Onex Reports Full-Year 2012 Results

TORONTO, ONTARIO--(Marketwire - Feb. 22, 2013) -

All amounts in U.S. dollars unless otherwise stated

Onex Corporation ("Onex") (TSX:OCX) today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2012 and an update on matters following year-end.

Highlights

• In 2012, Onex Partners acquired four businesses - SGS International, KraussMaffei, USI and BBAM - for a total purchase price of $4.2 billion. The total equity investment was $1.4 billion, of which Onex' share was $457 million.
  
  
• Including realizations and distributions, the value of Onex' interest in Onex Partners' and ONCAP's private investments grew by 17% and 23%, respectively, in 2012. Overall, Onex' proprietary capital, including $1.1 billion of cash and near-cash items, grew by 12% on a per share basis to $41.42.
  
  
• Onex opened an office in London, England to support continued growth of its investing activities.
  
  
• Onex Credit Partners completed two collateralized loan obligation ("CLO") offerings, raising approximately $840 million, including $58 million from Onex.
  
  
• In March, Allison Transmission completed a $690 million initial public offering priced at $23.00 per share compared to Onex' original cost of $8.44 per share.
  
  
• In July, Onex completed the sale of Center for Diagnostic Imaging, realizing a multiple of invested capital of 2.0 times.
  
  
• In December, Tomkins paid a $1.2 billion distribution, of which Onex' share was $171 million, representing 54% of the original equity investment.
  
  
• In December, ONCAP acquired Bradshaw International, a designer and marketer of everyday houseware products, for an equity investment of $80 million, of which Onex' share was $24 million.
  
  
• Earlier this month, Onex agreed to sell its 50% interest in RSI Home Products, resulting in a multiple of invested capital of 1.5 times.
  
  

Acquiring and Building Businesses

"2012 was a busy year for Onex with the acquisition of five businesses," said Gerald W. Schwartz, Chairman and Chief Executive Officer of Onex. "These investments reflect years of effort evaluating industry sectors and developing relationships with management teams."

USI, the ninth largest insurance broker in the United States, offers a broad range of property and casualty, and employee benefits insurance products to middle-market businesses. Onex' acquisition follows seven years researching the insurance brokerage sector. USI has a unique fully-integrated operating model and a proven add-on acquisition strategy, completing three acquisitions since the closing of Onex' investment. Onex Partners III invested $510 million, of which Onex' share was $128 million as a limited partner in the Fund. Including an additional $126 million co-investment, Onex' initial investment was $254 million. A process is underway to offer a portion of the co-investment to third-party limited partners and employees of USI.

BBAM is a leading manager of leased commercial aircraft. Over its 23-year history, the company has provided fleet and financing solutions to over 200 airline customers in more than 50 countries. BBAM provides asset management services to leasing companies, aviation investors and financial institutions covering more than 450 aircraft valued in excess of $13 billion. The BBAM investment is a proprietary opportunity that resulted from several years evaluating the aircraft leasing sector. Onex Partners III acquired a 50% interest in BBAM for $165 million, of which Onex' share was $42 million. In connection with this transaction, Onex Partners III also invested $20 million in newly issued shares of FLY Leasing Limited ("FLY") (NYSE:FLY), a global lessor of commercial jet aircraft managed by BBAM. Onex' share of the investment in FLY was $5 million.

With no debt and $1.1 billion of cash and near-cash items, Onex is in a very strong financial position. Onex also has $1.3 billion of undrawn, committed capital from limited partners in Onex Partners III and ONCAP III. Combined, we have the resources to pursue just about any attractive opportunity.

In 2012, Onex' operating companies paid down approximately $1.8 billion of debt and distributed approximately $1.6 billion, including a $1.2 billion distribution from Tomkins following the sale of several non-core assets. Our businesses also made capital expenditures and add-on acquisitions of approximately $1.1 billion, including JELD-WEN's acquisition of CraftMaster, the world's third-largest integrated manufacturer of interior doors and door facings.

