UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULES 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
November 3, 2004
Commission File Number: 0-29712
DOREL INDUSTRIES INC.
________________________________________________________________________________________________
1255 Greene Ave, Suite 300, Westmount, Quebec, Canada H3Z 2A4
_________________________________________________________________________________________________
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F
[ ]
Form 40-F
[ X ]
Indicate by check mark whether the registrant by furnishing the information in this Form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes
[ ]
No
[ X ]
![[f3nov04002.gif]](https://capedge.com/proxy/6-K/0001134821-04-000132/f3nov04002.gif)
| |
| C O M M U N I Q U É |
JUVENILE Cosco Safety 1st Maxi Cosi Quinny Baby Relax Babidéal MonBébé Bébé Confort
HOME FURNISHINGS Ameriwood Ridgewood Charleswood Dorel Home Products Cosco Home & Office Dorel Asia Carina Furniture
RECREATIONAL / LEISURE Pacific Cycle Schwinn GT Mongoose In Step
EXCHANGES
CANADA TSX: DII.A, DII.B
U.S.A. NASDAQ: DIIBF
CONTACT: Maison Brison Rick Leckner (514) 731-0000
Dorel Industries Inc. Jeffrey Schwartz (514) 934-3034 |
DOREL POSTS BEST-EVER QUARTERLY RESULTS · Third quarter earnings up 50.5%; revenues increase 43.5% · Sting Ray bike sales drive earnings · Juvenile sales/earnings up in North America and Europe · Home Furnishings experiences strong sequential earnings improvement
Montreal, November 3, 2004 — Dorel Industries Inc. (TSX: DII.MV; DII.SV; NASDAQ: DIIB) today announced record results for the third quarter ended September 30, 2004. Revenues increased 43.5%, reaching US$428.2 million compared to US$298.5 million last year. Third quarter net income was up 50.5% to US$28.2 million or US$0.86 per share fully diluted compared to US$18.8 million or US$0.58 per share fully diluted a year ago. For the nine months, revenues increased 45.6% to US$1.2 billion from US$840.1 million while net income grew 21.5% to US$66 million from US$54.3 million. Year-to-date earnings per share were US$2.00 compared to last year’s US$1.68 on a fully diluted basis.
Dorel President and CEO, Martin Schwartz, confirmed previous statements that the second half of 2004 would be stronger than the first six months. “We have concentrated heavily on exciting new product introductions and low cost production, producing our best quarter ever. Margins have improved across many of our product lines although the continuing rise in resin prices has kept margins from being even higher. The Sting Ray bicycle has continued to perform beyond expectations and many retailers have predicted that it will be one of this year’s hottest Christmas gift items. We remain encouraged for the balance of the year and are maintaining our 2004 earnings per share guidance at US$3.00 to US$3.15.”
Results for the third quarter and nine months ended September 30, 2004 were as follows: |
Summary of Financial Highlights |
Third quarter ended September 30 |
All figures in thousands of US $, except per share amounts |
| | 2004 | 2003 | Change % |
Total revenues | 428,154 | 298,464 | 43.5% |
Net income | 28,244 | 18,767 | 50.5% |
Per share - Basic | 0.86 | 0.59 | 45.8% |
Per share - Diluted | 0.86 | 0.58 | 48.3% |
Average number of shares outstanding - | | | |
diluted weighted average | 32,893,018 | 32,367,940 | |
Summary of Financial Highlights |
Nine months ended September 30 |
All figures in thousands of US $, except per share amounts |
| | 2004 | 2003 | Change % |
Total revenues | 1,222,912 | 940,089 | 45.6% |
Net income | 65,951 | 54,277 | 21.5% |
Per share - Basic | 2.02 | 1.72 | 17.4% |
Per share - Diluted | 2.00 | 1.68 | 19.0% |
Average number of shares outstanding - | | | |
diluted weighted average | 32,913,019 | 32,329,837 | |
Juvenile
Third quarter sales in the Juvenile segment rose 8.7% to US$179.6 million from US$165.2 million a year ago. Earnings from operations rose 32.6% to US$18.1 million, compared to US$13.6 million. Nine month sales reached US$565.3 million, a 13.3% increase from last year’s US$499.1 million. Earnings from operations for the nine months were US$48.3 million, down 3.6% year-over-year.
Both North America and Europe experienced third quarter sales and earnings advances. In North America, increased earnings were driven principally by higher sales volumes and earnings in Canada, as the Canadian dollar continued to strengthen. In Europe, earnings also rose, mainly as a result of improvements at Dorel Europe’s Northern operations and the effects of the stronger euro. Many of the changes implemented in Europe since the beginning of the year have begun to take effect, translating into improved earnings.
