EXCHANGES TSX: DII.B, DII.A
- Sales increase 20% to US$2.2 billion
- Net income rises 29% to US$113 millionMONTREAL, March 11 /CNW Telbec/ - Dorel Industries Inc. (TSX: DII.B
DII.A) today announced results for the fourth quarter and year ended December
30, 2008. Revenue for the fourth quarter increased 4.6% to US$479.9 million
from US$458.9 million a year ago. Organic revenue growth was approximately
10%. Net income decreased 14.2% to US$19.2 million, or US$0.57 per diluted
share, from US$22.3 million, or US$0.67 per diluted share a year ago.
Excluding restructuring costs, net income in 2007 was US$24.0 million, or
US$0.72 per diluted share.
Revenue for the year rose 20.3% to US$2.2 billion versus last year's
US$1.8 billion. Organic revenue growth for the year was 6% and was on track to
be higher had it not been for the slowdown in the fourth quarter. Net income
grew 29% to US$112.9 million or US$3.38 per diluted share from US$87.5 million
or US$2.63 per diluted share. Excluding restructuring costs in 2007, net
income for that year was US$100.1 million or US$3.01 per diluted share.
Pre-tax earnings were US$19.6 million compared to US$28.6 million for the
quarter and US$132.0 million compared to US$106.6 for the year.
"Dorel's 2008 performance is the best ever achieved despite challenges
which intensified as the year progressed. Rapidly rising commodity prices were
a major factor for a good part of the year, affecting the majority of the
Company's operating divisions. We were successful in passing some of these
higher input costs on to retailers without significantly weakening consumer
demand of Dorel products at store level. Despite the deepening global economic
crisis through the second half of the year, Dorel's products continued to
demonstrate that they are in demand even in times when retail sales as a whole
decline," commented Dorel CEO and President, Martin Schwartz.
"However, despite the demand for Dorel's products at retail, our
inventories rose to record levels during the fourth quarter as retailers
reacted to the economic crisis by significantly cutting back on orders to
suppliers, almost across the board, to reduce their in-stock level. The vast
majority of our inventories are non-seasonal, nor fashion oriented so we view
this as a temporary situation and we have already seen these inventory levels
reduce in the first two months of 2009. Unfortunately, the retailers' action
had the impact of reducing our sales, earnings and cash flow for the year.
Dorel's point-of-sale (POS) levels remained firm through the quarter. Juvenile
and Home Furnishings sales declines to retailers far exceeded demand at the
consumer level. As an example, sales at Dorel Home Products fell in the
quarter by 51% versus 2007 despite retail sales remaining steady compared to
the prior year. The Recreational/Leisure segment was able to grow sales
organically in this environment, but they were still lower than our
expectations," continued Mr. Schwartz.-------------------------------------------------------------------------
Summary of Financial Highlights
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Fourth Quarters Ended December 30
-------------------------------------------------------------------------
All figures in thousands of US $, except per share amounts
2008 2007 Change %
-------------------------------------------------------------------------
Revenues 479,880 458,853 4.6%
Net income 19,167 22,348 -14.2%
Per share - Basic 0.57 0.67 -14.9%
Per share - Diluted 0.57 0.67 -14.9%
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Average number of shares outstanding
- diluted weighted average 33,404,118 33,397,773
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Summary of Financial Highlights
-------------------------------------------------------------------------
For the Years Ended December 30
-------------------------------------------------------------------------
All figures in thousands of US $, except per share amounts
2008 2007 Change%
-------------------------------------------------------------------------
Revenues 2,181,880 1,813,672 20.3%
Net income 112,855 87,492 29.0%
Per share - Basic 3.38 2.63 28.5%
Per share - Diluted 3.38 2.63 28.5%
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Average number of shares outstanding
- diluted weighted average 33,398,892 33,293,248
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Juvenile Segment
-------------------------------------------------------------------------
Fourth Quarters Ended December 30
-------------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------------
$ % of rev. $ % of rev. Change%
Revenues 228,694 257,584 -11.2%
Gross Profit 62,472 27.3% 75,318 29.2% -17.1%
Earnings from
operations 26,268 11.5% 26,373 10.2% -0.4%
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For The Years Ended December 30
-------------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------------
$ % of rev. $ % of rev. Change%
Revenues 1,109,174 1,016,645 9.1%
Gross Profit 323,901 29.2% 309,236 30.4% 4.7%
Earnings from
operations 128,223 11.6% 113,285 11.1% 13.2%
-------------------------------------------------------------------------Fourth quarter
Juvenile revenue declined 11.2% and was down both in North America and
Europe as orders from retailers dropped to unprecedented levels. Sales in
continental Europe declined by 6.5% organically but increased by over 35% in
the United Kingdom. However the increase in the value of the US dollar versus
both the Euro and pound sterling resulted in reported revenues declining 12.3%
for Europe as whole.
