E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
< w w w . f i n n i n g . c o m >
F ro m : M i l e s H u n t , G e n e r a l M a n a g e r, O i l S a n d s , F t . M c M u r r a y A l b e r t a
S e n t : We d n e s d a y, O c t o b e r 1 3 , 1 9 9 9 4 : 0 7 P M
To : D o u g W h i t e h e a d , P re s i d e n t a n d C . O . O . , F i n n i n g I n t e r n a t i o n a l
C c : I a n R e i d , P re s i d e n t a n d C . O . O . , F i n n i n g ( C a n a d a )
S u b j e c t : S y n c r u d e / S u n c o r 7 9 7 Tr u c k O rd e r s
H e re ’s a n o v e r v i e w o f t h e c u r re n t s i t u a t i o n w i t h re s p e c t t o t h e p l a c e m e n t o f
C a t e r p i l l a r 7 9 7 M i n i n g Tr u c k s i n t h e O i l S a n d s :
S y n c r u d e C a n a d a L t d . a n d S u n c o r E n e rg y I n c . h a v e p l a c e d o rd e r s w i t h u s f o r a
t o t a l o f t e n C a t e r p i l l a r 7 9 7 m i n i n g t r u c k s . T h e t r u c k s a re r a t e d a t a p a y l o a d o f 3 6 0 t o n s ,
a n d w i l l g o t o w o r k b y y e a r- e n d a t S y n c r u d e ’s N o r t h M i n e a n d S u n c o r ’s S t e e p b a n k M i n e .
S y n c r u d e a l s o p l a c e d o rd e r s f o r e i g h t m o re 7 9 7 ’s t h a t w i l l b e d e l i v e re d a n d c o m m i s s i o n e d
i n A p r i l a n d M a y o f 2 0 0 0 . T h e s e t r u c k s w i l l w o r k a t S y n c r u d e ’s A u ro r a M i n e .
F I N N I N G I N T E R N A T I O N A L I N C . 1 9 9 9 A N N U A L R E P O R T
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
S E R V I C E O R D E R
F ro m : G r i ff i n K e y e s , F i n n i n g C a n a d a ( R e d D e e r ) C u s t o m e r S e r v i c e
S e n t : J a n u a r y 7 , 2 0 0 0 9 : 4 3 A M
To : R o n F l e t c h e r, F i n n i n g C a n a d a ( Va n c o u v e r )
S u b j e c t : D 7 R i p p e r B e a m
H e l l o R o n . A r i p p e r b e a m o n a c u s t o m e r ’s D 7 H o i l f i e l d c o n s t r u c t i o n u n i t h a s
e x p e r i e n c e d a u n i q u e p ro b l e m . L a v e r n e L a w w a s o n s i t e a n d t o o k s o m e d i g i t a l p i c t u re s .
C o u l d y o u t a k e a l o o k a n d h e l p m e d e t e r m i n e t h e c a u s e o f f a i l u re ?
I h a v e t h e p i e c e s i n m y s h o p n o w a n d c o u l d s e n d t h e m t o y o u i f re q u i re d .
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
U P D A T E
F ro m : G re g F. A n d re w s , M a i n t e n a n c e S u p e r i n t e n d e n t , B H P D i a m o n d s
S e n t : T h u r s d a y, J a n 2 0 , 2 0 0 0 1 1 : 1 9 A M
To : J a n H e r m a n n , C S A C o o rd i n a t o r, F i n n i n g C a n a d a
S u b j e c t : R e : e q u i p m e n t
J a n : T h a n k s a m i l l i o n , e v e r y t h i n g c a m e t h ro u g h o k a y.
We ’ v e p u rc h a s e d 2 D r i l l t e c h s w i t h e n g i n e s a n d w e ’ re i n t h e p ro c e s s o f p u rc h a s i n g
a C AT 2 1 0 k w G e n s e t o n a t r a i l e r. I t ’ l l h a v e a 3 3 0 6 e n g i n e . C a n y o u s e n d i n f o s e p a r a t e l y f o r n o w.
T h a n k s a g a i n , I ’ l l b e i n m y o ff i c e f o r m o s t o f t h e d a y.
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
U S E D E Q U I P M E N T
F ro m : s t e v e n e f z g e r / r u s t t r a c t o r
To : l z e re b e s k i @ f i n n i n g . c a
S u b j e c t : 5 1 8 S k i d d e r
We ’ re l o o k i n g f o r a 5 1 8 G r a p p l e S k i d d e r d o w n h e re i n A l b u q u e rq u e , N e w M e x i c o .
Te l l o l e G a r y S u m m e r s t o g e t t o w o r k .
T h a n k s a n d a d i o s .
S t e v e
“ S E R V I C E I S B E H I N D E V E R Y T H I N G W E D O ”
- - J i m S h e p a rd , C h a i r m a n a n d C . E . O .
s e r v i c e
I am pleased to report that Finning Inter national provided shareholders with significantly higher ear nings in
1 9 9 9 e v e n t h o u g h m a r k e t s w e re s t i l l i n re c o v e r y m o d e . N e t i n c o m e a n d c a s h f l o w i n c re a s e d w h i l e o v e r a l l
a s s e t s w e re d i l i g e n t l y re d u c e d .
Strategically, the Company has started to re-design itself, shifting from a selling business
that provides product support to a customer support business that sells. Finning’s operations
are focused on growing value-added businesses and developing new standards and internal
processes. These improvements are unfolding at a time when many of our customers are
seeing momentum returning to their industry sectors.
Looking back to the first quarter of 1999, our Company was facing low commodity prices
with Chilean and British economies in decline. To counter these market conditions, we
moved quickly to implement cost and asset reduction programs. Despite a decline in revenue
of 14%, the Company’s operating margins improved in 1999 and net income increased to
$59.6 million from $3.2 million in the previous year. Clearly, these results could not have
been achieved without the teamwork and commitment of Finning employees throughout
our organization.
During the year, our major corporate objectives were to reduce assets by $180 million and
lower operating expenses by $22 million. These ambitious goals were to be achieved without
any adverse effect on customer service – and they were. At the end of the year, we exceeded
our planned objectives as inventory levels dropped by $203 million and expenses declined
by $30 million. Total debt decreased by $234 million, restoring strength to the Company’s
balance sheet.
- - P A G E 7 - -
Through our internal re-design process, the Company is revisiting many of its performance
benchmarks. We are targeting those areas where Finning can improve operating efficiency and
i s b e h i n d
strive for “best in class”. Based on this process, we have set goals for the Company in terms of
asset management, productivity and growth. We recognize our customers must see the benefits
of these efforts and service levels must continue to be the highest in the marketplace.
Consequently, our operations are assigning more
> S E R V I C E
service technicians to the field so they can respond
faster to customer demands, thereby increasing
machine availability. Additionally, customer service levels have been enhanced with centralized
call centers. In 1999, test pilot programs in each of our operations showed improved inventory
turnover rates through focused asset and logistics management.
Finning (Canada), with Caterpillar’s support, launched a new e-commerce initiative to sell over
the internet. Building on this success, the e-commerce channel will be expanded company-
wide in 2000. We see the internet becoming increasingly important in serving our existing
customers and reaching new customers.
A vital component of our business is Caterpillar’s leadership in technology, providing the
most highly productive equipment in the industry. Our dedicated sales teams, working
closely with Caterpillar, are focused on growing market share and advancing Cat’s expanding
product line. For example, in the U.K., we see significant growth opportunities with
Caterpillar’s new compact equipment line. In Canada, the new 797 mine truck performed
well in field-testing and in 1999 we sold nine of these units to our largest customers in
the Athabasca Oil Sands. In 2000, these new trucks – the largest in the world – will also be
delivered to customers in Chile to further improve copper mining productivity. Recent major
initiatives by Caterpillar in agriculture and power systems will open new markets in many of
Finning’s operations.
- - P A G E 8
> F I N N I N G I N T E R N A T I O N A L I N C . - -
we’re only safe when each of us cares about each other – and ourselves. “No Accidents Today”
A key area of focus for management in 1999 was safety in the work environment. At Finning,
e v e r y t h i n g
to meet environmental requirements through recycling, re-use and waste disposal programs.
is the daily goal we will use to gain world class status for safety in our workplace. With
everyone’s commitment we will achieve that standard. In addition, the Company will continue
On the topic of management, I have announced that I will be stepping down from the position
of Chairman and C.E.O. at the Company’s annual meeting on April 26th. One of my major
responsibilities before retiring has been to help set a strategic course for the Company and
ensure there is strong management in place to execute that plan. We have internationally
experienced executives leading each of our operations, and we have selectively recruited top
talent to take advantage of new technology opportunities. I know that Finning will achieve
its future goals with the strong team in place under the leadership of Doug Whitehead.
> T E A M W O R K
I am also very pleased to announce the appointment
of Mr. John Cleghorn, of Royal Bank of Canada, and
Mr. John Willson, of Placer Dome, to Finning’s Board
of Directors. Their experience will provide additional strength to the Company’s Board
which will play an important role in the future growth of the Company.
As I look back over my 31 years with Finning, I am very proud to have served with such a team
of talented people. The Company has grown tremendously – both internally and through
acquisitions – and it is now an international operation with solid roots in three continents. I see
a bright future for exceptional shareholder returns as Finning engages in new e-commerce
channels, expanded product lines, greater customer support services and other opportunities
for growth. Finning has remained profitable and served its shareholders well over 67 years of
change – not because it coped with change, but because it drove change. Going forward,
Finning’s management will continue this effort under the guidance of our Board of Directors.
- - P A G E 9 - -
After years of valued service, Carl Cederberg, Michael Koerner and Bob Wyman will be retiring
in early 2000. Carl joined Finning in 1971. After numerous successful postings, his distinguished
w e d o.
distinction in the role of Chairman of the Audit Committee. Bob joined the Board in 1987 and
1996. Their contributions were significant in building the long- term success of the Company.
served on a number of committees and was non-executive Chairman of the Board from 1992 to
career concludes as President of Finning Chile. Michael joined the Board in 1978 and served with
Finning’s success over the years would not have been possible without its valued relationship
with Caterpillar. Through Caterpillar’s leadership in equipment design, manufacture and
service, we have been able to help our customers be successful. I have had the good fortune
to work with some of the senior officers who have helped forge the indelible Caterpillar
stamp of success on the heavy equipment industry worldwide. I especially appreciated the
opportunity of working with the executive team under the very able guidance of Glen Barton,
Chairman and Chief Executive Officer.
It has been an honour and pleasure to serve as Chairman and CEO of this wonderful Company.
I wish to thank the Board, the Management, and every Employee, who have all shown their
commitment to making our Company and our customers successful.
In conclusion, I wish to thank our shareholders for their confidence over the years. Let me
assure you that Finning management is well prepared for the unfolding opportunities of the new
business world and keenly aware of its responsibility to deliver growth in shareholder value.
Sincerely,
J a m e s F S h e p a r d
C h a i r m a n a n d C h i e f E x e c u t i v e O f f i c e r
- - P A G E 1 0
> F I N N I N G I N T E R N A T I O N A L I N C . - -
>
D o u g W h i t e h e a d
P r e s i d e n t a n d C h i e f O p e r a t i n g O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C C a n a d a
>
S u e H i n t o n
R e c e p t i o n i s t / T e l e p h o n i s t
C a n n o c k , U . K .
>
R i c k M a h l e r
E x e c u t i v e V i c e P r e s i d e n t
a n d C h i e f F i n a n c i a l O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C C a n a d a
>
C a r l C e d e r b e r g
V i c e C h a i r m a n
F i n n i n g C h i l e S . A .
>
J a c k C a r t h y
M a n a g i n g D i r e c t o r
F i n n i n g ( U K ) L t d .
>
F e l i p e F i e r r o
T e c h n i c a l M e c h a n i c
S a n t i a g o B r a n c h , C h i l e S . A .
>
G i l l e s L e c l e r c
H e a v y D u t y M e c h a n i c
C o m p o n e n t R e b u i l d C e n t r e
E d m o n t o n , A B C a n a d a
>
N e i l D i c k i n s o n
D i v i s i o n a l D i r e c t o r
P o w e r S y s t e m s
C a n n o c k , U . K .
>
I a n R e i d
P r e s i d e n t a n d
C h i e f O p e r a t i n g O f f i c e r
F i n n i n g ( C a n a d a )
E d m o n t o n , A B C a n a d a
T H E F A C E O F S E R V I C E
>
J i m S h e p a r d
C h a i r m a n a n d C h i e f E x e c u t i v e O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C C a n a d a
>
B r i a n B e l l
E x e c u t i v e V i c e P r e s i d e n t
C u s t o m e r S u p p o r t S e r v i c e s
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C C a n a d a
>
C h e r y l e K j e l s o n
C u s t o m e r S e r v i c e S y s t e m T r a i n e r
L a n g l e y , B C C a n a d a
>
H o r a c e H o
E x e c u t i v e V i c e P r e s i d e n t
H u m a n R e s o u r c e s
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C C a n a d a
>
A l a n T u b e y
F i e l d S e r v i c e E n g i n e e r
C a n n o c k , U . K .
>
N i c k L l o y d
P r e s i d e n t a n d
C h i e f E x e c u t i v e O f f i c e r
F i n n i n g C h i l e S . A .
S a n t i a g o , C h i l e
>
A l b e r t P o m b e r t
S u p e r v i s o r
C o m p o n e n t R e b u i l d C e n t r e
E d m o n t o n , A B C a n a d a
>
S t e v e O l l i n g e r
C u s t o m e r S e r v i c e M a n a g e r
E d m o n t o n , A B C a n a d a
>
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
COMPARISON OF RESULTS 1999 TO 1998
R E V I E W O F O P E R A T I O N S
H I G H L I G H T S
Finning International achieved higher earnings
and cash flow in 1999 despite lower revenue in each of its
operating units. Net income increased significantly to
$59.6 million, or $0.75 per share, from $3.2 million, or
$0.04 per share the previous year. Cash flow from opera-
tions was $251 million, up 11% compared with the twelve
months of 1998.
Consolidated revenue decreased in 1999 by 14% to
$2.2 billion compared with $2.6 billion the previous year.
Two of the dealer territories in which Finning operates,
namely the U.K. and Chile, experienced lower economic
activity. Chile’s gross domestic product declined by 1%
in 1999 while the U.K. avoided near recession with an
increase to GDP of 1.6%.
Despite lower activity levels, earnings improved in
1999 due to higher gross margins and lower operating
expenses. The reduction in operating expenses reflected
the Company’s restructuring program implemented in
1998 and its continued cost reduction efforts in 1999. In
addition, as a result of the Company’s focus on asset
management, equipment and parts inventories declined
by $231 million, or 27% in 1999. This resulted in a reduc-
tion of the Company’s interest expense by $9 million, or
12.5%. At year end, Finning’s operating debt-to-equity
ratio declined to 0.47-to-1.0 compared with 0.97-to-1.0
at December 31 1998.
N E W E Q U I P M E N T R E V E N U E
New equipment sales were down
22% to $0.9 billion in 1999 as weaker sales were reported
in all dealer territories. In particular, new equipment sales
in Chile were down $134 million or 53% because of lower
copper mining and decreased construction activity. Total
unit deliveries of new equipment declined 17% in 1999.