Home Furnishings
Home Furnishings revenues for the third quarter gained 7.1% to reach US$142.7 million compared to US$133.2 million a year ago. Earnings from operations declined 17.7% to US$14.1 million from US$17.1 million last year. For the nine months, revenues were up 16.0% to US$395.7 million from US$341.0 million, while earnings from operations were down 36.7% to US$29.4 million from US$46.5 million last year.
Earnings from operations more than doubled from the second quarter. Board prices continue to remain high and reduced the segment’s ready-to-assemble (RTA) operations earnings versus last year. However, as compared to the second quarter, earnings improved due to higher volumes and improved margins. In addition, the segment’s futon business, Dorel Asia and Cosco Home & Office all posted significant gains over both last year and the second quarter of 2004. The new mattress manufacturing equipment installed during the year at the Montreal futon plant also contributed to the segment’s earnings. In addition, Dorel Asia had its most profitable quarter and for the year is on track for a 50% increase in earnings over last year.
During the third quarter, Cosco Home & Office launchedAbility Care Essentials, a new Dorel consumer products category to address the aging baby-boomer population. Products will incorporate a wide variety of home healthcare items in three sectors: mobility, ambulatory and bath safety. Sales of US$25 million are anticipated in the first three years. In addition, Ameriwood signed a licensing agreement with California Closets, a strong household name which offers storage solutions for the home and office. Ameriwood will manufacture and distribute storage systems and related furniture to select national retailers under licence from California Closets.
Recreational/Leisure
Third quarter revenues reached US$105.8 million while earnings from operations were US$14.7 million. Year-to-date revenues were US$261.9 million with earnings from operations of US$33.8 million. The Sting-Ray bicycle is on track to be the most successful model of 2004 as all retailers continue to report strong weekly sales.
The Interbike trade show took place in Las Vegas October 6th – 8th and Pacific Cycle had its most successful show with independent bike dealers (IBD’s) since acquiring the Schwinn and GT brands. In addition, the Sting-Ray is driving traffic into these stores, further demonstrating the power of the brand. Show bookings were up80% over last year.
Special Recognition
On October 20th, Dorel’s executive management team, comprising Martin Schwartz, Jeffrey Schwartz, Alan Schwartz and Jeff Segel were collectively named as the recipient of the Quebec region Ernst & Young Entrepreneur of the Year 2004 Award. The group also received one of eight industry category awards. In their 11th year, the Entrepreneur of the Year awards honour those who have demonstrated excellence and extraordinary success in areas such as innovation, financial performance and personal commitment to their businesses and communities. Dorel executive management now qualifies for the national award, to be announced tomorrow night in Ottawa.
Outlook
Mr. Schwartz said the Company remains confident that the balance of the year will live up to expectations. “There have been a series of new product introductions in all of our divisions, many of which have met with an enthusiastic response. The juvenile segment’s Ride-On vehicles have been endorsed by major retailers. New models, including a fire truck, are being introduced in time for Christmas. Schwinn’s Sting Ray bicycle is riding a wave of popularity that has made it the hottest product ever launched by Dorel. It is on a number of retailers’ top Christmas gift lists and will help drive earnings in the fourth quarter. In Europe, the new BUZZ stroller, one of several new product launches, has been nominated for product of the year in the U.K. and baby product of 2005 in the Netherlands.”
CONFERENCE CALL
Dorel Industries Inc. will hold a conference call to discuss these results today at 1:30 P.M. Eastern Time. Interested parties can join the call by dialling (514) 807-8791 (Montreal or overseas) or (800) 814-4861 (elsewhere in North America). The conference call can also be accessed via live webcast atwww.newswire.ca orwww.q1234.com. If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-877-289-8525 and entering the passcode 21096358# on your phone. This tape recording will be available on Wednesday, November 3 as of 3:30 P.M. until 11:59 P.M. on Wednesday, November 10.
Complete financial statements will be available on the Company's website,www.dorel.com, and will be available through the SEDAR and EDGAR websites.
