UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO
____________
COMMISSION FILE NO. 0-10235
GENTEX CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2030505
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 N. CENTENNIAL, ZEELAND, MICHIGAN 49464
(Address of principal executive offices) (Zip Code)
(616) 772-1800
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
--- ---
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x Accelerated Filer Non-accelerated Filer
--- --- ---
Indicate by a check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes No x
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class at July 21, 2006
----- ------------------
Common Stock, $0.06 Par Value 146,828,652
Exhibit Index located at page 19
Page 1 of 29
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2006 December 31, 2005
------------- -----------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $326,302,964 $439,681,693
Short-term investments 56,226,643 67,331,928
Accounts receivable, net 70,508,025 60,924,437
Inventories 40,822,489 39,836,822
Prepaid expenses and other 12,037,673 11,212,647
------------ ------------
Total current assets 505,897,794 618,987,527
PLANT AND EQUIPMENT - NET 180,695,166 164,030,341
OTHER ASSETS
Long-term investments 130,542,950 132,524,966
Patents and other assets, net 7,357,744 7,102,968
------------ ------------
Total other assets 137,900,694 139,627,934
------------ ------------
Total assets $824,493,654 $922,645,802
============ ============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 29,409,808 $ 23,607,927
Accrued liabilities 43,403,228 34,480,332
------------ ------------
Total current liabilities 72,813,036 58,088,259
DEFERRED INCOME TAXES 21,898,366 22,962,168
SHAREHOLDERS' INVESTMENT
Common stock 8,809,719 9,362,639
Additional paid-in capital 194,688,318 194,476,306
Retained earnings 512,026,127 623,301,775
Other shareholders' investment 14,258,088 14,454,655
------------ ------------
Total shareholders' investment 729,782,252 841,595,375
------------ ------------
Total liabilities and
shareholders' investment $824,493,654 $922,645,802
============ ============
See accompanying notes to condensed consolidated financial statements.
-2-
GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30 June 30
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
NET SALES $142,391,231 $132,384,445 $281,411,824 $260,026,165
COST OF GOODS SOLD 91,494,753 82,818,876 182,282,638 162,407,779
------------ ------------ ------------ ------------
Gross profit 50,896,478 49,565,569 99,129,186 97,618,386
OPERATING EXPENSES:
Engineering, research and development 9,962,629 8,798,430 20,121,797 16,775,815
Selling, general
& administrative 7,512,959 7,011,298 15,304,027 13,851,129
------------ ------------ ------------ ------------
Total operating expenses 17,475,588 15,809,728 35,425,824 30,626,944
------------ ------------ ------------ ------------
Income from operations 33,420,890 33,755,841 63,703,362 66,991,442
OTHER INCOME (EXPENSE)
Interest and dividend income 5,161,146 4,038,564 10,386,637 7,122,659
Other, net 1,517,113 221,645 4,280,033 1,760,919
------------ ------------ ------------ ------------
Total other income 6,678,259 4,260,209 14,666,670 8,883,578
------------ ------------ ------------ ------------
Income before provision
for income taxes 40,099,149 38,016,050 78,370,032 75,875,020
PROVISION FOR INCOME TAXES 12,863,099 11,975,000 24,762,925 23,901,000
------------ ------------ ------------ ------------
NET INCOME $ 27,236,050 $ 26,041,050 $ 53,607,107 $ 51,974,020
============ ============ ============ ============
EARNINGS PER SHARE:
Basic $ 0.18 $ 0.17 $ 0.35 $ 0.33
Diluted $ 0.18 $ 0.17 $ 0.35 $ 0.33
Cash Dividends Declared per Share $ 0.09 $ 0.085 $ 0.18 $ 0.17
See accompanying notes to condensed consolidated financial statements.
-3-
GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For six months ended June 30,
-----------------------------
2006 2005
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 53,607,107 $ 51,974,020
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 13,379,195 11,803,513
(Gain) loss on disposal of assets (23,204) 154,501
(Gain) loss on sale of investments (3,637,158) (2,084,277)
Deferred income taxes (1,439,236) (767,301)
Amortization of deferred compensation 840,428 876,714
Stock based compensation expense related to employee
stock options and employee stock purchases 3,469,890 0
Tax benefit of stock plan transactions 0 1,142,827
Excess tax benefits from stock based compensation (176,803) 0
Change in operating assets and liabilities:
Accounts receivable, net (9,583,588) (5,887,843)
Inventories (985,667) (3,901,436)
Prepaid expenses and other (9,102) 96,934
Accounts payable 5,801,881 11,674,652
Accrued liabilities, excluding dividends declared 9,845,897 5,597,963
------------- ------------
Net cash provided by
operating activities 71,089,640 70,680,267
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Plant and equipment additions (30,180,530) (28,728,691)
Proceeds from sale of plant and equipment 294,361 24,400
(Increase) decrease in investments 15,465,915 (6,216,622)
Increase in other assets 553,133 (915,916)
------------- ------------
Net cash provided by (used for)
investing activities (13,867,121) (35,836,829)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock from
stock plan transactions 8,853,877 8,403,893
Cash dividends paid (27,882,204) (26,493,842)
Repurchases of common stock (151,749,724) 0
Excess tax benefits from stock based compensation 176,803 0
------------- ------------
Net cash provided by (used for)
financing activities (170,601,248) (18,089,949)
------------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (113,378,729) 16,753,489
CASH AND CASH EQUIVALENTS,
beginning of period 439,681,693 395,538,719
------------- ------------
CASH AND CASH EQUIVALENTS,
end of period $ 326,302,964 $412,292,208
============= ============
See accompanying notes to condensed consolidated financial statements.
