ArvinMeritor Reports Fourth-Quarter and Fiscal Year 2005 Results
Achieves Full-Year Income from Continuing Operations, Before Special Items, at Upper End of Guidance Range
TROY, Mich., Nov. 15 -- ArvinMeritor, Inc. today reported financial results for its full fiscal year and fourth quarter ended Sept. 30, 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO )
* In line with guidance previously provided, full-year income from
continuing operations, before special items, was $110 million, or $1.57
per diluted share.
* On a GAAP basis, income from continuing operations was $33 million, or
$0.47 per diluted share, which includes $72 million of after-tax
restructuring charges the company incurred to reshape the business.
* Sales from continuing operations for fiscal year 2005 were $8.9 billion,
up $870 million, or 11 percent, compared to the same period last year.
* Fourth-quarter income from continuing operations before special items
was $29 million, or $0.41 per diluted share. On a GAAP basis, income
from continuing operations was $12 million, or $0.17 per diluted share.
* Fourth-quarter sales were $2.1 billion, up 6 percent from the same
period last year.
"ArvinMeritor delivered a strong performance in the fourth quarter and throughout our 2005 fiscal year, despite the tough challenges confronting the entire automotive industry," said Chairman, CEO and President Chip McClure. "Our experienced management team and dedicated employees delivered excellent performance, enabling ArvinMeritor to achieve full-year income from continuing operations, before special items, at the high end of our guidance range."
Fourth-Quarter Results 2005
For the fourth quarter of fiscal year 2005, ArvinMeritor posted sales of $2.1 billion, a 6-percent increase over the same period last year. The increase in sales was driven by continued strength in commercial vehicle markets and an increase in sales from the company's new Commercial Vehicle Systems (CVS) axle joint ventures with the Volvo group in Europe. Currency translation also increased sales by approximately $40 million.
Operating income, before special items, was $60 million in the fourth quarter of fiscal 2005. Restructuring costs in the fourth quarter of fiscal 2005 were $36 million, of which $33 million related to actions announced in May. Steel costs, net of recovery, were approximately $15 million higher in the fourth quarter than in the same period last year. Operating income was $58 million in the fourth quarter of fiscal year 2004.
Income from continuing operations, excluding special items, was $29 million, or $0.41 per diluted share. Special items included $20 million of after-tax restructuring costs associated with actions announced in May and $3 million of after-tax costs associated with the debt exchange completed in September. In addition, income from continuing operations excludes $6 million of one-time favorable tax benefits.
Jim Donlon, ArvinMeritor's CFO, said, "We are pleased with the results of our CVS business, which saw sales of $997 million in the fourth quarter of fiscal year 2005. Excluding $5 million of new restructuring costs and higher net steel costs of $11 million, CVS operating margins would have been 6.3 percent, compared to the reported 5.3 percent in the fourth quarter of fiscal year 2004." Donlon added, "Light Vehicle Systems (LVS) is leading the way with our restructuring efforts and have made excellent progress in reshaping the business. Restructuring costs are on target and actions are proceeding as planned."
With regard to the Light Vehicle Aftermarket (LVA) business, "Due to evolving industry dynamics, we now believe selling the businesses individually, rather than as a whole, appears to be the right course of action to maximize our shareowners' value," McClure said. "This change in strategy has not materially impacted our view of the total expected proceeds. It does, however, for accounting purposes, require us to evaluate fair value on an individual business basis rather than LVA as a whole." This resulted in an after-tax non-cash impairment charge of $28 million, or $0.40 per diluted share in certain LVA businesses. Loss from discontinued operations, including the impairment charge, was $31 million, or $0.44 per diluted share, compared to a loss of $183 million, or $2.67 per diluted share, last year.
Outlook for 2006
The company's fiscal year 2006 forecast for light vehicle production is 15.6 million vehicles in North America and 16.4 million vehicles in Western Europe.
ArvinMeritor's forecast for North American Class 8 truck production is 305,000 units in fiscal year 2006. The forecast for heavy and medium truck volumes in Western Europe is 421,000 units.
For the first quarter of fiscal year 2006, the sales forecast for continuing operations is $2.1 billion. The company's outlook for diluted earnings per share from continuing operations is $0.13 to $0.17, before special items.