U S E D E Q U I P M E N T R E V E N U E Used equipment sales decreased
27% to $311 million primarily due to lower sales activity
in the U.K. and by Universal Machinery Services. Used
equipment sales in the U.K. continued to decline due to
the strong pound sterling and lower activity. In addition, the
1998 revenue included the one-time sale of $15 million in
excess inventory in the U.K. and a large package of pipeline
rental equipment in UMS.
R E V E N U E B Y A C T I V I T Y
( $ M I L L I O N S )
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
- - P A G E 1 5 - -
$
$
856
311
156
96
798
13
2,230
1 9 9 9
38%
14%
7%
4%
36%
1%
100%
$
$
1,103
425
170
91
783
13
2,585
1 9 9 8
C H A N G E
43%
16%
7%
3%
30%
1%
100%
(22%)
(27%)
(8%)
5%
2%
—
(14%)
R E V E N U E
B Y G E O G R A P H I C
S E G M E N T (%)
32
United Kingdom
Alberta / Northwest Territories 27
17
Chile
20
British Columbia / Yukon
4
International
C O N S O L I D AT E D
R E V E N U E (BY ACTIVITY) (%)
New equipment
Customer service
Used equipment
Equipment rental
Finance and other
Operating leases
38
36
14
7
1
4
R E N TA L R E V E N U E
Rental revenue declined 8% to $156
million. In Canada, rental revenue declined 10% primarily
due to lower activity in the first half of the year. In the U.K.,
rental revenue was flat while in Chile revenue declined
29% as a result of lower machine utilization at the Econor
gas pipeline project near Antofagasta. Rental revenue was
reclassified in 1999 to include the revenue contribution
from equipment currently under rental-purchase contracts.
In previous years, the principal from rental-purchase
billings was included in new and used equipment revenue
while the interest portion was included in finance revenue.
Under this reclassification, rental revenue includes all rev-
enue from rental purchase equipment as well as revenue
from regular rent-to-rent agreements.
O P E R AT I N G L E A S E S
Total operating lease revenue increased
5% to $96 million in 1999. Leasing revenue is comprised
of principal and interest on billings to customers for leased
equipment. Previously, the principal amount of the lease
was reported as a component of new and used equipment
revenue and the interest portion was reported as finance
revenue. Finning (Canada)’s revenue from operating leases
increased 7% while in Finning Chile it declined below
$1.0 million in 1999. The Finning dealership in the U.K.
does not hold any operating leases.
C U S T O M E R S U P P O R T S E R V I C E S
Total parts and service revenue
was $798 million, a 2% increase from the prior year. Rev-
enue increased 10% in Chile and declined 2% in Canada.
In the U.K., customer service was flat despite low economic
activity levels. The increase in Finning Chile reflected the
increased servicing requirements of a higher machine pop-
ulation in the territory. Used parts revenue in Universal
Machinery Services was basically flat at $10 million in 1999.
F I N A N C E R E V E N U E
Finance revenue in 1999 was flat at $13
million. Finance revenue in Finning (Canada) decreased
14% to $10 million compared with the prior year. Finance
revenue in Chile increased to $3.1 million, while revenue in
UMS declined to $0.1 million. Due to the reclassification of
revenue in 1999, the majority of the finance revenue is now
being reflected under operating lease revenue and rental
revenue. The majority of finance revenue represents
interest earned on notes receivable, which increased
51% to $119 million at the end of 1999. In 1998, the sale
of a portion of the Canadian finance portfolio was made to
Caterpillar Financial Services Ltd. Finning and Caterpillar
Finance have arrangements in place to provide customers
with competitive financial services in each of Finning’s
dealer territories.
C O N S O L I D A T E D R E V E N U E / N E T I N C O M E / E A R N I N G S P E R S H A R E
( $ T H O U S A N D S )
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
Revenue
Net income
Non-recurring items
Adjusted net income
- - P A G E 1 6
> F I N N I N G I N T E R N A T I O N A L I N C . - -
1 9 9 9
1 9 9 8
$
856,154
311,429
155,659
96,014
797,472
13,133
$ 2,229,861
$ 1,102,585
424,593
170,063
91,381
783,445
13,354
$ 2,585,421
$
$
59,600
—
59,600
$
$
0.75
—
0.75
$
$
3,185
15,461
18,646
$
$
0.04
0.19
0.23
N E T I N C O M E
Net income increased significantly to $59.6 million, or
$0.75 per share, from $3.2 million, or $0.04 per share the
previous year. During the twelve months ending Decem-
ber 31, 1998, earnings were negatively affected by non-
recurring charges of $0.19 per share due to the relocation
of Finning Canada’s head office to Edmonton and other
restructuring costs. Excluding these non-recurring items,
earnings per share were $0.75 compared with $0.23.
Cash flow from operations was $251 million, up 11%
compared with the twelve months of 1998.
Canadian operations improved significantly in 1999
contributing $43.2 million to consolidated net income, an
increase of 25% from 1998. The U.K. operations generated
income of $5.9 million in 1999 compared with a loss of
$32.2 million the previous year. Net income from Chilean
operations was $15.5 million in 1999 compared with $3.4
million in 1998. International operations, which includes
the contribution from Universal Machinery Services, corpo-
rate interest charges and head office expenses, showed a
loss of $5.0 million in 1999 compared with a loss of $2.8
million the prior year.
The Company’s overall gross profit margin increased
to 26.1% in 1999 compared with 22.5% the previous year.
Slightly higher new and used equipment margins contributed
to this improvement. In addition, a higher proportion of
revenue came from customer services which generates a
higher gross margin than equipment sales. Selling expenses
decreased 8% and general and administrative costs were
lower by 13% year-over-year. The greatest reductions in
operating expenses were made in Canada and the U.K. In
total, selling, general and administrative expenses were
down 9% to $432.4 million in 1999.
N E T I N C O M E
( $ T H O U S A N D S )
Operations
Rental
Finance
Consolidated1
1 eliminating entries not shown in this table
- - P A G E 1 7 - -
Finance costs and interest on other indebtedness
decreased to $65.8 million, down 13% from the prior year.
This resulted from the Company’s asset reduction program
that focused on reducing working capital and improving
inventory turnover. Each of the operating units reduced
their borrowing costs, with Chile achieving the largest
year-over-year reduction.
In terms of lines of business, Finning classifies the
majority of its new and used equipment sales as well as its
customer service business under Operations. In 1999, net
income from Operations improved significantly from a net
profit of $0.5 million in 1998 to $59.7 million in 1999. Each
operating unit, with the exception of Universal Machinery
Services, generated higher earnings in 1999. The Company’s
income contribution from Rental Operations decreased
37% due to lower rental equipment utilization in the U.K.
and Canada. Income from Finance Operations, including
income generated from notes receivable and operating
leases, increased 13% in 1999 due primarily to lower loan
losses. The Company’s segmentation of lines of business
and the allocated capital structure for each line is contained
on page 27 in this section.
In 2000, the Company expects market conditions to
improve in each of its dealerships as commodity prices
improve and economic activity is forecast to increase in
each territory. Finning expects activity levels in Western
Canada to improve modestly in 2000 as the economies of
British Columbia and Alberta improve year-over-year. In
Chile, the economy is expected to recover with copper
prices in the 75 to 85 cent range and the country’s national
elections completed. In the U.K., the economy is expected
to improve in 2000 but largely due to higher retail spending,
not large infrastructure expenditures and industrial expan-
sion. Additionally, the Company will continue its cost
reduction and asset management programs in 2000 and
expects overall results to be higher compared with 1999.
1 9 9 9
59,723
4,918
5,464
59,600
$
$
$
$
1 9 9 8
490
7,840
4,853
3,185
C A N A D I A N E Q U I P M E N T
D E L I V E R I E S B Y M A R K E T
(CONVERTED TO SALES
DOLLARS) (%)
Mining
Power systems
Construction
Petroleum
Forestry
Other
30
13
16
9
22
10
C A N A D I A N R E V E N U E
(BY ACTIVITY) (%)
New equipment
Customer service
Used equipment
Equipment rental
Finance
Operating leases
33
36
12
9
1
9
C A N A D I A N O P E R A T I O N S
H I G H L I G H T S
Finning (Canada) improved its operating effi-
ciency in 1999 and reported higher income despite a
decrease in total revenue of 9%. Net income was $43.2
million for the 12-month period ending December 31, 1999,
an increase of 25% compared with the previous year.
In the second half of 1999, Finning (Canada) experi-
enced a higher rate of activity in many of its sectors.
Although new unit deliveries were down 15% in 1999, unit
deliveries in the second half of the year were up 21% over
the same period in 1998.
Forestry revenues increased 28% in 1999 and con-
tributed to a modest 1% growth in revenue from operations
in British Columbia. A weak petroleum sector early in 1999
and lower mining revenues resulting from the downturn in
the coal industry contributed to a 16% decline in revenues
in Alberta and the Northwest Territories. Higher oil prices
in the latter part of 1999, however, started to generate
increased activity in the petroleum sector.
During 1999, Finning (Canada) completed the relocation
of its head office to Edmonton from the Company’s previ-
ous location on Great Northern Way in Vancouver. The
closure of five branches and the downsizing of five others
were also completed during the year and an early retire-
ment program was offered in the first quarter of 1999. At
year-end, Finning (Canada) had 31 branches and 8 depots.
Employees totaled 2,271 compared with 2,494 at the end
of 1998.
C A N A D A R E V E N U E / N E T I N C O M E / E A R N I N G S P E R S H A R E
( $ T H O U S A N D S )
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
Revenue
Net income
Non-recurring items
Adjusted net income
- - P A G E 1 8
> F I N N I N G I N T E R N A T I O N A L I N C . - -
F I N A N C I A L R E V I E W
N E W E Q U I P M E N T R E V E N U E
New equipment sales declined
18% to $342 million in 1999. Unit deliveries of new equip-
ment declined 32% but the average price of the delivered
units increased, primarily as a result of larger equipment
being sold to customers in the Oil Sands. The largest
declines in unit deliveries were in the petroleum, mining and
constructions sectors (down 48%, 20%, and 13% respec-
tively). Power systems revenue fell 30% in 1999. Petroleum
and power systems revenue were impacted by lower activity
in the energy sector in the first half of the year.
U S E D E Q U I P M E N T R E V E N U E
Domestic used equipment sales
declined $20 million, down 12% from 1998, reflecting
both lower unit sales to the mining sector and competitive
pricing pressures.
R E N TA L R E V E N U E
Rental fleet revenue was down 10% in
1999 primarily due to the lower contribution from equip-
ment rental purchase contracts (often referred to as RPOs,
or rental-purchase options). Canadian rental purchase
assets were down 18% to $57 million due to lower deliveries
into rental-purchase contracts and high conversion rates
during the year.
1 9 9 9
1 9 9 8
$
342,435
125,368
89,634
95,427
370,131
9,927
$ 1,032,922
$
417,320
143,148
99,567
89,296
375,992
11,594
$ 1,136,917
$
$
43,250
—
43,250
$
$
0.54
—
0.54
$
$
34,747
8,191
42,938
$
$
0.44
0.10
0.54
O P E R AT I N G L E A S E S
In 1999, leasing revenue increased 7%
to $95 million. Leasing revenue is comprised of principal
and interest on billings to customers for leased equipment.
New equipment units delivered into leasing contracts
increased 11% compared with the previous year. The
amount of equipment leased to customers was $270 mil-
lion, an increase of 14% from December 1998.
C U S T O M E R S U P P O R T S E R V I C E
Parts and service revenue
decreased slightly to $370 million, down 2% from the prior
year. Parts revenue was down 5% due to lower volumes in
Alberta. Customer service revenue increased 14% with
improved revenue coming from customer service mainte-
nance contracts. Increased activity in Oil Sands mining,
forestry, pipeline construction and diamond mining in the
Northwest Territories have provided Finning (Canada)
with the opportunity to increase parts and service revenue
in these sectors.
F I N A N C E R E V E N U E
Finance revenue was down 14% in 1999
due to the June 1998 sale of more than half of Finning’s
finance portfolio to Caterpillar Financial Services Ltd.
Since the sale in mid-year 1998, the instalment notes
receivable portfolio has increased by 30% to $106 million.
The majority of the interest on notes receivable is earned
on used equipment.
N E T I N C O M E
Net income from Canadian operations
increased 25% to $43.2 million compared with $34.7 million
in 1998. Excluding non-recurring items in 1998, net income
was up 1% over 1998. The net income margin, excluding
non-recurring items, increased to 4.2% in 1999 from
3.8% in 1998.
The improvement in net operating earnings despite
lower revenues was primarily the result of lower selling
expenses, which declined $19 million, and a decline in
general and administrative expenses of $26 million ($12
million excluding the pre-tax non-recurring items men-
tioned above). In addition, interest expense was $2 mil-
lion lower due to lower average debt levels resulting from
reduced asset levels. Gross profit margins improved
slightly in 1999 to 29.9% primarily due to a shift in revenue
to customer support service from equipment revenue.
- - P A G E 1 9 - -
New equipment margins decreased from 1999 levels,
reflecting the significance of lower margin large mining
unit sales and general market competitiveness. Used
equipment margins were also lower reflecting higher
obsolescence charges in the year, sale of aged inventory
at lower margins and increased competition.
Service margins and parts margins were higher during
1999. Service margins benefited from increased efficiency
on customer service maintenance contracts, while parts
margins benefited from foreign exchange gains earlier in
the year.
I N D U S T R Y R E V I E W
M I N I N G
In 1999, depressed coal prices more than offset
expansion in Oil Sands mining. As a result, deliveries of
new mining units by Finning (Canada) decreased 30%
while the average price per unit increased 14% due to the
sale of large mining units into the Oil Sands. The decline
in mining deliveries occurred primarily in the first half of
1999. Mining unit deliveries during the year accounted for
10% of total new general line equipment deliveries and
35% of the revenue, making it the largest end market for
Finning (Canada). In 1999, the first Caterpillar 360-ton
797 mining trucks were delivered to the Oil Sands in
northeastern Alberta.
Syncrude Canada Ltd. is continuing its planned expan-
sion of its Oil Sands operation at the Aurora Mine property,
north of its Mildred Lake upgrading complex. A further eight
797s have been scheduled for delivery in 2000, along with
several large support machines. Suncor Energy is pro-
ceeding with its expansion across the Athabasca River to
its Steepbank Mine, and with its Millennium expansion
project. In addition, Shell Canada Ltd. announced it was
proceeding with its Muskeg River project with partners
Chevron Canada Resources Ltd. and Western Oilsands Inc.
Approval was received for the project in 1999 and pro-
duction is expected to begin in the fourth quarter of 2001.
Finning has a strategic alliance with BHP Diamonds Inc.
(“BHP”) for all mechanical and parts support requirements
at the Ekati diamond minesite in the Northwest Territories,
jointly owned by BHP and Dia Met Minerals Ltd.
