Printer Friendly

NOVA CORP. OF ALBERTA ANNOUNCES YEAR END RESULTS

 NOVA CORP. OF ALBERTA ANNOUNCES YEAR END RESULTS
 CALGARY, Alberta, Jan. 27 /PRNewswire/ -- Net income for NOVA Corp.


(NYSE: NVA, Toronto, Montreal: NVA) of Alberta for the year ended Dec. 31, 1991, was negatively affected by weak profitability for its chemicals businesses which resulted from a severe industry downturn. Poor results in chemicals were partially offset by continued strong performance from NOVA's pipeline businesses.
 NOVA's regulated natural gas transmission business earned steadily increasing profits from operation and expansion of its Alberta pipeline system in response to customer requests for increased service. This trend will continue in 1992 and 1993.
 Profit margins for most chemicals declined sharply because of excess production capacity in the industry and a weak North American economy. Margins stabilized during the later months of 1991 but remain depressed. NOVA expects little or no improvement in chemicals market conditions or prices in the near term.
 In the fourth quarter of 1991, NOVA had an unaudited consolidated net loss from continuing operations of $668 million or $2.06 per common share, compared with net income of $67 million or 21 cents per common share in 1990.
 The fourth quarter loss includes an after-tax restructuring charge of $675 million, of which over $600 million represents non-cash adjustments to the carrying values of certain chemicals assets. As a result of the charge, future annual earnings are expected to improve by approximately $50 million after tax, principally because of reduced depreciation expense.
 "This restructuring charge is part of continuing actions by NOVA initiated in 1991 to strengthen its main businesses. It reflects the closure of certain non-competitive chemicals plants, and a NOVA-wide management streamlining and decentralizing initiative to deliver immediate and significant reduction in costs," said J. E. Newall, NOVA president and chief executive officer.
 Net income from continuing operations in the fourth quarter of 1991, before the restructuring charge, was $7 million, the same amount as reported for the third quarter of 1991.
 For the year ended Dec. 31, 1991, net income from continuing operations, before the restructuring charge, was $46 million, compared with $203 million in 1990. The decrease was caused primarily by a decline in income from chemicals operations due to lower product prices and margins. This decline was partially offset by an increase in income from pipeline operations, primarily as a result of continued expansion of the Alberta Gas Transmission Division (AGTD) pipeline system, and reduced interest expense as a result of lower interest rates and debt levels.
 Unaudited consolidated net loss for 1991 was $923 million ($2.99 basic and fully diluted per common share) on revenue of $3.1 billion, compared with net income of $185 million (56 cents basic and 55 cents fully diluted per common share) on revenue of $4 billion in 1990. The net loss for 1991 includes a loss from discontinued operation of $294 million, compared with $18 million in 1990. The loss from discontinued operation in 1991 comprises a loss of $259 million on disposal of NOVA's interest in Husky Oil Ltd. and a loss from operations of $35 million with respect to Husky. Proceeds of $325 million on the disposition were received on Dec. 31, 1991, and were used to reduce non- cost-of-service debt.
 Capital expenditures for the pipeline segment were $555 million 1991, compared with $717 million in 1990. Capital expenditures for AGTD are estimated at $650 million for 1992 and average annual expenditures are expected to be between $500 million and $600 million through 1995.
 Newall said NOVA continues to strengthen its two main businesses and to develop a strategic plan for growth and prosperity in the 1990s and beyond.
 "Our near-term objectives are to create the most cost-effective pipeline transmission service for our natural gas customers and to create a strong and fully competitive group of chemicals and plastics businesses," he said.
