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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003, OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ___________ TO ____________
COMMISSION FILE NO. 0-10235
GENTEX CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2030505
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 N. CENTENNIAL, ZEELAND, MICHIGAN 49464
(Address of principal executive offices) (Zip Code)
(616) 772-1800
(Registrant's telephone number, including area code)
-----------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
---------------- ---------------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes x No
---------------- ----------------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
---------------- ----------------
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class at April 17, 2003
----- -----------------
Common Stock, $0.06 Par Value 76,023,291
Exhibit Index located at page 14
Page 1 of 25
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31, 2003 December 31, 2002
-------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $119,817,809 $168,834,111
Short-term investments 116,171,454 46,816,690
Accounts receivable, net 43,474,027 35,890,380
Inventories 17,688,500 17,742,009
Prepaid expenses and other 10,004,446 7,515,219
------------ ------------
Total current assets 307,156,236 276,798,409
PLANT AND EQUIPMENT - NET 126,204,020 124,982,665
OTHER ASSETS
Long-term investments 207,953,624 203,358,933
Patents and other assets, net 4,292,908 4,032,660
------------ ------------
Total other assets 212,246,532 207,391,593
------------ ------------
Total assets $645,606,788 $609,172,667
============ ============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
CURRENT LIABILITIES
Accounts payable $ 15,237,032 $ 11,793,726
Accrued liabilities 33,001,930 17,266,309
------------ ------------
Total current liabilities 48,238,962 29,060,035
DEFERRED INCOME TAXES 5,325,824 6,472,270
SHAREHOLDERS' INVESTMENT
Common stock 4,561,397 4,573,282
Additional paid-in capital 127,189,707 123,923,391
Other shareholders' investment 460,290,898 445,143,689
------------ ------------
Total shareholders' investment 592,042,002 573,640,362
------------ ------------
Total liabilities and
shareholders' investment $645,606,788 $609,172,667
============ ============
See accompanying notes to condensed consolidated financial statements.
- 2 -
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
2003 2002
------------- -------------
NET SALES $ 115,308,564 $ 89,048,468
COST OF GOODS SOLD 67,192,569 53,857,806
------------- -------------
Gross profit 48,115,995 35,190,662
OPERATING EXPENSES:
Engineering, research and development 6,207,736 5,585,740
Selling, general
& administrative 5,526,676 5,040,345
------------- -------------
Total operating expenses 11,734,412 10,626,085
------------- -------------
Operating income 36,381,583 24,564,577
OTHER INCOME:
Interest and dividend income 2,665,211 2,760,848
Other, net (664,256) 754,301
------------- -------------
Total other income 2,000,955 3,515,149
------------- -------------
Income before provision
for income taxes 38,382,538 28,079,726
PROVISION FOR INCOME TAXES 12,474,000 9,126,500
------------- -------------
NET INCOME $ 25,908,538 $ 18,953,226
============= =============
Earnings Per Share:
Basic $ 0.34 $ 0.25
Diluted $ 0.34 $ 0.25
Weighted Average Shares:
Basic 75,944,285 75,313,856
Diluted 76,829,027 76,347,821
See accompanying notes to condensed consolidated financial statements.
- 3 -
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
----------------------------
2003 2002
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,908,538 $ 18,953,226
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 5,385,865 4,576,614
Gain on disposal of asset (15,250) (27,250)
(Gain) loss on sale of investments 1,707,499 (586,730)
Deferred income taxes (748,674) 73,459
Amortization of deferred compensation 291,649 268,967
Change in operating assets and liabilities:
Accounts receivable, net (7,583,647) (3,645,632)
Inventories 53,509 831,154
Prepaid expenses and other (2,223,816) 589,117
Accounts payable 3,443,306 2,074,633
Accrued liabilities 15,735,621 10,954,913
Tax benefit of stock plan transactions 629,664 1,705,550
------------- -------------
Net cash provided by
operating activities 42,584,264 35,768,021
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in short-term investments (69,354,764) (6,509,544)
Plant and equipment additions (6,629,885) (15,253,685)
Proceeds from sale of plant and equipment 72,000 189,926
Increase in long-term investments (8,197,000) (17,878,467)
Increase in other assets (141,059) (296,465)
------------- -------------
Net cash used for
investing activities (84,250,708) (39,748,235)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock from
stock plan transactions 2,896,952 4,266,968
Repurchases of common stock (10,246,810) 0
------------- -------------
Net cash provided by (used for)
financing activities (7,349,858) 4,266,968
------------- -------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (49,016,302) 286,754
CASH AND CASH EQUIVALENTS,
beginning of period 168,834,111 139,784,721
------------- -------------
CASH AND CASH EQUIVALENTS,
end of period $ 119,817,809 $ 140,071,475
============= =============
See accompanying notes to condensed consolidated financial statements.
