ArvinMeritor Reports Fiscal Year 2004 First-Quarter Results
TROY, Mich., Jan. 28, 2004 -- ArvinMeritor, Inc. today reported sales of $2.2 billion and net income of $19 million, or $0.28 per diluted share, for its first fiscal quarter ended Dec. 31, 2003, compared to the prior year's first-quarter net income of $32 million, or $0.47 per diluted share. Results for the first quarter of fiscal year 2004 include a net charge of $0.09 per diluted share as a result of the company's decision to withdraw its tender offer to acquire all of the outstanding shares of Dana Corporation (Dana). This charge includes $16 million of pre-tax costs, partially offset by a pre-tax gain of $7 million on the sale of Dana stock owned by the company.
Sales increased $471 million, or 28 percent, as compared to the prior year's first quarter. Foreign currency translation, driven primarily by the stronger euro, favorably impacted sales by approximately $135 million, and the company's acquisition of Zeuna Starker added sales of $203 million in the first fiscal quarter. Sales would have been up approximately eight percent without these items, as compared to the first quarter of fiscal year 2003, primarily as a result of strong North American Class 8 truck volumes.
ArvinMeritor Chairman and Chief Executive Officer Larry Yost said, "We are pleased to see the strengthening of our commercial vehicle markets, and look forward to benefiting from the continued recovery of the North American Class 8 truck market as the year progresses. Although our light vehicle and aftermarket businesses fell short of our financial targets, we expect to see improvements throughout the year, as we realize our efforts to reduce costs and improve operating performance."
Operating income for the first quarter of fiscal year 2004 was $49 million, which included $16 million of costs related to the withdrawn tender offer for Dana. Operating income was also impacted by pension and retiree medical costs, which were $9 million higher than the same quarter in 2003, and by premium product launch costs of $6 million.
Net interest expense of $26 million was up slightly from $25 million in last year's first quarter. The effective tax rate was 34 percent in the first quarter of fiscal year 2004, compared to 32 percent in the first quarter of fiscal year 2003.
Specific business segment financial results include:
* Light Vehicle Systems (LVS) sales were $1,251 million, up
$348 million or 39 percent, from the first quarter of fiscal year 2003.
Foreign currency translation, driven primarily by the stronger euro,
favorably impacted sales by approximately $90 million, and the
acquisition of Zeuna Starker added sales of $203 million. Excluding
the effects of currency translation and Zeuna Starker, sales would have
increased by approximately 6 percent, driven primarily by higher sales
in our door and roof businesses. Operating margin declined to 2.5
percent, from 4.7 percent in last year's first quarter, due to premium
product launch costs, higher pension and retiree medical costs, the
consolidation of the Zeuna Starker business and a stronger euro.
* Commercial Vehicle Systems (CVS) sales were $685 million, up
$113 million or 20 percent, from last year's first quarter. Excluding
the impact of foreign currency translation of $35 million, sales would
have been higher than the prior year by approximately 13 percent.
Operating income was $32 million, or 33 percent higher than the same
period last year, and operating margins improved to 4.7 percent, from
4.2 percent. Higher North American Class 8 truck production was the
major factor behind the increase.
* Light Vehicle Aftermarket (LVA) sales were $198 million, up slightly
from $197 million in last year's first quarter. Foreign currency
translation favorably impacted sales by roughly $10 million in the first
quarter of fiscal year 2004. LVA operating margin fell to 0.5 percent,
from 3.0 percent in the prior year's first quarter. Markets remained
weak for aftermarket parts in the first quarter, particularly in North
America.
Outlook
"Our fiscal year 2004 outlook for light vehicle production is 16.1 million vehicles in North America, up slightly from our previous estimate of 15.8 million vehicles. Our light vehicle production outlook for fiscal year 2004 in Western Europe is 16.6 million vehicles, up from our previous estimate of 16.2 million. Our current outlook for Class 8 truck production in North America remains unchanged from our previous estimate of 222,000 units for fiscal year 2004," Yost said.
"Our latest sales outlook for fiscal year 2004 is $9.0 billion, up from our previous guidance of $8.6 billion, as a result of higher sales in our LVS business and reflecting current foreign currency exchange-rate expectations," Yost continued. "We anticipate full-year diluted earnings per share to remain unchanged from our previous guidance of $2.20 to $2.40.
