11/13/2003
CONTACTS: MEDIA INQUIRIES
Lin Cummins
(248) 435-7112
linda.cummins@arvinmeritor.com
INVESTOR INQUIRIES
Alice McGuire
(248) 655-2159
alice.mcguire@arvinmeritor.com
ARVINMERITOR REPORTS FOURTH-QUARTER AND FISCAL YEAR 2003 RESULTS
TROY, MICH., (NOV. 13, 2003) -- ArvinMeritor, Inc. (NYSE:ARM) today
reported sales of $2.0 billion and net income of $33 million, or $0.48 per
diluted share, for its fourth fiscal quarter ended Sept. 30, 2003, compared to
last year's fourth-quarter net income of $41 million, or $0.61 per diluted
share. Net income for the fourth quarter of fiscal year 2003 included a charge
for the cumulative effect of a change in accounting principle due to the
adoption of FIN 46, "Consolidation of Variable Interest Entities," of $4
million, or $0.06 per diluted share.
Sales increased $231 million, or 13 percent, as compared to last year's
fourth quarter. Excluding the effect of currency, and acquisitions and
divestitures, sales would have been lower by one percent. Sales declined in
North America and Europe by three percent, but were up by more than 20 percent
in the rest of the world, driven by sales growth in
the Asia/Pacific region. Operating income for the fourth quarter of fiscal year
2003 was $76 million, compared to $91 million for the same period last year.
ArvinMeritor Chairman and Chief Executive Officer Larry Yost said, "We are
responding to the current automotive market conditions by aggressively
implementing actions to improve the profitability of our business, including
leveraging our scale by rationalizing facilities, further restructuring and
workforce consolidation; focusing on global sourcing initiatives; and
reinforcing quality programs and continuous improvement performance systems
throughout the organization."
Specific business segment financial results include:
o Light Vehicle Systems (LVS) sales were $1,093 million, up 26 percent from
the fourth quarter of fiscal year 2002. This increase was almost entirely
due to foreign currency translation resulting from a stronger euro and the
acquisition of Zeuna Staerker. Operating income in the fourth quarter of
fiscal year 2003 was favorably impacted by the $20-million gain on the
previously announced sale of the exhaust tube manufacturing facility. This
was offset by higher new product launch and steel costs of $10 million and
a pre-tax charge of $11 million related to account reconciliations and
information system implementation issues in a facility in Mexico, of which
$6 million related to prior fiscal years. Management, after consulting
with its independent auditors and outside counsel, has determined that the
amount related to prior fiscal years is not material. LVS also recorded
restructuring costs in this year's fourth fiscal quarter of $5 million
associated with previously announced programs.
Our LVS business continues to focus on reducing cost through restructuring
programs and other continuous improvement initiatives, while seeking new
business wins in the marketplace. In October 2003, ArvinMeritor announced
that Hyundai Motor Company has chosen our LVS business to become its North
American door module supplier for Hyundai's popular Santa Fe and Sonata
models, beginning production in 2005 and growing to one million door
modules annually.
o Commercial Vehicle Systems (CVS) sales were $616 million, up $4 million,
or one percent, from the fourth quarter of fiscal year 2002. Sales were
up, despite a decline in North American Class 8 truck production. Higher
trailer volumes in North
America and higher sales in Asia/Pacific offset declines in North American
truck volumes. Productivity improvements were partially offset by higher
engineering investments and warranty charges. Operating income declined by
$1 million.
Our CVS business is well-positioned to benefit from the recovery expected
in the North American heavy truck market in fiscal year 2004. CVS
continues to geographically diversify its business. Recently, CVS signed a
memorandum of understanding with the Volvo Group to form two new truck
axle joint ventures in Europe. Subject to finalizing the agreement, it is
intended that in 2004, the two new joint ventures, owned jointly by
ArvinMeritor and Volvo, would assume control and operation of the two
Volvo Group manufacturing operations in France.
o Light Vehicle Aftermarket (LVA) sales were $219 million, down four percent
from last year's fourth quarter. Without the impact of foreign currency
translation, sales would have declined approximately $20 million. Lower
volumes, higher product returns and lower pricing contributed to the
decrease in operating income.
Our LVA business remains focused on reducing its costs through global
outsourcing and rationalizing its distribution channels, while
strengthening its business relationship with major customers. In
September, for the second year in a row, the LVA Purolator filter business
received the Toyota Quality Alliance Platinum award from Toyota Motor
Sales, U.S.A. More recently, Grease Monkey International named Purolator
the 2002 Vendor of the Year.
