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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 19, 2006
GENTEX CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 0-10235 38-2030505
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 North Centennial Street
Zeeland, Michigan 49464
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (616) 772-1800
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12).
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240-14d-2(b)).
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)).
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SECTION 2 - FINANCIAL INFORMATION
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 19, 2006, Gentex Corporation issued a news release announcing results
for the third quarter ended September 30, 2006. A copy of the news release is
attached as Exhibit 99.1 to this Form 8-K.
The information in this Form 8-K and the attached Exhibit shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, except as shall be expressly set forth by specific reference in
such filing.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibit
99.1 - News Release Dated October 19, 2006.
SIGNATURE
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.
Dated: October 19, 2006 GENTEX CORPORATION
(Registrant)
By: /s/ Enoch Jen
-------------------------
Enoch Jen
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
99.1 News Release Dated October 19, 2006.
Exhibit 99.1
CONTACT: Connie Hamblin RELEASE: October 19, 2006
616) 772-1800
GENTEX REPORTS THIRD QUARTER RESULTS
ZEELAND, Michigan, October 19, 2006 -- Gentex Corporation, the Zeeland,
Michigan-based manufacturer of automatic-dimming rearview mirrors and commercial
fire protection products, today reported financial results for the third quarter
ended September 30, 2006. The Company also announced that it repurchased
approximately 4.0 million shares during the third quarter of 2006 under a
previously authorized and announced share repurchase plan.
The Company's net sales increased by two percent from $138.1 million in
the third quarter of 2005 to a record $141.3 million in the third quarter of
2006. Third quarter net income decreased by 13 percent to $24.3 million compared
with $27.9 million in the third quarter last year. Earnings per diluted share
were 17 cents in the third quarter of 2006 compared with 18 cents in the third
quarter of 2005.
For the first nine months of 2006, net sales increased by six percent
to a record $422.7 million compared with $398.1 million in the first nine months
of 2005. Net income for the first nine months of 2006 decreased by two percent
to $77.9 million compared with $79.9 million in the first nine months of 2005.
Earnings per diluted share were 52 cents for the first nine months of 2006
compared with 51 cents for the same prior-year period.
Excluding the impact of stock option expensing, the Company's net
income would have decreased by eight percent to $25.6 million in the third
quarter of 2006 compared to the third quarter of 2005, and earnings per diluted
share for those same periods would have been flat at 18 cents. Net income,
excluding the impact of stock option expensing, would have increased by two
percent for the first nine months of 2006 compared to the same period last year
to $81.5 million, and earnings per diluted share would have been 54 cents. Stock
option expensing did not impact the Company's income statement for the third
quarter and first nine months of 2005, but was disclosed in a footnote to the
financial statements.
"While we did well in a difficult operating environment, we do wish
that we could have posted better numbers in the third quarter, and still believe
that we have significant new opportunities in the future," said Gentex Chairman
and Chief Executive Officer Fred Bauer. "Mirror unit shipments for the third
quarter of 2006 increased just slightly compared to the same period in 2005,
mostly because of stronger unit shipments to automakers headquartered outside
North America that offset domestic production cuts. The stronger unit shipments
to automakers headquartered offshore have been camouflaged by those domestic
production cuts recently, but as we look to the future and further diversify our
customer base in the automotive industry, that will hopefully become less of an
issue."
Bauer added that he does expect the economy and North American auto
industry to improve. "We believe that it's not a question of `if'. . . it's a
question of "When."
The Company also reported that it repurchased approximately 3,968,000
shares during the third quarter of 2006 at a cost of approximately $55.6
million. The Company has a share repurchase plan in place with authorization to
repurchase up to 24 million shares of the Company's stock (including the May and
August 2006 Board of Directors' authorizations to repurchase a total of an
additional 16 million shares). As of the end of the third quarter of 2006,
including the prior share repurchases in 2003, 2005 and 2006, the Company has
repurchased approximately 16.3 million shares, leaving approximately 7.7 million
shares authorized to be repurchased under the plan.
"We continue to see improvements in our manufacturing yields and expect
that process to continue as we make our way up the learning curve and our
volumes increase on our lines," said Enoch Jen, the Company's Senior Vice
President and Chief Financial Officer. "We currently expect unit shipment growth
in the fourth quarter to increase by approximately five percent compared with
the fourth quarter of 2005. The expectation of five percent unit shipment growth
in the fourth quarter is at the lower end of the range of our previous guidance,
but it now reflects the significant North American light vehicle production cuts
that have previously been announced for the fourth quarter."
The unit shipment estimates provided by the Company for the 2006 fourth
quarter are based on an eight percent decline in light vehicle production
forecasts of CSM Worldwide for North America, and slight increases in those
forecasts for Europe, Japan and Korea.
Automotive revenues increased by three percent to $135.1 million in the
third quarter of 2006 compared with the same period last year, and increased by
six percent to $404.4 million for the first nine months of 2006 compared to the
same period last year. Fire Protection revenues decreased by four percent to
$6.2 million for the third quarter of 2006 compared with the third quarter of
2005, and were flat at $18.3 million for the first nine months of 2006, compared
with the same period in 2005.
