EXHIBIT 99.1
Denison International Meets Q2 2003 Earnings Expectations
Q2 2003 net sales 17% above Q2 2002 with Q2
order receipts totaling $48.6 million
MARYSVILLE, Ohio -- (BUSINESS WIRE)--July 14, 2003--Denison International plc
(NASDAQ:DENHY) today reported results for its second quarter and six months
ended June 30, 2003.
Special Note:
Effective January 1, 2002 Denison International (the "Company") adopted
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" (SFAS 142). In 2002, the Company also adopted Statement of
Financial Accounting Standards No. 141 "Business Combinations" (SFAS 141), which
requires that in a business combination in which the fair value of the net
assets acquired exceeds cost, any residual negative goodwill is recognized as an
extraordinary gain in the period in which the business combination is initially
recognized. At the time of adoption of SFAS 142 the Company was carrying a
balance of negative goodwill of $1.858 million. In accordance with SFAS 141,
upon the adoption of SFAS 142, the negative goodwill balance was written-off in
the first quarter of 2002 and recorded as a Change in Accounting Principle. For
comparative purposes, the table below summarizes the impact of the accounting
change related to the negative goodwill, on 2003 and 2002 results:
$000 Q2 2003 Q2 2002 YTD 2003 YTD 2002
---- ------- ------- -------- --------
Diluted EPS before Cumulative Effect
of Change in Accounting Principle $0.38 $0.32 $0.75 $0.59
Cumulative Effect of Change
in Accounting Principle $ -0- $ -0- $ -0- $0.18
----- ----- ----- -----
Reported Diluted EPS $0.38 $0.32 $0.75 $0.77
===== ===== ===== =====
Quarterly Results
For the three months ended June 30, 2003, the Company's net sales increased 17%
to $46.4 million from second quarter 2002 net sales of $39.6 million. Net income
for the current quarter increased 10.2%, or $0.3 million, to $3.8 million, from
$3.4 million recorded in the comparable quarter a year ago. Reported diluted
earnings per share of $0.38 for the current second quarter were $0.06 per share
higher than second quarter 2002 results.
Gross margin as a percent of sales of 35.5% in the current second quarter was
favorable to a gross margin of 35.3% for the same quarter of 2002. SG&A, as a
percent of sales, was 24.7% for the second quarter of 2003 versus 25.0% for the
second quarter of 2002. Operating income for the second quarter 2003 was $5.0
million, up $0.9 million or 22% from second quarter 2002. Operating margin, as a
percent of net sales, was 10.8% for the three months ended June 30, 2003 versus
10.4% for the same period of 2002. The effective tax rate for the three months
ended June 30, 2003 was 26.1%, compared to a 2002 effective tax rate of 20.7%,
after recognition of certain deferred tax assets for the Company's German
operations.
Six Month Results
For the six months ended June 30, 2003, net sales increased 17% to $90.8 million
versus net sales of $77.8 million for the comparable period of 2002. Net income
for the six months ended June 30, 2003 increased to $7.5 million compared with
$6.4 million, before the cumulative effect of a change in accounting principal,
recorded for the comparable period of 2002, resulting from higher revenues. Net
income per diluted share for the six months ended June 30, 2003 was $0.75 as
compared to $0.59, before the cumulative effect of a change in accounting
principle recorded in 2002.
Gross margin, as a percent of sales, increased to 35.9% for the six months ended
June 30, 2003, from 35.5% a year ago. SG&A, as a percent of sales, was 24.7% for
both periods. Operating income increased by $1.8 million, or 20.2%, for the six
months ended June 30, 2003 versus 2002 results.
Net working capital at the end of June 2003 was $99.7 million, compared to $92.7
million at March 2003. While several of the components of working capital
decreased from March 31, 2003 in local currencies, the Company benefited from a
favorable Euro to dollar currency exchange rate on its European operations
versus those at the end of the first quarter of 2003 resulting in increased
working capital. Cash flow from operations was strong, totaling $8.3 million for
the six months ended June 30, 2003 versus $4.4 million for the comparable period
in 2002. Cash, net of debt, at June 30, 2003 increased 24% to $47.9 million
compared to $39.2 million at March 31, 2003. No shares were repurchased in the
current quarter under the Company's Share Repurchase Program.