P E T R O L E U M
Deliveries of new units to the petroleum sector
by Finning (Canada) decreased 45% in 1999. Compared with
last year, deliveries were down 77% in the first half of the
year but were up 51% in the fourth quarter. Petroleum
related equipment revenues declined 48% from the prior
year. The petroleum activity is focused on the oil and gas
industry as well as pipeline construction. Drilling activity in
Western Canada was flat compared with 1998 as oil prices
were low in the first quarter of the year but more than
doubled before year end. Drilling activity is anticipated to
increase between 40% and 50% in 2000 and 2001. Pipeline
construction activity remained high, especially with the
building of the Alliance natural gas pipeline from northern
B.C. to Chicago, Illinois. Activity for well tie-ins, based on
higher natural gas production and exploration, has started
and should remain high for the balance of 2000.
F O R E S T RY Unit deliveries of new forestry machines increased
8% in 1999 and the average price per unit increased 18%.
The interior forest industry in British Columbia, buoyed
by continued growth in the U.S. economy, experienced
increased activity in 1999. Louisiana-Pacific Corp. and
Ainsworth Lumber Co. Ltd. both announced new mills
construction in northeastern B.C. that will require additional
log supply from that area. Coastal forestry improved in
the second half of the year when Asian demand began to
increase modestly. Early in 1999, Canadian Forest Products
Ltd. (“Canfor”) decided to extend its ‘Power by the Hour’
agreement with Finning (Canada) to all of its Northern
Interior solid wood mills, covering nine operations in B.C.
and Alberta. Under the agreement, more than 30 machines
have been delivered to Canfor. Finning (Canada) also
entered into a supply agreement with Weyerhaeuser
Company for wheel loaders and log stackers for their
Vancouver Island and Queen Charlotte operations. The
initial agreement is for more than 20 units.
- - P A G E 2 0
> F I N N I N G I N T E R N A T I O N A L I N C . - -
C O N S T R U C T I O N
Deliveries of new construction units by
Finning (Canada) declined 6% for the year, despite a strong
surge in fourth quarter sales. The value of those unit
deliveries was down 13% compared with 1998. Overall,
construction sales activity in Alberta in 1999 outper-
formed B.C. due to increased demand in the governmental
and commercial sectors. Deliveries of paving equipment,
compactors, and articulated dump trucks were lower in
1999 as residential housing starts declined as did orders
from public works departments in Alberta.
P O W E R S Y S T E M S
Power systems revenue declined 30%
despite a modest 7% increase in unit deliveries due pri-
marily to fewer large project sales in the year. Unit sales in
the second half of 1999 were higher than in the first half of
the year. Unit demand rose in the gas compression market
and noticeably in electrical power generation, which was
influenced by demand for backup power relating to the
year 2000 issue. A successful 18-megawatt power station
contract for Jupiter Power’s C1 project in Cambodia is
expected to be a precursor to an additional project of equal
size in 2000. The development of the Diavik diamond mine
in the Northwest Territories has led to several gensets
being placed for a total of 5-megawatt. These units will be
used for construction power in 2000.
U N I T E D K I N G D O M O P E R A T I O N S
H I G H L I G H T S
Total revenue for Finning (UK) in 1999 was
$713 million, a decrease of 10% compared with the previous
year. The 1999 results were affected by a 2.2% depreciation
of the pound sterling against the Canadian dollar.
Finning (UK)’s operations continued to face a difficult
operating environment in 1999. The British economy
recorded growth of only 1.6% and aside from the Channel
Tunnel Rail Link there were few large infrastructure projects
in the UK. The value of the pound sterling continued to be
high in 1999, which made the sale of used equipment
overseas less competitive and the purchase of European
products in the UK market a viable proposition. This led to
sustained competition from European produced products.
During the year, five depots in the UK were closed of
which three were the result of the sale of BCP Plant Hire in
February 1999. In addition, Finning (UK) continued to relo-
cate operations and reorganise functions. This allowed
for the closure of Wigan branch and the consolidation of
used equipment and rental operations to the Cannock area
adjacent to head office. The Windsor branch was also
closed with the remaining operations transferred to
premises in Slough. During the year, Finning (UK)’s
employee workforce increased slightly by 1% to 1,364.
F I N A N C I A L R E V I E W
N E W E Q U I P M E N T R E V E N U E New equipment revenue was down
9% to $394 million as unit deliveries decreased 6%. The
balance of the shortfall was primarily due to a change in mix
in favour of lower-valued, smaller construction machines.
U S E D E Q U I P M E N T R E V E N U E Used equipment revenue was
$76 million, a decrease of 36% from the prior year. Fewer
refinancing packages were made in 1999 compared with
a total of $23 million completed in 1998.
C U S T O M E R S U P P O R T S E R V I C E
Parts and customer service
revenue had a small increase of 0.6% to $196 million for the
year. Competition from alternative service providers made
for a competitive environment in the UK. There is improved
focus in respect of customer support with additional man-
agement resources being applied at a divisional level.
R E N TA L R E V E N U E
Equipment rental revenue decreased by
$0.2 million to $46 million in 1999. The BCP Plant Hire
Division was sold in February 1999. During the year,
Finning (UK) expanded its fleet to meet the needs of the
cross hire sector. Cross hire involves renting equipment to
customers (plant hirers) who in turn charge a rental fee for
its use on projects, either manned or unmanned. The total
rental assets increased by 70% to $74 million in 1999.
N E T I N C O M E
Finning (UK) reported a profit of $5.9 million in
1999 compared with a loss of $32.2 million in 1998. Exclud-
ing non-recurring items, the year-over-year improvement
in net income was $31.7 million.
The operation’s after-tax margin (excluding non-
recurring items) increased to 0.8% from negative 3.3%,
while the gross profit margin increased by 5.1% from the
prior year. New equipment margins increased slightly in
1999 while used equipment margins experienced signifi-
cant improvement following the reserves that were taken
against overvalued used equipment inventory at the end
of 1998. Rental equipment margins were higher while parts
margins declined and service margins remained flat.
U N I T E D K I N G D O M R E V E N U E / N E T I N C O M E / E A R N I N G S P E R S H A R E
( $ T H O U S A N D S )
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
Revenue
Net income (loss)
Non-recurring items
Adjusted net income (loss)
- - P A G E 2 1 - -
$
$
$
$
394,053
76,086
46,484
—
196,318
—
712,941
5,903
—
5,903
1 9 9 9
1 9 9 8
$
$
$
$
431,705
119,521
46,642
—
195,132
—
793,020
(32,231)
6,408
(25,823)
$
$
(0.41)
0.08
(0.33)
$
$
0.07
—
0.07
U . K . E Q U I P M E N T
D E L I V E R I E S B Y M A R K E T
(CONVERTED TO SALES
DOLLARS) (%)
Plant hire
Power systems
Construction
Materials handling
Quarrying
Mining
Other
29
17
14
11
11
9
9
U . K . R E V E N U E
(BY ACTIVITY) (%)
New equipment
Customer service
Used equipment
Equipment rental
55
28
11
6
Q U A R R Y I N G
National output of crushed rock, sand and
gravel, including marine-dredged sand, remained stable
at 220 million tons. The demand for these products was
sustained by the requirement for road repair and recondi-
tioning. Consolidation within the quarrying industry con-
tinued with a trend towards customer support agreements,
preferred suppliers and single source agreements.
Finning (UK) entered into five national parts and service
contracts with major quarrying companies in 1999. New
equipment sales in this sector decreased by 19% with
unit deliveries declining by 6%.
O P E N P I T M I N I N G
New mine development within England
and Wales is consistently affected by environmental
issues with the majority of open pit mines being located in
Scotland. Coal production levels in 1999 remained con-
sistent with 1998 quantities of 15 million tonnes. New
equipment sales to this sector decreased by 9% from the
prior year with unit deliveries decreasing by 5% reflecting
fewer rigid dump truck deliveries.
P O W E R S Y S T E M S
Revenue in the power system division
decreased 11% while unit deliveries improved by 6%.
Engine unit deliveries to pleasure craft builders were down
by 32% in 1999, although this was partially offset by cus-
tomers ordering larger engines. Commercial Marine sales
declined 14% by value, although orders were higher than
the previous year and many of these are scheduled for
delivery in 2000. Unit sales of diesel generators increased
225% in 1999, with a significant increase in activity with
Internet providers. Industrial engine deliveries remained
flat due to the strength of the pound sterling and its impact
on UK exports. Rental revenue improved 17% reflecting
activity at year end for back-up power requirements and
an overall increase in sales coverage. Sales of gas and
diesel-fired power generation and engines for the marine
pleasure craft industry are expected to increase in 2000.
M AT E R I A L S H A N D L I N G Materials handling revenue in Finning
(UK) declined 22% in 1999 with unit deliveries of lift
trucks down 26%. This was partially due to production
delays at Mitsubishi-Caterpillar’s plant and a preference
in the market to rent rather than buy. Competition remains
aggressive and in 1999 regional rental centres were
established to provide customers closer proximity to
support services.
Selling, general and administrative expenses, exclud-
ing non-recurring items, decreased 11% from the prior
year. This is a reflection of both lower revenue levels and
action taken in 1998 to reduce the cost base in the UK.
Cost saving initiatives are continuing into 2000. Interest
expense for Finning (UK) declined by 18% during the year,
reflecting lower debt levels with continued focus on asset
management. The reduction in borrowing rates during the
year also contributed to the reduction in interest expense.
Interest rates declined during the year with the base rate
at the Bank of England moving down 75 basis points lower
to 5.5% at the year end.
I N D U S T R Y R E V I E W
C O N S T R U C T I O N A N D P L A N T H I R E Government approval and
spending on infrastructure projects continued to be con-
strained under the Labour government in 1999. Work on
the Channel Tunnel Rail Link began in the first quarter of
1999 that stimulated some activity. The delay in the start
of the Birmingham Northern Relief Road continued,
although work on this project has been confirmed as
starting in the fourth quarter of 2000. Private and com-
mercial investment in construction increased 2% in 1999
with light construction activity outpacing heavy construc-
tion. The plant hire business saw a year of consolidation,
a trend that is likely to continue into 2000. This trend
resulted in very competitive hire rates in the market. In
1999, Finning (UK)’s sales of new equipment to the con-
struction and plant hire industries increased by 18% com-
pared with the previous year. Unit deliveries increased by
19% reflecting demand from the Channel Tunnel Rail Link
project. The introduction of Caterpillar’s compact con-
struction equipment line was well received in the market
with sales only limited by availability of supply. The relia-
bility of the machines has proven to be excellent and
expectations for sales in 2000 are high.
- - P A G E 2 2
> F I N N I N G I N T E R N A T I O N A L I N C . - -
U S E D E Q U I P M E N T R E V E N U E
Used equipment sales were
down 25% to $18.6 million given the slow market condi-
tions. In addition, during 1998 Finning Chile sold a large
package of used equipment to the South American leasing
operation of Caterpillar.
R E N TA L R E V E N U E
Rental revenue totaled $15 million in
1999, down 29% from the previous year. The rental fleet
serves mining operations, large turn-key construction
projects as well as building construction requirements in the
Antofagasta, Mejillones and Concepcion area. Rental fleet
assets increased 9% to $12 million at year end. Included
in the rental fleet are eight 240-ton mine trucks and three
large wheel loaders being rented to mining companies.
C U S T O M E R S U P P O R T S E R V I C E S
Parts and service revenue
increased 10% to $221 million in 1999 reflecting an increase
in Caterpillar general parts and exchange components.
Based on the large number of machines delivered to the
mining industry over the past five years, there is continuing
demand for both parts and service support in Finning Chile’s
territory. Several initiatives are being implemented in cus-
tomer services, including parts pricing based on market
segmentation and improved supply chain management.
N E T I N C O M E
Net income in 1999 was $15.5 million com-
pared with $3.4 million in the prior year. The net income
margin, excluding non-recurring items of $0.9 million in
1998, was 4.1% in 1999 compared with 0.9% in the prior
year. Overall gross margins improved by 6.4% as parts
represented a greater percentage of total sales compared
with 1998. New equipment margins declined marginally
while used equipment margins were also lower. Service
margins improved during the year as the management of
maintenance and repair contracts improved while parts
margins were down slightly. Chile reduced its selling,
general and administrative expense and interest expense
by $6.4 million or 7% in 1999. Chile’s focus on asset man-
agement, along with lower sales volumes, contributed to
this improvement.
1 9 9 9
119,665
18,598
14,826
587
221,008
3,093
377,777
15,464
—
15,464
$
$
$
$
1 9 9 8
253,560
24,766
20,852
2,085
201,366
876
503,505
3,424
862
4,286
$
$
$
$
$
$
0.04
0.01
0.05
$
$
0.19
—
0.19
C H I L E A N O P E R A T I O N S
H I G H L I G H T S
Total revenue in Finning Chile decreased
25% to $378 million in 1999 as unit deliveries of new
equipment were lower by 41%. Sales activity levels in the
mining and construction industries, which together repre-
sent approximately 60% of Finning Chile’s total revenue,
were down significantly. The main reason for the reduction
in activity was the rapid slowdown in the Chilean economy,
which went into recession in 1999 with GDP of negative
1%. This was partially due to lower copper prices, which
dropped to 61 cents a pound in the first quarter before
recovering to 82 cents at the year end. The lower copper
prices caused many mining companies to postpone
investment in new equipment in 1999. Higher interest
rates early in the year stalled private construction activity
in both the commercial and residential sectors.
During the year, Finning Chile reorganized several of
its branches and reduced its employee count by 7%. To
improve customer service levels in northern Chile,
Antofagasta branch was reorganized into four locations:
Antofagasta; Codelco North; Escondida; and Mantos
Blancos. In Southern Chile, Concepcion was established
as a regional branch with two other locations reporting to
it. At the end of 1999, Finning Chile had 1,259 employees.
F I N A N C I A L R E V I E W
N E W E Q U I P M E N T R E V E N U E
New equipment sales were
down 53% to $120 million. The decrease in new equipment
sales was due to lower demand in the mining and con-
struction industries in 1999 compared with last year which
had several large mining orders and increased infrastructure
and pipeline activity. In the construction sector, the delivery
of 26 units to Dumez GTM was the largest package sale of
the year.
C H I L E R E V E N U E / N E T I N C O M E / E A R N I N G S P E R S H A R E
( $ T H O U S A N D S )
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
Revenue
Net income
Non-recurring items
Adjusted net income
- - P A G E 2 3 - -
C H I L E A N E Q U I P M E N T
D E L I V E R I E S B Y M A R K E T
(CONVERTED TO SALES
DOLLARS) (%)
Mining
Construction
Kenworth
Power systems
Forestry
58
17
10
13
2
C H I L E A N R E V E N U E
(BY ACTIVITY) (%)
New equipment
Customer support services
Used equipment
Equipment rental
Finance
32
58
5
4
1
I N D U S T R Y R E V I E W
M I N I N G
The expansion and development of new copper
mining projects in Chile slowed dramatically in 1999 due
to the decline in the global base metal and precious metal
prices. However, production from existing copper mines in
Chile actually increased. For example, state-owned min-
ing company Codelco increased its annual production of
copper by 7.5% in 1999. Large Caterpillar mining equip-
ment packages were delivered to Escondida, Collahuasi
and Chuquicamata during 1999. Competition from other
equipment dealers in Chile, namely Komatsu, Terex and
Letorneau, resulted in aggressive pricing in the mining
sector in 1999.
