LucasVarity Reports Q4 and 1997 Results
31 March 1998
LucasVarity Reports Fourth Quarter and Full Year Results to January 31, 1998; Significantly Improved Results During a Year of Transition
LONDON, March 31 -- LucasVarity plc
(London: LVA; NYSE: LVA)today reports its results for the full year and three
month (fourth quarter) periods ended January 31, 1998.
FISCAL 1997 HIGHLIGHTS
-- Sales up 1.8% over the prior year - up 7.9% excluding currency
translation effects.
-- Operating profit before exceptional items up 15.5% - up 22.6% excluding
currency translation effects.
-- Earnings per ordinary share, before exceptional items up 22.1%.
-- Achievement of all merger related goals, including 43 million pounds of
cost savings in the year and 74 million pounds of working capital
reductions.
-- Portfolio strengthened with acquisition of four international
businesses. Ten businesses sold for 67 million pounds as part of a
divestment programme.
-- Announced the sale of VarityPerkins for gross proceeds of 803 million
pounds.
-- Significant contract awards secured in every business.
Victor A Rice, Chief Executive, commented:
"Our fourth quarter and full year results show significant progress over
the prior year as we continue to deliver on all merger related promises.
Having made a positive and confident start in our first full year, we are now
ready to capitalise on the opportunities that will become available to us in
our chosen markets."
LucasVarity plc's summary of financial results for the three month period
ended January 31, 1998 (Qtr 4) and year ended January 31, 1998 are as follows
(results for the fourth quarter of 1997 and the pro forma results for the year
ended 31 January 1997 are provided for comparative purposes):
Three Months Years Ended
millions of pounds ended January 31 January 31
1998 1997 1998 1997
Sales:
Continuing operations 985 1,003 4,018 3,945
Discontinued operations 183 195 663 655
Total sales 1,168 1,198 4,681 4,600
Operating profit before
exceptional items:
Continuing operations 92 60 329 277
Discontinued operations 21 23 59 59
Total operating profit 113 83 388 336
Profit before tax and
exceptional items for
total operations 96 70 329 282
Profit attributable to
shareholders before
exceptional items 70 47 227 187
Earnings per ordinary share
before exceptional items 5.3 pence 3.3p 16.0p 13.1p
SUMMARY AND OUTLOOK
Summary
Lucas Industries plc (Lucas Industries) and Varity Corporation (Varity)
were merged on September 6, 1996 to form LucasVarity plc (LucasVarity). The
results for the year ended January 31, 1998 (fiscal 1997), are compared to pro
forma combined results before exceptional items for the period ended January
31, 1997 (fiscal 1996). During most of fiscal 1996, the two companies were
not under common control and had different fiscal years.
In March 1998, subsequent to the Company's fiscal 1997 year-end
(January 31, 1998), the previously announced sale of VarityPerkins, which
constituted 100% of LucasVarity's Diesel Engines segment, was completed. As a
result, the sales and operating profit of VarityPerkins are shown under the
heading of discontinued operations in the accounts. The commentary below
includes the results of VarityPerkins.
Fiscal 1997 compared to Fiscal 1996
Group turnover for fiscal year 1997 increased by 1.8% to 4,681 million
pounds sterling and operating profit before exceptional items increased
15.5% to 388 million pounds as compared to pro forma fiscal 1996 results.
Excluding the effects of currency translation, which reduced reported sales by
281 million pounds, the underlying sales increase was 7.9%. This growth
included contributions from two acquisitions completed late in 1996 and four
during 1997 which, net of the sales reduction due to disposals completed in
1997, contributed 90 million pounds to the sales increase. Organic sales
growth before currency and acquisitions net of disposals, was 5.9% year on
year.
Likewise, excluding the effects of currency translation, which reduced
reported operating profit by 24 million pounds, the underlying operating
profit increase was 22.6%. The significant improvement in operating margin,
from 7.3% in 1996 to 8.3% in 1997, resulted primarily from merger related cost
savings totalling 43 million pounds.