 Several major steps were taken in 1991 to improve NOVA's performance. In addition to the management decentralization, sale of Husky and the charge against earnings, NOVA consolidated its petrochemicals and plastics divisions into one unified business to reduce costs and improve effectiveness; initiated a comprehensive strategic review of each of the corporation's chemicals businesses, to be completed in the second quarter of 1992; reduced capital spending to minimum levels in all business areas except the regulated operations of AGTD; and reduced the quarterly dividend on common shares to conserve cash to finance pipeline expansion.
 Additional initiatives will be taken in 1992 to further improve operations. Earlier this month, NOVA announced it had signed an underwriting agreement with a group of Canadian investment dealers for the sale in Canada of 35 million common shares at $7.15 per share. Net proceeds of $240 million are expected to be received on Feb. 3, 1992, and will be used to reduce non-cost-of-service debt, thereby strengthening the balance sheet and supporting pipeline expansion.
 On Dec. 13, 1991, the NOVA board of directors declared a quarterly dividend of 6 cents per common share, payable Feb. 15, 1992, to shareholders of record at the close of business Jan. 31, 1992.
 NOVA is a widely held company operating internationally from headquarters in Calgary. NOVA builds its business on pipelines, and the manufacturing and marketing of chemicals processed primarily from Alberta natural resources.
 NOVA CORP. OF ALBERTA
 FINANCIAL HIGHLIGHTS
 (unaudited)
 (millions of dollars, except per share data)
 Condensed Consolidated Statement of Income:
 Three Months Ended Year Ended
 Dec. 31, Dec. 31,
 1991 1990(a) 1991 1990(a)
 Revenue $735 $909 $3,074 $3,980
 Operating expenses (571) (660) (2,380) (3,020)
 Depreciation (78) (69) (300) (308)
 Operating income 86 180 394 652
 Interest expense (87) (79) (341) (399)
 Allowance for funds used
 during construction 4 7 23 23
 Equity in earnings of
 affiliates 10 9 33 34
 Gain (loss) on investments --- --- (8) 14
 General and corporate (9) (10) (58) (58)
 Income taxes 3 (40) 3 (63)
 Net income from continuing
 operations before
 restructuring charge 7 67 46 203
 Restructuring charge
 (net of tax of $75) (675) --- (675) ---
 Net income (loss) from
 continuing operations (668) 67 (629) 203
 Discontinued operation
 -- Husky Oil Ltd. (5) (16) (294) (18)
 Net income (loss) ($673) $51 ($923) $185
 Preferred share dividends $3 $4 $14 $18
 Average number of common
 shares outstanding (millions) 326 299 313 299
 Net income (loss) from
 continuing operations per common share
 Basic ($2.06) $0.21 ($2.05) $0.62
 Fully diluted ($2.06) $0.21 ($2.05) $0.61
 Net income (loss) per common share
 Basic ($2.07) $0.16 ($2.99) $0.56
 Fully diluted ($2.07) $0.16 ($2.99) $0.55
 Condensed Consolidated Balance Sheet:
 Dec. 31, Dec. 31,
 1991 1990(a)
 Current assets $676 $798
 Investments and other assets 280 522
 Plant, property and equipment (net) 4,846 4,734
 Discontinued operation - Husky Oil Ltd. --- 627
 Total assets $5,802 $6,681
 Current liabilities $903 $962
 Long-term debt
 - cost-of-service 2,270 1,950
 - non-cost-of-service(2) 786 950
 Other deferred credits 142 256
 Preferred shares 189 195
 Convertible debentures and common
 shareholders' equity 1,512 2,368
 Total liabilities and shareholders'
 equity $5,802 $6,681
 Consolidated Statement of Cash Flows:
 Three Months Ended Year Ended
 Dec. 31, Dec. 31,
 1991 1990(a) 1991 1990(a)
 Operating Activities
 Net income (loss) from
 continuing operations ($668) $67 ($629) $203
 Depreciation 78 69 300 308
 Deferred income taxes (8) (5) (24) 1
 Equity in earnings of
 affiliates (10) (9) (33) (34)
 Loss (gain) on investments --- --- 8 (14)
 Non-cash items in restructuring
 charge (net of tax) 608 --- 608 ---
 Other 1 40 (7) 45
 Funds from continuing
 operations 1 162 223 509
 Changes in non-cash working
 capital 8 (66) 23 (24)
 Cash from continuing
 operations 9 96 246 485
 Cash used by discontinued
 operation (8) (10) (35) (40)
 Total 1 86 211 445
 Investing Activities
 Proceeds on sale of
 investments 325 5 325 1,256
 Plant, property and equipment
 additions (147) (266) (666) (933)
 Other assets and long-term
 investments 13 (2) 17 (22)
 Changes in non-cash working
 capital --- 1,193 (3) (16)
 Total 191 930 (327) 285
 Financing Activities
 Common shares issued 2 2 205 7
 Long-term debt additions 218 198 714 806
 Long-term debt repaid (355) (108) (663) (1,375)
 Preferred shares purchased
 for cancellation (2) (1) (6) (9)
 Dividends (22) (43) (134) (173)
 Changes in current bank loans (48) 69 20 (26)
