Onex Corporation

Onex Corporation

March 03, 2005 16:00 ET

Onex Reports Fourth Quarter and Fiscal 2004 Financial Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: ONEX CORPORATION

TSX SYMBOL: OCX.SV

MARCH 3, 2005 - 16:00 ET

Onex Reports Fourth Quarter and Fiscal 2004 Financial
Results

TORONTO, ONTARIO--(CCNMatthews - March 3, 2005) - Onex Corporation
(TSX:OCX.SV) today announced financial results for the fourth quarter
and fiscal year ended December 31, 2004.

Full Year Results

- Revenues for the year were $16.2 billion, up 34% from 2003.

- Operating earnings for 2004 were $248 million, up $188 million from
$60 million for 2003.

- Net earnings for the year were $35 million ($0.25 per share) compared
to a net loss of $332 million ($2.16 per share) last year.

- Cash flow from operations, excluding changes in working capital and
other liabilities, was $415 million compared to cash from operations of
$107 million in 2003.

- Assets totalled $11.8 billion at December 31, 2004 compared to $14.6
billion at December 31, 2003.

Fourth Quarter Results

- Revenues were $3.9 billion, up 22% from $3.2 billion in the fourth
quarter of 2003.

- An operating loss of $72 million was reported in the fourth quarter of
2004 compared to operating earnings of $57 million in the same quarter
of last year. Included in the 2004 fourth-quarter operating loss is $217
million of charges recorded by Celestica.

- Net loss for the quarter was $214 million compared to net earnings of
$152 million in the same quarter of 2003. This was due primarily to the
effect of asset writedowns and restructuring provisions at Celestica.

"Our 2004 results reflect improved revenue and operating earnings at
many of our companies and the positive contribution from the new
businesses we added in 2004," said Gerald W. Schwartz, Chairman and CEO
of Onex Corporation. "The significant writedowns of goodwill and
intangible assets, as well as the restructuring provisions, primarily at
Celestica, obfuscated what were otherwise positive results. We believe
that our companies have significantly strengthened their operations in
2004 and will continue to focus on improving their financial performance
in 2005."

The increase in revenues was due primarily to higher revenues at
Celestica in 2004 and the inclusion of Magellan, which added $2.2
billion in revenues in 2004.

There were goodwill and intangible asset writedowns in 2004 of $393
million. These writedowns arose from annual reviews of goodwill and
intangible assets performed by Onex' operating companies. Specifically,
Celestica wrote off $388 million of its goodwill and intangible assets.

The adoption of new stock option accounting policies by Onex' operating
companies reduced results by $69 million during 2004 for current year
costs.

Acquisition, restructuring and other expenses totalled $211 million in
2004. Celestica's restructuring plans, which include reducing its
workforce and consolidating its production facilities, accounted for
$184 million of these restructuring expenses.

Included in the 2004 results is a net foreign exchange loss of $116
million. This loss was generated from the decline in value of the U.S.
dollar relative to the Canadian dollar on U.S. cash balances held at the
parent company.

There were gains on shares of operating companies of $182 million in
2004. Approximately $75 million of the gains in 2004 resulted from the
sale of Commercial Vehicle Group shares with that company's initial
public offering in August 2004. In addition, Onex recorded a $58 million
non-cash gain on Performance Logistics Group relating to its purchase of
Leaseway in 2004.

Onex had earnings from discontinued operations of $195 million in 2004
primarily related to the net after-tax gains on the sale of Loews
Cineplex ($135 million) and CMC Electronics' Cincinnati Electronics
division ($49 million). In addition, the after-tax gains on the sale of
Dura Automotive and Armtec were included in the 2004 earnings from
discontinued operations.

"We are enthusiastic about Onex' opportunities for growth as we enter
2005 with cash and near-cash items of approximately $1.7 billion and
available funding commitments of $1.1 billion through Onex Partners,"
said Mr. Schwartz. "To date in 2005, we have completed two acquisitions
as well as established Onex Real Estate Partners, a fund dedicated to
acquiring and improving real estate assets in North America. We also
recently announced the agreement to purchase a sizeable portion of
Boeing's commercial aircraft manufacturing business in a transaction
valued at $1.5 billion. We believe these transactions will create
long-term value for shareholders."

The consolidated balance sheets, statements of earnings, statements of
shareholders' equity, statements of cash flows and information by
industry segment for the years ended December 31, 2004 and 2003 are
attached.

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

Onex Corporation is a diversified company with annual consolidated
revenues of approximately $16 billion and consolidated assets of
approximately $12 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 4:30 p.m. today, Onex will be broadcasting a live conference call, in
listen only mode, on its website, www.onex.com, to review the Company's
Fiscal 2004 financial results.

For more information on Onex Corporation, visit its website at
www.onex.com.

Onex Corporation's security filings can also be accessed at
www.sedar.com.



