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Press release from PR Newswire

DOREL Reports Second Quarter 2011

Tuesday, August 09, 2011

DOREL Reports Second Quarter 201108:21 EDT Tuesday, August 09, 2011 EXCHANGES TSX: DII.B, DII.A Recreational/Leisure segment maintains strong growth U.S. economy affects Juvenile sale MONTREAL, Aug. 9, 2011 /PRNewswire/ - Dorel Industries Inc. (TSX: DII.B DII.A) today announced results for the second quarter ended June 30, 2011. Total revenue for the period was US$619.0 million, up 1.9% from US$607.7 million for the same quarter last year. Net income was US$23.0 million or US$0.70 per diluted share compared with US$32.9 million or US$0.99 per diluted share for the corresponding quarter of 2010. Year-to-date revenue was US$1.23 billion, compared to US$1.20 billion last year. Net income was US$54.2 million or US$1.65 per diluted share compared to US$71.1 million or US$2.14 per diluted share for the first half of 2010. Upon transition to IFRS, previously issued earnings per diluted share of US$1.05 and US$2.18 for the second quarter and six months of fiscal 2010 respectively have been restated to US$0.99 and US$2.14. "Dorel's Recreational / Leisure segment maintained its strong performance through the second quarter with a year-over-year revenue increase of 16% and an operating profit gain of 25%. With its strong focus on innovation, Cannondale has become a much desired brand and is selling very well. In addition, the marketing investments made in Schwinn have brought the desired results," commented Dorel President and CEO, Martin Schwartz. "Costs in the first half of 2011 are higher than last year, and given the highly conservative spending of today's typical consumer, initiating price increases to our customers is a challenge, particularly within our Juvenile segment in the U.S. While the economic climate in Europe remains difficult, notably in southern Europe, Dorel Europe is protecting or increasing its juvenile products' market share. Home Furnishings was affected by the still weak U.S. economy which impacted POS levels, as well as by the weaker U.S. dollar which hurt our Canadian plants shipping into the U.S," commented Mr. Schwartz.   Summary of Financial Highlights Second Quarters Ended June 30 All figures in thousands of US $, except per share amounts     2011   2010   Change % Total revenue   619,010   607,695   1.9% Net income   22,993   32,925   -30.2%   Per share - Basic   0.70   1.00   -30.0%   Per share - Diluted   0.70   0.99   -29.3% Average number of shares outstanding -             diluted weighted average   32,828,089   33,316,586                                 Summary of Financial Highlights Six Months Ended June 30 All figures in thousands of US $, except per share amounts     2011   2010   Change % Total revenue   1,226,793   1,204,008   1.9% Net income   54,157   71,131   -23.9%   Per share - Basic   1.66   2.16   -23.1%   Per share - Diluted   1.65   2.14   -22.9% Average number of shares outstanding -             diluted weighted average   32,862,173   33,292,611                                                 Juvenile Segment                                           Second Quarters Ended June 30     2011   2010       $   % of rev.   $   % of rev.   Change % Total revenue   243,965       259,791       -6.1% Gross profit   61,736   25.3%   69,489   26.7%   -11.2% Operating profit   14,855   6.1%   25,970   10.0%   -42.8%                                             Six Months Ended June 30     2011   2010       $   % of rev.   $   % of rev.   Change % Total revenue   513,585       545,584       -5.9% Gross profit   133,356   26.0%   152,588   28.0%   -12.6% Operating profit   38,527   7.5%   59,101   10.8%   -34.8% Second quarter revenue declined in the majority of the Juvenile segment's businesses, particularly when expressed in local currency. Revenues declined by 6.1% and after removing the impact of varying exchange rates, the overall organic revenue decline was approximately 12% for the quarter and 9% for the first half. The most significant reduction in revenue was at Dorel Juvenile Group USA (DJG) where the depressed retail environment due to the weak economy affected POS levels and sales and has driven a less favourable sales mix. In Europe, sales in Euros were down just over 4% due to a tough economic environment, however upon conversion to the U.S. dollar, recorded sales increased by 8.5%. The declines in Europe were most pronounced in Southern Europe. Notwithstanding these results, Dorel Europe is preserving its market share. For