Juvenile earnings were negatively affected by lower sales levels, a less
profitable product mix and higher input costs at most of the segment's
divisions. Counteracting these negatives was the fact that the segment
recorded operational foreign exchanges gains of approximately US$3 million.
These gains were a combination of losses due to the surge in the value of the
US dollar, offset by the recognition of unrealized gains on foreign exchange
contracts. The segment also recorded US$2.1 million in the quarter as an
estimate of the costs to comply with recent US legislation that regulates the
use of lead and phthalates in children's products. Dorel is well advanced in
its compliance with these new regulations.
Full year
Notwithstanding the weaker fourth quarter, the Juvenile segment had its
most successful year as revenues reached US$1.1 billion and earnings from
operations were US$128.2 million. Earnings in 2008 as a percentage of revenues
were 11.6% as compared to 12.0% the prior year, excluding 2007 restructuring
costs. All markets experienced sales increases and excluding the effect of
foreign exchange, organic sales growth was 5% in North America and 7% in
Europe.
In North America, revenue growth was fuelled by sales of travel systems,
car seats and strollers. There was sales growth at the majority of Dorel's
largest customers, indicating good acceptance of the Company's new products
and continued strength in service. Gains in Europe were prompted by progress
in car seats and strollers, their two major product categories. Dorel Europe
also posted sales increases in other categories, such as safety items. The
majority of these increases were in the United Kingdom and Germany as well as
in export sales to several smaller European countries. Sales in France, the
Company's largest European market, also improved over 2007 levels.
Juvenile gross margins were 29.2% in 2008 as compared to 30.4% in 2007.
Higher product costs and a less profitable product mix accounted for the
decline. As in the fourth quarter, full year results benefited from the
positive impact of foreign exchange.
Recreational / Leisure Segment-------------------------------------------------------------------------
Fourth Quarters Ended December 30
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2008 2007
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$ % of rev. $ % of rev. Change%
Revenues(*) 153,834 85,836 79.2%
Gross Profit 33,884 21.7% 15,569 18.1% 117.6%
Earnings from
operations 3,324 2.1% 5,830 6.8% -43.0%
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(*) 2008 revenue figures exclude Inter-segment sales of US$ 2.0 million
-------------------------------------------------------------------------
For The Years Ended December 30
-------------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------------
$ % of rev. $ % of rev. Change%
Revenues(*) 643,985 374,783 71.8%
Gross Profit 152,502 23.4% 72,948 19.5% 109.1%
Earnings from
operations 43,312 6.7% 32,952 8.8% 31.4%
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(*) 2008 revenue figures exclude Inter-segment sales of US$ 6.7 millionFourth quarter
Recreational/Leisure segment revenues increased by 79.2% in the fourth
quarter, in large part due to the acquisitions of Cannondale/SUGOI and PTI
Sports. Organic sales growth also occurred at the segment's mass merchant
customers in the quarter. Earnings, however, were hampered by several factors.
Product mix had a negative impact on margins as did the fact that the apparel
component of this segment has a unique seasonality that usually results in the
fourth quarter operating at a loss and this occurred in 2008. Additionally as
Dorel focuses on building the right infrastructure and re-engineers certain
aspects of the operations, higher costs were incurred. Finally, selling and
marketing costs were higher due to the timing of certain promotional costs and
warranty costs rose driven by higher sales volumes.
