Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
As used in this report, the term "Registrant", "Arvin", "Management" or "Company" means Arvin Industries, Inc. and its subsidiaries, unless the context otherwise requires.
Arvin is a diversified international manufacturing company supplying automotive parts and a variety of other products and services through ten operating entities in the U.S. and numerous other parts of the world.
Since its founding in 1919 Arvin has grown through internal development, acquisition and joint venture opportunities. In recent years, the Company's strategy has been to strengthen its automotive parts businesses by achieving a balance between sales to both original equipment manufacturers and replacement parts suppliers on a global basis. In September, 1989 the Company purchased 75 percent of AP Amortiguadores of Spain ("APA"). APA is a leading European manufacturer of automotive original equipment ride control products. In 1990 the Company acquired Tubauto's engine manifold and exhaust tube business located in France, as well as a 40 percent interest in a new joint venture, Arvin-Tubemakers Pty Ltd., an Australian manufacturer of original equipment exhaust systems. During the second quarter of 1992, the Company acquired a 50 percent interest in Schmitz & Brill GmbH, a German-based automotive parts manufacturer. The Company completed three strategic alliances during the third quarter of 1993. First, the Company's Calspan subsidiary was merged with Space Industries, Inc. The Company owns approximately 70 percent of the new company, Space Industries International, Inc. Second, the Company acquired a 49.9 percent interest in Way Assauto S.r.l. located in Asti, Italy. Way Assauto manufactures shock absorbers, MacPherson struts and related parts and stampings for the original equipment market. Finally, the Company formed a 50/50 replacement market exhaust joint venture with Sogefi S.p.A. located in Mantova, Italy. The new venture includes Sogefi's formerly wholly owned subsidiaries Etablissements Rosi, with manufacturing and distribution facilities in France, and Ansa Marmitte, with manufacturing and distribution facilities in Italy, and a portion of the operating assets of the Company's Timax business unit. These acquisitions continue the strategic focus of increasing the Company's presence in global automotive parts markets.
During the second quarter of 1989, the Company adopted a formal plan to dispose of the ArvinAir division, a manufacturer of evaporative cooling products, portable electric heaters and wind turbine home attic ventilators. The sale of this business was completed during January 1991. The impact of this divestiture is not material to the Company's consolidated financial results.
Additional information on the above events is contained in NOTE 2 located at item 8 herein.
Operations
A. Business Segments
The Company's products and services are classified based upon four primary market segments served: Automotive Original Equipment, Automotive Replacement, Technology and Industrial.
Manufacturing facilities for the Automotive Original Equipment, Automotive Replacement and Industrial segments are located in the United States, Canada, Mexico, France, Brazil, South Africa, The Netherlands, Spain, Italy and the United Kingdom, and incorporate highly mechanized production lines for stamping, welding, assembling, testing, laminating, coil coating, rubber molding, and brass forming.
Principal raw materials for these three segments are stainless, aluminized, galvanized, cold-rolled and vinylclad steel; aluminum sheets; and paint, brass, rubber, oil and zinc, all of which are available from a number of primary suppliers.
Automotive Original Equipment:
Principal products of the Automotive Original Equipment segment are exhaust systems (mufflers, exhaust and tail pipes, catalytic converters, tubular manifolds), ride control products (shock absorbers and MacPherson struts), gas springs, vacuum actuators, metal tubular parts, coated coil steel, press-molded thermoplastics, various other vinyl metal stampings, and both tube and tubeless tire valves.
Arvin is a leading producer of original equipment exhaust systemssold to Ford, General Motors, Chrysler, Diamond-Star Motors and Mazda. The Company's Cheswick business unit is a leading producer of original equipment exhaust systems sold to Ford (Europe), Volvo, Jaguar, Seat and Nissan. Additionally, the Company's joint venture with Sango Co., Ltd. of Japan supplies exhaust systems for Toyota and Nummi Motors (GM/Toyota) vehicles manufactured in the United States and Canada. The Company's Way Assauto joint venture supplies shock absorbers to Fiat vehicles manufactured in Italy. The Company is also a major supplier of catalytic converters to Chrysler and supplies original equipment shock absorbers to Ford, Chrysler and Nissan in the United States. The Company's APA subsidiary also supplies ride control products to European automotive original equipment market customers Ford, Renault, Seat and Nissan.
In addition to exhaust systems and ride control products, Arvin also supplies parts for the Automotive Original Equipment segment. Arvin's Roll Coater subsidiary is a leading independent coater of coil steel which is used in fabricating automobile and truck body parts. Schrader Automotive Inc. ("Schrader") is a leading worldwide producer of valves for pneumatic tires and inner tubes sold directly to automobile, truck and tire manufacturers. Arvin also produces a variety of decorative interior and exterior trim parts, stampings and vinyl-metal laminates, diesel engine oil pans and other fabricated metal parts for manufacturers of both automobiles and heavy-duty trucks and also produces press molded thermoplastics and other assembled metal components for original equipment applications.
The majority of the Company's products sold in this segment are handled by Arvin sales staff located throughout the U.S. and Europe.
Automotive Replacement:
Principal products of the Automotive Replacement segment include replacement mufflers, exhaust and tail pipes, catalytic converters, shock absorbers, MacPherson struts, gas springs, brake and front-end parts, tire valves and accessories.
Through Maremont Exhaust, Timax Exhaust Systems (formerly Bainbridge), Etablissements Rosi and Ansa Marmitte, the Company is a leading worldwide manufacturer and supplier of replacement exhaust systems and through Gabriel Ride Control the Company is a leading North American manufacturer and supplier of replacement shocks and other ride control products. Products are marketed under both customers' private labels as well as under the Company's own brand names: "Maremont", "Cherry Bomb", "TIMAX", "Truckmaster" and "Romax" for mufflers, "Gabriel" for shock absorbers and "Strong Arm" for gas springs. Maremont Exhaust and Gabriel Ride Control distribute their products through mass merchandisers (e.g. Sears, K-Mart), installers (e.g. Meineke, Firestone) and wholesale distributors (e.g. Parts Inc., Carquest). In Europe, significant customers for Timax Exhaust Systems include KwikFit and Partco.