ArvinMeritor's sales outlook for continuing operations in 2006 is expected to be approximately $8.6 billion, and the outlook for full-year diluted earnings per share from continuing operations is in the range of $1.50 to $1.70. This guidance excludes gains or losses on divestitures, restructuring costs, and other special items, including extended customer shutdowns or production interruptions.
"We are encouraged by the ongoing strong demand and volume in our commercial vehicle business -- and the growth opportunities we see for both CVS and LVS in diesel emissions technology," said McClure. "We are actively pursuing these and many other growth opportunities both in U.S. and international markets, while aggressively implementing actions to improve the profitability of our business."
About ArvinMeritor
ArvinMeritor, Inc. is a premier 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 certain aftermarkets. Headquartered in Troy, Mich., ArvinMeritor employs approximately 29,000 people at more than 120 manufacturing facilities in 25 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/.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in millions, except per share amount)
Quarter Ended Twelve Months Ended
September 30, September 30,
2005 2004 2005 2004
(Unaudited)
Sales $2,126 $2,014 $8,903 $8,033
Cost of Sales (1,974) (1,853) (8,267) (7,366)
GROSS MARGIN 152 161 636 667
Selling, General, & Administrative (88) (96) (376) (385)
Restructuring Costs (36) (4) (117) (15)
Gain on Divestitures, Net - - 4 20
Environmental Remediation Costs (1) (3) (7) (11)
Customer Bankruptcies - - (10) -
Costs for Withdrawn Tender Offer - - - (16)
OPERATING INCOME 27 58 130 260
Equity in Earnings of Affiliates 8 7 28 19
Gain on Sale of Marketable Securities - - - 7
Interest Expense, Net and Other (38) (30) (127) (107)
INCOME (LOSS) BEFORE TAXES (3) 35 31 179
Benefit (Provision) for Income Taxes 14 (5) 5 (44)
Minority Interests 1 - (3) (8)
Income From Continuing Operations 12 30 33 127
Loss from Discontinued Operations (31) (183) (21) (169)
NET INCOME (LOSS) $(19) $(153) $12 $(42)
DILUTED EARNINGS (LOSS) PER SHARE
Continuing Operations $0.17 $0.44 $0.47 $1.85
Discontinued Operations (0.44) (2.67) (0.30) (2.46)
Diluted Earnings (Loss) Per Share $(0.27) $(2.23) $0.17 $(0.61)
Diluted Shares Outstanding 70.1 68.7 69.9 68.6
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(In millions)
Quarter Ended Twelve Months Ended
September 30, September 30,
2005 2004 2005 2004
(Unaudited)
Sales:
Light Vehicle Systems $1,129 $1,115 $4,849 $4,818
Commercial Vehicle Systems 997 899 4,054 3,215
Total Sales $2,126 $2,014 $8,903 $8,033
Operating Income (Loss):
Light Vehicle Systems $(18) $13 $(53) $123
Commercial Vehicle Systems 47 48 193 164
Segment Operating Income 29 61 140 287
Unallocated Corporate Costs (2) (3) (10) (27)
Total Operating Income $27 $58 $130 $260
ARVINMERITOR, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(In millions)
September 30, September 30,
2005 2004
ASSETS
Cash and Cash Equivalents $187 $132
Receivables, Net 1,655 1,478
Inventories 541 523
Other Current Assets 256 238
Assets of Discontinued Operations 531 615
Net Property 1,013 1,032
Goodwill 801 808
Other Assets 886 813
TOTAL ASSETS $5,870 $5,639
LIABILITIES AND SHAREOWNERS' EQUITY
Short-Term Debt $131 $3
Accounts Payable 1,483 1,366
Other Current Liabilities 667 622
Liabilities of Discontinued Operations 242 282
Other Liabilities 963 830
Long-Term Debt 1,451 1,487
Minority Interests 58 61
Shareowners' Equity 875 988
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $5,870 $5,639
ARVINMERITOR, INC.
SUMMARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Twelve Months Ended
September 30,
2005 2004
OPERATING ACTIVITIES
Income from Continuing Operations $33 $127
Adjustments to Income From Continuing Operations
Depreciation and Amortization 182 183
Gains on Divestitures and
Marketable Securities, Net (4) (27)
Restructuring Costs, Net of Expenditures 75 (3)
Pension and Retiree Medical Expense 110 130
Pension and Retiree Medical Contributions (164) (212)
Proceeds from Termination of Interest Rate Swaps 22 -
Changes in Receivable Securitization and Factoring (19) (187)
Changes in Assets and Liabilities (136) 164
Cash Flows Provided By Continuing Operations 99 175
Cash Flows Provided By (Used For)
Discontinued Operations (131) 44
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (32) 219
INVESTING ACTIVITIES
Capital Expenditures (146) (152)
Acquisitions of Businesses and
Investments, Net of Cash Acquired (31) (3)
Proceeds from Disposition of
Property and Businesses 49 85
Proceeds from Sale of Marketable Securities - 18
Net Cash Flows Provided By (Used For)
Discontinued Operations 153 (68)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 25 (120)
FINANCING ACTIVITIES
Net Decrease in Revolving Credit Facilities - (53)
Borrowings on Accounts Receivable
Securitization Program 112 -
Purchase of Notes (21) -
Payments on Lines of Credit and Other (5) (2)
Net Change in Debt 86 (55)
Payment of Issuance Costs Associated with
Debt Exchange (10) -
Proceeds from Exercise of Stock Options 6 6
Cash Dividends (28) (28)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 54 (77)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE
RATES ON CASH 8 7
CHANGE IN CASH AND CASH EQUIVALENTS 55 29
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 132 103
CASH AND CASH EQUIVALENTS AT END OF YEAR $187 $132
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited, in millions)
(in millions, except per share amounts)
Q4 FY 05 New Restructuring Debt
Reported Actions Exchange
Sales $2,126 $- $-
Gross Margin 152 - -
Operating Income 27 33 -
Income from Continuing Operations 12 20 3
Diluted Earnings (Loss)
Per Share - Continuing
Operations $0.17 $0.28 $0.04
Segment Operating Income
LVS Operating Income (Loss) $ (18) $28 $ -
CVS Operating Income 47 5 -
Segment Operating Income 29 33 -
Unallocated corporate costs (2) - -
Total Operating Income $27 $33 $ -
Operating Margins
LVS -1.6%
CVS 4.7%
Segment Operating Margins 1.4%
Total Operating Margins 1.3%
Income Taxes Q4 FY05 Adjusted
Sales $- $2,126
Gross Margin - 152
Operating Income - 60
Income from Continuing Operations (6) 29
Diluted Earnings (Loss)
Per Share - Continuing
Operations $(0.08) $0.41
Segment Operating Income
LVS Operating Income (Loss) $- $10
CVS Operating Income - 52
Segment Operating Income - 62
Unallocated corporate costs - (2)
Total Operating Income $- $60
Operating Margins
LVS 0.9%
CVS 5.2%
Segment Operating Margins 2.9%
Total Operating Margins 2.8%
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited, in millions)
(in millions, except per share amounts)
New
FY 05 Restructuring Customer
Reported Actions Environmental Bankruptcy
Sales $8,903 $ - $ - $ -
Gross Margin 636 - - 4
Operating Income 130 101 6 9
Income from Continuing
Operations 33 62 4 6
Diluted Earnings Per
Share - Continuing
Operations $ 0.47 $ 0.89 $ 0.06 $ 0.09
Guidance
Segment Operating Income
LVS Operating Income
(Loss) $(53) $ 82 $ - $ 9
CVS Operating Income 193 19 - -
Segment Operating Income 140 101 - 9
Unallocated corporate
costs (10) - 6 -
Total Operating Income $130 $ 101 $ 6 $ 9
Operating Margins
LVS -1.1%
CVS 4.8%
Segment Operating Margins 1.6%
Total Operating Margins 1.5%
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
NON-GAAP
(Unaudited, in millions)
Income
Debt Exchange Taxes FY05 Adjusted
(in millions, except
per share amounts)
Sales $ - $ - $ 8,903
Gross Margin - - 640
Operating Income - - 246
Income from Continuing Operations 3 2 110
Diluted Earnings Per Share -
Continuing Operations $0.04 $0.02 $ 1.57
Guidance $1.40 - $1.60
Segment Operating Income $ - - $ 38
LVS Operating Income (Loss) - - 212
CVS Operating Income - - 250
Segment Operating Income
Unallocated corporate costs - - (4)
Total Operating Income $ - $ - $ 246
Operating Margins
LVS 0.8%
CVS 5.2%
Segment Operating Margins 2.8%
Total Operating Margins 2.8%