Full year
Earnings from operations for the year improved by 31.4%, benefiting from
both the acquisitions in the year and organic improvements at Pacific Cycle.
The increase in the segment's revenue was principally due to the 2008
acquisitions of Cannondale/SUGOI and PTI. Organic sales growth was also
substantial at 8%. The increase was driven by the core bicycle business with
sales gains at the majority of the mass merchants. Gross margins increased to
23.4% from 19.5% in the prior year primarily due to the contribution of higher
margin products sold by Cannondale and SUGOI. The parts and accessories now
sold through Pacific Cycle also attract higher margins.
Home Furnishings Segment-------------------------------------------------------------------------
Fourth Quarters Ended December 30
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2008 2007
-------------------------------------------------------------------------
$ % of rev. $ % of rev. Change%
Revenues(*) 97,352 115,433 -15.7%
Gross Profit 12,380 12.4% 19,730 16.8% -37.3%
Earnings from
operations 1,920 1.9% 9,811 8.3% -80.4%
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(*) 2008 revenue figures exclude Inter-segment sales of US$ 2.5 million
(2007; US$ 2.2 million)
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For The Years Ended December 30
-------------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------------
$ % of rev. $ % of rev. Change%
Revenues(*) 428,721 422,244 1.5%
Gross Profit 54,340 12.4% 56,070 13.0% -3.1%
Earnings from
operations 9,587 2.2% 10,083 2.3% -4.9%
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(*) 2008 revenue figures exclude Inter-segment sales of US$ 10.2 million
(2007; US$ 7.6 million)Fourth quarter
Home Furnishing revenues were also affected by retailer order reductions,
resulting in a year-over-year decrease of 15.7%. The declines were steepest at
the segment's metal folding furniture and futon divisions. Sales of
Ameriwood's domestically produced ready-to-assemble (RTA) furniture were up
slightly in the quarter and earnings significantly improved. These
improvements were not sufficient to offset the declines at the segment's other
divisions. In particular, the downward trend in sales and extremely low
margins at Cosco Home & Office (Cosco) metal folding furniture experienced in
the first nine months of 2008 continued into the fourth quarter, accounting
for the majority of Home Furnishing's lower earnings in the period.
Full year
Despite the weak economy, Dorel's focus on reasonably priced furniture
sold at non-traditional furniture stores benefited the segment. 2008 sales of
domestic and imported furniture at Ameriwood, Altra and Dorel Asia increased
over last year. However sales of metal folding furniture, ladders and futon
sales tempered these gains. Of all of Dorel's business units, Cosco was the
most affected by the steep rise in commodity prices and other cost pressures
through 2008. The inability to pass on these cost increases meant that margins
were extremely low on some items. As such, Cosco accounted for approximately
80% of the drop in earnings from operations.
Entering 2009, the Home Furnishings segment is the one most likely to see
substantially improved earnings in the current environment. The segment is the
one that benefits from a stronger US dollar as two Canadian plants service
customers in the United States and a stable cost environment will help both
the domestic manufacturing and import divisions in this segment. The steady to
improved sales at retail has continued into the first two months of the year
and Management is confident about this segment's profitability outlook.
Other
Due to Dorel's multi-national operations, foreign exchange rates can have
a significant impact on earnings. Over the past several years Dorel has
generally benefitted from the weakness of the US dollar versus other
currencies. This trend was reversed in the fourth quarter with the sudden
surge in the value of the US dollar against practically all foreign
currencies. The Company uses hedging instruments such as foreign exchange
contracts in an attempt to stabilize the impact of foreign exchange rates,
especially in Europe and has some contracts in place for 2009 US dollar
requirements. At current exchange rates, this proved to be an excellent
business decision. As the Company does not apply hedge accounting, the benefit
of these contracts is being recognized in 2008 as opposed to 2009, in the
amount of US$10.5 million pre-tax or US$7.4 million after-tax.
The Company's income tax expense was US$0.4 million in the fourth quarter
of 2008 as compared to US$6.2 million in 2007. The unusually low tax rate in
the quarter was due to earnings being generated in lower tax rate
jurisdictions. Additionally, the Company recognized a tax benefit of US$1.8
million pertaining to a prior year's estimated tax position. Excluding this
out-of-period benefit, the Company tax rate for the quarter would have been
11.0%. In August 2008 the Company stated that it expected its annual tax rate
would be between 15% and 20%. Removing the out-of-period benefit, the tax rate
becomes 15.9% as opposed to the 14.5% reported, in line with expectations.