C O N S T R U C T I O N
Construction of large infrastructure pro-
jects and highways was drastically affected by the eco-
nomic recession in Chile. Construction activity levels
almost stopped due to reduced government spending,
higher interest rates during first half of the year and the
large stock of houses available on the market. Deliveries of
new construction units by Finning Chile decreased 63% on
a year-over-year basis and total revenue decreased 58%.
P O W E R S Y S T E M S
Activity in the electrical power generation
market increased in 1999 while the marine market
remained slow. The sale of Olympian power generating
units increased as many companies requested indepen-
dent power following a failure in the Chilean electrical
power grid in early 1999. Rental activity for the power
system division decreased slightly but overall utilization
rates were improved. Five large marine engines were
delivered in 1999 and 24 Olympian gensets were sold to
Edwards Bank with five-year maintenance contracts.
- - P A G E 2 4
> F I N N I N G I N T E R N A T I O N A L I N C . - -
F O R E S T R Y
Forestry industry activity remained slow in
1999 primarily due to lower international pulp prices. New
equipment sales to this industry decreased 60% from
1998 levels but represented only 2% of Finning Chile’s
total new equipment sales.
Some major forestry projects have been postponed
due to both environmental and native concerns regarding
the impact of these potential initiatives. The main pro-
jects involved are Trillium, Cascade, and Celulosa Pedro
de Valdivia.
K E N W O R T H
Kenworth truck sales decreased by more
than 50% in 1999 given the rapid slowdown in the Chilean
economy. There are more than 15 dealers competing in
the Chilean market for Class 7 and Class 8 truck demand.
As a result, competitive pricing had a negative impact on
margins. Based on the management’s review of the Class 7
and Class 8 truck market, Finning Chile has entered into
an agreement with Paccar to exit this business in Chile
during the first half of 2000.
I N T E R N A T I O N A L O P E R A T I O N S
H I G H L I G H T S
International Operations is comprised of
Universal Machinery Services (UMS), a division of Finning
International Inc., and the corporate head office of Finning
International. This division is involved in selling both
Caterpillar and non-Caterpillar used equipment and used
parts around the world. During the year, UMS finalized its
long-term strategic plan that included restructuring and
separating its assets and operations from Finning (Canada)
and Finning (UK).
F I N A N C I A L R E V I E W
Revenue for UMS totaled $106 million in
1999, a decrease of 30% compared with $152 million in the
prior year. Equipment revenue was $91 million, a decrease
of 33%. In 1998, revenue included the non-recurring sale of
pipeline rental assets for $22 million as well as the sale of
$15 million of excess inventory as a result of the H. Leverton
acquisition in the UK. Total unit deliveries declined 20%
compared with 1998 primarily due to weaker market con-
ditions in the global mining sector. Economic conditions
stabilized in South America and Europe but remained weak
in Asia. In the U.S., used equipment volume and pricing
increased. In the U.K. and Europe, activity levels were
lower than the previous year. Asian markets began to
recover in 1999 following a significant downturn in 1998.
Used parts revenue decreased 9% in 1999 to $10 million,
again as a result of lower commodity prices.
The majority of UMS’ sales in 1999 were to the U.S.,
with a large number of deliveries also being made to Mexico
and South America. In 1999, UMS began a managed reduc-
tion program in aged inventory. Aged inventory decreased
due to reductions in pricing, auctions, trading and changing
machine locations to more saleable regions. Near the end of
1999, UMS began the due diligence necessary to set up a
website for the auction of machinery that is owned by
Finning as well as other principals, brokers and dealers.
Due to lower sales volume and a weak pricing environ-
ment in 1999, UMS reported a loss $0.8 million for the year.
Combining UMS and the corporate head office expenses,
this division reported a loss of $5 million in 1999 com-
pared with a loss of $3 million in the prior year. In 1999,
increased borrowing by the corporate office resulted in
higher interest charges as well as allocated head office
expenses associated with Finning International.
I N T E R N A T I O N A L R E V E N U E / N E T I N C O M E / E A R N I N G S P E R S H A R E
( $ T H O U S A N D S )
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
Revenue
Net loss
Non-recurring items
Adjusted net loss
- - P A G E 2 5 - -
1 9 9 9
—
91,378
4,715
—
10,104
114
106,221
(5,017)
—
(5,017)
$
$
(0.06)
—
(0.06)
$
$
$
$
1 9 9 8
—
137,158
2,981
—
10,955
885
151,979
(2,775)
—
(2,775)
$
$
(0.03)
—
(0.03)
$
$
$
$
C A S H F L O W F R O M
O P E R AT I O N S
($ MILLIONS)
99
98
97
96
251
226
317
245
GROSS CAPITAL
EXPENDITURES
($ MILLIONS) 130÷317=.41
99
98
97
96
25
44
47
26
L I Q U I D I T Y A N D C A P I T A L R E S O U R C E S
Finning management assesses liquidity in terms of its
ability to generate sufficient cash flow to fund its opera-
tions. Net cash flow is affected by the following items:
1- operating activities, including the level of accounts
receivable, inventories, accounts payable, rental
equipment and financing provided to customers;
2- investing activities, including acquisitions of comple-
mentary businesses, and capital expenditure; and
3- external financing, including bank credit facilities,
commercial paper and other capital market activities,
providing both short and long-term financing.
Cash flow from operations, before changes in oper-
ating assets and liabilities, was $251 million in 1999 com-
pared with $226 million in 1998, an increase of 11%. The
increase from 1998 was primarily a result of improved
earnings from most of the Company’s operations.
Cash generated from operating activities increased
significantly to $221 million from $71 million in 1998. The
marked improvement in 1999 reflects the results of the
Company’s asset management program. During the year,
equipment inventories were reduced by $174 million and
parts inventories declined by $57 million.
Cash used in investing activities totaled $9 million,
representing net capital expenditures of $9 million com-
pared with $34 million in 1998. The decline in net capital
expenditures reflects the Company’s focus on asset
reduction in 1999.
To complement the internally generated funds from
operating and investing activities, the Company has
approximately $900 million in unsecured bank short-term
credit facilities, and $135 million in unsecured bank term
facilities available. The Company also has a commercial
paper program for $300 million, which can be issued
against the designated short-term credit facilities amount.
At the year-end, approximately $380 million, including
commercial paper, was drawn against the bank facilities.
Longer-term capital resources are provided by direct
access to capital markets. The Company has a split rating
from the two rating agencies in Canada. In 1999, Canadi-
an Bond Rating Service (CBRS) maintained the Compa-
ny’s debenture rating at A (low) and its commercial paper
rating at A-1. In the first quarter of 1999, Dominion Bond
Rating Service (DBRS) downgraded Finning’s debentures
to BBB (high) from A (low), and its commercial paper to R-
2 (high) from R-1 (low).
- - P A G E 2 6
> F I N N I N G I N T E R N A T I O N A L I N C . - -
In the fourth quarter of 1999, the Company issued
$150 million of 7.75% debentures due November 1, 2004
under its $300 million Medium Term Note Program. The
proceeds of the issue were used to repay bank indebted-
ness and diversify the Company’s funding sources.
The improved cash flow from operations, reduction
in working capital, and lower capital requirements result-
ed in a decrease in short-term debt of $303 million during
the year and long-term debt remained at $522 million.
The current portion of long-term debt is $70 million com-
pared with $1 million in 1998, and it is management’s
intention to refinance the current portion of long-term
debt either through its available bank term facilities or
through the capital markets.
The Company did not have any equity issues in 1999.
Share capital increased slightly to $210 million from $209
million at the end of 1998 reflecting the exercise of stock
options and the conversion of preferred shares. On Feb-
ruary 1 2000, Finning announced its intention to effect a
normal course issuer bid through the facilities of the
Toronto Stock Exchange. Under this program, the Com-
pany is entitled to purchase up to 6.83 million common
shares during a one-year period commencing February 3,
2000 and ending February 2, 2001. The actual number of
shares that may be purchased during the one-year period
and the timing of any such purchases will be determined
by Finning. All shares purchased under the issuer bid will
be cancelled.
Finning has an employee share purchase plan for its
Canadian employees. Under the terms of this plan, eligi-
ble employees may purchase common shares of the
Company in the open market at market value. Finning
pays a portion of the purchase price to a maximum of 2%
of employee earnings. The plan may be cancelled by
Finning at any time. At December 31, 1999, 62% of Cana-
dian employees were participating in this plan compared
with 59% at the end of 1998.
B A L A N C E S H E E T L E V E R A G E
The Company’s balance sheet is comprised of three major
components, namely its operating, finance and rental activ-
ities. Each of these major business segments has a differ-
ent risk profile. Accordingly, Finning applies a different
capital structure and leverage to each business segment.
The finance assets and rental assets are supported
by a combination of debt and equity. Finning applies a
conservative debt to equity ratio of 7:1 to its finance
operation and 5:1 to its rental operation. Total debt and
shareholders’ equity is allocated to the operating, finance
and rental activities. Deferred income taxes are allocated
based on the assets and liabilities assigned to the operat-
ing, finance and rental activities.
The following table provides Finning’s capital structure
on a segmented basis and additional disclosure relating
to the returns associated with the business segments.
O P E R AT I O N S The Company’s debt to equity ratio for its operat-
ing activities (excluding finance and rental activities) improved
significantly to 0.47:1 from 0.97:1 at the end of last year. The
continued improvement in the debt to equity ratio was primarily
due to the Company’s focused asset management program to
reduce current operating assets and short-term borrowings.
( $ T H O U S A N D S )
1 9 9 9
A S S E T S
L I A B I L I T I E S & S H A R E H O L D E R S ’ E Q U I T Y
Short-term debt and Term debt
Deferred income taxes
Other liabilities
Shareholders’ equity
Debt to equity ratio
Return on average equity
1 9 9 8
A S S E T S
L I A B I L I T I E S & S H A R E H O L D E R S ’ E Q U I T Y
Short-term debt and Term debt
Deferred income taxes
Other liabilities
Shareholders’ equity
Debt to equity ratio
Return on average equity
The Company achieved an improvement in receivables collec-
tions, inventory turnover and earnings in 1999 as a result of
the program. Based on the allocated capital (noted above),
the return on average equity by this business segment was
10.2% in 1999 compared with 0.1% in 1998.
R E N TA L At December 31, 1999, Finning had rental assets
of $354 million compared with $337 million at the end of
1998. Rental assets include assets in the rent-to-rent
fleet, rental purchase contracts and customer accounts
receivables.
Based on the allocated capital structure (noted
above), the return on average equity by this business
segment was 8.8% in 1999 compared with 17.6% in
1998. The decline in 1999 reflects lower earnings due to
lower utilization levels of rent-to-rent fleet equipment pri-
marily in Canada, and reduced profitability in the U.K.
F I N A N C E Finance assets, which include notes receivable,
leased equipment, and customer accounts receivables,
totaled $402 million at the end of 1999 compared with
$351 million at December 31, 1998. Finning (Canada) was
the only operating unit to have significant financing activity
in 1999.
Based on the allocated capital structure (noted
above), the return on average equity by this business seg-
ment was 12.1% in 1999 compared with 9.3% in 1998.
O P E R AT I O N S
R E N TA L
F I N A N C E
C O N S O L I D AT E D)1
$ 1,269,999
$
275,652
(7,230)
410,301
678,723
591,276
$ 1,269,999
0.47:1
10.2%
$ 1,541,934
$
564,696
(12,168)
409,003
961,531
580,403
$ 1,541,934
0.97:1
0.1%
$
$
$
$
$
$
354,454
285,819
11,471
—
297,290
57,164
354,454
5.0:1
8.8%
337,139
270,369
12,696
—
283,065
54,074
337,139
5.0:1
17.6%
$
$
$
$
$
$
401,781
$ 2,026,234
337,088
13,431
3,107
353,626
48,155
401,781
7.0:1
12.1%
$
898,559
17,672
413,408
1,329,639
696,595
$ 2,026,234
1.29:1
8.7%
350,528
$ 2,229,601
297,070
11,020
—
308,090
42,438
350,528
7.0:1
9.3%
$ 1,132,135
11,548
409,003
1,552,686
676,915
$ 2,229,601
1.67:1
0.5%
1 Transactions between segments have been eliminated to arrive at consolidated results
- - P A G E 2 7 - -
F I N A N C I A L D E R I V A T I V E S A N D R I S K M A N A G E M E N T
The Company uses various financial instruments such as
interest rate swaps and forward exchange contracts as
hedges against actual assets or liabilities. Derivative
financial instruments are always associated with a related
risk position. The Company has a policy of arranging its
financing such that the fixed rate financing offered to its
customers is matched by fixed rate borrowings. As well,
the portfolio is matched on currency and term. Finning
enters into swap agreements, which fix the effective
interest rate and currency of the borrowing. This is an
effective and flexible method of matching fixed rate terms
provided to customers with fixed rate debt obligations.
Finning continually evaluates and manages risks
associated with financial derivatives. This includes coun-
terparty credit exposure. Finning manages its credit
exposure by ensuring there is no substantial concentra-
tion of credit risk with a single counterparty, and by deal-
ing only with highly rated financial institutions as
counterparties.
F I N A N C I A L R I S K S A N D U N C E R T A I N T I E S
The Company’s financial performance may be influenced
either favourably or adversely by fluctuations in currency
exchange and commodity prices.
The Company is subject to two direct sources of cur-
rency exchange risk. The first source of currency exchange
risk relates to fluctuations in the purchase price of invento-
ry. Canada and Chile source the majority of their product
from the United States and, as a consequence, exchange
rate movements affect the transaction price for most
equipment and parts. Finning is generally able to manage
this risk through adjustments in the pricing of its product
sales, and through the use of financial derivatives.
The second source of exchange risk relates to the
fact that the Company’s U.K. and Chilean operations are
recorded in its financial statements in Canadian dollars,
while those operations conduct business primarily in
British pounds in the U.K., and Chilean pesos and U.S.
dollars in Chile. Changes in the British pound, Chilean
peso and U.S. dollar to the Canadian dollar exchange
rate directly affect the financial performance in Canadian
dollars of the Company’s U.K. and Chilean operations.
The Company’s sales are also indirectly affected by
fluctuations in commodity prices and exchange rates. In
Canada, commodity price movements in the forestry, metals
and petroleum sectors can have an impact on customers’
demands for equipment and customer service. In Chile, sig-
nificant fluctuations in the price of copper and gold can have
similar effects. In the U.K., lower prices for thermal coal may
reduce equipment demand in that sector. In addition, the
strength of the British pound relative to other currencies may
result in lower activity levels in the used equipment market.
- - P A G E 2 8
> F I N N I N G I N T E R N A T I O N A L I N C . - -
Y E A R 2 0 0 0 I S S U E
The Year 2000 Issue arises because many computerized
systems use two digits rather than four to identify a year.
Date-sensitive systems may recognize the year 2000 as
1900 or some other date, resulting in errors when informa-
tion using year 2000 dates is processed. In addition, simi-
lar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date.
