Donnelly Corporation Reports Increased Sales And Earnings for Q3
27 April 1999
Donnelly Corporation Reports Increased Sales And Earnings for Third Fiscal Quarter
HOLLAND, Mich., April 27 -- Donnelly Corporation
today reported third quarter financial results for the company's 1999 fiscal
year. Donnelly's net sales for the quarter rose by 20.4 percent due primarily
to strong North American automotive sales and continuing steady sales in the
European market. Net earnings for the period grew by 13.3 percent over the
year-earlier period.
Net sales for the third quarter were $233 million, which represents an
increase of 20.4 percent over the $194 million in sales reported for the same
period last year. As North American sales remained strong, Donnelly also
benefited from the company's high dollar content on a number of high volume
vehicles such as the Ford Expedition and Chrysler minivan products. Net sales
in Europe also increased slightly during the quarter.
Donnelly's net earnings for the third quarter of fiscal 1999 were $3.8
million, or $0.38 per share, which is Donnelly's highest-ever third-quarter
earnings. This represents an increase of 13.3 percent over net earnings of
$3.4 million for the same period last year. Net earnings for the period
showed the favorable effects of Donnelly's actions during the second quarter
to restructure its holdings in two non-automotive ventures associated with the
digital imaging industry.
North American automotive operations continued to perform strongly.
During the period Donnelly experienced ongoing benefits from cost control
measures implemented throughout North American operations at the end of the
second quarter. Those measures included a headcount freeze and other
structural changes designed to improve profitability on North American sales.
The company's drive to reduce overhead costs in North America is expected to
continue generating savings for the remainder of the fiscal year and in the
year ahead.
Operations in Europe continued to be mixed. Donnelly's facilities in
Spain, France and Schleiz, Germany sustained the strong performance they have
delivered throughout the year. At the same time, the company's other German
operations and its operations in Ireland remained in a loss position.
There were two significant, non-recurring events during the quarter. The
first was a net gain of $3.3 million from the sale of Donnelly's interest in
VISION Group plc., a digital imaging company based in Edinburgh, Scotland.
The second was a non-recurring charge to net income of $3.5 million for
restructuring activities in several of Donnelly's European operations. The
two events were largely offsetting and as a result had minimal impact on
overall earnings for the quarter.
"With the restructuring of our digital imaging holdings, the approval of
the turnaround plan in Europe and our ongoing work to improve profitability in
North America, we have demonstrated our commitment to improving shareholder
returns," said Dwane Baumgardner, Donnelly chairman and chief executive
officer. "Our intent is to remain focused on improved profitability as our
number-one priority."
Year-to-date sales for Donnelly's 1999 fiscal year are $662 million, a 20-
percent increase over the company's total sales of $554 million during the
first nine months of fiscal 1998. Net earnings for the year-to-date period
are $3.3 million, or $0.32 per share, compared to earnings of $9.5 million, or
$0.96 per share, for the same period last year. Included in the year-to-date
earnings for 1998 was a one-time, pretax gain of approximately $4.6 million,
or $0.22 per share after tax, from Donnelly's sale of its 50% 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, door handles 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 5,500 employees in
12 countries worldwide. In addition, Donnelly is nationally recognized as a
leader in the application of participative management principles and systems.
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
April 3, March 28, April 3, March 28,
In thousands, except 1999 1998 1999 1998
share data
Net sales $233,154 $193,658 $661,850 $553,634
Cost of sales 195,191 161,009 562,037 459,432
Gross profit 37,963 32,649 99,813 94,202
Operating expenses:
Selling, general and
administrative 20,560 17,380 61,145 50,057
Research and development 9,570 8,595 28,637 28,003
Non-recurring charges 8,777 - 8,777 -
Operating income
(loss) (944) 6,674 1,254 16,142
Non-operating (income) expenses:
Interest expense 2,202 2,017 6,384 6,711
Gain on sale of
equity investment (5,130) - (5,498) (4,598)
Other (income)
expense, net 197 (1,025) (694) (1,562)
Income before taxes
on income 1,787 5,682 1,062 15,591
Taxes on income (credit) (281) 1,408 (935) 5,156
Income before minority interest
and equity earnings 2,068 4,274 1,997 10,435
Minority interest in net
(income) losses of
subsidiaries 1,783 (3) 1,741 231
Equity in losses of
affiliated companies (31) (898) (457) (1,138)
Net income $3,820 $3,373 $3,281 $9,528
Per share of common stock:
Basic net income
per share $0.38 $0.34 $0.32 $0.96
Diluted net income
per share $0.38 $0.33 $0.32 $0.94
Cash dividends
declared $0.10 $0.10 $0.30 $0.30
Average common shares
outstanding 10,093,510 9,963,706 10,086,031 9,932,265
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
April 3, June 27,
In thousands 1999 1998
ASSETS
Current assets:
Cash and cash equivalents $6,953 $5,628
Accounts receivable, net 85,887 92,972
Inventories 44,119 44,146
Prepaid expenses and
other current assets 32,012 24,031
Total current assets 168,971 166,777
Net property, plant and
equipment 180,477 168,905
Other assets 57,228 42,203
Total assets $406,676 $377,885
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $91,230 $77,595
Other current liabilities 47,717 36,662
Current maturities of
long-term debt 52 55
Total current liabilities 138,999 114,312
Long-term debt, less
current maturities 122,850 123,706
Deferred income taxes
and other liabilities 40,137 35,831
Total liabilities 301,986 273,849
Minority interest 949 754
Shareholders' equity 103,741 103,282
Total liabilities and
shareholders' equity $406,676 $377,885