Schrader is a worldwide leading supplier of tire valves and related accessories to the replacement parts market. Schrader products, which enjoy strong brand name recognition, are sold through a broad range of distribution channels, including automotive warehouse distributors and mass merchandisers.
All products in this segment are sold by a combination of the Company's own sales force and independent manufacturer's representatives.
Technology:
In the Technology segment, the Company's merger of its Calspan subsidiary with Space Industries, Inc. resulted in the Company owning approximately 70 percent of the new Space Industries International, Inc. (SIII). The Calspan business unit of SIII performs research, development and testing services on a contract basis for both government (primarily the Air Force, the National Aeronautics and Space Administration, the Navy and the Department of Transportation) and industry. Services include development and evaluation of aerodynamics, automobile crash testing and accident research, tire performance, restraint systems, aircraft systems, electronic systems analysis, surface and laser chemistry, non-destructive material evaluation, and networked computer systems. Calspan also manufactures sophisticated electronic monitoring systems, manages government-owned research facilities on a fixed-term contract basis, and operates its own wind tunnel and flight training simulators. The Space Industries business unit of SIII develops and designs products and services primarily for aerospace applications.
Facilities for SIII are located in the U.S. SIII employs primarily scientists and other research-oriented employees.
Industrial:
In the Industrial segment, Roll Coater supplies pre-coated coils of steel and aluminum to manufacturers of preengineered buildings, office furniture, metal shelving and housings for refrigerators, washers and dryers. Roll Coater also has a metal embossing line which enables it to offer embossed designs on prepainted finishes such as metal garage and refrigerator doors. The Industrial segment also produces vinylmetal laminate wraps to customer specifications for use in such products as cabinets for consumer appliances and electronic components.
Schrader provides the Industrial segment with valves and valve cores for various commercial applications. In addition, Gabriel Ride Control supplies customers in this segment with special application shock absorbers.
The Company's products in this segment are marketed by the Arvin sales staff and/or independent manufacturers' representative organizations located throughout the U.S.
Selected information by business segment is contained in NOTE 13 located at item 8 herein.
B. Number of Employees
Currently the Company has approximately 15,900 employees.
C. Competition and Customer Relationships
Each of the business segments in which the Company engages is highly competitive. Customer loyalty developed through longstanding relationships is a primary element of competition. The Company's longstanding relationships with its principal customers has been dependent upon the Company's ability to meet such customers' quantity and quality requirements in a timely manner.
The loss of a principal customer, or a significant decline in the requirements for the Company's products (resulting, for example, from a prolonged strike against the customer) could have a materially adverse effect on the operating results or financial condition of the Company. In 1993, the Company had sales to three customers that equaled or exceeded 10% of its consolidated net sales, Ford Motor Company-15.2 percent, General Motors-10.2 percent, and the U.S. Government-10.0 percent.
In the OE segment, the Company competes with vehicle manufacturers and independent suppliers. The Company believes that it is the leading supplier among four major competitors in the North American OE exhaust systems market and one of the leaders among nine major competitors in Western Europe. For OE ride control products, the Company believes that it is one of the three largest suppliers in the North American market and one of seven major suppliers in Western Europe. The Company believes that it is the leading worldwide supplier of OE tubeless tire valves.
The Company also competes with vehicle manufacturers and independent suppliers in the Replacement segment. The Company believes that it is one of four primary suppliers in the North American replacement exhaust systems market and the leader of five major suppliers in western Europe. The Company is one of two major suppliers in the North American replacement ride control products market and is one of several suppliers in western Europe. The Company believes that it is the leading worldwide supplier of Replacement tire valves.
The customer base for the Company's products in its Industrial segment (non-automotive derivatives of products sold in the OE and Replacement segments; vinyl-metal laminates; precoated steel coils) is large and the market is highly fractionalized. As a result, it is not possible for the Company to estimate its market position in this segment.
In the Technology segment the Company competes with numerous private contractors for the research, development, testing and evaluation business of federal government agencies. Business in this segment is generally obtained through sole sourced negotiated contracts, competitive bidding on fixed-price or cost-plus fixed-fee service contracts and research and development contracts or cost plus award fee contracts for the management and operation of government-owned research and testing facilities. Because of the nature of government contracting, it is not possible for the Company to estimate its market position in this segment.
D. Regulations
United States air pollutant emissions as well as acoustical emissions are controlled by government regulations that, coupled with mandated fuel economy improvements, continue to affect Arvin. Over the near term the Company does not anticipate any regulatory changes that will materially impact the use of catalytic converters in the United States.
European air pollutant emissions regulations continue to become more stringent and are currently on a country by country basis. The Company anticipates that the European Community will continue to phase in emission control standards in the future. Such emission control regulations will mandate the use of catalytic converters and/or other emissions control devices, and should have a positive impact on the results of operations for the Company.
Arvin believes its facilities either comply with applicable environmental control regulations or remedial action is being taken to bring such facilities into compliance. While Arvin does not believe that continuing compliance will have a material effect on its competitive condition, some additional capital expenditures and other expenses will be required to maintain compliance with such regulations.
E. Patents
The Company owns a considerable number of patents and patent applications which are, in its judgment, adequate for, but not essential to, the conduct of its businesses.
ITEM 2.



ITEM 2. PROPERTIES
The Company has manufacturing facilities, distribution outlets, sales offices and research centers located throughout the world.
Automotive Original Equipment:
The Company utilizes approximately 4,391,000 square feet to conduct its business activities related to the OE segment.
Principal manufacturing facilities in the United States are located in Columbus, Indiana, Franklin, Indiana, Greenwood, Indiana, Dexter, Missouri, Fayette, Alabama and Pulaski, Tennessee. The facilities in Columbus, Indiana and Franklin, Indiana are owned while the other principal manufacturing facilities are leased (capital leases financed by industrial revenue bonds). Principal sales offices for this segment are leased in Rochester Hills, Michigan.
