SOURCE: Dorman Products, Inc.

October 30, 2006 06:00 ET

Dorman Products, Inc. Reports Sales and Earnings for the Third Quarter Ended September 30, 2006

COLMAR, PA -- (MARKET WIRE) -- October 30, 2006 -- Dorman Products, Inc. (NASDAQ: DORM) (formerly R&B, Inc. NASDAQ: RBIN) today reported sales increased 1.5% to $74.9 million for the third quarter ended September 30, 2006 from $73.8 million in the same period last year. Sales for the nine months ended September 30, 2006 increased 7.0% to $217.9 million from $203.6 million in the same period last year. Revenue growth from products introduced in the past two years continued to climb during the quarter, but was offset by a softening of demand from most of the Company's aftermarket customers.

Net income in the third quarter of 2006 was $4.5 million compared to net income of $4.6 million in the same period last year. Diluted earnings per share for both the third quarter of 2006 and the third quarter of 2005 were $0.25.

Results for the nine months ended September 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. Total bad debt charges for the Swedish business were $0.8 million for the nine months ended September 30, 2006.

Excluding the goodwill impairment and deferred tax write off, net income for the first nine months of the year was $12.1 million compared to net income of $12.7 million in the same period last year and fully diluted EPS for the first nine months of the year were $0.67 compared to $0.69 in the same period last year. Net income for the first nine months of 2006 was $8.9 million compared to net income of $12.7 million in the same period last year. Diluted earnings per share for the first nine months of 2006 decreased to $0.49 from $0.69 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, "Order patterns were lower than expected throughout the third quarter. We remain enthusiastic about our new product initiatives despite the softened demand that we experienced in the third quarter. We look forward to sharing many of these exciting new product ideas with our customers during this week's AAPEX show."

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 "Item 1A - Risk Factors."



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

                                    13 Weeks                  13 Weeks
                                    --------                  --------
Third Quarter (unaudited)      9/30/06        Pct.     9/24/05        Pct.
Net sales                    $  74,891       100.0   $  73,783       100.0
Cost of goods sold              48,714        65.0      48,005        65.1
Gross profit                    26,177        35.0      25,778        34.9
Selling, general and
 administrative expenses        18,370        24.6      17,769        24.0
Income from operations           7,807        10.4       8,009        10.9
Interest expense, net              576         0.7         672         1.0
Income before income taxes       7,231         9.7       7,337         9.9
Provision for income taxes       2,682         3.6       2,724         3.6
Net income                   $   4,549         6.1     $ 4,613         6.3
Earnings per share
  Basic                      $    0.26           -     $  0.26           -
  Diluted                    $    0.25           -     $  0.25           -
Average shares outstanding
  Basic                         17,708           -      17,932           -
  Diluted                       18,147           -      18,444           -


                                    39 Weeks                  39 Weeks
                                    --------                  --------
Year-to-Date (unaudited)       9/30/06        Pct.     9/24/05        Pct.
Net sales                    $ 217,943       100.0   $ 203,625       100.0
Cost of goods sold             140,390        64.4     130,211        63.9
Gross profit                    77,553        35.6      73,414        36.1
Selling, general and
 administrative expenses        56,362        25.9      51,317        25.2
Goodwill impairment              2,897         1.3           -           -
Income from operations          18,294         8.4      22,097        10.9
Interest expense, net            1,797         0.8       1,961         1.0
Income before income taxes      16,497         7.6      20,136         9.9
Provision for income taxes       7,612         3.5       7,441         3.7
Net income                   $   8,885         4.1   $  12,695         6.2
Earnings per share
  Basic                      $    0.50           -   $    0.71           -
  Diluted                    $    0.49           -   $    0.69           -
Average shares outstanding
  Basic                         17,728           -      17,915           -
  Diluted                       18,148           -      18,452           -



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

                                       9/30/06           12/31/05
Assets:                              (unaudited)
Cash and cash equivalents            $   4,991          $   2,944
Accounts receivable                     66,729             64,778
Inventories                             74,685             75,535
Deferred income taxes                   10,133              9,560
Prepaid expenses                         1,490              1,545
Total current assets                   158,028            154,362
Property & equipment                    27,929             27,473
Goodwill                                26,998             29,617
Other assets                             1,242                704
Total assets                         $ 214,197          $ 212,156

Liability & Shareholders' Equity:
Current portion of long-term debt    $   8,651          $   8,571
Accounts payable                        12,077             14,739
Accrued expenses and other              15,077             15,240
Total current liabilities               35,805             38,550
Long-term debt and other                22,367             27,869
Deferred income taxes                    7,794              7,195
Shareholders' equity                   148,231            138,542
Total Liabilities and Equity         $ 214,197          $ 212,156


Selected Cash Flow Information:
(in thousands)                   13 Weeks (unaudited)  39 Weeks (unaudited)
                                 -------------------   -------------------
                                  9/30/06   9/24/05      9/30/06   9/24/05
Depreciation and
amortization                      $ 1,731   $ 1,420      $ 5,012   $ 4,194
Capital Expenditures              $ 1,637   $ 1,409      $ 5,432   $ 5,522



              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:



                                                        39 Weeks
                                              ----------------------------
                                               09/30/06  09/25/05 % Change
Net income, as reported                       $   8,885 $  12,695    -30.0%
  Add: Goodwill and asset impairment charge       3,216         -      N/A
                                              --------- --------- --------
Net income, as adjusted                       $  12,101 $  12,695     -4.7%
                                              ========= ========= ========


Fully diluted EPS, as reported                $    0.49 $    0.69    -29.0%
  Add: Goodwill and asset impairment charge        0.18         -      N/A
                                              --------- --------- --------
Fully diluted EPS, as adjusted                $    0.67 $    0.69     -2.9%
                                              ========= ========= ========


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