- 4 -
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) The condensed consolidated financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United
States have been condensed or omitted pursuant to such rules and
regulations, although the Registrant believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Registrant's 2002 annual report on Form 10-K.
(2) In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments, consisting of only a normal
and recurring nature, necessary to present fairly the financial position of
the Registrant as of March 31, 2003, and December 31, 2002, and the results
of operations and cash flows for the interim periods presented.
(3) Inventories consisted of the following at the respective balance sheet
dates:
March 31, 2003 December 31, 2002
-------------- -----------------
Raw materials $10,217,227 $ 9,911,022
Work-in-process 1,667,424 1,744,372
Finished goods 5,803,849 6,086,615
----------- -----------
$17,688,500 $17,742,009
=========== ===========
(4) The following table reconciles the numerators and denominators used in the
calculation of basic and diluted earnings per share (EPS):
Quarter Ended March 31,
-----------------------
2003 2002
---- ----
Numerators:
Numerator for both basic and
diluted EPS, net income $25,908,538 $18,953,226
Denominators:
Denominator for basic EPS,
weighted-average shares
outstanding 75,944,285 75,313,856
Potentially dilutive shares
resulting from stock plans 884,742 1,033,965
----------- -----------
Denominator for diluted EPS 76,829,027 76,347,821
=========== ===========
Shares related to stock plans not
included in diluted average common
shares outstanding because their
effect would be antidilutive 1,371,099 508,724
(5) At March 31, 2003, the Company has two stock option plans and an employee
stock purchase plan. The Company accounts for these plans under the
recognition and measurement principles of APB Opinion No. 25 (Accounting
for Stock Issued to Employees) and related interpretations. No stock-based
employee compensation cost is reflected in net income, as all options
granted under these plans have an exercise price equal to the market value
of the underlying common stock on the date of grant. The following table
illustrates the effect on net income and earnings per share if the Company
had applied the fair value recognition provisions of FASB Statement No. 123
(Accounting for Stock-Based Compensation) to stock-based employee
compensation.
- 5 -
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
Quarter Ended March 31,
-----------------------
2003 2002
---- ----
Net income, as reported $ 25,908,538 $ 18,953,226
Deduct: Total stock-based employee
compensation expense determined
under fair value-based method of all
awards, net of tax effects (1,984,653) (1,886,332)
-------------- --------------
Pro forma net income $ 23,923,885 $ 17,066,894
============== ==============
Earnings per share:
Basic -- as reported $ .34 $ .25
Basic -- pro forma .32 .23
Diluted -- as reported .34 .25
Diluted -- pro forma .31 .22
(6) Comprehensive income reflects the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. For the Company, comprehensive income represents net
income adjusted for items such as unrealized gains and losses on certain
investments and foreign currency translation adjustments. Comprehensive
income was as follows:
March 31, 2003 March 31, 2003
-------------- --------------
Quarter Ended $24,830,185 $18,336,351
(7) The decrease in common stock during the quarter ended March 31, 2003, is
attributable to the repurchase of 415,000 shares, partially offset by the
issuance of 216,921 shares of the Company's common stock under its
stock-based compensation plans.
(8) The Company currently manufactures electro-optic products, including
automatic-dimming rearview mirrors for the automotive industry, and fire
protection products for the commercial building industry:
Quarter Ended March 31,
-----------------------
Revenue: 2003 2002
---- ----
Automotive Products $110,176,859 $ 83,893,419
Fire Protection Products 5,131,705 5,155,049
------------ ------------
Total $115,308,564 $ 89,048,468
============ ============
Operating Income:
Automotive Products $ 35,487,086 $ 23,550,891
Fire Protection Products 894,497 1,013,686
------------ ------------
Total $ 36,381,583 $ 24,564,577
============ ============
- 6 -
GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
(9) New Accounting Pronouncements -- FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others," changes current practice in
accounting for, and disclosure of, guarantees. Interpretation No. 45 will
require certain guarantees to be recorded as liabilities at fair value on
the Company's balance sheet. Current practice requires that liabilities
related to guarantees to be recorded only when a loss is probable and
reasonably estimable, as those terms are defined in FASB Statement No. 5,
"Accounting for Contingencies." Interpretation No. 45 also requires a
guarantor to make significant new disclosures, even when the likelihood of
making any payments under the guarantee is remote, which is another change
from current practice. The disclosure requirements of Interpretation No. 45
are effective immediately; however the Company currently does not have
significant third party guarantees or warranty liabilities that would
require disclosure under the interpretation. The initial recognition and
measurement provisions are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. The recognition and measurement
provisions were adopted, prospectively, as of January 1, 2003, and did not
have an effect on the Company's consolidated financial position or results
of operations.
