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[ECHLIN LOGO]
Paul Ryder
Vice President
Investor Relations
ECHLIN UNVEILS AGGRESSIVE BUSINESS PLAN
-- McCurdy Tells Investors That Success in Repositioning Programs
Could Result in EPS of About $2.40-$2.50 in 1998, $3.65-$3.80 in 1999
and $4.40-$4.55 in 2000 --
NEW YORK, New York, March 31, 1998--At a presentation to
financial analysts and investors held here today, Larry McCurdy, chairman,
president and chief executive officer of Echlin Inc. (NYSE: ECH), discussed
the bright outlook for the company. He explained how, under the present
repositioning program being implemented at Echlin, the momentum the company
experienced thus far in fiscal 1998 will continue. As a result, Echlin
projects it will generate earnings that are considerably higher than analysts'
current expectations.
Earnings Projections Raised
Mr. McCurdy pointed out that the First Call consensus earnings
estimate for Echlin's fiscal year 1998, ending August 31, now stands at $2.28
per share, whereas Echlin expects to achieve approximately $2.40 to $2.50 per
share. This represents a 28 to 33% gain over the $1.88 per share, before
special charges, earned in fiscal 1997. Mr. McCurdy also projected that the
company's upside improvement would continue beyond 1998, with earnings for
fiscal 1999 in the range of $3.65 to $3.80 per share, and for fiscal 2000,
$4.40 to $4.55 per share.
Mr. McCurdy attributed Echlin's stepped-up earnings outlook to
the rapid and successful implementation of Phase 1 of its repositioning
program, and to new initiatives which he outlined for Phase 2. Phase 1
consists of a reorganized and simplified corporate structure; adoption of
economic value added (EVA) principles; an extensive cost-reduction program;
divestiture of underperforming and non-core assets; and acquisitions of
complementary businesses. Phase 2 will include a worldwide sourcing
initiative; massive realignment of the company's North American distribution
operations; operational optimization through a shared services approach and
new system software; and strategic acquisitions which are not included in the
earnings projections. Together, these significant moves are expected to
provide not only top-line growth, but just as importantly, a more efficient
and streamlined organization.
"One year ago, Echlin's board of directors installed a new
management team to bring change to this company, and positive change-- together
with value creation--is now being successfully realized in a rapid and
effective fashion," Mr. McCurdy said. "The board believes that the current
program is building both short-term and long-term value for shareholders."
SPX Proposal Being Evaluated
Mr. McCurdy stated that Echlin's board continues to evaluate
the SPX Corporation proposal, even though SPX has not yet commenced a formal
offer. Nevertheless, McCurdy pointed out that the board is extremely
concerned about the lack of business logic of an Echlin-SPX combination, and
about the effects of such combination on Echlin shareholders, customers,
employees, suppliers and the communities in which it operates.
"It appears that there are very few synergies between Echlin's
operations and SPX's, and that the resultant cost savings of a combination
would be considerably less than those SPX currently estimates. Moreover, SPX
does not appear to understand Echlin's business, and a combination of our two
companies, along the lines SPX spelled out in its new distribution concept,
would be extremely destructive to our long-term relationships with customers.
There is solid historical precedent that demonstrates a sizable loss of
business occurs when an industry player naively attempts to reinvent the
established channels of distribution. Already, we have had many of our major
aftermarket customers voice overwhelmingly negative reactions, and warn us
that a combination with SPX would severely risk ongoing business with them.
This would result in a considerable loss of value for Echlin shareholders.
"Since SPX's stock would be the primary consideration for
Echlin shares, we are very concerned about the impact the potential loss of
customers and lack of synergies would have on the stock price. We also have
concerns about SPX's business. Based upon a market study commissioned by
Echlin, SPX may have incurred some loss of market share, and appears to have
cut product research and development activity, which could hurt its long-term
position. Furthermore, technological advances may eliminate the need for
certain diagnostic equipment as it exists today, thus significantly reducing
overall demand for SPX's products," Mr. McCurdy continued.
"Make no mistake--our independent board is committed to doing
what is best for Echlin shareholders and its other constituents. Unlike the
proposed SPX- controlled board, ours is not a self-interested board whose only
job, we believe, is to rubber-stamp a pre-ordained agenda," Mr. McCurdy
concluded.
Caution Given on Forward-Looking Statements
Certain statements included in this news release are
"forward-looking" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Act"), and are made in good faith by Echlin pursuant
to the Act's "safe harbor" provisions. Such forward-looking statements are
not guarantees of future performance, and may involve known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those expressed or implied. Risks and uncertainties include,
without limitation, global and regional economic conditions, business
conditions in the overall automotive industry, and the cost and timing of the
company's repositioning-plan implementation. They also include other factors
discussed herein and those detailed from time to time in the company's filings
with the Securities and Exchange Commission.
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