<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of February 1999.
DENISON INTERNATIONAL plc
-------------------------
(Translation of registrant's name into English)
Masters House
107 Hammersmith Road
London W14 0QH
England
(Address of principal executive offices)
1
<PAGE>
DENISON INTERNATIONAL PLC REPORTS RESULTS FOR
---------------------------------------------
FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 1998
-----------------------------------------------
MARYSVILLE, Ohio, February 9 - Denison International plc (NASDAQ: DENHY)
announced today its financial results for the fourth quarter and year ended
December 31, 1998.
For the current three months ended December 31, 1998, the Company's net sales
increased 3.7% to $38.5 million, from $37.1 million in the fourth quarter of
1997. Restated, net sales (at 1997 fourth quarter exchange rates) for the
current third quarter were $37.8 million, a 1.9% increase over the comparable
1997 period. The increase in net sales is attributed to the contribution from
the Lokomec Acquisition of $2.3 million, completed late in 1998, partially
offset by a general slowdown in the hydraulics industry and the impact of the
current economic conditions in the Asian market, and, in turn, slower sales to
North American customers who have substantial exports to the Asian markets. The
lower sales in the Asian and North American markets were partially offset by
strong sales in the European markets.
Net Income was $3.4 million, or $.30 per diluted share, for the fourth quarter
of 1998, compared to net income of $5.8 million and diluted earnings per share
of $.52 for the comparable period in 1997. The fourth quarter of 1997 included a
credit for deferred taxes recognized, and, after adjusting fourth quarter 1997
results for this non-recurring item, fourth quarter 1998 net income of $3.4
million represents a $0.5 million or 12.8% decrease versus 1997. Fourth quarter
1998 profits from continuing operations were effected by the cost impacts of
lower manufacturing production levels, partially resulting from lower sales
volume and partially due to Company efforts to reduce inventory levels, combined
with the effects of some price reductions in the Asian market to regain volume
levels. Net income was also impacted by a higher effective tax rate for the
fourth quarter 1998 of 24.2% versus negative tax expense for fourth quarter
1997, resulting from the capitalization of Net operating loss carry forwards in
the Company's U.S. subsidiary, unavailable for 1998.
Operating income in the fourth quarter 1998 decreased by 10.2% versus 1997
reflecting the excess manufacturing costs and price impacts discussed above.
Operating margin of 11.4% for the fourth quarter 1998 was unfavorable to the
same period 1997 margin of 13.2%.
For the quarter ended December 31, 1998, gross profit decreased by 1.5% to $13.5
million, from $13.7 million in the same period 1997. Gross margin for the fourth
quarter 1998 of 34.9% was unfavorable to the gross margin of 36.8% for the same
period 1997, reflecting the manufacturing, price and continuing operations
volume issues discussed above.
1998 net sales of $145.3 million declined by $3.1 million or 2.1% versus 1997.
After adjusting for the impact of the Lokomec acquisition, 1998 net sales were
$5.4 million, or 3.6% lower than 1997. Restated, net sales (at year-to-date 1997
exchange rates) for 1998 were $148.2 million, $0.2 million lower than in 1997.
1998 net income decreased by $3.5 million, or 17.7% to $16.3 million, or $1.47
per diluted share, versus 1997 net income of $19.8 million, or $1.82 per diluted
share. After adjusting 1997 results for the non-recurring gain on sale of
2
<PAGE>
property of $2.1 million, 1998 net income of $16.3 million was $1.4 million or
7.9% unfavorable to 1997. Lower volume, and its impact on manufacturing costs
primarily at the Company's Marysville, Ohio facility were the primary factors
in the lower income reported. The decrease in net income was also impacted by a
higher effective tax rate for 1998 of 26.8% versus 14.5% for 1997, reflecting
the utilization of the deferred tax credit previously discussed.
Operating earnings for 1998 were $21.3 million representing a $ .5 million or
2.4% increase versus 1997 resulting from reductions in Selling, General and
Administrative expenses of $.6 million versus 1997. Operating margin of 14.7%
for 1998 was .7 points higher than the comparable period last year. Reflecting
the lower sales revenues realized, gross profit in 1998 decreased by less than
$0.1 million to $54.3 million versus $54.4 million for 1997. However, 1998 gross
margin of 37.4% was .8 points higher than 1997's gross margin of 36.6%.
Commenting on the results, David Weir, President and CEO, stated, "The
acquisition of Lokomec pushed 4th quarter revenues 3.7% ahead of prior year as
compared to an industry which is generally down. The addition of Lokomec will
strengthen Denison's system capabilities and help to offset the general weakness
in the marketplace.
For the year as a whole, sales were down 2.1% versus prior year; but with the
implementation of strict cost management we were successful in increasing gross
margins by 0.8 points and increased normalized EPS (earnings per share adjusted
for the 1997 gain in property disposal and a 30% effective tax rate) from $1.35
in 1997 to $1.40 in 1998. At the end of 1998 our balance sheet and cash position
remained strong."
Denison International plc designs, manufactures, distributes and services highly
engineered fluid power systems and components. Denison distributes its products
and services globally to a diverse group of original equipment manufacturers and
end users in a broad array of industrial applications, including machine tools
and material handling equipment, mobile construction, agricultural and utility
equipment, and marine applications, including military equipment.
Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Act of 1995. Such forward-looking statements are
subject to certain risks and uncertainties which could cause actual results to
differ materially from those currently anticipated. Shareholder, potential
investors and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements. The forward-looking statements made
herein are only made as of the date of this press release and the company
undertakes no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
(Tables Follows)
3
<PAGE>
DENISON INTERNATIONAL, plc
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
USD - (000's) 1998 1997 1998 1997
------------ ------------- ------------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 38,523 $37,144 $145,253 $148,388
Cost of Sales 25,049 23,465 90,917 94,008
Gross Profit 13,474 13,679 54,336 54,380
% 35.0% 36.8% 37.4% 36.6%
SG&A 9,067 8,772 33,028 33,618
Operating Income 4,407 4,907 21,308 20,762
% 11.4% 13.2% 14.7% 14.0%
Other Income 0 0 0 2,175
Net Interest Income 38 88 938 218
Income Before Taxes 4,445 4,995 22,246 23,155
Tax Provision 1,074 (792) 5,956 3,367
Net Income $3,371 $5,787 $16,290 $19,788
Basic earnings per share $0.30 $0.52 $1.47 $1.84
Diluted earnings per share $0.30 $0.52 $1.46 $1.82
</TABLE>
4
<PAGE>
DENISON INTERNATIONAL, plc
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31
-------------------------------------
1998 1997
----------------- ------------------
USD - (000's)
Current Assets:
<S> <C> <C>
Cash & Cash Equivalents $35,799 $30,337
Accounts receivable, net 29,716 29,212
Inventories 38,236 28,182
Other current assets 4,513 3,327
Total current assets 108,264 91,058
Property, plant and Equipment, net 24,726 14,948
Other assets 10,467 1,487
Total assets $143,457 $107,493
Current liabilities:
Notes payable to bank $12,532 $1,472
Accounts payable and other accrued
liabilities 29,300 25,752
Total current liabilities 41,832 27,224
Noncurrent liabilities 23,098 20,717
Shareholders equity:
Retained earnings 74,694 58,115
Other shareholders equity 3,833 1,437
Total shareholders equity 78,527 59,552
Total liabilities and
shareholders equity $143,457 $107,493
</TABLE>
###
5
<PAGE>
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.
DENISON INTERNATIONAL plc
By: /s/ Bruce A. Smith
--------------------
Bruce A. Smith
Chief Financial Officer
Date: February 12, 1999
6
