SOURCE: Dorman Products, Inc.

August 02, 2006 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Second Quarter Ended July 1, 2006

COLMAR, PA -- (MARKET WIRE) -- 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™, 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 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,   June 25,     %
                                               2006      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%
                                             ========= ========= =======


Fully diluted EPS, as reported               $    0.05 $    0.25   -80.0%
  Add: Goodwill and deferred tax write offs       0.18         -     N/A
                                             --------- --------- -------
Fully diluted EPS, as adjusted               $    0.23 $    0.25    -8.0%
                                             ========= ========= =======


                                                 26 Weeks (unaudited)
                                             ---------------------------
                                              July 1,   June 25,     %
                                               2006      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%
                                             ========= ========= =======


Fully diluted EPS, as reported               $    0.24 $    0.44   -45.5%
  Add: Goodwill and deferred tax write offs       0.18         -     N/A
                                             --------- --------- -------
Fully diluted EPS, as adjusted               $    0.42 $    0.44    -4.5%
                                             ========= ========= =======

Contact Information

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

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

    Visit our Home Page:
    www.dormanproducts.com