Consolidated Balance Sheets

As at December 31 (in millions of dollars) 2004 2003
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Assets
Current assets
Cash and short-term investments $3,310 $2,362
Accounts receivable 1,666 1,378
Inventories 1,447 1,492
Other current assets 604 477
Current assets held by discontinued operations 2 1,205
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7,029 6,914
Property, plant and equipment 1,709 1,762
Investments and other assets 762 613
Intangible assets 369 302
Goodwill 1,938 1,473
Long-lived assets held by discontinued operations 2 3,557
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$11,809 $14,621
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Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness, without recourse to Onex $13 $1
Accounts payable and accrued liabilities 2,986 2,547
Current portion of long-term debt and obligations
under capital leases of operating companies,
without recourse to Onex 321 298
Current liabilities held by discontinued operations 5 945
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3,325 3,791

Long-term debt of operating companies, without
recourse to Onex 2,363 1,471
Obligations under capital leases, without recourse
to Onex 25 28
Exchangeable debentures 156 180
Other liabilities 1,096 925
Future income taxes 691 637
Long-term liabilities held by discontinued operations 52 3,294
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7,708 10,326
Non-controlling interests 3,874 4,002
Shareholders' equity 227 293
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$11,809 $14,621
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Consolidated Statements of Earnings

Year ended December 31 (in millions of dollars
except per share data) 2004 2003
---------------------------------------------------------------------
Revenues $16,244 $12,119
Cost of sales (14,510) (10,859)
Selling, general and administrative expenses (953) (766)
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Earnings Before the Undernoted Items $781 $494
Amortization of property, plant and equipment (416) (407)
Amortization of intangible assets and deferred charges (94) (91)
Interest expense of operating companies (253) (191)
Interest and other income 111 81
Equity-accounted investments (8) -
Foreign exchange loss (116) (122)
Stock-based compensation (104) 14
Derivative instruments 29 -
Gains on shares of operating companies, net 182 129
Acquisition, restructuring and other expenses (211) (151)
Debt prepayment costs (8) (11)
Writedown of goodwill and intangible assets (393) (402)
Writedown of long-lived assets (94) (88)
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Loss before income taxes, non-controlling interests
and discontinued operations (594) (745)
Provision for income taxes (347) (67)
Non-controlling interests of operating companies 781 256
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Loss from continuing operations (160) (556)
Earnings from discontinued operations 195 224
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Net Earnings (Loss) for the Year $35 $(332)
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Net Earnings (Loss) per Subordinate Voting Share
Basic and Diluted:
Continuing operations $(1.12) $(3.62)
Discontinued operations $1.37 $1.46
Net earnings (loss) $0.25 $(2.16)
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Consolidated Statements of Shareholders' Equity

Total
Cumulative Share-
(in millions of dollars Share Retained Translation holders'
except per share data) Capital Earnings Adjustment Equity
---------------------------------------------------------------------
Balance - December 31, 2002 $658 $279 $107 $1,044
Dividends declared(a) - (17) - (17)
Issue of shares - dividend
reinvestment plan and exercise
of options 6 - - 6
Purchase and cancellation of
shares (46) (120) - (166)
Currency translation adjustment - - (242) (242)
Net loss for the year - (332) - (332)
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Balance - December 31, 2003 $618 $(190) $(135) $293
Change in stock-based compensation
accounting policy(b) - (5) - (5)
Dividends declared(a) - (15) - (15)
Issue of shares - dividend
reinvestment plan and exercise
of options 1 - - 1
Purchase and cancellation of
shares (37) (113) - (150)
Currency translation adjustment - - 68 68
Net earnings for the year - 35 - 35
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Balance - December 31, 2004 $582 $(288) $(67) $227
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(a) Dividends declared per Subordinate Voting Share during 2004
totalled $0.11 (2003 - $0.11).

(b) Adoption of the revised CICA Handbook Section 3870, "Stock-based
Compensation and other Stock-based Payments".


