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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported) MAY 15, 2000
MACKENZIE INVESTMENT MANAGEMENT INC.
(Exact name of registrant as specified in its chapter)
DELAWARE 000-17994 59-2522153
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 393-8900
Not Applicable
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(Former name or former address, if changed since last report)
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Item 7. Exhibits
The following exhibit is filed with this report:
Number Description
- ------ -----------
99.1 Press release dated May 15, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MACKENZIE INVESTMENT MANAGEMENT INC.
(Registrant)
Date
----------------------- ---------------------------------------------
Keith J. Carlson
President and Chief Executive Officer
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MACKENZIE INVESTMENT MANAGEMENT INC.
-------------------------------
FINANCIAL REPORT
FOR THE FOURTH QUARTER AND YEAR
ENDED MARCH 31, 2000
(U.S. DOLLARS)
-------------------------------
For additional information, contact (561) 393-8900
Keith J. Carlson, President and CEO
Beverly Yanowitch, Vice President and CFO
Pour obtenir la version francaise de ce document, veuillez ecrire a:
Mackenzie Investment Management Inc.
700 South Federal Highway
Boca Raton, FL 33432
U.S.A.
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MACKENZIE INVESTMENT MANAGEMENT INC.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
U.S.A.
(561) 393-8900
FOR IMMEDIATE RELEASE
MACKENZIE INVESTMENT MANAGEMENT INC. REPORTS
FINANCIAL RESULTS FOR THE FOURTH QUARTER
AND YEAR ENDED MARCH 31, 2000
BOCA RATON, FLORIDA - May 15, 2000 - Mackenzie Investment Management Inc. (the
"Corporation") (stock symbol TSE - MCI), a majority-owned subsidiary of
Mackenzie Financial Corporation ("MFC") (stock symbols TSE and ME - MKF; NASDAQ
- - MKFCF), reports its consolidated financial results for the three- and
twelve-month periods ended March 31, 2000 in condensed form. For the following
financial summary, results are in thousands of dollars (U.S.) except per share
figures and where otherwise stated.
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States and are DENOMINATED IN U.S.
CURRENCY. The Corporation has reviewed its consolidated financial statements
for the periods presented for compliance with accounting principles generally
accepted in Canada and has determined that there are no material differences
between the amounts reported in these financial statements and the amounts
which would be reported in accordance with accounting principles generally
accepted in Canada.
FINANCIAL SUMMARY:
<TABLE>
<CAPTION>
TWELVE MONTH PERIOD March 31,
2000 1999 (Decrease)
U.S.$ U.S.$ U.S.$ %
<S> <C> <C> <C> <C>
Revenues 63,506 66,256 (2,750) (4.2)
Income before income taxes 10,912 13,700 (2,788) (20.4)
Net income 6,448 8,549 (2,101) (24.6)
Basic earnings per share 0.34 0.45 (0.11) (24.4)
Diluted earnings per share 0.34 0.44 (0.10) (22.7)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTH PERIOD Fourth Quarter Increase
2000 1999
U.S.$ U.S.$ U.S.$ %
<S> <C> <C> <C> <C>
Revenues 17,815 15,477 2,338 15.1
Income before income taxes 4,489 3,152 1,337 42.4
Net income 2,898 1,865 1,033 55.4
Basic earnings per share 0.16 0.10 0.06 60.0
Diluted earnings per share 0.16 0.10 0.06 60.0
</TABLE>
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MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(U.S. DOLLARS)
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
2000 1999
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<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 41,095,301 $ 51,032,223
Marketable securities 3,388,768 1,447,734
Receivables:
Funds for fees and expense advances 4,725,964 5,372,633
Other 1,893,628 854,343
Property and equipment, net of accumulated
depreciation of $2,958,305 in 2000 and $2,262,386
in 1999 1,084,212 1,306,696
Management contracts, net of accumulated
amortization of $7,954,929 in 2000 and $6,831,667
in 1999 5,430,191 5,643,284
Deferred selling commissions 5,828,749 1,761,002
Other assets 624,964 751,342
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TOTAL ASSETS $ 64,071,777 $ 68,169,257
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Payable to the Funds for purchases of Funds' shares and
expense reimbursements $ 488,920 $ 158,365
Sub-advisory fees payable 3,249,994 3,447,159
Accounts payable, accrued expenses and other liabilities 2,071,720 3,015,002
Income taxes payable 275,650 9,241,917
Deferred tax liability 1,690,899 2,976
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TOTAL LIABILITIES 7,777,183 15,865,419