Although productive capacity in the United States automotive industry exceeds demand, the Company's original equipment facilities are currently nearly fully utilized. Due to the cyclical nature of the automotive industry, anticipated growth in the Company's volume should utilize any excess capacity.
Principal manufacturing facilities outside of the United States are located in the United Kingdom, Spain, The Netherlands, Italy and Canada. Additional manufacturing activities are conducted in South Africa, France, Brazil and Mexico. The Company's facilities in these countries are adequate for its current level of business. While most facilities are nearly fully utilized, some European facilities have excess capacity. In order to meet increased catalytic converter demand in Europe, the Company has constructed a second European converter plant in The Netherlands.
Automotive Replacement Parts:
The Company utilizes approximately 3,634,000 square feet of space to conduct its Replacement parts business.
Principal manufacturing facilities located within the United States are in Loudon, Tennessee, Chickasha, Oklahoma and Pulaski, Tennessee. These facilities are nearly fully utilized and provide the Company adequate productive capacity. Also, the United States Replacement operations lease a warehouse in Utah from which its products are distributed. The Company no longer utilizes warehouses that charge a volume based fee. Warehouses previously utilized currently purchase inventory outright as independent customers.
Principal Manufacturing facilities located outside the U.S. are in the United Kingdom and Canada. Other manufacturing activities are conducted in Italy, South Africa, France and Brazil. The major distribution center, in Blackpool, England, is leased as are many other smaller distribution centers in the United Kingdom and The Netherlands. The Company considers these facilities adequate to conduct its business.
Technology:
The Company utilizes approximately 1,639,000 square feet to conduct its research and testing activities. Approximately 51% of the square footage used is provided by the U. S. government while about 30% is owned and the remainder is leased. Research Centers are located in New York, Virginia, Massachusetts, California, Texas, Florida, Pennsylvania, Ohio, Alabama and Tennessee. The Company's research centers are nearly fully utilized and are considered adequate and suitable for conducting its research activities.
Industrial:
The Company utilizes 766,000 square feet to conduct business activities related to this segment. Principal manufacturing facilities are located in Kingsbury, Indiana, Greenfield, Indiana and Columbus, Indiana. Additional manufacturing activities are conducted in Monroe, North Carolina and France. These facilities are nearly fully utilized and adequate for conducting the current level of business.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
As previously reported, the Company is defending legal actions arising from the May 1987 sale of Saco Defense Inc. ("Saco"), a former Maremont subsidiary, to Chamberlain Mfg. Corporation ("Chamberlain"), a subsidiary of Duchossois Industries, Inc.
One suit, filed by Chamberlain, is based on assertions that there were at the time of the stock sale known defects in products manufactured by Saco under contracts with the Air Force. On December 15, 1993, an order was entered dismissing the Company as a defendant in this case, but Maremont still remains a defendant.
Chamberlain also made a so-called "Voluntary Disclosure" to the United States Government regarding the alleged product defects, as a result of which a jury investigation was conducted in Portland, Maine. It is the Company's understanding that the grand jury has expired and that no indictments were returned against any present or former Maremont or Saco employees.
Chamberlain filed a further suit against the Company and Maremont in January, 1992, also in the United District Court for the Northern District of Illinois, alleging that the Company failed to disclose Saco's liability for certain workers' compensation claims outstanding at the date of sale. Formal discovery is in the final stages in this case and has been completed in the product defects lawsuit. No trial date has been set in either case.
In December, 1991 the United States Government filed a civil suit against Maremont in the United States District Court for the District of Maine asserting claims under the False Claims Act based upon Saco's alleged knowing shipment of defective products under the aforesaid Air Force contracts, asking $9 million in damages. This lawsuit was settled in 1992.
The Company is also defending various environmental claims and legal actions that arise in the normal course of business, including matters in which the Company has been designated a potentially responsible party at certain waste disposal sites or has been notified that it may be a potentially responsible party at other sites as to which no proceedings have been initiated. Neither the remediation method, amount of remediation costs nor the allocation among potentially responsible parties has been determined at the majority of these sites. At some of these sites the information currently available leads the Company to believe it has very limited or even de minimis responsibility. At the Company's former Platt Saco Lowell operations, the Company is a participant with the EPA and the current owner in a corrective action proceeding under the Resource Conservation and Environmental Recovery Act. Ground water and surface treatment facilities have been installed as interim measures. A final phase remediation feasibility study is expected to commence in 1994 to identify potential remediation alternatives and related cost estimates. Pending completion of such study the Company does not possess sufficient information to reasonably estimate its remediation costs at Platt Saco Lowell beyond provisions already recorded.
The Company has provided for reasonably estimable costs of study, cleanup, remediation and certain other environmental matters, taking into account, as applicable, available information regarding site conditions, potential cleanup methods and the extent to which other parties can be expected to bear those costs. The Company does not expect that resulting liabilities beyond provisions already recorded will have a materially adverse effect on the Company's financial position.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Security Holders during the fourth quarter for the 1993 fiscal year.
All terms of all officers of the Registrant run until their respective successors are elected and qualified.
All listed executive officers except Mr. Smith and Mr. Snyder have been employed by the Registrant or one of its subsidiaries for the past five years. Mr. Smith joined Arvin as Treasurer of the Company in November, 1989 and became Vice President-Finance in early 1990. Previously he was Vice President and Treasurer of the May Department Store Co. and also served as Vice President and Controller of its Volume Shoe Corporation subsidiary. Mr. Snyder joined Arvin in his current capacity in December, 1992. Previously he was a partner in the Indianapolis law firm Barnes & Thornburg.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Arvin's Common Shares are listed on the New York Stock Exchange and the Chicago Stock Exchange. Set forth below are the dividends declared on and the high and low sales prices of the Common Shares for each quarter during the last two fiscal years.