-4-
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) The unaudited condensed consolidated financial statements included herein
have been prepared by the Registrant, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to
such rules and regulations, although the Registrant believes that the
disclosures are adequate to make the information presented not misleading.
It is suggested that these unaudited condensed consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Registrant's 2005 annual report on Form 10-K.
(2) In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting of
only a normal and recurring nature, necessary to present fairly the
financial position of the Registrant as of June 30, 2006, and the results
of operations and cash flows for the interim periods presented.
(3) Inventories consisted of the following at the respective balance sheet
dates:
June 30, 2006 December 31, 2005
------------- -----------------
Raw materials $23,791,242 $24,628,200
Work-in-process 4,170,927 3,739,394
Finished goods 12,860,320 11,469,228
----------- -----------
$40,822,489 $39,836,822
=========== ===========
(4) All earnings per share amounts, weighted daily average of shares of common
stock outstanding, common stock, and additional paid-in capital have been
restated, to reflect the Company's announcement on April 1, 2005, of a
two-for-one stock split effected in the form of a 100 percent common stock
dividend for each outstanding share, issued to shareholders on May 6, 2005.
The ex-dividend date was May 9, 2005.
(5) The following table reconciles the numerators and denominators used in the
calculation of basic and diluted earnings per share (EPS):
Quarter Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Numerators:
Numerator for both basic and
diluted EPS, net income $ 27,236,050 $ 26,041,050 $ 53,607,107 $ 51,974,020
Denominators:
Denominator for basic EPS,
weighted-average shares
outstanding 150,592,680 155,568,960 152,402,407 155,396,365
Potentially dilutive shares
resulting from stock plans 451,959 1,640,842 774,195 1,566,070
------------ ------------ ------------ ------------
Denominator for diluted EPS 151,044,639 157,209,802 153,176,602 156,962,435
============ ============ ============ ============
Shares related to stock plans not
included in diluted average common
shares outstanding because their
effect would be antidilutive 7,559,775 3,357,767 5,580,488 4,132,273
(6) Stock-Based Compensation Plans
At June 30, 2006, the Company had two stock option plans, a restricted plan
and an employee stock purchase plan, which are described more fully below.
Effective January 1, 2006, the Company adopted Statement of Financial
Accounting Standards No. 123 (revised), "Share-Based Payment" (SFAS 123(R))
utilizing the modified prospective approach. Prior to the adoption of SFAS
123(R) we accounted for stock option grants under the recognition and
measurement principles of APB Opinion No. 25 (Accounting for Stock Issued
to Employees) and related interpretations,
-5-
and accordingly, recognized no compensation expense for stock option grants
in net income. Readers should refer to Note 6 of our consolidated financial
statements in our Annual Report on Form 10-K for the calendar year ended
December 31, 2005, for additional information related to these stock-based
compensation plans.
Under the modified prospective approach, SFAS 123(R) applies to new awards
and to awards that were outstanding on December 31, 2005. Under the
modified prospective approach, compensation cost recognized in the second
quarter of 2006 includes compensation cost for all share-based payments
granted prior to, but not yet vested as of December 31, 2005, based on the
grant-date fair value estimated in accordance with the original provisions
of SFAS 123, and compensation cost for all share-based payments granted
subsequent to December 31, 2005, based on the grant-date fair value
estimated in accordance with the provisions of SFAS 123 (R). Prior periods
were not restated to reflect the impact of adopting the new standard.
As a result of adopting SFAS 123(R) on January 1, 2006, the Company's
income before taxes, net income and basic and diluted earnings per share
for the second quarter and six months ended June 30, 2006, were $1,749,795,
$1,324,894, and $.01 lower, and $3,469,890, $2,247,815 and $.01 lower,
respectively, than if we had continued to account for stock-based
compensation under APB Opinion No. 25 for our stock option grants.
Compensation cost capitalized as part of inventory as of June 30, 2006, was
$91,611. The cumulative effect of the change in accounting for forfeitures
was not material.
We receive a tax deduction for certain stock option exercises during the
period the options are exercised, generally for the excess of the price at
which the options are sold over the exercise price of the options. Prior to
the adoption of SFAS 123(R), we reported all tax benefits resulting from
the exercise of stock options as operating cash flows in our consolidated
statement of cash flows. In accordance with SFAS 123(R), for the six months
ended June 30, 2006, we revised our consolidated statement of cash flows
presentation to report the tax benefits from the exercise of stock options
as financing cash flows. For the six months ended June 30, 2006, $176,803
of tax benefits from the exercise of stock options and vested restricted
stock were reported as financing cash flows rather than operating cash
flows.
Net cash proceeds from the exercise of stock options and employee stock
purchases were $2,497,767 and $8,838,736, respectively, for the second
quarter and six months ended June 30, 2006. The actual income tax benefit
realized from stock option exercises and vested restricted stock are
$209,568 and $904,879, respectively, for the same periods.
The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," to stock-based employee compensation for the
second quarter and six months ended June 30, 2005:
Three Months Six
Ended Months Ended
June 30, 2005 June 30, 2005
------------- -------------
Net Income, as reported $26,041,050 $ 51,974,020
Deduct: Total stock-based employee
compensation expense determined
under fair value-based method of
all awards, net of tax effects (913,649) (18,017,075)
----------- ------------
Pro forma net income $25,127,401 $ 33,956,945
=========== ============
Earnings per share:
Basic - as reported $ .17 $ .33
Basic - pro forma $ .16 $ .22
Diluted - as reported $ .17 $ .33
Diluted - pro forma $ .16 $ .22
On March 30, 2005, in response to the required implementation of SFAS No.
