Donnelly Reports a Negative Development at Subsidiary

15 July 1998

    HOLLAND, Mich., July 15 -- Donnelly Corporation
today announced that the company's fourth-quarter and year-end earnings will
be negatively affected by the loss of anticipated orders for injection-molded
lenses at Donnelly Optics Corporation, a wholly owned subsidiary based in
Tucson, Arizona.  Donnelly Optics produces high-quality, injection-molded
optical lenses for use in the computer, medical instruments and automotive
industries, among others.
    Late in June, Intel Corporation notified Donnelly Optics
that, due to changing market dynamics, Intel had decided to cancel orders that
Donnelly Optics had anticipated as an important source of business.  As a
result, the company will take a one-time charge against earnings of $.22-$.24
per share to write off tooling and other assets.
    Donnelly Optics had scaled up its operations in Tucson in anticipation of
increased production volumes this year.  As a result of these developments,
Donnelly Optics is continuing to experience losses that negatively affect
Donnelly's corporate earnings.  Donnelly Corporation has already announced
that the company is evaluating a full range of options for restructuring or
repositioning Donnelly Optics to safeguard Donnelly's investment in the unit
and reduce the future negative impact on the company's bottom-line earnings.
    "It is disappointing to have this development appear so suddenly, at the
end of our fiscal year, because it overshadows the tremendous success we have
built in our North American automotive operations and in some of our European
operations," said Dwane Baumgardner, Donnelly chairman and chief executive
officer.  "We are pleased, however, that our operational performance for the
year will be within the range of analyst estimates of $1.25-$1.30 per share,
excluding the one-time charge taken for Donnelly Optics."
    Donnelly Corporation is an international automotive supplier dedicated to
serving customers around the globe with industry-leading components and
systems in automotive mirrors, windows and interior trim and lighting.
Through its various product lines, Donnelly is a supplier to every major
automotive manufacturer in the world.  The company has been based in Holland,
Michigan since 1905, and today has approximately 5,000 employees in eleven
countries worldwide.  Donnelly is recognized as a leader in the application of
participative management, and has been named to Fortune magazine's list of the
"100 Best Companies to Work for in America."
    This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995.  Investors are
cautioned that any current expectations of the Company, or its management, are
not guarantees of future performance and involve risk and uncertainties.
Actual results may differ materially from those in forward-looking statements
as a result of various factors including, but not limited to (a) general
economic and currency conditions in the markets in which the Company operates;
(b) fluctuation in worldwide or regional automobile and light truck
production; (c) changes in practices and/or policies of the Company's
significant customers; (d) human resource constraints which could impede
changes in Europe; and (e) other risks and uncertainties.