Profit before tax and exceptional items of 329 million pounds increased
16.7% compared to the prior year. After recording 13 million pounds of
exceptional losses relating to business and asset sales, profit before tax was
316 million pounds.
Tax expense was 96 million pounds which, after excluding 5 million pounds
of taxes associated with business and asset sales, resulted in an effective
tax rate of 28%.
Profit attributable to shareholders for fiscal 1997 was 209 million pounds
and earnings per ordinary share (EPS) was 14.7 pence ($2.41 per ADS based on
UK GAAP). Before exceptional items, 1997 EPS was 16.0p ($2.62 per ADS based
on UK GAAP), up 22.1% over 1996 pro forma EPS. Contributing to this increase
was the accretion relating to the Company's repurchase of 43 million ordinary
shares under a 3% share repurchase programme completed in 1997 at an average
price per share of 197.5p. In addition, during fiscal year 1997 4.5p of
dividends per share were paid to shareholders.
Fourth Quarter 1997 compared to Fourth Quarter 1996
Sales of 1,168 million pounds for the fourth quarter of 1997 declined by
2.5% compared to the fourth quarter of 1996 while operating profit before
exceptional items improved by 36.1% to 113 million pounds. Operating margins
before exceptional items improved from 6.9% in the prior year quarter to 9.7%.
Excluding the effects of currency translation, which reduced reported
sales by 92 million pounds, the underlying sales increase was 5.2%. Revenue
growth was also impacted by disposals in 1997, which, net of acquisitions,
reduced sales by 20 million pounds. Organic sales growth before currency
translation and disposals net of acquisitions, was 6.8% quarter on quarter.
Likewise, excluding the effects of currency translation, which reduced
reported operating profit by 9 million pounds, the underlying operating profit
increased 47.0%. The significant improvement in operating margin from 6.9% in
1996 to 9.7% in 1997 reflects merger related cost savings and a favourable
product mix in Aerospace.
Profit before tax and exceptional items of 96 million pounds improved
37.1% compared to the prior year quarter. After recording 31 million pounds
of exceptional losses in the quarter primarily relating to the sale of four
businesses, profit before tax was 65 million pounds.
Profit attributable to shareholders was 39 million pounds. Earnings per
ordinary share for the quarter were 2.7p ($0.44 per ADS based on UK GAAP).
Before exceptional items, fourth quarter earnings per share of 5.3p ($0.87 per
ADS based on UK GAAP) were up 60.6% compared to the 3.3p per share ($0.54 per
ADS based on UK GAAP) in the 1996 fourth quarter.
Key Events
During fiscal 1997, the company made major progress in strengthening the
strategic positions of its businesses, improving relationships with key
customers and capturing the merger related cost savings previously identified.
Key events were:
-- Four businesses were acquired - Remsa, an aftermarket friction
business; the engine controls business of Smiths Industries plc; Frenos
y Mecanismos, a brake operation in Mexico; and Freios Varga, the
largest brake company in South America. Each of these businesses has
been successfully integrated and will provide future growth
opportunities to its respective business segment.
-- Ten of the thirteen businesses identified at the time of the merger as
being for sale were sold. The Aerospace division's Geared Systems,
Inc. business and the Company's remaining interest in Hayes Wheels
International, Inc. were also sold. Total net proceeds of business and
asset sales aggregated 129 million pounds in 1997. Subsequent to
fiscal 1997, the Company announced that the remaining three of the
original thirteen identified businesses had been sold.
-- In December 1997, the sale of VarityPerkins to Caterpillar, Inc. for
gross proceeds of 803 million pounds in cash was announced. The sale
transaction was completed in March 1998.
-- Robust cost rationalisation and efficiency programmes were implemented
during the year, resulting in 43 million pounds of cost savings and
74 million pounds of working capital reductions in the year.