123(R), the Company accelerated the vesting of current "under water" stock
options. As a result of the vesting acceleration, approximately 2.3 million
shares became immediately exercisable and an additional approximate $13.6
million of proforma stock-based employee compensation expense was
recognized in the first quarter 2005, that otherwise would have been
recognized as follows: $6.1 million in 2005; $4.5 million in 2006; $2.2
million in 2007 and $0.8 million in 2008-2009. The objective of this
-6-
Company action was primarily to avoid recognizing compensation expense
associated with these options in future financial statements, upon the
Company's adoption of SFAS 123(R), effective January 1, 2006. In addition,
the Company also received shareholder approval of an amendment to its
Employee Stock Option Plan to allow the grant of non-qualified stock
options.
EMPLOYEE STOCK OPTION PLAN
In 2004, a new Employee Stock Option Plan was approved, replacing the prior
plan. The Company may grant options for up to 18,000,000 shares under its
new Employee Stock Option Plan. The Company has granted options on
5,001,353 shares (net of shares from canceled options) under the new plan
through June 30, 2006. Under the plans, the option exercise price equals
the stock's market price on date of grant. The options vest after one to
five years, and expire after three to seven years.
The fair value of each option grant in the Employee Stock Option Plan was
estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions for the indicated periods:
Three Months Six Months Ended
Ended June 30, June 30,
--------------- ----------------
2006 2005 2006 2005
------ ------ ------ ------
Dividend yield 1.88% 1.87% 2.00% 2.00%
Expected volatility 30.05% 42.26% 30.40% 42.73%
Risk-free interest rate 5.17% 3.72% 5.00% 3.89%
Expected term of options (in years) 4.37 4.36 4.37 4.37
Weighted-average grant-date fair value $ 3.90 $ 6.17 $ 4.27 $ 5.81
The Company determined that all employee groups exhibit similar exercise
and post-vesting termination behavior to determine the expected term.
As of June 30, 2006, there was $9,374,634 of unrecognized compensation cost
related to share-based payments which is expected to be recognized over the
vesting period with a weighted-average period of 4.4 years.
A summary of the status of the Company's employee stock option plan for the
second quarter and six months ended June 30, 2006, and changes during the
same periods, are presented in the table and narrative below:
Three Months Ended Six Months Ended
June 30, 2006 June 30, 2006
--------------------------------------- ----------------------------------------
Wtd. Avg. Aggregate Wtd. Avg. Aggregate
Remaining Intrinsic Remaining Intrinsic
Shares Wtd. Avg. Contract Value Shares Wtd. Avg. Contract Value
(000) Ex. Price Life (000) (000) Ex. Price Life (000)
------ --------- --------- --------- ------ --------- --------- ---------
Outstanding at Beginning of Period 10,419 $17 10,510 $17
Granted 452 14 856 15
Exercised (146) 13 $ 207 (614) 12 $2,380
Forfeited (79) 18 (106) 18
------ --- ------ --- ------
Outstanding at End of Period 10,646 17 3.0 Yrs $2,153 10,646 17 3.0 Yrs $2,153
------ --- --- --- ------ ------ --- --- --- ------
Exercisable at End of Period 7,532 $17 2.5 Yrs $1,926 7,532 $17 2.5 Yrs $1,926
-7-
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
A summary of the status of the Company's non-vested employee stock option
activity for the second quarter and six months ended June 30, 2006, are
presented in the table and narrative below:
Three Months Ended Six Months Ended
June 30, 2006 June 30, 2006
------------------- -------------------
Wtd. Avg. Wtd. Avg.
Shares Grant Date Shares Grant Date
(000) Fair Value (000) Fair Value
------ ---------- ------ ----------
Non-vested stock options at beginning of period 3,028 5.47 3,069 5.65
Granted 452 3.90 856 4.25
Vested (339) 7.05 (771) 7.05
Forfeited (28) 5.74 (41) 5.73
----- ---- ----- ----
Non-vested stock options at end of period 3,113 5.13 3,113 5.13
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Company has a Non-employee Director Stock Option Plan covering
1,000,000 shares that was approved, replacing a prior plan. The Company has
granted options on 357,240 shares (net of shares from canceled options)
under the current plan through June 30, 2006. Under the plan, the option
exercise price equals the stock's market price on date of grant. The
options vest after six months, and expire after ten years.
As of June 30, 2006, there was $195,198 of unrecognized compensation cost
related to share-based payments which is expected to be recognized over the
balance of the 2006 calendar year.
A summary of the status of the Company's Non-employee Director Stock Option
Plan for the second quarter and six months ended June 30, 2006, and changes
during the second quarter and six months ended June 30, 2006, are presented
in the table and narrative below:
Three and Six Months Ended
June 30, 2006
------------------------------------------
Wtd. Avg. Aggregate
Remaining Intrinsic
Shares Wtd. Avg. Contract Value
(000) Ex. Price Life (000)
------ --------- --------- ---------
Outstanding at Beginning of Period 445 $14
Granted 48 15
Exercised (40) 5 $396
Forfeited (0) --
--- ---
Outstanding at End of Period 453 15 6.09 Yrs $593
--- --- ---- ----
Exercisable at End of Period 405 $15 5.64 Yrs $593
-8-
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
A summary of the status of the Company's non-vested non-employee director
stock option plan activity for the second quarter and six months ended June
30, 2006 are presented in the table and narrative below:
Three and Six
Months Ended
June 30, 2006
-------------------
Wtd. Avg.
