Donnelly Announces Improved Fourth Quarter Results
HOLLAND, Mich., Feb. 21 Donnelly Corporation today announced fourth quarter 2001 net income of $3.9 million, or $0.38 per share, on sales of $209 million as compared to fourth quarter 2000 net income of $1.7 million, or $0.17 per share, on sales of $200 million.
Operating earnings (net income excluding restructuring and other non- recurring charges) for the fourth quarter of 2001 were $5.2 million, or $0.50 per share, compared with $2.2 million, or $0.21 per share, in the same period of the prior year. Restructuring charges in the fourth quarter of 2001 were $1.3 million after-tax, or $0.12 per share, and resulted from the continuing overhead reduction actions in the United States and Europe. Restructuring and other non-recurring charges for the fourth quarter of 2000 totaled $0.5 million after-tax, or $0.05 per share, for the period and included: 1) a $0.22 per share write-down of German deferred tax assets associated with the reduction of the German corporate tax rates, 2) a $0.15 per share return-to- income from a reduction of the European restructuring reserve in accordance with Generally Accepted Accounting Principles, and 3) a $0.02 per share gain on the sale of Donnelly's 17.1 percent interest in KAM Truck Components, Inc.
A significant factor in the increase in operating earnings was the improved performance of Donnelly Electronics, acquired during February 2001. Prior to February 2001, Donnelly Electronics' earnings (losses) were included in equity earnings (losses) of affiliated companies.
Net income for the year ended December 31, 2001 was $2.6 million, or $0.25 per share, on sales of $848 million as compared to net income of $11.1 million, or $1.09 per share, on sales of $857 million for 2000. Operating earnings (net income excluding restructuring and other non-recurring charges) for 2001 were $6.7 million, or $0.65 per share, compared to $11.6 million, or $1.14 per share, for 2000. Restructuring charges of $4.1 million, or $0.40 per share, in 2001 resulted from overhead reduction actions in the third and fourth quarters. Non-recurring charges in 2000 of $0.5 million after-tax, or $0.05 per share, are as described above.
Net income for 2001 benefited from research and development tax credits and export-related tax incentives. The impact on the tax rate was magnified in 2001 because the credits represent a much higher proportion of the 2001 taxes due to the lower overall level of earnings and taxes otherwise payable. The 2000 tax rate was higher than usual due to the write-down of German deferred tax assets.
Sales for the fourth quarter were $209 million, approximately 5 percent higher than sales for the year earlier period. Total 2001 sales of $848 million were down slightly from the prior year sales of $857 million due to foreign exchange rate fluctuations.
``The fourth quarter's performance was a result of our continued focus on operations and aggressive cost-cutting,'' said Chairman and Chief Executive Officer Dwane Baumgardner. ``This represents a strong response to the economic difficulties experienced in the third quarter of 2001 and demonstrates our commitment to be successful, even in the uncertain times ahead. Donnelly has a strong global presence supplying products to every major auto manufacturer in the world through its worldwide manufacturing and distribution system. The Company has a full pipeline of new products in areas such as integrated electronic mirror systems, electrochromic mirrors, electronic sensors, engineered window systems and child safety systems,'' said Baumgardner.
Donnelly is a technology-driven, customer-focused, automotive supplier that has been based in Holland, Michigan since 1905. Through its various product lines, Donnelly serves every major automotive manufacturer in the world. The Company has more than 6,000 employees in 14 countries worldwide. Donnelly has been named by the Society of Automotive Engineers as a model company in lean manufacturing practices, and has been recognized by Automotive Industries magazine as one of the ``Best of the Best'' suppliers of lighting systems, electronic systems and interior systems. In addition, Donnelly is nationally recognized as a leader in the application of participative management principles and systems. More information on Donnelly is available at the company's site on the World Wide Web, at http://www.donnelly.com .
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.
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
In thousands, 2001 2000 2001 2000
except share data
Net sales $209,237 $199,899 $847,927 $857,479
Cost of sales 175,769 168,325 719,885 720,503
Gross profit 33,468 31,574 128,042 136,976
Operating expenses:
Selling, general
and administrative 16,412 19,470 75,625 80,266
Research and
development 8,849 8,288 39,208 35,179
Restructuring and
other charges
(credits) 1,958 (3,796) 6,433 (3,796)
Total operating
expenses 27,219 23,962 121,266 111,649
Operating income 6,249 7,612 6,776 25,327
Non-operating
(income) expenses:
Interest expense 1,428 1,705 6,960 7,660
Other income, net (2,227) (1,254) (4,042) (3,914)
Non-operating
(income) expenses (799) 451 2,918 3,746
Income before
taxes on income 7,048 7,161 3,858 21,581
Taxes on income 2,723 3,871 180 7,137
Income before
minority interest
and equity
earnings 4,325 3,290 3,678 14,444
Minority interest
in net earnings
of subsidiaries (630) (197) (959) (129)
Equity in earnings
(losses) of
affiliated companies 238 (1,387) (135) (3,192)
Net income $3,933 $1,706 $2,584 $11,123
Per share of common stock:
Basic net income
per share $0.38 $0.17 $0.25 $1.09
Diluted net income
per share $0.38 $0.17 $0.25 $1.09
Cash dividends
declared $0.10 $0.10 $0.40 $0.40
Average common
shares
outstanding 10,432,051 10,182,194 10,361,849 10,167,999
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
In thousands 2001 2000
ASSETS
Current assets:
Cash and cash equivalents $1,823 $4,599
Accounts receivable, net 55,151 82,802
Inventories 59,140 55,933
Prepaid expenses and other
current assets 31,091 28,990
Total current assets 147,205 172,324
Net property, plant and equipment 189,812 212,134
Other assets 32,752 39,538
Total assets $369,769 $423,996
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $70,806 $89,163
Other current liabilities 34,735 39,727
Current maturities of
long-term debt 50 90
Total current liabilities 105,591 128,980
Long-term debt, less current
maturities 93,917 132,608
Postretirement plans and
other liabilities 59,481 46,430
Total liabilities 258,989 308,018
Minority interest 2,295 1,353
Shareholders' equity 108,485 114,625
Total liabilities and
shareholders' equity $369,769 $423,996