Finning has been planning for the year 2000 since
the mid-to-late eighties when it changed all its databases
and converted its mainframe systems in Canada and the
U.K. to allow for the year 2000. The core systems in all
three dealerships have now been replaced by Caterpil-
lar’s Dealer Business System version 2.0, which is year
2000 compliant. Third party software components of our
core systems, such as the payroll and general ledger
packages, are all year 2000 compliant. All future software
developed in-house and acquired externally will be year
2000 compliant. Finning is constantly verifying that infor-
mation technology hardware purchased, such as network
servers, is year 2000 compliant. The information systems
department has acquired specific software that scans all
applications running on PC’s in use at Finning in order to
verify the year 2000 compliance of the software. Finning
has also entered into a PC leasing agreement that saw all
older, potentially non-compliant hardware replaced well
before the end of 1999.
Finning’s core systems and its information systems
strategy are closely linked with those of Caterpillar, which
took the actions necessary to ensure its products and
services continued to operate on and after January 1,
2000. Finning has undertaken a program to address the
Year 2000 Issue beyond its information technology
department. The program involves all key service
providers.
In 1998, Finning engaged Arthur Andersen LLP to
conduct a full review of the year 2000 project status. The
project’s scope covered Canada, the U.K. and Chile. The
review began in February 1998 and was completed by
mid-year. Finning has already acted on the recommenda-
tions of this review. A simulation test of the year 2000 was
performed on the AS/400-based systems in 1998 and
was successful.
Although the change in date has occurred without
incident, there may be some aspects of the Year 2000
Issue that may affect the Company, including those relat-
ed to customers, suppliers, or other third parties, that
have not been fully resolved.
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
S E R V I C E
F ro m : M V U n d e r w o o d @ Ta r m a c . c o . u k
S e n t : 1 1 F e b r u a r y 2 0 0 0 1 2 : 1 6
To : “ F i n n i n g ”
S u b j e c t : Q u a l i t y O f S e r v i c e
E r i c :
We ’ re e n t e r i n g o u r t h i rd y e a r o f t h e 6 y e a r c o n t r a c t .
T h e m a c h i n e a v a i l a b i l i t y a n d d a y t o d a y d i a l o g u e h a s b e e n e x c e l l e n t .
T h ro u g h t h e m o n t h l y m e e t i n g s , a s o u n d w o r k i n g re l a t i o n s h i p h a s b e e n e s t a b l i s h e d .
M a r k U n d e r w o o d
O p e r a t i o n s M a n a g e r
11 n n
R e c e i v e d
I n b o x
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
n o p F r o m
S u b j e c t
D E L I V E R Y
F ro m : R . C o l l i n s @ s t o k e y p l a n t . f re e s e r v e . c o . u k
S e n t : 1 4 F e b r u a r y 2 0 0 0 1 7 : 5 8
To : e b r i n d l e y @ f i n n i n g . c o . u k
S u b j e c t : C a t D 1 0 R - I c e l a n d
D e a r E r i c ,
“ T h e C a t i s o u t o f t h e b a g ” - C a t D 1 0 R
I t ’s n o r m a l f o r o u r c u s t o m e r s t o d e m a n d t h e i m p o s s i b l e a n d i n re t u r n ,
w e e x p e c t F I N N I N G t o c re a t e t h e m i r a c l e .
Through Finning, we were able to source a new D10R originally destined for Iceland.
Inter-dealer discussions resulted in the delivery o f t h e m a c h i n e w i t h i n 4 w e e k s .
R . C o l l i n s - S t o k e y P l a n t H i re L t d . , a v e r y s a t i s f i e d c u s t o m e r.
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
R E Q U E S T
D a t e : 0 7 / 1 2 / 9 9 0 3 : 4 5 : 4 1 G M T S t a n d a rd t i m e
F ro m : R o b e r t F u l t o n @ c o r p . n e w m o n t . c o m
To : Te r r y Tr a v i s - F i n n i n g ( U K ) S p e c i a l P ro j e c t s
Te r r y : T h a t ’s t h e b e s t re s p o n s e I ’ v e h a d i n a l o n g t i m e , m a t e .
T h a n k s f o r t h e p i c t u re s a n d t h e i n f o o n t h e D - 1 0 R ’s .
We h a v e t h e b i g b o y s c o m i n g i n n e x t w e e k t o t a l k o n t h i s n e w e x p a n s i o n .
I f p o s s i b l e , s e n d m e t h e i n f o r m a t i o n o n t h e D - 1 0 ’s a n d e q u i p m e n t p a r t s i f y o u h a v e i t .
I k n o w t h i s i s a l o t o f w o r k b u t i t s h o u l d p u t a f e a t h e r i n y o u r h a t .
T h a n k s f o r y o u r h e l p o n t h i s .
C h e e r s . B o b
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
R E S P O N S E
D a t e : 1 2 / 0 7 1 : 5 5 A M G M T S t a n d a rd t i m e
F ro m : Te r r y Tr a v i s - F i n n i n g ( U K ) S p e c i a l P ro j e c t s
To : R o b e r t F u l t o n @ c o r p . n e w m o n t . c o m
E v e n i n g R o b e r t
I ’ l l g e t o n t o t h e D 1 0 re q u i re m e n t a t f i r s t l i g h t .
We h a v e s o m e D - 1 0 u n i t s i n t h e f i e l d a n d w e h a v e o n e o f t h e b i g g e s t
u s e d e q u i p m e n t l i s t s i n t h e w o r l d . B e b a c k t o y o u A S A P. R e g a rd s , Te r r y
11 n n
R e c e i v e d
I n b o x
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
n o p F r o m
S u b j e c t
S E R V I C E T R A I N I N G
F ro m : Wa l t e r O r b , P a r t s & S e r v i c e Te c h n o l o g y M a n a g e r
S e n t : Tu e s J a n 2 5 , 2 0 0 0 2 : 1 7 P M
To : C u s t o m e r S e r v i c e M a n a g e r s ; D a v i d F e h r ; D re w G o d l e y ; M a u k B r u e k e l s
S u b j e c t : S e r v i c e I n f o r m a t i o n S y s t e m a n d P a r t s I n t e g r a t o r Tr a i n i n g
A s o f J a n 2 0 t h , a t o t a l o f 4 8 “ P a r t s B r a n c h C h a m p i o n s ” h a v e b e e n t r a i n e d i n t h e u s e o f t h e
C a t e r p i l l a r S e r v i c e I n f o r m a t i o n S y s t e m ( S I S ) a n d D e a l e r B u s i n e s s S y s t e m ( D B S ) P a r t s I n t e g r a t o r.
S I S a u t o m a t e s o u r o rd e r s , re p l a c i n g 2 m i l l i o n p a g e s o f p a r t s a n d s e r v i c e i n f o r m a t i o n .
I t ’s i m p e r a t i v e t h a t e a c h a n d e v e r y B r a n c h C h a m p i o n c o n d u c t a t r a i n i n g s e s s i o n t o e n s u re
p ro p e r i m p l e m e n t a t i o n o f t h e p ro g r a m . R e g a rd s , Wa l t e r.
>
F I N N I N G I N T E R N A T I O N A L : L O N G T E R M G R O W T H
Over the past 20 years, Finning has expanded its operations
through internal growth and acquisitions. Both revenue and
cash flow from operations have increased five-fold during
this period (representing a compound annual growth rate of
approximately 9%).
3.0
2.5
2.0
1.5
1.0
0.5
350
300
250
200
150
100
50
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99
T O TA L
R E V E N U E ($ BILLIONS)
102÷2,585.421=0.03945
C A S H F L O W F R O M
O P E R AT I O N S ($ MILLIONS)
102÷316,731=0.322
>
M A N A G E M E N T ’ S R E P O R T T O T H E S H A R E H O L D E R S
The Consolidated Financial Statements of the Company have been prepared by management in accordance with generally
accepted accounting principles and necessarily include some amounts that are based on management’s best estimates and
judgements of all information available up to January 28, 2000.
The Company maintains an accounting system and related controls to provide management with reasonable assurance
that transactions are executed and recorded in accordance with its authorizations, that assets are properly safeguarded and
accounted for, and that financial records are reliable for preparation of financial statements.
The Company’s independent auditors, appointed by the shareholders, express an opinion as to whether management’s
financial statements present fairly the Company’s financial position, operating results and cash flow in accordance with gen-
erally accepted accounting principles.
The Audit Committee of the Board of Directors, consisting solely of outside directors, meets regularly during the year with
financial officers of the Company and the external auditors to review internal accounting controls, risk management, audit
results, quarterly financial results and accounting principles and practices. In addition, the Audit Committee reports its findings
to the Board of Directors which reviews and approves the Consolidated Financial Statements contained in this Annual Report.
The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality
and within the framework of the accounting policies summarized in Note 1 of the Notes to Consolidated Financial Statements.
Financial information elsewhere in this Annual Report is consistent with that in the financial statements.
R . T . M a h l e r
E x e c u t i v e V i c e P r e s i d e n t a n d C h i e f F i n a n c i a l O f f i c e r
J a n u a r y 2 8 , 2 0 0 0 , V a n c o u v e r , B C C a n a d a
>
A U D I T O R S ’ R E P O R T
To the Shareholders of Finning International Inc.:
We have audited the consolidated balance sheets of Finning International Inc. (a Canadian corporation) as at December 31, 1999
and 1998 and the consolidated statements of income and retained earnings and cash flow for the years then ended. These
Consolidated Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these Consolidated Financial Statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we
plan and perform an audit to obtain reasonable assurance whether the Consolidated Financial Statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Consolidated
Financial Statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall Consolidated Financial Statement presentation.
In our opinion, these Consolidated Financial Statements present fairly, in all material respects, the financial position of the
Company as at December 31, 1999 and 1998 and the results of its operations and cash flow for the years then ended in accordance
with generally accepted accounting principles.
A r t h u r A n d e r s e n L L P , C h a r t e r e d A c c o u n t a n t s
J a n u a r y 2 8 , 2 0 0 0 , V a n c o u v e r , B C C a n a d a
- - P A G E 3 8
> F I N N I N G I N T E R N A T I O N A L I N C . - -
>
C O N S O L I D A T E D B A L A N C E S H E E T S
A S AT D E C E M B E R 3 1 ($ THOUSANDS)
1 9 9 9
1 9 9 8
$
386,561
$
400,208
406,882
219,423
47,442
1,060,308
71,628
272,151
343,779
580,488
276,407
52,425
1,309,528
47,505
240,060
287,565
341,534
206,254
74,359
$ 2,026,234
319,879
236,066
76,563
$ 2,229,601
$
305,639
424,609
(11,201)
70,494
789,541
522,426
17,672
1,329,639
$
608,974
421,326
(12,323)
1,071
1,019,048
522,090
11,548
1,552,686
209,955
502,028
(15,388)
696,595
$ 2,026,234
208,579
458,366
9,970
676,915
$ 2,229,601
A S S E T S
C U R R E N T A S S E T S
Accounts receivable
Inventories
On-hand equipment
Parts and supplies
Current portion of instalment notes receivable
Total current assets
F I N A N C E A S S E T S
Instalment notes receivable
Equipment leased to customers (note 2)
Total finance assets
Rental equipment (note 3)
Land, buildings and equipment (note 4)
Goodwill (note 5)
T O T A L A S S E T S
L I A B I L I T I E S
C U R R E N T L I A B I L I T I E S
Short-term debt (note 6)
Accounts payable and accruals
Income tax payable
Current portion of long-term debt (notes 6 and 7)
Total current liabilities
Long-term debt (notes 6 and 7)
Deferred income taxes
T O T A L L I A B I L I T I E S
S H A R E H O L D E R S ’ E Q U I T Y
Share capital (note 8)
Retained earnings
Cumulative currency translation adjustments (note 9)
Total shareholders’ equity
T O T A L L I A B I L I T I E S A N D S H A R E H O L D E R S ’ E Q U I T Y
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
A p p r o v e d b y t h e D i r e c t o r s :
J . F . S h e p a r d , D i r e c t o r
W . R . W y m a n , D i r e c t o r
- - P A G E 3 9 - -
>
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E A N D R E T A I N E D E A R N I N G S
F O R T H E Y E A R S E N D E D D E C E M B E R 3 1 ($ THOUSANDS EXCEPT PER SHARE AMOUNTS)
1 9 9 9
1 9 9 8
R E V E N U E
New equipment
Used equipment
Equipment rental
Operating leases
Customer support services
Finance and other
Total revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Earnings before interest and taxes
Finance cost and interest on other indebtedness (notes 6 and 7)
Income before provision for income taxes
Provision for income taxes (note 11)
Net income
Dividends on preferred shares
Earnings attributable to common shares
Retained earnings, beginning of year
Dividends on common shares
Retained earnings, end of year
E A R N I N G S P E R S H A R E (note 12)
Basic
Fully diluted
Weighted average number of common shares outstanding
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
- - P A G E 4 0
> F I N N I N G I N T E R N A T I O N A L I N C . - -
$
$
856,154
311,429
155,659
96,014
797,472
13,133
2,229,861
1,648,478
581,383
432,471
148,912
65,768
83,144
23,544
59,600
19
59,581
458,366
517,947
15,919
502,028
$ 1,102,585
424,593
170,063
91,381
783,445
13,354
2,585,421
2,004,358
581,063
498,334
82,729
75,179
7,550
4,365
3,185
67
3,118
471,116
474,234
15,868
458,366
$
$
$
0.75
0.72
79,616,362
$
$
0.04
0.04
79,328,826
>
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W
F O R T H E Y E A R S E N D E D D E C E M B E R 3 1 ( $ T H O U S A N D S )
1 9 9 9
1 9 9 8
O P E R A T I N G A C T I V I T I E S
Net income
Add (deduct) items not affecting cash
Depreciation
Amortization of goodwill
Deferred income taxes
Equipment/parts provisions
Restructuring charges
Warranty reserves
Other items
C H A N G E S I N W O R K I N G C A P I T A L I T E M S A N D O T H E R
Accounts receivable
Inventories
On-hand equipment
Parts and supplies
Instalment notes receivable
Accounts payable and accruals
Income taxes
Cash provided by working capital items and other
Rental equipment, net of disposals
Equipment leased to customers, net of disposals
Cash provided by operating activities
I N V E S T I N G A C T I V I T Y
$
59,600
$
3,185
184,148
2,204
6,037
(429)
—
(4,023)
3,261
250,798
189,627
2,204
(13,163)
33,756
13,436
(3,615)
738
226,168
(14,592)
86,469
147,785
36,959
(20,116)
37,196
202
187,434
(117,866)
(99,043)
221,323
(31,444)
194
101,348
(74,567)
(54,277)
27,723
(103,994)
(78,609)
71,288
Cash invested in land, buildings and equipment, net of disposals
(9,020)
(33,868)
F I N A N C I N G A C T I V I T I E S
Increase in long-term debt
Repayment of long-term debt
Conversion and redemption of preferred shares
Issue of common shares on conversion of preferred shares and on exercise of stock options
Dividends paid
Currency translation adjustments
Cash provided by (used for) financing activities
Decrease in short-term debt
Short-term debt at beginning of year
Short-term debt at end of year
C A S H P A I D D U R I N G T H E Y E A R F O R
Interest
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
- - P A G E 4 1 - -
150,000
(66,370)
(996)
2,372
(15,938)
21,964
91,032
303,335
608,974
305,639
56,698
$
$
58,172
(68,158)
(170)
3,158
(15,935)
(5,443)
(28,376)
9,044
618,018
608,974
70,027
$
$
>
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
DECEMBER 31, 1999 AND 1998 ($ THOUSANDS, EXCEPT THE NUMBER OF SHARES AND PER SHARE AMOUNTS)
>
0 1 S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
These Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in
Canada which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. The significant accounting policies used in these Consolidated Financial Statements
are as follows:
P R I N C I P L E S O F C O N S O L I D AT I O N
The Consolidated Financial Statements include the accounts of the Company and its wholly
owned subsidiaries. Principal operating subsidiaries include Finning (UK) Ltd. and Finning Chile S.A.
