TROY, Mich., Feb. 4 /PRNewswire-FirstCall/ -- ArvinMeritor, Inc. (NYSE:
ARM) today reported financial results for its first fiscal quarter ended
Dec. 28, 2008.
First-Quarter Highlights
-- Sales from continuing operations of $1.4 billion, down $293 million, or
18 percent, from the same period last year (down 11 percent on a constant
currency basis).
-- On a GAAP basis, net loss from continuing operations was $991 million
or $13.71 per diluted share, compared to a net loss from continuing operations
of $1 million or $0.01 per diluted share in the same period last year.
-- GAAP results reflect non-cash charges of $944 million, including
valuation reserves for certain deferred tax assets, and other asset
impairments primarily for Light Vehicle Systems (LVS) goodwill and fixed
assets.
-- Loss from continuing operations, before special items, of $56 million,
or $0.77 per diluted share, compared to income from continuing operations,
before special items, of $6 million, or $0.08 per diluted share in the same
period last year.
-- Free cash outflow (cash outflow from operations, net of capital
expenditures) of $386 million compared to an outflow of $305 million in the
first quarter of fiscal year 2008.
"Although significant volume declines and charges associated with the LVS
business negatively affected our results this quarter, we are aggressively
executing a series of actions to help mitigate the effects of the ongoing
economic crisis," said Chip McClure, chairman, CEO and president.
"Through continued focus on reducing costs, strengthening the aftermarket
business and gaining new military contracts, the Commercial Vehicle Systems
(CVS) business performed well. Despite the severe downturn in heavy truck
markets in most regions of the world, the CVS team was able to offset the
negative volumes with minimal impact on performance. These results clearly
underscore the validity of our aggressive Performance Plus cost savings and
growth initiatives."
First-Quarter Fiscal Year 2009 Results
For the first quarter of fiscal year 2009, ArvinMeritor posted sales from
continuing operations of $1.4 billion, a decrease of approximately 18 percent
from the same period last year.
EBITDA, before special items, was $10 million, down $72 million from the
same period last year. This decrease is primarily due to lower production
volumes in most original equipment manufacturer market segments globally.
Loss from continuing operations, before special items, was $56 million, or
$0.77 per diluted share, compared to income of $6 million, or $0.08 per
diluted share, a year ago. Special items for the quarter reflect non-cash
charges including valuation reserves for certain deferred tax assets, other
asset impairments primarily related to LVS, restructuring charges and certain
costs incurred in anticipation of the previously planned spin-off or sale of
the LVS business.
Free cash outflow was $386 million in the first quarter of fiscal year
2009 compared with free cash outflow of $305 million in the same period last
year. The decrease in free cash flow reflects lower cash earnings, higher
inventories due to the dramatic rate of unplanned production declines, and
previously announced settlement payments to resolve claims with certain unions
and customers.
Cost-Reduction Actions
ArvinMeritor has implemented a number of initiatives to help manage cash,
and is prepared to take additional actions if needed. Initiatives in process
include:
-- Implemented workforce reductions of more than 1,500 employees.
-- Extended shutdowns and reduced work weeks at all plants.
-- Reduced and rebalanced capital spending.
-- Initiated a 10-percent salary reduction for all U.S. executive-level
employees; and a 5-percent reduction in salary for all other U.S. salaried
employees, in addition to similar actions in other parts of the world.
-- Eliminated matching contribution to the U.S. 401-K.
-- Suspended merit increases for fiscal year 2009.
-- Reduced discretionary spending by approximately 30 percent year-over-
year.
-- Reduced Board of Directors annual compensation by 10 percent.
-- Suspended quarterly dividend.
LVS Transaction
As previously announced, economic conditions do not support the company's
strategy to divest the entire LVS business at this time. "Due to continued
deterioration in the global markets, it is now our priority to complete the
divestiture of these businesses separately at acceptable returns to
shareowners," said McClure.
In January, the company executed multiple actions to reduce fixed costs
within the LVS business, which are expected to result in $57 million in annual
savings. These actions included the elimination of the LVS divisional
organization, resulting in a headcount reduction of more than 100 positions.
The Body and Chassis businesses are now being managed to realize maximum cost
efficiencies, with additional actions currently under consideration.
The Wheels business, located in Brazil and Mexico, will be retained by
ArvinMeritor.
Business Highlights
ArvinMeritor's strong product position on a variety of military platforms
continues to be a significant contributor to the company's results. These
products clearly demonstrate the company's unique technology and advanced
engineering competencies. ArvinMeritor anticipates additional business as its
customers are awarded new contracts:
-- BAE awarded 8,400 additional Family of Medium Tactical Vehicles
(FMTVs).
