Donnelly Announces Record Nine-Month Net Earnings from Operations
26 October 2000
Donnelly Announces Record Nine-Month Net Earnings from Operations
HOLLAND, Mich., Oct. 26 Donnelly Corporation
today announced record nine-month net earnings from operations through the
third quarter of 2000.
Sales for the third quarter were $193 million, 6 percent higher than sales
posted for the year-earlier period after adjusting for Lear Donnelly Overhead
Systems sales and foreign exchange rate fluctuations. For the year-earlier
quarter, sales were $209 million including sales from the company's interest
in Lear Donnelly Overhead Systems, which Donnelly sold during the second half
of 1999, and the benefit of favorable foreign exchange rates.
Net income for the third quarter was $0.6 million, or $0.06 per share
compared to net operating earnings of $2.6 million, or $0.26 per share in the
year earlier period. Reported net income for the prior-year period of
$9.9 million, or $0.98 per share, 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 an accounting change relating to the write-off of previously
capitalized start-up costs. Current calendar year-to-date reported net
earnings from operations were $1.43 per share compared to $1.25 for the year-
earlier period.
The third quarter was negatively impacted by customer production schedules
and increased expenses associated with high-tech product launches in both
Europe and North America. A slower than planned customer launch for a major
new program and shutdowns at Ford Explorer, Ranger and Expedition plants
reduced Donnelly's third quarter shipments of both mirrors and windows on key
vehicles.
In addition, the company incurred greater than planned start-up expenses
as it launched two new major technologies. The first, Donnelly's advanced
Solid Polymer Matrix (SPM)(TM) electrochromic technology, provides a new
standard for safer, more robust auto-dimming mirrors. Production and
shipments of SPM(TM) mirrors began in the third quarter.
Second, Donnelly is investing heavily in electronics for automotive
mirrors, including telematics, one of the hottest features in the automotive
industry. The company is currently developing 25 variations of prismatic and
auto-dimming interior mirrors featuring the telecommunications link to the
General Motors OnStar(R) system. Shipments of OnStar(R) mirrors began in the
third quarter. Similar programs are being developed with several major OEMs.
"We are ramping up quickly to support mirror programs loaded with
electronic features that make driving safer and more convenient, and link the
driver to communications systems," said Dwane Baumgardner, chairman and chief
executive officer. "The high-tech mirror business is growing at a dynamic,
unprecedented pace. Although the design, implementation and startup of new
products results in high initial costs, Donnelly is investing today to secure
our position as the key supplier for advanced technology mirrors worldwide."
Donnelly's North American sales of automotive products during the third
quarter were up 7 percent when compared to the same period in 1999. Sales in
North America were aided by Donnelly's strong product presence on popular
vehicles, notwithstanding the negative impact of OEM production schedules.
Sales in Europe during the third quarter were up by 2 percent at constant
foreign exchange rates when compared to the same period in 1999. However,
when adjusted for a 15 percent negative impact due to foreign currency
fluctuations, net dollar sales for Europe were down by 13 percent.
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
In thousands, September 30, October 2, September 30, October 2,
except share data 2000 1999 2000 1999
Net sales $192,684 $208,917 $657,580 $685,190
Cost of sales 167,356 179,445 552,178 583,252
Gross profit 25,328 29,472 105,402 101,938
Operating expenses:
Selling, general
and administrative 18,415 18,828 60,101 61,460
Research and
development 9,300 7,820 26,891 22,974
Restructuring and
other charges - - - 8,777
Total operating
expenses 27,715 26,648 86,992 93,211
Operating
income (loss) (2,387) 2,824 18,410 8,727
Non-operating
(income) expenses:
Interest expense 2,147 1,433 5,955 5,109
Gain on sale of
equity investment - (14,072) - (19,202)
Other income, net (1,363) (368) (3,478) (3,429)
Non-operating
(income) expenses 784 (13,007) 2,477 (17,522)
Income (loss) before
taxes on income (3,171) 15,831 15,933 26,249
Taxes on income
(credit) (1,584) 5,900 3,581 8,087
Income (loss)
before minority
interest and
equity earnings (1,587) 9,931 12,352 18,162
Minority interest
in net losses of
subsidiaries 1,304 575 1,212 3,831
Equity in earnings
of affiliated
companies 914 427 978 71
Income before
cumulative effect
of change in
accounting
principle 631 10,933 14,542 22,064
Cumulative effect
of adopting
SOP 98-5 - (1,010) - (1,010)
Net income $631 $9,923 $14,542 $21,054
Per share of common stock:
Basic EPS
Income before
cumulative
effect of
change in
accounting
principle $0.06 $1.08 $1.43 $2.18
Cumulative
effect of
adopting
SOP 98-5 - (0.10) - (0.10)
Net income $0.06 $0.98 $1.43 $2.08
Diluted EPS
Income before
cumulative
effect of
change in
accounting
principle $0.06 $1.07 $1.43 $2.17
Cumulative
effect of
adopting
SOP 98-5 - (0.10) - (0.10)
Net income $0.06 $0.97 $1.43 $2.07
Cash dividends
declared $0.10 $0.10 $0.30 $0.30
Average common
shares
outstanding 10,173,077 10,135,059 10,163,185 10,111,292
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
In thousands 2000 1999
ASSETS
Current assets:
Cash and cash equivalents $4,424 $4,153
Accounts receivable, net 95,538 80,605
Inventories 52,528 50,392
Prepaid expenses and
other current assets 24,387 28,784
Total current assets 176,877 163,934
Net property, plant
and equipment 202,262 198,386
Other assets 80,910 66,543
Total assets $460,049 $428,863
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $102,030 $92,098
Other current liabilities 47,751 46,483
Current maturities
of long-term debt 82 94
Total current liabilities 149,863 138,675
Long-term debt, less
current maturities 118,758 107,383
Deferred income taxes and
other liabilities 62,196 58,059
Total liabilities 330,817 304,117
Minority interest (117) 951
Shareholders' equity 129,349 123,795
Total liabilities
and shareholders'
equity $460,049 $428,863