example, it is maintaining its leadership in the all-important car seat category and is preserving its high market share in strollers. A number of new products have been launched in recent months abroad and several more will be introduced at the Cologne, Germany juvenile show next month. Traditionally in weaker economies, commodity prices decline which allows for sustained profitability even in an environment of poor demand. However the first half of 2011 experienced both higher costs and weakened demand. This resulted in the majority of these costs being absorbed by the Company, particularly at DJG, as retailers were reluctant to increase pricing to consumers in the current retail environment. Europe was also negatively impacted by higher costs, though the impact was less significant. Recreational/Leisure Segment                       Second Quarters Ended June 30     2011   2010       $   % of rev.   $   % of rev.   Change % Total revenue   249,094       214,888       15.9% Gross profit   60,592   24.3%   51,519   24.0%   17.6% Operating profit   21,274   8.5%   17,009   7.9%   25.1%                                             Six Months Ended June 30     2011   2010       $   % of rev.   $   % of rev.   Change % Total revenue   449,521       396,565       13.4% Gross profit   111,587   24.8%   97,642   24.6%   14.3% Operating profit   39,045   8.7%   32,080   8.1%   21.7% The second quarter's sales increase of 15.9% was driven by strong sales in the Cycling Sport's Group, the segment's independent bicycle dealer (IBD) division. Excluding the impact of foreign exchange variations on the segment's non-US based businesses, organic revenue increased approximately 12% for the quarter and 11% year-to-date. For the quarter, the IBD channel experienced sales gains in all of its divisions which are located in the U.S., Europe, Japan and Australia, with Europe posting a particularly strong sales increase of over 50%. There has also been strong revenue growth within the segment's international IBD distributors in Europe and Latin America. Consumers remain attracted to Dorel's premium bicycle brands. The demand for Cannondale is very strong and GT, Schwinn and Mongoose continue to make important gains in key North American and European IBD markets. Growth is coming both from existing dealers and from new distribution for all brands through a combination of additional dealers and cross-selling at existing dealers. The sales success of the segment's premium bicycles can be attributed to successful new product introductions and increased promotional spending which is improving brand awareness. Product development also remains a key focus. This is evident in the exciting innovations in the 2012 Cannondale line up, which is now ready to be shipped. The 2012 Schwinn and GT lines also feature significant changes with updated frame specifications and components. After a slow start due to a wet spring and retailers closely controlling inventories, second quarter Pacific Cycle sales to the mass merchant distribution channel improved slightly over last year. POS levels have increased since the weather finally broke in early June. Bolstered by an aggressive advertising and marketing campaign which has increased Schwinn's brand awareness, Pacific Cycle is increasing its market share in the adult category. Schwinn is outperforming the competition and has made gains over last year's second quarter. Home Furnishings Segment                       Second Quarters Ended June 30     2011   2010       $   % of rev.   $   % of rev.   Change % Total revenue           125,951            133,016       -5.3% Gross profit             15,603   12.4%          20,069   15.1%   -22.3% Operating profit               6,267   5.0%          11,269   8.5%   -44.4%                                             Six Months Ended June 30     2011   2010       $   % of rev.   $   % of rev.   Change % Total revenue           263,687            261,859       0.7% Gross profit             32,789   12.4%          39,893   15.2%   -17.8% Operating profit             14,017   5.3%          21,972   8.4%   -36.2% Home Furnishings revenues decreased 5.3% in the second quarter and were up 0.7% year-to-date. As in Juvenile, POS levels were affected by the fragile U.S. economy. The segment's products appeal primarily to opening price point consumers, who are being prudent in their spending choices. As well, revenue was affected by the decision by Cosco Home & Office to exit unprofitable product SKUs. An increase in other furniture lines at the segment's other divisions, mainly upholstered furniture and futons, partially offset this decrease. Cost increases on steel, textiles, container freight as well as other inputs affected margins.  