Total auto-dimming mirror unit shipments in the third quarter were
approximately 3.2 million, an increase of about 1/2 of one percent over the same
period last year. Auto-dimming mirror unit shipments increased by seven percent
to 10.0 million for the first nine months of 2006 compared to the first nine
months of 2005.
Auto-dimming mirror unit shipments to customers in North America
decreased by eight percent to approximately 1.4 million in the third quarter of
2006 compared with the same quarter last year. North American light vehicle
production declined by nine percent in the third quarter of 2006 compared with
the same period in 2005. For the first nine months of 2006, auto-dimming mirror
unit shipments to customers in North America increased by three percent to
approximately 4.6 million compared with the same period last year. North
American light vehicle production decreased by one percent for the first nine
months of 2006 compared with the same period in 2005.
Unit shipments to offshore customers increased by eight percent to
approximately 1.8 million in the third quarter of 2006 compared with the same
period in 2005. Light vehicle production in Europe was flat in the third quarter
of 2006 and increased by three percent for Japan and Korea in that same period,
compared with the same prior year periods. For the first nine months of 2006,
unit shipments to offshore customers increased by 11 percent to approximately
5.4 million, compared with the same period in 2005. Light vehicle production in
Europe increased by two percent in the first nine months of 2006 and increased
by four percent for Japan and Korea in that same period, compared with the same
prior year periods.
Non-GAAP Financial Measure
- --------------------------
The financial information provided, including earnings, is in
accordance with GAAP. Still, the Company believes it is useful to provide
non-GAAP earnings to exclude the effect of FAS 123(R). This non-GAAP financial
measure allows investors to evaluate current performance in relation to historic
performance without considering this non-cash charge.
The Company's management uses this non-GAAP information internally to
help assess performance in the current period versus prior periods. Disclosure
of non-GAAP earnings to exclude the effect of FAS 123(R) has economic substance
because the excluded expenses do not represent current or future cash
expenditures.
A reconciliation of non-GAAP earnings, to exclude the effect of FAS
123(R), to GAAP earnings can be found in the attached financial table. The use
of non-GAAP earnings is intended to supplement, not to replace, presentation of
GAAP earnings. Like all non-GAAP financial measures, non-GAAP earnings are
subject to inherent limitations because all of the expenses required by GAAP are
not included. The limitations are compensated by the fact that non-GAAP earnings
are not relied on exclusively, but are used to simply supplement GAAP earnings.
Safe Harbor Statement
- ---------------------
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21
E 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.
Third Quarter Conference Call
- -----------------------------
A conference call related to this news release will be simulcast live
on the Internet beginning at 9:30 am. Eastern Daylight Saving Time today. To
access that call, go to www.gentex.com and select the "Audio Webcast" icon in
the lower right-hand corner of the page. Other conference calls hosted by the
Company will also be available at that site in the future.
About the Company
- -----------------
Founded in 1974, Gentex Corporation (Nasdaq Global Market: GNTX) is an
international company that provides high-quality products to the worldwide
automotive industry and North American fire protection market. Based in Zeeland,
Michigan, the Company develops, manufactures and markets interior and exterior
automatic-dimming automotive rearview mirrors that utilize proprietary
electrochromic technology to dim in proportion to the amount of headlight glare
from trailing vehicle headlamps. Many of the mirrors are sold with advanced
electronic features, and approximately 95 percent of the Company's revenues are
derived from the sales of auto-dimming mirrors to nearly every major automaker
in the world.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Net Sales $ 141,265,647 $ 138,114,897 $ 422,677,471 $ 398,141,062
Costs and Expenses
Cost of Goods Sold 93,387,125 86,918,447 275,669,763 249,326,226
Engineering, Research & Development 10,536,334 9,140,231 30,658,131 25,916,046
Selling, General & Administrative 7,737,384 6,762,837 23,041,411 20,613,966
Other Expense (Income) (6,103,269) (5,489,437) (20,769,939) (14,373,015)
-------------- -------------- -------------- --------------
Total Costs and Expenses 105,557,574 97,332,078 308,599,366 281,483,223
-------------- -------------- -------------- --------------
Income Before Provision for Income Taxes 35,708,073 40,782,819 114,078,105 116,657,839
Provision for Income Taxes 11,370,152 12,847,000 36,133,077 36,748,000
-------------- -------------- -------------- --------------
Net Income $ 24,337,921 $ 27,935,819 $ 77,945,028 $ 79,909,839
============== ============== ============== ==============
Earnings Per Share
Basic $ 0.17 $ 0.18 $ 0.52 $ 0.51
Diluted $ 0.17 $ 0.18 $ 0.52 $ 0.51
Weighted Average Shares:
Basic 144,879,673 155,817,978 149,871,596 155,545,871
Diluted 145,092,084 157,458,416 150,441,525 157,137,065
Cash Dividends Declared per Share $ 0.095 $ 0.090 $ 0.275 $ 0.260
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
Sept 30, 2006 Dec 31, 2005
-------------- --------------
ASSETS
Cash and Short-Term Investments $ 333,066,565 $ 507,013,621
Other Current Assets 126,915,518 111,973,906
-------------- --------------
Total Current Assets 459,982,083 618,987,527
Plant and Equipment - Net 183,664,510 164,030,341
Long-Term Investments and Other Assets 143,074,408 139,627,934
-------------- --------------
Total Assets $ 786,721,001 $ 922,645,802
============== ==============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $ 70,448,610 $ 58,088,259
Long-Term Debt 0 0
Deferred Income Taxes 22,888,034 22,962,168
Shareholders' Investment 693,384,357 841,595,375
-------------- --------------
Total Liabilities & Shareholders' Investment $ 786,721,001 $ 922,645,802
============== ==============
GENTEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME RECONCILIATION
NON-GAAP MEASUREMENT TO GAAP
(unaudited) (unaudited)
Three Months Ended September 30, 2006
-----------------------------------------------
(Non-GAAP GAAP Non-GAAP
Stock Excluding 2006 vs. 2006 vs.