As of March 7, 1994, Arvin had 6,399 holders of record of its Common Shares.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ACQUISITIONS During the third quarter of 1993, Arvin Industries, Inc. (the Company) entered into three strategic alliances. The Company's Calspan subsidiary was merged with Space Industries, Inc. The Company owns approximately 70 percent of the new company, Space Industries International, Inc. (SIII). Additionally, the Company acquired a 49.9 percent interest in Way Assauto S.r.I., an original equipment ride control manufacturer located in Asti, Italy. The Company also formed a 50/50 replacement market exhaust joint venture with Sogefi S.p.A. located in Mantova, Italy. The new venture includes Sogefi's formerly wholly owned subsidiaries Etablissements Rosi and Ansa Marmitte and a portion of the operating assets of the Company's Timax business unit.
During 1992 the Company acquired a 50 percent interest in Schmitz & Brill GmbH, a German-based automotive parts manufacturer. The 1993 and 1992 transactions are consistent with the Company's strategy of increasing its presence in the worldwide automotive parts market.
DISCONTINUED OPERATIONS In 1991 the Company completed the sale of its ArvinAir subsidiary. The impact of the ArvinAir divestiture was not material to the Company's consolidated financial results.
RESULTS OF OPERATIONS 1993 sales of $1.94 billion represent a new record for the Company, exceeding 1992 sales of $1.89 billion by three percent and 1991 sales of $1.68 billion by 16 percent.
AUTOMOTIVE ORIGINAL EQUIPMENT SEGMENT SALES 1993 VS 1992 Original Equipment ("OE") segment sales increased 11 percent in 1993 over 1992. The increase in OE sales was attributable to higher North American light vehicle production, new exhaust business in North America, and increased demand for catalyst assemblies in Europe. This increase was partially offset by the unfavorable exchange rate impact of a stronger U.S. dollar, estimated at $45 million.
1992 VS 1991 OE sales increased 19 percent in 1992 over 1991. The increase in sales was attributable to increased exhaust and ride control volume, which was in part due to the nine percent increase in North American light vehicle production, new exhaust business in both North America and Europe and continued growth in catalyst sales in Europe.
AUTOMOTIVE REPLACEMENT SEGMENT SALES 1993 VS 1992 Automotive Replacement ("Replacement") segment sales decreased eight percent in 1993 from 1992. The decrease was primarily due to an unfavorable distribution channel shift and lower demand for ride control products in North America, combined with an estimated $30 million effect of a stronger U.S. dollar during the year.
1992 VS 1991 Replacement segment sales increased 11 percent in 1992 over 1991. This increase was principally the result of new ride control business and increased exhaust product demand in both North America and Europe.
TECHNOLOGY SEGMENT SALES 1993 VS 1992 Technology segment sales were flat for 1993 compared to 1992. Segment sales declined two percent during the last six months before the inclusion of post-merger Space Industries sales. Contracts awarded declined during the second half of 1993, resulting in lower realization of fourth quarter revenue.
1992 VS 1991 Technology segment sales decreased one percent in 1992 when compared to 1991. The modest decrease was primarily the result of a decline in available government contracts and the completion of several significant contracts during the year. Decreases were partially offset by increased revenues which were the result of expanded demand for technical and testing support.
INDUSTRIAL SEGMENT SALES 1993 VS 1992 Industrial segment sales increased three percent in 1993. This was primarily the result of increased coatings of metal garage doors and greater market penetration for industrial gas springs.
1992 VS 1991 Industrial segment sales increased seven percent in 1992 over 1991. Increased sales were primarily the result of new business in coated metal applications.
AUTOMOTIVE ORIGINAL EQUIPMENT SEGMENT INCOME 1993 VS 1992 OE segment income from operations increased 25 percent in 1993 over 1992. Productivity improvements and higher exhaust volumes in North America offset lower earnings from unconsolidated affiliates (see Note 15) and the unfavorable impact of a stronger U.S. dollar.
1992 VS 1991 OE segment income from operations for 1992 improved by 58 percent over 1991. Income from unconsolidated affiliates represented four percent of the increase in 1992. However, the primary reasons for the increase in operating profit during the period were improved exhaust product volume in both North America and Europe, the favorable mix of exhaust products sold during the year, and improved operating efficiencies.
AUTOMOTIVE REPLACEMENT SEGMENT INCOME 1993 VS 1992 Replacement segment income decreased 19 percent in 1993 from 1992. Lower volumes, an unfavorable North American ride control product mix, higher operating costs associated with reorganizing the European exhaust business, and the effect of a stronger U.S. dollar all negatively impacted income from operations.
1992 VS 1991 Replacement segment income increased 27 percent in 1992 when compared to 1991. Income from unconsolidated affiliates represented 15 percent of the increase in 1992; however, increased profits were primarily the result of higher volumes of exhaust and ride control products, principally in North America. Increased volumes were attributable to both new customers and increased demand. Other factors favorably affecting operating profit in 1992 included favorable product mix and continued efforts to reduce operating costs worldwide.
TECHNOLOGY SEGMENT INCOME 1993 VS 1992 Technology segment income decreased 82 percent from 1992 to 1993. Lower operating profits were attributed to higher bid and proposal costs resulting from the increased competition in securing contracts, expenses associated with the merger of the Company's Calspan subsidiary with Space Industries, Inc. (see Note 2), and the expensing of actual overhead rates in excess of provisional rates billed on government contracts.
1992 VS 1991 Technology segment income declined 19 percent during 1992. The decline in operating profit reflects the completion of several significant contracts during 1992 and the changing environment in securing government contracts, in which increased competition for fewer contracts has resulted in higher proposal costs and lower margins.
INDUSTRIAL SEGMENT INCOME 1993 VS 1992 Industrial segment income for 1993 improved by 59 percent over 1992. Higher volumes in metal coatings and industrial gas springs, and improved cost containment efforts resulted in increased income from operations in 1993.
1992 VS 1991 Industrial segment income increased 82 percent in 1992 over 1991. Operating profits increased at a greater rate than did sales as a result of the effect of increased volume on fixed costs and improved operating efficiencies.
Net Income in 1993 increased one percent and 77 percent, respectively, when compared to 1992 and 1991 prior to the cumulative effect of changes in accounting principles. Lower selling, general and administrative expenses, decreased interest expense and a lower effective tax rate offset lower earnings from unconsolidated affiliates.
