Donnelly Reports First-Quarter Profits Despite Industry
Climate
HOLLAND, Mich., April 24 Donnelly
Corporation today announced 2001 first quarter net income of $1.2
million, or $0.12 per share, despite a tough industry climate with irregular
and reduced production schedules. During the first quarter, overall North
American industry production declined 17%, and average production among the
three largest domestic original equipment manufacturers was down more than
20%. First quarter net income compares to $6.8 million, or $0.67 per share,
in the first quarter of 2000. Donnelly's net sales of $220 million for the
first quarter of 2001 are down 7% from $237 million in the year-earlier
period.
"Due to growth from new business, our sales were down only 7% despite the
significant decline in vehicle production, especially among our largest
customers, the 'Big Three' automakers," said Chairman and Chief Executive
Officer Dwane Baumgardner. "First quarter industry issues, launch costs on
key new products, and costs associated with the integration of the Donnelly
Electronics acquisition, completed during the quarter, affected our
profitability."
Donnelly is making significant investments to expand capacity in
electrochromic mirror production, support rapid development of technology in
telematic mirrors, implement SmartRelease(TM) into production, and advance its
camera vision technology while bringing existing camera vision products to the
market.
"We believe our commitment to the rapid expansion of sophisticated
electronic products provides Donnelly the opportunity for sustained growth in
revenues and profitability," said Baumgardner.
Donnelly Corporation also announced that it has signed a non-binding
letter of intent with diversified industrial manufacturer Eaton Corporation to
sell certain assets of Donnelly subsidiary, Donnelly Vision Systems Europe
Ltd. located in Manorhamilton, Ireland. The subsidiary currently manufactures
mirrors and mirror actuators. Under the agreement, Eaton will assume control
and responsibility for manufacturing a Donnelly actuator currently used on
certain vehicles in Europe. The agreement should be finalized by the end of
July 2001.
"The decision to initiate this transaction with Eaton in Manorhamilton
supports Donnelly's plan to effectively consolidate its European manufacturing
capacity and streamline operations," said Baumgardner. "We will continue to
manufacture actuators for many of our mirrors at Donnelly's operations in
Mexico. This agreement, while strengthening our relationship with Eaton
Corporation, fits Donnelly's long-term strategic plans for actuator
development and manufacturing at Donnelly de Mexico."
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31, April 1,
In thousands, except share data 2001 2000
Net sales $220,001 $237,404
Cost of sales 187,154 196,124
Gross profit 32,847 41,280
Operating expenses:
Selling, general and administrative 20,708 20,569
Research and development 9,444 9,762
Total operating expenses 30,152 30,331
Operating income 2,695 10,949
Non-operating (income) expenses:
Interest expense 2,104 1,783
Other income, net (549) (502)
Non-operating expenses 1,555 1,281
Income before taxes on income 1,140 9,668
Taxes on income (credit) (72) 2,653
Income before minority interest
and equity earnings 1,212 7,015
Minority interest in net earnings (237) (285)
of subsidiaries
Equity in earnings of affiliated companies 269 44
Net income $1,244 $6,774
Per share of common stock:
Diluted net income per share $0.12 $0.67
Basic net income per share $0.12 $0.67
Cash dividends declared $0.10 $0.10
Average common shares outstanding 10,255,270 10,153,601
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
In thousands 2001 2000
ASSETS
Current assets:
Cash and cash equivalents $4,974 $4,599
Accounts receivable, net 85,011 83,219
Inventories 62,046 55,933
Prepaid expenses and other current assets 28,697 28,990
Total current assets 180,728 172,741
Net property, plant and equipment 217,013 212,134
Other assets 76,046 79,145
Total assets $473,787 $464,020
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $95,774 $89,163
Other current liabilities 41,998 39,727
Current maturities of long-term debt 82 90
Total current liabilities 137,854 128,980
Long-term debt, less current maturities 130,616 132,608
Deferred income taxes and other
liabilities 68,681 66,298
Total liabilities 337,151 327,886
Minority interest 2,740 1,353
Shareholders' equity 133,896 134,781
Total liabilities and
shareholders' equity $473,787 $464,020