C U R R E N C Y T R A N S L AT I O N
Transactions undertaken in foreign currencies are translated into Canadian dollars at approximate
exchange rates prevailing at the time the transactions occurred.
Account balances denominated in foreign currencies are translated into Canadian dollars as follows: >1 Monetary
assets and liabilities at exchange rates in effect at the balance sheet dates; non-monetary items at historical exchange rates;
>2 Exchange gains and losses are included in income except where the exchange gain or loss arises from the translation of
monetary liabilities considered to be hedges, in which case the gain or loss is deferred and accounted for in conjunction with
the hedged asset.
Financial statements of self-sustaining foreign operations are translated into Canadian dollars as follows: >1 Assets and
liabilities using the exchange rates in effect at the balance sheet dates; >2 Revenue and expense items at approximate
exchange rates prevailing at the time the transactions occurred; >3 Unrealized translation gains and losses are deferred and
included as a separate component of shareholders’ equity. These cumulative currency translation adjustments are recognized
in income when there has been a reduction in the net investment in the self-sustaining foreign operation; >4 The Company
has hedged its investments in its foreign subsidiaries by borrowing funds in foreign currency. Exchange gains or losses are
accounted for in the cumulative currency translation adjustments.
I N V E N T O R I E S
Inventories are stated at the lower of cost and net realizable value. Cost is determined on a specific item basis
for on-hand equipment. For parts and supplies, approximately 61% is recorded on a first-in, first-out basis and the remainder
on an average cost basis.
I N S TA L M E N T N O T E S R E C E I V A B L E
Instalment notes receivable are recorded net of unearned finance charges.
E Q U I P M E N T L E A S E D T O C U S T O M E R S
Depreciation of equipment leased to customers is provided in the accounts in equal monthly
amounts over the terms of the individual leases after recognizing the estimated residual value of each unit at the end of each lease.
R E N TA L E Q U I P M E N T
Rental equipment is recorded at cost, net of depreciation. Cost is determined on a specific item basis.
Rental equipment inventories are depreciated to the estimated residual value of each unit based on usage.
- - P A G E 4 2
> F I N N I N G I N T E R N A T I O N A L I N C . - -
L A N D , B U I L D I N G S A N D E Q U I P M E N T
Land, buildings and equipment are recorded at cost, net of accumulated depreciation. Buildings
and equipment are depreciated over their estimated useful lives on a declining balance basis using the following annual rates:
Buildings
General equipment
Automotive equipment
5%
20%-30%
30%
R E V E N U E R E C O G N I T I O N
Revenue from sales of products and services is recognized at the time of shipment of products to, and
performance of services for customers. Equipment lease and rental revenue is recognized over the term of the lease or rental.
Finance income is recognized as earned.
P E N S I O N C O S T S
The Company and its subsidiaries have defined benefit and defined contribution pension plans. For defined
benefit pension plans, the cost of pension benefits is based on reports prepared by independent actuaries every two years in
the U.K. and every three years in Canada, using management’s best estimate assumptions and a projected benefit method
prorated on services. Adjustments arising from plan amendments, changes in assumptions and experience gains or losses are
amortized on a straight line basis over the expected average remaining service life of the employee groups covered by the
plans. For defined contribution plans, the cost of pension benefits is a fixed percentage of member earnings for the year.
G O O D W I L L
Goodwill acquired on the acquisition of subsidiaries is amortized to income on a straight line basis over 40 years.
Goodwill is evaluated annually, and is written down when the undiscounted future earnings of the related business is less than
its carrying amount.
I N C O M E TA X E S
The Company follows the deferral method of applying the tax allocation basis of accounting for income taxes.
P R I O R Y E A R C O M PA R AT I V E S
Certain prior year amounts have been reclassified to conform with the 1999 presentation.
- - P A G E 4 3 - -
>
0 2 E Q U I P M E N T L E A S E D T O C U S T O M E R S
Cost
Less accumulated depreciation
1 9 9 9
1 9 9 8
$
$
392,366
(120,215)
272,151
$
$
347,398
(107,338)
240,060
Depreciation of equipment leased to customers for the year ended December 31, 1999 was $66,539 (1998: $59,579). See Note
3 for the change in classification of customer rental-purchase contracts.
>
0 3 R E N T A L E Q U I P M E N T
Rental equipment
Less accumulated depreciation
1 9 9 9
1 9 9 8
$
$
465,628
(124,094)
341,534
$
$
457,160
(137,281)
319,879
Depreciation of rental equipment for the year ended December 31, 1999 was $91,924 (1998: $102,257). During the year, the
Company changed its method of presenting customer rental-purchase contracts to reflect them as rental equipment assets.
This equipment rental-purchase program totaled $64,430 at December 31, 1999 (1998: $77,630) and has been reclassified
from equipment leased to customers to rental equipment. Depreciation of customer rental-purchase contracts for the year
ended December 31, 1999 was $21,545 (1998: $31,598).
>
0 4 L A N D , B U I L D I N G S A N D E Q U I P M E N T
Land
Buildings and equipment
Less accumulated depreciation
Total land, buildings and equipment
1 9 9 9
1 9 9 8
$
$
47,647
321,573
(162,966)
158,607
206,254
$
$
54,090
368,266
(186,290)
181,976
236,066
Depreciation of buildings and equipment for the year ended December 31, 1999 was $25,685 (1998: $27,791).
>
0 5 G O O D W I L L
Purchased goodwill
Accumulated amortization
Amortization of goodwill for the year ended December 31, 1999 was $2,204 (1998: $2,204).
- - P A G E 4 4
> F I N N I N G I N T E R N A T I O N A L I N C . - -
1 9 9 9
1 9 9 8
$
$
88,619
(14,260)
74,359
$
$
88,619
(12,056)
76,563
>
0 6 S H O R T - T E R M A N D L O N G - T E R M D E B T
Short-term debt
Bank indebtedness, commercial paper and other loans (a)
Long-term debt
Debentures (b)
8.35% due March 22, 2004
7.75% due November 1, 2004
6.60% due December 8, 2006
Bank term facilities (c)
Bank term facilities denominated in Pound Sterling (d)
Other unsecured loans denominated in U.S. dollars
and Chilean pesos, maturing between 2000 and 2004
Less current portion of long-term debt
Total long-term debt
1 9 9 9
1 9 9 8
$
305,639
$
608,974
75,000
150,000
75,000
75,576
151,541
65,803
592,920
70,494
522,426
75,000
—
75,000
134,649
165,412
73,100
523,161
1,071
522,090
$
$
( a ) B a n k i n d e b t e d n e s s , c o m m e r c i a l p a p e r a n d o t h e r l o a n s
The Company has available $900,000 in unsecured bank
short-term credit facilities. Borrowings under the credit facilities are at floating rates of interest at a margin over Canadian dollar
bankers’ acceptance yields, and U.S. and U.K. LIBOR rates. In addition, the Company has a Canadian commercial paper program
for $300,000 which can be issued against the available credit amount. Other loans include supplier merchandising programs.
( b ) D e b e n t u r e s
The Company’s debentures are unsecured, and interest is payable semi-annually with principal due on maturity. On
October 27, 1999, the Company issued $150,000 of 7.75% debentures due November 1, 2004 under its $300,000 Medium
Term Note Program.
( c ) B a n k t e r m f a c i l i t i e s
The Company has available $135,000 in unsecured bank term facilities. Borrowings under the
term facilities are at floating rates of interest which averaged 5.23% in 1999 (1998: 5.48%). Total draws under the term facilities
were $75,576 as at December 31, 1999 (1998: $134,649). These facilities expire August 31, 2001 and December 31, 2002.
( d ) B a n k t e r m f a c i l i t i e s d e n o m i n a t e d i n P o u n d S t e r l i n g
The Pound Sterling term facilities are unsecured and are com-
prised of a £25,000 floating rate loan at an average interest rate of 6.22% (1998: 7.63%), maturing June 22, 2000; a £15,000
floating rate loan at an average interest rate of 6.09% (1998: 7.305%), maturing May 25, 2003; and a £25,000 fixed rate loan at
7.675%, maturing May 8, 2002. The proceeds of these loans have been used to finance the Company’s investment in the U.K.
L O N G - T E R M D E B T R E PAY M E N T S
Principal repayments on long-term debt in each of the next five years are as follows:
2000
2001
2002
2003
2004
Thereafter
$
$
70,494
8,496
136,483
74,249
228,198
75,000
592,920
Interest expense includes interest on debt incurred for a term greater than one year of $34,111 (1998: $38,795).
- - P A G E 4 5 - -
>
0 7 F I N A N C I A L I N S T R U M E N T S
The Company uses derivative financial instruments as part of an overall risk management strategy to manage the underlying
financial and economic risks of the Company and to achieve lower cost financing. The Company uses derivative financial
instruments to manage the mix of fixed and floating interest rate exposure, to manage foreign exchange exposure, and to
diversify sources of financing.
I N T E R E S T R AT E R I S K M A N A G E M E N T
The Company has a policy of arranging its financing so that the fixed rate financing offered to
its customers on its lease and notes portfolio is matched by fixed rate borrowings. As well, the portfolio is matched on currency
and term. To meet this objective, the Company enters into interest rate swap agreements, which fix the effective interest rate and
currency of the borrowing. At December 31, 1999, interest rate swap agreements having a notional principal amount of $104,810
(1998: $73,213) at a weighted average fixed rate of 5.49% (1998: 5.60%) were outstanding. These agreements expire on various
dates between 2000 and 2004. The fair value of the interest rate swap agreements as at December 31, 1999 was $485 (1998: ($557))
in favour of the Company, taking into account interest rates in effect at the time.
Additionally, the Company has an interest rate swap agreement outstanding at a notional principal amount of $150,000.
The Company will receive a fixed rate of 7.75% and will pay floating bankers’ acceptances based rates determined quarterly
(6.41% at December 31, 1999). The fair value of the interest rate swap agreement as at December 31, 1999, was $27 in favour of
counterparties. The agreement expires on November 1, 2004.
F O R E I G N E X C H A N G E R I S K M A N A G E M E N T
The Company manages foreign exchange risk by matching assets with related liabilities,
through adjustments in the pricing of its product sales, and through the use of derivative instruments such as forward
exchange contracts. As at December 31, 1999, the aggregate notional amount of forward exchange contracts was $1,672
(1998: $22,655).
F A I R V A L U E S
The fair value of financial instruments is determined by reference to quoted market prices for actual or similar
instruments, where available, or by estimates derived using present value or other valuation techniques. The fair value of accounts
receivable, notes receivable, short-term debt, accounts payable and accrued liabilities approximates their recorded values
due to the short-term maturities of these instruments.
A S S E T ( L I A B I L I T Y )
Long-term debt (includes current portion)
Interest rate swaps
Forward exchange contracts
C A R RY I N G VA L U E
1 9 9 9
FA I R VA L U E
C A R RY I N G VA L U E
1 9 9 8
FA I R VA L U E
$
(592,920)
—
—
$
(590,995)
458
(28)
$
(523,161)
—
—
$
(533,674)
(557)
(128)
C R E D I T R I S K
The Company operates internationally in one industry, that being the selling, servicing and financing of heavy
equipment and related products. The Company is not dependent on any single customer or group of customers. There is no
concentration of credit risk related to the Company’s position in trade accounts or notes receivables. Credit risk is minimized
because of the diversification of the Company’s operations, as well as its large customer base and its geographical dispersion.
The credit risk of the forward exchange contracts and interest rate swap agreements arises from the possibility that the counter-
parties to the agreements or contracts may default on their obligations; however, the Company does not anticipate such an event
to occur. In order to minimize this risk, the Company enters into such agreements only with highly rated financial institutions.
- - P A G E 4 6
> F I N N I N G I N T E R N A T I O N A L I N C . - -
>
0 8 S H A R E C A P I T A L
A U T H O R I Z E D
Unlimited
Unlimited
Preferred shares without par value of which 4,400,000
are designated as Cumulative Redeemable Convertible Preferred shares
Common shares
I S S U E D A N D O U T S T A N D I N G
—
79,736,877
Preferred shares, Series E (1998: 99,600)
Common shares (1998: 79,427,879)
1 9 9 9
1 9 9 8
$
$
— $
209,955
209,955
$
996
207,583
208,579
C O M M O N S H A R E S
A shareholders’ rights plan is in place which is intended to provide all holders of common shares with the
opportunity to receive full and fair value for all of their shares in the event a third party attempts to acquire a significant interest
in the Company. The Company’s dealership agreements with subsidiaries of Caterpillar Inc. are fundamental to its business
and any change in control must be approved by Caterpillar.
The plan provides that one share purchase right has been issued for each common share and will trade with the common
shares until such time as any person or group, other than a permitted bidder, bids to acquire or acquires 20% or more of the
Company’s common shares. The rights may also be triggered by a third party proposal for merger, amalgamation or a similar
transaction. The rights plan will expire at the termination of the Annual Meeting of shareholders to be held in 2002.
The plan will not be triggered if a bid meets certain criteria (a permitted bidder). These criteria include that:
-- the offer is made for all outstanding voting shares of the Company;
-- more than 50% of the voting shares have been tendered by independent shareholders pursuant to the Takeover Bid
(voting shares tendered may be withdrawn until taken up and paid for); and
-- the Takeover Bid expires not less than 60 days after the date of the bid circular.
A summary of the changes in common shares are as follows:
Balance, beginning of year
Conversion of 99,600 Series E (1998: 16,950) preferred shares
Exercise of stock options
Balance, end of year
S H A R E S
79,427,879
156,352
152,646
79,736,877
$
$
1 9 9 9
A M O U N T
207,583
996
1,376
209,955
S H A R E S
79,090,612
26,611
310,656
79,427,879
$
$
1 9 9 8
A M O U N T
204,425
170
2,988
207,583
P R E F E R R E D S H A R E S
S e r i e s E P r e f e r r e d S h a r e s
These preferred shares were issued under terms of an employee and director share purchase
plan and are redeemable by the Company at its option or retractable at the option of the holder at the issue price.
The cumulative preferential cash dividends on the preferred shares are payable quarterly based on the prime interest rate
of a specified Canadian chartered bank. The applicable rate for the preferred shares, and price at which the preferred shares
are convertible into common shares, is as follows:
Series E
D I V I D E N D R AT E
A S A % O F T H E
P R I M E I N T E R E S T R AT E
C O N V E R S I O N
P R I C E
80% of prime
$
6.3675
In 1999, the conversion rights of the preferred shares expired and all of the Series E preferred shares were converted to
common shares.
