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 Donnelly Announces Record Earnings and Revenue
   Thursday, July 25, 2002 7:02:14 AM ET

HOLLAND, Mich., Jul 25, 2002 /PRNewswire-FirstCall/ -- Donnelly Corporation (DON ) today announced net income of $9.7 million, or $0.91 per share, on second quarter revenues of $247 million, all-time records for earnings and revenue. For the second quarter of 2001, the Company reported net income of $5.0 million, or $0.49 per share, on revenues of $227 million. Second quarter 2002 net income benefited from strong growth and improved operating margins in Electronics Operations and the ongoing benefit from overhead reduction actions taken in 2001. Sales increased $20 million, or 9%, in the second quarter on a year-over-year basis, due primarily to the strong growth of key products including electrochromic mirrors, OnStar(R) telematics mirrors, and electronic sensor related products. Adoption of Statements of Financial Accounting Standards (SFAS) No. 142, which eliminated the amortization of goodwill, increased net income by approximately $0.2 million or $0.02 per share, for the second quarter of 2002. Net income would have increased by approximately $0.1 million, or $0.01 per share, for the second quarter of 2001 had this standard been adopted in 2001.

For the first six months of 2002, net income was $12.1 million, or $1.15 per share, on revenues of $458 million. For the comparable 2001 period, Donnelly reported net income of $5.0 million, or $0.48 per share, on revenues of $447 million. Strong growth in Electronic Operations was partially offset by weak European automotive production levels and the slow ramp-up of product launches by North American customers. Adoption of SFAS No. 142 increased net income by approximately $0.3 million, or $0.03 per share, in 2002 and would have increased net income by approximately $0.2 million, or $0.02 per share, in 2001 had this standard been adopted in 2001. The 2002 six-month results also included a $1.0 million non-cash charge, or $0.09 per share, (net of tax) for the final transition to the new accounting standard for goodwill (SFAS No. 142). Excluding this item, operating earnings for the first six months were $13.1 million, or $1.24 per share.

"The second quarter’s outstanding performance validates our strategy of becoming a technology-driven, global product-based organization focused on building a full pipeline of higher value-added products," said Chairman and CEO Dwane Baumgardner. "In each of the core areas of integrated interior and exterior mirror systems, electronic vision systems, electronic sensors and engineered window systems, we have begun to see returns on our investments in new product development. The strong performance of our Electronics Operations is based on new higher value-added features and helped by robust North American automotive production. Furthermore, we have been able to better leverage these opportunities by continuing our focus on aggressive cost- control, and I am confident that we will be able to deliver continuing improvements," concluded Baumgardner.

As previously announced, on June 25, 2002 Donnelly entered into a merger agreement under which the Company will become a wholly-owned subsidiary of Magna International Inc. upon consummation of the transaction. The closing of the merger transaction is conditioned on regulatory, shareholder and other approvals and on other conditions in the merger agreement. Donnelly’s financial results for the second quarter were not impacted by that transaction.

Donnelly is a technology-driven, customer-focused, automotive supplier that has been based in Holland, Michigan, since 1905. Through its various product lines, Donnelly serves every major automotive manufacturer in the world. The Company has more than 6,000 employees in 14 countries worldwide. Donnelly has been named by the Society of Automotive Engineers as a model company in lean manufacturing practices, and has been recognized by Automotive Industries Magazine as one of the "Best of the Best" suppliers of lighting systems, electronic systems and interior systems. In addition, Donnelly is nationally recognized as a leader in the application of participative management principles and systems. More information on Donnelly is available at the Company’s site on the World Wide Web, at http://www.donnelly.com .

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform act of 1995. Investors are cautioned that any current expectations of the Company, or its management, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements as a result of various factors including, but not limited to: (a) general economic and currency conditions in the markets in which the Company operates; (b) fluctuation in worldwide or regional automobile and light truck production; (c) changes in practices and/or policies of the Company’s significant customers; (d) human resource constraints which could impede changes in Europe; and (e) other risks and uncertainties.

                    DONNELLY CORPORATION AND SUBSIDIARIES
             CONDENSED COMBINED CONSOLIDATED STATEMENTS OF INCOME

                                  Three Months Ended       Six Months Ended
                                June 30,      June 30,    June 30,    June 30,
    In thousands, except          2002          2001        2002        2001
     share data

    Net sales                  $247,211      $227,276    $457,851    $447,277
    Cost of sales               204,768       189,646     381,727     376,800
      Gross profit               42,443        37,630      76,124      70,477
    Operating expenses:
    Selling, general and
     administrative              19,567        20,110      38,342      41,070
    Research and development     10,315        10,535      19,839      19,979
    Total operating expenses     29,882        30,645      58,181      61,049
      Operating income           12,561         6,985      17,943       9,428
    Non-operating (income)
     expenses:
    Interest expense              1,810         1,683       3,388       3,787
    Other income, net            (1,898)         (654)     (2,846)     (1,019)
    Non-operating (income)
     expenses                       (88)        1,029         542       2,768
      Income before taxes
       on income                 12,649         5,956      17,401       6,660
    Taxes on income               3,543         1,101       4,873         916
      Income before minority
       interest and equity
       earnings                   9,106         4,855      12,528       5,744
    Minority interest in net
     (earnings) losses of
     subsidiaries                   283          (131)         26        (117)
    Equity in earnings (losses)
     of affiliated companies        305           316         533        (657)
    Net income before cumulative
     effect of change in
     accounting principle        $9,694        $5,040     $13,087      $4,970
    Cumulative effect of
     adopting SFAS No. 142            -             -        (964)          -
    Net income                   $9,694        $5,040     $12,123      $4,970

    Per share of common stock:
      Basic EPS:
      Income before cumulative
       effect of change in
       accounting principle       $0.91         $0.49       $1.24       $0.48
      Cumulative effect of
       adopting SFAS No. 142          -             -       (0.09)          -
      Net Income                  $0.91         $0.49       $1.15       $0.48

      Diluted EPS:
      Income before cumulative
       effect of change in
       accounting principle       $0.90         $0.48       $1.23       $0.48
      Cumulative effect of
       adopting SFAS No. 142          -             -       (0.09)          -
      Net Income                  $0.90         $0.48       $1.14       $0.48

      Cash dividends declared     $0.10         $0.10       $0.20       $0.20

      Average common shares
       outstanding           10,624,919    10,369,569  10,553,382  10,312,735


                    DONNELLY CORPORATION AND SUBSIDIARIES
                CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS

                                                  June 30,        December 31,
    In thousands                                    2002               2001

    ASSETS
    Current assets:
    Cash and cash equivalents                      $27,251            $1,823
    Accounts receivable, net                        83,774            55,151
    Inventories                                     58,326            59,140
    Prepaid expenses and other current assets       35,097            31,091
       Total current assets                        204,448           147,205
    Net property, plant and equipment              192,634           189,812
    Other assets                                    37,403            36,625
       Total assets                               $434,485          $373,642

    LIABILITIES AND SHAREHOLDERS’ EQUITY
    Current liabilities:
    Accounts payable                               $86,047           $70,806
    Other current liabilities                       49,805            34,735
    Current maturities of long-term debt                33                50
       Total current liabilities                   135,885           105,591
    Long-term debt, less current maturities         94,173            93,917
    Post retirement plans and other liabilities     61,348            59,481
       Total liabilities                           291,406           258,989

    Minority interest                                2,208             2,295
    Shareholders’ equity                           140,871           112,358
       Total liabilities and
        shareholders’ equity                      $434,485          $373,642


    Contact:  Charlie Pear
              Investor Relations Contact
              616-786-5712

              Meredith Shearer
              Media Contact
              616-786-6007


                    

SOURCE Donnelly Corporation

              

Copyright (C) 2002 PR Newswire. All rights reserved.



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