Arvin Reports Record Sales and Earnings Net Earnings Increase 20 Percent
20 October 1999
Arvin Reports Record Sales and Earnings Net Earnings Increase 20 Percent
COLUMBUS, Ind.--Oct. 20, 1999--Arvin Industries, Inc. , today reported a third quarter net earnings increase of 20 percent to $20.1 million, or $0.82 per share. Sales for the quarter rose to $744 million, an increase of 30 percent over the comparable 1998 quarter. Net earnings and sales for last year's third quarter were $16.8 million, or $0.69 per share, and $574 million, respectively. Both sales and earnings for the 1999 period were records for the third quarter and represented the sixth consecutive record quarter for sales and earnings.For the first nine months of 1999, net earnings, before one-time items, increased to $69.8 million, or $2.85 per share versus net earnings, before one-time items, of $57.0 million, or $2.36 per share for the comparable period of 1998. Sales for the first nine months of 1999 increased to $2,322 million from $1,811 million last year.
V. William Hunt, Chairman, President and Chief Executive Officer, said, "Arvin's record performance continued in the third quarter, marking our fifteenth consecutive quarter over quarter increase in earnings per share. The record North American light vehicle build contributed to the strong performance of our Original Equipment segment. In addition, during the third quarter of 1999, significant exhaust platform launches included the Ford Excursion (North America), Toyota Solara (North America), Toyota Avensis (Europe), Cadillac DeVille and Concours (North America). In our Ride and Motion Control business, we launched the Ford Focus in North America," Hunt explained.
"For the first nine months, margins have improved in our Original Equipment segment and our coil coating business. In our Replacement segment, margins were below historic levels due to the continued integration of the Purolator acquisition and higher new business costs to support our growing customer base and market share. The integration of Purolator is on track and will be accretive to earnings in 1999 and an even more positive contributor in 2000.
"For the remainder of 1999 we remain confident of meeting consensus annual earnings expectations, which are in the $3.65 to $3.70 range. Beyond this year, our book of original equipment business is very strong with $200 million in net new business in each of the next two years. Arvin enters the new millennium with a solid and growing foundation of business on which to build continuing record-setting performance," Hunt concluded.
All per share amounts are reported on a diluted common share basis. Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) is not a measure of cash flow, operating results, or liquidity, as determined by generally accepted accounting principles. EBITDA is included because management believes that certain investors may find it to be a useful tool for analyzing operating performance, leverage and liquidity. Our EBITDA amounts may not be comparable to EBITDA as reported by or for other companies because we may not calculate EBITDA on the same basis as other companies.
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," "temporarily," "will," 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 22 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 Nine Months Ended
------------------ -----------------
10/3/99 9/27/98 10/3/99 9/27/98
------- ------- ------- -------
Net Sales:
Automotive Original Equipment $ 458.3 $ 370.9 $ 1,469.3 $ 1,204.1
Automotive Replacement 239.9 170.6 715.9 519.4
Other 46.2 32.3 136.9 87.0
---- ---- ----- ----
Net Sales $ 744.4 $ 573.8 $ 2,322.1 $ 1,810.5
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Operating Income:
Automotive Original Equipment $ 20.6 $ 17.0 $ 86.9 $ 65.2
Automotive Replacement 21.9 19.8 64.7 56.7
Other 5.3 2.6 12.8 2.0
--- --- ---- ---
Operating Income $ 47.8 $ 39.4 $ 164.4 $ 123.9
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Net Sales $ 744.4 $ 573.8 $ 2,322.1 $ 1,810.5
Costs and Expenses:
Cost of goods sold 642.9 490.2 1,995.7 1,541.4
Selling, operating general and
administrative 54.3 46.1 166.7 137.3
Corporate general and
administrative 7.1 5.5 21.4 16.0
Interest expense 13.3 9.4 37.5 27.3
Other expense/(income), net 2.6 (.6) 8.6 5.5
--- --- --- ---
720.2 550.6 2,229.9 1,727.5
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Earnings Before Income Taxes 24.2 23.2 92.2 83.0
Income taxes (8.4) (7.8) (32.0) (27.6)
Minority share of income 2.0 .1 2.9 (.8)
Equity income of affiliates 2.3 1.3 7.8 3.4
--- --- --- ---
Earnings before Cumulative Effect
of Accounting Change 20.1 16.8 70.9 58.0
Cumulative effect of accounting
change, net of income tax
benefits of $.3 - - (.5) -
------- ------- -------- -------
Net Earnings $ 20.1 $ 16.8 $ 70.4 $ 58.0
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Earnings Per Common Share
Basic:
Before cumulative effect of
accounting change $ .83 $ .70 $ 2.93 $ 2.44
Cumulative effect of
accounting change - - (.02) -
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Total Basic $ .83 $ .70 $ 2.91 $ 2.44
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Diluted:
Before cumulative effect of
accounting change $ .82 $ .69 $ 2.89 $ 2.40
Cumulative effect of
accounting change - - (.02) -
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Total Diluted $ .82 $ .69 $ 2.87 $ 2.40
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Average Common Shares
Outstanding (000's)
Basic 24,322 23,942 24,236 23,753
Diluted 24,570 24,332 24,523 24,177
Dividends Declared per
Common Share $ .21 $ .20 $ .63 $ .60
EBITDA $ 69.4 $ 56.5 $ 225.7 $ 180.7
Arvin Industries, Inc.
