CONTACT: Dan King, Vice President of Finance
The Cherry Corporation
(847) 360-3541
FOR IMMEDIATE RELEASE
CHERRY CORPORATION REPORTS RECORD SALES AND NET EARNINGS
FOR THIRD QUARTER
EXPECTS GREATER THAN NORMAL SEASONAL DECLINE
IN FOURTH QUARTER RESULTS
WAUKEGAN, IL. (December 17, 1998) -The Cherry Corporation (Nasdaq - CHERA &
CHERB) today announced record sales and earnings for its fiscal third quarter
ended November 30, 1998.
Sales for the third quarter were $131,187,000, the highest for any quarter in
the company's history and up 9.2 percent from sales of $120,167,000 in last
year's third quarter. Sales for the first nine months were $361,516,000, up 6.2
percent from sales of $340,478,000 a year earlier.
Net income for the third quarter was a record $8,190,000 up 31.7 percent from
net income of $6,219,000 a year earlier. For the first nine months net income
was $16,040,000, an increase of 26.5 percent over the net income of $12,683,000
reported for the first nine months of last year.
Diluted earnings per share of common stock for the third quarter were a record
$.65 compared with $.49 a year earlier. For the first nine months earnings per
share were $1.27 compared with $1.01 a year earlier.
"As was the case in the first half of the year, our international operations
were largely responsible for our sales and earnings growth," said Peter Cherry,
chairman and president. "Sales at these locations increased 20 percent, with the
largest gains coming from automotive products where our penetration has
increased compared with last year. Sales of keyboards were also higher as we
continue to sell more of our Advanced Performance keyboards and our customers
increased their inventories of standard keyboards. Our domestic operations had a
more modest three percent increase in sales with gains in power management
semiconductors being largely offset by lower sales to the automotive markets.
"As we look forward, we see indications that our international operations are in
for a correction," Mr. Cherry said. "Although we normally experience a seasonal
decline in sales between the third and fourth quarters, we expect it to be more
pronounced this year as keyboard customers purchase fewer units while they work
down their inventories. We also are seeing signs that the slower overall
economic conditions that have been present in Europe for the last few quarters
finally appear to be catching up with us. These factors, coupled with flat to
slightly lower sales for our domestic operations are expected to result in a
greater than normal seasonal decline in sales and earnings for the fourth
quarter. Despite the anticipated fourth quarter results, the fiscal year should
still be a sales and earnings record continuing our three year trend of improved
results."
More...
As announced earlier today, the Company's Dutch auction tender offer which was
announced on November 17, 1998 and was due to expire at 5:00 P.M. (New York City
Time) on Monday, December 21, 1998, will be extended until 5:00 p.m. (New York
City Time) on Wednesday, December 23, 1998.
The Cherry Corporation manufactures proprietary and custom electrical switches,
sensors, electronic keyboards and controls, and semiconductors for the worldwide
automotive, computer, and consumer and commercial markets. The company has eight
wholly owned subsidiaries in the United States, Germany, England, France,
Australia, Czech Republic, Mexico, and Hong Kong. Cherry also has 50-50 joint
ventures in Japan, Hirose Cherry Precision Company Limited, and in India, TVS
Cherry Private Limited, and a Japanese automotive sales and engineering office.
Additional information is available on the company's website at
http://www.cherrycorp.com.
Certain statements in this press release, including those regarding indications
of slower economic conditions in Europe, a greater than normal seasonal decline
in sales and earnings for the fourth quarter and improved year end results, are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve certain risks and uncertainties that
could significantly impact future results. A discussion of these risks and
uncertainties is contained in the Company's Form 10-K for the year ended
February 28, 1998, filed with the Securities and Exchange Commission.
Tables follow
THE CHERRY CORPORATION (NASDAQ CHERA & CHERB)
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Three Months Ended November 30, Nine Months Ended November 30,
------------------------------- ------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except share data) 1998 1997 % Change 1998 1997 % Change
- --------------------------------- ------------- -------------- -------- ------------- ------------- ----------
Net Sales $ 131,187 $ 120,167 9.2 $ 361,516 $ 340,478 6.2
Cost of Products Sold 89,980 84,528 6.4 253,296 244,313 3.7
----------- ----------- ------ ----------- ----------- ----
Gross Profit 41,207 35,639 15.6 108,220 96,165 12.5
Operating Expenses 27,813 25,350 9.7 81,158 74,612 8.8
----------- ----------- ------ ----------- ----------- ----
Operating Income 13,394 10,289 30.2 27,062 21,553 25.6
Other Income, Net 42 296 (85.8) 14 823 (98.3)
----------- ----------- ------ ----------- ----------- ----
Earnings Before Interest and Taxes 13,436 10,585 26.9 27,076 22,376 21.0
Interest Expense, Net 638 714 (10.6) 2,013 2,244 (10.3)
----------- ----------- ------ ----------- ----------- ----
Earnings Before Income Taxes 12,798 9,871 29.7 25,063 20,132 24.5
Income Tax Provision 4,608 3,652 26.2 9,023 7,449 21.1
----------- ----------- ------ ----------- ----------- ----
Net Earnings $ 8,190 6,219 31.7 $ 16,040 $ 12,683 26.5
=========== =========== ====== =========== =========== ====
EARNINGS PER SHARE
Basic
$ .66 $ .50 32.0 $ 1.28 $ 1.02 25.5
----------- ----------- ------ ----------- ----------- ----
Diluted $ .65 $ .49 32.7 $ 1.27 $ 1.01 25.7
----------- ----------- ------ ----------- ----------- ----
Average Shares Outstanding
Basic
12,500,377 12,451,608 0.4 12,494,223 12,441,578 0.4
----------- ----------- ------ ----------- ----------- ----
Diluted 12,658,676 12,587,397 0.6 12,589,733 12,537,607 0.4
----------- ----------- ------ ----------- ----------- ----
CONDENSED CONSOLIDATED BALANCE SHEETS NOV. 30, Feb. 28,
(In thousands except share data) 1998 1998 % Change
-------------------------------------------- ------------- -------------- --------------
ASSETS
Cash $ 15,218 $ 9,659 57.6
Accounts Receivable 66,447 63,332 4.9
Inventory 59,791 52,068 14.8
Other Current Assets 9,155 9,547 (4.1)
Land, Buildings and Equipment, Net 178,858 162,961 9.8
Investment in Affiliates and Other Assets 13,244 12,766 3.7
------------- -------------- --------------
TOTAL ASSETS $ 342,713 $ 310,333 10.4
============= ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term Debt $ 13,538 $ 20,630 (34.4)
Current Maturities of Long-term Debt 2,377 1,780 33.5
Other Current Liabilities 56,976 48,938 16.4
Long-term Debt 41,157 33,393 23.3
Deferred Taxes and Credits 26,139 22,138 18.1
------------- -------------- --------------
TOTAL LIABILITIES 140,187 126,879 10.5
STOCKHOLDERS' EQUITY 202,526 183,454 10.4
------------- -------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 342,713 $ 310,333 10.4
============= ============== ==============
STOCKHOLDERS' EQUITY PER SHARE $ 16.20 $ 14.71 10.1
============= ============== ==============
ENDING SHARES OUTSTANDING 12,501,227 12,475,615 0.2
============= ============== ==============