"For the second quarter of fiscal year 2004, our sales forecast is $2.3 billion, and our outlook for diluted earnings per share is in the range of $0.40 to $0.45 per diluted share, up from $0.36 per diluted share a year ago. Our outlook includes $0.07 per diluted share of anticipated restructuring charges, but does not include the impact of any divestitures, including the previously announced disposition of our 75-percent interest in AP Amortiguadores S.A., a joint venture that manufactures ride control products.
"We remain focused on taking costs out of our businesses, while continuing to invest in our future growth, by offering engineering and technology that meet our customers' requirements. We continue to look for ways to improve our return on invested capital by reducing fixed costs and focusing our capital on those activities that add value to our shareowners. Our recent announcement of our intent to sell our Kenton, Ohio, trailer-beam fabrication facility to Sypris Solutions is another example of this ongoing effort."
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.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in millions, except per share amounts)
Quarter Ended
December 31,
2003 2002
Sales $2,180 $1,709
Cost of Sales (1,998) (1,535)
Gross Margin 182 174
Selling, General and Administrative (116) (101)
Restructuring (1) -
Costs For Withdrawn Tender Offer (16) -
Operating Income 49 73
Equity in Earnings of Affiliates 2 1
Gain on Sale of Marketable Securities 7 -
Interest Expense, Net and Other (26) (25)
Income Before Income Taxes 32 49
Provision for Income Taxes (11) (16)
Minority Interests (2) (1)
Net Income $19 $32
Diluted Earnings Per Share $0.28 $0.47
Average Diluted Shares Outstanding 68.3 67.4
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(Unaudited, in millions)
Quarter Ended
December 31,
2003 2002
Sales:
Light Vehicle Systems $1,251 $903
Commercial Vehicle Systems 685 572
Light Vehicle Aftermarket 198 197
Other 46 37
Total Sales $2,180 $1,709
Operating Income:
Light Vehicle Systems $31 $42
Commercial Vehicle Systems 32 24
Light Vehicle Aftermarket 1 6
Other 1 1
Segment Operating Income 65 73
Costs For Withdrawn Tender Offer (16) -
Total Operating Income $49 $73
ARVINMERITOR, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(in millions)
December 31, September 30,
2003 2003
(Unaudited)
ASSETS
Cash $137 $103
Receivables
Inventories 1,386 1,327
581 543
Other Current Assets 267 266
Property, Net 1,337 1,332
Goodwill 985 951
Other Assets 734 731
Total $5,427 $5,253
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term Debt $12 $20
Accounts Payable
1,299 1,311
Accrued and Other Current Liabilities 555 547
Other Liabilities 892 871
Long-term Debt 1,572 1,541
Minority Interests 73 64
Equity 1,024 899
Total $5,427 $5,253
ARVINMERITOR, INC.
SUMMARY STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited, in millions)
Quarter Ended
December 31,
2003 2002
OPERATING ACTIVITIES
Net Income $19 $32
Adjustments to Net Income:
Depreciation and Amortization 56 50
Gain on Sale of Marketable Securities (7) -
Restructuring Costs, Net of Expenditures (3) (3)
Pension and Retiree Medical Expense 33 24
Pension and Retiree Medical Contributions (23) (22)
Change in Receivable Securitization (14) (5)
Changes in Other Assets and Liabilities (48) (99)
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 13 (23)
INVESTING ACTIVITIES
Capital Expenditures (32) (26)
Proceeds from Disposition of Property and Businesses 14 13
Proceeds from Sale of Marketable Securities 18 -
Other Investing Activities 2 (2)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2 (15)
FINANCING ACTIVITIES
Net Change in Revolving Debt 28 53
Net Change in Other Debt (7) 1
Net Increase in Debt 21 54
Cash Dividends (7) (7)
CASH PROVIDED BY FINANCING ACTIVITIES 14 47
IMPACT OF CURRENCY ON CASH 5 7
CHANGE IN CASH 34 16
CASH AT BEGINNING OF PERIOD 103 56
CASH AT END OF PERIOD $137 $72