The Company elected the early adoption of three new accounting standards in 1992. Statements of Financial Accounting Standards (SFAS) No. 106 and 112 were adopted effective December 30, 1991 (see NOTE 8 at item 8


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements:
Consolidated Statement of Operations for each of the three years in the period ended January 2, 1994 Consolidated Statement of Financial Condition at January 2, 1994 and January 3, 1993 Consolidated Statement of Shareholders' Equity for each of the three years in the period ended January 2, 1994 Consolidated Statement of Cash Flows for each of the three years in the period ended January 2, 1994 Notes to Consolidated Financial Statements Report of Independent Accountants and Independent Auditors' Report
Financial Statement Schedules: For each of the three years in the period ended January 2, 1994 V - Property, Plant and Equipment VI - Accumulated Depreciation VIII - Valuation and Qualifying Accounts IX - Short-Term Borrowings X - Supplementary Income Statement Information
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
Financial statements of unconsolidated affiliates have been omitted because the registrant's proportionate share of the income from continuing operations before income taxes, and total assets of each such company is less than 20% of the respective consolidated amounts, and the investment in and advances to each company is less than 20% of consolidated total assets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in tables in thousands unless noted otherwise)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation: The consolidated financial statements include the accounts of the parent company and all majority-owned subsidiaries. Affiliates that are 20 percent to 50 percent owned are accounted for using the equity method. Affiliates that are less than 20 percent owned are carried at cost.
Cash Equivalents: The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Inventories: Substantially all inventories located in the U.S. are stated under the last-in, first-out (LIFO) cost method. The remaining inventories are stated primarily on a first-in, first-out (FIFO) basis.
Property, Plant, and Equipment: Property, plant and equipment includes capital leases and significant additions or improvements extending asset lives. Maintenance and repair costs are expensed as incurred. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets for financial reporting purposes and accelerated methods for income tax purposes.
Excess of Cost Over Acquired Net Assets: The excess of cost over the fair market value of net assets acquired is amortized over periods ranging from 15 to 40 years using the straight line method.
Contract Revenue Recognition: Revenues on short and longterm service contracts for both government and industry are recorded on the percentage of completion method. Provisions for anticipated losses are made in the period in which they first become determinable. Unbilled receivables at year-end 1993 and 1992 were $21 and $27 million, respectively.
Foreign Currency: The functional currency of the consolidated operating subsidiaries, except for those operating in hyperinflationary economies, is the local currency of the country in which the subsidiary is located. The Company reclassifies gains and losses arising from the remeasurement of hyperinflationary currencies against the related operating statement line items. These reclassifications have no effect on net earnings.
Foreign exchange gains and (losses) included in the consolidated statement of operations for 1993, 1992 and 1991 were not material.
The Company occasionally uses forward exchange contracts and options to protect the U.S. dollar value of certain foreign currency positions and future foreign currency transactions. At January 2, 1994 the amount of options and forward exchange contracts outstanding was not material.
Pension Plans: Substantially all domestic employees of the Company are covered by non-contributory trusteed pension plans. Employees of the Company's United Kingdom operations are covered by contributory trusteed pension plans. Benefits are based on, in the case of certain plans, final average salary and years of service and, in the case of other plans, a fixed amount for each year of service. Net periodic pension costs for 1993, 1992 and 1991 were determined using the Projected Unit Credit Cost Method. The Company's funding policy provides that annual contributions to the pension trusts will be at least equal to the minimum amounts required by ERISA in the United States and actuarial recommendations in the United Kingdom.
Income Taxes: Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities.
Earnings Per Share: Earnings per share are based on the weighted average number of common and common equivalent shares outstanding during the year. Dividends on the Company's convertible exchangeable preferred shares, which were issued in the third quarter of 1989, are deducted from net earnings prior to calculating earnings per share for 1992 and 1991. The convertible exchangeable preferred shares were exchanged in 1992 for the convertible subordinated debentures due 2014.
Reclassifications: The Company has reclassified certain prior year financial information to conform with the current year's presentation.
Fiscal Year: The Company's fiscal year ends on the Sunday nearest to December 31.
NOTE 2 - ACQUISITIONS AND DISCONTINUED OPERATIONS:
During 1989 the Company adopted a formal plan to dispose of its ArvinAir subsidiary. The sale of this business took place during January, 1991. The ArvinAir division was reported as a discontinued operation (in the Consolidated Statement of Operations) during 1991.
In 1992, the Company acquired a 50 percent interest in Schmitz & Brill GmbH, a German-based automotive parts manufacturer. Schmitz & Brill is accounted for under the equity method.
During the third quarter of 1993, the Company completed the combination of the assets of its Calspan subsidiary with the assets of Space Industries, Inc. This transaction was accounted for as a purchase. The Company owns approximately 70 percent of the new company, Space Industries International, Inc. (SIII).
Space Industries, Inc. had capitalized $18.2 million related to an Industrial Space Facility (ISF). The ISF is the result of SIII-developed technology necessary to design, integrate and operate a man-tended orbital space facility. Until the U.S. Government makes decisions regarding the scope, schedule and cost of the anticipated International Space Station, the future economic potential of the ISF is uncertain. The ISF does not require any substantial additional engineering support at this time. The recovery of the capitalized costs is dependent on SIII's future success in selling technology, related services, or engineering designs of the ISF at profitable terms.
In the third quarter of 1993, the Company formed a 50/50 joint venture with Sogefi S.p.A. located in Mantova, Italy. The new venture includes Sogefi's formerly wholly owned subsidiaries Etablissements Rosi and Ansa Marmitte and a portion of the operating assets of the Company's Timax business unit.
Non-cash assets acquired, liabilities assumed and minority interest arising from these transactions were $59.3, $3.6 and $55.7 in millions, respectively.
Also during the third quarter of 1993, the Company purchased 49.9 percent of European ride control manufacturer Way Assauto S.r.l., located in Asti, Italy. Way Assauto manufactures principally for the original equipment market and is accounted for under the equity method.
