Donnelly Corporation Reports Record Sales for Fiscal 1997
6 August 1997
Donnelly Corporation Reports Record Sales for Fiscal 1997
HOLLAND, Mich., Aug. 6 -- Donnelly Corporation
today reported fourth quarter and annual financial results for the 1997 fiscal
year.
Annual Financial Results
Year-end and quarterly results reflect the consolidation of Donnelly's
European subsidiary, Donnelly Hohe, with total corporate performance. The
consolidation began in the second quarter of fiscal 1997 and is not reflected
in the fourth quarter or year-end results of one year ago. However, the
consolidation does not impact comparability of income from period to period.
Earnings for the 1997 fiscal year were $10.0 million, or $1.01 per share,
compared to $8.5 million, or $.86 per share, for fiscal 1996. This represents
a 23% increase. Earnings for the year were higher than the previous year
despite a European restructuring charge to net income of $4 million, or $.40
per share. Donnelly's overall operational performance improved significantly
year over year, excluding the restructuring cost. The increase in earnings
excluding the restructuring charge was 66%, compared to the previous year, and
was 55% higher than the company's prior record performance from operations.
North American operations were particularly strong in contributing to
earnings. Earnings from the company's European operations were impacted by
new product launches, currency exchange issues, problems with a supplier and
continuing pricing pressure from customers.
Net sales for the 1997 fiscal year were a record $671.3 million compared
to $439.6 million in sales for fiscal 1996. The consolidation of Donnelly
Hohe contributed approximately $164 million to net sales during fiscal 1997.
Excluding sales for Donnelly Hohe, consolidated net sales for the fiscal year
were still at a record-setting $507 million, an increase of 15% over 1996.
Donnelly's strong sales performance during the year was due primarily to
full-year production programs launched during fiscal 1996 and new product
introductions in modular windows, exterior door handles and interior lighting
and trim components. Net sales also benefited from Donnelly's relatively high
dollar content on strong-selling vehicles such as the Ford Expedition and
Chrysler minivans.
"Our fiscal 1997 was a year in which we moved forward to consolidate our
market position, integrate global operations and implement our strategic
objectives," said Dwane Baumgardner, Donnelly Chairman, President and CEO.
"This was all accomplished at the same time that we continued the improvements
in our financial performance, stayed ahead of the field in technology and made
solid progress in effectively moving our business systems deeply into the
organization."
"While the charges taken for our European restructuring did significantly
depress our earnings performance, we had anticipated the need for
restructuring for some time. We believe that the actions taken during the
year to restructure our European operations will help us achieve our financial
goals and position us to better take advantage of our strong market and
product presence there.
"We have also made a change in management by appointing a new COO for
Europe. We believe our progress will be enhanced under this new leadership,"
Baumgardner said.
Overall industry production levels for fiscal 1997 increased by
approximately 5% compared to fiscal 1996. Donnelly automotive sales grew
nearly 15% due to the implementation of new programs and high levels of
Donnelly content on popular vehicles.
The 1997 fiscal year was one in which Donnelly saw a number of key
developments, including:
* The successful recruitment of Hans Huber, a seasoned European automotive
executive, who agreed to join Donnelly as Chief Operating Officer for
Europe. Mr. Huber has 20 years of experience in the European auto
industry, a strong track record in effectively restructuring operations
and a strong marketing background.
* The establishment of a new joint-venture affiliate, Donnelly
Electronics, to produce the electronic components Donnelly uses in
products such as electrochromic mirrors and electronic compass systems.
* The creation of a new joint venture in China, Shunde Donnelly Zhen Hua,
to produce automotive mirrors and mirror systems for car makers throughout
southern China.
* A number of new business wins for electrochromic mirrors, including
vehicles that will be produced in North America and in Europe.
* A 5-for-4 stock split that achieved a 25 percent increase in the
company's dividend payout.
* A number of highly successful product launches for high-visibility
vehicle programs such as the Mercedes M-Class and Ford Expedition sport
utility vehicles.
* The creation of two independent entities -- Donnelly Optics Corporation
and Information Products Inc. -- to move Donnelly-developed technologies
into other markets outside the auto industry.
Fourth Quarter Financial Results
Net sales for the fourth quarter of fiscal 1997 were $188.2 million, which
represented an increase of $62 million over the $125.8 million in the fourth
quarter of fiscal 1996.
Net earnings for the fourth quarter of fiscal 1997 were $1.4 million, or
$.14 per share. Earnings for the quarter were impacted by the pretax charge
of $10 million for the European restructuring. Operational earnings for the
quarter were slightly above fiscal 1996. In fiscal 1996, earnings for the
fourth quarter were $5.1 million or $.52 per share.
Donnelly Corporation is an international automotive industry supplier
dedicated to serving its customers around the world with high-quality
fabricated, molded, and coated glass products. The company has been based in
Holland, Michigan since 1905, and today operates from 28 locations in the
U.S., Mexico, Europe, and Asia. Donnelly is also recognized as a leader in
the application of participative management practices and was named as one of
the "Top Ten" in the book, "The 100 Best Companies to Work for in America."
COMBINED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Twelve Months Ended
(in thousands, except June 28, June 29, June 28, June 29,
per share data) 1997 1996 1997 1996
Net Sales $ 188,179 $ 125,780 $ 671,297 $ 439,571
Costs and expenses:
Cost of sales 152,751 99,907 544,629 357,830
Selling, general
and administrative 19,206 7,648 66,530 38,123
Research and
development 7,521 8,067 32,492 27,728
Restructuring Charges9,965 2,399 9,965 2,399
Operating Income (1,264) 7,759 17,681 13,491
Interest expense 1,876 1,971 9,530 8,102
Royalty income (270) (973) (1,486) (5,239)
Other income, net (474) (100) (2,368) (1,721)
Income before taxes
on income (2,396) 6,861 12,005 12,349
Taxes on income (2,583) 2,342 2,786 4,191
Income before minority
interest and
equity earnings 187 4,519 9,219 8,158
Minority interest
in net (income)
loss of
subsidiaries 1,245 - 1,141 186
Equity in earnings
(losses) of
affiliated companies (9) 592 (340) 110
Net income $1,423 $5,111 $10,020 $8,454
Per share common stock:
Net income $0.14 $0.52 $1.01 $0.86
Cash dividends
declared $0.10 $0.08 $0.36 $0.32
Average common shares
outstanding 9,875,481 9,783,930 9,835,621 9,753,558
COMBINED CONSOLIDATED BALANCE SHEETS
(in thousands) June 28, 1997 June 29, 1996
ASSETS
Current Assets:
Cash & Equivalents $8,568 $1,303
Accounts Receivable, Net 67,850 73,123
Inventories 42,484 24,228
Other Current Assets 33,738 28,041
Total Current Assets 152,640 126,695
Net Property,
Plant and Equipment 165,124 99,764
Other Assets 40,529 45,033
$358,293 $271,492
Current Liabilities:
Accounts Payable $76,392 $44,349
Accruals 39,154 18,705
Current Maturities of
Long-Term Debt 103 159
Total Current
Liabilities 115,649 63,213
Long-Term Debt 122,798 101,757
Deferred Income Taxes &
Other Liabilities 25,674 17,670
Total Liabilities 264,121 182,640
Minority Interest 345 ---
Shareholders' Equity 93,827 88,852
$358,293 $ 271,492
SOURCE Donnelly Corporation