-- Navistar Defense awarded 400 more MaxxPro Dash vehicles, in addition to
more than 800 previously awarded and delivered in January.
-- Navistar Defense awarded up to 1,300 medium support vehicles for the
Canadian Department of National Defense.
-- Navistar Defense awarded 600 WorkStar variants for U.S. forces in Iraq.
Cash and Liquidity
At the end of the first quarter, the company had $158 million in cash and
cash equivalents. The company is in compliance with the financial covenants in
its material borrowing arrangements, including its $664 million revolving
credit facility, of which $141 million (including $38 million in letters of
credit) was utilized at the end of the quarter. ArvinMeritor maintains full
access to committed securitization lines.
Outlook
"ArvinMeritor is operating with the expectation that global markets will
remain weak for an extended period of time," said McClure. "Given the
deterioration of the market environment and the current global constraints on
credit, the management team remains intensely focused on maintaining the
liquidity necessary to operate our business. We expect to be in compliance
with the financial covenants in our material borrowing arrangements for the
remainder of the year and believe that the actions we are taking today will
help position the company well when economics and volumes improve."
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: www.arvinmeritor.com .
Forward-Looking Statements
This press release 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 planned disposition of the Body Systems and
Chassis 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 our liquidity will continue to be affected by
declining vehicle production volumes in the future; 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 access
capital markets; credit ratings of the company's debt; 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 ability of the company to access capital markets; credit ratings 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.
First-Quarter 2009 Conference Call
The company will host a conference call and Web cast to present the
company's fiscal year 2009 first-quarter financial results on Wednesday, Feb.
4, 2009, at 9 a.m. (ET).
To participate, call (617) 213-4864, ten minutes prior to the start of the
call. Please reference Passcode 71784700 when dialing in. Investors can also
listen to the conference call in real time - or for seven days by recording -
by visiting www.arvinmeritor.com. To access the listen-only audio Web cast,
visit the ArvinMeritor Web site at www.arvinmeritor.com and select the Web
cast link from the home page or the investor page.
A replay of the call will be available from 12 p.m. Feb. 4, 2009 to 11:59
p.m. Feb. 11, 2009, by calling (888) 286-8010 (within the United States) or
(617) 801-6888 for international calls. Please refer to replay Passcode
number 95181012.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In millions, except per share amounts)
Quarter Ended December 31,
2008 2007
Sales $1,370 $1,663
Cost of sales (1,297) (1,533)
GROSS MARGIN 73 130
Selling, general and administrative (106) (92)
Restructuring costs (26) (10)
Asset impairment charges (279) -
OPERATING INCOME (LOSS) (338) 28
Equity in earnings of affiliates 4 11
Interest expense, net (22) (27)
INCOME (LOSS) BEFORE INCOME TAXES (356) 12
Provision for income taxes (645) (10)
Minority interests 10 (3)
LOSS FROM CONTINUING OPERATIONS (991) (1)
LOSS FROM DISCONTINUED OPERATIONS - (11)
NET LOSS $(991) $(12)
DILUTED LOSS PER SHARE
Continuing operations $(13.71) $(0.01)
Discontinued operations - (0.16)
Diluted loss per share $(13.71) $(0.17)
Basic and diluted average common shares
outstanding 72.3 71.9
ARVINMERITOR, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited, In millions)
December 31, September 30,
2008 2008
ASSETS:
Cash and cash equivalents $158 $497
Receivables, trade and other, net 934 1,114
Inventories 610 623
Other current assets 122 218
Net property 529 775
Goodwill 427 522
Other assets 406 925
TOTAL ASSETS $3,186 $4,674
LIABILITIES AND SHAREOWNERS' EQUITY (DEFICIT)
Short-term debt $207 $240
Accounts payable 933 1,287
Other current liabilities 582 610
Long-term debt 1,172 1,063
Retirement benefits 656 690
Other liabilities 307 247
Minority interests 56 75
Shareowners' equity (deficit) (727) 462
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY
(DEFICIT) $3,186 $4,674
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(Unaudited, In millions)
