TROY, Mich., (Nov. 15, 2004) —
ArvinMeritor, Inc. (NYSE: ARM) today reported sales of $2.0
billion and income from continuing operations of $30 million, or $0.44 per
diluted share, for its fourth fiscal quarter ended Sept. 30, 2004, compared to
last year’s fourth-quarter income from continuing operations of $26 million, or
$0.38 per diluted share.
As previously announced, the company plans to
divest its Light Vehicle Aftermarket (LVA) and Roll Coater businesses and, as a
result, LVA and Roll Coater are excluded from continuing operations and reported
as discontinued operations.
Net loss for the fourth quarter of fiscal year
2004, including discontinued operations, was $153 million, or $2.23 per diluted
share. The net loss includes the previously announced non-cash goodwill
impairment charge of $190 million, or $2.77 per diluted share, in the LVA
business. Excluding the goodwill charge, net income would have been $37
million, or $0.54 per diluted share, compared to net income of $38 million, or
$0.56 per diluted share, in the fourth quarter of fiscal year 2003, before the
cumulative effect of an accounting change.
ArvinMeritor Chairman, Chief Executive Officer and
President Charles G. “Chip” McClure said, “During the quarter, our Commercial
Vehicle Systems (CVS) business continued to benefit from strong global markets,
and we are pleased with our top-line growth in this important segment. In
an effort to minimize the risks of cyclicality in North America and accelerate
growth, CVS has made significant progress in its strategy to diversify its
customer base and expand its global presence. As a result of this strategy, we
recently announced two joint ventures with the Volvo Group to produce axles in
France.
“The lack of availability and the price of steel
continue to challenge all of our businesses as well as our entire
industry. We have seen gross steel costs increase by approximately $100
million, principally in our LVS and CVS businesses during our fiscal year, of
which $50 million was incurred in the fourth quarter.
“We are committed to finding a solution and are
aggressively putting actions into place to find new steel sources all over the
world, to identify alternative materials and to find new ways to engineer the
product. We also are working with our suppliers and customers to actively
address the issue of the supply and cost of steel.”
McClure continued, “We remain committed to cash
generation and debt reduction. I am pleased that the company generated
approximately $225 million in free cash flow and $100 million in net proceeds
from the sales of businesses and other assets during fiscal year 2004.
This cash has been used to reduce our net debt by $329 million since Sept. 30,
2003. We used an additional $54 million of operating cash flow to buy out
a lease that will be part of the Roll Coater divestiture.”
Results of Continuing
Operations
Sales increased $316 million, or 19 percent, from the
prior year’s fourth quarter, and operating income was $57 million, a decline of
$3 million from the same period last year. In the fourth quarter of fiscal year
2003 the company recorded a $20 million gain on the sale of a facility that was
partially offset by an $11 million charge in one of its Mexican
operations. The benefits from higher CVS volumes were reduced by higher
steel costs.
Equity in earnings of affiliates was $7 million, $5
million higher than the same period last year, primarily as a result of higher
commercial vehicle affiliate earnings. The effective tax rate in fiscal year
2004 for continuing operations decreased to 25 percent, compared to 30 percent
last year. The reduction was driven by legal entity restructurings and the
favorable tax treatment of certain transactions. The company expects the
fiscal year 2005 effective tax rate to approximate 27 percent.
Specific business segment financial results
include:
- Light Vehicle Systems (LVS) sales were $1,115
million, up $33 million, or three percent, from the fourth quarter of fiscal
year 2003. Operating income of $9 million was down $19 million from the
same period last year. Operating income was unfavorably impacted by
higher steel costs and $4 million in additional environmental remediation
costs associated with a former Rockwell facility. Included in operating income
a year ago was the $20 million gain on the sale of the company’s exhaust tube
manufacturing facility, partially offset by the $11 million charge in
Mexico.
- Commercial Vehicle Systems (CVS) sales were $899
million, up $283 million, or 46 percent, from last year’s fourth quarter,
primarily as a result of stronger commercial vehicle truck and trailer
volumes. North American and Western European truck and trailer volumes
improved by 40 percent and 35 percent, respectively. Operating income of $48
million was $16 million, or 50 percent higher than the same period last year.