Second quarter profitability was further compounded by the strength of the Canadian dollar which is increasing costs for two of the segments plants that are based in Canada and ship the majority of its product to the United States. Other The second quarter tax rate was 28.1% and 20.5% year-to-date. This compares to 25.4% and 23.4% for the second quarter and year-to-date respectively last year. Based on current expectations, the Company maintains that the annual tax rate will be in the range of 15% to 20%. However, variations in earnings across quarters mean that this rate may vary significantly from quarter to quarter. Versus the first quarter of 2011, second quarter inventory levels increased mainly due to an increase within the Home Furnishings segment as a strong third quarter shipping of futons is anticipated. Therefore inventories rose to US$504.0 million as of June 30, 2011. Versus year end, inventories have decreased by US$6.1 million. The impact of the weaker US dollar was to increase the June balance by US$11.0 million versus year end. As previously stated, the Company estimates the appropriate level of inventory to support the business to be in the US$450 to US$470 million range. This remains the expectation for the second half of this year. First half inventory reductions generated approximately US$17 million in cash flow. Quarterly dividend The Board of Directors of Dorel declared its regular quarterly dividend of US$0.15 per share on the outstanding number of the Company's Class A Multiple Voting Shares, Class B Subordinate Voting Shares and Deferred Share Units. The dividend is payable on September 6, 2011 to shareholders of record as at the close of business on August 23, 2011. Outlook There are several catalysts which are expected to maintain the positive momentum in the Company's Recreational/Leisure segment. Innovative 2012 Cannondale models are being met with enthusiastic response from independent bicycle dealers and on-going marketing investments are being made in both the Schwinn and Mongoose brands.  In Juvenile, there are no indications of an imminent rebound and as such the second half will remain challenging.  In Home Furnishings, the impact of the poor economy has been less pronounced than in Juvenile and the second half is expected to be slightly better than the prior year. "Global economic uncertainty, underlined by the recent volatility in world stock markets and ongoing concerns in Europe, continue to drive fears of another possible recession.  This is depressing already weak consumer confidence and is further undermining the existing fragile retail environment. On the positive side, with the economy not recovering as many had anticipated, we are seeing some easing of commodity prices as well as some excess capacity at our overseas suppliers. Should this trend continue, this could alleviate some of the margin pressure experienced during the first half. Notwithstanding the difficult economy, Dorel is remaining aggressive in new product development and exciting new products will be introduced in the upcoming months," concluded Mr. Schwartz. Conference Call Dorel Industries Inc. will hold a conference call to discuss these results today, August 9, 2011 at 1:00 P.M. Eastern Time. Interested parties can join the call by dialling 1-800-731-5319. The conference call can also be accessed via live webcast at www.dorel.com or www.newswire.ca. 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 4459235# on your phone. This tape recording will be available on Tuesday, August 9, 2011 as of 4:00 P.M. until 11:59 P.M. on Tuesday, August 16, 2011. Complete financial statements will be available on the Company's website, www.dorel.com, and will be available through the SEDAR websites. 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, IronHorse 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$2.3 billion company with 4700 employees, facilities in nineteen countries, and sales worldwide. Caution Regarding Forward Looking Statements Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation.  Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize. Forward-looking statements are provided in this press release for the purpose of giving information about Management's current expectations and plans and allowing investors and others to get a better understanding of Dorel's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose. Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations expressed in or implied by the forward-looking statements include:  general economic conditions; changes in product costs and supply channel; foreign currency fluctuations; customer and credit risk including the concentration of revenues with few customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets and subject to dividends being declared by the Board of Directors, there can be no certainty that Dorel's Dividend Policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel's annual MD&A and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously mentioned documents are specifically incorporated herein by reference. Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on our business, financial condition or results of operations.  Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Dorel therefore cannot describe the expected impact in a meaningful way or in the same way Dorel presents known risks affecting the business.     DOREL INDUSTRIES INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ALL FIGURES IN THOUSANDS OF US $               as at   as at     June 30, 2011   December 30, 2010               (unaudited)   (unaudited)           ASSETS         CURRENT ASSETS           Cash and cash equivalents   $ 24,578   $ 15,748   Trade and other receivables   430,402   356,507   Inventories   503,993   510,068   Other financial assets   625   2,554   Income taxes receivable   15,046   14,096   Prepaid expenses   19,288   17,823     993,932   916,796           NON-CURRENT ASSETS           Property, plant and equipment   162,336   158,752   Intangible assets   404,305   396,354   Goodwill   572,447   554,528   Deferred tax assets   64,528   65,690   Other assets   1,630   2,215     1,205,246   1,177,539     $ 2,199,178   $ 2,094,335           LIABILITIES         CURRENT LIABILITIES           Bank indebtedness   $ 30,153   $ 30,515   Trade and other payables   340,639   323,588   Other financial liabilities   5,002   4,203   Income taxes payable   5,774   13,154   Long-term debt   10,880   10,667   Provisions   40,712   43,232     433,160   425,359           NON-CURRENT LIABILITIES           Long-term debt   328,210   319,281   Pension and post-retirement benefit obligations   32,493   32,056   Deferred tax liabilities   114,047   109,789   Provisions   1,986   1,780   Other financial liabilites   32,844   31,253   Other long-term liabilities   4,258   2,966     513,838   497,125           EQUITY         SHARE CAPITAL   178,769   178,816 CONTRIBUTED SURPLUS   25,342   23,776 ACCUMULATED OTHER COMPREHENSIVE INCOME   101,119   64,626 RETAINED EARNINGS   946,950   904,633     1,252,180   1,171,851     $ 2,199,178   $ 2,094,335 DOREL INDUSTRIES INC. CONSOLIDATED INCOME STATEMENTS ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS                       Second Quarters Ended   Six Months Ended     June 30, 2011   June 30, 2010   June 30, 2011   June 30, 2010     (unaudited)   (unaudited)   (unaudited)   (unaudited)                   Sales   $ 615,710   $ 604,174   $ 1,220,127   $ 1,197,870 Licensing and commission income   3,300   3,521   6,666   6,138 TOTAL REVENUE   619,010   607,695   1,226,793   1,204,008                   Cost of sales   481,079   466,618   949,061   913,885 GROSS PROFIT   137,931   141,077   277,732   290,123                                     Selling expenses   48,019   44,193   92,462   85,923 General and administrative expenses    44,482   41,480   90,260   88,947 Research and development expenses   7,740   6,719   15,330   14,492 OPERATING PROFIT   37,690   48,685   79,680   100,761                   Finance expenses   5,709   4,567   11,587   7,845 INCOME BEFORE INCOME TAXES   31,981   44,118   68,093   92,916                   Income taxes expense   8,988   11,193   13,936   21,785 NET INCOME   $ 22,993   $ 32,925   $ 54,157   $ 71,131                   EARNINGS PER SHARE                   Basic   $0.70   $1.00   $1.66   $2.16   Diluted   $0.70   $0.99   $1.65   $2.14                   SHARES OUTSTANDING                   Basic - weighted average   32,624,000   32,952,376   32,641,723   32,943,021   Diluted - weighted average   32,828,089   33,316,586   32,862,173   33,292,611                     DOREL INDUSTRIES INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ALL FIGURES IN THOUSANDS OF US $                       Second Quarters Ended   Six Months Ended     June 30, 2011   June 30, 2010   June 30, 2011   June 30, 2010     (unaudited)   (unaudited)   (unaudited)   (unaudited)                   NET INCOME   $ 22,993   $ 32,925   $ 54,157   $ 71,131                   OTHER COMPREHENSIVE INCOME:                 Cumulative translation account:                 Net change in unrealized foreign currency gains (losses) on translation of net investments in foreign operations, net of tax of nil   12,297   (39,493)   38,699   (67,273)                                     Net changes in cash flow hedges:                 Net change in unrealized gains (losses) on derivatives designated as cash flow hedges   (682)   (2,094)   (3,888)   (1,345) Reclassification to income   (958)   (277)   (2,408)   (67) Reclassification to the related non financial asset   1,875   (242)   3,355   (614) Deferred income taxes   167   1,121   911   1,327     402   (1,492)   (2,030)   (699)                   Defined benefit plans:                 Acturial gains (losses) on defined benefit plans   (36)   (840)   (122)   (1,747) Deferred income taxes   (76)   309   (54)   635     (112)   (531)   (176)   (1,112)                   TOTAL OTHER COMPREHENSIVE INCOME (LOSS)   12,587   (41,516)   36,493   (69,084)                   TOTAL COMPREHENSIVE INCOME (LOSS)   $ 35,580   $ (8,591)   $ 90,650   $ 2,047                   DOREL INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ALL FIGURES IN THOUSANDS OF US $                   Attributable to equity holders of the Company   Share Capital Contributed Surplus Cumulative Translation Account* Cash Flow Hedges* Defined Benefit Plans* Retained Earnings Total Equity   (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)                 Balance as at December 31, 2009 $ 174,816 $ 20,311 $ 96,840 $ 895 $ -  $ 809,976 $ 1,102,838                 Total comprehensive income (loss) - - (67,273) (699) (1,112) 71,131 2,047 Issued under stock option plan 3,654 - - - - - 3,654 Reclassification from contributed surplus due to exercise of stock options 884 (884) - - - - - Repurchase and cancellation of shares (1,199) -  - - - - (1,199) Premium paid on share repurchase - -  - - - (5,495) (5,495) Share-based payments - 2,485 - - - - 2,485 Dividends on common shares - -  - - - (9,065) (9,065) Dividends on deferred share units - 24 - - - (24) -                 Balance as at June 30, 2010 $ 178,155 $ 21,936 $ 29,567 $ 196 $ (1,112) $ 866,523 $ 1,095,265                                 Balance as at December 31, 2010 $ 178,816 $ 23,776 $ 67,970 $ (1,032) $ (2,312) $ 904,633 $ 1,171,851                 Total comprehensive income (loss) - - 38,699 (2,030) (176) 54,157 90,650 Issued under stock option plan 402 - - - - - 402 Reclassification from contributed surplus due to exercise of stock options 82 (82) - - - - - Repurchase and cancellation of shares (531) - - - - - (531) Premium paid on share repurchase - - - - - (2,026) (2,026) Share-based payments - 1,614 - - - -  1,614 Dividends on common shares - - - - - (9,780) (9,780) Dividends on deferred share units - 34 - - - (34) -                 Balance as at June 30, 2011 $ 178,769 $ 25,342 $ 106,669 $ (3,062) $ (2,488) $ 946,950 $ 1,252,180                 *Accumulated other comprehensive income               DOREL INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ALL FIGURES IN THOUSANDS OF US $                       Second Quarters Ended   Six Months Ended     June 30, 2011   June 30, 2010   June 30, 2011   June 30, 2010     (unaudited)   (unaudited)   (unaudited)   (unaudited)                   CASH PROVIDED BY (USED IN):                                   OPERATING ACTIVITIES                 Net income   $ 22,993   $ 32,925   $ 54,157   $ 71,131 Items not involving cash:                   Depreciation and amortization   14,428   12,431   27,612   25,183   Amortization of deferred financing costs   277   50   646   79   Accretion expense on contingent consideration and put option liabilities   556   466   1,087   941   Other finance expenses   5,153   4,101   10,500   6,904   Income taxes expense   8,988   11,193   13,936   21,785   Share-based payments   584   1,160   1,395   2,148   Pension and post-retirement defined benefit plans   834   711   1,692   1,632   (Gain) loss on disposal of property, plant and equipment   (41)   (4)   (59)   2     53,772   63,033   110,966   129,805 Net changes in non-cash balances related to operations:                   Trade and other receivables   40,569   24,887   (63,088)   (60,387)   Inventories   (6,726)   (80,192)   17,322   (57,756)   Prepaid expenses   848   105   (1,536)   (2,431)   Trade and other payables   (4,042)   67,088   8,814   98,510   Pension and post-retirement benefit obligations   (787)   (569)   (2,099)   (1,423)   Provisions, other financial liabilities and other long-term liabilities   (1,829)   (664)   (617)   294     28,033   10,655   (41,204)   (23,193)                     Income taxes paid   (13,563)   (21,158)   (19,203)   (23,637)   Income taxes received   386   972   490   3,692   Interest paid   (6,933)   (996)   (10,110)   (5,513)                   CASH PROVIDED BY OPERATING ACTIVITIES   61,695   52,506   40,939   81,154                   FINANCING ACTIVITIES                   Bank indebtedness   (14,623)   (12,440)   (1,782)   655   Increase of long-term debt   -    149,431   8,121   200,000   Repayments of long-term debt   (26,017)   (165,122)   -    (220,122)   Share repurchase   (1,588)   (5,294)   (2,557)   (6,694)   Issuance of share capital   220   2,895   402   3,654   Dividends on common shares   (4,866)   (4,947)   (9,780)   (9,065) CASH USED IN FINANCING ACTIVITIES   (46,874)   (35,477)   (5,596)   (31,572)                   INVESTING ACTIVITIES                   Additions to property, plant and equipment   (8,341)   (10,467)   (14,951)   (16,095)   Additions to intangible assets   (5,210)   (4,560)   (9,825)   (9,297) CASH USED IN INVESTING ACTIVITIES   (13,551)   (15,027)   (24,776)   (25,392)                     Effect of exchange rate changes on cash and cash equivalents   (1,385)   (5,410)   (1,737)   (10,050)                   NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (115)   (3,408)   8,830   14,140                   Cash and cash equivalents, beginning of period   24,693   37,395   15,748   19,847                   CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 24,578   $ 33,987   $ 24,578   $ 33,987     DOREL INDUSTRIES INC. INDUSTRY SEGMENTED INFORMATION SECOND QUARTERS ENDED JUNE 30 ALL FIGURES IN THOUSANDS OF US $                         Total Juvenile Recreational / Leisure Home Furnishings     2011 2010 2011 2010 2011 2010 2011 2010     (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Total revenue   $ 619,010 $ 607,695 $ 243,965 $ 259,791 $ 249,094 $ 214,888 $ 125,951 $ 133,016 Cost of sales   481,079 466,618 182,229 190,302 188,502 163,369 110,348 112,947 Gross profit   137,931 141,077 61,736 69,489 60,592 51,519 15,603 20,069 Selling expenses   47,512 43,735 20,528 19,566 22,709 20,041 4,275 4,128 General and administrative expenses   40,283 36,375 20,133 18,778 15,803 13,705 4,347 3,892 Research and development expenses   7,740 6,719 6,220 5,175 806 764 714 780 Operating profit   42,396 54,248 $ 14,855 $ 25,970 $ 21,274 $ 17,009 $ 6,267 $ 11,269 Finance expenses   5,709 4,567             Corporate expenses   4,706 5,563             Income taxes   8,988 11,193                                 Net income   $ 22,993 $ 32,925                                 Earnings per Share                     Basic   $0.70 $1.00               Diluted   $0.70 $0.99                                 Depreciation and amortization included in operating profit   $ 14,372 $ 12,394 $ 10,533 $ 8,782 $ 2,364 $ 2,272 $ 1,475 $ 1,340     DOREL INDUSTRIES INC. INDUSTRY SEGMENTED INFORMATION SIX MONTHS ENDED JUNE 30 ALL FIGURES IN THOUSANDS OF US $                         Total Juvenile Recreational / Leisure Home Furnishings     2011 2010 2011 2010 2011 2010 2011 2010     (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Total revenue   $ 1,226,793 $ 1,204,008 $ 513,585 $ 545,584 $ 449,521 $ 396,565 $ 263,687 $ 261,859 Cost of sales   949,061 913,885 380,229 392,996 337,934 298,923 230,898 221,966 Gross profit   277,732 290,123 133,356 152,588 111,587 97,642 32,789 39,893 Selling expenses   91,391 84,889 41,255 39,514 41,676 37,447 8,460 7,928 General and administrative expenses   79,422 77,589 41,272 42,381 29,166 26,678 8,984 8,530 Research and development expenses   15,330 14,492 12,302 11,592 1,700 1,437 1,328 1,463 Operating profit   91,589 113,153 $ 38,527 $ 59,101 $ 39,045 $ 32,080 $ 14,017 $ 21,972 Finance expenses   11,587 7,845             Corporate expenses   11,909 12,392             Income taxes   13,936 21,785                                 Net income   $ 54,157 $ 71,131                                 Earnings per Share                     Basic   $1.66 $2.16               Diluted   $1.65 $2.14                                 Depreciation and amortization included in operating profit   $ 27,522 $ 25,111 $ 20,155 $ 17,995 $ 4,556 $ 4,394 $ 2,811 $ 2,722     SOURCE DOREL INDUSTRIES INC.For further information: <p> MaisonBrison Communications<br/> Rick Leckner<br/> (514) 731-0000 </p> <p> Dorel Industries Inc.<br/> Jeffrey Schwartz<br/> (514) 934-3034 </p>