TROY, Mich., May 5 /PRNewswire-FirstCall/ -- ArvinMeritor, Inc.
(NYSE: ARM) today reported financial results for its second fiscal
quarter ended March 31, 2009. Quarterly Highlights -- Sales of $1.1
billion, down approximately $671 million, or 38 percent, from the
same period last year (down 32 percent on a constant currency
basis). -- On a GAAP basis, net loss from continuing operations was
$52 million or $0.72 per diluted share, compared to net income from
continuing operations of $24 million or $0.33 per diluted share in
the same period last year. -- Loss from continuing operations,
before special items, of $9 million, or $0.12 per diluted share,
compared to income from continuing operations, before special
items, of $27 million, or $0.37 per diluted share in the same
period last year. -- Cash outflow from operations was $102 million
in the second quarter of fiscal year 2009. Excluding reductions in
sales of receivables, cash flow was positive $77 million resulting
from reductions in working capital and benefits of cost reduction
actions. -- Free cash outflow (cash outflow from operations less
capital expenditures) of $138 million in the second quarter of
fiscal year 2009 compared to positive free cash flow of $134
million in the same period last year. "We are proud of the strong
performance from our global operations teams despite continued low
volumes in the commercial and light vehicle markets," said Chip
McClure, chairman, CEO and president. "While revenues are down in
the OE light vehicle, truck and trailer businesses, compared to the
first quarter, we are reporting more favorable earnings due to a
continued focus on cost reduction efforts and strong performance
from our specialty and aftermarket groups." Second-Quarter Fiscal
Year 2009 Results For the second quarter of fiscal year 2009,
ArvinMeritor posted sales from continuing operations of $1.1
billion, a decrease of approximately 38 percent from the same
period last year. This decrease is primarily due to significantly
lower production volumes in most original equipment markets
globally. EBITDA, before special items, was $36 million, down $68
million from the same period last year. The unfavorable impact of
lower sales on EBITDA was partially offset by aggressive cost
reduction efforts and demand for specialty and aftermarket
products, driven by the company's military contracts and expanding
remanufacturing business. Also impacting EBITDA in the second
quarter of fiscal year 2009 was a favorable one-time adjustment of
$12 million resulting from the elimination of substantially all
variable incentive compensation. Loss from continuing operations,
before special items, was $9 million, or $0.12 per diluted share,
compared to income from continuing operations, before special items
of $27 million, or $0.37 per diluted share, in the same period last
year. Special items for the quarter primarily reflect $56 million
of pre-tax restructuring charges. Commercial vehicle sales were
$739 million, down 38 percent from the same period last year.
EBITDA, before special items, for Commercial Vehicle Systems was
$53 million for the quarter, down 37 percent from the second
quarter of fiscal year 2008, primarily due to lower sales. However,
compared to the company's first quarter, EBITDA, before special
items, was higher despite sales being down 23 percent. This
reflects the impact of our cost reduction actions as well as a
favorable mix of specialty and aftermarket products. Cost-Reduction
Actions During the first half of fiscal year 2009, the company
executed various actions to reduce costs and manage cash during
these difficult economic times. These actions are expected to
result in savings of approximately $430 million on an annual basis,
or $311 million for fiscal year 2009. Cost reduction actions
include the elimination of the Light Vehicle Systems (LVS)
divisional organization, temporary or permanent reduction of
approximately 3,000 employees globally, salary reductions,
suspension of annual salary increases, elimination of the 401-K
match, extended plant shutdowns across the company's global
operations, the elimination of all non-essential discretionary
spending and savings driven by the Performance Plus program. Light
Vehicle Systems Update In January, the company announced that
difficulties in the credit markets and continued volume weakness in
most markets prevented the sale of Body and Chassis as one entity
at an acceptable value. Therefore, the company has remained
intensely focused on managing both the Body Systems and Chassis
businesses for maximum cost efficiencies. EBITDA, before special
items, for LVS was negative $13 million for the quarter, compared
to negative $35 million in the first quarter. Improvements in labor
and burden, restructuring initiatives, pricing adjustments,
contract renegotiations and strong aftermarket sales contributed to
stronger performance this quarter. Body Systems has also been
awarded new business expected to be valued at more than $15 million
of annual sales in China, $60 million of annual sales in North
America (of which 80 percent is with non-U.S. companies) and more
than $47 million of annual sales in Europe. In total, we believe
these business wins represent significant sales over the life of
the programs and should enhance the value of this business. In
addition, the company continues to aggressively pursue exit
strategies for its Chassis businesses. ArvinMeritor anticipates
finalizing the first transaction for a significant unit of Chassis
in the near future. Impact of Chrysler Bankruptcy As of April 29,
ArvinMeritor had $7 million of outstanding receivables subject to
Chrysler's U.S. bankruptcy proceedings. Of that amount, only $3
million are expected to be outside of administrative claim status.