Results of Discontinued
Operations
Sales from discontinued operations for the fourth
quarter of fiscal year 2004 were $278 million, flat with the same period last
year. Excluding the goodwill impairment charge, income from discontinued
operations was $7 million, net of tax, down $5 million from the same period last
year.
Full-Year Fiscal 2004
Results
Sales from continuing operations for fiscal year 2004
were $8.0 billion, up $1.3 billion, or 19 percent, compared to the same period
last year. Sales would have been up approximately 12 percent, or $840
million, without the effect of currency translation that increased sales by
approximately $400 million and the impact of acquisitions and
divestitures. Operating income for fiscal year 2004 increased six percent
to $260 million, from $246 million in the same period last year. Income
from continuing operations for fiscal year 2004 increased to $127 million, a
27-percent increase compared to a year ago, resulting in diluted earnings per
share from continuing operations of $1.85, up from $1.48 per diluted share in
the same period last year.
Sales from discontinued operations for fiscal year
2004 were $1.1 billion, flat with the same period last year. Excluding the
goodwill impairment charge, income from discontinued operations was $21 million,
net of tax, down $16 million from the same period last year.
Net loss including discontinued operations, for
fiscal year 2004 was $42 million, or $0.61 per diluted share. Net loss
includes the non-cash goodwill impairment charge of $190 million, or $2.77 per
diluted share. In the fourth quarter of fiscal year 2004, the company
changed its method of accounting for certain CVS inventories. This change
unfavorably impacted our previously reported results in the third quarter of
fiscal year 2004 by $0.03 per diluted share. Excluding the goodwill charge
and the impact of the inventory accounting change, diluted earnings per share
would have been $2.19 for fiscal year 2004.
Outlook
“Our fiscal year
2005 outlook for light vehicle production is 15.9 million vehicles in North
America and 16.8 million vehicles in Western Europe. Our forecast for North
American Class 8 truck production is 275,000 units in fiscal year 2005,” McClure
said.
“Our sales outlook for continuing operations in
fiscal year 2005 is approximately $8.4 billion, up about five percent from
fiscal year 2004.
“While we believe our CVS business group will
benefit from higher volumes, we will continue to face challenges posed by the
availability and higher price of steel. We anticipate full-year diluted
earnings per share from continuing operations in the range of $1.60 to
$1.80.
“For the first quarter of fiscal year 2005, our
sales forecast for continuing operations is $2.0 billion, and our outlook for
diluted earnings per share from continuing operations is $0.15 to $0.20,”
McClure continued.
“ArvinMeritor has a great tradition of
technological innovation and exceptional customer service,” said McClure. “We
have embarked on a path to focus our efforts and resources on our core
competencies in the global automotive and commercial truck markets, where we can
better add value for our customers and operate profitably for our
shareowners. Our recent decision to divest our Light Vehicle
Aftermarket and Roll Coater businesses reflects our commitment to focus on what
we do best, while applying our traditional strengths in engineering and design
to provide innovative solutions for our customers.
“We will strive to meet our short-term financial
and customer commitments, while at the same time providing long-term
sustainability and creating opportunities to prosper. We will do this by
executing a clear direction, aligning the organization to the right goals and
objectives, and holding everyone accountable. We will no doubt face some
tough challenges ahead and will need to make decisions based on the realities of
the market. But, we are committed to exceeding the performance expectations of
our shareowners, employees and customers.”
ArvinMeritor, Inc. is a premier $8 billion global
supplier of a broad range of integrated systems, modules and components to the
motor vehicle industry. The company serves light vehicle, commercial truck,
trailer and specialty original equipment manufacturers and related aftermarkets.
Headquartered in Troy, Mich., the company employs approximately 32,000 people at
more than 150 manufacturing facilities in 27 countries. 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/.
# # #
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.