Cash flow
During 2008 free cash flow, a non-GAAP financial measure, was US$15.7
million in 2008 versus US$116.2 million in 2007. Cash flow from operations,
before changes in working capital, increased by US$15.5 million. After changes
in non-cash working capital items, cash flow from operations decreased by
US$87.5 million. The majority of this decline was due to an increase in
inventories. Over and above the increase in inventories due to the
acquisitions of Cannondale/SUGOI and PTI, inventories were up substantially
due to significant reductions by retailers in the fourth quarter and higher
average input costs in 2008. While the spike in inventories did significantly
reduce cash flow in 2008, in 2009 cash flow will improve materially as that
inventory is sold and brought back down to more normal levels. Already in
2009, the Company has seen inventory reductions already across most of its
divisions.
Outlook
At current exchange rates, Dorel will be negatively impacted in 2009
versus 2008. A large portion of the Company's earnings are generated outside
the US and the impact of a stronger US dollar will lower earnings both
operationally and upon translation of results to the US dollar, the Company's
reporting currency. Despite the current economic environment, there are
several positive factors that are expected to benefit Dorel in 2009. These
are:- Consumer demand: While retailers reacted by indiscriminately reducing
orders from suppliers in the fourth quarter of 2008 and early into
the first quarter of 2009, the decrease in orders of Dorel's product
lines did not represent the reality of sales at the retail level.
Since the beginning of 2009, point-of-sale figures for Dorel's
products continue to be only moderately affected and in some cases
are actually up over 2008. As an example, sales in the Home
Furnishings segment are flat to moderately increasing thus far in
2009. This is a testament to the recession resistant nature of
Dorel's products.
- Market share: Dorel is winning new listing placements in many of its
categories, and often at the expense of the competition. In addition,
our retail customers are shying away from direct imports, seeking the
added-value of reliable domestic supply chain partners like Dorel.
- Input costs: The Company is not expecting to have to manage the very
challenging cost environment that it did in 2008 which created severe
pressure on margins throughout the year due to the lag period between
absorbing these increased costs and our attempts to recover them from
our customers. The stable to lower costs being seen thus far in 2009
will materially benefit the Company.
- Improved cash flow: Cash flow will be significantly stronger in 2009
as inventories are reduced throughout the year. As Dorel's products
are non-seasonal, accumulated inventories will be sold throughout the
year and lower inventory levels are already being seen at the
majority of the Company's divisions.
- Interest rates: Lower interest rates compared to 2008 are
anticipated."The economic crisis presents opportunities for financially-sound
companies such as Dorel. Subsequent to year-end, we announced the formation of
Dorel Brazil, a new operating division of the Juvenile segment. Brazil holds
tremendous promise and we are well positioned to benefit from the excellent
market opportunities there. In January we also acquired a Belgian company
which markets innovative high-end juvenile products and accessories which will
reinforce Dorel Europe's current offerings. These moves will further secure
Dorel's dominance as a global leader in the juvenile products industry.
"The new management structure put in place in mid 2008 has had positive
benefits and we have already seen results. Programs are being developed more
rapidly and are being implemented faster than in the past. The structure also
provides the ability to focus on all three of Dorel's segments simultaneously
and sets the stage for a new important chapter in Dorel's evolution.
"A trend that does occur in difficult economic times is that consumers
lower their discretionary spending and often seek out lower cost alternatives.
As a result, Dorel expects a greater percentage of its sales to be in the
opening to mid-price point products. While this may place some pressure on
margins, we are already seeing a trend for retailers to increase their
listings of opening to mid-price products. Dorel is a leader in these
categories and expects to increase its market share.
"We do not anticipate that 2009 will be as profitable as 2008, but nor do
we expect it to be anywhere nearly as negative as current market conditions
suggest. Our recession resilient product line and the other factors outlined
above place Dorel in an admirable position as we face 2009. We are gaining
market share in many categories and are expecting strong performance in Home
Furnishings. A clear mandate for all divisions is to reduce inventories, which
will significantly strengthen our cash flow situation," commented Mr.
Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these
results today, March 11, 2009 at 1:00 P.M. Eastern Time. Interested parties
can join the call by dialling 1-800-733-7560. The conference call can also be
accessed via live webcast at www.dorel.com , www.newswire.ca or www.q1234.com.
If you are unable to call in at this time, you may access a tape recording of
the meeting by calling 1-877-289-8525 and entering the passcode 21298849#. on
your phone. This tape recording will be available on Wednesday, March 11, 2009
as of 3:00 P.M. until 11:59 P.M. on Wednesday, March 18, 2009.
Complete financial statements will be available on the Company's website,
www.dorel.com, and will be available through the SEDAR website.
Profile
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile
products and bicycle company. Established in 1962, Dorel creates style and
excitement in equal measure to safety, quality and value. The Company's
lifestyle leadership position is pronounced in both its Juvenile and Bicycle
categories with an array of trend-setting products. Dorel's powerfully branded
products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in
Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in
Recreational/Leisure. Dorel's Home Furnishings segment markets a wide
assortment of furniture products, both domestically produced and imported.
Dorel is a US$2 billion company with 4600 employees, facilities in seventeen
countries, and sales worldwide.
Caution Concerning Forward-Looking Statements
Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of Dorel Industries Inc. These statements are based on
suppositions and uncertainties as well as on management's best possible
evaluation of future events. The business of the Company and these
forward-looking statements are subject to a number of risks and uncertainties
that could cause actual results to differ from expected results. Important
factors which could cause such differences may include, without excluding
other considerations, increases in raw material costs, particularly for key
input factors such as particle board and resins; increases in ocean freight
container costs; failure of new products to meet demand expectations; changes
to the Company's effective income tax rate as a result of changes in the
anticipated geographic mix of revenues; the impact of price pressures exerted
by competitors, and settlements for product liability cases which exceed the
Company's insurance coverage limits. A description of the above mentioned
items and certain additional risk factors are discussed in the Company's
Annual MD&A and Annual Information Form, filed with the securities regulatory
authorities. The risk factors outlined in the previously mentioned documents
are specifically incorporated herein by reference. The Company's business,
financial condition, or operating results could be materially adversely
affected if any of these risks and uncertainties were to materialize. Given
these risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.DOREL INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
ALL FIGURES IN THOUSANDS OF US $
as at as at
December 30, December 30,
2008 2007
------------ ------------
(audited) (audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,966 $ 22,513
Accounts receivable 316,267 286,924
Income taxes receivable 19,798 6,519
Inventories 509,467 322,332
Prepaid expenses 16,236 10,538
Future income taxes 37,342 35,228
------------ ------------
916,076 684,054
PROPERTY, PLANT AND EQUIPMENT 158,895 140,362
INTANGIBLE ASSETS 368,847 276,383
GOODWILL 540,187 525,235
OTHER ASSETS 46,468 31,870
------------ ------------
$ 2,030,473 $ 1,657,904
------------ ------------
------------ ------------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ 4,398 $ 5,836
Accounts payable and accrued liabilities 380,915 325,938
Income taxes payable 30,164 25,532
Future income taxes 2,713 136
Current portion of long-term debt 8,879 62,906
------------ ------------
427,069 420,348
------------ ------------
LONG-TERM DEBT 450,704 192,385
------------ ------------
PENSION & POST-RETIREMENT BENEFIT OBLIGATIONS 20,072 20,942
------------ ------------
FUTURE INCOME TAXES 111,874 79,635
------------ ------------
OTHER LONG-TERM LIABILITIES 6,010 6,848
------------ ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 177,422 177,271
------------ ------------
CONTRIBUTED SURPLUS 16,070 11,623
------------ ------------
RETAINED EARNINGS 738,113 641,981
ACCUMULATED OTHER COMPREHENSIVE INCOME 83,139 106,871
------------ ------------
821,252 748,852
------------ ------------
1,014,744 937,746
------------ ------------
$ 2,030,473 $ 1,657,904
------------ ------------
------------ ------------
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF INCOME
ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS
Fourth Quarters Ended Twelve Months Ended
------------------------- -------------------------
Dec. 30, Dec. 30, Dec. 30, Dec. 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
(unaudited) (unaudited) (audited) (audited)
Sales $ 475,781 $ 454,831 $ 2,164,767 $ 1,792,611
Licensing and
commission income 4,099 4,022 17,113 21,061
------------ ------------ ------------ ------------
TOTAL REVENUE 479,880 458,853 2,181,880 1,813,672
------------ ------------ ------------ ------------
EXPENSES
Cost of sales 371,144 348,236 1,651,137 1,375,418
Selling, general
and administrative
expenses 70,679 62,035 319,118 244,798
Depreciation and
amortization 10,939 10,635 45,854 39,844
Research and
development costs 2,271 2,581 10,909 9,009
Restructuring costs (724) 1,753 726 14,509
Interest on
long-term debt 5,772 5,106 21,162 23,782
Other interest 239 (79) 961 (316)
------------ ------------ ------------ ------------
460,320 430,267 2,049,867 1,707,044
------------ ------------ ------------ ------------
Income before
income taxes 19,560 28,586 132,013 106,628
Income taxes 393 6,238 19,158 19,136
------------ ------------ ------------ ------------
NET INCOME $ 19,167 $ 22,348 $ 112,855 $ 87,492
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
EARNINGS PER SHARE
Basic $ 0.57 $ 0.67 $ 3.38 $ 2.63
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted $ 0.57 $ 0.67 $ 3.38 $ 2.63
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SHARES OUTSTANDING
Basic - weighted
average 33,402,192 33,397,192 33,398,544 33,285,990
Diluted - weighted
average 33,404,118 33,397,773 33,398,892 33,293,248
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
ALL FIGURES IN THOUSANDS OF US $
Fourth Quarters Ended Twelve Months Ended
---------------------------------------------------
Dec. 30, Dec. 30, Dec. 30, Dec. 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
(unaudited) (unaudited) (audited) (audited)
NET INCOME $ 19,167 $ 22,348 $ 112,855 $ 87,492
OTHER COMPREHENSIVE
INCOME:
Net change in
unrealized foreign
currency gains
(losses) on
translation of net
investments in
self-sustaining
foreign operations,
net of tax of nil (10,337) 15,227 (23,348) 42,985
Portion included in
income as a result
of reductions in
net investments in
self-sustaining
foreign operations,
net of tax of nil - - (384) -
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME $ 8,830 $ 37,575 $ 89,123 $ 130,477
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
ALL FIGURES IN THOUSANDS OF US $
Twelve Months Ended
-------------------------
Dec. 30, Dec. 30,
2008 2007
------------ ------------
(audited) (audited)
CAPITAL STOCK
Balance, beginning of period $ 177,271 $ 162,555
Issued under stock option plan 151 14,716
------------ ------------
Balance, end of period 177,422 177,271
------------ ------------
CONTRIBUTED SURPLUS
Balance, beginning of period 11,623 6,061
Stock-based compensation 4,447 5,562
------------ ------------
Balance, end of period 16,070 11,623
------------ ------------
RETAINED EARNINGS
Balance, beginning of period 641,981 567,020
Net income 112,855 87,492
Dividends on common shares (16,707) (12,524)
Dividends on deferred share units (16) (7)
------------ ------------
Balance, end of period 738,113 641,981
------------ ------------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of period 106,87 63,886
Other comprehensive income (23,732) 42,985
------------ ------------
Balance, end of period 83,139 106,871
------------ ------------
