|
DOMCO TARKETT REPORTS SECOND QUARTER 2001 RESULTS
Farnham,
Quebec, August 1, 2001 – The Board of Directors of Domco Tarkett
Inc. approved today the Corporation’s unaudited consolidated financial
statements for the second quarter of fiscal year 2001, which ended
June 30. Unless otherwise stated, all dollar amounts are in Canadian
dollars.
Operating
Results
Consolidated
net sales for the second quarter reached $176,982,000 compared
to $181,599,000, a decline of 2.5% from the previous year. Of
this total, 84.3% were generated on the U.S. market, compared
to 85.4% for the same period in 2000. Had last year’s exchange
rates prevailed in 2001, sales for the second quarter of 2001
would have amounted to $170,461,000, a 6.1% decrease from the
corresponding quarter in 2000.
For
the first six months of the year, sales reached $340,036,000,
an increase of 1.2% over the corresponding period a year ago.
At constant exchange rates, sales would have declined by 3.0%
for the first half-year of 2001.
The
decline in sales reflects a mix of a robust performance in the
hardwood segment, modest growth in distribution activities and
a decrease in the resilient flooring segment.
Second
quarter sales for the resilient flooring segment reached $127,303,000,
compared to $141,274,000 for the corresponding quarter last year.
At a constant exchange rate, this figure would have been $122,863,000
or 13.0% lower than 2000. For the six-month period ended June 30,
Domco Tarkett posted sales of $246,914,000 in the resilient flooring
segment, compared to $259,877,000 a year ago. At a constant exchange
rate, this figure would have been $237,248,000 or 8.7% lower than
2000. This decline was particularly felt in the residential sector,
while sales of commercial resilient flooring increased. The decline
in the residential market has been going on for several quarters
and reflects the growth of natural surfaces (wood, ceramics, etc.)
in this segment of the market. The company is responding by developing
new products that compete more effectively with these natural
surfaces.
The
hardwood-flooring segment experienced healthy growth. For the
second quarter Domco Tarkett posted sales of $49,679,000, compared
to $40,325,000 for the corresponding quarter the preceding year.
At a constant exchange rate, this figure would have been $47,598,000,
or an increase of 18.0% over the same quarter of 2000. Sales were
$93,122,000 for the first six months of 2001, compared to $76,174,000
a year ago. At a constant exchange rate, this figure would have
been $88,858,000 or 16.7% over the first six months of 2000. The
hardwood segment accounts for 28.1% of the second quarter consolidated
net sales, compared to 22.2% in the second quarter of 2000.
Sales
related to distribution activities totaled $21,368,000, compared
to $20,359,000 one year earlier. This 5.0% growth is attributable
to the acquisition in late March of assets of HFI Hardwood Flooring
Inc., a hardwood-flooring distributor serving Western Canada.
Sales for the first six months of 2001 were $39,339,000, compared
to $37,664,000 for the corresponding period in 2000.
Gross
margin
Consolidated
gross margin reached 30.2% of sales, compared to 31.8% for the
second quarter of 2000. For the first semester the decline was
from 32.2% to 30.2%. This decline is caused by the strong growth
in the hardwood segment for which the margin is lower than in
the resilient segment. Other contributing factors include rising
raw materials and energy costs, as well as the sale of slow turning
inventory, mainly in the first quarter.
Administrative,
distribution and selling expenses
Administrative,
distribution and selling expenses amounted to $37,025,000 (or
20.9% of consolidated sales), compared to $39,076,000 (or 21.5%
of consolidated sales) for the same quarter one year ago. After
elimination of the impact of exchange rate variations, the decline
in administrative, distribution and selling expenses was $3,253,000.
For the first six months of the year, expenses declined by $1,378,000,
or $4,020,000 after eliminating the impact of exchange rate variations.
This improvement results from tighter control of operating expenses
as well as plant and administrative personnel downsizing under
a cost reduction program.
For
the quarter, Domco Tarkett reported earnings before interest,
taxes, depreciation and amortization (EBITDA) of $16,416,000 (or
9.3% of consolidated sales). In the second quarter of 2000, this
figure was $18,648,000 (or 10.3% of consolidated sales). For the
semester ended June 30, EBITDA was $29,563,000 (8,7% of sales)
compared to $33,778,000 or 10.1% of sales for the first half of
the preceding year.
Net
earnings
Net
earnings for the quarter were $4,490,000, or $0.17 per share,
compared to $6,283,000, or $0.25 per share, for the corresponding
quarter in 2000. For the first six months of the year, net earnings
were $6,443,000, or $0.25 per share, compared to $10,288,000,
or $0.40 per share, one year before.