- - P A G E 4 7 - -
0 8 S H A R E C A P I T A L ( C O N T I N U E D )
S T O C K O P T I O N S
The Company has several stock option plans for employees and directors, the details of which are as follows:
1 9 9 9
Options outstanding, beginning of year
Issued
Exercised
Cancelled
Options outstanding, end of year
S H A R E S
O P T I O N P R I C E
4,998,340
1,213,000
(152,646)
(125,776)
5,932,918
$ 5.49 to $ 17.00
$ 9.04 to $ 10.95
$ 5.54 to $ 11.86
$ 5.49 to $ 17.00
$ 6.00 to $ 17.00
A total of 3,758,141 options were exercisable at December 31, 1999 with the remaining options outstanding exercisable at
various times to February 11, 2009.
>
0 9 C U M U L A T I V E C U R R E N C Y T R A N S L A T I O N A D J U S T M E N T S
Balance, beginning of year
Gain realized during the year
Translation adjustments for the year
Balance, end of year
1 9 9 9
1 9 9 8
$
$
9,970
(5,435)
(19,923)
(15,388)
$
$
10,472
(2,701)
2,199
9,970
Translation gains or losses on the consolidation of foreign subsidiaries financial statements are accumulated in this account.
Translation adjustments arise as a result of fluctuations in foreign currency exchange rates. At December 31, 1999, 1998 and
1997, the Canadian dollar exchange rates against the British pound were 2.3314, 2.5448 and 2.3472, respectively, and the
Chilean peso exchange rates against the Canadian dollar were 367, 308 and 299, respectively.
During 1999, a dividend of £10,000 (1998: £10,000) was paid from Finning Holdings Limited (U.K.) to the Company which
generated a foreign exchange gain of $5,435 (1998: $2,701).
>
1 0 P E N S I O N P L A N S
The Company’s obligations for pension benefits, under its defined benefit plans at December 31, 1999, were estimated by the
plans’ actuaries to be $356,734 (1998: $329,299). Pension plan assets at December 31, 1999, on an adjusted market value
basis, were $373,182 (1998: $369,118).
- - P A G E 4 8
> F I N N I N G I N T E R N A T I O N A L I N C . - -
>
1 1 P R O V I S I O N F O R I N C O M E T A X E S
Current
Deferred
Provision for income taxes
The Company’s provision for income taxes is determined as follows:
Combined federal and provincial income tax rates
Provision for income taxes based on the combined federal and provincial rates
Increase (decrease) in provision for income taxes resulting from:
Lower effective rates on the losses (earnings) of foreign subsidiaries
Benefit of unrecognized tax loss carryforward of foreign subsidiary
Amortization of goodwill and increase in assigned asset value
Large corporation tax
Income not subject to tax
Other items
Provision for income taxes
1 9 9 9
17,507
6,037
23,544
1 9 9 8
17,528
(13,163)
4,365
$
$
1 9 9 9
1 9 9 8
43.99%
36,575
43.73%
3,302
$
(9,049)
(2,320)
433
2,002
(2,735)
(1,362)
23,544
$
3,321
(514)
760
1,530
(1,421)
(2,613)
4,365
$
$
$
$
The Company’s subsidiary, Finning Chile S.A., has a tax loss carryforward of $96,130 (1998: $103,000), denominated in local
currency, available to offset future taxable income. This loss was acquired on acquisition of the company in August 1993.
These losses are indexed to Chile’s inflation rate, which was 2.60% in 1999, and have no expiry date.
>
1 2 E A R N I N G S P E R S H A R E
Earnings per share has been calculated using the weighted average number of common shares outstanding during each year.
Fully diluted earnings per share has been calculated on the assumption that all the outstanding preferred shares were
converted and all outstanding stock options were exercised at the beginning of the year.
>
1 3 E C O N O M I C R E L A T I O N S H I P S
The Company distributes and services heavy equipment and related products. The Company has dealership agreements with
numerous equipment manufacturers, of which the most significant are with subsidiaries of Caterpillar Inc. Distribution and
servicing of Caterpillar products account for the major portion of the Company’s operations. Finning has a strong relationship
with Caterpillar that has been ongoing since 1933.
- - P A G E 4 9 - -
>
1 4 S E G M E N T E D I N F O R M A T I O N
The Company and its subsidiaries have operated primarily in one industry during the year, that being the selling, servicing and
financing of heavy equipment and related products.
Operating units serve the following geographic areas:
-- Canadian operations: British Columbia, Alberta, the western part of the Northwest Territories and the Yukon;
-- U.K. operations: England, Scotland, Wales, Falkland Islands and the Channel Islands;
-- Chilean operations: throughout the country; and
-- International operations: this segment represents the sale of used equipment and used parts worldwide and the
expenses associated with the corporate head office.
The reportable geographic segments are:
1 9 9 9
Revenue from external sources
Earnings (loss) before
interest and taxes
Finance costs and interest
on other indebtedness
Provision for
(recovery of) income taxes
Net income (loss)
Identifiable assets
Capital expenditures
Depreciation and amortization
of capital assets and goodwill
1 9 9 8
Revenue from external sources
Earnings (loss) before
interest and taxes
Finance costs and interest
on other indebtedness
Provision for
(recovery of) income taxes
Net income (loss)
Identifiable assets
Capital expenditures
Depreciation and amortization
of capital assets and goodwill
C A N A D A
U . K .
C H I L E
I N T E R N AT I O N A L
S E G M E N T
E L I M I N AT I O N S
C O N S O L I D AT E D
$ 1,032,922
$
723,879
$
388,551
$
106,221
$
(21,712)
$ 2,229,861
102,480
18,976
29,294
(1,838)
33,341
10,299
13,830
8,298
25,889
43,250
$
$ 1,242,837
$
$
8,703
145,152
2,774
5,903
454,267
6,106
24,504
$
$
$
$
—
15,464
245,725
6,055
15,846
$
$
$
$
(5,119)
(5,017)
362,466
—
850
$
$
$
$
$ 1,136,917
$
794,356
$
503,505
$
151,979
85,434
(30,429)
25,415
35,194
12,613
21,991
15,493
34,747
$
$ 1,303,092
$
$
29,332
147,548
(10,831)
(32,211)
464,770
6,778
19,471
$
$
$
$
—
3,424
354,029
8,066
23,315
$
$
$
$
$
$
$
$
2,309
5,381
(297)
(2,775)
378,661
—
1,497
—
—
—
—
148,912
65,768
23,544
59,600
$
(279,061)
$ 2,026,234
—
—
$
$
20,864
186,352
(1,336)
$ 2,585,421
—
—
—
—
82,729
75,179
4,365
3,185
$
(270,951)
$ 2,229,601
—
—
$
$
44,176
191,831
$
$
$
$
$
$
$
$
$
>
1 5 Y E A R 2 0 0 0
The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other
than a date. Although the change in date has occurred, it is not possible to conclude that all aspects of the Year 2000 Issue
that may affect the Company, including those related to customers, suppliers, or other third parties, have been fully resolved.
- - P A G E 5 0
> F I N N I N G I N T E R N A T I O N A L I N C . - -
>
T W O Y E A R S U M M A R Y B Y Q U A R T E R
F I S C A L P E R I O D
1 9 9 9
1st quarter
2nd quarter
3rd quarter
4th quarter
1 9 9 8
1st quarter
2nd quarter
3rd quarter
4th quarter
R E V E N U E
( $ T H O U S A N D S )
N E T I N C O M E )1
( $ T H O U S A N D S )
B A S I C ( $ )
F U L LY
D I L U T E D ( $ )
D I V I D E N D ( $ )
C L O S I N G
S T O C K P R I C E ( $ )
E A R N I N G S P E R C O M M O N S H A R E
548,977
574,714
503,616
602,554
2,229,861
689,156
748,680
582,267
565,318
2,585,421
6,249
15,924
16,233
21,194
59,600
(7,843)
20,229
3,659
(12,860)
3,185
0.08
0.20
0.20
0.27
0.75
(0.10)
0.25
0.05
(0.16)
0.04
0.08
0.19
0.20
0.25
0.72
(0.10)
0.25
0.05
(0.16)
0.04
0.05
0.05
0.05
0.05
0.20
0.05
0.05
0.05
0.05
0.20
11.65
13.00
14.30
13.50
15.75
13.40
11.80
10.95
1 In 1998, $15.5 million in non-recurring charges were taken during the year.
>
S E G M E N T E D I N F O R M A T I O N
T W E LV E M O N T H S E N D E D D E C E M B E R 3 1 ( $ T H O U S A N D S )
1 9 9 9
1 9 9 8
1 9 9 7
1 9 9 6
R E V E N U E
Canadian operations
U.K. operations
Chilean operations
International operations
Consolidated
N E T I N C O M E
Canadian operations
U.K. operations
Chilean operations
International operations
Consolidated
- - P A G E 5 1 - -
$ 1,032,922
712,941
377,777
106,221
$ 2,229,861
$ 1,136,917
793,020
503,505
151,979
$ 2,585,421
$ 1,146,406
565,376
514,068
101,214
$ 2,327,064
$
926,653
437,949
408,616
101,491
$ 1,874,709
$
$
43,250
5,903
15,464
(5,017)
59,600
$
$
34,747
(32,211)
3,424
(2,775)
3,185
$
$
61,668
20,110
19,535
2,382
103,695
$
$
40,776
26,308
17,746
3,354
88,184
T E N Y E A R F I N A N C I A L S U M M A R Y
>
Y E A R S E N D E D D E C E M B E R 3 1 ( $ T H O U S A N D S E X C E P T P E R S H A R E D ATA )
1 9 9 9
1 9 9 8
R E V E N U E
Canadian operations
U.K. operations
Chilean operations
International operations
Total Consolidation
Income before provision for income taxes
As a percent of revenue
Net income
As a percent of revenue
E A R N I N G S P E R C O M M O N S H A R E
Basic
Fully diluted
D I V I D E N D S
Total common share
Per common share
Cash flow
Cash flow per share
Gross capital expenditures
R A T I O S
Asset turnover ratio
Debt to equity
Liabilities to equity
Operating debt to equity (excluding finance and rental activities)1
Book value per common share
Return on average shareholders’ equity
C O M M O N S H A R E P R I C E
High
Low
Common shares outstanding (THOUSANDS)
Revenue per employee
Net income per employee
N U M B E R O F E M P L O Y E E S
Canada
U.K.
Chile
International
Total
$ 1,032,922
712,941
377,777
106,221
$ 2,229,861
$ 1,136,917
793,020
503,505
151,979
$ 2,585,421
$
$
$
$
$
$
$
$
$
$
$
$
$
$
83,144
3.7%
59,600
2.7%
0.75
0.72
15,919
0.20
250,798
3.15
20,864
1.05
1.29:1
1.90:1
0.47:1
8.74
8.7%
15.40
9.00
79,737
450,113
12,031
2,271
1,364
1,259
60
4,954
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7,550
0.3%
3,185
0.1%
0.04
0.04
15,868
0.20
226,168
2.85
44,176
1.13
1.67:1
2.29:1
0.97:1
8.52
0.5%
18.50
10.25
79,426
492,367
606
2,494
1,348
1,354
55
5,251
Financial data has been restated to incorporate common share subdivisions occurring during the ten year period and to reflect a retroactive
change in accounting for revenue recognition for exchange components implemented in 1992.
1 Assumes a debt to equity ratio of 7:1 in the finance operation and 5:1 in the rental operation. The debt to equity ratio has been restated to
reflect a retroactive change in presenting customer rental-purchase contracts as finance assets implemented in 1996.
- - P A G E 5 2
> F I N N I N G I N T E R N A T I O N A L I N C . - -
1 9 9 7
1 9 9 6
1 9 9 5
1 9 9 4
1 9 9 3
1 9 9 2
1 9 9 1
1 9 9 0
$ 1,146,406
565,376
514,068
101,214
$ 2,327,064
$
926,653
437,949
408,616
101,491
$ 1,874,709
$
923,275
416,034
350,650
62,032
$ 1,751,991
$
838,680
338,499
241,221
39,138
$ 1,457,538
$
675,490
258,235
74,464
34,768
$ 1,042,957
$
$
$
$
$
$
$
$
$
$
$
$
$
$
149,351
6.4%
103,695
4.5%
1.32
1.27
15,761
0.20
316,731
4.00
47,148
0.99
1.66:1
2.37:1
0.90:1
8.69
16.2%
20.50
14.43
79,091
475,570
22,119
2,496
1,720
1,228
50
5,494
$
$
$
$
$
$
$
$
$
$
$
$
$
$
128,503
6.9%
88,184
4.7%
1.13
1.09
15,600
0.20
244,909
3.12
43,132
1.04
1.50:1
1.97:1
0.59:1
7.59
16.0%
14.58
9.75
78,547
441,940
20,788
2,269
925
1,008
40
4,242
$
$
$
$
$
$
$
$
$
$
$
$
$
$
119,392
6.8%
77,493
4.4%
1.00
0.98
15,451
0.20
209,827
2.71
25,812
1.09
1.55:1
2.11:1
0.61:1
6.55
16.2%
11.63
8.63
77,442
428,674
18,961
2,228
884
941
34
4,087
$
$
$
$
$
$
$
$
$
$
$
$
$
$
95,488
6.6%
61,421
4.2%
0.80
0.78
9,985
0.13
176,764
2.30
16,641
1.06
1.35:1
1.99:1
0.43:1
5.83
14.8%
12.06
9.19
77,026
374,978
15,802
2,124
873
861
29
3,887
$
$
$
$
$
$
$
$
$
$
$
$
$
$
35,895
3.4%
22,271
2.1%
0.30
0.30
6,592
0.09
116,371
1.53
13,752
0.95
1.23:1
1.80:1
0.39:1
5.00
6.5%
10.88
5.88
76,266
283,875
6,062
2,025
863
759
27
3,674
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
553,316
251,909
—
27,512
832,737
1,728
0.2%
2,878
0.3%
0.03
0.03
5,042
0.08
94,546
1.40
7,025
0.86
1.59:1
2.03:1
0.66:1
4.58
0.9%
7.25
5.25
67,370
281,425
973
2,004
930
—
25
2,959
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
583,542
267,828
—
—
851,370
$
727,321
319,727
—
—
$ 1,047,048
3,139
0.4%
4,612
0.5%
0.05
0.05
6,844
0.10
102,180
1.52
11,643
0.92
1.46:1
1.95:1
0.56:1
4.79
1.4%
7.82
5.88
67,056
260,757
1,413
2,142
1,123
—
—
3,265
$
$
$
$
$
$
$
$
$
$
$
$
$
$
43,889
4.2%
30,283
2.9%
0.44
0.43
15,286
0.23
114,467
1.72
26,116
1.07
1.63:1
2.09:1
0.87:1
4.79
9.8%
8.50
5.13
66,640
289,480
8,372
2,531
1,086
—
—
3,617
- - P A G E 5 3 - -
>
F I N A N C I A L P E R F O R M A N C E
E A R N I N G S
P E R S H A R E ($)
1 2 7 ÷ 1 . 2 7 = 1 0 0
99
98
97
96
0.72
0.04
1.27
0.98
Earnings per share on a fully diluted basis are calculated by dividing net income by the weighted average number of common
shares outstanding during the year (assuming that all outstanding preferred shares were converted and all outstanding stock
options were exercised at the beginning of the year).