Management has determined that if some or all of these receivables
are ultimately not collectible, the impact on the company's
second-quarter results would not be material. ArvinMeritor will be
impacted by Chrysler's announcement to idle its facilities during
the bankruptcy process. The company anticipates a 30-60 day
shutdown to have a negative impact on EBITDA in the range of $2
million to $5 million. Liquidity The ArvinMeritor management team
remains focused on managing the business for maximum liquidity. At
the end of the second quarter, the company was in compliance with
all covenants in our senior secured credit facility and the U.S.
securitization facility. It is possible that the company may need
amendments or waivers to these facilities before the end of the
2009 fiscal year in order to increase the flexibility afforded to
ArvinMeritor through the senior secured debt-to-EBITDA covenants.
If such amendments or waivers are not needed by the end of the
third fiscal quarter, it is increasingly likely that they will be
needed on Sept. 30, 2009. If amendments or waivers are needed and
not obtained, the company would be in violation of the debt to
EBITDA covenant and the lenders would have the right to accelerate
the obligations. Even with amendments or waivers to the company's
senior secured credit facility and the U.S. securitization
facility, it may be necessary to pursue additional liquidity
enhancing actions, which are not entirely within the company's
control, including exploring asset sales or obtaining additional
external sources of liquidity. Outlook While current market
conditions remain depressed, North America and South America are
showing signs of stabilization, and certain markets in Asia are
indicating slight signs of improvement, offsetting continued
declines in Europe. For the third quarter of fiscal year 2009
(compared to the second fiscal quarter of 2009), the company
anticipates: -- Revenue to be about flat -- Loss per share, before
special items, to be greater -- Free cash flow, before reductions
in sales of receivables, to be positive -- Total free cash flow to
be slightly negative "ArvinMeritor was proactive in taking
aggressive steps to preserve liquidity through this downturn and
continues to be diligent in maintaining all of the actions put into
place in the past six months," said McClure. "We will continue to
operate with that same rigor, while maintaining a constant focus on
the company's financial position. We anticipate that we will begin
to see positive signs of improvement in some markets during the
second half of this year." About ArvinMeritor ArvinMeritor, Inc. is
a premier global supplier of a broad range of integrated systems,
modules and components to the motor vehicle industry. The company
marks its centennial anniversary in 2009, celebrating a long
history of 'forward thinking.' ArvinMeritor serves commercial
truck, trailer and specialty original equipment manufacturers and
certain aftermarkets, and light vehicle manufacturers. ArvinMeritor
common stock is traded on the New York Stock Exchange under the
ticker symbol ARM. For more information, visit the company's Web
site at: http://www.arvinmeritor.com/. Forward-Looking Statements
This presentation contains statements relating to future results of
the company (including certain projections and business trends)
that are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are typically identified by words or phrases such as
"believe," "expect," "anticipate," "estimate," "should," "are
likely to be," "will" and similar expressions. There are risks and
uncertainties relating to the approval by the New York Stock
Exchange of our plan to meet compliance with listing requirements,
our ability to obtain any needed amendment to our credit agreement,
our ability to achieve anticipated cost savings from cost reduction
actions and the planned disposition of the Body Systems and Chassis
Systems businesses of ArvinMeritor's LVS business, including the
timing and certainty of completion and the terms of any transaction
or transactions. In addition, actual results may differ materially
from those projected as a result of certain risks and
uncertainties, including but not limited to global economic and
market cycles and conditions, including the recent global economic
crisis; whether we will have sufficient liquidity as we continue to
be affected by declining vehicle production volumes; the financial
condition of the company's suppliers and customers, including
potential bankruptcies; possible adverse effects of any future
suspension of normal trade credit terms by our suppliers; the
ability of the company to continue to comply with covenants in its
financing agreements; the ability of the company to find a
replacement facility for its U.S. securitization facility; the
ability of the company to access capital markets; credit ratings of
the company's debt; continued decline in the price of our common
stock on the NYSE; the demand for commercial, specialty and light
