EXHIBIT 99.1
Denison International Meets Q3 2003 Earnings Expectations
Q3 2003 EPS 12.9% above Q3 2002, with Q3 order receipts totaling $40.9 million
MARYSVILLE, Ohio -- (BUSINESS WIRE)--October 16, 2003--Denison International plc
(NASDAQ:DENHY) today reported results for its third quarter and nine months
ended September 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 Q3 2003 Q3 2002 YTD 2003 YTD 2002
------- ------- -------- --------
Diluted EPS before Cumulative Effect of Change in
Accounting Principle $0.35 $0.31 $1.10 $ 0.90
Cumulative Effect of Change in Accounting
Principle $ - 0 - $ - 0 - $ - 0 - $ 0.18
------- ------- ------- ------
Reported Diluted EPS $0.35 $0.31 $1.10 $ 1.08
===== ===== ===== ======
Quarterly Results
For the three months ended September 30, 2003, the Company's net sales increased
11.4% to $43.4 million from third quarter 2002 net sales of $38.9 million. Net
income for the current quarter increased 9.4%, or $0.3 million, to $3.5 million,
from $3.2 million recorded in the comparable quarter a year ago. Reported
diluted earnings per share of $0.35 for the current third quarter were up 12.9%,
or $0.04, per share, over third quarter 2002 results.
Gross margin as a percent of sales of 35.8% in the current third quarter was
slightly unfavorable to a gross margin of 36.5% for the same quarter of 2002.
SG&A, as a percent of sales, declined to 24.8% for the third quarter of 2003
versus 25.7% for the third quarter of 2002. Operating income for the third
quarter 2003 was $4.8 million, up $0.6 million or 14.3% from third quarter 2002.
Operating margin, as a percent of net sales, was 11.0% for the three months
ended September 30, 2003 versus 11.2% for the same period of 2002. The effective
tax rate for the three months ended September 30, 2003 was 27.0%, compared to a
2002 effective tax rate of 25.7%, after recognition of certain deferred tax
assets for the Company's German operations for 2002.
Nine Month Results
For the nine months ended September 30, 2003, net sales increased 15.0% to
$134.2 million versus net sales of $116.7 million for the comparable period of
2002. Net income for the nine months ended September 30, 2003 increased to $11.0
million compared with $9.6 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 nine months ended
September 30, 2003 was $1.10 as compared to $0.90, 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 nine months
ended September 30, 2003, from 35.8% a year ago. SG&A, as a percent of sales,
was 24.8% for the current nine months, compared to 25.0% reported in the
comparable 2002 period. Operating income increased by $2.3 million, or 18.3%,
for the nine months ended September 30, 2003 versus 2002 results.
Net working capital at the end of September 2003 was $105.1 million, compared to
$99.7 million at June 2003. While several of the components of working capital
decreased from June 30, 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 second quarter of 2003 resulting in increased
working capital. Cash flow from operations was strong, totaling $16.2 million
for the nine months ended September 30, 2003 versus $13.0 million for the
comparable period in 2002. Cash, net of debt, at September 30, 2003 increased
15.7% to $55.4 million compared to $47.9 million at June 30, 2003. No shares
were repurchased in the current quarter under the Company's Share Repurchase
Program.
Order Activity
Order receipts for the third quarter of 2003 increased 9.1% from a year ago to
$40.9 million, or 0.4% on a currency adjusted volume basis. North American order
receipts were favorable by 2.1% versus the third quarter of 2002, despite the
overall downward trend in the North American hydraulics industry, while European
orders increased 4.6%. Asia-Pacific orders were strong in the third quarter of
2003, increasing by 43.4%, reflecting resumption of the growth rates experienced
prior to the SARS health concerns that hampered business activity in the region.
Order backlog at September 30, 2003 increased 9.2%, or $2.6 million, to $30.8
million compared to $28.2 million at September 30, 2002.
Year to date 2003 order receipts of $136.1 million increased $20.0 million, or
17.2% versus 2002, or 4.4% on a currency adjusted volume basis. European orders
continued to grow with YTD 2003 actual orders up 24.7% versus 2002, and up 4.5%
on a volume basis. North American orders were 2.1% favorable to the prior year
on a volume basis, 3.8% on an actual basis, despite the difficult conditions
experienced in the North American hydraulics industry. Asia-Pacific orders year
to date for 2003 were favorable by 14.5% on an actual basis and 8.0% on a volume
basis.
CEO Comments and Outlook
Commenting on performance, President and CEO David Weir said "We were pleased
with our third quarter results, as we surpassed the sales growth of the 2003
first and second quarters, again posting record sales of $43.4 million in our
third quarter. Although we benefited in part from Euro/dollar currency exchange
gains, we also benefited from strong performance at our Asia-Pacific operations
as a result of a return to the growth rates previously experienced in that
region prior to the SARS health concerns. Our European operations were also
strong recording a 6.5% sales increase on a currency adjusted basis. At the same
time, third quarter 2003 sales results in our North American operations were
weaker than 2002, with lower sales from our North American OEM's in the mining,
drilling and tunneling sectors. EPS increased by $0.04 per share for the third
quarter versus 2002, and is up 22% year to date 2003 on a comparable accounting
basis."
Weir concluded, "Order intake during the quarter was up 9.1% over the same
period in 2002 to $40.9 million, and our order backlog of $31 million indicates
a continuation of the strong trend we have experienced this year. Our balance
sheet remains strong with cash net of borrowings increasing by $16.6 million
from year end 2002 to $55 million or $5.65 per share."