 Changes in non-cash working
 capital --- (1,181) (21) ---
 (207) (1,064) 115 (770)
 Decrease in Cash (15) (48) (1) (40)
 Cash at beginning
 of period 17 51 3 43
 Cash at End of Period $2 $3 $2 $3
 Consolidated Capitalization:
 Pro Forma
 Dec. 31, Dec. 31, Dec. 31,
 1991(c) 1991 1990(a)
 Per Per Per
 $Cent $Cent $Cent
 Cost-of-Service(d)
 Long-term debt
 (including current
 portion) $2,347 65 $2,347 65 $2,029 65
 Preferred shares 89 3 89 3 95 3
 Common equity 1,150 32 1,150 32 1,003 32
 Total $3,586 $3,586 $3,127
 Non-Cost-of-Service
 Long-term debt
 (including current
 portion)(b) $575 45 $815 64 $963 40
 Preferred shares 100 8 100 8 100 4
 Common equity 606 47 362 28 1,365 56
 Total $1,281 $1,277 $2,428
 Three Months Ended Year Ended
 Dec. 31, Dec. 31,
 1991 1990(a) 1991 1990(a)
 Segmented Information:
 Revenue
 Chemicals
 Petrochemicals $421 $639 $1,804 $2,354
 Plastics 189 257 864 1,011
 Rubber --- --- --- 641
 Intersegment eliminations (96) (169) (415) (709)
 Total 514 727 2,253 3,297
 Pipelines 221 182 821 683
 Total $735 $909 $3,074 $3,980
 Cost-of-service $306 $270 $1,163 $1,035
 Non-cost-of-service 429 639 1,911 2,945
 Total $735 $909 $3,074 $3,980
 Operating income (loss)
 Chemicals
 Petrochemicals $23 $74 $109 $286
 Plastics (39) 27 (80) 61
 Rubber --- --- --- 26
 Total (16) 101 29 373
 Pipelines 102 79 365 279
 Total $86 $180 $394 $652
 Capital Expenditures
 Chemicals $32 $48 $111 $216
 Pipelines 115 218 555 717
 Total $147 $266 $666 $933
 Contribution to Net Income from Continuing Operations
 Before Restructuring Charge:
 Cost-of-Service
 Operating income $123 $104 $455 $375
 Interest expense (59) (51) (224) (189)
 Allowance for funds used
 during construction 4 7 23 23
 Equity in earnings of
 affiliates 9 9 33 33
 Income taxes (24) (16) (78) (57)
 Total 53 53 209 185
 Non-Cost-of-Service
 Operating income (loss) (37) 76 (61) 277
 Interest expense (28) (28) (117) (210)
 Equity in earnings of
 affiliates 1 --- --- 1
 Gain (loss) on investments - --- (8) 14
 General and corporate (9) (10) (58) (58)
 Income taxes 27 (24) 81 (6)
 (46) 14 (163) 18
 Net Income from Continuing
 Operations
 Before Restructuring
 Change $7 $67 $46 $203
 Notes:
 (a) 1990 figures have been restated to reflect the retroactive effect of the following items:
 (1) accounting for NOVA's investment in Foothills Pipe Lines Ltd. has been changed from the proportionate consolidation method to the equity method.
 (2) gas marketing revenue is presented net of related gas purchases.
 (3) NOVA's investment in Husky Oil Ltd. is accounted for as a discontinued operation.
 (b) As at Dec. 31, 1991, NOVA's non-cost-of-service debt includes approximately $125 million with respect to the consolidation of Novalta Resources Inc. and the polypropylene business. These investments were previously held for sale but will now be retained by NOVA.
 (c) Pro forma consolidated capitalization assumes that $240 million net proceeds on sale of 35 million common shares were received on Dec. 31, 1991 and used to reduce non-cost-of-service debt.
 (d) Effective Jan. 1, 1992, NOVA increased the deemed common equity component for AGTD to 35 percent from 32 percent and reduced the return on common equity to 13.5 percent from 13.75 percent. These changes will be reviewed by the Alberta Public Utilities Board as a result of complaints filed by interested parties.
 -0- 1/27/92
 /CONTACT: C.A. Read, 403-290-7807; or A.T. Poole, 403-290-7714, both of NOVA Corp. of Alberta/
 (NVA) CO: NOVA Corp. of Alberta ST: Alberta IN: OIL SU: ERN


EH -- LA039 -- 3993 01/27/92 21:16 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 27, 1992
Words:1985
Previous Article:COOPER DEVELOPMENT CO. REPORTS TAX RECLASSIFICATION
Next Article:COMPAQ REPORTS 1991 SALES OF $3.3 BILLION; FOURTH QUARTER SALES OF $873 MILLION
Topics:


Related Articles
NOVACOR CHEMICALS LTD. - COMPANY UPDATE
NOVA CORPORATION OF ALBERTA ANNOUNCES LETTERS OF CREDIT ARRANGED
TURNAROUND IN CHEMICALS EARNINGS DELIVERS IMPROVED NOVA 1992 RESULTS
NOVA ANNOUNCES FIRST QUARTER 1993 RESULTS
NOVA ANNOUNCES SECOND QUARTER 1993 RESULTS
NOVA ANNOUNCES SECOND QUARTER 1993 RESULTS
NOVA CORP. ANNOUNCES THIRD QUARTER RESULTS
NOVA BOARD APPROVES CORPORATE REORGANIZATION PLAN
NOVA CORP. REPORTS FIRST QUARTER 1994 RESULTS
NOVA CORP. CEO RECAPS RECORD PERFORMANCES AT ANNUAL MEETING

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters