Jan. 1, 2003 – Finance Digest

ArvinMeritor Declares Dividend
ArvinMeritor, Inc. (NYSE:ARM), Troy, Mich., has declared a quarterly dividend of 10 cents per share on its common stock, payable Dec. 16, 2002, to shareowners of record on Dec. 2, 2002.

Polaris to expand plant
Polaris Industries Inc., Medina, Minn., said it plans a $3 million expansion to its production facility in Spirit Lake, Iowa. Polaris expects the project to create approximately 120 new jobs in the Iowa Great Lakes area over the next three years. It’s the second major expansion the company has announced in the last three months. In September, Polaris announced plans for a major expansion to its Roseau, Minn. facility.
The 33,000-sq. ft. addition will house new state-of-the-art manufacturing equipment and space to expand assembly operations. The expansion is expected to be fully operational by July 2003.The Polaris Spirit Lake facility employs more than 500 people.
Tom Tiller, Polaris president and CEO, said the state of Iowa assembled “a very attractive financial incentive package that gave us the confidence to make a major investment in our Spirit Lake facilities.”

Oakley revises forecast
Oakley Inc. (NYSE:OO), Foothill Ranch, Calif., has revised its sales and earnings forecast for the 2002 fourth quarter to reflect soft sales in several of its major markets, principally the company’s sunglass products, and to reflect an anticipated charge related to the restructuring of its European operations.
The company said Dec. 5 it now expects fourth quarter sales of approximately $100 million, an increase of approximately 11% from the prior year but approximately nine percent below previous expectations. Fourth quarter earnings per diluted share are now expected to be approximately three cents before the restructuring charge discussed below, or breakeven to one cent after the charge. The company’s previous fourth quarter guidance, provided in conjunction with its third quarter earnings announcement and conference call on Oct. 23, 2002, anticipated earnings of approximately 10 cents per diluted share.
As a vertically integrated manufacturer of sunglasses, a decline in sunglass sales affects the company’s earnings to a greater degree than it does net sales because of the significant operating margins on incremental sales of sunglasses.
In the fourth quarter of 2001, the company reported net sales of $90.2 million and earnings of five cents per diluted share (three cents per share on a same-tax-rate-basis with the 2002 tax rate).
Oakley stock slumped in conjunction with the Dec. 5 announcement. Oakley common reached a 52-week high of $20.09 on April 25, 2002, but dropped to a low of $8.87 on Oct. 10, 2002. It rebounded to $13.93 on Nov. 27, but fell more than $2, or about 18%, on Dec. 6, closing at $10.12 on trading of 3.16 million shares.
“While we are receiving favorable spring footwear and apparel bookings and remain confident in our product diversification strategies over the longer term, sunglass sales in the United States, Europe and the South Pacific region have been softer than expected in the fourth quarter,” said Chief Operating Officer Link Newcomb.
He said there are several factors contributing to this softness.

  • First, and most importantly, soft consumer spending and weak retail conditions affected its sunglass sales more than anticipated.
  • Second, deliveries of its 2002 summer sunglass introductions to retailers were delayed, resulting in fewer turns during the summer selling season and reducing the level of reorders leading up to the holiday season.
  • Third, Foot Locker said it intends to reduce the number of stores carrying Oakley sunglasses after the end of the year and has cut its orders during the quarter as it reduces inventory in preparation for this change.
  • Finally, the company underestimated the negative impact that Sunglass Hut’s return to Oakley’s business may be having on retailers other than Sunglass Hut, as compared to the comparable prior year period when Sunglass Hut was not purchasing Oakley products.

The company also said it plans to restructure it’s European operations, with significant changes to the regional sales and distribution organization.
As part of this plan, relationships with several outside sales agents will be modified or terminated; and changes will also be implemented to rationalize other warehousing and distribution functions within the European markets.
“In the past five years, Oakley’s European net sales have grown to approximately $110 million from $47 million,” Newcomb noted. “We believe these actions to modify our sales and distribution organization in the region will improve the company’s infrastructure to support future growth and position us to capitalize on opportunities in footwear and apparel.”
He said the company expects increased European net sales and reduced operating expenses to be fully achieved within 12 to 18 months.
The restructuring will result in an estimated after tax charge to earnings of approximately two to three cents per share.
Oakley SEC filings and the company’s annual report are available at no charge through the company’s Web site, www.oakley.com.

Yamaha Targets Record Earnings
Yamaha Motor Co. Ltd., Tokyo, says its net profit during the first half of fiscal 2002 surged 54% from a year earlier as pretax profit doubled on better sales, a weaker yen and cost-cutting efforts.
Yamaha posted a net profit of about $95.4 million in the April to September period. At the same time, its pretax profit came to roughly $318.3 million – up 100.9% from a year earlier.
Yamaha sales rose 5.5% to $4.37 billion on the back of robust motorcycle sales in Asia, even amid what it described as a slowdown in demand in North America. A company executive told AFX News Service he does not expect that motorcycle markets in North America will continue double-digit growth, and said he believes markets will experience flat year-on-year growth in the second half.
Yamaha Motor said it expects a group net profit of $207.8 million and pretax profit of $548.67 million on group sales of $8.40 billion for the year. The company posted a group net profit of $79.3 million and pretax profit of $271.6 million on group sales of $7.87 billion in the previous year.

Harley-davidson dividend
Harley-Davidson, Inc. (NYSE: HDI), Milwaukee, Wisc., declared a quarterly cash dividend of 3.5 cents per share, payable Dec. 31, 2002, to shareholders of record as of Dec. 20, 2002. The company has approximately 302.6 million shares of common stock outstanding.

Financial Services Venture formed
Brunswick Corporation (NYSE:BC) and Transamerica Distribution Finance have formed the Brunswick Acceptance Company, LLC (BAC), a joint venture between Brunswick and Transamerica. BAC will offer wholesale financing to the domestic Brunswick Boat Group and Mercury Marine dealer networks.
“Over the past 10 years, many financial institutions have gotten into, and out of, marine lending. Our goal is to provide stability and to assure a source of floor plan financing for our dealers over the long term,” said Brunswick Chairman and CEO George W. Buckley.

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