NOTE 3 - INVENTORIES:
The Company uses the dollar-value link chain method for calculating its LIFO inventories. Since the Company uses the method of pooling by individual inventory components, e.g., steel, substrate, labor and overhead, to determine the overall index, it is impractical to classify LIFO inventories into the finished goods, work in process and raw material components. The reduction in LIFO inventories increased pre-tax earnings in the amount of $1 million in 1993 and $3 million in both 1992 and 1991.
Approximately $58 million and $61 million of total inventories at year-end 1993 and 1992 were stated on the LIFO method. The excess replacement costs of these inventories over the stated LIFO value were approximately $6 million and $7 million, respectively.
NOTE 4 - INCOME TAXES:
During 1993, no significant changes occurred in the conclusions regarding the need for a valuation allowance in any tax jurisdiction. Deferred tax assets relating to net operating loss (NOL) carryforwards and tax credit carryforwards, respectively, were available in various tax jurisdictions at January 2, 1994 expiring in the following years:
At year-end 1993 consolidated retained earnings included undistributed earnings of non-U.S. subsidiaries of approximately $112 million. These earnings are indefinitely reinvested in non-U.S. operations or will be remitted substantially free of additional U.S. income taxes. Accordingly, no provision has been made for income taxes that may be payable upon remittance of such earnings.
NOTE 5 - BORROWINGS:
Maturities of long-term debt for the years ended 1994 through 1998 are $2,543, $4,980, $65,698, $75,137, and $45,183, respectively. The 9 1/8 percent sinking fund debentures require annual payments of $4 million from 2005 to 2016.
The Company has two revolving credit facilities totaling $100 million with termination dates of June 30 and September 30, 1995. At January 2, 1994 there were no borrowings under either facility. In addition, the Company has uncommitted credit facilities totaling $192 million. At January 2, 1994 borrowings under these facilities totaled $6.5 million.
In October, 1993 one of the Company's foreign subsidiaries issued 10 3/8 percent Notes due 2018 under a financing agreement, guaranteed by the Company, which resulted in net proceeds of $48.0 million.
In January and February, 1994 the Company called for redemption at par all of its 8 3/8 percent Notes due 1997 and completed the issue of $75 million 6 7/8 percent Notes due 2001 to fund the redemption on March 1, 1994.
The Company uses interest rate swaps and options to manage its interest rate exposure. At January 2, 1994 the Company had swap and option agreements of $50 million and $75 million notional principal, respectively. The $50 million swap agreement effectively changes long-term debt from a fixed rate of interest to a floating rate of interest for a two year period. The $75 million option agreement, over a three year period, results in the Company paying a fixed rate of interest while receiving a floating rate of interest.
At January 2, 1994, the fair value of long-term debt, including that due within one year, was approximately $491 million. Fair value was estimated using market prices and discounted cash flow analyses, based on current borrowing rates for similar types of debt.
NOTE 6 - STOCK OPTIONS:
Two stock option plans for key employees have been authorized by the Company's shareholders. Options are granted at the fair market value on the date of grant and generally expire ten years later. On February 11, 1993 the Board of Directors adopted an amendment to the Company's 1988 Stock Benefit Plan, which was approved by the Shareholders during the April 1993 annual meeting, increasing the number of Common Shares that may be made subject to awards under the Plan from 1,800,000 to 2,760,000.
NOTE 7 - LEASES:
All non-cancelable leases with an initial term greater than one year have been classified as either capital or operating leases.
Future minimum payments under capital and operating leases and related subleases having non-cancelable terms of more than one year are as follows:
NOTE 8 - OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS:
A. Other Postretirement Benefits
The Company provides certain retiree health care benefits for a majority of its U.S. salaried employees. Employees are generally eligible for benefits upon retirement and completion of a specified number of years of credited service. The plans are contributory based on years of service, with contributions adjusted annually. Plan design changes to limit future cost increases to the Company were made to the plans effective January 1, 1992. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these plans in the future.
In the fourth quarter of 1992, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," changing to the accrual method of accounting for these benefits effective December 30, 1991. Prior to 1992, postretirement benefit expense was recognized when claims were paid. A pre-tax charge of $45 million ($28 million after taxes or $1.38 per share) was recorded as the cumulative effect of the accounting change at the beginning of 1992. This change also resulted in 1992 postretirement benefit expense of $5 million which was $3 million higher ($2 million after taxes or $.11 per share) than the previous pay-as-you-go cost.
Prior to 1992, outlays for health care benefits to retirees were not totally separable from those for active employees. Domestic expenditures for these benefits during 1991 totaled $15 million for 3,601 active and 765 retired employees.
The components of nonpension postretirement benefit expense in 1993 and 1992 were as follows:
The accumulated postretirement benefit obligation in the accompanying balance sheet at year-end 1993 and 1992, is comprised of the following components:
Future benefit costs were estimated assuming medical costs would increase at a 15 percent annual rate for 1992 and 1993, decreasing to 7 percent annual growth rate ratably over the next 8 years and then remaining at a 7 percent growth rate thereafter. A 1 percent increase in this annual trend rate would have increased the accumulated postretirement benefit obligation at January 2, 1994 by 16.7 percent. The effect of this change on the aggregate of service and interest cost for 1993 would be an increase of 20.6 percent. The weighted average discount rate used to estimate the accumulated postretirement benefit obligation was 7.5 percent and 8.25 percent at year end 1993 and 1992, respectively.
Certain of the Company's non-U.S. subsidiaries provide limited non-pension benefits to retirees. Most retirees outside the United States are covered by government sponsored and administered programs, and the cost of these programs is not significant to the Company.
B. Other Postemployment Benefits
In the fourth quarter of 1992, the Company adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits" effective December 30, 1991. Postemployment benefits include disability benefits, supplemental unemployment benefits, workers' compensation benefits, and continuation of health care benefits and life insurance coverage. Prior to 1992, the Company accounted for certain types of these benefits on a pay-as-you-go basis. SFAS 112 requires the use of the accrual method of accounting for postemployment benefits. Expenses are recognized as employee service is rendered. The effect of adopting SFAS 112 in 1992 resulted in an $8 million pre-tax charge ($6 million after tax or $0.29 per share).