In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure -- an amendment of FASB Statement
No. 123." SFAS 148 amends SFAS 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair-value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure
requirements of Statement No. 123 to require disclosure in interim
financial statements regarding the method used on reported results. The
Company does not intend to adopt a fair-value based method of accounting
for stock-based employee compensation until a final standard is issued by
the FASB that requires this accounting. Proforma disclosures of quarterly
earnings are included in Note 5 of this quarterly statement.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." This standard clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statement,"
and addresses consolidation by business enterprises of variable interest
entities (more commonly known as Special Purpose Entities or SPE's).
Interpretation No. 46 requires existing unconsolidated variable interest
entities to be consolidated by their primary beneficiaries if the entities
do not effectively disperse risk among the parties involved. Interpretation
No. 46 also enhances the disclosure requirements related to variable
interest entities. This statement is effective for variable interest
entities created or in which an enterprise obtains an interest after
January 31, 2003. Interpretation No. 46 will be effective for the Company
beginning January 1, 2004, for all interest in variable interest entities
acquired before February 1, 2003. The adoption of Interpretation No. 46 is
not expected to have an effect on the Company's consolidated financial
statements.
- 7 -
GENTEX CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS:
FIRST QUARTER 2003 VERSUS FIRST QUARTER 2002
Net Sales. Net sales for the first quarter of 2003 increased by
approximately $26,260,000, or 29%, when compared with the first quarter
last year. Net sales of the Company's automotive mirrors increased by
$26,283,000, or 31%, as electrochromic mirror unit shipments increased
by 23% from approximately 2,056,000 in the first quarter of 2002 to
2,535,000 in the current quarter. This increase reflected the increased
penetration of interior and exterior electrochromic Night Vision
Safety(TM) (NVS(R)) Mirrors on 2003 model year vehicles plus additional
content. Unit shipments to customers in North America increased by 14%,
primarily due to increased penetration, despite flat automotive
production levels. Mirror unit shipments to automotive customers
outside North America increased by 36% compared with the first quarter
in 2002, primarily due to increased interior and exterior mirror
sub-assembly shipments to European and Asian-Pacific automakers. Net
sales of the Company's fire protection products decreased less than 1%,
primarily due to lower sales of certain of the Company's smoke
detectors.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold
decreased from 60% in the first quarter of 2002 to 58% in the first
quarter of 2003. This decreased percentage primarily reflected the
higher sales level leveraged over the fixed overhead costs and product
mix, partially offset by annual customer price reductions.
Operating Expenses. Research and development expenses increased
approximately $622,000, but decreased from 6% to 5% of net sales, when
compared with the same quarter last year, primarily reflecting
additional staffing, engineering and testing for new product
development, including mirrors with additional electronic features.
Selling, general and administrative expenses increased approximately
$486,000, but decreased from 6% to 5% of net sales, when compared with
the first quarter of 2002. This increased expense primarily reflected
the continued expansion of the Company's overseas sales and engineering
offices.
Other Income - Net. Other income decreased by approximately $1,514,000
when compared with the first quarter of 2002, primarily due to realized
losses on the sale of equity investments.
FINANCIAL CONDITION:
Cash flow from operating activities for the three months ended March
31, 2003, increased $4,522,000 to $40,877,000, compared to $36,355,000
for the same period last year, primarily due to increased net income.
Capital expenditures for the three months ended March 31, 2003, were
$6,630,000, compared to $15,254,000 for the same period last year,
primarily due to the purchase of a company airplane in 2002.
Management considers the Company's working capital and long-term
investments totaling approximately $466,871,000 at March 31, 2003,
together with internally generated cash flow and an unsecured
$5,000,000 line of credit from a bank, to be sufficient to cover
anticipated cash needs for the next year and for the foreseeable
future.
