EXHIBIT 99.1
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Denison International Meets Q4 and Full Year 2002 Earnings Expectations;
Ends 2002 with Strong Revenues and Order Intake
Q4 2002 EPS 67% above Q4 2001
MARYSVILLE, Ohio -- (BUSINESS WIRE)--February 17, 2003--Denison International
plc (NASDAQ:DENHY) today reported results for its fourth quarter and twelve
months ended December 31, 2002.
For the current quarter ended December 31, 2002, the Company's net sales
increased 17.8% to $41.3 million from fourth quarter 2001 net sales of $35.0
million. Net income for the current quarter increased 61.9%, or $1.3 million, to
$3.5 million, from $2.2 million recorded in the comparable quarter a year ago.
Reported diluted earnings per share of $0.35 for the current fourth quarter were
$0.14 per share higher than fourth quarter 2001 results.
Gross margin as a percent of sales of 33.0% in the current fourth quarter was
unfavorable to the 36.4% gross margin recorded for the same quarter of 2001. The
impact on gross margin from the higher sales volume was partially offset by
slightly higher manufacturing costs and the mix of products sold in the period.
SG&A, as a percent of sales, was 24.2% for the fourth quarter of 2002 versus
27.8% for the fourth quarter of 2001, resulting primarily from the higher sales
volume recorded and spending controls, partially offset by the absence in 2002
of amortization of negative goodwill of $225K, as a result of the adoption of
SFAS 142 in 2002 (See Special Note below).
For the twelve months ended December 31, 2002, net sales increased 1.6% to
$158.0 million versus net sales of $155.4 million for the comparable period of
2001. 2002 net income of $15.0 million was $1.3 million favorable to net income
for the same period of 2001. Net Income per diluted share as reported was $1.43,
versus net income per diluted share of $1.30 for the twelve months ended
December 30, 2001.
Gross margin, as a percent of sales, decreased slightly to 35.0% for the twelve
months ended December 31, 2002, from 35.5% a year ago. SG&A, as a percent of
sales, increased to 24.8% from 23.6% recorded for 2001, resulting primarily from
the absence of $900K of negative amortization of goodwill in the 2002 results.
Net working capital at the end of December 2002 was $85.8 million, compared to
$82.7 million at September 30, 2002 and $72.6 million at December 31, 2001. The
Company's balance sheet remains strong, with the increase in working capital
from year-end 2001 resulting from the impact on translation of the Company's
European operations at favorable currency exchange rates and the working capital
assumed in the Rander acquisition.
Cash, net of debt, at December 31, 2002 was $38.9 million compared to $37.7
million at September 30, 2002, and $32.7 million at December 31, 2001. In the
quarter ended December 31, 2002 the Company repurchased 300,000 of its shares
under the shareholder approved share repurchase program at an average price of
$14.70 per share, and for all of 2002 the Company repurchased 550,000 shares
under the same program at an average price of $14.83 per share.
CEO Comments and Outlook
Commenting on the Company's performance, President and CEO David Weir said,
"Results for the quarter and full year 2002 were in line with our expectations.
The fourth quarter showed some strengthening of revenues and order intake on a
worldwide basis, and continued the generally improving trend that we have seen
since the beginning of 2002. Also, the de-stocking experienced from our US
distributors appears to have bottomed out. Both revenues and profits benefited
from the weakening of the US dollar against the Euro and other world currencies.
The Rander acquisition made in mid-2002 has been accretive for us and we look
for improved results from this acquisition in 2003."
Weir continued, "Order intake for the fourth quarter was strong, up 28% over the
weak fourth quarter of 2001 and up 7% over the third quarter of 2002, and
resulted in a strong start to 2003. The continued weakness in the dollar since
December, combined with the recovery trend in our worldwide hydraulics markets
and the reduced number of shares outstanding resulting from our share repurchase
program will also benefit 2003 EPS, and we look forward to an improved year over
2002. On the cautionary side, like all companies, we are ever mindful that the
current worldwide economic and political climate is fragile, and as such can
quickly change producing negative impacts."
"Denison's balance sheet remains strong, and, notwithstanding the share
repurchases made in 2002, our cash, net of borrowings, increased by $1.2 million
during the quarter and $6.2 million since December 2001, and now stands at $3.88
per share."