This press release contains certain non-GAAP
financial measures including net debt* and
free cash flow**. Such measures
should not be considered substitutes for any measures derived in accordance with
generally accepted accounting principles, and may also be inconsistent with
similar measures presented by other companies. Reconciliation of these
non-GAAP measures to the most nearly comparable GAAP measures, if applicable, is
presented on our website, http://www.arvinmeritor.com/, in
the fiscal year fourth quarter earnings conference call presentation.
Notes
*The company defines net debt as balance sheet
debt less the fair value adjustment of debt due to interest rate swaps plus
amounts outstanding under its accounts receivable securitization and factoring
programs less cash.
**The company defines free cash flow as cash
flow from operations before the change in accounts receivable securitization and
factoring programs less capital expenditures.
This press release also 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. 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 conditions; the demand
for commercial, specialty and light vehicles for which the company supplies
products; risks inherent in operating abroad, including foreign currency
exchange rates; availability and cost of raw materials; 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 customers and suppliers; successful integration of acquired or
merged businesses; the ability to achieve the expected annual savings and
synergies from past and future business combinations; success and timing of
potential divestitures; potential impairment of long-lived assets, including
goodwill; 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; as well as other risks and uncertainties, including, but not limited
to, those detailed from time to time in the filings of the company with the
Securities and Exchange Commission.
The company will host a telephone conference
call and Web cast to discuss the company’s fiscal year 2004 fourth-quarter
financial results on Monday, Nov. 15, 2004, at 11:00 a.m.
(ET).
To participate, call 1-706-643-7449 ten minutes prior to the start of
the call. Please reference ArvinMeritor when dialing in. Investors
can also listen to the conference call in real time - or for 90 days by
recording - by visiting http://www.arvinmeritor.com/.
A replay of the call will be available from
1:00 p.m., Nov. 15, until midnight, Nov. 17, 2004, by calling 1-800-642-1687
(within the United States and Canada) or 1-706-645-9291 (for international calls). Please
refer to conference ID number 1163265.
To access the listen-only audio Web cast, visit
the ArvinMeritor Web site at http://www.arvinmeritor.com/
and click on the Web cast link on either the home page or the investor
page.
ARVINMERITOR,
INC.
STATEMENT OF
OPERATIONS
(In millions, except per share
amounts)
Quarter Ended Fiscal Year
Ended
September 30, September
30,
2004 2003
2004
2003
(Unaudited)
Sales
$2,014 $1,698 $8,033
$6,723
Cost of
Sales
(1,853) (1,568) (7,366)
(6,132)
GROSS
MARGIN
161 130
667 591
SG&A
(96) (85)
(385) (340)
Gain on
Divestitures
--
20
20 15
Environmental Remediation Costs
(3) --
(11) --
Restructuring
Costs
(5) (5)
(15) (20)
Costs
for Withdrawn Tender Offer
-- --
(16) --
OPERATING
INCOME
57 60
260 246
Equity in Earnings of Affiliates
7
2
19
8
Gain on Sale of
Marketable
Securities
--
--
7 --
Interest Expense, Net and Other
(30) (26)
(107) (104)
INCOME BEFORE
TAXES
34 36
179 150
Provision for Income
Taxes
(4) (11)
(44) (45)
Minority
Interests
--
1
(8) (5)
Income From
Continuing Operations
30 26
127 100
Discontinued Operations
Income from Discontinued
Operations
8
12
24
37
Goodwill
Impairment
(190) --
(190) --
Minority
Interests
(1) --
(3) --
Income (Loss)
from Discontinued
Operations
(183) 12
(169) 37
Income
(Loss) Before Cumulative
Effect of Accounting
Change
(153) 38
(42) 137
Cumulative Effect of Accounting
Change
-- (4)
-- (4)
NET
INCOME
(LOSS)
$(153) $34
$(42) $133
DILUTED EARNINGS
PER SHARE
Continuing
Operations
$0.44 $0.38
$1.85 $1.48
Discontinued
Operations
(2.67) 0.18
(2.46) 0.54
Cumulative
Effect of Accounting
Change
-- (0.06)
-- (0.06)
Diluted
Earnings Per Share
$(2.23) $0.50 $(0.61)
$1.96
Diluted Shares
Outstanding
68.7 68.1
68.6 67.9
Note: Prior periods have been restated for discontinued operations
and
the
change in the method of accounting for certain
inventories.