Shares Grant Date
(000) Fair Value
------ ----------
Non-vested stock options at beginning of period 0 $ --
Granted 48 5.61
Vested 0 --
Forfeited 0 --
--- -----
Non-vested stock options at end of period 48 $5.61
EMPLOYEE STOCK PURCHASE PLAN
In 2003, a new Employee Stock Purchase Plan covering 1,200,000 shares was
approved, replacing a prior plan. The Company has sold a total of 384,248
shares under the new plan through June 30, 2006. The Company sells shares
at 85% of the stock's market price at date of purchase. The weighted
average fair value of shares sold in 2006 was approximately $13.31.
RESTRICTED STOCK PLAN
The Company has a Restricted Stock Plan covering 1,000,000 shares of common
stock that was approved, the purpose of which is to permit grants of
shares, subject to restrictions, to key employees of the Company as a means
of retaining and rewarding them for long-term performance and to increase
their ownership in the Company. Shares awarded under the plan entitle the
shareholder to all rights of common stock ownership except that the shares
may not be sold, transferred, pledged, exchanged or otherwise disposed of
during the restriction period. The restriction period is determined by a
committee, appointed by the Board of Directors, but may not exceed ten
years. The Company has 533,990 shares outstanding as of June 30, 2006, and
95,610 shares were granted with a restriction period of five years at a
market prices ranging from $14.00 to $17.09 year to date. As of June 30,
2006, the Company has unearned stock-based compensation of $5,168,728
associated with these restricted stock grants. The unearned stock-based
compensation related to these grants is being amortized to compensation
expense over the applicable restriction periods.
(7) Comprehensive income reflects the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. For the Company, comprehensive income represents net
income adjusted for items such as unrealized gains and losses on
investments and foreign currency translation adjustments. Comprehensive
income was as follows:
June 30, 2006 June 30, 2005
------------- -------------
Quarter Ended $24,835,305 $26,133,449
Six Months Ended $53,731,609 $49,922,035
(8) The decrease in common stock during the six months ended June 30, 2006, was
primarily due to the repurchase of 10,004,629 shares for approximately
$151,750,000, partially offset by the issuance of 789,299 shares,
respectively, of the Company's common stock under its stock-based
compensation plans. The Company has also recorded a $0.09 per share cash
dividend in the first and second quarters. The second quarter dividend of
approximately $13,215,000, was declared on May 25, 2006, and was paid on
July 21, 2006.
-9-
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
(9) The Company currently manufactures electro-optic products, including
automatic-dimming rearview mirrors for the automotive industry, and fire
protection products for the commercial building industry:
Quarter Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenue:
Automotive Products $136,049,551 $126,124,967 $269,279,619 $248,084,935
Fire Protection Products 6,341,680 6,259,478 12,132,205 11,941,230
------------ ------------ ------------ ------------
Total $142,391,231 $132,384,445 $281,411,824 $260,026,165
============ ============ ============ ============
Operating Income:
Automotive Products $ 32,143,170 $ 32,359,395 $ 61,244,877 $ 64,336,234
Fire Protection Products 1,277,720 1,396,446 2,458,485 2,655,208
------------ ------------ ------------ ------------
Total $ 33,420,890 $ 33,755,841 $ 63,703,362 $ 66,991,442
============ ============ ============ ============
(10) In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes." This
interpretation clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
statement No. 109, "Accounting for Income Taxes." Interpretation No. 48
prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This Interpretation also provides
guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. This
Interpretation is effective for fiscal years beginning after December 15,
2006. The adoption of Interpretation No. 48 is not expected to have any
significant effect on the Company's consolidated financial position or
results of operations.
-10-
GENTEX CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
SECOND QUARTER 2006 VERSUS SECOND QUARTER 2005
Net Sales. Net sales for the second quarter of 2006 increased by
approximately $10,007,000, or 8%, when compared with the second
quarter last year. Net sales of the Company's automotive auto-dimming
mirrors increased by approximately $9,925,000, or 8%, in the second
quarter of 2006, when compared with the second quarter last year,
primarily due to a 10% increase in auto-dimming mirror unit shipments
from approximately 3,095,000 in the second quarter of 2005 to
3,408,000 in the current quarter. This unit increase primarily
reflected the increased penetration of interior and exterior
auto-dimming mirrors on 2006 model year vehicles. Unit shipments to
customers in North America for the current quarter increased by 10%
compared with the second quarter of the prior year, primarily due to
the takeover business at General Motors previously disclosed. Mirror
unit shipments for the current quarter to automotive customers outside
North America increased by 10% compared with the second quarter in
2005, primarily due to increased penetration at certain European and
Asian automakers. Net sales of the Company's fire protection products
increased 1% for the current quarter versus the same quarter of last
year.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold
increased from 63% in the second quarter of 2005 to 64% in the second
quarter of 2006. This percentage increase primarily reflected the
impact of automotive customer price reductions.
Operating Expenses. Engineering, research and development expenses for
the current quarter increased 13% and approximately $1,164,000, when
compared with the same quarter last year, primarily reflecting stock
option expensing, additional staffing, engineering and testing for new
product development, including mirrors with additional electronic
features, and stock option expensing. Excluding stock option expense
of $619,000, E, R & D expenses increased by 6% when comparing the
current quarter to the same quarter last year. Selling, general and
administrative expenses increased 7% and approximately $502,000, for
the current quarter, when compared with the second quarter of 2005.
