Raytech Corporation Announces First Quarter Results for 2001

    SHELTON, Conn.--May 14, 2001--Raytech Corporation today announced net income for the thirteen-week period ended April 1, 2001 amounting to $1.7 million or $.49 per basic share as compared to $4.8 million or $1.38 per basic share for the prior year first quarter. The results were impacted by the severely reduced production of vehicles in the North American market. Sales in the first quarter of $55.2 million were $12.3 million less than the prior year amount of $67.5 million, a reduction of 18%.
    "We observed the early warning signals noted in the fourth quarter of 2000 and took action in anticipation of the production cuts by the automobile manufacturers. We reduced both hourly and salaried personnel and reduced production schedules in order to control costs," said Albert Canosa, President and Chief Executive Officer of Raytech Corporation. Mr. Canosa went on to say, "We reduced our administrative expenses $1.0 million or 11% in the first quarter 2001 compared to the prior year first quarter and have introduced additional cost containment programs throughout the Company."
    Results relating to segment performance show the Wet Friction segment recorded sales during the first quarter of 2001 of $37 million compared to $47.2 million in the comparable prior year first quarter, a decrease of $10.2 million. As noted above, the sales were significantly impacted by the reduced production of vehicles in the North American market. The production is estimated to be lower by 20% period-over-period. The Aftermarket segment recorded sales of $13.1 million, which was $1.9 million less than the comparable prior year quarter. This 12.7% reduction reflects the slow economy and stronger inventory management at the customer level. The Dry Friction operation recorded sales of $8.1 million, which was less than the comparable prior year quarter amount of $8.7 million by $.6 million. The reduced sales in U.S. dollars were substantially caused by currency translation.
    "The outlook for the remainder of 2001 is difficult to foresee at this time. The erratic production schedules of the North American vehicle producers will hopefully become clearer by the end of the second quarter, "Mr. Canosa stated. "We continue to develop new products for our existing markets and to explore opportunities to take our technology to new markets. We successfully emerged from bankruptcy in April 2001 and look forward to the new opportunities that lie ahead."
    Raytech Corporation is a recognized world leader in the production of wet and dry clutch, power transmission and brake systems as well as specialty engineered polymer matrix composite products and related services for vehicular applications, including automotive OEM, heavy duty on-and-off highway vehicles and aftermarket vehicular power transmission systems.
    Through three technology and research centers and six manufacturing operations worldwide, Raytech develops and delivers energy absorption, power transmission and custom-engineered components focusing on niche applications where its expertise and technological excellence provide a competitive edge.

                         RAYTECH CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (000's omitted, except share data)

Comparative results are as follows:

                                           For the 13 Weeks Ended    
                                           April 1,       April 2,    
                                             2001           2000
                                           -----------------------
                                                 (Unaudited)

Net Sales                                  $ 55,205       $ 67,475

Net income                                 $  1,715       $  4,820

Basic earnings per share:

  Earnings per share                       $    .49       $   1.38

  Weighted average shares                 3,519,313      3,480,904

Diluted earnings per share:

  Earnings per share                       $    .48       $   1.36

  Weighted average shares                 3,537,446      3,546,239