Special Note:
Effective January 1, 2002 Denison International (the "Company") adopted
Financial Accounting Standards No. 142. A provision of the Standard requires
that, upon adoption, the Company write off the balance of its negative goodwill,
established when the company was formed in 1993, and cease the periodic
amortization of goodwill.
For comparative purposes, the table below summarizes the impact of the
accounting change related to goodwill, on the Company's EPS for 2002 and 2001:
$000 Q4 2002 Q4 2001 2002 2001
------- ------- ---- ----
Diluted EPS before effect of
Goodwill Amortization $ 0.35 $ 0.18 $ 1.25 $ 1.21
Net Goodwill Amortization $ 0.00 $ 0.03 $ 0.00 $ 0.09
Negative Goodwill Write-off $ 0.00 $ 0.00 $ 0.18 $ 0.00
-------- -------- -------- --------
Reported Diluted EPS $ 0.35 $ 0.21 $ 1.43 $ 1.30
Fourth quarter diluted earnings per share, before the impact of amortization of
goodwill in 2001, was $0.35 for the current quarter versus $0.18 per share for
the same quarter of 2001.
Net income per diluted share for the twelve months ended December 31, 2002,
before the impact of amortization of goodwill in 2001 and the negative goodwill
write-off in 2002, was $1.25 per share compared to $1.21 per share for the same
period in 2001.
Order Activity
Order receipts for the fourth quarter of 2002 increased 28.1% from a year ago to
$40.1 million and were 25.9% favorable to fourth quarter 2001 on a currency
adjusted volume basis. It should be noted that the Company's order intake for
the fourth quarter of 2001 was extremely low on a historical basis, due to the
worldwide economic uncertainty that followed the events of September 11, 2001.
North American order receipts were favorable by 23.4% versus the fourth quarter
of 2001, while European orders increased by 38.2% (34.3% on a currency adjusted
volume basis) and Asia-Pacific orders declined by 1%. Order backlog at December
31, 2002 was $26.3 million compared to $24.2 million at December 31, 2001.
Order receipts for the twelve months ended December 31, 2002 were $156.2 million
or favorable by 4.8% to 2001 order receipts of $148.7 million. On a currency
adjusted volume basis, 2002 order receipts were 3.3% favorable to the same
period in 2001. Full year 2002 North American order receipts were up 1% versus
the same period of 2001, while European orders increased 10.4% and Asia-Pacific
orders were unfavorable to the same period of 2001 by 7.4%. On a volume basis,
excluding the impact of the currency fluctuations between the dollar and Euro
and Asian currencies, Asia-Pacific orders were unfavorable by 5.7% versus 2001
and European orders were favorable to the twelve months ended December 31, 2001
by 6.9%.
Segment Results
Sales in North America increased 4.4% to $10.2 million for the current quarter
versus 2001. Sales in the Asia-Pacific region were $6.2 million, equal to 2001
results. Sales in Europe increased by 30.5% to $24.9 million in the current
quarter versus 2001, and were favorable to the 2001 fourth quarter by 16.7%
after adjusting for the change in currency rates.
North America reported operating income of $0.5 million for the current quarter,
compared to operating loss of $0.7 million for the fourth quarter of 2001,
resulting from increased sales volume and cost controls. Operating income in the
Asia-Pacific region was $0.1 million compared to operating income of $0.6
million for the 2001 fourth quarter, as the fourth quarter of 2001 contained a
considerable amount of business from a special project for the Australian Navy.
European operating income increased 37.5%, or $1.0 million, to $3.7 million for
the current quarter from a year ago reflecting the sharp increase in sales
revenues.
North American sales declined by 6.0% in 2002 to $45.2 million, while
Asia-Pacific sales rose 4.8% to $23.1 million from 2001 levels. 2002 European
net sales were $89.7 million, a 5.2% increase over the same period of 2001.
