SOURCE: Dorman Products, Inc.

February 23, 2007 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Fourth Quarter and Year Ended December 30, 2006

COLMAR, PA -- (MARKET WIRE) -- February 23, 2007 -- Dorman Products, Inc. (NASDAQ: DORM) (formerly R&B, Inc. NASDAQ: RBIN) today announced financial results for the fourth quarter and year ended December 30, 2006. The Company operates on a fifty-two, fifty-three week period ending on the last Saturday of the calendar year. As a result, fourth quarter 2005 results are for 14 weeks and fiscal 2005 includes 53 weeks while the current year results are for 13 and 52 weeks, respectively.

Sales increased 5% to $77.9 million for the fourth quarter ended December 30, 2006 from $74.5 million in the same period last year despite one less selling week in the current year. Sales for the year ended December 30, 2006 increased 6% to $295.8 million from $278.1 million in the same period last year. Revenue growth was driven primarily by increased sales from new products.

Net income in the fourth quarter of 2006 was $4.9 million compared to net income of $4.4 million in the same period last year. Diluted earnings per share in the fourth quarter increased 13% to $0.27 from $0.24 in the same period last year.

Results for the year ended December 30, 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 second quarter 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.

Excluding the goodwill impairment and deferred tax write off, net income for the year was $17.0 million compared to net income of $17.1 million last year and fully diluted EPS for the year were $0.94 compared to $0.93 last year. Reported net income for the year ended December 30, 2006 was $13.8 million compared to net income of $17.1 million in the same period last year. Reported diluted earnings per share for the year ended December 30, 2006 decreased to $0.76 from $0.93 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 impact of adopting SFAS No. 123R in 2006 reduced diluted earnings per share for the year by $0.02.

Mr. Richard Berman, Chairman, President and Chief Executive Officer said, "Stronger fourth quarter orders resulted in solid revenue growth after adjusting for last year's 14-week quarter. The higher sales level enabled us to better leverage our expenses, which is necessary to offset the impact that a shifting mix to higher priced but lower margin hard parts has on reducing our gross margin. We remain committed to making the right investments to ensure new product leadership in all of our markets. Dorman will continue to be the leader in new product development for the automotive aftermarket."

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™, HELP!®, AutoGrade™, First Stop™, Conduct-Tite®, Pik-A-Nut® and Scan-Tech® 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 2005 Annual Report on Form 10-K under "Item 1A - Risk Factors."



                 DORMAN PRODUCTS, INC. AND SUBSIDIARIES
                 Consolidated Statements of Operations
                (in thousands, except per-share amounts)

                                      13 Weeks              14 Weeks
                                  ----------------      ----------------
Fourth Quarter (unaudited)        12/30/06   Pct.       12/31/05   Pct.
Net sales                         $ 77,882   100.0      $ 74,492   100.0
Cost of goods sold                  51,958    66.7        49,042    65.8
Gross profit                        25,924    33.3        25,450    34.2
Selling, general and
 administrative expenses            17,448    22.4        17,771    23.9
Income from operations               8,476    10.9         7,679    10.3
Interest expense, net                  470     0.6           654     0.9
Income before income taxes           8,006    10.3         7,025     9.4
Provision for income taxes           3,092     4.0         2,643     3.5
Net income                        $  4,914     6.3      $  4,382     5.9
Earnings per share
  Basic                           $   0.28       -      $   0.24       -
  Diluted                         $   0.27       -      $   0.24       -
Average shares outstanding
  Basic                             17,704       -        17,913       -
  Diluted                           18,113       -        18,394       -


                                       52 Weeks              53 Weeks
                                  ----------------      ----------------
Year-to-Date                      12/30/06   Pct.       12/31/05   Pct.
Net sales                         $295,825   100.0      $278,117   100.0
Cost of goods sold                 192,348    65.0       179,253    64.5
Gross profit                       103,447    35.0        98,864    35.5
Selling, general and
 administrative expenses            73,810    25.0        69,088    24.8
Goodwill impairment                  2,897     1.0             -       -
Income from operations              26,770     9.0        29,776    10.7
Interest expense, net                2,267     0.7         2,615     0.9
Income before income taxes          24,503     8.3        27,161     9.8
Provision for income taxes          10,704     3.6        10,084     3.7
Net income                        $ 13,799     4.7      $ 17,077     6.1
Earnings per share
  Basic                           $   0.78       -      $   0.95       -
  Diluted                         $   0.76       -      $   0.93       -
Average shares outstanding
  Basic                             17,722       -        17,914       -
  Diluted                           18,139       -        18,437       -




                 DORMAN PRODUCTS, INC. AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets
                             (in thousands)

                                       12/30/06          12/31/05
Assets:
Cash and cash equivalents              $  5,080          $  2,944
Accounts receivable                      77,187            64,778
Inventories                              67,768            75,535
Deferred income taxes                    10,330             9,560
Prepaid expenses                          1,443             1,545
Total current assets                    161,808           154,362
Property & equipment                     27,963            27,473
Goodwill                                 26,958            29,617
Other assets                              1,029               704
Total assets                           $217,758          $212,156

Liability & Shareholders' Equity:
Current portion of long-term debt      $  8,651          $  8,571
Accounts payable                         12,822            14,739
Accrued expenses and other               13,531            15,240
Total current liabilities                35,004            38,550
Long-term debt and other                 20,596            27,869
Deferred income taxes                     8,315             7,195
Shareholders' equity                    153,843           138,542
Total Liabilities and Equity           $217,758          $212,156


Selected Cash Flow Information:
(in thousands)                       Quarter Ended
                                      (unaudited)           Year Ended
                                  -------------------   -------------------
                                  12/30/06   12/31/05   12/30/06   12/31/05
Depreciation and
amortization                      $  1,812   $  1,580   $  6,824   $  5,774
Capital Expenditures              $  1,846   $  1,698   $  7,278   $  7,220


                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:

                                                          Year
                                                          Ended
                                              --------- --------- --------
                                               12/31/06  12/31/05 % Change
Net income, as reported                       $  13,799 $  17,077    -19.2%
  Add: Goodwill and asset impairment charge       3,216         -      N/A
                                              --------- --------- --------
Net income, as adjusted                       $  17,015 $  17,077     -0.4%
                                              ========= ========= ========


Fully diluted EPS, as reported                $    0.76 $    0.93    -18.3%
  Add: Goodwill and asset impairment charge        0.18         -      N/A
                                              --------- --------- --------
Fully diluted EPS, as adjusted                $    0.94 $    0.93      1.1%
                                              ========= ========= ========

Contact Information



  • Corporate Headquarters:
    Dorman Products, Inc.
    3400 East Walnut Street
    Colmar, Pennsylvania 18915
    Fax: (215) 997-8577

    For Further Information Contact:
    Mathias J. Barton, CFO
    (215) 997-1800 x 5132
    E-mail: Email Contact

    Visit our Home Page:
    www.dormanproducts.com