Order Activity
Order receipts for the second quarter of 2003 increased 20.4% from a year ago to
$48.6 million, or 4.7% on a currency adjusted volume basis. North American order
receipts were unfavorable by 3.0% versus the second quarter of 2002, mirroring
the overall downward trend in the North American hydraulics industry, while
European orders remained strong, increasing 39.6%, or 13.6% on a currency
adjusted volume basis. Asia-Pacific orders decreased by 2.3%, or 8.2% on a
currency adjusted volume basis, reflecting the impact of SARS and related health
concerns, particularly in the China region, which has hampered business
activity. Order backlog at June 30, 2003 increased 11.4%, or $3.4 million, to
$33.1 million compared to $29.7 million at March 31, 2003.
Year to date 2003 order receipts of $95.2 million increased $16.6 million, or
21.1% versus 2002, or 6.1% on a currency adjusted volume basis. European orders
continue to show growth with YTD 2003 orders up 10.5% versus 2002 on a volume
basis. North American orders were 3.1% favorable to the prior year on a volume
basis, 4.6% on an actual basis, despite the difficult conditions experienced in
the North American hydraulics industry. Asia-Pacific orders year to date for
2003 were unfavorable by 4% on a volume basis.
CEO Comments and Outlook
Commenting on the performance, President and CEO David Weir said "We added to
the strong start we experienced in the first quarter of 2003, particularly in
our European operations. We surpassed the sales growth of the 2003 first
quarter, again posting record sales of $46.4 million in our second quarter,
helped in part from the continuing weaker dollar/Euro relationship. While second
quarter 2003 sales results in our North American operations were weaker than
2002, we did see a modest increase in North American sales on a year to date
basis. With SARS and the related health concerns that have slowed business
activity in the Asia region subsiding, we are anticipating a return of the
growth previously experienced in that region as we enter the third quarter. EPS
increased by $0.06 per share for the second quarter versus 2002, and is up 27%
year to date 2003 on a comparable accounting basis."
Weir concluded, "Order intake during the quarter was up 20.4% over the same
period in 2002 to $48.6 million, and our order backlog of $33 million indicates
a continuation of the strong trend we have experienced this year. Our balance
sheet remains strong with cash net of borrowings increasing nearly $9 million
from year end 2002 to $48 million or $4.80 per share."
Segment Results
Sales in Europe increased 28.9%, or 5.4% on a currency adjusted basis, to $28.3
million for the current quarter versus $21.9 million recorded in the 2002 second
quarter. Sales in the Asia-Pacific region increased 6.4% to $6.2 million versus
$5.8 million recorded in the second quarter of 2002, and were equal to 2002
second quarter sales on a volume basis. North American sales of $11.9 million
were equal to second quarter 2002 sales results.
The European segment recorded operating income of $3.6 million for the second
quarter, up $0.7 million or 22.6% versus the same period of 2002. Asia-Pacific
recorded operating income of $0.4 million, in line with 2002 results. North
America reported operating income of $0.5 million for the current quarter,
compared to operating income of $0.7 million for the second quarter of 2002.
Year to date sales in the European segment were $55.2 million, up $11.9 million
or 27.5% over 2002 results, and were favorable by 4.6% on a currency adjusted
volume basis. Sales in the Asia-Pacific segment for the first six months of 2003
were $11.7 million, favorable by 6.5% on an actual basis and equal to 2002 on a
volume basis.
North American year to date 2003 sales of $23.9 million were 1.6% favorable to
2002 on an actual basis and in line with 2002 results on a volume basis.
European operating income increased $1.4 million or 22.8% year to date for 2003
versus 2002 results. North American operating income increased 52.8%, or $0.6
million, resulting from increased operating efficiencies at the Company's
Marysville, Ohio manufacturing facility. Asia-Pacific operating income of $0.7
million was in line with 2002 results.
Denison International plc (NASDAQ:DENHY), is an industrial manufacturer and
servicer of highly engineered hydraulic fluid power systems and components. For
more information about our products and services, please visit us at
www.denisonhydraulics.com
Notice of Conference call: Denison's conference call will be held on Thursday,
July 15, 2003 at 11:30 a.m. ET to discuss the Company's second quarter 2003
results and will be available to all interested parties via live audio webcast
or through archive on the company's website at www.denisonhydraulics.com.
Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Act of 1995. Such forward-looking statements,
including statements in the CEO Comments paragraph regarding future prospects
and performance, are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those currently anticipated.