Consolidated Statement of Financial Condition
(Dollars in millions, except per share amounts)
As of As of As of
10/3/99 1/3/99 9/27/98
Unaudited Audited Unaudited
--------- ------- ---------
Assets
------
Current Assets:
Cash and cash equivalents $ 45.6 $ 107.0 $ 73.8
Receivables, net of allowances 474.6 319.0 439.8
Inventories 215.2 151.3 145.4
Other current assets 123.7 103.7 89.7
----- ----- ----
Total current assets 859.1 681.0 748.7
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Non-Current Assets:
Property, plant and equipment:
Land, buildings, machinery
& equipment 1,403.2 1,289.8 1,197.7
Less: Allowance for depreciation 740.8 704.0 691.3
----- ----- -----
662.4 585.8 506.4
Goodwill, net 282.0 170.2 172.1
Investment in affiliates 163.0 148.2 74.4
Other assets 66.0 61.3 45.8
---- ---- ----
Total non-current assets 1,173.4 965.5 798.7
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$ 2,032.5 $ 1,646.5 $ 1,547.4
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Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities:
Short-term debt $ 174.7 $ 10.1 $ 3.5
Accounts payable 379.6 337.9 300.8
Employee related costs 66.6 63.3 62.2
Accrued expenses 113.8 105.6 118.9
----- ----- -----
Total current liabilities 734.7 516.9 485.4
----- ----- -----
Long-term debt 416.4 307.7 305.9
Long-term employee benefits 83.1 70.4 68.7
Other long-term liabilities 59.5 41.6 41.3
Minority interest 54.0 57.1 6.8
Capital securities 89.1 89.1 89.1
Shareholders' Equity:
Common shares ($2.50 par value) 68.8 68.8 65.6
Capital in excess of par value 306.7 305.2 250.3
Retained earnings 389.4 334.3 319.0
Cumulative translation adjustment (71.6) (41.3) (35.1)
Employee stock benefit trust (59.1) (64.7) (11.3)
Common shares held in
treasury (at cost) (38.5) (38.6) (38.3)
----- ----- -----
Total shareholders' equity 595.7 563.7 550.2
----- ----- -----
$ 2,032.5 $ 1,646.5 $ 1,547.4
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Arvin Industries, Inc.
Consolidated Statement of Cash Flows
(Dollars in millions)
Unaudited
Nine Months Ended
-----------------
Oct 3, Sep 27,
1999 1998 (1)
---- --------
Operating Activities:
Net earnings $ 70.4 $ 58.0
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 78.9 63.3
Amortization 6.4 4.5
Minority interest (2.9) .8
Gain on sale of investment (7.3) (5.5)
Change in deferred income tax benefit, net (3.9) (.4)
Other 2.8 7.9
Changes in operating assets and liabilities:
Receivables (103.2) (87.9)
Inventories and other current assets (36.1) (25.5)
Accounts payable and other accrued expenses 10.7 2.2
Income taxes payable 5.1 10.9
--- ----
Net Cash Provided by Operating Activities 20.9 28.3
---- ----
Investing Activities:
Purchase of property, plant and equipment, net (76.2) (62.3)
Proceeds from sale of investment 12.4 9.6
Investments in affiliates (2.1) (19.0)
Business acquisitions, net of cash acquired (272.1) (25.4)
Cash proceeds from sale of business, net
of cash balance of business sold - 6.9
Other 2.5 1.2
--- ---
Net Cash Used for Investing Activities (335.5) (89.0)
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Financing Activities:
Change in short-term debt, net 121.2 4.3
Proceeds from long-term financings 156.7 99.9
Principal payments on long-term financings (10.7) (74.7)
Dividends paid (15.3) (14.2)
Exercise of stock options 3.0 11.8
Other (.6) .4
--- --
Net Cash Provided by Financing Activities 254.3 27.5
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Cash and Cash Equivalents:
Effect of exchange rate changes on cash (1.1) (1.9)
---- ----
Net decrease (61.4) (35.1)
Beginning of the year 107.0 108.9
----- -----
End of the period $ 45.6 $ 73.8
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(1) Certain amounts have been reclassified to conform with current
year presentation.