Arvin Reports Record Sales and Earnings
14 October 1998
Arvin Reports Record Sales and Earnings E.P.S. Increase Over 18 Percent
COLUMBUS, Ind.--Oct. 14, 1998--Arvin Industries, Inc. , today reported third quarter net earnings from continuing operations increased over 23 percent from a year ago to $16.8 million, or $0.69 per diluted common share on sales of $574 million.This compares to last year's third quarter of $13.6 million, or $0.58 per diluted common share on sales of $554 million. Both sales and earnings were records for the third quarter.
For the first nine months of 1998, net earnings from continuing operations increased 22 percent to $58 million or $2.40 per diluted common share on sales of $1,811 million. In 1997, net earnings from continuing operations for the first nine months were $47.7 million or $2.06 per diluted share on sales of $1,751 million.
V. William Hunt, Arvin President and Chief Executive Officer, said, "I am very pleased with our record third quarter performance. In the face of growing concern about the world economy and an extended strike by our largest North American customer, General Motors, we were able to grow earnings faster than sales for the eleventh consecutive quarter. Sales in our Original Equipment (O.E.) segment increased six percent and margins improved by about 15 percent. Continued improvement in our O.E. ride control business and strong North American O.E. exhaust performance were key contributors. Our commitment to world class quality, continuous improvement, and customer service have helped make Arvin an important supplier to automakers worldwide.
"In the replacement market, our manufacturing and distribution processes continue to improve, making Arvin more efficient than its competition. These improvements have offset the decline in unit sales resulting from the current soft replacement market. In today's environment, having the lowest cost operation is imperative. Arvin replacement businesses are well situated to meet this challenge. Our replacement customers continue to reward Arvin with added market share as a result of both the total value and high level of service we provide them," Hunt added.
"For the remainder of 1998, we anticipate the continuation of current market conditions in both O.E. and Replacement. Given this, we should meet current E.P.S. expectations, which are in the $3.10-$3.15 range," Hunt explained.
"Arvin's growth plan to more than double the size of our company by the end of 2002 is on track. We are making steady progress and carefully analyzing new opportunities that will complement our focused product lines. The difficult world economic environment should provide some attractive opportunities for consolidators like Arvin in the auto parts industry," Hunt concluded.
Certain information and statements included or implied are forward looking and involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These forward-looking statements are identified by their use of terms and phrases such as "expected," "expect," "should," "estimated earnings," "anticipate," and "believe." Information about potential factors identified by the Company which would affect the actual financial results are included in the Company's Form 8-K, filed January 3, 1997, with the SEC.
Arvin Industries, Inc., is a global manufacturer of automotive components with over 50 manufacturing facilities and eight technical centers located in 16 countries. Arvin is a leading manufacturer of automotive exhaust systems and ride control products. Our replacement products are sold under various trademarks including Arvin, Maremont, Timax, ANSA and ROSI for exhaust systems; Gabriel shock absorbers; and StrongArm gas charged lift supports.
For more information on Arvin Industries via the Internet, visit our Corporate Home Page at http://www.arvin.com or our Corporate News on the Net site at http://www.businesswire.com/cnn/arv.htm. For information via fax, please call our News On Demand service at 888/622-1161.
Arvin Industries, Inc.
Consolidated Results of Operations
(Dollars in millions, except per share amounts)
Unaudited
Three Months Ended Nine Months Ended
-------------------- --------------------
9/27/98 9/28/97 9/27/98 9/28/97
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Net Sales:
Automotive Original
Equipment $ 370.9 $ 348.3 $ 1,204.1 $ 1,171.5
Automotive Replacement 170.6 175.0 519.4 494.1
Other 32.3 30.7 87.0 84.9
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Net Sales $ 573.8 $ 554.0 $ 1,810.5 $ 1,750.5
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Operating Income:
Automotive Original
Equipment $ 17.0 $ 13.9 $ 65.2 $ 61.2
Automotive Replacement 19.8 20.5 56.7 51.8
Other 2.6 3.6 2.0 13.2
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Operating Income $ 39.4 $ 38.0 $ 123.9 $ 126.2
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Net Sales $ 573.8 $ 554.0 $ 1,810.5 $ 1,750.5
Costs and Expenses:
Cost of goods sold 490.2 473.7 1,541.4 1,504.2
Selling, operating general
and administrative 46.1 42.6 137.3 122.4
Corporate general
and administrative 5.5 4.1 16.0 15.0
Interest expense 9.4 10.7 27.3 30.2
Other (income)/expense,
Net (.6) 3.2 5.5 7.5
--------- --------- --------- ---------
550.6 534.3 1,727.5 1,679.3
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Earnings Before Income
Taxes 23.2 19.7 83.0 71.2
Income taxes (7.8) (7.0) (27.6) (24.6)
Minority share of income .1 - (.8) (2.9)
Equity income of
Affiliates 1.3 .9 3.4 4.0
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Earnings from Continuing
Operations 16.8 13.6 58.0 47.7
Income from disposal of
discontinued operations - 1.6 - 1.6
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Net Earnings $ 16.8 $ 15.2 $ 58.0 $ 49.3
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Earnings Per Common Share
Basic:
Continuing Operations $ .70 $ .59 $ 2.44 $ 2.09
Discontinued Operations - .07 - .07
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Total Basic $ .70 $ .66 $ 2.44 $ 2.16
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Diluted:
Continuing Operations $ .69 $ .58 $ 2.40 $ 2.06
Discontinued Operations - .07 - .07
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Total Diluted $ .69 $ .65 $ 2.40 $ 2.13
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Average Common Shares Outstanding (000's)
Basic 23,942 23,017 23,753 22,831
Diluted 24,332 23,600 24,177 23,190
Dividends Declared per Common Share
$ .20 $ .19 $ .60 $ .57
Arvin Industries, Inc.