ARVINMERITOR,
INC.
CONSOLIDATED BUSINESS SEGMENT
INFORMATION
(In
millions)
Quarter Ended Fiscal Year
Ended
September 30, September
30,
2004 2003
2004
2003
(Unaudited)
Sales:
Light
Vehicle
Systems
$1,115 $1,082 $4,818
$4,301
Commercial Vehicle
Systems
899 616
3,215 2,422
Total
Sales
$2,014 $1,698 $8,033
$6,723
Operating
Income:
Light Vehicle
Systems
$9 $28
$112 $135
Commercial Vehicle
Systems
48 32
164
111
Segment Operating
Income
57 60
276 246
Costs for Withdrawn Tender Offer
-- --
(16)
--
Total Operating
Income
$57 $60
$260 $246
Note: Prior periods have been restated for discontinued operations
and
the change in the method of accounting for
certain
inventories.
ARVINMERITOR,
INC.
SUMMARY CONSOLIDATED BALANCE
SHEET
(In
millions)
September 30, September 30,
ASSETS
2004
2003
Cash
$132
$103
Receivables
1,478
1,208
Inventories
523
461
Other current
assets
218
224
Assets of discontinued
operations
615
744
Net
property
1,032
1,081
Goodwill
808
776
Other
assets
754
795
TOTAL
ASSETS
$5,560
$5,392
LIABILITIES AND SHAREOWNERS'
EQUITY
Short-term
debt
$3
$18
Accounts
payable
1,366
1,143
Accrued and other current
liabilities
602
534
Liabilities of discontinued
operations
282
281
Other
liabilities
771
889
Long-term
debt
1,487
1,541
Minority
interest
61
61
Equity
988
925
TOTAL LIABILITIES AND SHAREOWNERS'
EQUITY
$5,560
$5,392
Note: Prior periods have been
restated for discontinued operations and
the change
in the method of accounting for certain
inventories.
ARVINMERITOR,
INC.
STATEMENT OF CONSOLIDATED CASH
FLOWS
(in
millions)
Twelve Months
Ended
September
30,
2004
2003
OPERATING ACTIVITIES
Income
from continuing
operations
$127
$100
Adjustments to income from continuing
operations
Depreciation and other
amortization
183
185
Gain on
divestitures
(20)
(15)
Gain on sale of marketable
securities
(7)
--
Restructuring costs, net of
expenditures
(3)
8
Pension and retiree medical
expense
130
99
Pension and retiree medical
contributions
(212)
(163)
Changes in
receivables
securitization and
factoring
(187)
90
Changes in assets and
liabilities
164
(72)
Net cash flows provided by continuing
operations
175
232
Net cash flows provided by discontinued
operations
44
42
CASH PROVIDED BY OPERATING
ACTIVITIES
219
274
INVESTING
ACTIVITIES
Capital
expenditures
(152)
(173)
Acquisitions of businesses
and
investments, net of cash
acquired
(3)
(107)
Proceeds from dispositions
of
property and
businesses
85
104
Proceeds from sale of marketable
securities
18
--
Net investing cash flows used
by
discontinued
operations
(68)
(15)
CASH USED FOR INVESTING
ACTIVITIES
(120)
(191)
FINANCING
ACTIVITIES
Net change in revolving
debt
(53)
26
Net change in other
debt
(2)
(55)
Net change in
debt
(55)
(29)
Proceeds from exercise of stock
options
6
--
Cash
dividends
(28)
(27)
CASH PROVIDED BY FINANCING
ACTIVITIES
(77)
(56)
IMPACT OF CURRENCY ON
CASH
7
20
CHANGE IN
CASH
29
47
CASH AT BEGINNING OF
PERIOD
103
56
CASH AT END OF
PERIOD
$132
$103
Note: Prior periods have been
restated for discontinued operations and
the change
in the method of accounting for certain inventories.
