Cherry Corporation Reports First Quarter Results
17 June 1999
Cherry Corporation Reports First Quarter Results Match Pre-Release Announcement
WAUKEGAN, Ill., June 16 -- The Cherry Corporation
(Nasdaq: CHERA CHERB) today announced level sales and lower earnings for the
first quarter ended May 31, 1999. These results are in line with the
Company's first quarter pre-release on June 1, 1999.
Sales for the quarter of $123,461,000 were up .6% from the prior year but
net earnings of $3,576,000 were down 43.5% from the prior year. Diluted
earnings per share of $.35 for the quarter were down 30.0% versus the 43.5%
net earnings drop as a result of a reduction in the average shares
outstanding. In December of 1998 the Company completed a tender offer for 2.3
million shares of the Company's stock, reducing the shares outstanding.
The Company had anticipated lower earnings on relatively flat sales from
its semiconductor operation as the result of its increased sales and
engineering effort in the computer and communications marketplace. This
effort should result in increased semiconductor sales in the second half of
the fiscal year.
The Company, however, had expected stronger sales and earnings in its
other business segments. Instead, sales to date are flat with the prior year,
mostly as the result of timing issues. Stronger sales of an existing
electronic control panel had been expected prior to the production start of
its replacement in June. It now appears that the new control will have
stronger sales than anticipated for the rest of the year. In addition, some
advanced performance keyboard and sensor programs have been delayed. Finally
there is some softness in the snap switch business.
"We are disappointed with the quarter," said Peter Cherry, chairman and
president. "We are, however, still maintaining a positive outlook for our
various businesses. In addition to the programs scheduled to come on stream
this summer and fall there are numerous potentials in all our businesses, and
we have the technical and manufacturing capabilities in place to capitalize on
these opportunities."
The Cherry Corporation manufactures proprietary and custom electrical
switches, sensors, electronic keyboards and controls, and semiconductors for
the worldwide automotive, computer, and consumer and commercial markets. The
Company has eight wholly owned subsidiaries in the United States, Germany,
England, France, Australia, Czech Republic, Mexico and Hong Kong. Cherry also
has 50-50 joint ventures in Japan, Hirose Cherry Precision Company Limited,
and in India, TVS Cherry Private Limited. Additional information is available
on the Company's website at http://www.cherrycorp.com .
Certain statements in this press release, including those regarding
indications of future sales of semiconductor and electronic control panel
increases, are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve certain risks and
uncertainties that could significantly impact future results. A discussion of
these risks and uncertainties is contained in the Company's Form 10-K for the
year ended February 28, 1999, filed with the Securities and Exchange
Commission.
THE CHERRY CORPORATION (Nasdaq CHERA & CHERB)
Condensed Financial Statements (Unaudited)
Three Months Ended May 31
Condensed Consolidated
Statements of Earnings
(In thousands except share data) 1999 1998 % Change
Net Sales $123,461 $122,665 0.6
Cost of Products Sold 89,062 85,934 3.6
Gross Profit 34,399 36,731 -6.3
Operating Expenses 28,194 26,381 6.9
Operating Income 6,205 10,350 -40.0
Other Income, Net 485 219 121.5
Earnings Before Interest and Taxes 6,690 10,569 -36.7
Interest Expense, Net 1,188 676 75.7
Earnings Before Income Taxes 5,502 9,893 -44.4
Income Tax Provision 1,926 3,562 -45.9
Net Earnings $3,576 $6,331 -43.5
Earnings Per Share
Basic $.35 $.51 -31.4
Diluted $.35 $.50 -30.0
Average Shares Outstanding
Basic 10,177,697 12,483,267 -18.5
Diluted 10,242,680 12,656,548 -19.1
Condensed Consolidated
Balance Sheets
May 31, Feb. 28,
(In thousands except share data) 1999 1999 % Change
Assets
Cash $7,955 $12,458 -36.1
Accounts Receivable 63,721 68,021 -6.3
Inventory 52,488 53,737 -2.3
Other Current Assets 9,754 9,467 3.0
Land, Buildings and Equipment, Net 175,977 179,317 -1.9
Investment in Affiliates and
Other Assets 13,498 13,491 0.1
Total Assets $323,393 $336,491 -3.9
Liabilities and Stockholders' Equity
Short-term Debt $7,777 $17,458 -55.5
Current Maturities of Long-term Debt 2,324 2,301 1.0
Other Current Liabilities 48,046 46,493 3.3
Long-term Debt 70,441 75,389 -6.6
Deferred Taxes and Credits 25,760 27,181 -5.2
Total Liabilities 154,348 168,822 -8.6
Stockholders' Equity 169,045 167,669 0.8
Total Liabilities and
Stockholders' Equity $323,393 $336,491 -3.9
Stockholders' Equity Per Share $16.61 $16.47 0.9
Ending Shares Outstanding 10,178,679 10,180,817 0.0