Consolidated Statement of Financial Condition
(Dollars in millions, except per share amounts)
Unaudited
As of As of
Assets 9/27/98 12/28/97
------ --------- ---------
Current Assets:
Cash and cash equivalents $ 73.8 $ 108.9
Receivables, net of allowances 439.8 354.6
Inventories 145.4 124.5
Other current assets 89.7 81.4
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Total current assets 748.7 669.4
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Non-Current Assets:
Property, plant and equipment:
Land, buildings, machinery & equipment 1,197.7 1,133.5
Less: Allowance for depreciation 691.3 632.1
--------- ---------
506.4 501.4
Goodwill, net 172.1 165.9
Investment in affiliates 74.4 53.9
Other assets 45.8 56.5
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Total non-current assets 798.7 777.7
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$ 1,547.4 $ 1,447.1
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Liabilities and Shareholders' Equity
Current Liabilities:
Short-term debt $ 3.5 $ 55.6
Accounts payable 300.8 303.3
Employee related costs 62.2 57.6
Accrued expenses 118.9 104.7
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Total current liabilities 485.4 521.2
--------- ---------
Long-term debt 305.9 222.3
Long-term employee benefits 68.7 66.7
Other long-term liabilities 41.3 40.4
Minority interest 6.8 12.4
Capital securities 89.1 98.9
Shareholders' Equity:
Common shares ($2.50 par value) 65.6 65.6
Capital in excess of par value 250.3 248.8
Retained earnings 319.0 275.1
Cumulative translation adjustment (35.1) (41.8)
Employee stock benefit trust (11.3) (25.6)
Common shares held in treasury (at cost) (38.3) (36.9)
--------- ---------
Total shareholders' equity 550.2 485.2
--------- ---------
$ 1,547.4 $ 1,447.1
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Arvin Industries, Inc.
Consolidated Statement of Cash Flows
(Dollars in millions)
Unaudited
Nine Months Ended
----------------------
9/27/98 9/28/97
(1)
--------- ---------
Operating Activities:
Net earnings $ 58.0 $ 49.3
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 63.3 61.4
Amortization 4.5 4.6
Minority interest .8 2.9
Gain on investment (5.5) --
Other 7.6 (2.8)
Changes in operating assets and liabilities:
Receivables (87.9) (60.2)
Inventories and other current assets (25.7) 5.3
Accounts payable and other accrued
Expenses 2.2 40.7
Income taxes payable and deferred taxes 11.0 (4.3)
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Net Cash Provided by Operating
Activities 28.3 96.9
--------- ---------
Investing Activities:
Purchase of property, plant and equipment (66.2) (65.7)
Proceeds from sale of
property, plant, and equipment 3.9 .6
Proceeds from redemption of investment 9.6 --
Investments in affiliates (19.0) (7.0)
Business acquisitions, net of cash acquired (25.4) (19.5)
Cash proceeds from sale of business, net
of cash balance of business sold 6.9 6.9
Other 1.2 10.3
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Net Cash Used for Investing
Activities (89.0) (74.4)
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Financing Activities:
Change in short-term debt, net 14.2 (40.8)
Proceeds from long-term financings 99.9 99.8
Principal payments on long-term financings (84.6) (35.8)
Dividends paid (14.2) (12.9)
Exercise of stock options 11.8 9.3
Other .4 (.2)
--------- ---------
Net Cash Provided by Financing
Activities 27.5 19.4
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Cash and Cash Equivalents:
Effect of exchange rate changes on cash (1.9) (1.6)
--------- ---------
Net (decrease)/increase (35.1) 40.3
Beginning of the year 108.9 39.4
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End of the period $ 73.8 $ 79.7
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(1) Certain amounts have been reclassified to
conform with current year presentation.