Onex' interest in Onex Partners' and ONCAP's private companies grew by 17% and 23%, respectively, in 2012. Overall, Onex' proprietary capital, including $1.1 billion of cash and near-cash items, grew by 12% on a per share basis during the year.

By transforming good businesses into industry leaders, Onex has generated a 28-year gross IRR of 28% and an average multiple of 2.9 times invested capital from realized, substantially realized and publicly traded investments. At Onex, we all share in the success and failure of our investments. At December 31, 2012, the value of the Onex team's investment in Onex' shares and its businesses was approximately $1.7 billion.

Managing and Growing Third-Party Capital

Onex earns recurring management fees and/or carried interest on $8.8 billion of third-party assets under management. In 2012, Onex Partners, ONCAP and Onex Credit Partners earned a total of $113 million in management and other fees. Onex also received $3 million of carried interest as a result of the realization of Center for Diagnostic Imaging. Combined fees and carried interest received offset ongoing operating expenses in 2012.

At December 31, 2012, the value of Onex' unrealized carried interest was approximately $50 million based on the traded market values of Onex Partners' public companies and a further $90 million based on the year-end valuations of the private businesses. Onex' share of the total unrealized carried interest grew by $47 million in 2012. The amount of carried interest ultimately realized by Onex depends on the overall performance of each Fund.

With Onex Partners III more than 75% invested, Onex is in a position to fundraise for Onex Partners IV.

Onex Credit Partners completed two CLO offerings in 2012, raising approximately $840 million, including $58 million from Onex. These CLOs increased Onex Credit Partners' third-party capital under management to $1.8 billion. In the last few years, the market for CLOs has significantly consolidated and favours well-capitalized, diversified sponsors. As market conditions permit, we expect Onex Credit Partners to launch additional CLOs, which would represent an additional source of recurring management fees.

Creating Value for Shareholders

Over time, we hope that the value of Onex' shares reflects both growth in the value of our assets and the intrinsic value of our asset management capabilities. At December 31, 2012 Onex' Subordinate Voting Shares closed at C$41.87, a 26% increase from December 31, 2011. This compares to a 13% increase in the S&P 500 and a 4% increase in the S&P/TSX Composite Index.

The Company paid a fourth-quarter dividend of C$0.0275 per Subordinate Voting Share on January 31, 2013 to shareholders of record on January 10, 2013.

In 2012, Onex repurchased 627,061 Subordinate Voting Shares under its Normal Course Issuer Bids for a total cost of C$24 million or an average cost per share of C$38.59. In January 2013, Onex repurchased 545,400 shares for a total cost of C$23 million or an average cost per share of C$42.51.

Consolidated Results

Onex' quarterly and full-year consolidated financial results do not follow any specific trends due to acquisitions and dispositions of businesses, changes in the value of its publicly traded and privately held operating companies and varying business cycles at its operating companies.

On a consolidated basis for the fourth quarter, revenues increased 2% to $6.9 billion compared to the same period of the prior year. Onex reported a consolidated net loss of $77 million compared to a loss of $113 million in the fourth quarter of 2011. Cash from operations was $784 million in the fourth quarter of 2012 compared to $707 million in 2011.

On a consolidated basis for the full year ended December 31, 2012, revenues increased 11% to $27.4 billion. The acquisitions completed in 2011, including JELD-WEN, contributed to this year-over-year revenue increase. Net earnings for the year were $39 million compared to $1.6 billion for 2011, which included $1.7 billion of earnings relating to the sales of Husky International and Emergency Medical Services Corporation. Cash flow from operations was $2.0 billion in 2012 compared to $1.2 billion in the prior year.

Attached are the Consolidated Balance Sheets, Statements of Earnings, Statements of Cash Flows and information by industry segment for the full year ended December 31, 2012 and 2011 as prepared under International Financial Reporting Standards. The complete financial statements, including Management's Discussion and Analysis of the results, are posted on Onex' website, www.onex.com, and are also available on SEDAR at www.sedar.com. Also attached are the "How We Are Invested" schedule, which details Onex' $5.0 billion of proprietary capital and provides private company performance information, and the Schedule of Fees and Expenses.

