 6 9
Gains on sales of operating investments, net 1,144 1,307
Acquisition, restructuring and other expenses (123) (292)
Writedown of goodwill and intangible assets (7) (10)
Writedown of long-lived assets (15) (3)
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Earnings before income taxes, non-controlling interests
and discontinued operations 1,421 1,118
Provision for income taxes (295) (24)
Non-controlling interests (1,017) (838)
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Earnings from continuing operations 109 256
Earnings from discontinued operations 119 746
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Net Earnings for the Year $ 228 $ 1,002
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Net Earnings per Subordinate Voting Share
Basic and Diluted:
Continuing operations $ 0.85 $ 1.93
Discontinued operations $ 0.93 $ 5.62
Net earnings $ 1.78 $ 7.55
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Consolidated Statements of Shareholders' Equity and Comprehensive Earnings

Accumulated
(in millions of Other Total
dollars except Share Retained Comprehensive Shareholders'
per share data) Capital Earnings Earnings (Loss) Equity
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Balance -
December
31, 2005 $ 578 $ 648 $ (74)(b) $ 1,152
Dividends
declared(a) - (15) - (15)
Purchase and
cancellation
of shares (37) (166) - (203)
Currency
translation
adjustments - - (121) (121)
Net earnings for
the year - 1,002 - 1,002
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Balance -
December
31, 2006 541 1,469 (195)(b) 1,815
Adoption of
financial
instrument
accounting
policies - 1 - 1
Dividends
declared(a) - (14) - (14)
Purchase and
cancellation
of shares (12) (101) - (113)
Comprehensive
Earnings (Loss)
Net earnings for
the year - 228 - 228
Other
comprehensive
earnings (loss)
for the year:
Currency
translation
adjustments - - (202) (202)
Change in fair
value of
derivatives
designated as
hedges - - (22) (22)
Other - - 10 10
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Balance -
December 31,
2007 $ 529 $ 1,583 $ (409)(c) $ 1,703
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(a) Dividends declared per Subordinate Voting Share during 2007 totalled
$0.11 (2006 - $0.11). In 2007, shares issued under the dividend
reinvestment plan amounted to less than $1 (2006 - less than $1).

(b) Accumulated Other Comprehensive Earnings (Loss) at December 31, 2006
and 2005 consists of currency translation adjustments. Included in the
currency translation adjustments for the year ending December 31, 2006
is negative $129 relating to the discontinued operations of J.L. French
Automotive Castings, Inc.

(c) Accumulated Other Comprehensive Earnings (Loss) as at December 31, 2007
consists of currency translation adjustments of negative $397,
unrealized losses on the effective portion of cash flow hedges of $20
and unrealized gains on available-for-sale financial assets and other
of $8. Income taxes did not have a significant effect on these items.


Consolidated Statements of Cash Flows

Year ended December 31 (in millions of dollars) 2007 2006
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Operating Activities
Net earnings for the year $ 228 $ 1,002
Earnings from discontinued operations (119) (746)
Items not affecting cash:
Amortization of property, plant and equipment 535 370
Amortization of intangible assets and deferred charges 409 91
Writedown of goodwill and intangible assets 7 10
Writedown of long-lived assets 15 3
Non-cash component of restructuring 5 91
Non-controlling interests 1,017 838
Future income taxes 68 72
Stock-based compensation 150 438
Loss (earnings) from equity-accounted investments 44 (25)
Foreign exchange loss (gains) 132 (10)
Gains on sales of operating investments, net (1,144) (1,307)
Other 26 31
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1,373 858

Changes in non-cash working capital items:
Accounts receivable (358) (128)
Inventories 176 (619)
Other current assets 109 7
Accounts payable and accrued liabilities 270 258
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Increase (decrease) in cash due to changes in working
capital items 197 (482)
Increase (decrease) in warranty reserves and unearned
premiums and other liabilities (242) 520
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1,328 896
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Financing Activities
Issuance of long-term debt 1,927 543
Repayment of long-term debt (1,643) (792)
Cash dividends paid (14) (15)
Repurchase of share capital (113) (203)
Issuance of share capital by operating companies 2,123 822
Distributions by operating companies (886) (1,036)
Decrease due to other financing activities (47) (9)
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1,347 (690)
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Investing Activities
Acquisition of operating companies, net of cash in
acquired companies of $326 (2006 - $144) (1,840) (850)
Purchase of property, plant and equipment (633) (823)
Proceeds from sales of operating investments 1,311 1,391
Decrease due to other investing activities (1,871) (266)
Cash from discontinued operations 216 172
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(2,817) (376)
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Decrease in Cash for the Year (142) (170)
Increase (decrease) in cash due to changes in foreign
exchange rates (351) 10
Cash, beginning of the year - continuing operations 2,944 3,089
Cash, beginning of the year - discontinued operations 11 26
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Cash, end of year 2,462 2,955
Short-term investments - -
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Cash and short-term investments 2,462 2,955
Cash held by discontinued operations - (11)
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Cash and Short-term Investments Held by Continuing
Operations $ 2,462 $ 2,944
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Contact Information

  • Onex Corporation
    Donald W. Lewtas
    (416) 362-7711
    Website: www.onex.com