Donnelly Extends Record of Highest-Ever Quarterly Operating Earnings
27 July 2000
Donnelly Extends Record of Highest-Ever Quarterly Operating Earnings
HOLLAND, Mich. - Donnelly Corporation today announced financial results for
the second quarter of 2000 that included the company's highest-ever operating
income for a single quarter. The period marks the sixth consecutive quarter of
record operating performance at Donnelly.
Aided by North American new vehicle sales that remain robust and
continuing strong sales in Europe, Donnelly posted net sales of $227 million
during the period, compared with sales of $243 million during the year-earlier
period. For comparative purposes it is important to note that Donnelly's
total sales in the year-earlier period included an additional $18 million in
sales from the company's interest in Lear Donnelly Overhead Systems, which
Donnelly sold during the second half of 1999.
Net income for the period was $7.1 million, or $0.70 per share. That
represents the company's highest-ever earnings on operations for the period
and for any quarter. In the year-earlier period, net earnings were $7.3
million, or $0.72 per share. However, the year-earlier results included a
one-time gain of $1.3 million at net, resulting from a cash payment received
by Donnelly upon the formation of Schott-Donnelly L.L.P. Smart Glass
Solutions. Without the one-time gain, net earnings on operations for the
quarter were $6.0 million, or $0.59 per share.
"It is clear that the strength of our products and our customer base can
lead us to sustained earnings increases over the long term," said Dwane
Baumgardner, Donnelly chairman and chief executive officer. "As we head into
the second half of the year, our emphasis will remain on bringing some of our
more technologically advanced products into the marketplace. I look for it to
be an exciting time."
Donnelly's April-June record earnings gave Donnelly its sixth consecutive
quarter of record results. Over the past 18 months the company has carried
out a number of strategic initiatives to reduce costs and concentrate more
closely on core businesses. Those actions have led to steady improvements in
earnings and have helped push reported 12-month trailing earnings on
operations to $2.14 per share.
Donnelly's North American sales of automotive products during the second
quarter were up 4 percent when compared to the same period in 1999. Sales in
North America were aided by Donnelly's strong product presence on popular
vehicles such as the Ford Expedition and Taurus, and the Chrysler minivan and
LH programs.
Sales in Europe during the second quarter were up by 12 percent at
constant foreign exchange rates. However, when adjusted for a 14 percent
negative impact due to foreign currency fluctuations, net dollar sales for
Europe were down by 2 percent. The increase reflects new product launches,
favorable sales mix and continuing strong vehicle production in the European
market. Overall, Donnelly's European operations performed at a profitable
level during the period, the third straight quarter of profitability following
an extended period of restructuring.
Through its various product lines, Donnelly is a technology-driven,
customer-focused supplier to every major automotive manufacturer in the world.
The company has been based in Holland, Michigan, since 1905, and today has
approximately 6,100 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
Three Months Ended Six Months Ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
In thousands, except share data
Net sales $227,492 $243,119 $464,896 $476,273
Cost of sales 188,698 208,616 384,822 403,807
Gross profit 38,794 34,503 80,074 72,466
Operating expenses:
Selling, general and
administrative 21,117 22,072 41,686 42,632
Research and development 7,829 5,584 17,591 15,154
Restructuring and
other charges - - - 8,777
Total operating
expenses 28,946 27,656 5 9,277 66,563
Operating income 9,848 6,847 20,797 5,903
Non-operating (income) expenses:
Interest expense 2,025 1,474 3,808 3,676
Gain on sale of
equity investment - - - (5,130)
Other income, net (1,613) (3,258) (2,115) (3,061)
Non-operating (income)
expenses 412 (1,784) 1,693 (4,515)
Income before taxes
on income 9,436 8,631 19,104 10,418
Taxes on income 2,512 2,468 5,165 2,187
Income before minority interest
and equity earnings 6,924 6,163 13,939 8,231
Minority interest in net (earnings)
losses of subsidiaries 193 1,473 (92) 3,256
Equity in earnings (losses)
of affiliated companies 20 (325) 64 (356)
Net income $ 7,137 $ 7,311 $13,911 $11,131
Per share of common stock:
Diluted net income
per share $0.70 $0.72 $1.37 $1.10
Basic net income
per share $0.70 $0.72 $1.37 $1.10
Cash dividends
declared $0.10 $0.10 $0.20 $0.20
Average common shares
outstanding 10,162,983 10,105,306 10,158,266 10,099,408
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
July 1, December 31,
In thousands 2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 3,114 $ 4,153
Accounts receivable, net 93,214 80,605
Inventories 50,890 50,392
Prepaid expenses and other current assets 31,593 28,784
Total current assets 178,811 163,934
Net property, plant and equipment 202,417 198,386
Other assets 70,006 66,543
Total assets $451,234 $428,863
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $102,561 $ 92,098
Other current liabilities 52,659 46,483
Current maturities of long-term debt 89 94
Total current liabilities 155,309 138,675
Long-term debt, less current maturities 102,226 107,383
Deferred income taxes and other liabilities 60,031 58,059
Total liabilities 317,566 304,117
Minority interest 1,021 951
Shareholders' equity 132,647 123,795
Total liabilities and shareholders' equity $451,234 $428,863