Defiance, Inc. Reports First Quarter Fiscal 1998 Results
22 October 1997
Defiance, Inc. Reports First Quarter Fiscal 1998 Results
CLEVELAND, Oct. 22 -- Defiance, Inc. today
reported net earnings for its first fiscal quarter ended September 30, 1997
were $262,000, or $0.04 per share, compared with $710,000, or $0.11 per share,
for the same period last year. Sales for the quarter were $20,601,000,
compared with $22,067,000 for the same period last year.
Jerry A. Cooper, president and chief executive officer, said, "As reported
in a press release last month, we have experienced slower business conditions
than we anticipated at the start of the fiscal year. However, the trend
within the quarter showed steady improvement. A slow July was followed by a
better August and a still better September.
"Total sales were down seven percent from last year, though sales from
continuing operations were down just one percent for the quarter. Last year's
sales included $1.2 million from the former Vaungarde business unit which was
sold in August 1996.
"Sales in our bearings business were up 12 percent over last year,
primarily from increased sales to Eaton Corporation for new Chrysler
automotive requirements. However, delays in the release of new prototype and
tooling programs from Ford and Chrysler reduced tooling revenues for the
quarter 21 percent below year-ago levels. We have also seen a decline in
testing revenues of nine percent, reflecting scaled-back demand from OEMs and
Tier One suppliers.
"Operating margins, without the effect of the former Vaungarde business,
were 3.6 percent of sales for the quarter compared with 7.8 percent for the
same period last year. Margins were negatively affected primarily by soft
demand for tooling and testing work. On the positive side, CFR and axle
production levels increased with considerably improved efficiencies this
quarter at our Upper Sandusky facility.
"Looking at the full year, we continue to anticipate new testing and
tooling programs for Ford and Chrysler will get back on schedule, Chrysler cam
follower roller and axle production will continue to ramp up as anticipated,
and operating efficiencies will continue to improve at our Upper Sandusky
plant. Assuming the year unfolds as we now see it, we look for substantial
improvement in the second quarter compared with the first, followed by a much
stronger second half. We continue to believe fiscal 1998 earnings will exceed
those of last year.
"We continued to pay down interest-bearing debt, reducing our debt to
total capitalization ratio to just over 30 percent at September 30, 1997
compared with 34 percent at June 30, 1997. We also continued to repurchase
Company stock under a plan adopted in January 1996. We have repurchased
360,000 shares of stock since July 1, 1997, bringing the total shares
repurchased since the plan was adopted to 864,100 shares.
Defiance, heaquartered in Cleveland, is a supplier of tooling systems,
testing services, and specialty anti-friction bearings and precision-machined
products to the U.S. motor vehicle industry.
This press release contains forward-looking statements within the meaning
of the Private 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
Operations and Cash Flow 9/30/97 9/30/96
Net sales $20,601,000 $22,067,000
Cost of goods sold 16,977,000 17,629,000
Selling and administrative expenses 2,888,000 2,875,000
Operating earnings 736,000 1,563,000
Interest expense - net 323,000 461,000
Earnings before income tax provision 413,000 1,102,000
Income tax provision 151,000 392,000
Net earnings $262,000 $710,000
Net earnings per common share $0.04 $0.11
Average common outstanding shares 6,444,547 6,581,672
Cash dividends per share $0.04 $0.04
Depreciation and amortization $1,844,000 $1,738,000
Capital expenditures $493,000 $2,132,000
Financial Condition 9/30/97 6/30/97
Current assets $25,684,000 $28,974,000
Property - net 36,762,000 37,822,000
Goodwill 4,808,000 4,871,000
Other assets 1,445,000 2,152,000
Total assets $68,699,000 $73,819,000
Current liabilities $14,778,000 $17,193,000
Long-term obligations 12,219,000 14,968,000
Deferred income taxes 3,315,000 3,267,000
Stockholders' equity 38,387,000 38,391,000
Total liabilities and
stockholders' equity $68,699,000 $73,819,000
Funded (interest-bearing) debt $16,893,000 $19,797,000
Debt to total capitalization ratio 30.6% 34.0%
SOURCE Defiance, Inc.