COLMAR, PA– R&B announced financial results for the first quarter ending April 1.
Sales increased 13 percent to $68.9 million from $61.2 million in the same period last year. Net income in the first quarter of 2006 was $3.42 million compared to net income of $3.45 million in the same period last year. Diluted earnings per share for both the first quarter of 2006 and the first quarter of 2005 was 19 cents.
Revenue growth was primarily the result of increased sales from products introduced in the past two years. Gross profit margins declined as a result of a continued mix shift to lower margin automotive hard parts, higher customer returns and allowances and a $0.5 million increase in the company’s provision for excess and obsolete inventory in 2006.
Effective Jan. 1, the company adopted SFAS No. 123R, “Accounting for Stock-Based Compensation,” and related interpretations and began expensing the grant date fair value of employee stock options. Prior to Jan. 1, 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 2 cents.
Richard Berman, chairman, president and chief executive officer, said, “Sales growth in the first quarter was the result of our continued success on the new product front. Earnings, however, were below expectation. In addition to a gross margin shortfall, we have not yet fully leveraged our recent investments in systems, sales and new product development. We remain confident that these investments will contribute to our long-term goal of double digit growth in sales and earnings.”
The company also announced that, subject to shareholder approval, it intends to change its name and trading symbol to Dorman Products, Inc. and DORM, respectively. In November 2005, the company launched its “Dorman New Since 1918” marketing campaign and repositioned its brands under a single corporate umbrella — Dorman. The company’s products are now sold under seven Dorman sub-brands. The change from R&B, Inc. to Dorman Products, Inc. will present a sharper image of the company and strengthen its corporate identity by connecting it directly to the company’s strongest brand. If approved by the shareholders, the changes will be effective shortly after the next annual shareholders meeting scheduled for May 24.
For more information, go to: www.dormanproducts.com .
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