Outlook
"Even
though our results still lag behind last year’s, our restructuring
efforts are starting to show progress and quarter-to-quarter comparison
shows that we are catching up", said Mr. Ulf Mattsson, President
and CEO of Domco Tarkett. "We are successfully reducing overhead
expenses. We intend to continue our efforts to improve profitability,
however, we do not anticipate any dramatic improvement in the
economic environment, raw material prices or energy costs. We
nevertheless expect that Domco Tarkett’s results for the second
half of 2001 should be better than the corresponding period last
year."
Domco
Tarkett Inc., headquartered in Farnham, Quebec, Canada, is the
second largest North American manufacturer of vinyl and hardwood
flooring. With ten manufacturing facilities and extensive distribution
networks serving all regions of Canada and the United States,
Domco Tarkett offers one of the most comprehensive, high-quality
product lines in the flooring industry. Its products are sold
to commercial and residential users under the Azrock, Domco, Harris-Tarkett,
Nafco and Tarkett brands. Domco Tarkett employs approximately
2,200 people.
(Financial
Statements follow)
|
Domco
Tarkett Inc.
Consolidated
Balance Sheets
(unaudited
for 2001)
|
|
|
(in
thousands of dollars)
|
|
Assets
|
|
June
30, 2001
|
|
December
31,
2000
|
|
June
24, 2000
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
56
493
|
$
|
53
907
|
$
|
40
388
|
|
Accounts
receivable
|
|
89
437
|
|
66
751
|
|
82
711
|
|
Inventories
|
|
141
853
|
|
139
395
|
|
140
088
|
|
Prepaid expenses
|
|
7
007
|
|
5
607
|
|
6
984
|
|
Income taxes
recoverable
|
|
1
170
|
|
5
669
|
|
6
014
|
|
|
|
295
960
|
|
271
329
|
|
276
185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
158
640
|
|
163
402
|
|
163
360
|
|
Goodwill,
net of accumulated amortization
|
|
130
863
|
|
132
964
|
|
135
145
|
|
Future income
taxes
|
|
-
|
|
-
|
|
1
719
|
|
Other assets
|
|
26
443
|
|
27
105
|
|
32
172
|
|
|
$
|
611
906
|
$
|
594
800
|
$
|
608
581
|
|
|
|
|
|
|
|
|
|
Liabilities
and shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
106
047
|
$
|
95
681
|
$
|
97
019
|
|
Current portion
of long-term debt
|
|
16
507
|
|
16
347
|
|
6
366
|
|
|
|
122
554
|
|
112
028
|
|
103
385
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
152
545
|
|
155
442
|
|
172
909
|
|
Future income
taxes
|
|
3
273
|
|
3
475
|
|
3
777
|
|
Accrued employees'
future benefit liabilities
|
|
25
902
|
|
24
749
|
|
29
857
|
|
|
|
304
274
|
|
295
694
|
|
309
928
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
( 25 407 535 common shares) and contributed surplus
|
|
166
931
|
|
166
931
|
|
166
931
|
|
Retained
earnings
|
|
119
795
|
|
113
352
|
|
115
802
|
|
Deferred
translation adjustments
|
|
20
906
|
|
18
823
|
|
15
920
|
|
|
|
307
632
|
|
299
106
|
|
298
653
|
|
|
$
|
611
906
|
$
|
594
800
|
$
|
608
581
|
|
|
|
|
|
|
|
|
|
Domco
Tarkett Inc.
|
|
Consolidated
Statements of Retained Earnings
|
|
(
Unaudited )
|
|
|
|
(in
thousands of dollars)
|
|
|
|
6
Months
|
|
6
Months
|
|
|
|
Ended
|
|
Ended
|
|
|
|
June
30,
|
|
June
24,
|
|
|
|
2001
|
|
2000
|
|
|
|
|
|
|
|
Balance,
beginning of period
|
$
|
113,352
|
$
|
109,325
|
|
|
|
|
|
|
|
Net income
|
|
6,443
|
|
10,288
|
|
|
|
|
|
|
|
|
|
119,795
|
|
119,613
|
|
|
|
|
|
|
|
Common
share dividends
|
|
-
|
|
(3,811)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
end of period
|
$
|
119,795
|
$
|
115,802
|
|
|
|
|
|
|
|
Domco
Tarkett Inc.