vehicles for which the company supplies products; risks inherent in
operating abroad (including foreign currency exchange rates and
potential disruption of production and supply due to terrorist
attacks or acts of aggression); availability and sharply rising
cost of raw materials, including steel and oil; OEM program delays;
demand for and market acceptance of new and existing products;
successful development of new products; reliance on major OEM
customers; labor relations of the company, its suppliers and
customers, including potential disruptions in supply of parts to
our facilities or demand for our products due to work stoppages;
potential difficulties competing with companies that have avoided
their existing contracts in bankruptcy and reorganization
proceedings; successful integration of acquired or merged
businesses; the ability to achieve the expected annual savings and
synergies from past and future business combinations and the
ability to achieve the expected benefits of restructuring actions;
success and timing of potential divestitures; potential impairment
of long-lived assets, including goodwill; potential adjustment of
the value of deferred tax assets; competitive product and pricing
pressures; the amount of the company's debt; the outcome of
existing and any future legal proceedings, including any litigation
with respect to environmental or asbestos-related matters; the
outcome of actual and potential product liability and warranty and
recall claims; rising costs of pension and other post-retirement
benefits and possible changes in pension and other accounting
rules; as well as other risks and uncertainties, including but not
limited to those detailed from time to time in filings of the
company with the SEC. These forward-looking statements are made
only as of the date hereof, and the company undertakes no
obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise,
except as otherwise required by law. All earnings per share amounts
are on a diluted basis. The company's fiscal year ends on the
Sunday nearest Sept. 30, and its fiscal quarters end on the Sundays
nearest Dec. 31, March 31 and June 30. All year and quarter
references relate to the company's fiscal year and fiscal quarters,
unless otherwise stated. Non-GAAP Measures In addition to the
results reported in accordance with accounting principles generally
accepted in the United States ("GAAP") included throughout this
press release, the company has provided information regarding
income or loss from continuing operations, diluted earnings per
share and operating income before special items, which are non-GAAP
financial measures. These non-GAAP measures are defined as reported
income or loss from continuing operations, reported diluted
earnings or loss per share, and EBITDA plus or minus special items.
Other non-GAAP financial measures include "free cash flow." EBITDA
is defined as income or loss from continuing operations before
interest, income taxes, depreciation and amortization and loss on
sale of receivables. We use EBITDA as the primary basis to evaluate
the performance of each of our reportable segments. Free cash flow
represents net cash provided by operating activities, less capital
expenditures. Management believes that the non-GAAP financial
measures used in this press release are useful to both management
and investors in their analysis of the company's financial position
and results of operations. In particular, management believes that
EBITDA is a meaningful measure of performance as it is commonly
utilized by management and the investment community to analyze
operating performance and entity valuation; and free cash flow is
useful in analyzing the company's ability to service and repay its
debt. Further, management uses these non-GAAP measures for planning
and forecasting in future periods. These non-GAAP measures should
not be considered a substitute for the reported results prepared in
accordance with GAAP. EBITDA should not be considered as an
alternative to net income as an indicator of our operating
performance or to cash flows as a measure of liquidity. Free cash
flow should not be considered a substitute for cash provided by
operating activities, or other cash flow statement data prepared in
accordance with GAAP, or as a measure of financial position or
liquidity. In addition, the calculation of free cash flow does not
reflect cash used to service debt or cash received from the
divestitures of businesses or sales of other assets and thus does
not reflect funds available for investment or other discretionary
uses. These non-GAAP financial measures, as determined and
presented by the company, may not be comparable to related or
similarly titled measures reported by other companies. Set forth on
the following pages are reconciliations of these non-GAAP financial
measures, if applicable, to the most directly comparable financial
measures calculated and presented in accordance with GAAP.