This increased expense primarily reflected stock option expensing.
Excluding stock option expense of $556,000, S, G & A expenses
decreased by 1% when comparing the current quarter to the same quarter
last year, primarily due to decreased state taxes.
Total Other Income. Total other income for the current quarter
increased by approximately $2,418,000 when compared with the second
quarter of 2005, primarily due to increased interest income due to
higher interest rates and realized gains on the sale of equity
investments.
Taxes. The provision for income taxes varied from the statutory rate
during the current quarter, primarily due to Extra Territorial Income
Exclusion Act exempted taxable income, domestic production deduction,
tax-exempt investment income and stock option expense.
Net Income. The Company's net income for the current quarter increased
by $1,195,000, or 5%, when compared with the same quarter last year.
Excluding stock option expense of $1,325,000, the Company's net income
increased 10%.
SIX MONTHS ENDED JUNE 30, 2006, VERSUS SIX MONTHS ENDED JUNE 30, 2005
Net Sales. Net sales for the six months ended June 30, 2006, increased
by $21,386,000, or 8%, when compared with the same period last year.
Net sales of the Company's automotive auto-dimming mirrors increased
by $21,195,000, or 9%, as auto-dimming mirror shipments increased by
11% from approximately 6,125,000 in the first six months of 2005 to
6,800,000 units in the first six months of 2006. This increase
primarily reflected the increased penetration of interior auto-dimming
mirrors on 2006 model year vehicles. Unit shipments to customers in
North America increased by 9%, primarily due to the takeover business
at General Motors. Mirror shipments to automotive customers outside
North America increased by 13%, primarily due to increased penetration
at certain European and Asian automakers. Net sales of the Company's
fire protection products increased 2%.
-11-
Cost of Goods Sold. As a percentage of net sales, cost of goods sold
increased from 62% in the six months ended June 30, 2005, to 65% in
the six months ended June 30, 2006, primarily reflecting automotive
customer price reductions and stock option expense. Each factor is
estimated to have impacted cost of goods sold by approximately 1-2
percentage points.
Operating Expenses. For the six months ended June 30, 2006,
engineering, research and development expenses increased approximately
$3,346,000, and increased from 6% to 7% of net sales, when compared to
the same period last year, primarily due to stock option expense and
additional staffing, engineering and testing for new product
development, including mirrors with additional electronic features.
Excluding stock option expense of $1,277,000, E, R & D expenses
increased by 6% for the current period versus the same period last
year. Selling, general and administrative expenses increased
approximately $1,453,000 for the six months ended June 30, 2006, but
remained at 5% of net sales, when compared to the same period last
year, primarily reflecting stock option expense and the continued
expansion of the Company's overseas offices. Excluding stock option
expense of $1,076,000, S, G & A expense increased by 3% versus the
same period in the prior year.
Total Other Income. Other income for the six months ended June 30,
2006, increased $5,783,000 when compared to the same period last year,
primarily due to increased interest income due to higher interest
rates and realized gains on the sale of equity investments.
Taxes. The provision for income taxes varied from the statutory rate
during the six months ended June 30, 2006, primarily due to Extra
Territorial Income Exclusion Act exempted taxable income, domestic
production deduction, tax-exempt investment income and stock option
expense.
Net Income. The Company's net income for the six months ended June 30,
2006, increased $1,633,000, or 3%, when compared to the same period
last year, primarily due to the increased net sales. Excluding stock
option expense of $2,248,000, the Company's net income increased by
7%.
FINANCIAL CONDITION:
Cash flow from operating activities for the six months ended June 30,
2006, slightly increased to $71,090,000, compared to $70,680,000, for
the same period last year, primarily due to an increase in net income.
Capital expenditures for the six months ended June 30, 2006, increased
to $30,181,000, compared to $28,729,000 for the same period last year,
including the new facility construction.
The Company has completed the construction of its fourth automotive
manufacturing facility and a new technical center will be completed in
the summer of 2006. The Company has invested approximately $35-40
million for the new facilities during 2004-2006, which has been funded
from its cash and cash equivalents on hand.
Accounts receivable as of June 30, 2006, increased approximately
$9,584,000 compared to December 31, 2005. The increase was primarily
due to the higher sales level, as well as monthly sales within each
quarter.
Management considers the Company's working capital and long-term
investments totaling approximately $563,628,000 as of June 30, 2006,
together with internally generated cash flow and an unsecured
$5,000,000 line of credit from a bank, to be sufficient to cover
anticipated cash needs for the next year and for the foreseeable
future.
On October 8, 2002, the Company announced a share repurchase plan,
under which it may purchase up to 8,000,000 shares (post-split) based
on a number of factors, including market conditions, the market price
of the Company's common stock, anti-dilutive effect on earnings,
available cash and other factors that the Company deems appropriate.
On July 20, 2005, the Company announced that it had raised the price
at which the Company may repurchase shares under the existing plan. On
May 16, 2006, the Company announced that the Company's Board of
Directors had authorized the repurchased of an additional eight
million shares under the plan. During the quarter ended March 31,
2003, the Company repurchased 830,000 shares (post-split) at a cost of
approximately $10,247,000. During the quarter ended September 30,
2005, the Company repurchased approximately 1,496,000 shares at a cost
of approximately $25,215,000. During the quarter ended March 31, 2006,
the Company repurchased approximately 2,804,000 shares at a cost of
approximately $47,145,000. During the quarter ended June 30, 2006, the
Company repurchased approximately 7,201,000 shares at a cost of
approximately $104,604,000. Approximately 3,669,000 shares remain
authorized to be repurchased under the plan.