|
|
Consolidated
Statements of Income
(Unaudited)
|
|
|
|
|
|
(in
thousands of dollars, except per share amounts)
|
|
|
|
3
Months
|
|
3
Months
|
|
6
Months
|
|
6
Months
|
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
|
June
30,
|
|
June
24,
|
|
June
30,
|
|
June
24,
|
|
|
|
2001
|
|
2000
|
|
2001
|
|
2000
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
176
982
|
$
|
181
599
|
$
|
340
036
|
$
|
336
051
|
|
Cost of goods
sold
|
|
123
541
|
|
123
875
|
|
237
264
|
|
227
686
|
|
Gross
Margin
|
|
53
441
|
|
57
724
|
|
102
772
|
|
108
365
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Administrative,
distribution and selling expenses
|
|
37
025
|
|
39
076
|
|
73
209
|
|
74
587
|
|
|
|
|
|
|
|
|
|
|
|
Income before
depreciation, interest on
|
|
|
|
|
|
|
|
|
|
long-term
debt, provision for income taxes
|
|
|
|
|
|
|
|
|
and amortization
of goodwill
|
|
16
416
|
|
18
648
|
|
29
563
|
|
33
778
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
6
021
|
|
5
847
|
|
12
009
|
|
11
536
|
|
Amortization
of goodwill
|
|
1
874
|
|
2
258
|
|
3
716
|
|
3
472
|
|
Interest
on long-term debt
|
|
2
622
|
|
3
467
|
|
5
748
|
|
6
686
|
|
|
|
10
517
|
|
11
572
|
|
21
473
|
|
21
694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
|
5
899
|
|
7
076
|
|
8
090
|
|
12
084
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
|
|
|
|
|
|
|
Current
|
|
1
648
|
|
-1
127
|
|
1
835
|
|
-612
|
|
Future
|
|
(239)
|
|
1
920
|
|
(188)
|
|
2
408
|
|
|
|
1
409
|
|
793
|
|
1
647
|
|
1
796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4
490
|
$
|
6
283
|
$
|
6
443
|
$
|
10
288
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0,17
|
$
|
0,25
|
$
|
0,25
|
$
|
0,40
|
|
Fully diluted
|
$
|
0,17
|
$
|
0,25
|
$
|
0,25
|
$
|
0,40
|
|
Domco
Tarkett Inc.
Consolidated
Statements Of Cash Flows
(
Unaudited )
|
|
(in
thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
Months
|
|
3
Months
|
|
6
Months
|
|
6
Months
|
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
|
June
30,
|
|
June
24,
|
|
June
30,
|
|
June
24,
|
|
|
|
2001
|
|
2000
|
|
2001
|
|
2000
|
|
Cash
flows from (used in) operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4
490
|
$
|
6
283
|
|
6
443
|
$
|
10
288
|
|
Adjustments
to determine net cash from operating activities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
6
021
|
|
5
847
|
|
12
009
|
|
11
536
|
|
Amortization
|
|
2
090
|
|
2
000
|
|
4
147
|
|
3
869
|
|
Future
income taxes
|
|
(239)
|
|
1
920
|
|
(188)
|
|
2
408
|
|
Other
|
|
852
|
|
612
|
|
851
|
|
873
|
|
Net change
in non-cash working capital items
|
|
|
|
|
|
|
|
|
|
related
to operations
|
|
11
348
|
|
6
049
|
|
(9
331)
|
|
(1
102)
|
|
|
|
24
562
|
|
22
711
|
|
13
931
|
|
27
872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows used in financing activities
|
|
|
|
|
|
|
|
|
|
Repayment
of long-term debt
|
|
(77)
|
|
(73)
|
|
(4
507)
|
|
(4
239)
|
|
Dividends
|
|
-
|
|
(3
811)
|
|
-
|
|
(3
811)
|
|
Other
|
|
(2)
|
|
40
|
|
(112)
|
|
40
|
|
|
|
(79)
|
|
(3
844)
|
|
(4
619)
|
|
(8
010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows used in investing activities
|
|
|
|
|
|
|
|
|
|
Purchase
of property, plant and equipment
|
|
(4
986)
|
|
(3
222)
|
|
(5
976)
|
|
(3
954)
|
|
Proceeds
from disposal of property, plant and equipment
|
-
|
|
121
|
|
-
|
|
121
|
|
Business
acquisition
|
|
(55)
|
|
-
|
|
(1
093)
|
|
-
|
|
|
|
(5
041)
|
|
(3
101)
|
|
(7
069)
|
|
(3
833)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of changes in exchange rates on cash
|
|
|
|
|
|
|
|
|
|
and cash
equivalents
|
|
(2
111)
|
|
3
208
|
|
343
|
|
4
378
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
17
331
|
|
18
974
|
|
2
586
|
|
20
407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, beginning of period
|
|
39
162
|
|
21
414
|
|
53
907
|
|
19
981
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$
|
56
493
|
$
|
40
388
|
|
56
493
|
$
|
40
388
|
-
30 -
|
For
information:
|
|
Mr.
Robert O. Desautels
Senior
Vice President, Finance and Chief Financial Officer
Domco
Tarkett Inc.
(450)
293-3173
|
Daniel
Larouche (ext. #106)
GPC
International
(514)
282-1100
|
|
[Press
releases]
|