NOTE 9 - CONTINGENCIES:
The Company is defending various environmental claims and legal actions that arise in the normal course of business, including matters in which the Company has been designated a potentially responsible party at certain waste disposal sites or has been notified that it may be a potentially responsible party at other sites as to which no proceedings have been initiated. Neither the remediation method, amount of remediation costs nor the allocation among potentially responsible parties has been determined at the majority of these sites. At some of these sites the information currently available leads the Company to believe it has very limited or even de minimis responsibility. At the Company's former Platt Saco Lowell operations, the Company is a participant with the EPA and the current owner in a corrective action proceeding under the Resource Conservation and Environmental Recovery Act. The Company is currently performing a remedial feasibility investigation at this site to identify the types and extent of contamination. Thereafter, a corrective measures study will be conducted to identify potential remediation alternatives and related cost estimates. Pending completion of the feasibility investigation and corrective measures study, the Company does not possess sufficient information to reasonably estimate its remediation costs at Platt Saco Lowell. The Company does not expect that resulting liabilities beyond provisions already recorded will have a materially adverse effect on the Company's financial position.
NOTE 10 - PENSION PLANS:
Net pension expense of $3 million in 1993, 1992, and 1991 is summarized as follows:
The funded status of the Company's pension plans at both year-end 1993 and 1992 is as follows:
The Company's domestic pension obligations were projected to, and the assets were valued as of the end of, 1993 and 1992. The assets, comprised almost entirely of high grade stocks and bonds, included 1.3 million shares of the Company's common stock at both year-end 1993 and 1992.
Assumptions used in determining the projected benefit obligation for the domestic plans included a discount rate of 7.5 percent, 8.25 percent, and 8.5 percent in 1993, 1992, and 1991, an expected return on plan assets of 9 percent for 1993, 1992, and 1991 and average salary increases of 5 percent for 1993, 1992, and 1991.
The Company's principal foreign-based defined benefit plans are in the United Kingdom (see Note 1). Actuarial estimates for these plans included net pension expense of $2 million in 1993 and $1 million for both 1992 and 1991, a projected benefit obligation of $42 million and $28 million and net plan assets of $50 million and $35 million in 1993 and 1992, respectively. The estimates for plan obligations and assets were projected to and valued as of the end of 1993 and 1992. Assumptions used in the determination of these estimates included a discount rate of 7.5 percent, 10 percent, and 10 percent, a return on plan assets of 9 percent, 10 percent, and 10 percent, and average salary increases of 5.5 percent, 7.5 percent, and 7.5 percent for 1993, 1992, and 1991, respectively.
NOTE 11 - REDEEMABLE PREFERRED SHARES:
On September 30, 1992 the Company exercised its option to exchange $100,455,000 of outstanding $3.75 convertible exchangeable preferred shares for 7.5 percent convertible subordinated debentures due 2014. As a result of the exercise, the Company issued 209,244 Arvin common shares to holders of exchangeable preferred shares exercising their right to convert such shares to common stock. All remaining convertible exchangeable shares were exchanged for $97,526,000 of 7.5 percent convertible subordinated debentures.
NOTE 12 - SHAREHOLDERS' EQUITY:
Preferred Stock Purchase Rights: During 1986 the Company distributed one Preferred Stock Purchase Right ("Right") to shareholders of record for each share of the Company's common stock held. The Rights entitle qualifying shareholders to purchase one-hundredth of a share of the Company's Series C Junior Participating Preferred Stock, of which 500,000 shares are authorized. The exercise price is $90 per share, subject to certain anti-dilution provisions.
The Rights have no voting power. The Rights are currently not exercisable, certificates representing the Rights have not been issued, and the Rights automatically trade with the Company's common shares. The Rights become exercisable in the event of an attempt by a person or group to acquire the Company on terms not approved by the Company's Board of Directors. The Rights, if exercised, will result in substantial dilution. The Rights are redeemable by the Board of Directors for $.10 per Right until a person or group acquires beneficial ownership of 20 percent or more of the Company's common shares, at which time they become non-redeemable. The Rights expire on June 13, 1996.
In February, 1989, the Company's Board approved an amendment to these purchase rights which entitles current shareholders to buy the Company's common shares at a reduced price should a third party acquire a 20 percent or more ownership.
Average common shares outstanding for 1993, 1992 and 1991 were 22,311, 20,054, and 19,094, respectively.
NOTE 13 - BUSINESS SEGMENTS:
The Company is engaged in the manufacture and sale of a broad range of products and services. Representative products and services by major category are described in item 1, above.
Sales to three customers exceeded 10 percent of total net sales in 1993. In 1992 and 1991, sales to two customers exceeded 10 percent of total net sales. Sales to all three customers are included in the business segments as follows:
Sales exported out of the United States and sales between business segments (affiliated customers) were not significant and are thus not separately reported. Information on the Company's geographic areas is as follows:
NOTE 14 - CONCENTRATIONS OF CREDIT RISK:
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable.
The Company's customer base includes virtually every significant automotive manufacturer and a large number of well known jobbers, distributors, and installers of automotive replacement parts in North America and Europe. The Company generally does not require collateral and the majority of its trade receivables are unsecured. Although the Company is directly affected by the financial well-being of the automotive industry, management does not believe significant credit risk exists at January 2, 1994.
NOTE 15 - INVESTMENTS IN AFFILIATES:
Included in Arvin's continuing operations at January 2, 1994 are equity interests of 50 percent or less in companies engaged in producing and providing automotive exhaust and ride control products, consisting primarily of a 50 percent interest in Timax Exhaust Systems' subsidiaries Etablissements Rosi and Ansa Marmitte, 50 percent interest in Arvin Sango, 49.9 percent interest in Way Assauto S.r.l., and a 50 percent interest in Schmitz & Brill.
The difference between the carrying amounts of the investments in affiliates, and the underlying equity in net assets, $35.0 million in 1993 and $0 in 1992, represents the excess of cost over acquired net assets which is being amortized over forty years using the straight line method. In 1993, 1992, and 1991 the Company received dividends from affiliates of $1.3, $2.4 and $0.4 million respectively.