-- The Diesel Systems division announced 650 million pounds of contract
awards for its common rail high speed direct injection (HSDI) fuel
systems technology.
-- The Aerospace business announced a risk and revenue sharing agreement
with Rolls-Royce plc to provide engine control systems on the latest
derivatives of the Trent family of aeroengines. The agreement is
expected to produce total sales of at least 2 billion pounds over the
life of the programme.
-- Subsequent to fiscal 1997, a major joint venture agreement with TRW,
Inc. was announced for electric power assisted steering (EPAS).
Outlook
In North America, the light truck market (pick-ups, vans and sport utility
vehicles), where LucasVarity enjoys strong market positions, is expected to
grow at the expense of passenger cars. In excess of 70% of our braking
segments' North American sales are generated from light trucks. The French
automotive market, one of LucasVarity's largest markets, is anticipated to
grow within an overall flat European automotive market. The Aerospace markets
continue to be robust while the Aftermarket business will continue to be
affected by mixed trading conditions.
Within these markets, reported revenue growth for 1998 should be
satisfactory. Continued progress on merger related cost savings will have a
positive impact on earnings and margins.
OPERATING AND FINANCIAL REVIEW
In March 1998, subsequent to the Company's fiscal 1997 year-end
(January 31, 1998), the previously announced sale of VarityPerkins, which
constituted 100% of LucasVarity's Diesel Engine segment, was Completed. As a
result, the sales and operating profit of VarityPerkins are shown under the
heading of discontinued operations in the accounts. The analysis below sets
out the results of the operations and excludes exceptional items.
Review of operations (unaudited except for the year ended January 31,
1998):
millions of pounds
Three Months Year Ended
ended January 31 January 31
SALES 1998 1997 1998 1997
Braking Systems 379 383 1,550 1,554
Other Automotive 432 466 1,812 1,841
Aerospace 174 141 648 510
Diesel Engines
(discontinued) 183 195 663 655
Corporate / Other -- 13 8 40
Totals 1,168 1,198 4,681 4,600
OPERATING PROFIT
Braking Systems 33 25 134 121
Other Automotive 46 39 162 169
Aerospace 23 13 75 49
Diesel Engines
(discontinued) 21 23 59 59
Corporate / Other (10) (17) (42) (62)
Totals 113 83 388 336
OPERATING MARGIN
Braking Systems 8.7% 6.5% 8.6% 7.8%
Other Automotive 10.6% 8.4% 8.9% 9.2%
Aerospace 13.2% 9.2% 11.6% 9.6%
Diesel Engines
(discontinued) 11.5% 11.8% 8.9% 9.0%
Totals 9.7% 6.9% 8.3% 7.3%
BRAKING SYSTEMS
Turnover in the Braking Systems' segment, comprising the light and heavy
vehicle braking businesses, improved 7.5% excluding the effects of currency
translation which reduced 1997 reported sales by 120 million pounds. Sales
benefited from Light Vehicle Braking Systems' strong position in the North
American light-truck market, which increased 5.4% year on year. In addition,
the sales increase was aided by the continuing move of vehicle manufacturers
towards full systems rather than component supply. As a consequence, content
per vehicle on platforms supplied by LVBS has increased. These favorable
developments helped to offset the constant downward pressure on prices.
Excluding the effects of currency translation, which reduced reported
operating profit by 11 million pounds, the underlying profit increase was
19.8%. The operating margin increased significantly, from 7.8% in 1996 to
8.6% in 1997. This improvement was due primarily to the realisation of cost
savings and productivity improvements, including the closure or sale of four
manufacturing sites, a headcount reduction of approximately 500 positions,
rationalisation of administrative, engineering and support operations and
purchasing synergies. The increased sales level and a favourable mix of sales
also contributed to the margin improvement. It is anticipated that further
savings will be realised through continued improvements in work practices and
savings with suppliers and other actions.
