EX-99 3 earnings.txt EARNINGS RELEASE DATED FEBRUARY 23, 2007 Corporate Headquarters: Dorman Products, Inc. 3400 East Walnut Street Colmar, Pennsylvania 18915 Fax: (215) 997-8577 For Further Information Contact: Visit our Home Page: Mathias J. Barton, CFO www.dormanproducts.com (215) 997-1800 x 5132 E-mail: MBarton@dormanproducts.com Dorman Products, Inc. Reports Sales and Earnings for the Fourth Quarter and Year Ended December 30, 2006 Colmar, Pennsylvania (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 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(TM), HELP!(R), AutoGrade(TM), First Stop(TM), Conduct-Tite(R), Pik-A-Nut(R) and Scan-Tech(R) 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 12/3105 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 reporte $ 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%