TOTAL SHAREHOLDERS' EQUITY $ 1,014,744 $ 937,746
------------ ------------
------------ ------------
DOREL INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
ALL FIGURES IN THOUSANDS OF US $
Fourth Quarters Ended Twelve Months Ended
---------------------------------------------------
Dec. 30, Dec. 30, Dec. 30, Dec. 30,
2008 2007 2008 2007
------------ ------------ ------------ ------------
(unaudited) (unaudited) (audited) (audited)
CASH PROVIDED
BY (USED IN):
OPERATING ACTIVITIES
Net income $ 19,167 $ 22,348 $ 112,855 $ 87,492
Items not involving
cash:
Depreciation and
amortization 10,939 10,635 45,854 39,844
Amortization of
deferred
financing costs 212 68 362 217
Future income taxes (370) (2,880) 2,156 (7,282)
Stock based
compensation 709 1,636 4,447 5,562
Pension and
post-retirement
defined benefit
plans (1,144) 198 (27) 1,346
Restructuring
activities (2,590) 1,351 (6,849) 15,436
Exchange gain from
reduction of net
investments in
foreign operations - - (384) -
(Gain) loss on
disposal of
property, plant
and equipment (44) 239 (24) 243
------------ ------------ ------------ ------------
26,879 33,595 158,390 142,858
Net changes in non-cash
balances related to
operations:
Accounts receivable 23,397 5,252 28,223 19,811
Inventories (59,156) (2,354) (121,027) 13,137
Prepaid expenses 1,387 (1,943) 677 (126)
Accounts payable,
accruals and
other liabilities 18,808 28,570 22,105 (23,707)
Income taxes (3,834) 9,288 (8,485) 15,367
------------ ------------ ------------ ------------
(19,398) 38,813 (78,507) 24,482
------------ ------------ ------------ ------------
CASH PROVIDED BY
OPERATING ACTIVITIES 7,481 72,408 79,883 167,340
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Bank indebtedness 418 1,419 (1,055) 1,577
Repayments of
long-term debt 156 (69,772) (62,400) (136,036)
Increase of
long-term debt 3,538 - 266,297 -
Dividends on
common shares (4,176) (4,175) (16,707) (12,524)
Issuance of
capital stock 4 - 155 14,698
------------ ------------ ------------ ------------
CASH USED IN PROVIDED
BY FINANCING
ACTIVITIES (60) (72,528) 186,290 (132,285)
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Acquisition of
subsidiary companies (7,648) 46 (226,190) (2,786)
Additions to
property, plant and
equipment - net (9,402) (8,712) (26,518) (22,269)
Deferred
development costs (5,441) (4,093) (19,069) (14,470)
Intangible assets (499) (551) (1,860) (1,871)
------------ ------------ ------------ ------------
CASH USED IN
INVESTING ACTIVITIES (22,990) (13,310) (273,637) (41,396)
------------ ------------ ------------ ------------
Effect of exchange
rate changes on
cash and cash
equivalents 2,080 1,083 1,917 2,929
------------ ------------ ------------ ------------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (13,489) (12,347) (5,547) (3,412)
Cash and cash
equivalents,
beginning of period 30,455 34,860 22,513 25,925
------------ ------------ ------------ ------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $ 16,966 $ 22,513 $ 16,966 $ 22,513
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DOREL INDUSTRIES INC.
INDUSTRY SEGMENTED INFORMATION
FOR THE FOURTH QUARTERS ENDED DECEMBER 30
ALL FIGURES IN THOUSANDS OF US $
----------------------------------------------------
Total Juvenile
----------------------------------------------------
2008 2007 2008 2007
(unaudited) (unaudited) (unaudited) (unaudited)
Sales to customers $ 479,880 $ 458,853 $ 228,694 $ 257,584
Inter-segment sales - - - -
----------------------------------------------------
Total revenue 479,880 458,853 228,694 257,584
Cost of sales 371,144 348,236 166,222 182,266
Selling, general
and administrative 64,769 53,656 27,937 36,604
Depreciation and
amortization 10,908 10,613 7,299 8,856
Research and
development costs 2,271 2,581 1,692 1,955
Restructuring costs (724) 1,753 (724) 1,530
----------------------------------------------------
Earnings from
operations 31,512 42,014 $ 26,268 $ 26,373
-------------------------
-------------------------
Interest 6,011 5,027
Corporate expenses 5,941 8,401
Income taxes 393 6,238
--------------------------
Net income $ 19,167 $ 22,348
--------------------------
--------------------------
Earnings per Share