In response to customers' requirements to provide greater geographical
support from their suppliers as they globalise their operations, LVBS in 1997
acquired the Mexican brake manufacturer Frenos y Mecanismos, which produces
foundation brakes for Chrysler and GM vehicles assembled in Mexico. Late in
the fiscal year it acquired, for 71 million pounds in cash, the 66% of voting
shares of Freios Varga, the leading South American brakes manufacturer, which
it did not already own.
Significant contracts announced by LVBS during the year included awards to
supply brake components for future models of Chrysler's popular Dodge Ram
pick-up trucks; aluminium rear brake callipers for a range of Volkswagen and
Audi passenger car models; a number of innovative braking components for the
new Mercedes A-Class cars, and complete braking systems, including ABS and
traction control for a new generation of passenger cars for Proton of
Malaysia. LVBS also secured lifetime ABS supply contracts for current and
future models of General Motors' light truck platforms.
Heavy Vehicle Braking Systems secured three major development contracts
during 1997 for new truck models from existing European customers to supply
air disc brakes fitted to both front and rear axles. These major contracts
commence in 1999 and will provide annual sales revenue of 70 million pounds.
OTHER AUTOMOTIVE
The Other Automotive segment comprises the Diesel Systems, Electrical and
Electronic Systems and Aftermarket businesses. Excluding the effects of
currency translation, which reduced 1997 reported sales by 138 million pounds,
underlying sales improved 109 million pounds, or 5.9%. Acquisitions, net of
business disposals, contributed 21 million pounds of the sales increase.
Excluding the effects of currency translation, which reduced reported
operating profit by 15 million pounds compared to the prior year, the
underlying profit increased by 4.7%, resulting in an operating margin of 8.9%
as compared to 9.2% in the previous year. The decline in margin is
attributable to the Diesel Systems business, which was affected by currency
weakness, increased and accelerated investment in R&D, specifically on the
development of common rail, and reduced diesel car production in France.
During 1997, Diesel Systems secured significant customer awards from
Renault, Ford and Kia for its common rail high speed direct injection (HSDI)
system. These total 650 million pounds over the life of the commitments. In
1997, Diesel Systems withdrew from a contract with Volkswagen to supply
Electronic Unit Injection (EUI) systems, a competing HSDI technology, as the
business case no longer achieved LucasVarity's EVA requirements for investment
of funds.
During 1997, Lucas Electrical and Electronic Systems (E&ES) sold its
ownership interests in seven non-core businesses with annual sales of
82 million pounds: Lucas Industrial Components, Lucas Nitrotec, Lucas Yuasa
Batteries, Lucas Electrical do Brasil, Lucas Heavy Duty Products, Lucas South
Africa and Lucas Indiel, Argentina. Merger and cost actions included the
closure or sale of seven plants, a reduction in headcount of 900 and the
continued migration of manufacturing operations to lower cost territories with
the expansion of capacity at its Polish wiring facility and the construction
of wiring harness plants in Slovakia and Egypt.
In addition, during 1997 E&ES completed the acquisition of BKL, a leader
in the field of electro luminescent technology for both industrial and
automotive applications and secured several significant customer contract
awards. Subsequent to fiscal 1997, Electrical and Electronic Systems entered
into a joint venture with TRW, Inc. to develop and manufacture electric power
assisted steering (EPAS).
Lucas Aftermarket Operations strengthened its market position and product
offerings through several major actions in 1997. It restructured its
operations to reduce costs, developed improved product programmes and launched
an extensive total quality initiative. It strengthened its portfolio in North
America with the acquisition, in late 1996, of Autospecialty, a distributor of
brakes and clutches, and it acquired the Remsa Group, a brake friction
material manufacturer in Spain, during 1997. This latter acquisition secures
supply of brake pads for the independent aftermarket in Europe and provides a
base for further expansion of the business in North America. In July 1997,
the Lucas Assembly and Test Systems (LATS) business, which had annual sales of
approximately 69 million pounds, was sold. In August 1997, Lucas Hellas SA,
which had annual sales of 7 million pounds, was sold. The effect of these
acquisitions and divestments has been to improve margins and provide a
platform for further market share growth.
