Defiance, Inc. Reports Fourth Quarter and Fiscal Year Results
6 August 1997
Defiance, Inc. Reports Fourth Quarter and Fiscal Year Results
CLEVELAND, Aug. 6 -- Defiance, Inc. today
reported net earnings for its fourth fiscal quarter ended June 30, 1997 were
$1,363,000, or $0.21 per share, compared with a loss of $1,079,000, or $0.16
per share, for the same period last year. Revenues for the quarter were
$24,948,000, compared with $26,649,000 for the same period last year.
Net earnings for the twelve months ended June 30, 1997 were $4,335,000, or
$0.67 per share, compared with $1,598,000, or $0.24 per share, for the prior
year. Fiscal year revenues were $92,123,000, compared with $103,975,000 for
the prior year.
Earnings for the current year were affected by a $632,000 pre-tax charge
in the third fiscal quarter to close out a defined benefit pension plan.
Earnings for the prior year were affected by a $2,600,000 pre-tax charge in
the fourth fiscal quarter relative to the sale of a business unit. Without
the effect of these one-time charges, earnings per share would have been $0.73
for the current year compared with $0.63 for the prior year.
Jerry A. Cooper, president and chief executive officer, said, "Sales from
continuing operations were up 10 percent for the quarter and 12 percent for
the year. Last year's sales included $22.7 million from the former hard
tooling and Vaungarde businesses, compared with $1.3 million this year. We
shut down the hard tooling venture in May 1996 and sold Vaungarde in August
1996.
"Sales of gasoline engine cam follower rollers and axles were
significantly ahead of last year for the quarter and year from new business
started last year for General Motors' light truck engine applications and
increased sales to Eaton Corporation for existing Ford and new Chrysler
automotive requirements. Sales of diesel engine rollers and axles were also
up for the quarter and year, consistent with the overall heavy-duty truck
market. Revenues from testing services were down slightly for the quarter and
year, reflecting a slowdown in OEM demand for product validation testing.
Revenues from tooling systems remained ahead of last year's pace for the
quarter and year. A slightly stronger prototype market helped increase demand
from automotive OEMs for soft tooling work.
"Operating margins, without the effect of the pension charge or the former
hard tooling and Vaungarde businesses, were 9.3 percent and 9.6 percent of
sales for the quarter and year, compared with 12.1 percent and 11.7 percent
for the same periods last year. Production start-up issues, equipment
problems and training personnel at our new Upper Sandusky cam follower roller
and axle facility affected margins this year. We do expect Upper Sandusky CFR
and axle production levels to increase with improved efficiencies during the
next quarter as we take on more of Eaton's Chrysler automotive requirements.
Soft demand for product validation testing by OEMs held back testing margins
this year. Tooling margins, however, improved over last year's levels.
"We look forward to improved earnings next year assuming new testing and
tooling programs are released as expected, Chrysler CFR and axle production
volume ramps up as anticipated, and efficiencies continue to improve at the
Upper Sandusky facility.
"Free cash flow for the year increased over 1996 levels as a result of
higher earnings, substantially lower capital spending requirements and cash
received from the sale of Vaungarde. Funds were used to pay down interest-
bearing debt, reducing our debt to total capitalization ratio to 34.0 percent
at June 30, 1997, compared with 39.5 percent a year ago. Funds were also used
to repurchase Company stock under a plan adopted in January 1996. We
repurchased 39,700 shares of stock during the three months ended June 30,
1997, bringing the total shares repurchased since the plan was adopted to
504,100 shares. These shares were purchased in open market transactions at an
average price of $6.25 per share."
Defiance, Inc. is recognized as a world-class supplier of tooling systems,
testing services, specialty anti-friction bearings and precision-machined
products to the U.S. transportation industry, with headquarters in Cleveland,
Ohio.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from anticipated results due to certain risks and
uncertainties, including but not limited to general economic conditions in the
markets in which Defiance operates, fluctuations in the production of vehicles
for which Defiance is a supplier, fluctuations in the level of new model
development activity at Defiance's significant customers, labor disputes
involving Defiance or its significant customers and other risks detailed from
time to time in Defiance's Securities and Exchange Commission filings.
DEFIANCE, INC.
Consolidated Financial Highlights
Three Months Ended Twelve Months Ended
Operations and Cash Flow 6/30/97 6/30/96 6/30/97 6/30/96
Net sales $24,948,000 $26,649,000 $92,123,000 $103,975,000
Cost of goods sold 20,085,000 21,386,000 72,719,000 84,519,000
Selling and
administrative
expenses 2,541,000 2,496,000 10,699,000 11,279,000
Charge to terminate
pension plan -- -- 632,000 --
Charge for sale of
business -- 2,600,000 -- 2,600,000
Operating earnings 2,322,000 167,000 8,073,000 5,577,000
Interest expense - net 404,000 411,000 1,673,000 1,680,000
Earnings before
income tax provision 1,918,000 (244,000) 6,400,000 3,897,000
Income tax provision 555,000 835,000 2,065,000 2,299,000
Net earnings $1,363,000 $(1,079,000) $4,335,000 $1,598,000
Net earnings per
common share $0.21 $(0.16) $0.67 $0.24
Average common
outstanding shares 6,469,520 6,627,313 6,505,456 6,707,078
Cash dividends per share $0.04 $0.04 $0.16 $0.16
Depreciation and
amortization $1,809,000 $1,793,000 $7,155,000 $5,982,000
Capital expenditures $1,067,000 $1,747,000 $4,208,000 $9,994,000
Financial Condition 6/30/97 6/30/96
Current assets $28,974,000 $27,716,000
Property - net 37,822,000 39,516,000
Goodwill 4,871,000 5,122,000
Other assets 2,152,000 2,414,000
Total assets $73,819,000 $74,768,000
Current liabilities $17,193,000 $18,179,000
Long-term obligations 14,968,000 18,134,000
Deferred income taxes 3,267,000 3,017,000
Stockholders' equity 38,391,000 35,438,000
Total liabilities and
stockholders' equity $73,819,000 $74,768,000
Funded (interest-bearing) debt $19,797,000 $23,185,000
Debt to total capitalization ratio 34.0% 39.5%
SOURCE Defiance, Inc.