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COMMITMENTS
STOCKHOLDERS' EQUITY:
Capital stock, $.01 par value, 100,000,000 shares
authorized, 18,591,800 and 19,210,200 shares
issued and outstanding as of
March 31, 2000 and 1999, respectively 185,918 192,102
Additional paid-in capital 37,952,532 40,403,488
Retained earnings 18,156,144 11,708,248
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TOTAL STOCKHOLDERS' EQUITY 56,294,594 52,303,838
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 64,071,777 $ 68,169,257
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</TABLE>
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MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(U.S. DOLLARS)
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE FOR THE
QUARTERS ENDED YEARS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Management and administration fees $ 10,158,123 $ 9,626,873 $ 39,610,738 $ 40,955,150
Sub-advisory fees from Canadian Funds 3,253,687 1,580,389 9,468,542 5,994,295
Distribution fees and other 2,850,497 3,805,236 9,820,574 17,951,159
Interest, dividends and other 617,212 432,256 2,755,378 1,406,506
Net realized gain on marketable securities 1,511,006 - 1,514,857 -
Net unrealized appreciation (depreciation)
on marketable securities (575,738) 32,733 336,041 (51,229)
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17,814,787 15,477,487 63,506,130 66,255,881
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EXPENSES:
General and administrative 6,127,214 4,614,273 24,487,764 18,717,901
12b-1 Service fees 2,283,280 2,115,568 8,984,970 9,036,835
Sub-advisory fees 3,309,921 3,445,034 13,603,911 14,826,319
Amortization of management contracts 291,677 270,474 1,123,262 1,081,895
Amortization of deferred selling commissions 412,544 1,177,566 1,113,821 6,202,132
Depreciation 181,774 149,788 696,535 549,930
Interest - 105,408 - 473,842
Reimbursement to Funds for expenses 719,611 446,999 2,584,021 1,667,174
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13,326,021 12,325,110 52,594,284 52,556,028
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Income before income taxes 4,488,766 3,152,377 10,911,846 13,699,853
Provision for income taxes 1,590,392 1,287,027 4,463,950 5,151,197
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NET INCOME 2,898,374 1,865,350 6,447,896 8,548,656
RETAINED EARNINGS, BEGINNING OF PERIOD 15,257,770 9,842,898 11,708,248 3,159,592
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RETAINED EARNINGS, END OF PERIOD $ 18,156,144 $ 11,708,248 $ 18,156,144 $ 11,708,248
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BASIC EARNINGS PER SHARE $ 0.16 $ 0.10 $ 0.34 $ 0.45
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING USED IN BASIC
CALCULATION 18,593,822 19,209,633 18,781,410 19,137,480
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DILUTED EARNINGS PER SHARE $ 0.16 $ 0.10 $ 0.34 $ 0.44
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WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING
USED IN DILUTED CALCULATION 18,671,974 19,244,517 18,817,070 19,267,093
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</TABLE>
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MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED MARCH 31,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,447,896 $ 8,548,656
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation 696,535 549,930
Amortization of management contracts 1,123,262 1,081,895
Amortization of deferred selling commissions 1,113,821 6,202,132
Deferred tax expense (benefit) 1,687,923 (4,656,197)
Net realized gain on marketable securities (1,514,857) -
Net unrealized (appreciation) depreciation on
marketable securities (336,041) 51,229
Proceeds from the sale of marketable securities 2,515,446 -
Purchases of marketable securities (2,605,582) (506,219)
Payment of deferred selling commissions (5,181,570) (3,876,736)
Change in assets and liabilities:
Receivables (392,616) 518,444
Other assets 126,378 (313,377)
Payable to Funds for purchases of Funds' shares and
expense reimbursements 330,555 65,687
Sub-advisory fees payable (197,165) (316,788)
Accounts payable, accrued expenses and other liabilities (943,282) (143,980)
Income taxes payable (8,966,267) 9,241,917
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Net cash (used in) provided by operating activities (6,095,564) 16,446,593
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of management contracts (910,169) -
Purchases of property and equipment (474,049) (696,410)
Proceeds from the sale of deferred selling commissions, net - 20,816,896