Consolidated Statements of Cash Flows

Year ended December 31 (in millions of dollars) 2004 2003
---------------------------------------------------------------------
Operating Activities
Net loss for the year from continuing operations $(160) $(556)
Items not affecting cash:
Amortization of property, plant and equipment 416 407
Amortization of intangible assets and deferred charges 94 91
Writedown of goodwill and intangible assets 393 402
Writedown of long-lived assets 94 88
Non-controlling interests in results of
operating companies (781) (256)
Future income taxes 252 8
Stock-based compensation 104 (14)
Derivative instruments (29) -
Gains on shares of operating companies, net (182) (129)
Other 214 66
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415 107
Increase in other liabilities 50 3
Changes in non-cash working capital items:
Accounts receivable (294) 25
Inventories 68 (332)
Other current assets 36 (60)
Accounts payable and accrued liabilities (139) 51
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Increase in non-cash net working capital
related to operations (329) (316)
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136 (206)
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Financing Activities
Issuance of long-term debt 2,543 496
Repayment of long-term debt (1,797) (547)
Cash dividends paid (14) (12)
Repurchase of share capital (150) (166)
Issuance of share capital by operating companies 464 116
Repurchase of share capital by operating companies (405) (691)
Decrease in other financing activities (33) (75)
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608 (879)
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Investing Activities
Acquisition of operating companies,
net of cash in acquired
companies of $319 (2003 - $11) (216) (99)
Purchase of property, plant and equipment (348) (387)
Proceeds from sales of shares of operating companies 114 256
Net decrease in investments and other
investing activities (159) 83
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(609) (147)
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Cash from discontinued operations 572 53
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Increase (Decrease) in Cash and Short-term
Investments for the Year 707 (1,179)
Decrease in cash and short-term investments due
to changes in foreign exchange rates (197) (663)
Cash and short-term investments
- beginning of the year(i) 2,800 4,642
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Cash and Short-term Investments
- End of the Year $3,310 $2,800
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---------------------------------------------------------------------

(i) Includes cash from discontinued operations of $438 at
December 31, 2003.

INFORMATION BY INDUSTRY

Onex Corporation's reportable segments operate through autonomous
companies and strategic partnerships. Each reportable segment offers
different products and services and is managed separately.

The Company had six reportable segments in 2004:


2004 Industry segments

Electronics Theatre
Manufacturing Exhi- Health-
Services bition care
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Revenues $11,480 $356 $2,199
Cost of sales (10,913) (271) (1,762)
Selling, general and administrative expenses (358) (18) (137)
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Earnings before the undernoted items $209 $67 $300
Amortization of property, plant and equipment (223) (25) (38)
Amortization of intangible assets and
deferred charges (45) - (18)
Interest expense of operating companies (56) (8) (48)
Interest and other income 49 1 8
Equity -accounted investments - - 1
Foreign exchange gains (loss) (8) - -
Stock-based compensation (20) - (35)
Derivative instruments - - -
Gains on shares of operating companies, net - - -
Acquisition, restructuring and other expenses (184) - (7)
Debt prepayment costs (2) - -
Writedown of goodwill and intangible assets (388) - -
Writedown of long-lived assets (84) - -
---------------------------------------------------------------------
Earnings (loss) before income taxes
non-controlling interests, and
discontinued operations $(752) $35 $163

---------------------------------------------------------------------
Provision for income taxes
Non-controlling interests of operating
companies
Loss from continuing operations
Earnings from discontinued operations

Net earnings
---------------------------------------------------------------------
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Total assets(b) $5,925 $368 $1,537
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Long-term debt (c) $750 $129 $450
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Property, plant and equipment additions $180 $23 $39
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Goodwill additions $298 $- $576
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2004 Industry segments (continued)

Auto-
Customer motive Consoli-
Management Prod- dated
Services ucts Other(a) Total
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Revenues $730 $932 $547 $16,244
Cost of sales (458) (743) (363) (14,510)
Selling, general and administrative
expenses (196) (39) (205) (953)
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Earnings before the undernoted items $76 $150 $(21) $781
Amortization of property, plant and
equipment (41) (65) (24) (416)
Amortization of intangible assets and
deferred charges (15) - (16) (94)
Interest expense of operating companies (19) (101) (21) (253)
Interest and other income 7 1 45 111
Equity -accounted investments - - (9) (8)
Foreign exchange gains (loss) 3 3 (114) (116)
Stock-based compensation (1) (14) (34) (104)
Derivative instruments - - 29 29
Gains on shares of operating
companies, net - - 182 182
Acquisition, restructuring and
other expenses (5) (7) (8) (211)
Debt prepayment costs - (5) (1) (8)
Writedown of goodwill and intangible
assets (5) - - (393)
Writedown of long-lived assets (2) (8) - (94)
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Earnings (loss) before income taxes
non-controlling interests, and
discontinued operations $(2) $(46) $8 (594)

------------------------------------------------------------
Provision for income taxes (347)
Non-controlling interests of
operating companies 781
---------
Loss from continuing operations (160)
Earnings from discontinued operations 195
---------
---------
Net earnings $35
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Total assets(b) $303 $452 $3,224 $11,809
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Long-term debt (c) $192 $721 $416 $2,658
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Property, plant and equipment additions $43 $52 $11 $348
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Goodwill additions $- $- $328 $1,202
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(a) Includes Radian, Cosmetic Essence, ONCAP and parent company.
(b) Other includes discontinued operations.
(c) Long-term debt includes current portion and excludes capital
leases.


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Onex Corporation
    Ewout R. Heersink or Donald Lewtas
    (416) 362-7711
    www.onex.com