Donnelly Corporation Reports First Quarter Financial Results
16 October 1997
Donnelly Corporation Reports First Quarter Financial Results
HOLLAND, Mich., Oct. 16 -- Donnelly Corporation today
reported first quarter financial results for the 1998 fiscal year.
Net sales for the first quarter of fiscal 1998 were $165.2 million, up 46%
compared to $113.4 million for the same period last year. Sales for the
period are up dramatically, largely due to the consolidation of Donnelly Hohe
with Donnelly Corporation. This consolidation took place during the second
quarter of fiscal 1997 and was not reflected in the first quarter fiscal 1997.
The effect of this consolidation in the first quarter of fiscal 1998 adds
$44.1 million to sales for the quarter. Without the consolidation, Donnelly's
sales would have increased moderately compared to the same period last year.
Net earnings for the quarter were $1.0 million, compared to $1.7 million
for the same period last year. Earnings, on a per share basis, for the first
quarter of fiscal 1998 were $.10 compared to $.18 for the same period last
year. Earnings prior to consolidation of Donnelly Hohe with Donnelly
Corporation did reflect the contributions or losses at Donnelly Hohe each
quarter. Therefore, the consolidation does not affect comparisons to previous
quarters for earnings as it does for sales.
Earnings were solid in a number of key areas of the company. North
American operations, which represent the largest operating group in the
company, continue to perform well. During the first quarter of fiscal 1998,
the unit contributed solidly, slightly exceeding its goals for the period.
In addition, operations in Spain and France continued to perform very well.
Asian joint ventures are still operating at a small loss. However, that
performance is consistent with start-up plans for those businesses. Two non-
automotive ventures, one wholly owned subsidiary in Michigan called
Information Products and one joint venture in Colorado called Applied Films
Corporation, also contributed positively during the quarter.
Financial performance for the quarter was negatively impacted by ongoing
higher costs and operational problems at two foreign operational groups, those
in Ireland and those in Germany. In Ireland, the business continues to face
operational difficulties associated with a supplier and currency issues. Both
operations are also dealing with strong competitive pricing pressures. In
Germany, plans for restructuring operations were delayed for a short period to
complete a change in management. The new management expects to implement a
modified restructuring plan over the next four to six months. As a result,
cost savings associated with the original restructuring plan were delayed and
none were realized during the first quarter. In Arizona, Donnelly continues
to make investments in a new start-up business called Donnelly Optics. Sales
for this business are currently very small, however, opportunities appear
strong (particularly in the area of image modules for digital cameras) and the
investments required to pursue this business are negatively impacting earnings
in the short-term.
In summary, Donnelly is focusing very strongly on implementing plans
during fiscal 1998 to improve financial performance over 1997 levels. However,
the delays in implementing improvements in Germany, operational difficulties
in Ireland and the investments required for Donnelly Optics in Arizona will
place considerable pressure on financial goals for the corporation in the
months ahead. It now appears these operations may not contribute as strongly
as originally expected to annual performance in fiscal 1998. While the
company continues to work toward achieving its original plan goals for fiscal
1998, company officials believe that these goals will be difficult to achieve
and internal plans are being adjusted to be moderately more conservative.
Longer-term financial goals are not affected by this adjustment.
Donnelly Corporation is an international automotive supplier, dedicated to
serving customers around the globe with high-quality fabricated, molded and
coated glass products. The company has been based in Holland, Michigan since
1905, and today employs nearly 5000 people in 11 countries around the world.
Donnelly is also recognized as a leader in the application of participative
management, 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 Sept. 27, Sept. 28, June 28, June 29,
per share data) 1997 1996 1997 1996
Net Sales $ 165,176 $ 113,400 $ 671,297 $ 439,571
Cost of sales 137,476 90,252 544,629 357,830
Gross Profit 27,700 23,148 126,668 81,741
Operating Expenses
Selling, general
and administrative 15,265 11,087 66,530 38,123
Research and development 9,345 7,119 32,492 27,728
Restructuring Charges -- -- 9,965 2,399
Operating Income 3,090 4,942 17,681 13,491
Interest expense 2,404 1,957 9,530 8,102
Other income, net (26) (164) (3,854) (6,960)
Income before taxes on income 712 3,149 12,005 12,349
Taxes on income 15 1,171 2,786 4,191
Income before minority
interest and
equity earnings 697 1,978 9,219 8,158
Minority interest
in net (income)
loss of subsidiaries 345 -- 1,141 186
Equity in earnings (losses)
of affiliated companies (56) (256) (340) 110
Net income $986 $1,722 $10,020 $8,454
Per share common stock:
Net income $ 0.22 $ 0.22 $ 1.01 $ 0.86
Cash dividends declared $ 0.10 $ 0.10 $ 0.36 $ 0.32
Average common shares
outstanding 9,892,525 7,836,615 9,835,621 9,753,558
COMBINED CONSOLIDATED BALANCE SHEETS
(in thousands) September 27, 1997 June 28, 1997
ASSETS
Current Assets:
Cash & Equivalents $ 9,462 $ 8,568
Accounts Receivable, Net 57,580 67,850
Inventories 45,020 42,484
Other Current Assets 35,552 33,738
Total Current Assets 147,614 152,640
Net Property, Plant
and Equipment 165,764 165,124
Other Assets 46,865 40,529
360,243 358,293
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 58,611 $76,392
Accruals 38,424 39,154
Current Maturities
of Long-Term Debt 84 103
Total Current
Liabilities 97,119 115,649
Long-Term Debt 142,509 122,798
Deferred Income Taxes
& Other Liabilities 27,559 25,674
Total Liabilities 267,187 264,121
Minority Interest 273 345
Shareholders' Equity 92,783 93,827
360,243 358,293
SOURCE Donnelly Corporation