Arvin Reports Best Quarter in Company History
19 July 1999
Arvin Reports Best Quarter in Company History
COLUMBUS, Ind.--July 19, 1999--Arvin Industries, Inc. , today reported record sales and earnings for its fiscal second quarter of 1999. Sales were $839 million versus $643 million in the same quarter of 1998, an increase of 30 percent. Earnings were $32.4 million or $1.32 per share, versus $26.7 million, or $1.10 per share, before one-time items, in the same quarter of 1998. This is the best quarter in Arvin's 80-year history.For the first six months of 1999, net earnings, before one-time items, increased to $49.7 million or $2.03 per share versus net earnings of $40.2 million or $1.67 per share in the first half of 1998. Sales for the first six months of 1999 increased to $1,578 million from $1,237 million last year.
V. William Hunt, Arvin Chairman, President and Chief Executive Officer, said, "I am particularly pleased with our record second quarter performance. In our O.E. segment, sales benefited from a strong North American car and light truck production schedule. Fundamentally, Arvin will continue to benefit from the trends affecting suppliers, including supplier consolidation, full system purchasing, and tighter emission standards.
"In the Replacement segment, Arvin benefited from the addition of Purolator to our sales for the second quarter. The integration of Purolator's filter business into our Replacement segment is progressing faster and better than we expected," Hunt said. "Only four months after the acquisition, we have already achieved substantial synergies on both the revenue and cost side. Several customers who purchase our other replacement products have shifted their filter requirements to Purolator. Administrative functions have been combined, and we have announced the closure of two redundant facilities while improving service levels. The acquisition, which we expected to be moderately accretive in the first year, will provide benefits of $0.10 - $0.15 in Earnings per Share this year, and we are confident we will measurably exceed the earlier forecast of more than $0.20 in Earnings per Share contribution on an annualized basis for years beyond 1999," Hunt said.
"For the remainder of 1999, Arvin should continue to benefit from a strong car and light truck build rate in North America. While there is some softness in our replacement markets, Arvin is doing better than our competition," Hunt explained.
"With the current economic conditions continuing and no major customer labor stoppages, I am confident that Arvin will achieve another record year, and meet analyst expectations for Earnings per Share in the $3.50 - $3.65 range for the full year," Hunt concluded.
All per share amounts are reported on a diluted common share basis. 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," "plans," "estimated earnings," "confident," "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 10-K, filed March 4, 1999, with the SEC.
Arvin Industries, Inc., is a global manufacturer of automotive components with over 60 manufacturing facilities and eight technical centers located in 21 countries. Arvin is a leading manufacturer of automotive exhaust systems; ride control products; air, oil and fuel filters; and gas charged lift supports. Our replacement products are sold under various trademarks including Arvin, Maremont, Timax, ANSA and ROSI exhaust systems; Gabriel shock absorbers; Purolator filters; 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.shtml. 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 Six Months Ended
------------------ ----------------
7/4/99 6/28/98 7/4/99 6/28/98
------ ------- ------ -------
Net Sales:
Automotive Original Equipment $ 515.3 $ 426.2 $ 1,011.0 $ 833.2
Automotive Replacement 273.2 188.6 476.0 348.8
Other 50.8 28.5 90.7 54.7
------- -------- --------- --------
Net Sales $ 839.3 $ 643.3 $ 1,577.7 $1,236.7
------- -------- --------- --------
------- -------- --------- --------
Operating Income:
Automotive Original Equipment $ 36.3 $ 26.0 $ 66.3 $ 48.2
Automotive Replacement 28.8 23.4 42.8 36.9
Other 5.6 1.7 7.5 (.6)
------- -------- --------- ---------
Operating Income $ 70.7 $ 51.1 $ 116.6 $ 84.5
------- -------- --------- --------
------- -------- --------- --------
Net Sales $ 839.3 $ 643.3 $ 1,577.7 $1,236.7
Costs and Expenses:
Cost of goods sold 711.2 538.7 1,352.8 1,051.2
Selling, operating general
and administrative 59.0 46.9 112.4 91.2
Corporate general and
administrative 6.0 6.2 14.3 10.5
Interest expense 13.7 9.2 24.2 17.9
Other expense, net 3.3 3.4 6.0 6.1
----- ----- ------- -------
793.2 604.4 1,509.7 1,176.9
----- ----- ------- -------
Earnings Before Income Taxes 46.1 38.9 68.0 59.8
Income taxes (16.8) (12.2) (23.6) (19.8)
Minority share of income .5 (.6) .9 (.9)
Equity income of affiliates 2.6 1.6 5.5 2.1
--- --- --- ---
Earnings before Cumulative
Effect of Accounting Change 32.4 27.7 50.8 41.2
Cumulative effect of accounting
change, net of income tax
benefits of $.3 - - (.5) -
------- -------- --------- ---------
Net Earnings $ 32.4 $ 27.7 $ 50.3 $ 41.2
------- -------- --------- --------
------- -------- --------- --------
Earnings Per Common Share
Basic:
Before cumulative effect
of accounting change $ 1.34 $ 1.16 $ 2.10 $ 1.74
Cumulative effect of
accounting change - - (.02) -
------- -------- --------- ---------
Total Basic $ 1.34 $ 1.16 $ 2.08 $ 1.74
------- -------- --------- --------
------- -------- --------- --------
Diluted:
Before cumulative effect $ 1.32 $ 1.14 $ 2.07 $ 1.71
of accounting change
Cumulative effect of
accounting change - - (.02) -
------- -------- --------- ---------
Total Diluted $ 1.32 $ 1.14 $ 2.05 $ 1.71
------- -------- --------- --------
------- -------- --------- --------
Average Common Shares Outstanding (000's)
Basic 24,237 23,787 24,194 23,658
Diluted 24,536 24,217 24,500 24,099
Dividends Declared per
Common Share $ .21 $ .20 $ .42 $ .40
Arvin Industries, Inc.