FULL-YEAR FISCAL 2003 RESULTS
Sales for the fiscal year were $7.8 billion, up $906 million, or 13
percent, compared to last year. Excluding the effect of acquisitions and
divestitures, and the impact of foreign currency, revenue grew one percent.
Operating income was $309 million, a decline of $34 million, compared to fiscal
year 2002, reflecting an operating margin of 4.0 percent, down from 5.0 percent
last year. Operating income for fiscal year 2003 was favorably impacted by the
gain on the sale of the exhaust tube manufacturing facility, but was offset by
higher steel costs, product launch costs, higher engineering investments,
pricing pressures and the adjustment in Mexico.
Net income for fiscal year 2003 was $136 million, or $2.00 per diluted
share, up from $107 million, or $1.59 per diluted share last year. Included in
net income were the effects of changes in accounting principles of $4 million,
or $0.06 per diluted share, in fiscal year 2003 and $42 million, or $0.63 per
diluted share, in fiscal year 2002.
"Although we made progress in a number of areas, our fiscal year 2003
financial results did not achieve the expectations set by our management team,"
Yost said. "Our entire ArvinMeritor team is committed and dedicated to improving
our company's financial performance. We will remain focused on reducing costs,
leveraging our global resources, streamlining our asset base, and improving
return on invested capital and free cash flow. The strength of our entire team
is focused on returning value to our shareowners."
OUTLOOK
"Our fiscal year 2004 outlook for light vehicle production remains
unchanged from our previous guidance at 15.8 million vehicles in North America
and 16.2 million vehicles in Western Europe. We continue to remain optimistic
about the growth in the North American Class 8 truck production to 222,000 units
in fiscal year 2004," Yost said. "Our sales outlook for fiscal year 2004 is
approximately $8.6 billion, up about ten percent from fiscal year 2003, and
slightly higher than our previous guidance to reflect current foreign currency
exchange rate expectations.
"For the first quarter of fiscal year 2004, our sales forecast is $2.0 billion,
and our outlook for diluted earnings per share is unchanged from our previous
guidance of $0.25 to $0.30 per diluted share," Yost continued. "We anticipate
that our first quarter results will continue to be affected by the product
launch costs that also impacted our fiscal year 2003 fourth quarter. We expect
these issues to be substantially resolved in the first quarter.
"For the remainder of fiscal year 2004, we expect to achieve improved
performance as volumes, particularly in the Commercial Vehicle business, return
to more normal levels, our launch issues are resolved and performance
improvement programs are achieved. We anticipate full-year diluted earnings per
share in the range of $2.20 to $2.40 for fiscal year 2004."
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: 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 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; potential increases in raw material
costs; 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; the
outcome of the tender offer for common stock of Dana Corp.; successful
integration of acquired or merged businesses; the ability to achieve the
expected annual savings and synergies from past and future business
combinations; 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.
ArvinMeritor, Inc. (NYSE:ARM) will host a telephone conference call to discuss
the company's fiscal year 2003 fourth-quarter financial results on Thursday,
November 13, 2003, at 10:00 a.m. (ET). To participate, call (706) 643-7449 10
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 www.arvinmeritor.com. A replay of the
call will be available from 12:00 p.m., November 13, until midnight, November
15, 2003, by calling 1-800-642-1687 (within the United States and Canada) or
(706) 645-9291 (for international calls). Please refer to conference ID number
3158733.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED FISCAL YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED)
--------------------------------- ---------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
SALES $ 1,977 $ 1,746 $ 7,788 $ 6,882
COST OF SALES (1,806) (1,552) (7,042) (6,142)
------------- ------------- ------------- -------------