On October 8, 2002, the Company announced a share repurchase plan,
under which the Company may purchase up to 4,000,000 shares based on a
number of factors, including market conditions, the market price of the
Company's common stock, anti-dilutive effect on earnings, available
cash and other factors as the Company deems appropriate. During the
quarter ended March 31, 2003, the Company repurchased 415,000 shares at
a cost of approximately $10,247,000.
TRENDS AND DEVELOPMENTS:
The Company is subject to market risk exposures of varying correlations
and volatilities, including foreign exchange rate risk, interest rate
risk and equity price risk. There were no significant changes in the
market risks reported in the Company's 2002 Form 10-K report during the
quarter ended March 31, 2003.
- 8 -
TRENDS AND DEVELOPMENTS (CONT.):
The Company has some assets, liabilities and operations outside the
United States, which currently are not significant. Because the Company
sells its automotive mirrors throughout the world, it could be
significantly affected by weak economic conditions in worldwide markets
that could reduce demand for its products. The Company utilizes the
forecasting services of J.D. Power and Associates, and its current
forecasts for light vehicle production are approximately 16.0 million
in North America, 15.7 million in Western Europe and 20.3 million in
the Asia-Pacific region for calendar 2003.
In addition to price reductions over the life of its long-term
agreements, the Company continues to experience pricing pressures from
its automotive customers, which have affected, and which will continue
to affect, its margins to the extent that the Company is unable to
offset the price reductions with productivity improvements, engineering
and purchasing cost reductions, and increases in unit sales volume. In
addition, profit pressures at certain automakers are resulting in
increased cost reduction efforts by them, including requests for
additional price reductions, decontenting certain features from
vehicles, and warranty cost-sharing programs, which could adversely
impact the Company's sales growth and margins. The Company also
continues to experience from time to time some pressure for select raw
material cost increases.
The Company generally supplies NVS(R) Mirrors to its customers
worldwide under annual blanket purchase orders. The Company currently
supplies NVS(R) Mirrors to DaimlerChrysler AG and General Motors
Corporation under long-term agreements. The long-term supply agreement
with DaimlerChrysler AG runs through the 2003 Model Year, while the GM
contract is through the 2004 Model Year for inside mirrors.
Automakers have been experiencing increased volatility and uncertainty
in executing planned new programs which have, in some cases, resulted
in cancellations or delays of new vehicle platforms, package
reconfigurations and inaccurate volume forecasts. In addition, there
remains uncertainty associated with automotive light vehicle production
schedules for the balance of the year due to weaker automotive sales,
the economy and the war in Iraq. This increased volatility and
uncertainty has made it more difficult for the Company to forecast
future sales and effectively utilize capital, engineering, research and
development, and human resource investments.
The Company does not have any significant off-balance sheet
arrangements or commitments that have not been recorded in its
consolidated financial statements.
On October 1, 2002, Magna International acquired Donnelly Corporation.
Magna Donnelly is the Company's major competitor for sales of
automatic-dimming rearview mirrors to domestic and foreign vehicle
manufacturers and their mirror suppliers. The Company also sells
certain automatic-dimming rearview mirror sub-assemblies to Magna
Donnelly. At this time, it is too early to determine the impact, if
any, of Magna's acquisition of Donnelly upon the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this item is provided under the caption
"Trends and Developments" under Item 2 -- Management's Discussion and
Analysis of Results of Operations and Financial Condition.
- 9 -
ITEM 4. CONTROLS AND PROCEDURES
As of March 31, 2003, an evaluation was performed under the supervision
and with the participation of the Company's management, including the
CEO and CFO, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures [(as defined in Exchange
Act Rules 13a -- 14(c) and 15d -- 14(c)]. Based on that evaluation, the
Company's management, including the CEO and CFO, concluded that the
Company's disclosure controls and procedures were effective as of March
31, 2003, to ensure that material information relating to the Company
would be made known to them by others within the Company, particularly
during the period in which this Form 10-Q was being prepared. There
have been no significant changes in the Company's internal controls or
in other factors that could significantly affect internal controls
subsequent to March 31, 2003, nor any significant deficiencies or
material weaknesses in such controls requiring corrective actions. As a
result, no corrective actions were required or taken.
Statements in this Quarterly Report on Form 10-Q which express
"belief", "anticipation" or "expectation" as well as other statements
which are not historical fact, are forward-looking statements and
involve risks and uncertainties described under the headings
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Trends and Developments" that could cause
actual results to differ materially from those projected. All
forward-looking statements in this Report are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on Page 13.