Webcast

Onex management will host a conference call to review Onex' fiscal 2012 results on Friday, February 22 at 11:00 a.m. ET. A live webcast of this conference call will be available in listen-only mode on its website, www.onex.com.

About Onex

With offices in Toronto, New York and London, Onex is one of the oldest and most successful private equity firms. Onex acquires and builds high-quality businesses in partnership with talented management teams. The Company has approximately $15 billion of assets under management, including $5 billion of proprietary capital, in private equity, credit securities and real estate. Onex invests its proprietary capital directly and as a substantial limited partner in its Funds.

Onex' businesses have assets of $43 billion, generate annual revenues of $37 billion and employ approximately 250,000 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.

How We Are Invested
Unless otherwise noted, all amounts are in millions of U.S. dollars except per share data.
		Proprietary Capital
As at December 31			2012		2011
Private Equity
Onex Partners
	Private Companies(1),(2)	$	1,862	$	1,847
	Public Companies(2),(3)		704		235
	Unrealized Carried Interest on Onex Partners Investments(4)		140		96
ONCAP(5)			409		319
Direct Investments
	Private Companies(6)		148		204
	Public Companies(3)		145		130
			3,408		2,831
Onex Real Estate Partners(7)			192		180
Onex Credit Partners(8)			171		100
			363		280
Other Investments			108		81
Cash and Near-Cash(9)			1,141		1,302
Onex Corporation Debt			-		-
		$	5,020	$	4,494
Proprietary Capital per Share (December 31, 2012 - C$41.21; December 31, 2011 - C$37.47)(10)		$	41.42	$	36.85

Public Companies
As at December 31, 2012		Shares Subject to Carried Interest (millions)	Shares Held by Onex (millions)	Closing Price per Share(11)		Market Value of Onex' Investment
Onex Partners
	Skilled Healthcare Group(12)	10.7	3.5	$	6.37	$	22
	Spirit AeroSystems(12)	11.9	6.5	$	16.97		110
	TMS International(12)	13.2	9.3	$	12.52		116
	Allison Transmission(2),(12)	33.5	23.4	$	20.42		479
							727
	Estimated Management Investment Plan Liability						(23	)
							704
Direct Investments - Celestica		-	17.8(13)	$	8.15		145
						$	849

Significant Private Companies
As at December 31, 2012		Onex' and its Limi- ted Part- ners' Owner- ship		LTM EBITDA(14)		Net Debt		Cumu- lative Distri- butions		Onex' Eco- nomic Owner- ship		Orig- inal Cost of Onex' Invest- ment
Onex Partners
	The Warranty Group	91	%	$	111(15)	$	249(15)	$	338	29	%	$	154
	Carestream Health	93	%		429		1,509		561	37	%		186
	RSI Home Products	50	%		n/a		n/a		n/a	20	%		126
	Tropicana Las Vegas	83	%		(10)		33		-	18	%		70
	Tomkins	56	%		512(16)		1,482		1,180	14	%		315
	ResCare	98	%		138		341		-	20	%		41
	JELD-WEN	64(17)	%		188(18)		540(18)		-	16(17)	%		213(19)
	SGS International	94	%		104(20)		592		-	24	%		66
	USI	93	%		255(20)		1,633		-	37	%		254(21)
	BBAM	50	%		73		-		-	13	%		47(22)
	KraussMaffei	97	%	EUR	100	EUR	235		-	25	%		90
													1,562
Direct Investments - Sitel Worldwide		70	%	$	125	$	725	$	-	70	%		251
												$	1,813