Profile
Dorel is a global consumer products company which designs, manufactures or sources, markets and distributes a diverse portfolio of powerful product brands, marketed through its Juvenile, Home Furnishings, and Recreational/Leisure segments. US operations include the Dorel Juvenile Group USA, which incorporates the Cosco and Safety 1st brands; Ameriwood Industries, Cosco Home & Office; and Pacific Cycle, which includes the Schwinn, Mongoose, GT, InSTEP and Roadmaster brands. In Canada, Dorel operates Dorel Juvenile Group Canada, Ridgewood Industries and Dorel Home Products. The Dorel Juvenile Group Europe carries out activities throughout Europe, under the Maxi-Cosi, Quinny, Safety 1st, Bébé Confort, Babidéal, MonBébé and Baby Relax brands. Dorel Asia sources and imports home furnishings. Dorel employs approximately 5,000 people in fourteen countries. 2003 sales wer e US$1.2 billion. 2004 sales are expected to be between US$1.6 – US$1.8 billion.
Forward-Looking Statements
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of the Company. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for the Company's products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.
DOREL INDUSTRIES INC.
CONSOLIDATED BALANCE SHEET
ALL FIGURES IN THOUSANDS OF US $
| | As at September 30, 2004 (unaudited) | As at December 30, 2003 (audited) |
ASSETS | | |
CURRENT ASSETS | | |
Cash and cash equivalents | 17,800 | 13,877 |
Funds held by ceding insurer | 9,755 | 6,803 |
Accounts receivable | 265,538 | 210,905 |
Inventories | 291,716 | 207,371 |
Prepaid expenses | 11,831 | 10,719 |
Future income taxes | 5,541 | 9,184 |
| | 602,181 | 458,859 |
| | | |
CAPITAL ASSETS | 157,525 | 147,837 |
GOODWILL | 658,791 | 380,535 |
DEFERRED CHARGES | 19,682 | 18,501 |
INTANGIBLE ASSETS | 86,292 | 85,448 |
FUTURE INCOME TAXES | 8,151 | 8,382 |
OTHER ASSETS | 10,270 | 10,995 |
| | 1,542,892 | 1,110,557 |
| | | |
LIABILITIES | | |
CURRENT LIABILITIES | | |
Bank indebtedness | 796 | 764 |
Accounts payable and accrued liabilities | 351,129 | 253,145 |
Income taxes payable | 5,263 | 2,037 |
Balance of sale payable | 7,590 | - |
Current portion of long-term debt | 7,552 | 7,758 |
| | 372,330 | 263,704 |
| | | |
| | 532,706 | 282,421 |
LONG-TERM DEBT | 14,095 | 13,818 |
PENSION OBLIGATION | 15,635 | 2,314 |
BALANCE OF SALE | 42,211 | 45,148 |
FUTURE INCOME TAXES | 7,305 | 8,266 |
OTHER LONG-TERM LIABILITIES | | |
| | | |
SHAREHOLDERS’ EQUITY | | |
CAPITAL STOCK | 159,993 | 156,274 |
RETAINED EARNINGS | 353,534 | 287,583 |
CUMULATIVE TRANSLATION ADJUSTMENT | 45,083 | 51,029 |
| | 558,610 | 494,886 |
| | 1,542,892 | 1,110,557 |
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF INCOME
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
| | Third quarter ended | Nine months ended |
| | September 30, 2004 (unaudited) | September 30, 2003 (unaudited) | September 30, 2004 (unaudited) | September 30, 2003 (unaudited) |
| | | | | |
Sales | 422,737 | 296,835 | 1,209,370 | 836,579 |
| | | | | |
Licensing and commission income | 5,417 | 1,629 | 13,542 | 3,510 |
| | | | | |
TOTAL REVENUE | 428,154 | 298,464 | 1,222,912 | 840,089 |
| | | | | |
EXPENSES | | | | |
Cost of sales | 325,794 | 223,656 | 934,247 | 614,589 |
Operating | 51,751 | 36,456 | 159,592 | 111,170 |
Amortization | 8,142 | 7,459 | 25,562 | 21,761 |
Research and development costs | 1,015 | 2,846 | 4,691 | 6,662 |
Interest on long-term debt | 7,472 | 4,159 | 21,512 | 11,472 |
Other interest | 2,473 | 238 | 2,988 | 498 |
| | 396,647 | 274,814 | 1,148,592 | 766,152 |
| | | | | |
Income before income taxes | 31,507 | 23,650 | 74,320 | 73,937 |
| | | | | |
