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Raytech Corporation Announces First Quarter Results for 1999

14 May 1999

Raytech Corporation Announces First Quarter Results for 1999

    SHELTON, Conn.--May 13, 1999--Raytech Corporation today announced net income for the thirteen-week period ended April 4, 1999 amounting to $4,488 or $1.31 per basic share as compared with $4,157 or $1.24 per basic share for the corresponding period in 1998.
    Albert A. Canosa, President and Chief Executive Officer of Raytech Corporation, stated, "The strong results for this quarter reflect the Company's commitment to quality products produced in the most efficient manner. The managers and employees of Raytech Corporation are focused on achieving growth in sales and profitability while maintaining the world class quality for which Raytech Corporation is known. The increase in sales was entirely due to new products in the automotive original equipment market and in the aftermarket. Our engineers work closely with our customers to provide new technology for improved performance and reliability."

Net Income up 7.1%

    Raytech Corporation continued the momentum from year-end with net income rising in the first quarter to $4.5 million or $1.31 per basic share as compared to $4.2 million or $1.24 per basic share in the first quarter of 1998. Earnings were driven by strong performance in the aftermarket segment and improved performance in the wet friction segment due primarily to increased sales in the automotive original equipment market. The Company's dry friction operations were down slightly over last year as a result of the startup operations in China and the slowing of the economy in Europe.

Net Sales Up 7.0%

    Worldwide net sales rose 7.0% in the first quarter of 1999 to $67.3 million as compared to $62.9 million in the first quarter of 1998.
    The wet friction segment reported increased sales of $.7 million as compared to the same period in the prior year. The rise in sales is primarily the result of increased sales of new products to New Venture Gear and increased unit production among the automotive original equipment manufacturers, which is reflected in the reported sales increase of $4.2 million in this market sector over the prior year. Domestic car and light truck sales are expected to increase from 14.8 million units to 15.6 million units in 1999. According to industry analysts, the heavy duty markets continue their decline as a result of the economic downturn in Asia and Latin America. In addition the demand for heavy duty equipment was affected by a decline in orders from the oil and mining industries. Sales in this market decreased $1.6 million as compared to last year. However domestic sales of heavy duty equipment is expected to remain strong. Demand for agricultural equipment remains weak as the farm sector continues to feel the effects of depressed agricultural commodity prices. Sales in this market decreased $1.9 million over last year.
    Sales in the aftermarket segment showed significant improvement over last year. Improved sales reflected deeper penetration into the current customer base and sales of new products, such as planetary gears, which were introduced into the product line in the latter part of 1998. Additionally, the introduction of dry friction products in the North American aftermarket took place during this quarter. The combination of the above provided increased sales of $3.7 million over the same period in the prior year, a year-over-year growth rate of 27.7%.
    The dry friction segment reported improved sales of less than $.1 million, driven entirely by new sales from our operation in China. The German operation remained at the same level as that of the prior year due to the cooling of the German economy and the European Union as a whole.
    The Company has been under the protection of the U.S. Bankruptcy Court relating to asbestos personal injury and environmental liabilities since March 1989. The ultimate liability of the Company with respect to asbestos-related, environmental or other claims cannot presently be determined.
    Raytech Corporation is headquartered in Shelton, Connecticut, with operations serving world markets for energy absorption and power transmission products, as well as custom- engineered components.

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


Comparative results are as follows:

                                   For the 13 Weeks Ended
                                 April 4,          March 29,
                                   1999              1998

Net Sales                     $   67,343        $   62,895

Net income(a)                 $    4,488        $    4,157

Basic earnings per share:

   Earnings per share         $     1.31        $     1.24

   Weighted average shares     3,421,395         3,350,194


Diluted earnings per share:

   Earnings per share         $     1.29        $     1.18

   Weighted average shares     3,471,122         3,532,081


(a)  The Company has been under the protection of the U.S. Bankruptcy
     Court relating to asbestos personal injury and environmental
     liabilities since March 1989. The ultimate liability of the
     Company with respect to asbestos-related, environmental or other
     claims cannot presently be determined.