Defiance, Inc. Reports First Quarter Results
15 October 1998
Defiance, Inc. Reports First Quarter Results
CLEVELAND, Oct. 15 -- Defiance, Inc. today
reported net earnings for its first fiscal quarter ended September 30, 1998
were $221,000, or $0.04 per share, compared with $262,000, or $0.04 per share,
for the same period last year. Sales for the quarter were $21,980,000,
compared with $20,601,000 for the same quarter last year.
Jerry A. Cooper, president and chief executive officer, said, "Earnings
per share matched last year's results despite the General Motors labor strike,
which negatively affected earnings this quarter by about 6 cents a share. The
strike began affecting shipments of cam follower rollers to General Motors'
Delphi Automotive Systems unit in late June and volumes did not return to
previous levels until the end of August. Despite this, sales increased nearly
7 percent over last year. Sales of cam follower rollers and axles in total
remained consistent with last year's levels primarily as a result of increased
demand for diesel engine cam follower rollers used in heavy-duty truck
applications. Sales of prototype dies and parts were up 12 percent, and
revenues from testing and tooling development services also increased
12 percent over last year, reflecting increased prototype, tooling and testing
activity levels at the Big Three and their Tier One suppliers.
"Gross profit, as a percentage of sales, was 1.4 points lower than last
year. We had to nearly stop production at one plant for six weeks due to the
GM strike, resulting in significant costs and inefficiencies as workers were
laid off in early July, then called back beginning in mid-August. Selling and
administrative costs, as a percentage of sales, were down slightly, while
interest costs were 28 percent lower than last year, the result of
significantly lower borrowing levels. Our balance sheet remains strong, with
debt to total capitalization below 30 percent.
"We also returned nearly $1.4 million to our shareholders in the form of
dividends and stock repurchases during the quarter. In addition to a 4-cent
per share quarterly dividend, we repurchased 157,700 shares of stock during
the quarter under a plan adopted in January 1996. This brings the total
shares repurchased since the plan was adopted to 1,021,800 shares."
Defiance, headquartered in Cleveland, manufactures specialty anti-friction
bearings and metal prototype dies and parts and provides testing and tooling
development services to the U.S. motor vehicle industry.
Defiance's Internet address is http://www.defiance-inc.com.
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
Operations and Cash Flow Three Months Ended
9/30/98 9/30/97
Net sales $21,980,000 $20,601,000
Cost of goods sold 18,422,000 16,977,000
Gross profit 3,558,000 3,624,000
Selling and administrative expenses 2,982,000 2,888,000
Operating earnings 576,000 736,000
Interest expense - net 232,000 323,000
Earnings before income tax provision 344,000 413,000
Income tax provision 123,000 151,000
Net earnings $221,000 $262,000
Basic and diluted earnings per share $0.04 $0.04
Average common outstanding shares:
Used for basic earnings per share 6,126,653 6,417,789
Used for diluted earnings per share 6,141,081 6,458,350
Cash dividends per share $0.04 $0.04
Depreciation and amortization $1,705,000 $1,844,000
Capital expenditures $1,155,000 $493,000
Financial Condition 9/30/98 6/30/98
Current assets $27,144,000 $27,297,000
Property - net 34,461,000 34,722,000
Goodwill 4,557,000 4,619,000
Other assets 1,322,000 1,304,000
Total assets $67,484,000 $67,942,000
Current liabilities $12,314,000 $14,675,000
Long-term obligations 12,982,000 9,955,000
Deferred income taxes 3,252,000 3,209,000
Stockholders' equity 38,936,000 40,103,000
Total liabilities and stockholders'
equity $67,484,000 $67,942,000
Funded (interest-bearing) debt $15,945,000 $13,308,000
Debt to total capitalization ratio 29% 25%