Income taxes | 3,263 | 4,883 | 8,369 | 19,660 |
NET INCOME | 28,244 | 18,767 | 65,951 | 54,277 |
| | | | | |
EARNINGS PER SHARE: | | | | |
Basic | 0.86 | 0.59 | 2.02 | 1.72 |
Diluted | 0.86 | 0.58 | 2.00 | 1.68 |
| | | | | |
SHARES OUTSTNDING: | | | | |
Basic – weighted average | 32,770,265 | 31,743,931 | 32,709,782 | 31,636,085 |
Diluted – weighted average | 32,893,018 | 32,367,940 | 32,913,019 | 32,329,837 |
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
ALL FIGURES IN THOUSANDS OF US $
| | Nine months ended |
| | September 30, 2004 (unaudited) | September 30, 2003 (unaudited) |
| | | |
BALANCE, BEGINNING OF PERIOD | 287,583 | 212,660 |
| | | |
Net income | 65,951 | 54,277 |
| | | |
Premium paid on purchase of shares | - | (105) |
BALANCE, END OF PERIOD | 353,534 | 266,832 |
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
ALL FIGURES IN THOUSANDS OF US $
| | Third quarter ended | Nine months ended |
| | September 30, 2004 (unaudited) | September 30, 2003 (unaudited) | September 30, 2004 (unaudited) | September 30, 2003 (unaudited) |
| | | | | |
CASH PROVIDED BY (USED IN): | | | | |
OPERATING ACTIVITIES | | | | |
Net income from continuing operations: | 28,244 | 18,767 | 65,951 | 54,277 |
Adjustments for: | | | | |
Amortization | 8,142 | 7,459 | 25,562 | 21,761 |
Future income taxes | (526) | 262 | (1,759) | 240 |
Funds held by ceding insurer | (34) | 5,472 | (2,952) | 4,523 |
Loss (gain) on disposal of capital assets | 81 | 11 | 410 | (453) |
| | 35,907 | 31,971 | 87,212 | 80,348 |
| | | | | |
Changes in non-cash working capital: | | | | |
Accounts receivable | (46,683) | (13,308) | (24,069) | (4,276) |
Inventories | (23,718) | 3,526 | (34,275) | (6,289) |
Prepaid expenses | 562 | 286 | 2,303 | (1,078) |
Accounts payable and accrued liabilities | 18,399 | 11,648 | 46,545 | 8,808 |
Income taxes payable | 5,657 | 165 | 6,331 | (9,129) |
| | (45,783) | 2,317 | (3,165) | (11,964) |
CASH PROVIDED BY OPERATING ACTIVITIES |
(9,876) |
34,288 |
84,047 |
68,384 |
| | | | | |
FINANCING ACTIVITIES | | | | |
Increase (decrease) in long-term debt | 12,333 | 40,212 | 250,079 | 225,386 |
Balance of sale and other amounts payable | (69) | 2,216 | 20,911 | 3,852 |
Issuance of capital stock | 515 | 359 | 3,694 | 7,874 |
Repurchase of capital stock | - | - | - | (129) |
Increase (decrease) in bank indebtedness | (1,228) | (4,042) | 32 | (11,572) |
CASH PROVIDED BY (USED) IN FINANCING ACTIVITIES |
11,551 |
38,745 |
274,716 |
225,411 |
| | | | | |
INVESTING ACTIVITIES | | | | |
Acquisition of subsidiary companies | - | (39,721) | (320,530) | (286,919) |
Cash acquired | - | - | 3,734 | 7,207 |
| | - | (39,721) | (316,796) | (279,712) |
Re-acquisition of accounts receivable | - | (27,750) | - | (27,750) |
Additions to capital assets – net | (8,238) | (9,482) | (24,928) | (19,328) |
Deferred charges | (2,850) | (1,251) | (9,727) | (5,496) |
Intangible assets | (190) | (561) | (2,790) | (806) |
CASH USED IN INVESTING ACTIVITIES | (11,278) | (78,765) | (354,241) | (333,092) |
Effect of exchange rate change on cash | 328 | 280 | (599) | (789) |
| | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(9,275) |
(5,452) |
3,923 |
(40,086) |
Cash and cash equivalents, | | | | |
beginning of period | 27,075 | 19,816 | 13,877 | 54,450 |
CASH AND CASH EQUIVALENTS, END OF PERIOD |
17,800 |
14,364 |
17,800 |
14,364 |
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, thereunto duly authorized.
DOREL INDUSTRIES INC.
By: /s/ Martin Schwartz_____________
Martin Schwartz
Title: President and Chief Executive Officer
By: /s/ Jeffrey Schwartz_____________
Jeffrey Schwartz
Title: Executive Vice-President,
Chief Financial Officer
November 3, 2004