Consolidated Statement of Financial Condition
(Dollars in millions, except per share amounts)
Unaudited
As of As of As of
Assets 7/4/99 1/3/99 6/28/98
------ ------ ------ -------
Current Assets:
Cash and cash equivalents $ 47.6 $ 107.0 $ 137.2
Receivables, net of allowances 483.2 319.0 446.3
Inventories 208.4 151.3 134.5
Other current assets 120.3 103.7 85.1
----- ----- ----
Total current assets 859.5 681.0 803.1
----- ----- -----
Non-Current Assets:
Property, plant and equipment:
Land, buildings, machinery &
equipment 1,364.9 1,289.8 1,161.3
Less: Allowance for depreciation 712.0 704.0 665.5
--------- ---------- ----------
652.9 585.8 495.8
Goodwill, net 278.2 170.2 162.2
Investment in affiliates 156.8 148.2 57.0
Other assets 61.8 61.3 47.6
--------- ---------- ----------
Total non-current assets 1,149.7 965.5 762.6
--------- ---------- ----------
$ 2,009.2 $ 1,646.5 $ 1,565.7
--------- ---------- ----------
--------- ---------- ----------
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term debt $ 125.0 $ 10.9 $ 24.0
Accounts payable 385.7 337.1 324.9
Employee related costs 64.3 63.3 59.5
Accrued expenses 128.0 105.6 110.4
----- ----- -----
Total current liabilities 703.0 516.9 518.8
----- ----- -----
Long-term debt 454.5 307.7 314.7
Long-term employee benefits 82.4 70.4 67.2
Other long-term liabilities 62.0 41.6 39.6
Minority interest 55.6 57.1 6.4
Capital securities 89.1 89.1 98.9
Shareholders' Equity:
Common shares ($2.50 par value) 68.8 68.8 65.6
Capital in excess of par value 306.5 305.2 249.6
Retained earnings 374.6 334.3 307.0
Cumulative translation adjustment (87.9) (41.3) (48.2)
Employee stock benefit trust (60.8) (64.7) (15.9)
Common shares held in treasury (at cost) (38.6) (38.6) (38.0)
----- ----- -----
Total shareholders' equity 562.6 563.7 520.1
--------- ---------- ----------
$ 2,009.2 $ 1,646.5 $ 1,565.7
--------- ---------- ----------
--------- ---------- ----------
Arvin Industries, Inc.
Consolidated Statement of Cash Flows
(Dollars in millions)
Unaudited
Six Months Ended
----------------
July 4, June 28,
1999 1998 (1)
---- --------
Operating Activities:
Net earnings $ 50.3 $ 41.2
Adjustments to reconcile net earnings to
net cash (used for) / provided by
operating activities:
Depreciation 53.5 42.3
Amortization 4.1 3.0
Minority interest (.9) .9
Gain on sale of investment (7.3) (5.5)
Change in deferred income tax benefit, net (.8) .5
Other 8.1 8.9
Changes in operating assets and liabilities:
Receivables (120.1) (94.2)
Inventories and other current assets (30.2) (16.3)
Accounts payable and other accrued expenses 32.0 36.4
Income taxes payable and deferred taxes 8.5 (2.2)
Net Cash (Used for) / Provided ------ ------
by Operating Activities (2.8) 15.0
------ ------
Investing Activities:
Purchase of property, plant and equipment, net (48.0) (41.1)
Proceeds from sale of investment 12.4 9.6
Investments in affiliates (2.1) (3.2)
Business acquisitions, net of cash acquired (267.0) (8.7)
Other 1.3 .6
------ -----
Net Cash Used for Investing Activities (303.4) (42.8)
------ -----
Financing Activities:
Change in short-term debt, net 105.2 10.2
Proceeds from long-term financings 156.2 99.0
Principal payments on long-term financings (4.0) (46.2)
Dividends paid (10.2) (9.4)
Exercise of stock options 2.1 7.6
Other (.7) (3.8)
------ ------
Net Cash Provided by Financing Activities 248.6 57.4
------ ------
Cash and Cash Equivalents:
Effect of exchange rate changes on cash (1.8) (1.3)
--------- ---------
Net (decrease) / increase (59.4) 28.3
Beginning of the year 107.0 108.9
--------- --------
End of the period $ 47.6 $ 137.2
--------- --------
--------- --------
(1) Certain amounts have been reclassified to conform with current
year presentation.