Donnelly Announces Record Earnings For Fourth Quarter, Calendar Year
22 February 2000
Donnelly Corporation Announces Record Earnings For Fourth Quarter, Calendar Year
HOLLAND, Mich., Feb. 22 -- Donnelly Corporation
today released fourth-quarter financial results for calendar year 1999 that
included the company's highest-ever earnings for the October-December period,
on total sales of $213 million. It was the fourth straight quarter of record
earnings at Donnelly, and represented the company's highest ever earnings for
a 12-month period.
Net earnings for the fourth quarter of calendar 1999 were $8.1 million, or
$0.80 per share, compared with earnings of $1.5 million, or $0.14 per share
during the same period one year ago.
Net earnings for the period included a one-time gain of $2.9 million, or
$0.29 per share, which was a deferred gain from the sale of Donnelly's stake
in Lear Donnelly Overhead Systems. That gain resulted from the conclusion of
negotiations on a specific piece of business that were not completed when the
sale went forward in the third quarter. Without the one-time gain, net
earnings for the period were $5.2 million, or $0.51 per share, which
represents the company's highest-ever fourth quarter earnings on operations.
Net sales for the quarter were $213 million, down from sales of $239
million during the same period one year ago. However, the decrease in sales
was largely attributable to the exclusion of sales previously booked through
the company's interest in Lear Donnelly Overhead Systems, reductions in window
glass prices that the company passed through to it's customers, and
fluctuations in foreign exchange rates due to the strength of the dollar
against the euro. The overall impact of these adjustments on net income was
minimal. On an adjusted basis, sales during the quarter would have been
roughly equal to the year-earlier period.
"We are clearly seeing the benefits of the steps taken over the past 15
months to improve our operating performance," said Dwane Baumgardner, Donnelly
chairman and chief executive officer. "With our cost controls firmly in
place, and improved profitability in our European operations, we have begun to
demonstrate what we can achieve. Now our work must be to continue building on
that progress."
Donnelly's strong fourth-quarter results were due largely to improved
margins, significant results from ongoing initiatives to control spending and
the sustained high demand for new cars and light trucks in North America.
Donnelly's total sales for the 1999 calendar year were $898 million, an
increase of 8.0 percent over the $832 million in sales during the same period
one year ago. Net earnings for the 1999 calendar year were $29.2 million,
compared to $6.3 million in net earnings during 1998.
Net income in calendar 1999 included six non-recurring items:
* 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.
* The sale of Donnelly's share of Lear Donnelly Overhead Systems,
resulting in a net gain of $8.3 or $0.82 per share.
* A one-time net gain of $2.9 million, or $0.29 per share, which was a
deferred gain from the sale of Donnelly's stake in Lear Donnelly Overhead
Systems.
Net income in calendar 1998 included two non-recurring items:
* A charge to net income of $2.3 million or $0.23 per share, at the
Company's wholly owned affiliate, Donnelly Optics Corporation.
* A net gain of $200,000, or $0.02 per share, resulting from the sale of
a portion of Donnelly's interest in VISION Group plc.
Adjusted for these one-timers, calendar 1999 earnings from operations were
$17.8 million, or $1.76 per share, compared to $8.4 million, or $0.83 per
share, for the same period one year ago. This represents the highest ever
12-month earnings in the Company's history.
During the last six months of calendar year 1999, Donnelly made the
transition from a June fiscal year end to a calendar year end. The company's
2000 fiscal year began on January 1, 2000.
Donnelly Corporation is a technology-driven, customer-focused
international supplier dedicated to serving customers around the world with
industry-leading components and systems. Through its various product lines-
automotive mirrors, windows, electronic features and handle products-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 7,000 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 Twelve Months Ended
December 31, January 2, December 31, January 2,
In thousands, except share data
1999 1999 1999 1999
Net sales $ 212,724 $ 239,093 $ 897,914 $ 832,031
Cost of sales 177,638 204,004 760,890 701,102
Gross profit 35,086 35,089 137,024 130,929
Operating expenses:
Selling, general and
administrative 18,473 21,997 79,933 78,280
Research and
development 8,643 9,782 31,617 36,077
Restructuring and
other charges - - 8,777 3,468
Total operating
expenses 27,116 31,779 120,327 117,825
Operating income 7,970 3,310 16,697 13,104
Non-operating
(income) expenses:
Interest expense 1,442 2,172 6,551 7,835
Gain on sale of
equity
investment (4,386) (368) (23,588) (368)
Other income, net (392) (441) (3,821) (2,908)
Non-operating
(income)
expenses (3,336) 1,363 (20,858) 4,559
Income before
taxes on
income 11,306 1,947 37,555 8,545
Taxes on income 3,679 386 11,766 651
Income before minority interest
and equity
earnings 7,627 1,561 25,789 7,894
Minority interest in net
(earnings) losses
of subsidiaries 318 (275) 4,149 105
Equity in earnings (losses)
of affiliated
companies 163 165 234 (1,684)
Income before extraordinary gain
and cumulative effect of change
in accounting
principle 8,108 1,451 30,172 6,315
Cumulative effect
of adopting
SOP 98-5 - - (1,010) -
Net income $ 8,108 $ 1,451 $ 29,162 $ 6,315
Per share of common stock:
Basic EPS
Income before extraordinary gain and cumulative
effect of change in accounting
principle $ 0.80 $ 0.14 $ 2.88 $ 0.63
Cumulative effect
of adopting
SOP 98-5 $ - $ - $ (0.10) $ -
Net income $ 0.80 $ 0.14 $ 2.78 $ 0.63
Diluted EPS
Income before extraordinary gain and cumulative
effect of change in accounting
principle $ 0.80 $ 0.14
Cumulative effect
of adopting
SOP 98-5 $ - $ -
Net income $ 0.80 $ 0.14
Cash dividends
declared $ 0.10 $ 0.10
Average common
shares
outstanding 10,144 10,087 10,119 10,045
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
December 31, July 3,
In thousands 1999 1999
ASSETS
Current assets:
Cash and cash equivalents $ 4,153 $ 3,413
Accounts receivable, net 80,605 73,925
Inventories 50,392 42,722
Prepaid expenses and other
current assets 28,784 25,855
Total current assets 163,934 145,915
Net property, plant and
equipment 198,386 188,855
Other assets 66,543 60,331
Total assets $ 428,863 $ 395,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 92,098 $ 97,372
Other current liabilities 46,483 41,165
Current maturities of
long-term debt 94 49
Total current liabilities 138,675 138,586
Long-term debt, less current
maturities 107,383 92,166
Deferred income taxes and
other liabilities 58,059 54,657
Total liabilities 304,117 285,409
Minority interest 951 1,361
Shareholders' equity 123,795 108,331
Total liabilities and
shareholders' equity $ 428,863 $ 395,101