Donnelly Corporation Announces Record Third Quarter Sales and Earnings
26 October 1999
Donnelly Corporation Announces Record Third Quarter Sales and Earnings
HOLLAND, Mich., Oct. 26 -- Donnelly Corporation
today released third-quarter financial results for calendar year 1999 that
included record sales, record net earnings and record operating earnings. It
was the third straight quarter of record sales and earnings at Donnelly.
Net sales for the period were $209 million, an increase of 10.2 percent
over sales of $190 million during the same period one year ago. Net earnings
for the third quarter of calendar 1999 were $9.9 million, or $0.98 per share,
compared to a loss of $2.0 million, or ($0.20) per share during the same
period one year ago. Net earnings for the third quarter of calendar year 1999
included a one-time gain of $8.3 million, or $0.82 per share, from the sale of
Donnelly's stake in Lear Donnelly Overhead Systems. Also included was a one-
time charge of $0.10 per share that is the result of accounting changes
relating to the write-off of previously capitalized start-up costs.
Without the two one-time occurrences, Donnelly's operating earnings for
the quarter were $2.6 million, or $0.26 per share, the company's highest ever
earnings for the July-September period.
"Obviously we are very pleased with our rate of progress toward improved
profitability," said Dwane Baumgardner, Donnelly chairman and chief executive
officer. "Three straight quarters of record performance is a clear validation
of the strategic steps we have taken over the past year. But more
importantly, it speaks to the commitment of every Donnelly employee in their
drive to build a highly profitable company. Our challenge now is to remain
focused on the long-term profitability goals we've set, keep building on the
momentum we've gained, and continue the steady improvements we need to attain
our goals."
A number of factors contributed to Donnelly's strong performance during
the period. They included continuing strong automotive sales in North
America, and especially strong sales of vehicles in which Donnelly has high
levels of dollar content. Also contributing were ongoing cost reduction
efforts in North American operations, and improved operating performance in
the company's European operations.
Donnelly's year-to-date sales for the first nine months of calendar year
1999 are $685 million, an increase of 15.6 percent over the $593 million in
sales during the same period one year ago. Net earnings for the year-to-date
period are $21.1 million, compared to $4.9 million in net earnings during the
same period one year ago.
Net income in calendar 1999 included five non-recurring items:
* The sale of Donnelly's share of Lear Donnelly Overhead Systems,
resulting in a net gain of $8.3 or $0.82 per share.
* The sale of Donnelly interest in VISION Group plc., which resulted in a
net gain of $3.3 million or $0.33 per share
* A charge to net income of $3.5 million, or $0.35 per share, for
turnaround activities in several of Donnelly's European operations.
* A net gain of $1.3 million, or $0.13 per share, resulting from the
formation of a joint technology venture with Schott Corporation.
* A net charge of $1.0 million, or $0.10 per share for the write off of
previously capitalized start up cost due to the Company's adoption of
SOP 98-5.
Net income in calendar 1998 included one non-recurring charge:
* A charge to net income of $2.3 million or $0.23 per share, at the
Company's wholly owned affiliate, Donnelly Optics Corporation.
Adjusted for these one-time items, calendar 1999 earnings for the first
nine months are $12.6 million, or $1.25 per share, compared to $7.2 million,
or $0.71 per share, for the same period one year ago. This represents the
highest ever nine months' earnings in the Company's history.
During the last six months of calendar year 1999, Donnelly is making the
transition from a June fiscal year end to a calendar year end. The company's
year 2000 fiscal year will begin on January 1, 2000. During the July-December
1999 transition period, the company will provide comparisons of calendar 1998
and 1999 year-to-date numbers that have been restated to reflect calendar-year
results. The restated numbers are unaudited in their calendar year
presentation, and are intended for comparisons only.
Donnelly Corporation is an international automotive supplier dedicated to
serving customers around the globe with industry-leading components and
systems in automotive mirrors, windows and door handles. 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 more than 6,000 employees in 12 countries worldwide. Donnelly
has been named by the Society of Automotive Engineers as a model company in
lean manufacturing practices. In addition, Donnelly is nationally recognized
as a leader in the application of participative management principles and
systems.
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF INCOME
Calendar Year Restated
Three Months Ended Nine Months Ended
October 2, September 26, October 2, September 26,
In thousands, except 1999 1998 1999 1998
share data
Net sales $208,917 $189,603 $685,190 $592,938
Cost of sales 179,445 162,842 583,252 497,098
Gross profit 29,472 26,761 101,938 95,840
Operating expenses:
Selling, general and
administrative 18,828 18,588 61,460 56,283
Research and development 7,820 9,285 22,974 26,295
Restructuring and other
charges - - 8,777 3,468
Total operating expenses 26,648 27,873 93,211 86,046
Operating income 2,824 (1,112) 8,727 9,794
Non-operating (income) expenses:
Interest expense 1,433 2,010 5,109 5,663
Gain on sale of equity
investment (14,072) - (19,202) -
Other income, net (368) (450) (3,429) (2,467)
Non-operating (income)
expenses (13,007) 1,560 (17,522) 3,196
Income (loss) before taxes on
income 15,831 (2,672) 26,249 6,598
Taxes on income (credit) 5,900 (1,040) 8,087 265
Income (loss) before minority interest
and equity earnings 9,931 (1,632) 18,162 6,333
Minority interest in net losses
of subsidiaries 575 233 3,831 380
Equity in earnings (losses) of affiliated
companies 427 (591) 71 (1,849)
Income (loss) before cumulative effect of change
in accounting principle 10,933 (1,990) 22,064 4,864
Cumulative effect of adopting SOP
98-5 (1,010) - (1,010) -
Net income (loss) $9,923 $(1,990) $21,054 $4,864
Per share of common stock:
Basic EPS
Income (loss) before cumulative effect of change
in accounting principle $1.08 $(0.20) $2.18 $0.48
Cumulative effect of adopting SOP
98-5 $(0.10) $ - $(0.10) $ -
Net income (loss) $0.98 $(0.20) $2.08 $0.48
Diluted EPS
Income (loss) before cumulative effect of change
in accounting principle $1.07 $(0.20)
Cumulative effect of adopting SOP
98-5 $(0.10) $ -
Net income (loss) $0.97 $(0.20)
Cash dividends declared $0.10 $0.10
Average common shares
outstanding 10,135,059 10,078,032 10,110,999 10,029,876
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
October 2, July 3,
In thousands 1999 1999
ASSETS
Current assets:
Cash and cash equivalents $6,568 $3,413
Accounts receivable, net 92,400 73,925
Inventories 48,467 42,722
Prepaid expenses and other current assets 31,059 25,855
Total current assets 178,494 145,915
Net property, plant and equipment 196,599 188,855
Other assets 55,628 60,331
Total assets $430,721 $395,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $90,895 $97,372
Other current liabilities 62,354 41,165
Current maturities of long-term debt 90 49
Total current liabilities 153,339 138,586
Long-term debt, less current maturities 104,060 92,166
Deferred income taxes and other liabilities 53,240 54,657
Total liabilities 310,639 285,409
Minority interest 1,279 1,361
Shareholders' equity 118,803 108,331
Total liabilities and shareholders' equity $430,721 $395,101