SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: August 20, 2001
Donnelly Corporation
(Exact name of registrant as specified in its charter)
Michigan I-9716 38-0493110
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
49 West Third Street
Holland, Michigan 49423-2813
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (616) 786-7000
Item 5 OTHER EVENTS
The Registrant announced on August 20, 2001, that it will restate its
financial statements for all periods beginning with fiscal 1998 to reflect a
change in its accounting for its investments in Donnelly Electronics, Inc.
("DEL") and for Donnelly Hohe GmbH & Co. K.G. ("Hohe"). The Registrant filed a
Form 10-Q for the quarter ended June 30, 2001, which included restated financial
information for prior periods. The Registrant's earnings for that quarter were
$5.0 million ($.49 per share), as compared with $5.2 million ($.50 per share)
which had been previously released on July 24, 2001. The results of prior
periods as restated in the Form 10-Q, and the results of the six months ended
June 30, 2001, differ adversely from previously filed or released financial
information. The accounting change is not expected to have a material impact on
the Registrant's net income or cash flow in any future period.
Prior to February 28, 2001, the Registrant owned approximately 18% of DEL
and, under the cost method of accounting previously used, did not include any of
DEL's losses in the Registrant's financial results. In the restated financial
statements, the Registrant will include in its results substantially all of the
losses of DEL, all of which were funded by the Registrant through advances to
DEL. During its start up period, DEL incurred substantial research and
development costs, much of which the Registrant expects will be recouped as the
products which it has developed are manufactured and sold. DEL has continued to
sustain losses in 2001. On February 28, 2001, the Registrant acquired all of the
remaining stock in DEL and since that date, has included all of DEL's losses in
its financial statements.
In 1995, the Registrant acquired a 66-2/3% interest in Hohe and thereafter
had included in its net income 66-2/3% of Hohe's results. The restated financial
statements will include all losses of Hohe in the Registrant's net income. All
such losses were funded by the Registrant through advances. Hohe sustained
cumulative losses after its acquisition by the Registrant through 2000. Hohe was
slightly profitable in the first six months of 2001, but incurred a small loss
in the second quarter.
The Registrant is completing the accounting required to restate its
financial statements and estimates that the restatement will reduce previously
reported net income of the Registrant for fiscal 1998, 1999, the six months
ended December 31, 1999, fiscal 2000 and the first quarter of 2001 by
approximately $1.4 million, $5.6 million, $2.7 million, $7.3 million and $1.3
million respectively. The accounting change had no material adverse impact on
the results of operations for the quarter ended June 30, 2001, and is not
expected to have any material impact on the Registrant's future net income or
cash flow.
The Registrant's management and audit committee have engaged Arthur
Andersen LLP to advise them in connection with restating its financial
statements. The Registrant's independent auditors, BDO Seidman, LLP, are working
to complete the audit of the Registrant's restated financial statements. As soon
as practicable after the audit is completed, the Registrant will amend its Form
10-K for the year ended December 31, 2000 and its Form 10-Q for the quarter
ended March 31, 2001. Until such time as the Registrant issues such restated
financial
statements, the previously filed financial statements and applicable auditor
reports should not be relied upon.
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The terms "believe,"
"anticipate," "intend," "goal," "expect," and similar expressions may identify
forward-looking statements. Investors are cautioned that any forward-looking
statements, including statements regarding the intent, belief, or current
expectations of the Company or its management, are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those in forward-looking statements as a result of
various factors including, but not limited to (i) general economic conditions in
the markets in which the Company operates, (ii) fluctuation in worldwide or
regional automobile and light truck production, (iii) changes in practices
and/or policies of the Company's significant customers including forced price
reduction, (iv) market development of specific products of the Company,
including electrochromic mirrors, (v) whether the Company restructures its
European operations, (vi) fluctuations in foreign currencies, and (vii) other
risks and uncertainties. The Company does not intend to update these
forward-looking statements.
Item 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
(c) Exhibits
99 Press release dated August 20, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1936, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: August 20, 2001 DONNELLY CORPORATION
By: /s/ Kevin L. Brown
Kevin L. Brown
Its: Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Document
99 Press Release dated August 20, 2001
::ODMA\PCDOCS\GRR\604692\1
Release Date: August 20, 2001
Contact: Beverly Snyder Website: www.donnelly.com
616-786-6014
Exchange: NYSE Symbol: DON
Donnelly Announces Restatement of Prior Earnings
Holland, Mich. - Donnelly Corporation announced today that it will be restating
its financial statements to reflect a change in its accounting for its
investment in Donnelly Electronics, Inc. ("DEL") and for Donnelly Hohe GmbH &
Co. K.G. ("Hohe"). The restatement will not materially change the company's
earnings for its quarter ended June 30, 2001, but will adversely affect prior
periods. The accounting change is not expected to have a material impact on the
company' s net income or cash flow in any future period.
Prior to February 28, 2001, the company owned approximately 18% of DEL and under
the accounting method previously used, did not include any of DEL's losses in
the company's financial results. Under the restated financial statements, the
company will include in its net income substantially all of the losses of DEL,
all of which were funded by the company. During its start up period, DEL
incurred substantial research and development costs, much of which the company
expects will be recouped as the products it has developed are manufactured and
sold. On February 28, 2001, the company acquired all of the remaining stock in
DEL and since that date has included all of DEL's losses in its financial
statements.
