BERU Group reports nine months´ figures

BERU increases profit after taxes in the first nine months of business year 1999/2000 by 69%

Ludwigsburg (Germany) February 23, 2000 --- BERU Group reported a significant increase in earnings for the first nine months of business year 1999/2000 (ending March 31, 2000). Backed by a strong market performance of diesel passenger cars in Europe and product launches in the field of automotive electronic systems, sales and net income exceeded expectations. Sales increased by 8.6% to DM 335.1 mn (DM 308.7 mn). Profit after taxes rose by 68.5% and amounted to DM 42.8 mn (DM 25.4 mn). The sale of the stake in Optek Technologies, Inc., Carrollton, USA, contributed DM 5.0 mn after taxes. BERU management will further expand its activities in the field of automotive electronics and is confident to maintain the achieved growth rate also for the full business year.

Diesel cold start technology and electronics push growth

Sales expansion by 8.6% topped the originally planned increase of 5-6%. Sales of BERU Mexico, BERU Korea and the recently acquired electronics company SIMESA, Spain will be consolidated at the end of the business year adding another 3-4% in sales growth. BERU has been able to further expand its position as the market leader in diesel cold start technology by launching new technologies such as the slim line glow plug and winning major orders from ISUZU, GM and Ford Group, Europe. Sales in the core business field diesel cold start technology outgrew the booming European diesel market: sales increased by 22.5% to DM 187.0 mn (DM 152.6 mn). Ignition technology for petrol engines however showed a decrease of 8.7% to DM 110.2 mn (DM 120.7 mn) due to lower than expected sales of ignition coils and ignition connectors and the high numbers of diesel passenger cars produced. In the business field sensors, suppression equipment and general industrial products, sales increased by 7.1% from DM 35.4 mn to DM 37.9 mn. Sales in BERU´s oil and gas burner industry´s systems business and sensor technology were particularly strong. The electronic tire pressure monitoring systems division, acquired in September 1999, contributed to sales for the first time.

Reducing costs while increasing personnel

Personnel expenses increased by 6.0% disproportionately to sales from DM 91.3 mn to DM 96.8 mn. Due to the sales expansion and the acquisition of the electronic tire pressure monitoring systems division from AMI Doduco the number of employees of BERU Group (at the balance sheet qualifying date December 31st, 1999) rose by 144 employees to 1,701 (1,557). During the first nine months BERU employed a world-wide average of 1,612 (1,472) people. This corresponds to an increase of 9.5%. As a percentage of sales personnel expenses were reduced from 29.6% to 28.9% although BERU created new jobs and the numbers of employees rose. Higher output had material costs increase from DM 100.9 mn to DM 103.0 mn. As a percentage of sales material costs were reduced further from 32.7% to 30.7%. High utilization of the production facilities caused well above average maintenance and repair costs so that other operating costs — that comprise expenses for marketing, sales, plant expenses and administration — increased from DM 52.8 mn to DM 54.4 mn. As a percentage of sales other operating expenses also decreased to 16.2% (17.1%).

EBIT margin above 20%

The ongoing efficiency programme and the increasingly optimized international production organisation combined with an increasing capacity utilizationto lift operating margins further. The sale of the stake in the Texan company Optek Technologies, Inc., Carrollton, USA resulted in a capital gain of DM 9.7 mn pre-tax. EBIT (earnings before interest and taxes) topped a year-ago´s level of DM 48.4 mn by 62.4% and reached DM 78.6 mn. The operating margin was established above the 20% level at 23.5%. Adjusted for the one-off income from the Optek sale, the EBIT margin came in at 21.6% after 15,7% in the previous year. Income from participations and financial result was slightly higher at DM 3.6 (3.4) mn so that pre-tax profit soared 58.7% totalling 82.2 (51.8) mn. Adjusted for Optek pre-tax profit was up 40.0%. Pre-tax profit margin rose from 16.8% to 24.5%. Adjusted for the Optek sale pre-tax profit margin still remains at 21.6%.

Profit after taxes picks up 69%, Cash Flow up 42%

Net income profited from the increasingly international organisation of the group and lowered corporate tax (income tax) rates. Taxation decreased to 47,9% following 51,0% in the previous year. Consequently profit after taxes in the first nine months 1999/2000 was up 68.5% amounting to DM 42.8 (25.4) mn. Adjusted for the Optek sale BERU still grew net income by 48.8%. Group cash flow (net income+amortization and depreciation on intangible fixed assets and property, plant and equipment) increased 42.2% to DM 64.7 (45.5) mn.

DVFA/SG earnings per share rises from DM 2.61 to DM 3.78

BERU increased adjusted DVFA/SG earnings per share above analysts´ expectations from DM 2.61 (Euro 1.33) to DM 3.78 (Euro 1.93) achieving a 44.8% year-on-year growth rate.

