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Donnelly Takes Next Step in Strategic Business Focus

2 July 1999

Donnelly Takes Next Step in Strategic Business Focus

    HOLLAND, Mich., July 1 --  With the sale of its stake in an
interior components joint venture, Donnelly Corporation will take
the next step forward in attaining the strategic business focus the company
began working toward late last year.
    Donnelly announced today that it has signed a letter of intent to sell its
50-percent share of Lear Donnelly Overhead Systems, LLC to Lear Corporation,
Donnelly's partner in the joint venture.  The transaction, which is subject to
regulatory approval, is expected to be completed by later this summer.
    With the sale of the joint venture Donnelly will take the next step in the
strategic direction set by the company's board and management late last year.
That strategy calls for a much closer focus on Donnelly's core automotive
businesses -- automotive mirror, window and handle systems and products.  Over
the past six months Donnelly has taken a number of actions to support its
strategy:

    *  In early December, the company merged its Donnelly Optics subsidiary
with Applied Image Group, in a swap that left Donnelly with ownership of less
than 20 percent of a larger, more successful company.  The move ended the
drain on management time and energy caused by the venture, and ended the
negative earnings impact caused by losses at the venture.
    *  In January, Donnelly sold its equity stake in VISION Group plc, a
Scotland-based videochip technology company that also had a negative impact on
Donnelly's earnings due to operating losses at the concern.
    *  In March, Donnelly's European management team began implementing a
board-approved turnaround plan to reduce headcount, consolidate facilities and
renegotiate labor agreements in the company's European automotive operations.
Progress on implementing the plan is well underway.
    *  At the end of April, Donnelly merged its Tucson Advanced Technology
Center into a joint venture with Schott Corporation.  Schott, one of the
world's leading producers of specialty glass products, brings the investment,
expertise and international position to commercialize Donnelly's
electrochromic glass technologies in automotive and architectural
applications.  The move also had a positive financial impact on Donnelly.

    Those moves, combined with the sale of Lear Donnelly Overhead Systems,
have positioned Donnelly to compete more effectively in the core products in
which the company already holds a world leadership position: automotive
mirror, window and handle products and systems.
    "We are continuing our drive to become world class in every aspect of our
business," said Dwane Baumgardner, Donnelly chairman and chief executive
officer.  "To achieve that, we are following closely the strategic course we
set to become the best-in-class supplier of our core automotive products.
While we value all that we have gained through our partnership with Lear, we
firmly believe that we must concentrate ourselves very closely on our core
mirror, window and handle products.  That focus must set our direction for the
future."
    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.