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AFFINIA GROUP GROSS PROFIT UP 27% IN 2006
ANN ARBOR, MICHIGAN, March 15, 2007 – Affinia Group Inc. announced significantly improved gross profit and increased net income for the fourth quarter and fiscal year ended December 31, 2006.
‘‘Affinia gross profit increased 27%, while sales rose 1.4% as we continue to strengthen our competitive position in the dynamic aftermarket,’’ said Thomas Madden, Affinia’s Senior Vice President and Chief Financial Officer.
2006 Year End
For the fiscal year 2006, sales were $2.16 billion, as compared to $2.13 billion for 2005. This increase reflects strong filtration product and European heavy-duty product sales. The company’s 2006 sales grew 1.4% despite the termination of a customer relationship in early 2006 which reduced sales by $30 million. In addition, the company’s sales increased $39 million related to the impact of foreign currency changes.
Gross profit increased 27% to $376 million in fiscal year 2006, as compared to $295 million for the same period in 2005. This improvement is primarily due to an overall improvement in operational efficiency as a result of the company’s business restructuring.
Selling, general and administrative expenses for fiscal year 2006 were $332 million as compared to $261 million for 2005. The increase was a result of restructuring costs of $39 million and the expenses related to establishing and staffing a new corporate headquarters for the company, Sarbanes-Oxley implementation, and selling expenses related to new business gains.
Net income for the year ended December 31, 2006 improved by $25 million to a loss of $5 million, as compared to a loss of $30 million for the year ended December 31, 2005.
As of December 31, 2006 Affinia had $70 million of cash. Total long-term debt outstanding as of December 31, 2006 was $597 million, a decrease of $15 million from the year ended December 31, 2005. Affinia had no borrowings under the company’s receivables securitization program at December 31, 2006. At December 31, 2006 Affinia continued to be in compliance with all covenants in its senior credit agreement including financial covenants consisting of a cash interest expense ratio, a leverage ratio, and a maximum annual capital expenditure.
‘‘This year, Affinia continued to implement its restructuring plan with great success. Costs were down; and sales and gross profitability were up during this transitional period. We now look ahead to completing our restructuring plan, which will significantly strengthen our position as a cost competitive global manufacturer,’’ said Terry McCormack, Affinia Group’s President and Chief Executive Officer.
For the fourth quarter 2006, sales were $502 million, as compared to $514 million for the fourth quarter of 2005.
Gross profit for the quarter increased 45% to $87 million, as compared to $60 million for the fourth quarter of 2005.
The following information was filed by Affinia Group Intermediate Holdings Inc. (AFN) on Tuesday, March 20, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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