AEROSPACE
Aerospace's 1997 sales increased 138 million pounds, or 27.1% from the
previous year and operating profit grew 53.1%. Operating margin improved from
9.6% in 1996 to 11.6% in 1997. The increase in sales included 66 million
pounds from the acquisition of the Boeing Georgia cargo systems business in
October 1996 and the engine controls business of Smiths Industries plc in July
1997.
The remaining sales growth resulted from the continuing increase in
deliveries relating to the large commercial aircraft segment. Demand for
spare parts, which accounted for 28% of total Aerospace turnover in 1997,
increased 16% over 1996 as a direct result of increased airline passenger
traffic and aircraft usage. The significant improvement in operating margin
was attributable to increased volumes, the successful integration of the two
acquisitions and continuing progress on operational improvement programmes.
Examples of the latter included the reconfiguration of five plants to modular
manufacturing layouts, outsourcing of low added-value machining operations and
strategic sourcing of components and services. These improved efficiencies
led to the closure of two facilities and reduction of 330 positions within the
Division.
During the year, Lucas Aerospace announced that it had secured a 2 billion
pounds contract from Rolls Royce plc to provide the control systems on the
latest derivatives of the Trent family of aero engines. These engines will
power Airbus and Boeing aircraft being introduced to serve the long haul
market, one of the fastest growing sectors of the airline industry. In
addition to this contract, the largest ever awarded to Lucas Aerospace,
several other key strategic contracts were secured.
In 1997, Aerospace disposed of its Geared Systems, Inc. business, the
sales of which were accounted for within the Corporate/other segment in both
1997 and 1996.
DIESEL ENGINES
In March 1998, LucasVarity completed the sale of VarityPerkins, which
represents 100% of the Diesel Engines segment, to Caterpillar Inc. of the
United States for gross proceeds of 803 million pounds in cash.
Sales, operating profits and margins were flat between 1997 and 1996. The
principal factors inhibiting year on year growth were the decline of the large
engine power generation market, the impact of the strength of sterling and
economic weakness in Asian markets.
During the year, VarityPerkins entered into a joint venture agreement with
Tianjin Engine Works to manufacture more than 50,000 engines a year in China
by 2001. It also announced an engine and parts supply agreement with NACCO
Materials Handling Group, Inc. worth in total 80 million pounds.
CORPORATE/OTHER
Sales in both 1997 and 1996 represented the turnover of Geared Systems,
Inc. which was sold in 1997. Corporate expense in 1997 declined 32.3% from
the prior year due primarily to merger related cost savings.
OTHER FINANCIAL HIGHLIGHTS
Exceptional items
In 1997, net losses for exceptional items of 18 million pounds were
recorded. These include 25 million pounds of losses net, of gains, relating
to the disposal of the 10 businesses referred to within the Electrical and
Electronic Systems, Aftermarket and Aerospace segment sections plus a
1 million pounds loss on fixed asset disposals. The remaining 13 million
pounds gain less tax of 5 million pounds resulted from the sale of the Group's
remaining interest in Hayes Wheels International, Inc. for gross proceeds of
29 million pounds.
Shareholder funds
Shareholder funds were reduced by the write-off of 87 million pounds of
goodwill relating to the acquisitions made in 1997, the largest of which was
49 million pounds for the Freios Varga acquisition. In addition, 28 million
pounds of goodwill was recorded against reserves in 1997 relating to the 1996
acquisition of Varity Corporation. Shareholder funds were also reduced by
55 million pounds on currency translation as sterling strengthened against
most other currencies and by 148 million pounds for dividends and share
repurchases in the year. Shareholder funds will increase significantly as a
result of the disposal of VarityPerkins, which was completed in March 1998.
