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Arvin Announces Two Initiatives to Enhance Shareholder Value

11 February 2000

Arvin Announces Two Initiatives to Enhance Shareholder Value and Declares Quarterly Cash Dividend

    COLUMBUS, Ind.--Feb. 10, 2000--Arvin Industries, Inc. announced today that the company's Board of Directors has authorized two initiatives to further enhance shareholder value in light of recent depressed share price levels. Both programs are continuing evidence that the Board and management of Arvin are firmly committed to maximizing long-term shareholder value.

    BOARD AUTHORIZES SHARE REPURCHASE PROGRAM

    The Board of Directors authorized the purchase of up to 1 million shares of its common stock during 2000. Purchases will be made in the open market or in privately negotiated transactions, depending upon share price and other considerations.
    V. William Hunt, Chairman, President and Chief Executive Officer of Arvin Industries, Inc., said, "This share repurchase program represents an important part of Arvin's plans to enhance shareholder value. At recent price levels, we believe that our stock presents a very attractive investment opportunity and that the parameters of the program are consistent with the company's financial targets and credit rating objectives."

    ARVIN ADOPTS ECONOMIC PROFIT INITIATIVE

    The Board also approved an enhanced management system based on Economic Profit (EP) designed to even more closely align company decisions and actions with long-term shareholder interests.
    Bill Hunt said, "We're delighted with the Board's support of this new system. Investors require superior returns on the capital we manage. Utilizing EP as the primary measure of management performance is the best way to help all employees manage our assets effectively and deliver those superior returns. Our asset management record is outstanding due to the strong influence of the Arvin Total Quality Production System, which is based on achieving leanness throughout our operations and value chain. The use of EP will provide even greater discipline to our investment decision making and will be the primary driver of incentive pay."
    Arvin's EP framework goes beyond the traditional measures of economic value. "We believe that implementation of true Economic Profit requires more than capital adjustments and a bonus program," said Hunt. "Employees must have an incentive to improve performance, the information necessary to make good decisions and the ability to influence positive change. The new executive incentive plan is the first step in an overall strategy to link all employees to the drivers of EP.
    "The EP framework is a logical outgrowth of Arvin's highly successful Total Quality process. We've been aligning systems and training at all levels for many years," Hunt said. "We expect a smooth implementation of the EP system because we have in place measurement systems for financial and quality improvement. Using EP will allow us to make better business decisions -- where we employ capital and how we increase operating profit. It will provide an additional measure of financial discipline to both our capital spending and the execution of our growth strategy."

    BOARD DECLARES CASH DIVIDEND

    The Board also declared today a quarterly cash dividend of 22 cents per common share, payable March 31, 2000 to shareholders of record as of the close of business on March 3, 2000. This is the seventy-sixth consecutive year in which cash dividends have been paid on Arvin common stock.
    Arvin Industries, Inc., is a global manufacturer of automotive components with over 60 manufacturing facilities and 6 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 and RydeFX 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.