Segment Results
Sales in Europe increased 20.8%, or 6.5% on a currency adjusted basis, to $25.9
million for the current quarter versus $21.5 million recorded in the 2002 third
quarter. Sales in the Asia-Pacific region increased 16.5% to $6.8 million versus
$5.9 million recorded in the third quarter of 2002, and were favorable by 11.3%
on a volume basis. North American sales of $10.6 million were unfavorable to
third quarter 2002 sales results by 8.6% on an actual basis.
The European segment recorded operating income of $3.6 million for the third
quarter, up $0.5 million or 17.0% versus the same period of 2002. Asia-Pacific
recorded operating income of $0.6 million, up 77.1% or $0.3 million versus third
quarter 2002 results. North America reported operating income of $0.3 million
for the current quarter, compared to operating income of $0.9 million for the
third quarter of 2002.
Year to date sales in the European segment were $81.2 million, up $16.4 million
or 25.2% over 2002 results, and were favorable by 5.2% on a currency adjusted
volume basis. Sales in the Asia-Pacific segment for the first nine months of
2003 were $18.5 million, favorable to 2002 by 10.0% on an actual basis and 3.5%
on a volume basis. North American year to date 2003 sales of $34.5 million were
1.7% unfavorable to 2002 on an actual basis and were unfavorable by 3.6% on a
volume basis.
European operating income increased $2.9 million or 20.9% year to date for 2003
versus 2002 results. North American operating income of $2.0 million was
slightly unfavorable to 2002 levels; while Asia-Pacific operating income of $1.3
million increased $0.3 million or 24.8% to 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 Friday,
October 17, 2003 at 2:00 p.m. ET to discuss the Company's third 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
CFO President
(937) 644-4437 Melrose Consulting
(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 Nine months Ended
September 30 September 30
------------ ------------
2003 2002 2003 2002
---- ---- ---- ----
Net Sales 43,365 38,925 134,165 116,731
Cost of Sales 27,851 24,728 86,037 74,936
------ ------ ------ ------
Gross Profit 15,514 14,197 48,128 41,795
% 35.8% 36.5% 35.9% 35.8%
S,G&A 10,753 10,007 33,225 29,235
------ ------ ------ ------
Operating Income 4,761 4,190 14,903 12,560
% 11.0% 10.8% 11.1% 10.8%
Other Income/(expense) (241) (110) (333) (332)
Net Interest Income 265 270 640 713
--- --- --- ---
Income Before Taxes 4,785 4,350 15,210 12,941
Tax Provision 1,293 1,130 4,222 3,348
----- ----- ----- -----
Net Income, Before Cumulative Effect of a
change in Accounting Principle 3,492 3,220 10,998 9,593
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 3,492 3,220 10,998 11,451
===== ===== ====== ======
Basic Earnings Per Share, Before
Cumulative Effect of a change in
Accounting Principle $0.35 $0.31 $1.10 $0.91
Cumulative Effect of a Change in
Accounting Principle $0 $0 $0 $0.18
-- -- -- -----
Basic Earnings per Share $0.35 $0.31 $1.10 $1.09
===== ===== ===== =====
Diluted Earnings Per Share $0.35 $0.31 $1.10 $1.08
===== ===== ===== =====
Basic Shares for Period 9,937,651 10,510,635 9,960,673 10,548,469
========= ========== ========= ==========
Diluted Shares for Period 10,058,443 10,525,982 10,022,204 10,589,733
========== ========== ========== ==========
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
USD-(000's) (unaudited) (audited)
September 30, December 31,
2003 2002
---------------------- ----------------------
Current assets:
Cash & cash equivalents $ 56,203 $ 39,752
Accounts receivable, net 36,870 32,554
Inventories 46,816 42,677
Other current assets 4,489 5,590
---------------------- ----------------------
Total current assets 144,378 120,573
Property, plant & equipment, net 32,457 31,132
Other assets 16,700 17,834
---------------------- ----------------------
Total assets $ 193,535 $ 169,539
====================== ======================
Current liabilities:
Notes payable to bank $ 793 $ 898
Accounts payable and other
accrued liabilities 38,438 33,925
---------------------- ----------------------
Total current liabilities 39,231 34,823
Noncurrent liabilities 19,657 18,360
Shareholders equity:
Retained earnings 119,555 109,900
Other shareholders equity 15,092 6,456
---------------------- ----------------------
Total shareholders equity 134,647 116,356
Total liabilities and
shareholders equity $ 193,535 $ 169,539
====================== ======================
DENISON INTERNATIONAL plc
SEGMENT INFORMATION
Three Months Ended Nine months Ended
($000) September 30 September 30
------------------------------------ ------------------------------------
2003 2002 2003 2002
---------------- -------------- --------------- -----------------
Net Sales
Europe 25,949 21,488 81,168 64,810
North America 10,577 11,568 34,459 35,064
Asia-Pacific 6,839 5,869 18,538 16,857
Corporate - - - -
---------------- -------------- --------------- -----------------
Consolidated 134,165
43,365 38,925 116,731
Gross Earnings
Europe 9,910 8,581 30,951 25,170
North America 3,270 3,675 10,833 10,742
Asia-Pacific 2,034 1,946 5,684 5,477
Corporate / IC Profit Elim 300 (5) 660 406
---------------- -------------- --------------- -----------------
Consolidated
15,514 14,197 48,128 41,795
Operating Income
Europe 3,619 3,094 11,197 9,265
North America 296 928 2,041 2,070
Asia-Pacific 636 359 1,338 1,072
Corporate / IC Profit Elim 210 (191) 327 153
---------------- -------------- --------------- -----------------
Consolidated 14,903
4,761 4,190 12,560
# # #