Cash flow and debt
At January 31, 1998, net borrowings amounted to 574 million pounds. Net
cash flow from operating activities in the year amounted to 452 million
pounds. This amount included cash outflows for restructuring activities of
125 million pounds and a net cash inflow of 74 million pounds for reductions
in working capital. Cash flow from operating activities after interest, tax
and dividends paid to minority shareholders was 332 million pounds.
Investments of 357 million pounds were made for capital expenditures and
acquisitions (totalling 72 million pounds) during 1997 to ensure profitable
future growth, while proceeds from disposals and asset sales amounted to
129 million pounds. Costs in 1997 relating to the repurchase of 43 million
shares (at an average share price of 197.5p) and dividends paid were
149 million pounds. As a result of these cash flows, net borrowings increased
by 111 million pounds during the year.
Dividends and Share Repurchase Programme During 1997
Dividends of 4.5p per ordinary share were paid and 43 million shares were
repurchased by the Group. The Directors are recommending a final dividend of
2.25p per share for the six month period ended January 31, 1998 to be paid on
July 1, 1998 to shareholders on the register at May 15, 1998, and has approved
a 3% share repurchase plan for 1998.
LucasVarity plc
Consolidated Profit and Loss Accounts
For the 3 and 12 month periods ended January 31, 1998
(Fourth Quarter and Fiscal Year 1997)
Fourth Full
Quarter Year
millions of pounds millions of pounds
Turnover:
Continuing operations 985 4,018
Discontinued operations 183 663
Total turnover 1,168 4,681
Cost of sales (1,057) (4,300)
Surplus on trading 111 381
Share of profits less losses
of associated undertakings 2 7
Total operating profit before
exceptional items:
Continuing operations 92 329
Discontinued operations 21 59
Total operating profit
before exceptional items 113 388
Profit on the sale of current
asset investment -- 13
Total operating profit 113 401
Loss on business and fixed
asset disposals (31) (26)
Profit on ordinary activities
before interest and taxation 82 375
Interest payable less receivable (17) (59)
Profit on ordinary activities
before taxation 65 316
Taxation (24) (96)
Profit on ordinary activities
after taxation 41 220
Minority interests (2) (11)
Profit attributable
to shareholders 39 209
Earnings per ordinary share 2.7p 14.7p
LucasVarity plc
Balance Sheets
At January 31, 1998 and 1997
1998 1997
millions of pounds millions of pounds
Fixed assets:
Tangible assets 1,362 1,302
Intangible assets 27 13
Investments 47 49
1,436 1,364
Current assets:
Investments -- 16
Stocks 489 518
Debtors 869 871
Cash 155 227
1,513 1,632
Creditors:
Amounts falling due
within one year:
Borrowings (414) (368)
Other creditors (1,097) (976)
(1,511) (1,344)
Net current assets 2 288
Total assets less
current liabilities 1,438 1,652
Creditors:
Amounts falling due after one year:
Borrowings (315) (322)
Accruals and deferred income (52) (34)
(367) (356)
Provisions for liabilities
and charges (545) (707)
Net Assets 526 589
Capital & Reserves:
Total shareholders' funds 458 546
Minority interests 68 43
526 589
LucasVarity plc
Consolidated Cash Flow Statements
For the 3 and 12 month periods ended January 31, 1998
(Fourth Quarter and Fiscal Year 1997)
Fourth Full
Quarter Year
millions of pounds millions of pounds
Cash flow from operating
activities:
Group operating profit 113 401
Share of profit less dividends
of associated undertakings (2) (6)
Depreciation / amortisation 47 168
Profit on sale of current
asset investment -- (13)
Utilisation of provision
for restructuring (47) (125)
Decrease in other provisions (17) (47)