Second-Quarter 2009 Conference Call The company will host a
conference call and Web cast to present the company's fiscal year
2009 second-quarter financial results on Tuesday, May 5, 2009, at
4:30 p.m. (ET). To participate, call (617) 213-4854 ten minutes
prior to the start of the call. Please reference pass code 85210970
when dialing in. Investors can also listen to the conference call
in real time - or for seven days by recording - by visiting
http://www.arvinmeritor.com/. A replay of the call will be
available from 7:30 p.m. May 5, to 11:59 p.m. May 12, 2009, by
calling (888) 286-8010 (within the United States) or (617) 801-6888
for international calls. Please refer to replay pass code number
95313064. To access the listen-only audio Web cast, visit the
ArvinMeritor Web site at http://www.arvinmeritor.com/ and select
the Web cast link from the home page or the investor page. The
company's second-quarter financial results will be released prior
to the conference call and Web cast on May 5, 2009. The release
will be issued through PR Newswire, First Call and the company's
Web site. ARVINMERITOR, INC. CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) (In millions, except per share amounts) Quarter Ended
Six Months Ended March 31, March 31, 2009 2008 2009 2008 Sales
$1,110 $1,781 $2,480 $3,444 Cost of sales (1,022) (1,614) (2,319)
(3,147) GROSS MARGIN 88 167 161 297 Selling, general and
administrative (69) (105) (175) (197) Restructuring costs (56) (5)
(82) (15) Asset impairment charges - - (279) - Other expense, net
(1) (1) (1) (1) OPERATING INCOME (LOSS) (38) 56 (376) 84 Equity in
earnings (losses) of affiliates (3) 6 1 17 Interest expense, net
(23) (20) (45) (47) INCOME (LOSS) BEFORE INCOME TAXES (64) 42 (420)
54 Benefit (provision) for income taxes 12 (14) (633) (24) Minority
interests - (4) 10 (7) INCOME (LOSS) FROM CONTINUING OPERATIONS
(52) 24 (1,043) 23 INCOME (LOSS) FROM DISCONTINUED OPERATIONS 5 (4)
5 (15) NET INCOME (LOSS) $(47) $20 $(1,038) $8 DILUTED EARNINGS
(LOSS) PER SHARE Continuing operations $(0.72) $0.33 $(14.41) $0.32
Discontinued operations 0.07 (0.05) 0.07 (0.21) Diluted earnings
(loss) per share $(0.65) $0.28 $(14.34) $0.11 Diluted average
common shares outstanding 72.6 72.5 72.4 72.5 ARVINMERITOR, INC.
CONSOLIDATED BALANCE SHEET (Unaudited, In millions) March 31,
September 30, 2009 2008 ASSETS: Cash and cash equivalents $165 $497
Receivables, trade and other, net 783 1,114 Inventories 506 623
Other current assets 115 218 Net property 530 775 Goodwill 423 522
Other assets 352 925 TOTAL ASSETS $2,874 $4,674 LIABILITIES AND
SHAREOWNERS' EQUITY (DEFICIT) Short-term debt $141 $240 Accounts
payable 715 1,287 Other current liabilities 435 610 Long-term debt
1,376 1,063 Retirement benefits 654 690 Other liabilities 272 247
Minority interests 50 75 Shareowners' equity (deficit) (769) 462
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY (DEFICIT) $2,874 $4,674
ARVINMERITOR, INC. CONSOLIDATED BUSINESS SEGMENT INFORMATION
(Unaudited, In millions) Quarter Ended Six Months Ended March 31,
March 31, 2009 2008 2009 2008 Sales: Commercial Vehicle Systems
$739 $1,192 $1,695 $2,272 Light Vehicle Systems 371 589 785 1,172
Total sales $1,110 $1,781 $2,480 $3,444 EBITDA: Commercial Vehicle
Systems $15 $84 $45 $155 Light Vehicle Systems (29) 19 (331) 21
Total Segment EBITDA (14) 103 (286) 176 Unallocated Corporate Costs
(7) (4) (23) (5) Total EBITDA (21) 99 (309) 171 Loss on Sale of
Receivables (2) (5) (6) (9) Depreciation and Amortization (18) (36)
(50) (68) Interest Expense, Net (23) (20) (45) (47) Benefit
(Provision) for Income Taxes 12 (14) (633) (24) Income (Loss) from
Continuing Operations $(52) $24 $(1,043) $23 ARVINMERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, In
millions) Six Months Ended March 31, 2009 2008 OPERATING ACTIVITIES
Income (loss) from continuing operations $(1,043) $23 Adjustments
to loss from continuing operations: Depreciation and amortization
50 68 Asset Impairment charges 279 - Deferred income tax expense
632 21 Restructuring costs, net of payments 41 (5) Pension and
retiree medical expense 43 52 Other adjustments to income (loss)
from continuing operations, net 7 (5) Pension and retiree medical
