ArvinMeritor Reports Fiscal Year 2003 First-Quarter
Results
TROY, Mich., Jan. 21 /PRNewswire-FirstCall/ --
ArvinMeritor, Inc. today reported sales of $1.7 billion and net
income of $32 million, or $0.47 per diluted share, for its first fiscal
quarter ended Dec. 31, 2002. Sales increased $143 million, or nine percent, as
compared to the prior year's first quarter, and net income improved $63
million, as compared to last year's net loss of $31 million. Results for the
first quarter of fiscal year 2002 included restructuring costs of $15 million
($10 million after-tax, or $0.15 per diluted share) and the cumulative effect
of the goodwill accounting change of $42 million, or $0.64 per diluted share.
Excluding these charges from last year's results, net income increased by
$11 million, or 52 percent.
ArvinMeritor Chairman and Chief Executive Officer Larry Yost said, "We are
pleased with the improvement in our first-quarter results. Our sales and
earnings benefited from the carryover effect of the emissions standards change
on Class 8 trucks built in North America. New business awards in our Light
Vehicle Systems group and the stronger euro also had a favorable impact on our
sales and earnings."
ArvinMeritor has changed to the fair value method of accounting for its
stock-based compensation plans and began expensing the fair value of stock
options, effective Oct. 1, 2002. The Financial Accounting Standards Board has
issued a new rule, SFAS 148, "Accounting for Stock-Based Compensation --
Transition and Disclosure," that provides alternative methods of transition
for a voluntary change to the fair value method. The company has elected the
modified prospective method, which allows for the recognition of compensation
expense for the non-vested portion of previously issued stock options, as well
as for new grants of stock options. In the first quarter of fiscal year 2003,
the company recorded compensation expense for stock options of $1 million
($1 million after-tax, or $0.01 per diluted share). For fiscal year 2003, the
company expects to record compensation expense for stock options of $7 million
($5 million after-tax, or $0.07 per diluted share).
Operating income for the first quarter of fiscal year 2003 was
$73 million, compared to $48 million for the same period last year.
Restructuring costs of $15 million were included in operating income in the
first quarter of fiscal year 2002. Operating margin improved to 4.3 percent,
up from 4.0 percent in the first quarter of fiscal year 2002, excluding the
restructuring charge. The Commercial Vehicle Systems segment drove the
operating margin improvement.
Net interest expense of $25 million was down slightly from $28 million in
last year's first quarter. The effective tax rate was 32 percent in the first
quarter of fiscal years 2003 and 2002. The company expects the full-year
effective tax rate to approximate the first-quarter rate of 32 percent.
Specific business segment financial results include:
* Light Vehicle Systems (LVS) sales were $903 million, up $57 million, or
seven percent, from the first quarter of fiscal year 2002. New business
awards and favorable currency translation drove the increase in sales.
LVS operating margin declined to 4.7 percent, from 5.2 percent in last
year's first quarter. Higher steel prices, as well as premium freight
and other costs associated with steel shortages, negatively impacted
operating margin in the first quarter of fiscal year 2003.
* Commercial Vehicle Systems (CVS) sales were $572 million, up
$89 million, or 18 percent, from last year's first quarter. Higher
North American Class 8 truck production was the major factor behind the
sales increase. CVS operating margin improved to 4.2 percent, up from
2.3 percent in the first quarter of fiscal year 2002. Higher sales
levels and cost-reduction actions drove the operating margin
improvement.
* Light Vehicle Aftermarket (LVA) sales were $197 million, down slightly
from $200 million in last year's first quarter. LVA operating margin
fell to 3.0 percent, from 4.5 percent in the prior year's first
quarter, as a result of higher product returns and changeover expense.
Outlook
"Our fiscal year 2003 outlook for light vehicle production remains
unchanged at 16.0 million vehicles in North America and 16.5 million vehicles
in Western Europe. We are also holding our fiscal year outlook for North
American Class 8 truck production at 161,000 units," Yost said. "Although our
market estimates have not changed, our sales outlook for fiscal year 2003 is
$7.8 billion, up from our prior guidance of $7.1 billion. Our outlook includes
sales related to the recently completed acquisition of the remaining
51-percent interest in Zeuna Starker GmbH & Co. KG, our German exhaust joint
venture, as well as new business in our CVS group and the favorable impact of
a stronger euro. We anticipate full-year diluted earnings per share in the
range of $2.50 to $2.70 for fiscal year 2003. For the second quarter of fiscal
year 2003, our sales forecast is $2.0 billion, and our outlook for diluted
earnings per share is in the range of $0.40 to $0.46. Our outlook for the
full year and second quarter includes the costs and savings associated with
the workforce reduction and facility closing announced today. We expect costs,
net of savings, of $0.09 per diluted share in the second fiscal quarter and
$0.04 per diluted share for fiscal year 2003 related to these actions.