Decrease in working capital 88 74
Net cash inflow from
operating activities 182 452
Interest paid and dividends paid to
minority shareholders (23) (61)
Tax paid (19) (59)
Capital expenditure and
financial investment:
Purchase of tangible fixed assets (98) (285)
Disposal of tangible fixed assets 19 35
Investment in intangible
fixed assets (15) (15)
Net cash outflow for capital
expenditure and
financial investment (94) (265)
Net cash outflow for
acquisitions and disposals (29) (7)
Equity dividends paid (32) (64)
Net cash outflow before management
of liquid resources and financing(15) (4)
Management of liquid resources
and financing:
Proceeds from sale of current
asset investment -- 29
Issue of ordinary share capital -- 14
Purchase of ordinary
share capital (6) (85)
Increase in bank loans 45 33
(Increase) / decrease in
short-term deposits (29) 18
Capital element of finance
lease rental payments (9) (22)
Net cash inflow / (outflow) from
management of liquid resources
and financing 1 (13)
Decrease in cash in the period (14) (17)
LucasVarity plc
Reconciliation of net cash flow
to movement in net debt
For the year to January 31, 1998
millions of pounds
Decrease in cash in the period (17)
Cash inflow from increase in debt and lease financing (11)
Cash inflow from decrease in short-term deposits (18)
Change in net debt resulting from cash flows (46)
Bank loans acquired with subsidiary undertakings (47)
New finance lease commitments (14)
Exchange movements (4)
Movement in net debt in the period (111)
Net debt at January 31, 1997 (463)
Net debt at January 31, 1998 (574)
LucasVarity plc
Reconciliation of movements in shareholders' funds
For the year to January 31, 1998
millions of pounds
Profit attributable to shareholders 209
Dividends in respect of current period (63)
Currency translation differences (55)
New share capital subscribed 14
Repurchase of shares (85)
Goodwill set off on acquisitions (87)
Goodwill adjustment on prior year acquisition (28)
Goodwill on disposals transferred to profit and loss account 7
Net decrease in shareholders' funds (88)
Opening shareholders' funds 546
Closing shareholders' funds 458
LucasVarity plc
UK to US GAAP Reconciliations
January 31, 1998
Results are based on United Kingdom accounting principles and are
unaudited. Under US Generally Accepted Accounting Principles (GAAP), net
income for the fourth quarter and fiscal year ended January 31, 1998 were:
Fourth Quarter Full Year
millions millions millions millions
of pounds of dollars of pounds of dollars
Net Income - UK GAAP 39 64 209 343
Adjustments to conform
with US GAAP:
Goodwill amortisation (9) (15) (40) (66)
Goodwill written off
on divestments 3 5 4 7
Entry fees (15) (24) (15) (24)
Pension credit 29 48 117 192
Property revaluation 10 16 10 16
Provisions for restructuring (39) (64) (95) (156)
Exchange gains relating to
forward exchange contracts(20) (33) (3) (5)
Deferred tax (4) (7) (6) (10)
Other (3) (5) (1) (2)
Net Income - US GAAP (9) (15) 180 295
Earnings per
ADS (US GAAP) (0.06)pounds$(0.10) 1.27pounds $2.08
A reconciliation of shareholders' funds based on UK GAAP to shareholders'
equity based on US GAAP at January 31, 1998 is as follows:
millions of pounds millions of dollars
Shareholders' funds (UK GAAP) 458 751
Adjustments to conform
with US GAAP:
Goodwill 1,283 2,104
Revaluation of tangible
fixed assets (112) (184)
Entry fees (15) (25)
Prepaid pension cost 454 745
Exchange gains relating to
forward exchange contracts 42 69
Proposed final dividend including
Advanced Corporation Tax 39 64
Restructuring provision 36 59
Deferred taxation 15 25
Other (16) (26)
Shareholders' equity (US GAAP) 2,184 3,582
SOURCE LucasVarity plc