O'Sullivan Corporation Reports Earnings Results
14 July 1998
O'Sullivan Corporation Reports Second Quarter and Six Months Earnings Results
WINCHESTER, Va.--July 14, 1998--O'Sullivan Corporation (ASE:OSL) today reported consolidated sales and earnings results for the three and six months ended June 30, 1998.Net sales from continuing operations for the three months ended June 30, 1998, were $42.1 million, a decrease of 5.7% compared with sales of $44.7 million for the three months ended June 30, 1997. Net income from continuing operations for the three months ended June 30, 1998, was $3.5 million or $0.22 per share, up 1.0% compared with net income of $3.4 million from continuing operations or $0.22 per share for the three months ended June 30, 1997.
Sales for the three months ended June 30, 1998, were lower then company expectations because of reduced demand for products produced for automotive customers. Products sold to Tier-One suppliers to General Motors accounted for approximately 30% of the decline in sales of automotive products. The remaining decline resulted for product mix changes. Sales of industrial products improved moderately during the three months ended June 30, 1998, when compared to the same period for 1997. Net income for the period ended June 30, 1998, increased as a result of improved gross margin and reduced income tax expense. The gross margin increase was due to stable raw material costs and improved manufacturing efficiencies for the period. The reduced income tax expense was due primarily to a reduced charge for state income taxes.
For the six months ended June 30, 1998, net sales from continuing operations were $84.1 million, down 1.3% compared to a total of $85.2 million net sales from continuing operations for the first six months ended June 30, 1997. Net income from continuing operations for the six months ended June 30, 1998, totaled $6.4 million or $0.41 per share, up 8.5% compared to $5.9 million or $0.38 per share for the net income from continuing operations for the six months ended June 30, 1997.
The company estimates that the strike against General Motors by the UAW resulted in lower earnings for the three months ended June 30, 1998, of $0.01 per share. If the strike extends through the three months ended Sept. 30, 1998, the company estimates the results for that quarter could be decreased as much as $0.04 per share.
During the three months ended June 30, 1998, the company purchased 147,200 shares of its Common Stock under a previously announced Stock Repurchase Plan, bringing to 914,000 the total number of shares repurchased under the Plan. The company believes the share price to be undervalued and intends to continue stock purchases subject to availability of cash and other economic conditions.
O'Sullivan Corp. produces premium-quality, flexible vinyl sheeting and coverstock for the automotive, medical, swimming pool, loose-leaf, home furnishings, press polished and geomembrane markets.
C. Bryant Nickerson
Secretary, Treasurer and CFO