12th May 2008 - Affinia Group Announces Financial Results for First Quarter 2008

Affinia Group Inc. announced a 5.4% increase in sales for the first quarter ended March 31, 2008 compared with the first quarter ended March 31, 2007.  Additionally, operating profit for the first quarter improved by 64% over the same period in 2007. Operating profit was $18 million in the first quarter of 2008 compared with $11 million in the first quarter of 2007.  The Company also posted $18 million of operating cash flow for the first quarter of 2008, a $15 million improvement over the same period in 2007.

For the first quarter of 2008, net sales were $529 million, as compared to $502 million for the first quarter of 2007, increasing primarily as a result of currency movements against the US dollar.  In addition, the Company’s Brazilian operations had significant increases in volume in the first quarter of 2008 due to favorable market conditions in the Brazilian domestic aftermarket.  The higher sales in Brazil were largely offset by weaker sales in North America.

Gross profit for the first quarter of 2008 was $95 million, $1 million higher than in the first quarter of 2007.  Gross profit margin for the quarter was 18% compared to 19% for the same period in 2007.  The lower gross profit margin was due to lower sales in North America along with increased material and freight costs.

Selling, general and administrative expenses for the first quarter of 2008 were $77 million as compared to $83 million for the same period in 2007.  The reduction was due to lower restructuring, advertising and changeover expenses.

“Although we faced headwinds with respect to increasing material and freight costs, a significant reduction in our selling, general and administrative expense resulted in an operating profit margin of 3.4%, the strongest first quarter operating profit margin since Affinia came into existence in 2004” said Thomas Madden, Affinia’s Chief Financial Officer.

Net income for the quarter ended March 31, 2008 was $3 million, compared to a net loss of $3 million for the quarter ended March 31, 2007. The improvement in net income was primarily a result of a $6 million reduction in selling, general and administrative expense.

As of March 31, 2008 Affinia had $71 million of cash. Cash from operations for the first quarter resulted in an $18 million source of cash compared to a $3 million source of cash for the same period in 2007.  The improvement in operating cash flow was primarily attributable to a $7 million reduction in inventory in the first quarter as compared to a $39 million increase in inventory in the first quarter of 2007.  The quarter over quarter reduction in inventory was partially offset by an increase in the Company’s accounts receivable.  Capital expenditures of $6 million in the first quarter of 2008 remained unchanged from the same period in 2007.

Total long-term debt outstanding as of March 31, 2008 was $597 million, unchanged from the year ended December 31, 2007. At March 31, 2008 Affinia had no borrowings under its receivables securitization program and the Company continued to be in compliance with all covenants in its senior credit agreement including the following financial covenants: a leverage ratio, a cash interest expense ratio and a maximum annual capital expenditure.

Affinia Group Inc. is a global leader in the on- and off-highway replacement products and service industry. In North America the Affinia family of brands includes WIX® filters, Raybestos® , AIMCO® and BrakePro®  brake products, and McQuay-Norris® and Spicer® chassis parts. South American and European brands include Nakata®, Filtron®, Urba® and Quinton Hazell®. For more information, visit www.affiniagroup.com