North America reported operating income of $2.5 million for 2002 versus $1.6
million for the same period in 2001, reflecting improvements in manufacturing
costs at the Company's Marysville, Ohio facility. 2002 operating income for the
Company's European operations declined 12.1%, or $1.8 million, to $13.0 million,
from the same period in 2001, reflecting lower production and resulting cost
inefficiencies. The Company's Asia-Pacific operations recorded operating income
of $1.2 million, down 39.3% from the operating income reported for the same
period in 2001, again resulting from the absence of special projects in 2002 as
noted in the quarterly 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 Tuesday,
February 18, 2002 at 10:00 a.m. ET to discuss the Company's fourth quarter 2002
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) (audited)
Three Months Ended Twelve Months Ended
December 31 December 31
2002 2001 2002 2001
---- ---- ---- ----
Net Sales 41,280 35,046 158,011 155,446
Cost of Sales 27,664 22,273 102,600 100,207
------ ------ ------- -------
Gross Profit 13,616 12,733 55,411 55,239
% 33.0% 36.4% 35.0% 35.5%
S,G&A 9,982 9,733 39217 36,689
----- ----- ----- ------
Operating Income 3,634 3,000 16,194 18,550
% 8.8% 8.6% 10.2% 11.9%
Other Income/(expense) (154) (62) (486) 109
Net Interest Income 404 551 1,117 1,258
--- --- ----- -----
Income Before Taxes 3,884 3,489 16,825 19,917
Tax Provision 357 1,310 3,705 6,195
--- ----- ----- -----
Net Income, Before Cumulative Effect of a
change in Accounting Principle 3,527 2,179 13,120 13,722
Cumulative Effect of a Change in
Accounting Principle, Net of Taxes 0 0 1,858 0
- - ----- -
Net Income, After Cumulative Effect of a
Change in Accounting Principle 3,527 2,179 14,978 13,722
===== ===== ====== ======
Basic Earnings Per Share, Before
Cumulative Effect of a change in
Accounting Principle $0.35 $0.21 $1.25 $1.30
Cumulative Effect of a Change in
Accounting Principle $0 $0 $0.18 $0
-- -- ----- --
Basic Earnings per Share $0.35 $0.21 $1.43 $1.30
===== ===== ===== =====
Diluted Earnings Per Share $0.35 $0.21 $1.43 $1.30
===== ===== ===== =====
Basic Shares for Period 10,169,874 10,563,950 10,453,042 10,563,950
========== ========== ========== ==========
Diluted Shares for Period 10,180,906 10,576,241 10,486,748 10,580,660
========== ========== ========== ==========
DENISON INTERNATIONAL plc
CONDENSED CONSOLIDATED BALANCE SHEETS
USD-(000's) (audited) (audited)
December 31, December 31,
2002 2001
----------- ------------
Current assets:
Cash & cash equivalents $ 39,752 $ 43,245
Accounts receivable, net 32,554 27,715
Inventories 42,677 39,257
Other current assets 5,590 4,680
--------- ---------
Total current assets 120,573 114,897
Property, plant & equipment, net 31,132 27,912
Other assets 17,834 14,006
--------- ---------
Total assets $ 169,539 $ 156,815
========= =========
Current liabilities:
Notes payable to bank $ 898 $ 10,545
Accounts payable and other
accrued liabilities 33,925 31,729
--------- ---------
Total current liabilities 34,823 42,274
Concurrent liabilities 18,360 18,316
Shareholders equity:
Retained earnings 109,900 103,107
Other shareholders equity 6,456 (6,882)
--------- ---------
Total shareholders equity 116,356 96,225
Total liabilities and
shareholders equity $ 169,539 $ 156,815
========= =========
DENISON INTERNATIONAL plc
SEGMENT INFORMATION
Three Months Ended Twelve Months Ended
($000) December 31 December 31
-------------------- ---------------------
2002 2001 2002 2001
------ ------ ------- -------
Net Sales
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Europe 24,908 19,082 89,718 85,305
North America 10,154 9,723 45,218 48,118
Asia-Pacific 6,218 6,241 23,075 22,023
Corporate -- -- -- --
------ ------ ------- -------
Consolidated 41,280 35,046 158,011 155,446
Gross Earnings
--------------
Europe 9,339 7,612 34,509 34,859
North America 3,031 2,242 13,773 12,674
Asia-Pacific 1,673 2,818 7,150 8,142
Corporate / IC Profit Elim (427) 101 (21) (436)
------ ------ ------- -------
Consolidated 13,616 12,773 55,411 55,239
Operating Income
----------------
Europe 3,727 2,710 12,992 14,786
North America 463 (709) 2,533 1,571
Asia-Pacific 140 630 1,212 1,998
Corporate / IC Profit Elim (696) 369 (543) 195
------ ------ ------- --------
Consolidated 3,634 3,000 16,194 18,550
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