Onex Corporation

Onex Corporation

May 12, 2005 08:01 ET

Onex Reports First Quarter Earnings Of $721 Million

TORONTO, ONTARIO--(CCNMatthews - May 12, 2005) - Onex Corporation (TSX:OCX.SV) -

All amounts in Canadian dollars unless otherwise stated

Onex Corporation today released its financial results for the first quarter ended March 31, 2005.

- Revenues were $4.2 billion, a 9% increase from $3.9 billion for first quarter of 2004.

- Operating earnings were $217 million, up $131 million, 152% from $86 million in 2004.

- Earnings from discontinued operations were $108 million compared to a loss of $8 million in the quarter last year.

- Net earnings were $721 million ($5.19 per share) compared to net earnings of $37 million ($0.25 per share) in the first quarter of 2004.

- Cash provided from operations, excluding changes in working capital, was $173 million compared to $134 million in the first quarter of 2004.

- Included in the net earnings in the first quarter of 2005 are net gains of $603 million, primarily associated with the early redemption of the Celestica exchangeable debentures compared to $90 million of gains in first quarter 2004.

- As at March 31, 2005, assets totalled $13.2 billion and shareholders' equity was approximately $1 billion.

"Our first quarter growth in revenues and operating earnings is primarily from our acquisitions over the last year in the healthcare segment," said Gerald W. Schwartz, President and CEO of Onex Corporation. "These new businesses are performing well and making a very positive contribution. The close out of our Celestica exchangeable debentures enabled us to record the substantial gain in the value of Celestica shares we had achieved when we originally entered into these arrangements."

The healthcare segment contributed $945 million in revenues, up $406 million from the first quarter last year. Operating earnings also grew to $93 million in the first quarter of 2005 from $40 million in the same quarter last year. The improvement in revenues and operating earnings was due primarily to the acquisitions of Center for Diagnostic Imaging, Inc. and Emergency Medical Services in January and February 2005, respectively.

Celestica increased revenues by 7% from the same quarter last year due primarily to higher volumes from the company's Asian operations, which increased 20%, as well as improved demand and new customers. Operating earnings also increased by $47 million in the first quarter of 2005 from the same quarter last year as a result of improved operating efficiency, benefits from restructuring activities and lean manufacturing initiatives.

J.L. French reported lower revenues and operating earnings in the first quarter of 2005 compared to same quarter last year due primarily to lower production volumes from its major customers, Ford and General Motors.

There were gains on sales of operating investments of $603 million in the first quarter of 2005. Approximately $560 million of the gains resulted from the early redemption of the Celestica exchangeable debentures in February 2005 for which the cash was received when we issued the debentures. In addition, Onex recorded a $21 million gain on the sale of a portion of the CGG convertible bonds in early January 2005.

Interest and other income grew $44 million to $50 million in the first quarter of 2005. Approximately $40 million of that growth was recorded by Onex, the parent company, relating to income on the sale of non-strategic assets, as well as $13 million in interest income.

Earnings from discontinued operations in the first quarter of 2005 were $108 million ($0.78 per share) compared to an $8 million ($0.06 per share) loss from discontinued operations for the first quarter of 2004. Included in the 2005 first-quarter earnings from discontinued operations was a $73 million gain recorded by Onex on the sale of InsLogic, which was comprised of net cash proceeds of $22 million and the reversal of losses of InsLogic previously recognized by Onex. There was also a $35 million pre-tax gain recorded by CMC Electronics on the sale of its NovAtel shares.

"Onex, the parent company, remains financially strong with approximately $1.5 billion of cash and no debt obligations," said Mr. Schwartz. "We are continuing to search for the right growth opportunities both in new industries and as add-on acquisitions to our existing companies."

The Consolidated Statements of Earnings for the three months ended March 31, 2005 and 2004 are attached. In accordance with required accounting rules, the 2004 results have been reclassified from those previously reported for those businesses that have been discontinued in 2005.

Operating earnings is Earnings Before the Undernoted Items (as shown in the attached Consolidated Statements of Earnings) less amortization of property, plant and equipment, stock-based compensation, equity-accounted investments and foreign exchange gains plus interest and other income.

Onex Corporation is a diversified company with annual consolidated revenues of approximately $18 billion and consolidated assets of approximately $13 billion. Onex is one of Canada's largest companies with global operations in service, manufacturing and technology industries. Its operating companies include Celestica Inc., Magellan Health Services, Inc., Emergency Medical Services Corporation, ClientLogic Corporation, Cineplex Galaxy LP, J.L. French Automotive Castings, Inc., Res-Care, Inc., Cosmetic Essence, Inc., Center for Diagnostic Imaging, Inc. and Radian Communication Services Corporation. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX.SV.

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 10:00 a.m. today, Onex will webcast live its Annual Shareholders Meeting in listen-only mode on its website. Also, at 4:00 p.m. today, Onex will webcast a live conference call to review the Company's First Quarter 2005 Results in listen-only mode on its website,

For more information on Onex, visit its website at

The company's security filings can also be accessed at

Consolidated Statements of Earnings

(Unaudited) Three months ended March 31
(in millions of dollars
except per share data) 2005 2004

Revenues $ 4,236 $ 3,881
Cost of sales (3,691) (3,403)
Selling, general and administrative expenses (271) (259)

Earnings Before the Undernoted Items $ 274 $ 219
Amortization of property, plant and equipment (104) (99)
Amortization of intangible assets and
deferred charges (28) (21)
Interest expense of operating companies (70) (53)
Interest and other income 50 6
Equity-accounted investments 4 -
Foreign exchange gains 12 2
Stock-based compensation (19) (42)
Derivative instruments 1 (20)
Gains on sales of operating investments, net 603 90
Acquisition, restructuring and other expenses (43) (26)
Writedown of long-lived assets - (2)

Earnings before income taxes, non-controlling
interests and discontinued operations 680 54
Provision for income taxes (38) (3)
Non-controlling interests of operating
companies (29) (6)
Earnings from continuing operations 613 45
Earnings (loss) from discontinued operations 108 (8)
Net Earnings for the Period $ 721 $ 37

Net Earnings (Loss) per Subordinate
Voting Share
Basic and Diluted:
Continuing operations $ 4.41 $ 0.31
Discontinued operations $ 0.78 $ (0.06)
Net earnings $ 5.19 $ 0.25

Contact Information

  • Onex Corporation
    Ewout R. Heersink
    (416) 362-7711
    Onex Corporation
    Donald W. Lewtas
    (416) 362-7711