Donnelly Corporation Reports Fiscal Q3 Sales and Earnings
22 April 1998
Donnelly Corporation Reports Increased Sales and Earnings For Third Fiscal Quarter
HOLLAND, Mich., April 22 -- Donnelly Corporation
today reported third quarter financial results for the company's 1998 fiscal
year. Net sales for the quarter rose approximately 7 percent, despite
relatively flat automotive production in North America.
Net sales for the period were $194 million, which represents an increase
of approximately 7 percent over the $182 million in sales reported for the
same period last year. Contributing to the increase were strong sales in
North America and Europe, fueled by Donnelly's strong position on a number of
high volume vehicles such as the Ford Expedition and Chrysler minivan
products. The net sales increase during the period was somewhat higher than 7
percent before being adjusted for a dollar that has strengthened against major
European currencies since the year-ago period.
Donnelly's net earnings for the third quarter of fiscal 1998 were $3.4
million, or $.34 per share, which represents an increase of approximately 14
percent over net earnings of $3.0 million for the same period last year. Net
earnings associated with core automotive operations were approximately 20
percent higher during the third quarter than for the same period last year. A
number of different factors impacted net earnings during the quarter.
North American automotive operations continued to perform strongly.
European operations were slightly positive during the quarter, for the first
time since 1995. Automotive operations in France and Spain performed well,
and in Germany, management continued working to make the operational
improvements necessary to reach mandated levels of profitability.
Operational improvements are also beginning to take effect in Ireland,
which experienced improved year-to-year performance during the quarter. In
addition, Irish operations have benefited from a favorable shift in currency
rates. Improvements in Donnelly's Irish and German automotive operations are
expected to continue in the fourth quarter and throughout fiscal 1999.
Donnelly's third-quarter performance experienced a significant unfavorable
impact from two non-automotive ventures, both of which focus on digital
imaging technologies. Donnelly Optics is a wholly owned, start-up subsidiary
based in Tucson, Arizona, which designs and produces precision injection-
molded optical devices. Donnelly Optics continued to experience major losses
during the third quarter, due to slower-than-expected consumer acceptance of
digital imaging products. Donnelly is currently evaluating options for
responding to these market conditions.
Donnelly also experienced an unfavorable impact on earnings from the
company's equity relationship with VLSI Vision Limited (VVL), based in
Edinburgh, Scotland. VVL develops and sells highly integrated camera
microchip products, and a slowly developing consumer market has not allowed
VVL to achieve the sales volumes needed to reach acceptable levels of
performance.
"Despite some very challenging developments during the third quarter, we
were able to improve our overall automotive performance and continue progress
toward the performance goals we have set," said Dwane Baumgardner, Donnelly
chairman and chief executive officer. "Given the strength of our North
American automotive operations, and the continuing improvements we are seeing
at some of our European operations, we are very confident that Donnelly is
moving in a more positive earnings direction."
Year-to-date sales for Donnelly's 1998 fiscal year are $554 million, a 15-
percent increase over the company's total sales of $483 million during the
first nine months of fiscal 1997. Net earnings for the year-to-date period
are $9.5 million, or $.96 per share, compared to earnings of $8.6 million, or
$.87 per share, for the same period last year. Included in 1998 earnings is a
one-time, pretax gain of $4.6 million, or $0.22 per share, from Donnelly's
sale of its 50 percent interest in Applied Films Corporation of Boulder,
Colorado.
Donnelly Corporation is an international automotive supplier dedicated to
serving customers around the globe with industry-leading components and
systems in automotive mirrors, windows and interior trim and lighting.
Through its various product lines, Donnelly is a supplier to every major
automotive manufacturer in the world. The company has been based in Holland,
Michigan since 1905, and today has approximately 5,000 employees in eleven
countries worldwide. Donnelly is recognized as a leader in the application of
participative management, and has been named to Fortune magazine's list of the
"100 Best Companies to Work for in America."
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 Nine Months Ended
March 28, March 29, March 28, March 29,
In thousands,
except share data 1998 1997 1998 1997
Net sales $193,658 $181,681 $553,634 $483,118
Cost of sales 161,009 148,360 459,432 391,878
Gross profit 32,649 33,321 94,202 91,240
Operating expenses:
Selling, general and
administrative 17,380 18,514 50,057 47,324
Research and
development 8,595 9,404 28,003 24,971
Operating income 6,674 5,403 16,142 18,945
Non-operating (income) expenses:
Interest expense 2,017 2,663 6,711 7,654
Gain on sale of equity
investment -- -- (4,598) --
Other income, net (1,025) (640) (1,562) (3,110)
Income before taxes
on income 5,682 3,380 15,591 14,401
Taxes on income 1,408 1,226 5,156 5,369
Income before minority
interest and equity
earnings 4,274 2,154 10,435 9,032
Minority interest in net (income)
loss of subsidiaries (3) 490 231 (104)
Equity in losses of affiliated
companies (898) 314 (1,138) (331)
Net income $3,373 $2,958 $9,528 $8,597
Per share of common stock:
Basic net income
per share $0.34 $0.30 $0.96 $0.87
Diluted net income
per share $0.34 $0.30 $0.95 $0.86
Cash dividends
declared $0.10 $0.10 $0.30 $0.26
Average common shares
outstanding 9,963,706 9,848,733 9,932,265 9,822,335
Certain reclassifications have been made to current and prior year,
previously released data to conform to the current presentation and had no
effect on net income reported for any period.
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
March 28, June 28,
In thousands 1998 1997
ASSETS
Current Assets:
Cash and cash equivalents $6,679 $6,070
Accounts receivable, net 75,137 69,138
Inventories 43,384 45,310
Prepaid expenses and other
current assets 24,042 33,715
Total current assets 149,242 154,233
Net property, plant
and equipment 167,517 157,160
Other assets 43,039 36,125
Total assets $359,798 $347,518
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $68,166 $69,490
Other current liabilities 41,885 35,446
Current maturities of
long-term debt 67 5,306
Total current liabilities 110,118 110,242
Long-term debt, less current
maturities 118,606 117,017
Deferred income taxes and
other liabilities 31,323 24,516
Total liabilities 260,047 251,775
Minority interest 732 279
Shareholders' equity 99,019 95,464
Total liabilities and
shareholders' equity $359,798 $347,518
Certain reclassifications have been made to current and prior year,
previously released data to conform to the current presentation and had no
effect on net income reported for any period.
SOURCE Donnelly Corporation