"During the past two years, we have focused on reducing our break-even
levels and driving a continuous improvement culture throughout our global
organization. Through these efforts and our commitment to providing
innovative, technologically advanced solutions, we are confident that we will
exceed both customer and shareowner expectations," Yost said.
ArvinMeritor, Inc. is a premier $7-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. In
addition, ArvinMeritor is a leader in coil coating applications. The company
is headquartered in Troy, Mich., and employs 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 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; 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. will host a telephone conference call to discuss the
company's fiscal year 2003 first-quarter financial results on Tuesday,
Jan. 21, 2003, at 2:00 p.m. (ET). To participate, call (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 5:00 p.m., Jan. 21, until midnight,
Jan. 24, 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 7258479.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in millions, except per share amounts)
Quarter Ended
December 31,
2002 2001
Sales $1,709 $1,566
Cost of Sales (1,535) (1,412)
Gross Margin 174 154
Selling, General and Administrative (101) (91)
Restructuring Costs -- (15)
Operating Income 73 48
Equity in Earnings of Affiliates 1 --
Interest Expense, Net and Other (25) (28)
Income Before Income Taxes 49 20
Provision for Income Taxes (16) (6)
Minority Interests (1) (3)
Income Before Cumulative Effect of Accounting Change 32 11
Cumulative Effect of Accounting Change -- (42)
Net Income $32 $(31)
Diluted Earnings Per Share Before Cumulative
Effect of Accounting Change $0.47 $0.17
Cumulative Effect of Accounting Change -- (0.64)
Diluted Earnings Per Share $0.47 $(0.47)
Average Diluted Shares Outstanding 67.4 66.0
Before Special Items (1):
Operating Income $73 $63
Net Income $32 $21
Diluted Earnings Per Share $0.47 $0.32
(1) Excludes first quarter fiscal 2002 restructuring costs of $15 million
($10 million after-tax, or $0.15 per share) and the cumulative effect
of the write-off of impaired goodwill of $42 million
($42 million after-tax, or $0.64 per share) due to the adoption of
SFAS 142 on October 1, 2001.
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(Unaudited, in millions)
Quarter Ended
December 31,
2002 2001
Sales:
Light Vehicle Systems $903 $846
Commercial Vehicle Systems 572 483
Light Vehicle Aftermarket 197 200
Other 37 37
Total Sales $1,709 $1,566
Operating Income:
Light Vehicle Systems $42 $44
Commercial Vehicle Systems 24 11
Light Vehicle Aftermarket 6 9
Other 1 (1)
Segment Operating Income 73 63
Restructuring Costs -- (15)
Total Operating Income $73 $48
ARVINMERITOR, Inc.
SUMMARY CONSOLIDATED BALANCE SHEET
(in millions)
Dec. 31, Sept. 30,
2002 2002
(Unaudited)
ASSETS
Cash $72 $56
Receivables 1,150 1,251
Inventories 499 458
Other Current Assets 239 211
Net Property 1,184 1,179
Goodwill 817 808
Other Assets 696 688
Total $4,657 $4,651
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term Debt $9 $15
Accounts Payable 1,015 1,123
Accrued and Other Current Liabilities 542 605
Other Liabilities 656 635
Long-term Debt 1,500 1,435
Preferred Capital Securities 39 39
Minority Interests 65 58
Shareowners' Equity 831 741
Total $4,657 $4,651
ARVINMERITOR, Inc.
SUMMARY STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited, in millions)
Quarter Ended
December 31,
2002 2001
OPERATING ACTIVITIES
Income Before Cumulative Effect of
Accounting Change $32 $11
Adjustments to Income:
Depreciation and Amortization 50 48
Restructuring, Net of Expenditures -- 14
Pension and Retiree Medical Expense 24 18
Pension and Retiree Medical Contributions (22) (31)
Accounts Receivable Securitization (5) (13)
Changes in Working Capital (147) 26
Changes in Other Assets and Liabilities 45 6
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (23) 79
INVESTING ACTIVITIES
Capital Expenditures (26) (34)
Proceeds from Asset Dispositions 13 --
Other Investing Activities (2) (8)
CASH USED FOR INVESTING ACTIVITIES (15) (42)
FINANCING ACTIVITIES
Net Change in Revolving Debt 54 (7)
Purchase of Preferred Capital Securities -- (18)
Cash Dividends (7) (7)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 47 (32)
IMPACT OF CURRENCY ON CASH 7 1
CHANGE IN CASH 16 6
CASH AT BEGINNING OF PERIOD 56 101
CASH AT END OF PERIOD $72 $107