Summarized financial information of the affiliates is as follows:
REPORT OF INDEPENDENT ACCOUNTANTS:
To the Shareholders and Board of Directors Arvin Industries, Inc.
In our opinion, based upon our audits and the report of other auditors, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Arvin Industries, Inc. and its subsidiaries at January 2, 1994 and January 3, 1993, and the results of their operations and their cash flows for each of the three years in the period ended January 2, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Space Industries International, Inc., an approximately 70% owned subsidiary, which statements reflect total assets of $126,590 at January 2, 1994 and net sales of $211,374 for the period ended January 2, 1994. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion herein, insofar as it relates to the amounts included for Space Industries International, Inc., is based solely on the report of other auditors. We conducted our audits of these statements in accordance with generally accepted accounting standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for the opinion expressed above.
As discussed in Note 8 to the consolidated financial statements, in 1992 the Company adopted Statement of Financial Accounting Standards (SFAS) 106 "Employers' Accounting for Postretirement Benefits Other than Pensions," and SFAS 112 "Employers' Accounting for Postemployment Benefits."
Price Waterhouse
Indianapolis, Indiana February 1, 1994 except as to Note 5 which is as of February 16, 1994
INDEPENDENT AUDITORS' REPORT
The Board of Directors Space Industries International, Inc.:
We have audited the accompanying consolidated balance sheet of Space Industries International, Inc. and subsidiaries (formerly Calspan Holding Corporation) as of January 2, 1994 and the related statements of operations, stockholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The financial statements of Space Industries International, Inc. and subsidiaries (formerly Calspan Holding Corporation) as of January 3, 1993 and December 29, 1991 were audited by other auditors whose report dated April 16, 1993 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Space Industries International, Inc. and subsidiaries (formerly Calspan Holding Corporation) as of January 2, 1994, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles.
The consolidated balance sheet as of January 2, 1994 includes $18,154,619 of capitalized costs related to the Space Facility Technology. As described in Note 4, the recovery of these costs is dependent on the future success in selling the Space Facility Technology or the Industrial Space Facility or the related service, at profitable terms or the sale of the engineering designs of the Industrial Space Facility.
KPMG Peat Marwick
Houston, Texas January 25, 1994
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Directors of the Registrant is contained in the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 14, 1994, under the caption "Election of Directors", and is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
This information is contained in the definitive proxy statement of Registrant for the Annual Meeting of Shareholders to be held April 14, 1994 under the caption "Executive Compensation" (exclusive of the portion under the subcaption "Report of the Compensation Committee of the Board of Directors on Executive Compensation") and is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is contained in the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 14, 1994 under the captions "Certain Beneficial Owners" and "Election of Directors" and is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is contained in the definitive proxy statement of the Registrant for the Annual Meeting of Shareholders to be held April 14, 1994 under the caption "Compensation Committee Interlocks and Insider Participation" and is incorporated herein by reference.
Part IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Consolidated Statement of Operations for each of the three years in the period ended January 2, 1994 Consolidated Statement of Financial Condition at January 2, 1994 and January 3, 1993 Consolidated Statement of Shareholders' Equity for each of the three years in the period ended January 2, 1994 Consolidated Statement of Cash Flows for each of the three years in the period ended January 2, 1994 Notes to Consolidated Financial Statements Report of Independent Accountants and Independent Auditors' Report
(a) (2) Financial Statement Schedules
For each of the three years in the period ended January 2, 1994 V - Property, Plant and Equipment VI - Accumulated Depreciation VIII - Valuation and Qualifying Accounts IX - Short-Term Borrowings X - Supplementary Income Statement Information
The registrant's financial statement schedules are included in item 8 herein.
(a) (3) Exhibits
The exhibits filed as a part of this Annual Report on Form 10K are:
(b) Reports on Form 8-K - ------------------------
No reports on Form 8-K were filed by the Company during the fourth quarter of 1993.
SIGNATURES
Arvin Industries, Inc.
by: ____________________ R.A. Smith Vice President-Finance & Chief Financial Officer
by: ____________________
R.L. Emshwiller Controller & Chief Accounting Officer
Date: March 31, 1994
The signatures that follow constitute a majority of the Board of Directors of the Registrant.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.
J.K. Baker March 31, 1994 Chairman of the Board of Directors
B.O. Pond March 31, 1994 Chief Executive Officer and President
V.W. Hunt March 31, 1994 Executive Vice President and Director
J.P. Allen March 31, 1994 Director
R.E. Fowler March 31, 1994 Director
J.P. Flannery March 31, 1994 Director
R.W. Hanselman March 31, 1994 Director
D.J. Kacek March 31, 1994 Director
Exhibit 10 (B)
Arvin Industries, Inc. Management Incentive Plans
For many years the Company has established annual incentive plans for its executive officers and other key employees. These plans provide for the payment to the eligible employees of additional cash compensation based on Comapny, divisional or individual performance as measured against criteria established at the beginning of the year. The executive officers of the Company were eligible for incentive compensation payments under the "1993 Executive Incentive Plan" which was approved by the Compensation Committee of the Board of Directors or Arvin Industries, Inc. The "1993 Executive Incentive Plan" provided for payments based on earnings per share and the acheivement of certain financial and other business-related objectives at the beginning of the year.
Exhibit 21
Arvin Industries, Inc. Subsidiaries of the Registrant
Exhibit 23(A)
Arvin Industries, Inc. Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-50371, No. 33-50381, No. 33-21717, No. 33-19049, No. 33-04407, No. 2-97395, No. 2-78417, and No. 33-40438) of Arvin Industries, Inc. of our report dated February 1, 1994 except as to Note 5 which is as of February 16, 1994, appearing in this Form 10-K.
Price Waterhouse
Indianapolis, Indiana March 29, 1994
Exhibit 23(B)
Arvin Industries, Inc. Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (No. 33-34818 and No. 33-41242) of Arvin Industries, Inc. of our report dated February 1, 1994 except as to Note 5 which is as of February 16, 1994, appearing in this Form 10-K.
Price Waterhouse
Indianapolis, Indiana March 29, 1994