Full businesss year projected to come in above plan

BERU chairman of the board Ulrich Ruetz is confident to reach a sales and earnings increase for the full business year that will come in considerably above the original plan to increase sales by 5-6%. As has been the case in former years BERU projects another double digit increase in sales, exceeding DM 485 mn. Net income is expected to reach between DM 57 mn and DM 59 mn. It remains BERU´s goal to further strengthen its position as the world-wide market leader in the rapidly growing diesel cold start technology market and develop and market complete systems in automotive electronics. Further acquisitions and joint ventures will contribute to BERU´s expansion.

Possible Carlyle takeover bid for 30 Euro per share

The situation envolving the intention of The Carlyle Group Industrie-beteiligungs GmbH, Munich, Germany to make a bid for all outstanding BERU shares presumably in February remains unchanged. The board of BERU Aktiengesellschaft, Ludwigsburg, Germany was informed in December 1999 that The Carlyle Group Industriebeteiligungs GmbH, Munich, Germany had concluded an agreement with a group of family shareholders for the purchase of an expected 26,25 percent of BERU nominal capital. According to Carlyle the purchase price, that should then also be offered for all outstanding shares, had amounted to 30 Euro per share.

Share buyback started

In February, 2000, BERU Group made use of the authorization of the Annual General Meeting on September 15, 1999 and has started to purchase stocks at the stock exchange. The company carries substantial cash and generates a high free cash flow every business year whereas the valuation of the stock seems to not fully reflect the company´s financial performance and outlook. The Board considers to use the repurchased shares for further acquisitions by the BERU Group.

Consolidated Profit and Loss Account BERU Aktiengesellschaft, Ludwigsburg
First nine months 1999/2000 (April 1, — December 31, 1999)

in DM mn	1. nine months 1999/2000	1. nine months 1998/1999	change in %
Sales	335.1	308.7	8.6
Change in inventory of finished products and work-in-process	6.7	3.0	123.3
Other own work capitalised	0.5	0.3	66.7
Other operating income*	12.4	1.5	726.7
Material costs	103.0	100.9	2.1
Personnel expenses	96.8	91.3	6.0
Depreciation	21.9	20.1	9.0
Other operating expenses	54.4	52.8	3.0
Operating profit (EBIT)	78.6	48.4	62.4
Financial result	3.6	3.4	5.9
Income from ordinary activities	82.2	51.8	58.7
Extraordinary expenses	0.0	0.0	0.0
Pre-tax profit	82.2	51.8	58.7
Taxes on income**	39.4	26.4	49.2
Profit after taxes (PAT)	42.8	25.4	68.5
Earnings per share (in DM)	3.78	2.61
* including sale of Optek	9.7
** taxes on Optek	4.7
PAT excluding sale of Optek	37.8

Cash Flow Statement of the Group

in DM thou	12/31/1999 1999/2000	12/31/1998 1998/1999
Jahresüberschuß	42,757	25,382
Depreciation on intangible fixed assets and tangible assets	21,944	20,112
Result of the disposal of fixed assets	-58	-
Increase in special item for investment subsidies	823	502
Increase in inventories	-24,106	-15,872
Decrease in trade accounts receivable (previous year increase)	2,204	-8,915
Increase of other assets and prepaid expenses (previous year decrease)	-110	1,402
Decrease in other accruals (previous year increase)	-14,485	12,215
Increase in trade accounts payable (previous year decrease)	732	-2,694
Decrease of other liabilities and accrued expenses	-1,517	-3,084
Change in receivables from and liabilities to affiliated companies	-2,535	2,150
Inflow of funds from operating activities	25,649	31,485
Payments for investments in fixed assets	-40,700	-17,195
Outflow of funds for investment activities	-40,700	-17,195
Changes in liabilities due to banks	2,713	-4,205
Dividends paid out	-10,000	-8,000
Outflow of funds for financing activities	-7,287	-12,205
Effective changes in overall funds	-22,338	2,085
Total funds at beginning of period	157,750	156,697
Total funds at end of period	135,412	158,782

Consolidated Cash Flow

in DM mn	12/31/1999 1999/2000	12/31/1998 1998/1999
Net income	42.8	25.4
Depreciation	21.9	20.1
	64.7	45.5

Corporate background: BERU Group is a listed public company since October 1997. The company is the leading manufacturer of diesel cold start systems with an estimated world-wide market share of 40% for glow plugs. In the field of ignition technology for gasoline engines BERU is one of the four major manufacturers in Europe. The company also produces suppresser devices, sensors, ignition systems for the oil and gas burner industry as well as electronic controlling units. Almost all OE-manufacturers of automobiles, commercial vehicles and engines are BERU´s customers. The company´s headquarters are located in Ludwigsburg.