More earnings:
Attention Business/Financial Editors:
DOREL'S FIRST QUARTER EARNINGS SET STAGE FOR ANOTHER RECORD YEAR
MONTREAL, May 2 /CNW/ - First quarter results, made public today, clearly
indicate that Dorel Industries Inc. (TSE: DII.A, DII.B; NASDAQ: DIIBF) will
easily attain billion dollar status this year. In announcing results for the
period ended March 31, 2000, Dorel President and Chief Executive Officer,
Martin Schwartz, said the milestone will be achieved even without taking in
account revenues from its most recent acquisition, Safety 1st. In 1999 Safety
1st recorded sales of over $230 million. The Safety 1st purchase is expected
to close next month.
Results for the first quarter ended March 31, 2000 were as follows:
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________________________________________________________________________
Summary of Financial Highlights
________________________________________________________________________
First quarter ended March 31,
2000 1999 Change
__________________________________
Sales 271,535,232 243,342,285 11.6%
Net Income 15,444,816 12,283,865 25.7%
Earnings Per Share
Basic 0.55 0.45 22.2%
Fully diluted 0.52 0.42 23.8%
Average number of shares
outstanding - diluted 29,635,572 29,377,592
________________________________________________________________________
>>
The Juvenile segment was a solid performer, with particularly strong
growth registered at Cosco. Ready-to-Assemble (RTA) profit rose despite a
slight decrease in sales. Top line growth continued in Home Furnishings,
however margins on some products affected earnings.
JUVENILE
Sales in the Juvenile segment were up 26% to $131.9 million, while
earnings from operations increased 41% to $11 million from the first quarter a
year ago. Sales of Cosco car seats rose significantly. Maxi Miliaan also
contributed to the record quarter.
Cosco's licensing agreements with Eddie Bauer and the National
Association for Stock Car Racing (NASCAR) were important factors in the growth
of Juvenile during the quarter. Additional agreements are currently being
negotiated and a major license is expected to be announced during the current
quarter.
READY TO ASSEMBLE
RTA sales were down 2% to $94 million while earnings from operations rose
by 8% to $14.6 million. Three key factors affected the top line. Ameriwood
discontinued certain items, which for the corresponding period last year,
contributed over $4 million in sales. Several large customers changed planned
product roll-outs to the second quarter from the first. As well, the
strengthened Canadian dollar affected the conversion rate of RTA sales. In
fact, first quarter sales in U.S. dollars actually increased 1.8%. ``We are
confident of a strong year in RTA and are also pleased with the continuous
improvements in efficiencies resulting from operational changes and the
administrative merger of Ameriwood and Ridgewood. We have expanded business
with existing clients and are making good progress with the development of new
accounts,'' said Mr. Schwartz.
HOME FURNISHINGS
Home Furnishings sales rose almost 7% to $45.7 million while earnings
from operations were down 25% to $2.4 million. Margins on futons manufactured
by Dorel Home Products were affected by the market's competitive environment.
As a result, an aggressive cost cutting program has been completed which will
resolve this situation through the balance of the current fiscal year. Cosco's
housewares performed well with the new line of ``The World's Greatest Step
Stool'' running at maximum capacity. The product has also been added to a
major national U.S. retailer, which is new business for Cosco.
OUTLOOK
``We are very optimistic that fiscal 2000 will shape up as yet another
record year. We are simultaneously making inroads in various areas, which will
maintain the uninterrupted growth we have experienced during the past 23
quarters. The addition of Safety 1st to the Dorel family will serve to
solidify our position in the market and further enhance shareholder value,''
concluded Mr. Schwartz.
ABOUT DOREL
Dorel is a rapidly growing, consumer products manufacturer specializing
in three product areas: ready-to-assemble (RTA) furniture, juvenile products
and home furnishings. Dorel's product offerings include a wide variety of RTA
furniture for home and office use; juvenile products such as infant car seats,
strollers, high chairs, toddler beds and cribs; and home furnishings such as
metal folding chairs, tables, bunk beds, futons and step stools.