Quarter Ended
December 31,
2008 2007
Sales:
Commercial Vehicle Systems $956 $1,080
Light Vehicle Systems 414 583
Total sales $1,370 $1,663
EBITDA:
Commercial Vehicle Systems $36 $71
Light Vehicle Systems (308) 2
Total Segment EBITDA (272) 73
Unallocated Corporate Costs (16) (1)
Total EBITDA (288) 72
Loss on Sale of Receivables (4) (4)
Depreciation and Amortization (32) (32)
Interest Expense, Net (22) (27)
Provision for Income Taxes (645) (10)
Loss from Continuing Operations $(991) $(1)
ARVINMERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In millions)
Three Months Ended December 31,
2008 2007
OPERATING ACTIVITIES
Loss from continuing operations $(991) $(1)
Adjustments to loss from continuing operations:
Depreciation and amortization 32 32
Asset impairment charges 279 -
Deferred income tax expense (benefit) 638 36
Restructuring costs, net of payments 14 -
Pension and retiree medical expense 21 26
Other adjustments to loss from continuing
operations, net (1) (4)
Pension and retiree medical contributions (48) (22)
Changes in off-balance sheet receivable
securitization and factoring (4) 115
Changes in assets and liabilities (277) (449)
Cash flows used for continuing operations (337) (267)
Cash flows used for discontinued operations, net (1) (4)
CASH USED FOR OPERATING ACTIVITIES (338) (271)
INVESTING ACTIVITIES
Capital expenditures (48) (34)
Acquisitions of businesses and investments,
net of cash acquired - (43)
Proceeds from disposition of property and
businesses 2 8
Net investing cash flows provided by
discontinued operations - 23
CASH USED FOR INVESTING ACTIVITIES (46) (46)
FINANCING ACTIVITIES
Borrowings (payments) on accounts receivable
securitization program (18) 70
Borrowings on revolving credit facility 103 4
Borrowings (payments) on lines of credit
and other, net (6) 7
Net change in debt 79 81
Debt issuance and extinguishment costs - (6)
Cash dividends (8) (7)
CASH PROVIDED BY FINANCING ACTIVITIES 71 68
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS (26) 4
CHANGE IN CASH AND CASH EQUIVALENTS (339) (245)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 497 409
CASH AND CASH EQUIVALENTS AT END OF PERIOD $158 $164
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited)
(In millions, except per share amounts)
LVS
Impair- Separ- Income Q1 FY 09
Q1 FY 09 Restruct- ment ation Tax Before
Reported uring Charges Costs Charges Special
Items
Sales $1,370 $- $- $- $- $1,370
Gross Margin 73 - - - - 73
Operating Loss (338) 26 279 6 - (27)
Loss from
Continuing
Operations (991) 26 238 6 665 (56)
Diluted Loss Per
Share -
Continuing
Operations $(13.71) $0.36 $3.29 $0.08 9.21 $(0.77)
Segment EBITDA:
Commercial
Vehicle Systems $36 $8 $8 $- $- $52
Light Vehicle
Systems (308) 15 252 - - (41)
Total Segment
EBITDA $(272) $23 $260 $- $- $11
Segment EBITDA
Margins
Commercial
Vehicle Systems 3.8% 5.4%
Light Vehicle
Systems -74.4% -9.9%
Total Segment
EBITDA Margins -19.9% 0.8%
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited)
(In millions, except per share amounts)
Q1 FY 08
Before
Q1 FY 08 Restruct- Income Special
Reported uring Taxes Items
Sales $1,663 $- $- $1,663
Gross Margin 130 - - 130
Operating Income 28 10 - 38
Income (Loss) from Continuing
Operations (1) 6 1 6
Diluted Earnings (Loss) Per Share -
Continuing Operations $(0.01) $0.08 $0.01 $0.08
Segment EBITDA:
Commercial Vehicle Systems $71 $- $- $71
Light Vehicle Systems 2 10 - 12
Total Segment EBITDA $73 $10 $- $83
Segment EBITDA Margins
Commercial Vehicle Systems 6.6% 6.6%
Light Vehicle Systems 0.3% 2.1%
Total Segment EBITDA Margins 4.4% 5.0%
ARVINMERITOR, INC.
EBITDA BEFORE SPECIAL ITEMS RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Three Months Ended
December 31,
2008 2007
Total EBITDA - Before Special Items $10 $82
Asset Impairment Charges, (1) (266) -
Restructuring Costs (26) (10)
LVS Separation Costs (6) -
Loss on Sale of Receivables (4) (4)
Depreciation and Amortization (32) (32)
Interest Expense, Net (22) (27)
Provision for Income Taxes (645) (10)
Loss From Continuing Operations $(991) $(1)
(1) Net of minority interests.
ARVINMERITOR, INC.
FREE CASH FLOW - RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Quarter Ended
December 31,
2008 2007
Cash flows used for continuing operations $(337) $(267)
Cash flows used for discontinued operations (1) (4)
Cash expenditures (48) (34)
Free cash flow - full company $(386) $(305)
(Logo: http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO )
