Exhibit 99.1
Corporate Headquarters:
Dorman Products, Inc.
3400 East Walnut Street
Colmar, Pennsylvania 18915
Fax: (215) 997-8577
For Further Information Contact: Visit our Home Page:
Mathias J. Barton, CFO www.dormanproducts.com
(215) 997-1800 x 5132
E-mail: MBarton@dormanproducts.com
Dorman Products, Inc. Reports Sales and Earnings for the Second Quarter Ended
July 1, 2006
Colmar, Pennsylvania (August 2, 2006) - Dorman Products, Inc.,
(NASDAQ:DORM) (formerly R&B, Inc. NASDAQ: RBIN) today reported sales increased
8% to $74.2 million for the second quarter ended July 1, 2006 from $68.6 million
in the same period last year. Sales for the six months ended July 1, 2006
increased 10% to $143.1 million from $129.8 million in the same period last
year. Revenue growth was primarily the result of increased sales from products
introduced in the past two years.
Results for the second quarter and six months ended July 1, 2006
include a one-time $3.2 million non-cash write-down for goodwill impairment
($2.9 million or $0.16 per share) and the write off of deferred tax benefits
($0.3 million or $0.02 per share) associated with the Company's Swedish
subsidiary (Scan-Tech). The charges, which are not tax deductible, were the
result of a review of the Scan-Tech business in response to bad debt charge offs
at two large customers and the resulting loss of those customers in the first
half of the year. Total bad debt charges for the Swedish business were $0.6
million in the second quarter and $0.8 million for the six months ended July 1,
2006.
Net income in the second quarter of 2006 was $0.9 million compared to
net income of $4.6 million in the same period last year. Diluted earnings per
share in the second quarter of 2006 decreased to $0.05 from $0.25 in the same
period last year. Excluding the goodwill impairment and deferred tax write off,
net income in the second quarter of 2006 was $4.1 million compared to net income
of $4.6 million in the same period last year and fully diluted EPS in the second
quarter of 2006 were $0.23 compared to $0.25 in the same period last year.
Net income for the first six months of 2006 was $4.3 million compared
to net income of $8.1 million in the same period last year. Diluted earnings per
share for the first six months of 2006 decreased to $0.24 from $0.44 in the same
period last year. Excluding the goodwill impairment and deferred tax write off,
net income for the first half of the year was $7.6 million compared to net
income of $8.1 million in the same period last year and fully diluted EPS in the
second quarter of 2006 were $0.42 compared to $0.44 in the same period last
year.
Effective January 1, 2006, the Company adopted SFAS No. 123R,
"Share-Based Payment" and related interpretations and began expensing the grant
date fair value of employee stock options. Prior to January 1, 2006, the Company
applied Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations in accounting for its stock option
plans. Accordingly, no compensation expense was recognized in net income for
employee stock options in the prior year. The Company adopted SFAS No. 123R
using the modified prospective transition method and therefore has not restated
prior periods. The estimated impact of adopting SFAS No. 123R in 2006, is
expected to reduce diluted earnings per share for the year by approximately
$0.02.
Mr. Richard Berman, Chairman, President and Chief Executive Officer
said, "The $3.2 million second quarter charge related to our Scan-Tech business
is a non-cash item and will not have a significant impact on our financial
position or future results of operations. We remain fully committed to the
Scan-Tech business and its customer base despite the recent disappointments.
Overall results for the quarter before the goodwill charge and the Scan-Tech bad
debt write offs were flat and below expectation despite strong new product
sales. We remain confident in and committed to our long term strategy of growing
sales through new products, and leveraging operating expenses with this sales
growth.
Dorman Products, Inc., is a leading supplier of OE Dealer "Exclusive"
automotive replacement parts, automotive hardware, brake products, and household
hardware to the Automotive Aftermarket and Mass Merchandise markets. Dorman
automotive parts and hardware are marketed under the OE Solutions(TM), HELP!(R),
AutoGrade(TM), First Stop(TM), Conduct-Tite(R), Pik-A-Nut(R) and Scan-Tech(R)
brand names.
Forward looking statements in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward looking
statements which speak only as of the date hereof. Factors that cause actual
results to differ materially include, but are not limited to, those factors
discussed in the Company's Annual Report on Form 10-K under "Item1A - Risk
Factors."
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per-share amounts)
13 Weeks 13 Weeks
Second Quarter (unaudited) 7/01/06 Pct. 6/25/05 Pct.
Net sales $ 74,187 100.0 $ 68,611 100.0
Cost of goods sold 47,500 64.0 43,668 63.6
Gross profit 26,687 36.0 24,943 36.4
Selling, general and
administrative expenses 19,333 26.1 16,925 24.7
Goodwill impairment 2,897 3.9 - -
Income from operations 4,457 6.0 8,018 11.7
Interest expense, net 631 0.8 682 1.0
Income before income taxes 3,826 5.2 7,336 10.7
Provision for income taxes 2,910 4.0 2,708 4.0
Net income $ 916 1.2 $ 4,628 6.7
Earnings per share
Basic $ 0.05 - $ 0.26 -
Diluted $ 0.05 - $ 0.25 -
Average shares outstanding
Basic 17,730 - 17,927 -
Diluted 18,147 - 18,464 -
26 Weeks 26 Weeks
Year-to-Date (unaudited) 7/01/06 Pct. 6/25/05 Pct.
Net sales $ 143,052 100.0 $ 129,842 100.0
Cost of goods sold 91,676 64.1 82,206 63.3
Gross profit 51,376 35.9 47,636 36.7
Selling, general and
administrative expenses 37,992 26.6 33,548 25.8
Goodwill impairment 2,897 2.0 - -
Income from operations 10,487 7.3 14,088 10.9
Interest expense, net 1,221 0.8 1,289 1.0
Income before income taxes 9,266 6.5 12,799 9.9
Provision for income taxes 4,930 3.5 4,717 3.7
Net income $ 4,336 3.0 $ 8,082 6.2
Earnings per share
Basic $ 0.24 - $ 0.45 -
Diluted $ 0.24 - $ 0.44 -
Average shares outstanding
Basic 17,738 - 17,906 -
Diluted 18,153 - 18,457 -
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
7/1/06 12/31/05
Assets: (unaudited)
Cash and cash equivalents $ 4,891 $ 2,944
Accounts receivable 61,597 64,778
Inventories 75,994 75,535
Deferred income taxes 10,033 9,560
Prepaid expenses 1,672 1,545
Total current assets 154,187 154,362
Property & equipment 28,025 27,473
Goodwill 27,000 29,617
Other assets 920 704
Total assets $210,132 $212,156
Liability & Shareholders' Equity:
Current portion of long-term debt $ 8,571 $ 8,571
Accounts payable 12,143 14,739
Accrued expenses and other 12,091 15,240
Total current liabilities 32,805 38,550
Long-term debt and other 25,643 27,869
Deferred income taxes 7,768 7,195
Shareholders' equity 143,916 138,542
Total Liabilities and Equity $210,132 $212,156
Selected Cash Flow Information:
(in thousands) 13 Weeks (unaudited) 26 Weeks (unaudited)
-------------------- --------------------
7/01/06 6/25/05 7/01/06 6/26/05
Depreciation and
amortization $ 1,659 $ 1,448 $ 3,281 $ 2,774
Capital Expenditures $ 2,293 $ 1,953 $ 3,795 $ 4,113
DORMAN PRODUCTS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
(in thousands, except per-share amounts)
During the second quarter of 2006 the Company recorded a $3.2 million non-cash
write-down for goodwill impairment ($2.9 million) and the write off of deferred
tax benefits ($0.3 million) associated with the Company's Swedish operation
(Scan-Tech). This press release contains non-GAAP measures which adjust current
year net income and fully diluted earnings per share to exclude the impact of
these charges. The presentation of these non-GAAP measures is intended to
enhance the usefulness of the financial information by providing measures which
the Company's management uses internally to evaluate the Company's baseline
performance. A reconciliation of net income and fully diluted earnings per share
follows:
13 Weeks (unaudited)
_________________________________________________
July 1, 2006 June 25, 2005 % Change
Net Income, as reported $ 916 $ 4,628 -80.2%
Add: Goodwill and deferred
tax write offs 3,216 - N/A
--------------------------------------------------
Net Income, as adjusted $ 4,132 $ 4,628 -10.7%
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Fully Diluted EPS,
as reported $ 0.05 $ 0.25 -80.0%
Add: Goodwill and
deferred tax write offs 0.18 - N/A
--------------------------------------------------
Fully Diluted, as adjusted $ 0.23 $ 0.25 -8.0%
__________________________________________________
26 Weeks (unaudited)
_________________________________________________
July 1, 2006 June 25, 2005 % Change
Net Income, as reported $ 4,336 $ 8,082 -46.3%
Add: Goodwill and deferred
tax write offs 3,216 - N/A
--------------------------------------------------
Net Income, as adjusted $ 7,552 $ 8,082 -6.6%
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Fully Diluted EPS,
as reported $ 0.24 $ 0.44 -45.5%
Add: Goodwill and
deferred tax write offs 0.18 - N/A
--------------------------------------------------
Fully Diluted, as adjusted $ 0.42 $ 0.44 -4.5%
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