In 1995, the company acquired a 66-2/3% interest in Hohe and thereafter had
included in its net income 66-2/3% of Hohe's results. The restated financial
statements will include in the company's net income all losses of Hohe, all of
which were funded by the company. Hohe has sustained cumulative losses after its
acquisition by the company through 2000. Hohe was slightly profitable in the
first six months of 2001, but incurred a small loss in the second quarter.
The company is completing the accounting required to reflect these changes and
estimates that the restatement will reduce previously reported net income of the
company for fiscal 1998, 1999, the six months ended December 31, 1999, fiscal
2000 and the first quarter of 2001 by approximately $1.4 million, $5.6 million,
$2.7 million, $7.3 million and $1.3 million, respectively.
Dwane Baumgardner, chairman and chief executive officer, stated "Although we are
disappointed to be required to restate our financial statements in order to
comply with the technical accounting rules, we are pleased to report that this
accounting change had no
material impact on the results of operations for the quarter ended June 30,
2001, and is not expected to have a material impact on net income or cash flow
moving forward. The company is excited about its acquisition of DEL and Hohe and
about the opportunities which they bring to the company."
The company's management and audit committee have engaged Arthur Andersen LLP to
advise them in connection with restating its financial statements. The company's
independent auditors, BDO Seidman, LLP, are working to complete the audit of the
company's restated financial statements. When the audit is completed, the
company will amend its Form 10-K for the year ended December 31, 2000, and its
Form 10-Q for the quarter ended March 31, 2001, as soon as practicable.
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. 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 .
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 Donnelly, or its management, are not guarantees of
future performance and involve risk 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 Donnelly operates; (b) fluctuation in world
wide or regional automobile and light truck production; (c) changes in practices
and/or policies of Donnelly's significant customers; (d) human resource
constraints which could impede changes in Europe and (e) other risks and
uncertainties.
The company's financial statements included below reflect the restatement and
supercede the financial statements contained in the company's release of July
24, 2001.
-- more --
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Six Months Ended
------------------ ----------------
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
In thousands, except share data (as restated) (as restated)
- --------------------------------------------------------------------------------------------------------------
Net sales $227,276 $ 227,492 $ 447,277 $ 464,896
Cost of sales 189,646 188,698 376,800 384,822
--------- --------- --------- ---------
Gross profit 37,630 38,794 70,477 80,074
Operating expenses:
Selling, general and administrative 20,110 21,301 41,070 42,182
Research and development 10,535 7,829 19,979 17,591
--------- --------- --------- ---------
Total operating expenses 30,645 29,130 61,049 59,773
--------- --------- --------- ---------
Operating income 6,985 9,664 9,428 20,301
--------- --------- --------- ---------
Non-operating (income) expenses:
Interest expense
1,683 2,025 3,787 3,808
Other income, net (654) (1,366) (1,019) (1,653)
--------- --------- --------- ---------
Non-operating expenses 1,029 659 2,768 2,155
--------- --------- --------- ---------
Income before taxes on income 5,956 9,005 6,660 18,146
Taxes on income 1,101 2,409 916 4,971
--------- --------- --------- ---------
Income before minority interest
and equity earnings
4,855 6,596 5,744 13,175
Minority interest in net earnings
of subsidiaries
(131) (63) (117) (136)
Equity in earnings (losses) of affiliated companies 316 (1,003) (657) (1,942)
--------- --------- --------- ---------
Net income $ 5,040 $ 5,530 $ 4,970 $ 11,097
========= ========= ========= =========
Per share of common stock:
Basic net income per share $ 0.49 $ 0.54 $ 0.48 $ 1.09
Diluted net income per share $ 0.48 $ 0.54 $ 0.48 $ 1.09
Cash dividends declared $ 0.10 $ 0.10 $ 0.20 $ 0.20
Average common shares outstanding 10,369,569 10,162,983 10,312,735 10,158,266
DONNELLY CORPORATION AND SUBSIDIARIES
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
In thousands (as restated)
- ----------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,533 $ 4,599
Accounts receivable, net 83,954 82,802
Inventories 61,947 55,933
Prepaid expenses and other current assets 29,961 28,990
--------------- ------------------
Total current assets 179,395 172,324
Net property, plant and equipment 213,869 212,134
Other assets 31,195 39,538
--------------- ------------------
Total assets $424,459 $423,996
=============== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 91,747 $ 89,163
Other current liabilities 45,204 39,727
Current maturities of long-term debt 79 90
--------------- ------------------
Total current liabilities 137,030 128,980
Long-term debt, less current maturities 117,117 132,608
Deferred income taxes and other liabilities 52,039 46,430
--------------- ------------------
Total liabilities 306,186 308,018
--------------- ------------------
Minority interest 2,872 1,353
Shareholders' equity 115,401 114,625
--------------- ------------------
Total liabilities and shareholders' equity $424,459 $423,996
=============== ==================