-12-
CRITICAL ACCOUNTING POLICIES:
The preparation of the Company's consolidated condensed financial
statements, which have been prepared in accordance with accounting
principles generally accepted in the Unites States, requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. On an
on-going basis, management evaluates these estimates. Estimates are
based on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other
sources. Historically, actual results have not been materially
different from the Company's estimates. However, actual results may
differ from these estimates under different assumptions or conditions.
The Company has identified the critical accounting policies used in
determining estimates and assumptions in the amounts reported in its
Management's Discussion and Analysis of Financial Condition and
Results of Operations in its Annual Report on Form 10-K for the fiscal
year ended December 31, 2005. Management believes there have been no
changes in those critical accounting policies, except as noted below.
STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation in accordance with
the fair value recognition provisions of SFAS No. 123(R). The Company
utilizes the Black-Scholes model, which requires the input of
subjective assumptions. These assumptions include estimating (a) the
length of time employees will retain their vested stock options before
exercising them ("expected term"), (b) the volatility of the Company's
common stock price over the expected term, (c) the number of options
that will ultimately not complete their vesting requirements
("forfeitures") and (d) expected dividends. Changes in the subjective
assumptions can materially affect the estimate of fair value of
stock-based compensation and consequently, the related amounts
recognized on the consolidated condensed statements of operations.
TRENDS AND DEVELOPMENTS:
During the first quarter of 2005, the Company negotiated an extension
to its long-term agreement with General Motors (GM) in the ordinary
course of the Company's business. Under the extension, the Company
will be sourced all of the interior auto-dimming rearview mirrors
programs for GM and its worldwide affiliates through August 2009, and
includes all but two low-volume models that had previously been
awarded to a competitor under a lifetime contract. The new business
also includes the GMT360 program, which is the mid-size truck/SUV
platform that previously did not offer auto-dimming mirrors. The new
GM programs will be transferred to the Company by no later than the
2007 model year. We currently estimate that this new business
represents incremental auto-dimming mirror units in the range of
500,000 on an annualized basis. The Company also negotiated a price
reduction for the GM OnStar(R) feature in its auto-dimming mirrors,
effective January 1, 2005, in connection with GM's stated plan to make
their OnStar system standard across their vehicle models over the next
several years.
During the quarter ended September 30, 2005, the Company negotiated an
extension to its long-term agreement with DaimlerChrysler in the
ordinary course of the Company's business. Under the extension, the
Company will be sourced virtually all Mercedes and Chrysler interior
and exterior auto-dimming rearview mirrors through December 2009.
The Company currently expects that auto-dimming mirror unit shipments
will be approximately 0-5% higher in the third quarter and 5-10%
higher in the calendar year of 2006, compared with the same periods in
2005. These estimates are based on light vehicle production forecasts
in the regions to which the Company ships product, as well as the
estimated option rates for its mirrors on prospective vehicle models.
The Company utilizes the light vehicle production forecasting services
of CSM Worldwide, and CSM's current forecasts for light vehicle
production for calendar 2006 are approximately 15.8 million units for
North America, 20.3 million for Europe and 14.3 million for Japan and
Korea.
-13-
The Company is subject to market risk exposures of varying
correlations and volatilities, including foreign exchange rate risk,
interest rate risk and equity price risk. During the quarter ended
June 30, 2006, there were no material changes in the risk factors
previously disclosed in the Company's report on Form 10-K for the
fiscal year ended December 31, 2005.
The Company has some assets, liabilities and operations outside the
United States, which currently are not significant. Because the
Company sells its automotive mirrors throughout the world, it could be
significantly affected by weak economic conditions in worldwide
markets that could reduce demand for its products.
The Company continues to experience pricing pressures from its
automotive customers, which have affected, and which will continue to
affect, its margins to the extent that the Company is unable to offset
the price reductions with productivity or yield improvements,
engineering and purchasing cost reductions, and increases in unit
sales volume. In addition, profit pressures at certain automakers are
resulting in increased cost reduction efforts by them, including
requests for additional price reductions, decontenting certain
features from vehicles, and warranty cost-sharing programs, which
could adversely impact the Company's sales growth and margins. The
Company also continues to experience some manufacturing yield issues
and pressure for select raw material cost increases. The automotive
industry is experiencing increasing financial and production stresses
due to continuing pricing pressures, lower domestic production levels
due to loss of market share, supplier bankruptcies, and commodity
material cost increases.
Automakers have been experiencing increased volatility and uncertainty
in executing planned new programs which have, in some cases, resulted
in cancellations or delays of new vehicle platforms, package
reconfigurations and inaccurate volume forecasts. This increased
volatility and uncertainty has made it more difficult for the Company
to forecast future sales and effectively utilize capital, engineering,
research and development, and human resource investments.
The Company does not have any significant off-balance sheet
arrangements or commitments that have not been recorded in its
consolidated financial statements.