Shareholders, potential investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking statements. The
forward-looking statements made herein are only made as of the date of this
press release and the company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
Contacts: Bruce A. Smith Melodye Demastus
Sr. Vice President & CFO Melrose Consulting
(937) 644-4437 (614) 771-0860
-three pages of tables to follow-
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
($000 except share data) (unaudited) (unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ----------------------
2003 2002 2003 2002
---- ---- ---- ----
Net Sales 46,356 39,620 90,800 77,806
Cost of Sales 29,893 25,618 58,186 50,208
------ ------ ------ ------
Gross Profit 16,463 14,002 32,614 27,598
% 35.5% 35.3% 35.9% 35.5%
S,G&A 11,470 9,890 22,472 19,228
------ ----- ------ ------
Operating Income 4,993 4,112 10,142 8,370
% 10.8% 10.4% 11.2% 10.8%
Other Income/(expense) (183) (53) (92) (222)
Net Interest Income 274 236 375 443
--- --- --- ---
Income Before Taxes 5,084 4,295 10,425 8,591
Tax Provision 1,330 889 2,929 2,218
----- --- ----- -----
Net Income, Before Cumulative Effect of a
change in Accounting Principle 3,754 3,406 7,496 6,373
Cumulative Effect of a Change in
Accounting Principle, Net of Taxes 0 0 0 1,858
Net Income, After Cumulative Effect of a
Change in Accounting Principle 3,754 3,406 7,496 8,231
===== ===== ===== =====
Basic Earnings Per Share, Before
Cumulative Effect of a change in
Accounting Principle $0.38 $0.32 $0.75 $0.60
Cumulative Effect of a Change in
Accounting Principle $0 $0 $0 $0.18
-- -- -- -----
Basic Earnings per Share $0.38 $0.32 $0.75 $0.78
===== ===== ===== =====
Diluted Earnings Per Share $0.38 $0.32 $0.75 $0.77
===== ===== ===== =====
Basic Shares for Period 9,934,100 10,567,700 9,972,374 10,567,700
========= ========== ========= ==========
Diluted Shares for Period 9,983,430 10,640,443 10,004,275 10,621,923
========= ========== ========== ==========
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
USD-(000's) (unaudited) (audited)
June 30, December 31,
2003 2002
----------- ------------
Current assets:
Cash & cash equivalents $ 48,749 $ 39,752
Accounts receivable, net 39,455 32,554
Inventories 45,655 42,677
Other current assets 5,040 5,590
-------- --------
Total current assets 138,899 120,573
Property, plant & equipment, net 32,066 31,132
Other assets 16,518 17,834
-------- --------
Total assets $187,483 $169,539
======== ========
Current liabilities:
Notes payable to bank $ 895 $ 898
Accounts payable and other
accrued liabilities 38,353 33,925
-------- --------
Total current liabilities 39,248 34,823
Noncurrent liabilities 19,222 18,360
Shareholders equity:
Retained earnings 116,063 109,900
Other shareholders equity 12,950 6,456
-------- --------
Total shareholders equity 129,013 116,356
Total liabilities and
shareholders equity $187,483 $169,539
======== ========
DENISON INTERNATIONAL plc
SEGMENT INFORMATION
Three Months Ended Six Months Ended
($000) June 30 June 30
----------------- -----------------
2003 2002 2003 2002
------ ------ ------ ------
Net Sales
---------
Europe 28,297 21,948 55,219 43,322
North America 11,889 11,874 23,882 23,496
Asia-Pacific 6,170 5,798 11,699 10,988
Corporate -- -- -- --
------ ------ ------ ------
Consolidated 46,356 39,620 90,800 77,806
Gross Earnings
--------------
Europe 10,364 8,334 21,041 16,589
North America 3,580 3,738 7,563 7,067
Asia-Pacific 1,960 1,898 3,650 3,531
Corporate / IC Profit Elim 559 32 360 411
------ ------ ------ ------
Consolidated 16,483 14,002 32,814 27,598
Operating Income
----------------
Europe 3,645 2,972 7,578 6,171
North America 541 687 1,745 1,142
Asia-Pacific 445 417 702 713
Corporate / IC Profit Elim 362 36 117 344
------ ------ ------ ------
Consolidated 4,993 4,112 10,142 8,370
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