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Net cash (used in) provided by investing activities (1,384,218) 20,120,486
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CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable repayments - (6,800,000)
Purchase and retirement of common stock (2,460,890) (108,537)
Proceeds from the exercise of stock options 3,750 413,900
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Net cash used in financing activities (2,457,140) (6,494,637)
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (9,936,922) 30,072,442
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 51,032,223 20,959,781
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CASH AND CASH EQUIVALENTS, END OF YEAR $ 41,095,301 $ 51,032,223
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Supplemental disclosures:
Interest paid $ - $ 490,783
Income taxes paid $ 11,740,000 $ 495,000
</TABLE>
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THREE MONTH PERIOD
REVENUES
Revenues for the three-month period ended March 31, 2000 were $17.8 million, up
15% from $15.5 million for the comparable period last year, reflecting the
increase in U.S. assets under management. Average U.S. net assets under
management for the three-month period ended March 31, 2000 were $3,510 million
compared to $3,373 million for the three-month period ended March 31, 1999, an
increase of 4%, which caused management and administrative fees to increase by
$531,000 compared to the three-month period ended March 31, 1999.
Fees received for providing sub-advisory services to the Universal mutual
funds, sold in Canada and managed by MFC, increased $1,673,000, or 106%, as the
Universal mutual funds' average net assets under management for the three-month
period ended March 31, 2000 were $3,205 million compared to $1,341 million for
the three-month period ended March 31, 1999, an increase of 139%.
Distribution related fees decreased by $955,000, or 25%, compared to the
three-month period ended March 31, 1999, primarily due to the sale of the Class
B deferred selling commission asset in March 1999. As a result of the sale,
the purchaser receives 12b-1 distribution fees and redemption fees on the
mutual fund shares represented by the Class B deferred selling commission asset
sold. Consequently, there has been a decrease in the asset base on which the
Corporation collects distribution related fees.
Interest, dividends and other revenue for the three-month period ended March
31, 2000 increased $185,000, or 43%, compared to the three-month period ended
March 31, 1999, due to an increase in average cash balances primarily due to
cash received from the sale of the Class B deferred selling commission asset.
Net unrealized appreciation (depreciation) and net realized gain on marketable
securities for the three-month period ended March 31, 2000 increased $903,000,
or 276%, compared to the three-month period ended March 31, 1999, primarily due
to the Corporation's liquidation of its investment in Ivy European
Opportunities Fund.
EXPENSES
Expenses for the three-month period ended March 31, 2000 were $13.3 million, up
8% from $12.3 million for the comparable period last year.
General and administrative expenses have increased $1,513,000, or 33%, due to
an increase in staff size, primarily in sales and marketing, and an increase in
expenses incurred for computer programming and contracted services.
Reimbursement to the Funds for expenses increased $273,000, primarily due to an
increase in the number of funds for which the Corporation reimburses expenses.
The Corporation has brought seven new funds to market since March 1999.
12b-1 Service fees increased $168,000 due to the increase in average U.S.
assets under management.
During the three-month period ended March 31, 2000, certain expenses decreased
when compared to the prior period last year. The amortization of deferred
selling commissions decreased $765,000 as a result of the sale of the Class B
deferred selling commission asset. Sub-advisory fees expense decreased
$135,000 due to a decrease in the net assets of Ivy International Fund, for
which a third party provides investment advisory services.
INCOME BEFORE TAXES for the three-month period ended March 31, 2000 of
$4,488,000 increased by 42% as compared to $3,152,000 for the comparable period
last year. After recording an income tax provision
<PAGE> 6
of $1,590,000, NET INCOME of $2,898,000 increased by $1,033,000 as compared to
the corresponding period last year. Both BASIC AND DILUTED EARNINGS PER SHARE
were $0.16 and $0.10 for the three-month period ended March 31, 2000 and 1999,
respectively.