On March 30, 2005, in response to the required implementation of SFAS
No. 123(R) as disclosed in Note 10, the Company accelerated the
vesting of current "under water" stock options. As a result of the
vesting acceleration, approximately 2.3 million shares became
immediately exercisable and an additional approximate $13.6 million of
proforma stock-based employee compensation expense was recognized in
the first quarter. The objective of this Company action is primarily
to avoid recognizing compensation expense associated with these
options in future financial statements, upon the Company's adoption of
SFAS No. 123(R). In addition, the Company has also received
shareholder approval of an amendment to its Employee Stock Option Plan
to allow the grant of non-qualified stock options.
On April 1, 2005, the Company announced a two-for-one stock split
effected in the form of a 100 percent common stock dividend for each
outstanding share, issued to shareholders on May 6, 2005. The
ex-dividend date was May 9, 2005.
On October 1, 2002, Magna International acquired Donnelly Corporation,
the Company's major competitor for sales of automatic-dimming rearview
mirrors to domestic and foreign vehicle manufacturers and their mirror
suppliers. The Company sells certain automatic-dimming rearview mirror
sub-assemblies to Magna Donnelly. To date, the Company is not aware of
any significant impact of Magna's acquisition of Donnelly upon the
Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this item is provided under the caption
"Trends and Developments" under Item 2 - Management's Discussion and
Analysis of Results of Operations and Financial Condition.
-14-
ITEM 4. CONTROLS AND PROCEDURES
The management, with the participation of its principal executive
officer and principal financial officer, has evaluated the
effectiveness, as of June 30, 2006, of the Company's "disclosure
controls and procedures," as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based upon that evaluation, the Company's
management, including the principal executive officer and principal
financial officer, concluded that the Company's disclosure controls
and procedures, as June 30, 2006, were effective to provide reasonable
assurance that information required to be disclosed by the Company in
the reports filed or submitted by it under the Exchange Act is
recorded, processed, summarized, and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms,
and to provide reasonable assurance that information required to be
disclosed by the Company in such reports is accumulated and
communicated to the Company's management, including its principal
executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure.
In the ordinary course of business, the Company may routinely modify,
upgrade, and enhance its internal controls and procedures for
financial reporting. However, there was no change in the Company's
"internal control over financial reporting" (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the quarter ended June 30, 2006, that has materially affected,
or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
SAFE HARBOR STATEMENT:
Statements in this Quarterly Report on Form 10-Q contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act, as amended, that are based on management's belief,
assumptions, current expectations, estimates and projections about the
global automotive industry, the economy, the impact of stock option
expenses on earnings, the ability to leverage fixed manufacturing
overhead costs, unit shipment growth rates and the Company itself.
Words like "anticipates," "believes," "confident," "estimates,"
"expects," "forecast," "likely," "plans," "projects," and "should,"
and variations of such words and similar expressions identify
forward-looking statements. These statements do not guarantee future
performance and involve certain risks, uncertainties, and assumptions
that are difficult to predict with regard to timing, expense,
likelihood and degree of occurrence. These risks include, without
limitation, employment and general economic conditions, the pace of
economic recovery in the U.S. and in international markets, the pace
of automotive production worldwide, the types of products purchased by
customers, competitive pricing pressures, currency fluctuations, the
financial strength of the Company's customers, the mix of products
purchased by customers, the ability to continue to make product
innovations, the success of newly introduced products (e.g.
SmartBeam), and other risks identified in the Company's filings with
the Securities and Exchange Commission. Therefore actual results and
outcomes may materially differ from what is expressed or forecasted.
Furthermore, the Company undertakes no obligation to update, amend, or
clarify forward-looking statements, whether as a result of new
information, future events, or otherwise.
-15-
PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
Information regarding risk factors appears in management's discussion and
analysis of financial condition and results of operations in Part I - Item
2 of this Form 10-Q and in Part I - Item 1A - Risk Factors of the Company's
report on Form 10-K for the fiscal year ended December 31, 2005. There have
been no material changes from the risk factors previously disclosed in the
Company's report form on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities
The following is a summary of share repurchase activity during the second
quarter ended June 30, 2006:
Total Number
Average of Shares Maximum Number
Total Price Purchased of Shares
Number Paid As Part of That May Yet
Of Shares Per a Publicly Be Purchased
Period Purchased Share Announced Plan Under the Plan
- ------ --------- ------- -------------- --------------
April 2006 750,006 $14.74 750,006 2,120,387
May 2006 3,300,319 $14.82 3,300,319 6,820,068
June 2006 3,150,756 $14.16 3,150,756 3,669,312
--------- ---------
Total 7,201,081 7,201,081
On October 8, 2002, the Company announced a share repurchase plan,
under which it may purchase up to 8,000,000 shares (post-split) based
on a number of factors, including market conditions, the market price
of the Company's common stock, anti-dilutive effect on earnings,
available cash and other factors that the Company deems appropriate.
On July 20, 2005, the Company announced that it had raised the price
at which the Company may repurchase shares under the existing plan.
During the quarter ended March 31, 2003, the Company repurchased
830,000 shares (post-split) at a cost of approximately $10,247,000.
During the quarter ended September 30, 2005, the Company repurchased
approximately 1,496,000 shares at a cost of approximately $25,215,000.
During the quarter ended March 31, 2006, the Company repurchased
approximately 2,804,000 shares at a cost of approximately $47,145,000.
On May 16, 2006, the Company announced that the Company's Board of
Directors had authorized the repurchase of an additional eight million
shares under the plan.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the shareholders of the Company was held on
May 11, 2006.
(b) The following nominees were elected to serve three-year terms on
the Company's Board of Directors by the following votes.