Notes to Tables
(1)	Based on the US$ fair value of the investments in Onex Partners' financial statements net of the estimated Management Investment Plan ("MIP") liability on these investments of $39 million (2011 − $33 million). CDI, which was sold in July 2012, was included in private companies of Onex Partners at December 31, 2011.
(2)	In March 2012, Allison Transmission completed an initial public offering of approximately 30.0 million shares of common stock (NYSE:ALSN), including the over-allotment option, priced at $23.00 per share. At December 31, 2011, Allison Transmission was included in private companies of Onex Partners, whereas it is included in public companies at December 31, 2012.
(3)	Based on the closing market values and net of the estimated MIP liability on these investments.
(4)	Represents Onex' share of the unrealized carried interest on public and private companies in the Onex Partners Funds.
(5)	Based on the C$ fair value of the investments in ONCAP's financial statements net of the estimated MIP liability on these investments of $25 million (2011 − $13 million) and a US$/C$ exchange rate of 0.9949 (2011 - 1.0170).
(6)	Based on the fair value.
(7)	Based on the fair value of Onex Real Estate Partners' investments.
(8)	Based on the market values of investments in Onex Credit Partners' funds and Onex Credit Partners' Collateralized Loan Obligations. Onex Credit Partners' Collateralized Loan Obligations were established in 2012. Excludes $328 million (2011 − $312 million) invested in a segregated Onex Credit Partners unleveraged senior secured loan strategy fund, which is included with cash and near-cash items.
(9)	Includes $328 million (2011 − $312 million) invested in a segregated Onex Credit Partners unleveraged senior secured loan strategy fund.
(10)	Calculated on a diluted basis.
(11)	Closing prices on December 31, 2012.
(12)	Excludes Onex' potential participation in the carried interest and includes shares related to the MIP.
(13)	Excludes shares held in connection with the MIP.
(14)	EBITDA is a non-GAAP measure and is based on the local GAAP of the individual operating companies. These adjustments may include non-cash costs of stock-based compensation and retention plans, transition and restructuring expenses including severance payments, the impact of derivative instruments that no longer qualify for hedge accounting, the impacts of purchase accounting and other similar amounts.
(15)	Amount presented for The Warranty Group is net earnings rather than EBITDA and total debt rather than net debt.
(16)	LTM EBITDA excludes EBITDA from businesses divested as of December 31, 2012.
(17)	Onex' and its limited partners' investment is in convertible preferred shares. The ownership percentage is presented on an as-converted basis.
(18)	LTM EBITDA and net debt are presented for JELD-WEN Holding, inc. Net debt excludes $128 million of convertible notes, including accrued interest, held by Onex, Onex Partners III, Onex management, certain limited partners and others.
(19)	Net of $83 million of the amount originally invested in JELD-WEN that was sold by Onex to certain limited partners and others as a co-investment in February 2012 and $14 million return of capital on the convertible promissory notes to date.
(20)	LTM EBITDA for SGS International and USI are presented on a pro-forma basis to reflect the impact of acquired businesses.
(21)	Onex' investment in USI includes $126 million as a co-investment.
(22)	Included in Onex' cost is $5 million that was invested in FLY Leasing Limited (NYSE:FLY) in conjunction with the investment in BBAM.

Schedule of Fees and Expenses
			Year ended December 31,
(USD Millions)				2012		2011
Revenue Items
	Management and Advisory Fees1
		Base Management Fees	$	108	$	110
		Transaction Fees, Net		5		-
		Total Management and Advisory Fees		113		110
	Carried Interest and Performance Fees Received2			6		72
	Interest and Other Treasury Income3			39		8
Total				158		190
Expense Items4
	Compensation
		Base Compensation (incl. benefits)		29		29
		Variable Compensation		67		88
				96		117
	Other Expense Items, Net			21		33
Total				117		150
Net Amount			$	41	$	40
(1)	The management fees include those from the third-party investors in the Onex Partners and ONCAP private equity funds, those earned by Onex Credit Partners manager and Onex' retained portion of the management fees from operating companies.
(2)	Carried interest and performance fees received are on a cash received basis.
(3)	Interest and other treasury income includes the returns on Onex' investment as a limited partner in Onex Credit Partners Funds and the interest earned on Onex' cash balance.
(4)	Expenses include those of the Onex corporate office, ONCAP, Onex Credit Partners and Onex Real Estate Partners. There is no allocation of the expenses to the management of Onex' $5.0 billion of proprietary capital. The expenses exclude stock-based compensation.