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CAE reports second-quarter results
TORONTO, Nov. 5 /PRNewswire-FirstCall/ -- (NYSE: CGT; TSX: CAE) - CAE today
reported earnings from continuing operations for the second quarter (Q2) ending
September 30, 2003 of C$15.1 million (or 7 cents per share), compared to the
same earnings in the first quarter and C$23.3 million (11 cents per share) in
the prior fiscal year.
Consolidated revenue for the second quarter was C$246.1 million compared to
C$242.9 million in the first quarter and C$252.3 million in the prior year,
while the backlog of C$2.2 billion at September 30 was constant with the June 30
level.
The year-over-year reduction in operating earnings was due primarily to pricing
pressures in civil aviation markets, lower margins on the changing mix of
military programs, foreign exchange impacts, and higher pension and long- term
compensation expense. Foreign exchange impacts reduced second quarter earnings
per share by two cents relative to last year. Operating earnings increased C$3.5
million and margins improved 13% from the first quarter, with the increase in
operating earnings counterbalanced by a C$4.0 million increase in Q2 tax
expense.
Year-to-date earnings from continuing operations of C$30.2 million (14 cents per
share) and revenue of C$489.0 million compared to C$60.6 million (28 cents per
share) and C$528.1 million respectively in the prior year, with foreign exchange
impacts having reduced earnings per share by six cents relative to the prior
first half. Net earnings for the second quarter and year- to-date were C$15.1
million (or 7 cents per share) and C$28.3 million (or 13 cents per share)
respectively.
CAE's net debt, defined as long-term debt less cash and short-term investments,
decreased by C$232.1 million to C$549.8 million during the second quarter. Net
debt has now been reduced by 40% (or C$363.2 million) since December 31, 2002.
The reduction in net debt during the second quarter was attributable to net
proceeds from an equity issue in the amount of C$168.0 million and the receipt
of C$94.0 million from the sale and leaseback of five simulators, offset by
increases in non-cash working capital of C$12.3 million and capital expenditures
of C$33.5 million. Second-quarter capital expenditures were C$24.3 million lower
than last year, while year-to- date capital expenditures of C$58.7 million
compare to C$130.9 million in the first half of the prior fiscal year.
CAE's President and CEO Derek H. Burney stated, "During the second quarter, CAE
achieved a major objective for the year as a whole - the significant
strengthening of our balance sheet. As expected, our operating performance
remained constrained by the severe market pressure in the civil aviation sector
and by foreign exchange fluctuations."
Business Unit Highlights
Civil Simulation and Training ("Civil") reported second-quarter operating
earnings of C$9.9 million compared to C$6.6 million in the first quarter and
C$19.9 million in the prior year period. The reduction in operating earnings
relative to the prior year is attributable primarily to adverse equipment market
conditions, foreign exchange impacts and the accounting for additional sale and
leaseback financings. Revenue for the second quarter increased slightly from the
first quarter and 7% from the prior year to C$111.3 million. The year-over-year
increase in Q2 revenue is attributable to a 10% increase in Q2 training revenue
(20% net of foreign exchange impacts). Training revenue year-to-date increased
15% over last year (23% net of foreign exchange) to reach C$131.8 million,
thereby accounting for 60% of Civil's revenue in the first half of this fiscal
year compared to approximately 50% in the prior year.
Capacity utilization of Civil's installed training base of 92 simulators was 61%
year-to-date, with the decline in Q2 utilization relative to the first quarter
due to seasonal factors, delays in the Dornier 328 aircraft program and Air
Canada's reduced training needs. Civil has secured a foothold in the growing
Russian aviation market through an eight-year training agreement with Aeroflot.
As well, Civil has entered a new training joint venture with Iberia Airlines
involving a consolidation of Spanish-based assets that could serve as the model
for similar ventures with other major airlines.
Civil has won 11 of 12 competed orders for full-flight simulators as of November
5, already matching the 11 orders secured during the entire prior fiscal year.
Among the Q2 orders was a prototype simulator for the new Airbus A380 aircraft.
The orders secured in the first half will begin to impact on Civil's production
levels and financial performance in the second half of the year and fiscal year
2005.
Military Simulation and Training ("Military') generated second-quarter operating
earnings of C$11.8 million, compared to C$12.3 million in the first quarter and
C$16.2 million in the prior fiscal year. Second-quarter revenue of C$100.4
million was constant relative to the first quarter while decreasing 8% from the
prior year. The year-over-year reductions in revenue and earnings were due
primarily to foreign exchange impacts and a one-time incentive payment for early
delivery included in last year's results. Military's margins were also impacted
by higher start up costs on new projects and higher bid and proposal costs
incurred in pursuit of new opportunities. The recent committed orders from
Lockheed Martin of more than C$125 million to provide C-130J training for the
U.S. Air Force and additional contracts from the U.S. Army Special Operations
Forces with a potential value exceeding C$110 million are evidence of new
success in the key U.S. defence market that will bolster Military's performance
in the balance of the year.
Marine Controls ("Marine) generated second-quarter operating earnings of C$5.6
million, compared to C$4.9 million in the first quarter and C$7.2 million in the
prior year. Revenues of C$34.4 million compared to C$34.2 in the first quarter
and C$39.3 million in the prior year. The reductions in year-over-year operating
earnings and revenue are attributable primarily to foreign exchange impacts and
delays on the U.K. Astute submarine training program. During the second quarter,
Marine was awarded new contracts by the U.S. and Indian navies.
CAE is a leading provider of integrated training solutions and advanced
simulation and controls technologies to civil aviation, military and marine
customers. The company generates annual revenues in excess of C$1 billion and
employs about 6,000 people in Canada, the United States and around the globe.
This press release includes forward-looking statements that are based on
certain assumptions and reflects CAE's current expectations. These
forward- looking statements are subject to a number of risks and
uncertainties that could cause actual results or events to differ
materially from current expectations. Additional factors are discussed in
CAE's materials filed with the securities regulatory authorities in
Canada and the United States from time to time. CAE disclaims any
intention or obligation to update or revise any forward-looking
statements.
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DATASOURCE: CAE INC.
CONTACT: Arthur C. Perron, Vice-President, Government and Media
Relations, (514) 341-6780, ext. 5370, ; Andrew
Arnovitz, Director, Corporate communications & Investor relations,
(514) 734-5760, ; On the Web: http://www.cae.com/