Fred Bauer Gary Goode J. Terry Moran
----------- ----------- --------------
For 142,038,365 134,728,466 142,737,174
Against -- -- --
Withheld 1,715,705 9,025,604 1,016,896
The terms of office for incumbent Directors Ken La Grand, Arlyn
Lanting, John Mulder, Rande Somma, Frederick Sotok and Wallace Tsuha,
continued after the meeting.
-16-
(c) A proposal to ratify the appointment of Ernst & Young LLP as the
Company's auditors for the fiscal year ended December 31, 2006,
was approved by the following vote:
For 142,629,614
Against 1,012,153
Abstain / Broker Non-Votes 112,302
See Part II, Item 4 (b), with respect to the election of directors.
ITEM 6. EXHIBITS
(a) See Exhibit Index on Page 19.
-17-
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.
GENTEX CORPORATION
Date: August 1, 2006 /s/ Fred T. Bauer
-----------------------------------------
Fred T. Bauer
Chairman and Chief
Executive Officer
Date: August 1, 2006 /s/ Enoch C. Jen
-----------------------------------------
Enoch C. Jen
Senior Vice President and
Chief Financial Officer
Principal Financial and
Accounting Officer
-18-
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
3(a) Registrant's Restated Articles of Incorporation, adopted on
August 20, 2004, were filed as Exhibit 3(a) to Registrant's
Report on Form 10-Q dated November 2, 2004, and the same is
hereby incorporated herein by reference.
3(b) Registrant's Bylaws as amended and restated February 27,
2003, were filed as Exhibit 3(b)(1) to Registrant's Report
on Form 10-Q dated May 5, 2003, and the same are hereby
incorporated herein by reference.
4(a) A specimen form of certificate for the Registrant's common
stock, par value $.06 per share, was filed as part of a
Registration Statement on Form S-8 (Registration No.
2-74226C) as Exhibit 3(a), as amended by Amendment No. 3 to
such Registration Statement, and the same is hereby
incorporated herein by reference.
4(b) Amended and Restated Shareholder Protection Rights
Agreement, dated as of March 29, 2001, including as Exhibit
A the form of Certificate of Adoption of Resolution
Establishing Series of Shares of Junior Participating
Preferred Stock of the Company, and as Exhibit B the form
of Rights Certificate and of Election to Exercise, was
filed as Exhibit 4(b) to Registrant's Report on Form 10-Q
dated April 27, 2001, and the same is hereby incorporated
herein by reference.
10(a)(1) A Lease dated August 15, 1981, was filed as part of a
Registration Statement on Form S-1 (Registration Number
2-74226C) as Exhibit 9(a)(1), and the same is hereby
incorporated herein by reference.
10(a)(2) First Amendment to Lease dated June 28, 1985, was filed as
Exhibit 10(m) to Registrant's Report on Form 10-K dated
March 18, 1986, and the same is hereby incorporated herein
by reference.
*10(b)(1) Gentex Corporation Qualified Stock Option Plan (as amended
and restated, effective February 26, 2004) was included in
Registrant's Proxy Statement dated April 6, 2004, filed
with the Commission on April 6, 2004, which is hereby
incorporated herein by reference.
*10(b)(2) First Amendment to Gentex Corporation Stock Option Plan (as
amended and restated February 26, 2004) was filed as
Exhibit 10(b)(2) to Registrant's Report on Form 10-Q dated
August 2, 2005, and the same is hereby incorporated herein
by reference.
*10(b)(3) Specimen form of Grant Agreement for the Gentex Corporation
Qualified Stock Option Plan (as amended and restated,
effective February 26, 2004) was filed as Exhibit 10(b)(3)
to Registrant's Report on Form 10-Q dated November 1, 2005,
and the same is hereby incorporated herein by reference.
*10(b)(4) Gentex Corporation Second Restricted Stock Plan was filed
as Exhibit 10(b)(2) to Registrant's Report on Form 10-Q
dated April 27, 2001, and the same is hereby incorporated
herein by reference.
*10(b)(5) Specimen form of Grant Agreement for the Gentex Corporation
Restricted Stock Plan, was filed as Exhibit 10(b)(4) to
Registrant's Report on Form 10-Q dated November 2, 2004,
and the same is hereby incorporated herein by reference.
-19-
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
*10(b)(6) Gentex Corporation 2002 Non-Employee Director Stock Option
Plan (adopted March 6, 2002), was filed as Exhibit 10(b)(4)
to Registrant's Report on Form 10-Q dated April 30, 2002,
and the same is incorporated herein by reference.
*10(b)(7) Specimen form of Grant Agreement for the Gentex Corporation
2002 Non-Employee Director Stock Option Plan, was filed as
Exhibit 10(b)(6) to Registrant's Report on Form 10-Q dated
November 2, 2004, and the same is hereby incorporated
herein by reference.
*10(b)(8) Confidential Severance Agreement and Release between Gentex
Corporation and Garth Deur 21
10(e) The form of Indemnity Agreement between Registrant and each
of the Registrant's directors and certain officers was
filed as Exhibit 10 (e) to Registrant's Report on Form 10-Q
dated October 31, 2002, and the same is incorporated herein
by reference.
31.1 Certificate of the Chief Executive Officer of Gentex
Corporation pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350). 27
31.2 Certificate of the Chief Financial Officer of Gentex
Corporation pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. 1350). 28
32 Certificate of the Chief Executive Officer and Chief
Financial Officer of Gentex Corporation pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) 29
- ---------
* Indicates a compensatory plan or arrangement.
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