Option Stock Option Quarter Ended 2005 % 2005 %
GAAP Expense Expense) 9/30/05 Change Change
-------------- ------------- -------------- -------------- -------- --------
Net Sales $ 141,265,647 $ 0 $ 141,265,647 $ 138,114,897 2.3% 2.3%
Costs and Expenses
Cost of Goods Sold 93,387,125 (565,696) 92,821,429 86,918,447 7.4% 6.8%
Engineering, Research & Development 10,536,334 (604,667) 9,931,667 9,140,231 15.3% 8.7%
Selling, General & Administrative 7,737,384 (636,647) 7,100,737 6,762,837 14.4% 5.0%
Other Expense (Income) (6,103,269) 0 (6,103,269) (5,489,437) 11.2% 11.2%
-------------- ------------- -------------- --------------
Total Costs and Expenses 105,557,574 (1,807,010) 103,750,564 97,332,078 8.5% 6.6%
-------------- ------------- -------------- --------------
Income Before Provision
for Income Taxes 35,708,073 1,807,010 37,515,083 40,782,819 (12.4)% (8.0)%
Provision for Income Taxes 11,370,152 540,848 11,911,000 12,847,000 (11.5)% (7.3)%
-------------- ------------- -------------- --------------
Net Income 24,337,921 1,266,162 25,604,083 27,935,819 (12.9)% (8.3)%
============== ============= ============== ==============
Nine Months Ended September 30, 2006
-----------------------------------------------
(Non-GAAP GAAP Non-GAAP
Stock Excluding 2006 vs. 2006 vs.
Option Stock Option 2005 % 2005 %
GAAP Expense Expense) YTD 9/30/05 Change Change
-------------- ------------- -------------- -------------- -------- --------
Net Sales $ 422,677,471 $ 0 $ 422,677,471 $ 398,141,062 6.2% 6.2%
Costs and Expenses
Cost of Goods Sold 275,669,763 (1,683,057) 273,986,706 249,326,226 10.6% 9.9%
Engineering, Research & Development 30,658,131 (1,881,448) 28,776,683 25,916,046 18.3% 11.0%
Selling, General & Administrative 23,041,411 (1,712,395) 21,329,016 20,613,966 11.8% 3.5%
Other Expense (Income) (20,769,939) 0 (20,769,939) (14,373,015) 44.5% 44.5%
-------------- ------------- -------------- --------------
Total Costs and Expenses 308,599,366 (5,276,900) 303,322,466 281,483,223 9.6% 7.8%
-------------- ------------- -------------- --------------
Income Before Provision
for Income Taxes 114,078,105 5,276,900 119,355,005 116,657,839 (2.2)% 2.3%
Provision for Income Taxes 36,133,077 1,762,923 37,896,000 36,748,000 (1.7)% 3.1%
-------------- ------------- -------------- --------------
Net Income 77,945,028 3,513,977 81,459,005 79,909,839 (2.5)% 1.9%
============== ============= ============== ==============
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
2006 2005 % CHANGE 2006 2005 % CHANGE
--------- --------- --------- --------- --------- ---------
Domestic Interior 978 1,032 -5% 3,207 3,111 3%
Domestic Exterior 421 492 -14% 1,387 1,351 3%
Total Domestic Units 1,399 1,524 -8% 4,594 4,462 3%
Foreign Interior 1,248 1,197 4% 3,808 3,527 8%
Foreign Exterior 563 477 18% 1,608 1,334 21%
Total Foreign Units 1,811 1,674 8% 5,416 4,861 11%
Total Interior Mirrors 2,226 2,229 Flat 7,015 6,638 6%
Total Exterior Mirrors 984 969 2% 2,995 2,685 12%
Total Mirror Units 3,210 3,198 0.4% 10,010 9,323 7%
Note: Certain prior year amounts have been reclassified to conform with the
current year presentation. Amounts may not total due to rounding.