Basic $ 0.57 $ 0.67
------------- ------------
------------- ------------
Diluted $ 0.57 $ 0.67
------------- ------------
------------- ------------
----------------------------------------------------
Recreational/Leisure Home Furnishings
----------------------------------------------------
2008 2007 2008 2007
(unaudited) (unaudited) (unaudited) (unaudited)
Sales to customers $ 153,834 $ 85,836 $ 97,352 $ 115,433
Inter-segment sales 2,010 - 2,493 2,228
----------------------------------------------------
Total revenue 155,844 85,836 99,845 117,661
Cost of sales 121,960 70,267 87,465 97,931
Selling, general
and administrative 28,179 9,326 8,653 7,726
Depreciation and
amortization 2,381 413 1,228 1,344
Research and
development costs - - 579 626
Restructuring costs - - - 223
----------------------------------------------------
Earnings from
operations $ 3,324 $ 5,830 $ 1,920 $ 9,811
----------------------------------------------------
----------------------------------------------------
--------------------------
Eliminations
--------------------------
2008 2007
(unaudited) (unaudited)
Sales to customers $ - $ -
Inter-segment sales (4,503) (2,228)
--------------------------
Total revenue (4,503) (2,228)
Cost of sales (4,503) (2,228)
Selling, general
and administrative - -
Depreciation and
amortization - -
Research and
development costs - -
Restructuring costs - -
--------------------------
Earnings from
operations $ - $ -
--------------------------
--------------------------
DOREL INDUSTRIES INC.
INDUSTRY SEGMENTED INFORMATION
FOR THE TWELVE MONTHS ENDED DECEMBER 30
ALL FIGURES IN THOUSANDS OF US $
----------------------------------------------------
Total Juvenile
----------------------------------------------------
2008 2007 2008 2007
(audited) (audited) (audited) (audited)
Sales to customers $ 2,181,880 $ 1,813,672 $ 1,109,174 $ 1,016,645
Inter-segment sales - - - -
----------------------------------------------------
Total revenue 2,181,880 1,813,672 1,109,174 1,016,645
Cost of sales 1,651,137 1,375,418 785,273 707,409
Selling, general
and administrative 292,227 218,661 154,140 149,838
Depreciation and
amortization 45,759 39,755 32,900 32,174
Research and
development costs 10,909 9,009 7,928 6,364
Restructuring costs 726 14,509 710 7,575
----------------------------------------------------
Earnings from
operations 181,122 156,320 $ 128,223 $ 113,285
-------------------------
-------------------------
Interest 22,123 23,466
Corporate expenses 26,986 26,226
Income taxes 19,158 19,136
--------------------------
Net income $ 112,855 $ 87,492
Earnings per Share
Basic $ 3.38 $ 2.63
------------ -------------
------------ -------------
Diluted $ 3.38 $ 2.63
------------ -------------
------------ -------------
----------------------------------------------------
Recreational/Leisure Home Furnishings
----------------------------------------------------
2008 2007 2008 2007
(audited) (audited) (audited) (audited)
Sales to customers $ 643,985 374,783 428,721 422,244
Inter-segment sales 6,670 - 10,150 7,649
----------------------------------------------------
Total revenue 650,655 374,783 438,871 429,893
Cost of sales 498,153 301,835 384,531 373,823
Selling, general
and administrative 102,226 38,260 35,861 30,563
Depreciation and
amortization 6,964 1,736 5,895 5,845
Research and
development costs - - 2,981 2,645
Restructuring costs - - 16 6,934
----------------------------------------------------
Earnings from
operations $ 43,312 $ 32,952 $ 9,587 $ 10,083
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Eliminations
--------------------------
2008 2007
(audited) (audited)
Sales to customers $ - $ -
Inter-segment sales (16,820) (7,649)
--------------------------
Total revenue (16,820) (7,649)
Cost of sales (16,820) (7,649)
Selling, general
and administrative - -
Depreciation and
amortization - -
Research and
development costs - -
Restructuring costs - -
--------------------------
Earnings from
operations $ - $ -
--------------------------
--------------------------
For further information: MaisonBrison: Rick Leckner, (514) 731-0000;
Dorel Industries Inc.: Jeffrey Schwartz, (514) 934-3034