(b) No reports on Form 8-K were filed during the
three months ended March 31, 2003.
- 10 -
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.
GENTEX CORPORATION
Date: May 5, 2003 /s/ Fred T. Bauer
--------------------- --------------------------------
Fred T. Bauer
Chairman and Chief
Executive Officer
Date: May 5, 2003 /s/ Enoch C. Jen
---------------------- --------------------------------
Enoch C. Jen
Vice President - Finance,
Principal Financial and
Accounting Officer
- 11 -
CERTIFICATIONS
I, Fred T. Bauer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Gentex
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 5, 2003
-------------------
/s/ Fred T. Bauer
--------------------------------
Chief Executive Officer
- 12 -
I, Enoch C. Jen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Gentex
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 5, 2003
-------------------
/s/ Enoch C. Jen
--------------------------------
Vice President -- Finance
- 13 -
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
3(a)(1) Registrant's Articles of Incorporation were filed in 1981 as
Exhibit 2(a) to a Registration Statement on Form S-18
(Registration No. 2-74226C), an Amendment to those Articles was
filed as Exhibit 3 to Registrant's Report on Form 10-Q in August
of 1985, an additional Amendment to those Articles was filed as
Exhibit 3(a)(1) to Registrant's Report on Form 10-Q in August of
1987, an additional Amendment to those Articles was filed as
Exhibit 3(a)(2) to Registrant's Report on Form 10-K dated March
10, 1992, an Amendment to Articles of Incorporation, adopted on
May 9, 1996, was filed as Exhibit 3(a)(2) to Registrant's Report
on Form 10-Q dated July 31, 1996, and an Amendment to Articles
of Incorporation, adopted on May 21, 1998, was filed as Exhibit
3(a)(2) to Registrant's Report on Form 10-Q dated July 30, 1998,
all of which are hereby incorporated herein be reference.
3(b)(1) Registrant's Bylaws as amended and restated February 27, 2003. 16
4(a) A specimen form of certificate for the Registrant's common
stock, par value $.06 per share, was filed as part of a
Registration Statement on Form S-18 (Registration No. 2-74226C)
as Exhibit 3(a), as amended by Amendment No. 3 to such
Registration Statement, and the same is hereby incorporated
herein by reference.
4(b) Amended and Restated Shareholder Protection Rights Agreement,
dated as of March 29, 2001, including as Exhibit A the form of
Certificate of Adoption of Resolution Establishing Series of
Shares of Junior Participating Preferred Stock of the Company,
and as Exhibit B the form of Rights Certificate and of Election
to Exercise, was filed as Exhibit 4(b) to Registrant's Report on
Form 10-Q dated April 27, 2001, and the same is hereby
incorporated herein by reference.
10(a)(1) A Lease dated August 15, 1981, was filed as part of a
Registration Statement (Registration Number 2-74226C) as Exhibit
9(a)(1), and the same is hereby incorporated herein by
reference.
10(a)(2) A First Amendment to Lease dated June 28, 1985, was filed as
Exhibit 10(m) to Registrant's Report on Form 10-K dated March
18, 1986, and the same is hereby incorporated herein by
reference.
*10(b)(1) Gentex Corporation Qualified Stock Option Plan (as amended and
restated, effective August 25, 1997) was filed as Exhibit
10(b)(1) to Registrant's Report on Form 10-Q, and the same is
hereby incorporated herein by reference.
*10(b)(2) Gentex Corporation Second Restricted Stock Plan was filed as
Exhibit 10(b)(2) to Registrant's Report on Form 10-Q dated April
27, 2001, and the same is hereby incorporated herein by
reference.
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EXHIBIT NO. DESCRIPTION PAGE
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*10(b)(3) Gentex Corporation 2002 Non-Employee Director Stock Option Plan
(adopted March 6, 2002), was filed as Exhibit 10(b)(4) to
Registrant's Report on Form 10-Q dated April 30, 2002, and the
same is incorporated herein by reference.
10(e) The form of Indemnity Agreement between Registrant and each of
the Registrant's directors and certain officers was filed as
Exhibit 10 (e) to Registrant's Report on Form 10-Q dated October
31, 2002, and the same is incorporated herein by reference.
99.1 Certificate of the Chief Executive Officer of Gentex Corporation
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. 1350). 24
99.2 Certificate of the Chief Financial Officer of Gentex Corporation
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. 1350). 25
*Indicates a compensatory plan or arrangement.
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