Dorel employs more than 3,500 people in nine countries. Major North
American facilities are located in Montreal, Quebec; Cornwall, Ontario;
Columbus, Indiana; Wright City, Missouri; Tiffin, Ohio; Dowagiac, Michigan;
Cartersville, Georgia; Fort Smith, Arkansas and San Diego, California. The
Company's major divisions in the United States include Cosco, Ameriwood and
Infantino. In Canada, Dorel operates Ridgewood and Dorel Home Products.
European operations are carried out through Maxi-Miliaan B.V. in the
Netherlands and Dorel (U.K.) Ltd. in the United Kingdom.
Except for the historical information contained herein, this press
release contains statements that constitute forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that
could cause actual results to differ materially from the forward-looking
statements. Factors that may cause or contribute to such differences include,
among other things, the Company's ability to close the proposed transaction.
Other risks and uncertainties include changes in business conditions and the
economy in general, changes in governmental regulations, unforeseen litigation
and other risk factors identified in the Company's public filings under ``Risk
Factors.'' The Company undertakes no obligation to update these
forward-looking statements for revisions or changes after the date of this
press release.
<<
DOREL INDUSTRIES INC.
CONSOLIDATED BALANCE SHEET (unaudited)
AS AT MARCH 31, 2000
2000 1999
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 5,522,631 8,266,802
Accounts receivable 183,339,715 174,502,048
Inventories 154,073,408 140,247,524
Prepaid expenses 19,521,637 8,814,500
Deferred income taxes 17,708,949 6,396,698
_____________________________
380,166,340 338,227,572
CAPITAL ASSETS 134,988,562 136,610,106
DEFERRED CHARGES 5,220,002 4,854,577
INTANGIBLE ASSETS 19,690,878 22,379,391
_____________________________
540,065,782 502,071,646
_____________________________
_____________________________
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 2,671,646 10,356,522
Accounts payable and accrued
liabilities 84,431,942 83,863,717
Salaries payable 10,495,584 10,932,505
Income taxes payable 9,168,015 7,188,762
Current portion of long-term debt 8,906,503 2,345,253
_____________________________
115,673,690 114,686,759
_____________________________
_____________________________
LONG-TERM DEBT 118,399,287 145,454,466
_____________________________
PENSION OBLIGATION 17,308,048 -
_____________________________
DEFERRED INCOME TAXES 21,805,493 10,962,461
_____________________________
SHAREHOLDERS' EQUITY
CAPITAL STOCK 90,185,862 88,210,689
RETAINED EARNINGS 174,712,967 129,070,733
CUMULATIVE TRANSLATION ADJUSTMENT 1,980,435 13,686,538
_____________________________
266,879,264 230,967,960
_____________________________
540,065,782 502,071,646
_____________________________
_____________________________
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (unaudited)
2000 1999
$ $
BALANCE, BEGINNING OF PERIOD 172,250,054 116,786,868
Accounting change (Note 1) (12,154,986) -
Net income 15,444,816 12,283,865
Premium paid on repurchase of shares (826,917) -
_____________________________
BALANCE, END OF PERIOD 174,712,967 129,070,733
_____________________________
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (unaudited)
2000 1999
$ $
SALES 271,535,232 243,342,285
_____________________________
EXPENSES
Cost of sales 211,793,564 189,227,359
Operating 28,295,981 26,294,848
Amortization 6,219,279 6,831,334
Research and development costs 882,297 666,660
Interest on long-term debt 2,021,591 2,578,065
Other interest 72,758 37,429
_____________________________
249,285,470 225,635,695
_____________________________
INCOME BEFORE INCOME TAXES 22,249,762 17,706,590
Income taxes 6,804,946 5,422,725
_____________________________
NET INCOME 15,444,816 12,283,865
_____________________________
_____________________________
EARNINGS PER SHARE
Basic 0.55 0.45
_____________________________
_____________________________
Fully Diluted 0.52 0.42
_____________________________
_____________________________
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (unaudited)
2000 1999
$ $
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income 15,444,816 12,283,865
Adjustments for:
Amortization 6,219,279 6,831,334
Deferred income taxes (62,366) 47,248
Gain on disposal of capital assets (4,113) -
_____________________________
21,597,616 19,162,447
Changes in non-cash working
capital:
Increase in accounts
receivable (32,225,724) (56,344,401)