contributions (61) (43) Proceeds from terminations of interest rate
swaps - 28 Changes in off-balance sheet receivable securitization
and factoring (183) 197 Changes in assets and liabilities (197)
(430) Cash flows used for continuing operations (432) (94) Cash
flows used for discontinued operations, net (8) (14) CASH USED FOR
OPERATING ACTIVITIES (440) (108) INVESTING ACTIVITIES Capital
expenditures (84) (63) Acquisitions of businesses and investments,
net of cash acquired - (41) Proceeds from disposition of property
and businesses 2 8 Proceeds from investments and marketable
securities 6 5 Net investing cash flows provided by discontinued
operations - 55 CASH USED FOR INVESTING ACTIVITIES (76) (36)
FINANCING ACTIVITIES Borrowings (payments) on accounts receivable
securitization program (23) 128 Borrowings on revolving credit
facility, net 318 - Repayment of notes (83) (5) Borrowings on lines
of credit and other, net 6 4 Net change in debt 218 127 Debt
issuance and extinguishment costs - (6) Cash dividends (8) (15)
CASH PROVIDED BY FINANCING ACTIVITIES 210 106 EFFECT OF CHANGES IN
FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (26) 6
CHANGE IN CASH AND CASH EQUIVALENTS (332) (32) CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD 497 409 CASH AND CASH
EQUIVALENTS AT END OF PERIOD $165 $377 ARVINMERITOR, INC. SELECTED
FINANCIAL INFORMATION - RECONCILIATION Non-GAAP (Unaudited) (In
millions, except per share amounts) LVS Q2 FY 09 Q2 FY 09
Separation Before Reported Restructuring Costs Special Items Sales
$1,110 $- $- $1,110 Gross Margin 88 - - 88 Operating Income (Loss)
(38) 56 2 20 Loss from Continuing Operations (52) 41 2 (9) Basic
Loss Per Share - Continuing Operations $(0.72) $0.57 $0.03 $(0.12)
Segment EBITDA: Commercial Vehicle Systems $15 $38 $- $53 Light
Vehicle Systems (29) 16 - (13) Total Segment EBITDA $(14) $54 $-
$40 Segment EBITDA Margins Commercial Vehicle Systems 2.0% 7.2%
Light Vehicle Systems -7.8% -3.5% Total Segment EBITDA Margins
-1.3% 3.6% Q1 FY 09 Q1 FY 09 Impairment Before Adjusted (1)
Restructuring Charges Special Items Segment EBITDA: Commercial
Vehicle Systems $30 $8 $8 $46 Light Vehicle Systems (302) 15 252
(35) Total Segment EBITDA $(272) $23 $260 $11 (1) Segment EBITDA
results for the first quarter of fiscal year 2009 have been
adjusted to conform to the year-to-date allocations of corporate
costs. ARVINMERITOR, INC. SELECTED FINANCIAL INFORMATION -
RECONCILIATION Non-GAAP (Unaudited) (In millions, except per share
amounts) Q2 FY 08 Q2 FY 08 Before Reported Restructuring Special
Items Sales $1,781 $- $1,781 Gross Margin 167 - 167 Operating
Income 56 5 61 Income from Continuing Operations 24 3 27 Diluted
Earnings Per Share - Continuing Operations $0.33 $0.04 $0.37
Segment EBITDA: Commercial Vehicle Systems $84 $- $84 Light Vehicle
Systems 19 5 24 Total Segment EBITDA $103 $5 $108 Segment EBITDA
Margins Commercial Vehicle Systems 7.0% 7.0% Light Vehicle Systems
3.2% 4.1% Total Segment EBITDA Margins 5.8% 6.1% ARVINMERITOR, INC.
EBITDA BEFORE SPECIAL ITEMS RECONCILIATION Non-GAAP (Unaudited, in
millions) Three Months Ended March 31, 2009 2008 Total EBITDA -
Before Special Items $36 $104 Restructuring Costs, net of minority
interests (55) (5) LVS Separation Costs (2) - Loss on Sale of
Receivables (2) (5) Depreciation and Amortization (18) (36)
Interest Expense, Net (23) (20) Benefit (Provision) for Income
Taxes 12 (14) Income (Loss) From Continuing Operations $(52) $24
ARVINMERITOR, INC. FREE CASH FLOW - RECONCILIATION Non-GAAP
(Unaudited, in millions) Quarter Ended March 31, 2009 2008 Cash
flows provided by (used for) operating activities, before
receivables securitization and factoring $77 $81 Changes in
receivables securitization and factoring (179) 82 Cash flows
provided by (used for) operating activities (102) 163 Capital
expenditures (36) (29) Free cash flow $(138) $134 (Logo:
http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO )
http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGODATASOURCE:
ArvinMeritor, Inc. CONTACT: Media Inquiries, Lin Cummins,
+1-248-435-7112, , or Investor Inquiries, Terry Huch,
+1-248-435-9426, Web Site: http://www.arvinmeritor.com/
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