Onex Corporation
TSX : OCX.SV

Onex Corporation

November 14, 2005 08:00 ET

Onex Reports Third-Quarter Earnings

TORONTO, ONTARIO--(CCNMatthews - Nov. 14, 2005) -

All amounts in Canadian dollars unless otherwise stated

Onex Corporation (TSX:OCX.SV) today reported its consolidated financial results for the third quarter ended September 30, 2005.

- Revenues were $4.4 billion, up 29% from $3.4 billion for the third quarter of 2004.

- Operating earnings grew to $57 million from an operating loss of $9 million for the third quarter of last year.

- Net earnings for the quarter were $13 million ($0.09 per share) compared to $281 million ($2.02 per share) for the third quarter of 2004. $252 million of significant items that were included in the 2004 third-quarter net earnings were $117 million of income from the marking to market of the Celestica exchangeable and forward contracts and a $135 million net after-tax gain on the sale of Loews Cineplex.

- Cash from operations for the quarter, excluding changes in working capital and other liabilities, totalled $39 million compared to negative cash of $52 million for the third quarter of 2004.

- At September 30, 2005, consolidated assets totalled $13.6 billion.

"Our most recently acquired businesses, Spirit AeroSystems and Emergency Medical Services, were significant drivers in the growth of revenues and operating earnings in the quarter," said Gerald W. Schwartz, President and CEO of Onex Corporation. "We are pleased with the performance of these businesses and delighted to be working with their management teams."

The 2005 acquisitions of Spirit AeroSystems, Emergency Medical Services and Center for Diagnostic Imaging added revenues of $1.3 billion and operating earnings of $51 million in the third quarter of 2005.

Celestica reported that operating earnings were up $17 million to $42 million in the quarter in spite of a $445 million decline in revenues to $2.4 billion. The earnings were up due primarily to cost reductions realized from the company's restructuring initiatives and benefits from lean manufacturing processes and exited businesses. Revenues declined primarily due to lower volumes in the Telecommunications & Enterprise markets and exited businesses.

During the third quarter, the automotive supply sector continued to be adversely affected by the declining automotive production volumes of North American original equipment manufacturers. As a result, J.L. French Automotive reported revenues of $133 million and operating earnings of $7 million, which were down $21 million and $4 million, respectively, in the quarter compared to the same quarter of last year.

Onex had gains on sales of operating investments of $54 million in the third quarter of 2005 compared to $10 million in the third quarter last year. Included in the third-quarter gains was a $30 million accounting dilution gain, which resulted from Cineplex Entertainment's issuance of units for its Famous Players acquisition.

Discontinued operations represent those businesses that have been or are intended to be sold. Earnings from discontinued operations in the third quarter of 2005 were $84 million ($0.60 per share) compared to $212 million ($1.52 per share) for the third quarter of 2004. Included in the 2005 third-quarter earnings from discontinued operations was a $68 million net after-tax gain recorded by Onex on the sale of its remaining shares of Commercial Vehicle Group. In the third quarter of 2004, there was a $135 million net after-tax gain on the sale of Loews Cineplex as well as a $67 million net after-tax gain on our initial sale of Commercial Vehicle Group shares.

Revenues for the nine months ended September 30, 2005 were $12.2 billion, up 18% from the $10.3 billion reported for the first nine months of 2004. Operating earnings to September 30, 2005 were $397 million, up from $111 million for the nine months ended September 30, 2004. Operating earnings increased due primarily to: improved operating results at Celestica, which added $113 million to operating earnings; the inclusion of Spirit AeroSystems, CDI and EMS' operating earnings, which totalled $105 million; an $85 million increase in interest and other income; and lower reported foreign exchange losses.

Earnings from continuing operations in the first nine months of 2005 were $760 million ($5.47 per share) compared to $25 million ($0.18 per share) for the nine months ended September 30, 2004. Included in the earnings from continuing operations for the first nine months of 2005 were $751 million of gains recorded by Onex on the settlement of the Celestica exchangeable debentures and forward sales agreements.

Earnings from discontinued operations for the nine months ended September 30, 2005 were $213 million compared to $224 million of earnings in the same period of last year. Included in the 2005 year-to-date earnings from discontinued operations were:

- a $73 million gain recorded by Onex on the sale of InsLogic;

- a $68 million gain recorded on the sale of our remaining Commercial Vehicle Group shares;

- a $45 million gain recorded by CMC Electronics on the sale of all its NovAtel shares; and

- a $15 million gain on the sale of Magellan shares.

Net earnings for the first nine months of 2005 totalled $973 million ($7.00 per share) compared to net earnings of $249 million ($1.75 per share) reported for the first nine months of 2004.

For the nine months ended September 30, 2005, cash from operations, excluding changes in non-cash net working capital and other liabilities, totalled $329 million, up from $120 million in the first nine months of 2004.

The Consolidated Statements of Earnings for the three and nine months ended September 30, 2005 and 2004 are attached. In accordance with required accounting rules, the 2004 results have been restated 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 losses plus interest and other income.

Onex Corporation is a diversified company with annual consolidated revenues of approximately $16 billion and consolidated assets of approximately $14 billion. Onex is one of Canada's largest companies with global operations in service, manufacturing and technology industries. Its operating companies include Celestica Inc., Spirit AeroSystems, Inc., Emergency Medical Services Corporation, ClientLogic Corporation, Cineplex Entertainment Limited Partnership, 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 4:00 p.m. today, Onex will webcast a live conference call to review the Company's Third Quarter 2005 Results in listen-only mode on its website, www.onex.com.

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.



Consolidated Statements of Earnings

(Unaudited) Three months Nine months
ended ended
(in millions of dollars September 30 September 30
except per share data) 2005 2004 2005 2004
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Revenues $4,379 $3,405 $12,224 $10,326
Cost of sales (3,860) (3,064) (10,738) (9,274)
Selling, general and administrative
expenses (299) (192) (811) (574)
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Earnings Before the Undernoted Items $220 $149 $675 $478
Amortization of property, plant and
equipment (105) (95) (302) (282)
Amortization of intangible assets and
deferred charges (24) (20) (71) (54)
Interest expense of operating
companies (101) (50) (239) (121)
Interest and other income 34 9 99 14
Equity-accounted investments (4) (6) 1 (4)
Foreign exchange loss (58) (79) (25) (63)
Stock-based compensation (30) 13 (51) (32)
Derivative instruments 2 117 3 38
Gains on sales of operating
investments, net 54 10 870 102
Acquisition, restructuring and
other expenses (57) (47) (154) (145)
Debt prepayment 13 (4) 13 (6)
Writedown of goodwill and intangible
assets - - (2) (5)
Writedown of long-lived assets (4) - (4) (2)
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Earnings (loss) before income taxes,
non-controlling
interests and discontinued operations (60) (3) 813 (82)
Recovery of (provision for)
income taxes (22) 12 (50) 19
Non-controlling interests 11 60 (3) 88
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Earnings (loss) from continuing
operations (71) 69 760 25
Earnings from discontinued operations 84 212 213 224
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Net Earnings for the Period $13 $281 $973 $249
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Net Earnings (Loss) per Subordinate
Voting Share
Basic and Diluted:
Continuing Operations $(0.51) $0.50 $5.47 $0.18
Discontinued Operations $0.60 $1.52 $1.53 $1.57
Net Earnings $0.09 $2.02 $7.00 $1.75
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Contact Information

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