Decrease (increase) in
inventories (6,784,666) 388,106
Decrease (increase) in
prepaid expenses (3,858,723) 2,570,477
Increase in accounts payable
and accrued liabilities 8,950,231 10,214,321
Increase in income taxes payable 5,111,737 2,334,250
Decrease in salaries payable (4,106,035) (313,108)
_____________________________
(32,913,180) (41,150,355)
_____________________________
_____________________________
CASH USED IN OPERATING
ACTIVITIES (11,315,564) (21,987,908)
_____________________________
FINANCING ACTIVITIES
Increase in long-term debt 11,348,238 30,292,050
Issuance of capital stock - 185,031
Repurchase of capital stock (962,575) -
Increase (decrease) in bank
indebtedness 1,110,904 (2,549,524)
_____________________________
CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 11,496,567 27,927,557
_____________________________
INVESTING ACTIVITIES
Additions to capital
assets - net (3,390,252) (5,504,263)
Deferred charges (666,520) (499,832)
Intangible assets - 194,953
_____________________________
CASH USED IN INVESTING ACTIVITIES (4,056,772) (5,809,142)
_____________________________
OTHER
Effect of exchange rate
changes on cash 619,082 (1,714,993)
_____________________________
NET DECREASE IN CASH AND CASH
EQUIVALENTS (3,256,687) (1,584,486)
Cash and cash equivalents,
beginning of period 8,779,318 9,851,288
_____________________________
CASH AND CASH EQUIVALENTS,
END OF PERIOD 5,522,631 8,266,802
Notes to the Consolidated Financial Statements
--------------------------------------
(unaudited)
1. Adoption of New Accounting Standards
a) Employee future benefits
Effective January 1, 2000, the company adopted new recommendations
issued by the Accounting Standards Board of the Canadian Institute of
Chartered Accountants for the recognition, measurement and disclosure
of the cost of employee future benefits. Under this standard, a
liability and an expense is recognized for all employee future
benefits in the reporting period in which an employee has provided the
service that give rise to the benefits. The recommendations were
adopted in a manner that produces recognized and unrecognized amounts
for all of its benefit plans the same as those determined by
application of accounting principles generally accepted in the United
States.
The new recommendations, which will not affect the company's cash
flows or liquidity, have been adopted retroactively without restating
prior periods. As a result, Retained Earnings were decreased by
$9.1 million, Deferred Tax Assets were increased by $6.9 million,
Prepaid Expenses were increased by $0.4 million, Deferred Tax
Liabilities were increased by $0.3 million, Pension Obligation was
increased by $17.0 million and Cumulative Translation Adjustment was
decreased by $0.9 million at January 1, 2000. The impact of the new
recommendations on the first quarter of 2000, was to increase cost of
sales by $235,000 and decrease net earnings after taxes by $141,000.
b) Income taxes
Effective January 1, 2000, the company adopted new recommendations
issued by the Accounting Standards Board of the Canadian Institute of
Chartered Accountants with respect to accounting for income taxes.
This standard requires the use of liability method for computing
future income taxes. Under this method, future tax assets and
liabilities are determined based on reporting differences between the
bases of assets and liabilities used for financial statement and
income statement purposes. Such differences are then measured using
substantially enacted tax rates and laws that will be in effect when
these differences are expected to reverse. Prior to the adoption of
this standard, income tax expense was determined using the deferral
method of tax allocation.
The new recommendations, which will not affect the company's cash
flows or liquidity, have been adopted retroactively without restating
prior periods. As a result, retained earnings were decreased by $3.1
million and deferred tax liabilities were increased by $3.1 million
at January 1, 2000. The impact of the new recommendations on the first
quarter of 2000, was to decrease income tax expense by $95,000 and
increase net earnings by $95,000.
2. Comparative Figures
Certain of the prior year's accounts have been reclassified to conform
to the 2000 financial statement presentation.
>>
%SEDAR: 00003790EB
-30-
For further information: Jeffrey Schwartz, Dorel Industries Inc;
(514) 934-3034 or Rick Leckner, Maison Brison; (514) 731-0000
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