Fitch Ratings Assigns 'BBB-' To ArvinMeritor Inc.

    CHICAGO--Feb. 21, 2002--Fitch Ratings assigns 'BBB-' to ArvinMeritor Inc.'s (ARM) 10-year notes due 2012. The proceeds of the issuance are expected to be used for repayment of bank debt. The rating assignment reflects ARM's solid market position with leading product lines, geographic presence, diversified end-markets and products, and executed/realized merger integration and restructuring plans. These factors have enabled ARM to maintain a moderate level of operating profitability through ongoing cyclical softness in much of ARM's end markets, allowing for positive cash flow and debt reduction. Much of the debt reduction, however, was derived from significant working capital reduction. ARM's financial policy to reduce dividends by 55% and rescind the share repurchase program during FY2001 has also aided debt holder protection. While the continuing softness in ARM's end markets and pressures from OEMs for price concessions constrain the margin outlook, ARM's restructuring and integration efforts are anticipated to be an offset, allowing ARM to be marginally cash flow positive again through FY2002. Net operating cash flow will be one of the key metrics Fitch will monitor going through ARM's current market environment. The Rating Outlook is Stable.
    ArvinMeritor, Inc., headquartered in Troy, Michigan, is a global supplier of various integrated systems, modules and components in the areas of exhaust systems, axles, brakes, suspension and ride control, door and roof systems and filters, serving both the original equipment (OE) and replacement aftermarkets. ARM was formed in July 2000 through the merger of Arvin Industries, Inc. and Meritor Automotive, Inc.