C A S H F L O W
P E R S H A R E ($) 1 2 7 ÷ 4 = 3 1 . 7 5
99
98
97
96
3.15
2.85
4.00
3.12
Cash flow per share is calculated by dividing cash generated from operations (excluding changes in operating assets and
liabilities) by the average number of shares outstanding during the year. In 1999, cash flow per share increased by 10.5% compared
with the previous year.
D I V I D E N D S
P E R S H A R E ($) 1 2 7 ÷ . 2 = 6 3 5
99
98
97
96
0.20
0.20
0.20
0.20
In setting the dividend payment per common share, the Board of Directors considers the Company’s recent and projected
earnings and capital investment requirements and its total return to shareholders. In 1999, the common dividend was maintained
at $0.20 per share for a total annual payout of $16 million.
RETURN ON
SHAREHOLDERS‘ EQUITY (%)
1 2 7 ÷ 1 6 . 2 = 7 . 8 3 9
99
98
97
96
8.7
0.5
16.2
16.0
The return on shareholders’ equity is calculated by dividing net income by the average shareholders’ equity during the year
(including share capital, retained earnings and cumulative currency translation adjustments). The return on shareholders’
equity in 1999 was 8.7% compared with 0.5% in 1998.
T O TA L S H A R E H O L D E R
R E T U R N S
FINNING
TSE 300 INDEX
8 1 ÷ 2 2 5 = . 3 6
$100
94
$220
$142
99
The graph above compares the yearly percentage change in the Company’s cumulative total return on its common shares
(annual stock price change plus dividends) with the cumulative total return of the TSE 300 index. Based on $100 invested in
1994, Finning’s cumulative total return over the five-year period was $142 compared with $220 for the TSE 300 index.
- - P A G E 5 4
> F I N N I N G I N T E R N A T I O N A L I N C . - -
>
S H A R E H O L D E R I N F O R M A T I O N
S T O C K E X C H A N G E
The common shares of Finning International Inc. are listed on
the Toronto Stock Exchange. (Symbol: FTT)
A U D I T O R S
Arthur Andersen LLP
Chartered Accountants, Vancouver, BC, Canada
S O L I C I T O R S
Ladner Downs
Barristers and Solicitors, Vancouver, BC, Canada
R E G I S T R A R A N D T R A N S F E R A G E N T
Montreal Trust Company of Canada
510 Burrard Street
Vancouver, BC V6C 3B9
Tel (604) 661-9400
A N N U A L M E E T I N G
The Annual Meeting of the shareholders will be held at 11:00 am,
April 26th, 2000 at The Hotel Vancouver in Vancouver, Canada.
C O R P O R AT E I N F O R M AT I O N
The Company’s head office is located at 555 Great Northern Way,
Vancouver, BC, Canada, V5T 1E2. The Company prepares an
Annual Information Form (AIF) which is filed with the securities
commissions or similar bodies in all of the provinces of
Canada. Copies of the AIF and Annual and Quarterly Reports
are available to shareholders and other interested parties on
request or can be accessed directly from Finning’s home
page on the Internet at: http://www.finning.ca.
- - P A G E 5 5 - -
I N V E S T O R R E L AT I O N S
Inquiries relating to shares or dividends should be directed to
the Company’s Registrar and Transfer Agent. Inquiries relating to
the Company’s operating activities and financial information
should be addressed to:
David Climie
Director, Investor and Corporate Relations
Tel (604) 331-4885, Fax (604) 331-4899
E-mail dclimie@finning.ca
0
3
.
5
1
0
3
.
5
5 1
8
.
3
1
5
1
.
4
0 1
8
.
2
1
0
0
.
3
1
5
7
.
3
1
0
0
.
3
1
5
8
.
4
1
0
7
.
3
1
0
5
.
4
1
0
6
.
3
1
0
0
.
4
1
0
0
.
3
1
0
6
.
3
1
0
4
.
2
1
0
1
.
3
1
5
2
.
0
1
0
1
.
1
1
5
2
.
9
5
4
.
9
0
0
.
9
5
7
.
1
1
0
0
.
9
J
F
M
A
M
J
J
A
S
O
N
D
1 9 9 9 M O N T H LY H I G H / L O W S T O C K P R I C E S ($)
S T O C K P E R F O R M A N C E ( $ ) 1 4 4 ÷ 1 8 . 5 = 9 . 4 1 1
This graph indicates the high and low closing stock prices for
each month in 1999.
>
D I R E C T O R S , O F F I C E R S A N D C O M M I T T E E S
B O A R D O F D I R E C T O R S
M . N . A n d e r s o n
P r e s i d e n t
A n d e r s o n & A s s o c i a t e s
V a n c o u v e r , B C
R . B a c a r r e z a
P r e s i d e n t
P r o i n v e s t S . A .
S a n t i a g o , C h i l e
J . E . C l e g h o r n
C h a i r m a n a n d
C h i e f E x e c u t i v e O f f i c e r
R o y a l B a n k o f C a n a d a
T o r o n t o , O N
J . F . D i n n i n g
E x e c u t i v e V i c e P r e s i d e n t
S u s t a i n a b l e D e v e l o p m e n t a n d
E x t e r n a l R e l a t i o n s
Tr a n s A l t a C o r p .
C a l g a r y , A B
T . S . H o w d e n
C o m p a n y D i r e c t o r
M a r l o w , E n g l a n d
M . M . K o e r n e r
P r e s i d e n t
C a n a d a O v e r s e a s
I n v e s t m e n t s L i m i t e d
T o r o n t o , O N
N . B . L l o y d
P r e s i d e n t a n d
C h i e f E x e c u t i v e O f f i c e r
F i n n i n g C h i l e S . A .
S a n t i a g o , C h i l e
D . S . O ’ S u l l i v a n
P r e s i d e n t
O ’ S u l l i v a n R e s o u r c e s L t d .
E d m o n t o n , A B
C . A . P i n e t t e
P r e s i d e n t a n d
C h i e f O p e r a t i n g O f f i c e r
L i g n u m L i m i t e d
V a n c o u v e r , B C
J . F . S h e p a r d
C h a i r m a n a n d
C h i e f E x e c u t i v e O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C
A . H . S i m o n
E x e c u t i v e Vi c e C h a i r m a n
D i a m a n t B o a r t S . A .
L o n d o n , E n g l a n d
D . W . G . W h i t e h e a d
P r e s i d e n t a n d
C h i e f O p e r a t i n g O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C
J . M . W i l l s o n
V i c e C h a i r m a n
P l a c e r D o m e I n c .
V a n c o u v e r , B C
W . R . W y m a n
C h a i r m a n
S u n c o r E n e r g y I n c .
W e s t V a n c o u v e r , B C
O F F I C E R S
B . C . B e l l
E x e c u t i v e V i c e P r e s i d e n t
C u s t o m e r S u p p o r t S e r v i c e s
F i n n i n g I n t e r n a t i o n a l I n c .
C o q u i t l a m , B C
J . A . C a r t h y
M a n a g i n g D i r e c t o r
F i n n i n g ( U K ) L t d .
S u t t o n C o l d f i e l d
W e s t M i d l a n d s , U K
C . A . C e d e r b e r g
V i c e C h a i r m a n
F i n n i n g C h i l e S . A .
S a n t i a g o , C h i l e
A . R . G u g l i e l m i n
C o r p o r a t e T r e a s u r e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C
H . M . H o
E x e c u t i v e V i c e P r e s i d e n t
H u m a n R e s o u r c e s
F i n n i n g I n t e r n a t i o n a l I n c .
R i c h m o n d , B C
N . B . L l o y d
P r e s i d e n t a n d
C h i e f E x e c u t i v e O f f i c e r
F i n n i n g C h i l e S . A .
S a n t i a g o , C h i l e
R . T . M a h l e r
E x e c u t i v e V i c e P r e s i d e n t
a n d C h i e f F i n a n c i a l O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
W e s t V a n c o u v e r , B C
I . M . R e i d
P r e s i d e n t a n d
C h i e f O p e r a t i n g O f f i c e r
F i n n i n g ( C a n a d a )
E d m o n t o n , A B
J . F . S h e p a r d
C h a i r m a n a n d
C h i e f E x e c u t i v e O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
V a n c o u v e r , B C
J . T . S t r u t h e r s
C o r p o r a t e S e c r e t a r y
F i n n i n g I n t e r n a t i o n a l I n c .
D e l t a , B C
D . W . G . W h i t e h e a d
P r e s i d e n t a n d
C h i e f O p e r a t i n g O f f i c e r
F i n n i n g I n t e r n a t i o n a l I n c .
C o q u i t l a m , B C
A U D I T C O M M I T T E E
J . F . D i n n i n g
( C h a i r m a n )
R . B a c a r r e z a
J . E . C l e g h o r n
M . M . K o e r n e r
C . A . P i n e t t e
A . H . S i m o n
W . R . W y m a n
E N V I R O N M E N TA L , H E A LT H
A N D S A F E T Y C O M M I T T E E
D . S . O ’ S u l l i v a n
( C h a i r m a n )
R . B a c a r r e z a
T . S . H o w d e n
J . F . S h e p a r d
J . M . W i l l s o n
G O V E R N A N C E C O M M I T T E E
C . A . P i n e t t e
( C h a i r m a n )
M . N . A n d e r s o n
J . F . D i n n i n g
D . S . O ’ S u l l i v a n
H U M A N R E S O U R C E S
A N D C O M P E N S AT I O N C O M M I T T E E
M . N . A n d e r s o n
( C h a i r m a n )
T . S . H o w d e n
J . F . S h e p a r d
W . R . W y m a n
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- - - - P A G E : 5 6
- - P A G E 5 6
> F I N N I N G I N T E R N A T I O N A L I N C . - -
F I N N I N G I N T E R N A T I O N A L I N C . - - - -
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
B U Y B A C K P R O G R A M
F ro m : t o n y g u g l i e l m i n @ f i n n i n g . c o m
To : d c l i m i e @ f i n n i n g . c o m
S u b j e c t : s h a re b u y b a c k p ro g r a m
D a t e : F e b r u a r y 1 , 2 0 0 0
D a v i d .
J u s t t o l e t y o u k n o w t h a t t h e B o a rd h a s o k ’ d t h e n o r m a l c o u r s e i s s u e r b i d .
T h e To ro n t o S t o c k E x c h a n g e h a s a p p ro v e d t h e n o t i c e o f i n t e n t t o p u rc h a s e 6 . 8 m i l l i o n s h a re s i n t h e o p e n
m a r k e t . G i v e m e a c a l l t o d i s c u s s i n i t i a t i o n .
T h a n k s .
To n y
11 n n
R e c e i v e d
I n b o x
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
n o p F r o m
S u b j e c t
E Q U I P M E N T S O U R C I N G
To : g u i a s @ m a t c o . c o m . m x
F ro m : l z e re b e s k i @ f i n n i n g . c a
S u b j e c t : 1 9 9 5 C a t D 1 0 N P h o t o s
X - A t t a c h m e n t s : H : \ e q u i p \ e q p h o t o s \ 1 9 0 1 1 8 - a . j p g ; H : \ e q u i p \ e q p h o t o s \ 1 9 0 1 1 8 - b . j p g ;
A t t e n t i o n : G u i l l e r m o A s t i a z a r a n
1 9 9 5 C a t D 1 0 N - s / n 3 S K 0 0 9 5 0 i s a v a i l a b l e ; p h o t o s a re a t t a c h e d a n d a b r i e f d e s c r i p t i o n f o l l o w s .
S U b l a d e w i t h t i l t . F ro n t c o u n t e r w e i g h t . S S r i p p e r w i t h p i n p u l l e r ; n e w t i p & p ro t e c t o r.
C a t s a l t E S 2 4 " u n d e rc a r r i a g e w i t h 7 5 % re g ro u s e re d s h o e s , 6 0 % l i n k s , 2 8 % i d l e r s , 8 8 % s p ro c k e t s ,
a n d 2 8 % p i n s & b u s h i n g s . O r i g i n a l c o m p o n e n t s . F a s t f u e l . L o c a t i o n : H o u s t o n , T X
R e g a rd s , L a u r a
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
C O O P E R A C I Ó N
To : S a m u e l M u ñ o z , S a n t i a g o B r a n c h M a n a g e r, F i n n i n g C h i l e S . A .
F ro m : F e r n a n d o A c e v e d o , S u p e r i n t e n d e n t e M a n t e n c i ó n
C o m p a ñ í a M i n e r a D i s p u t a d a L a s C o n d e s
A re a E l S o l d a d o
D a t e : N o v. 1 0 , 1 9 9 9
F i n a l m e n t e , s e d e s t a c a p o r a m b o s l a d o s e l g r a d o d e c o o p e r a c i ó n c o n q u e s e re a l i z ó
d u r a n t e t o d o e l t i e m p o e l c o n t r a t o M A R C ( 7 a ñ o s ) , e l p ro f e s i o n a l i s m o c o n q u e s e c o n c l u y o
y e n t re g a ro n l o s c a m i o n e s y q u e e s t a s b u e n a s re l a c i o n e s c l i e n t e - p ro v e e d o r d e b i e r a p e r m a n e c e r
e n e l t i e m p o . F i n n i n g m a n i f i e s t a s u d e c i d i d o a p o y o e n n u e s t r a g e s t i ó n f u t u r a .
Translation: Finally, it is noteworthy to mention the degree of co-operation that existed during the entire period of the MARC contract (7 years),
and the professionalism with which the sale and delivery of the new CAT 785 trucks was concluded. This excellent client / supplier relationship
should continue over time. Finning has shown its commitment to our future success.
E d i t
F i l e
(cid:223) R e p l y (cid:224) F o r w a r d 44 R e d i r e c t ++ N e w M e s s a g e ** R e c e i v e x F i n d 11 A t t a c h
Tr a n s f e r
To o l s
H e l p
I n b o x
n o p F r o m
S u b j e c t
11 n n
R e c e i v e d
< w w w . f i n n i n g . c o m >
F ro m : C h r i s t y L P a r r [ @ C AT. c o m ]
S e n t : F r i d a y, O c t o b e r 1 5 , 1 9 9 9 1 1 : 0 5 A M
To : F i n n i n g ( C a n a d a ) e - c o m m e rc e t e a m
S u b j e c t : S t o re f ro n t P ro c e s s & C h e c k l i s t
G l a d t o h e a r t h a t y o u ’ l l b e j o i n i n g t h e e - c o m m e rc e / I n t e r n e t D e a l e r S t o re f ro n t i n i t i a t i v e .
A t t a c h e d i s t h e l a t e s t v e r s i o n o f t h e S t o re f ro n t P ro c e s s a n d R e a d i n e s s C h e c k l i s t .
L o o k t h e m o v e r a n d i f y o u h a v e q u e s t i o n s , d o n ' t h e s i t a t e t o g i v e m e a c a l l t o d i s c u s s .