GROSS MARGIN 171 194 746 740
SELLING, GENERAL AND ADMINISTRATIVE (109) (103) (435) (388)
RESTRUCTURING COSTS (6) -- (22) (15)
GAIN ON SALE OF BUSINESS 20 -- 20 6
------------- ------------- ------------- -------------
OPERATING INCOME 76 91 309 343
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES 2 (2) 8 (3)
INTEREST EXPENSE, NET AND OTHER (26) (26) (104) (105)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 52 63 213 235
PROVISION FOR INCOME TAXES (16) (20) (68) (75)
MINORITY INTERESTS 1 (2) (5) (11)
------------- ------------- ------------- -------------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 37 41 140 149
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (4) -- (4) (42)
------------- ------------- ------------- -------------
NET INCOME $ 33 $ 41 $ 136 $ 107
============= ============= ============= =============
DILUTED EARNINGS PER SHARE BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 0.54 $ 0.61 $ 2.06 $ 2.22
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (0.06) -- (0.06) (0.63)
------------- ------------- ------------- -------------
DILUTED EARNINGS PER SHARE $ 0.48 $ 0.61 $ 2.00 $ 1.59
============= ============= ============= =============
AVERAGE DILUTED SHARES OUTSTANDING 68.1 67.6 67.9 67.2
============= ============= ============= =============
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(IN MILLIONS)
QUARTER ENDED FISCAL YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED)
--------------------------------- ---------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
SALES:
LIGHT VEHICLE SYSTEMS $ 1,093 $ 867 $ 4,355 $ 3,601
COMMERCIAL VEHICLE SYSTEMS 616 612 2,422 2,249
LIGHT VEHICLE AFTERMARKET 219 227 845 875
OTHER 49 40 166 157
------------ ------------ ------------ ------------
TOTAL SALES $ 1,977 $ 1,746 $ 7,788 $ 6,882
============ ============ ============ ============
OPERATING INCOME:
LIGHT VEHICLE SYSTEMS $ 30 $ 38 $ 147 $ 186
COMMERCIAL VEHICLE SYSTEMS 31 32 122 88
LIGHT VEHICLE AFTERMARKET 9 19 31 66
OTHER 6 2 9 3
------------ ------------ ------------ ------------
TOTAL OPERATING INCOME $ 76 $ 91 $ 309 $ 343
============ ============ ============ ============
ARVINMERITOR, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
-------------- --------------
ASSETS
CASH $ 103 $ 56
RECEIVABLES 1,327 1,251
INVENTORIES 543 458
OTHER CURRENT ASSETS 266 211
PROPERTY, NET 1,332 1,179
GOODWILL 951 808
OTHER ASSETS 731 688
-------------- --------------
TOTAL $ 5,253 $ 4,651
============== ==============
LIABILITIES AND SHAREOWNERS' EQUITY
SHORT-TERM DEBT $ 20 $ 15
ACCOUNTS PAYABLE 1,311 1,123
ACCRUED AND OTHER CURRENT LIABILITIES 547 605
OTHER LIABILITIES 871 635
LONG-TERM DEBT 1,502 1,435
PREFERRED CAPITAL SECURITIES 39 39
MINORITY INTERESTS 64 58
EQUITY 899 741
-------------- --------------
TOTAL $ 5,253 $ 4,651
============== ==============
ARVINMERITOR, INC.
SUMMARY STATEMENT OF CONSOLIDATED CASH FLOWS
(IN MILLIONS)
FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------
2003 2002
--------- ---------
OPERATING ACTIVITIES
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 140 $ 149
ADJUSTMENTS TO INCOME:
DEPRECIATION AND AMORTIZATION 214 196
GAIN ON SALE OF BUSINESS (20) (6)
RESTRUCTURING COSTS, NET OF EXPENDITURES 8 5
DEFERRED INCOME TAXES (21) (33)
PENSION AND RETIREE MEDICAL EXPENSE 99 78
PENSION AND RETIREE MEDICAL CONTRIBUTIONS (163) (136)
CHANGE IN RECEIVABLE SECURITIZATION 94 (106)
CHANGES IN OTHER ASSETS AND LIABILITIES (96) 37
--------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES 255 184
--------- ---------
INVESTING ACTIVITIES
CAPITAL EXPENDITURES (193) (184)
ACQUISITIONS OF BUSINESSES, NET OF CASH ACQUIRED, AND INVESTMENTS (88) (25)
PROCEEDS FROM ASSET DISPOSITIONS 109 11
--------- ---------
CASH USED FOR INVESTING ACTIVITIES (172) (198)
--------- ---------
FINANCING ACTIVITIES
NET DECREASE IN REVOLVING DEBT 26 (600)
PROCEEDS FROM ISSUANCE OF NOTES -- 591
PAYMENTS ON OTHER DEBT (55) --
PURCHASE OF PREFERRED CAPITAL SECURITIES -- (18)
--------- ---------
NET DECREASE IN DEBT (29) (27)
PROCEEDS FROM STOCK OPTION EXERCISES -- 22
CASH DIVIDENDS (27) (27)
--------- ---------
CASH USED FOR FINANCING ACTIVITIES (56) (32)
--------- ---------
IMPACT OF CURRENCY ON CASH 20 1
--------- ---------
CHANGE IN CASH 47 (45)
CASH AT BEGINNING OF PERIOD 56 101
--------- ---------
CASH AT END OF PERIOD $ 103 $ 56
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