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ArvinMeritor Comments on First Quarter and Fiscal 2001 Outlook

14 December 2000

ArvinMeritor Comments on First Quarter and Fiscal 2001 Outlook

    TROY, Mich., Dec. 14 ArvinMeritor, Inc. today
updated earnings guidance reflecting current market conditions.  The company
indicated that earnings per share will be between $0.30 and $0.35 in the first
fiscal quarter ending Dec. 31, 2000.
    "Production volumes are falling faster and further than we had anticipated
for both our heavy and light vehicle businesses," said Larry Yost, chairman
and chief executive officer of ArvinMeritor.  "Our current outlook for fiscal
2001 shows a 40 percent decline in North American Class 8 vehicle production
to 160,000 units versus a previously expected 30 percent decline representing
180,000 units in 2001.  For light vehicle production we now look for close to
a 10 percent decline in North America and a two percent decline in Europe
during fiscal 2001, as compared to the modest declines we had anticipated."
    Other market conditions that will impact ArvinMeritor earnings include a
continued softness in the global light vehicle replacement markets and
conditions in the foreign exchange markets, notably weakness of the euro
relative to the US dollar.
    "These industry conditions will have an impact on our company's revenues,
which we expect to decline about 10 percent in fiscal 2001," Yost said.  "Due
largely to this factor, we have revised our previous guidance for full year
earnings per share from $3.57 as indicated in early November to a range of
$2.00 to $2.30, representing expected net income of $130 million to
$150 million.
    "We previously announced several restructuring and cost cutting actions to
significantly reduce costs and improve operational efficiencies. Our
restructuring actions include consolidating manufacturing and engineering
facilities, closing selected facilities and reducing the global workforce,
which are part of our continuous effort to remove fixed costs and improve
manufacturing flexibility."
    ArvinMeritor expects to generate strong operating cash flow in excess of
$370 million in fiscal 2001.  This reflects an estimate of depreciation and
amortization expense of $255 million to $270 million, and a 40 basis point
reduction in year end working capital as measured as a percentage of sales.
Capital spending will be reduced by about one-third to $220 million to
$240 million for fiscal 2001.  Dividends are expected to be maintained at
$0.22 per share per quarter or $0.88 per share for the fiscal year.
    "Looking forward, we continue to concentrate on growing our revenue base,"
Yost said.  "This new business coupled with the company's cost reduction
initiatives will help make us a much stronger company for the future."