SALES of the U.S. managed mutual funds for the three-month period ended March
31, 2000 increased 173% over the corresponding period last year ($380 million
versus $139 million). This represents the best quarter for sales by the
Corporation since the quarter ended June 30, 1997. These stronger sales can be
attributed to the increased interest in international investing, in addition to
the reopening of Ivy European Opportunities Fund. For the three-month period
ended March 31, 2000, redemptions were $529 million. Redemptions in Ivy
International Fund, which is closed to new investors, represented $390 million,
or 74%, of the total redemptions during this period. Redemptions for the
corresponding period last year were $351 million.
TWELVE MONTH PERIOD
For the twelve-month period ended March 31, 2000, REVENUE decreased by 4% to
$63.5 million from $66.3 million largely attributable to: (1) the sale of the
Class B deferred selling commission asset; and (2) a decrease in average net
assets under management in the U.S., which were $3,391 million for the
twelve-month period ended March 31, 2000, as compared to $3,540 million for the
comparable period last year, or a 4% decrease. EXPENSES for the twelve-month
period ended March 31, 2000 of $52.6 million were comparable to the
corresponding period last year. NET INCOME decreased $2.1 million, or 25%, to
$6.4 million for the twelve-month period ended March 31, 2000 from $8.5 million
for the comparable period last year. BOTH BASIC AND DILUTED EARNINGS PER SHARE
were $0.34 for the twelve-month period ended March 31, 2000 as compared to
basic and diluted earnings per share of $0.45 and $0.44, respectively, for the
twelve-month period ended March 31, 1999.
GROSS SALES of the U.S. managed mutual funds were $764 million for the
twelve-month period ended March 31, 2000 as compared to $518 million for the
comparable period last year, an increase of 47%. For the twelve-month period
ended March 31, 2000, redemptions were $1,271 million. Redemptions in Ivy
International Fund represented $903 million, or 71%, of the total redemptions
during this period. Redemptions for the corresponding period last year were
$1,041 million.
MUTUAL FUND ASSETS UNDER MANAGEMENT
Mutual fund net assets under management in the U.S. increased 5% to $3,512
million at March 31, 2000 from $3,331 million at March 31, 1999. Assets
managed for MFC increased 145% to $3,516 million at March 31, 2000 from $1,437
million at March 31, 1999.
ADDITIONAL INFORMATION
Normal Course Issuer Bid
In June 1998, the Corporation entered into a normal course issuer bid, which
terminated in June 1999. During the first quarter of fiscal year 2000, the
Corporation purchased 378,000 of its common shares at a total cost of
$1,593,386 under this normal course issuer bid.
In July 1999, the Corporation entered into another normal course issuer bid,
which was approved by the Toronto Stock Exchange, to purchase up to 941,610 of
its common shares, representing 5% of the issued and outstanding common shares
at the date of the notice. From the July 1999 bid commencement date through
March 31, 2000, the Corporation purchased an additional 243,400 of its common
shares at a total cost of $867,504. All shares were acquired at market price
at the time of acquisition.
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The Corporation believes that, at the dates of repurchase, its common shares
were undervalued at the then market prices based on its earnings, and that the
repurchase of common shares was an appropriate use of corporate funds and
should benefit shareholders.
Ivy International Fund
The Corporation has internalized the portfolio management of its largest fund,
Ivy International Fund, which has approximately $1.9 billion in assets.
Previously, the fund had been sub-advised by an unrelated third party. The
sub-advisory agreement, which provided for payment of sub-advisory fees at the
rate of 0.60% of average daily net assets, will be terminated effective as of
May 27, 2000. The Corporation will reopen the fund to new investors on or
about June 1, 2000.
Ivy Cundill Value Fund
On April 18, 2000, the Corporation launched the Ivy Cundill Value Fund. The
fund is sub-advised by Peter Cundill & Associates.
Reclassifications
Certain amounts in the 1999 consolidated financial statements have been
reclassified to conform with the 2000 presentation.
