TROY, Mich., Nov. 15 /PRNewswire-FirstCall/ -- ArvinMeritor, Inc.
(NYSE: ARM) today reported sales of $2.0 billion and income from continuing
operations of $30 million, or $0.44 per diluted share, for its fourth fiscal
quarter ended Sept. 30, 2004, compared to last year's fourth-quarter income
from continuing operations of $26 million, or $0.38 per diluted share.
As previously announced, the company plans to divest its Light Vehicle
Aftermarket (LVA) and Roll Coater businesses and, as a result, LVA and Roll
Coater are excluded from continuing operations and reported as discontinued
operations.
Net loss for the fourth quarter of fiscal year 2004, including
discontinued operations, was $153 million, or $2.23 per diluted share. The
net loss includes the previously announced non-cash goodwill impairment charge
of $190 million, or $2.77 per diluted share, in the LVA business. Excluding
the goodwill charge, net income would have been $37 million, or $0.54 per
diluted share, compared to net income of $38 million, or $0.56 per diluted
share, in the fourth quarter of fiscal year 2003, before the cumulative effect
of an accounting change.
ArvinMeritor Chairman, Chief Executive Officer and President Charles G.
"Chip" McClure said, "During the quarter, our Commercial Vehicle Systems (CVS)
business continued to benefit from strong global markets, and we are pleased
with our top-line growth in this important segment. In an effort to minimize
the risks of cyclicality in North America and accelerate growth, CVS has made
significant progress in its strategy to diversify its customer base and expand
its global presence. As a result of this strategy, we recently announced two
joint ventures with the Volvo Group to produce axles in France.
"The lack of availability and the price of steel continue to challenge all
of our businesses as well as our entire industry. We have seen gross steel
costs increase by approximately $100 million, principally in our LVS and CVS
businesses during our fiscal year, of which $50 million was incurred in the
fourth quarter.
"We are committed to finding a solution and are aggressively putting
actions into place to find new steel sources all over the world, to identify
alternative materials and to find new ways to engineer our products. We also
are working with our suppliers and customers to actively address the issue of
the supply and cost of steel."
McClure continued, "We remain committed to cash generation and debt
reduction. I am pleased that the company generated approximately $225 million
in free cash flow and $100 million in net proceeds from the sales of
businesses and other assets during fiscal year 2004. This cash has been used
to reduce our net debt by $329 million since Sept. 30, 2003. We used an
additional $54 million of operating cash flow to buy out a lease that will be
part of the Roll Coater divestiture."
Results of Continuing Operations - Fourth Quarter
Sales increased $316 million, or 19 percent, from the prior year's fourth
quarter, and operating income was $57 million, a decline of $3 million from
the same period last year. In the fourth quarter of fiscal year 2003 the
company recorded a $20 million gain on the sale of a facility that was
partially offset by an $11 million charge in one of its Mexican operations.
The benefits from higher CVS volumes were reduced by higher steel costs.
Equity in earnings of affiliates was $7 million, $5 million higher than the
same period last year, primarily as a result of higher commercial vehicle
affiliate earnings.
Specific business segment financial results include:
* Light Vehicle Systems (LVS) sales were $1,115 million, up $33 million,
or three percent, from the fourth quarter of fiscal year 2003.
Operating income of $9 million was down $19 million from the same
period last year. Operating income was unfavorably impacted by higher
steel costs and $4 million in additional environmental remediation
costs associated with a former Rockwell facility. Included in operating
income a year ago was the $20 million gain on the sale of the company's
exhaust tube manufacturing facility, partially offset by the
$11 million charge in Mexico.
* Commercial Vehicle Systems (CVS) sales were $899 million, up
$283 million, or 46 percent, from last year's fourth quarter, primarily
as a result of stronger commercial vehicle truck and trailer volumes.
North American and Western European truck and trailer volumes improved
by 40 percent and 35 percent, respectively. Operating income of
$48 million was $16 million, or 50 percent higher than the same period
last year.
Results of Discontinued Operations - Fourth Quarter
Sales from discontinued operations for the fourth quarter of fiscal year
2004 were $278 million, flat with the same period last year. Excluding the
goodwill impairment charge, income from discontinued operations was $7
million, net of tax, down $5 million from the same period last year.
Full-Year Fiscal 2004 Results
Sales from continuing operations for fiscal year 2004 were $8.0 billion,
up $1.3 billion, or 19 percent, compared to the same period last year. Sales
would have been up approximately 12 percent, or $840 million, without the
effect of currency translation that increased sales by approximately $400
million and the impact of acquisitions and divestitures. Operating income for
fiscal year 2004 increased six percent to $260 million, from $246 million in
the same period last year. Income from continuing operations for fiscal year
2004 increased to $127 million, a 27-percent increase compared to a year ago,
resulting in diluted earnings per share from continuing operations of $1.85,
up from $1.48 per diluted share in the same period last year.
The effective tax rate in fiscal year 2004 for continuing operations
decreased to 25 percent, compared to 30 percent last year. The reduction was
driven by legal entity restructurings, the favorable tax treatment of the sale
of APA and the favorable impact of recently issued IRS regulations supporting
recoverability of previously disallowed capital losses. The company expects
the fiscal year 2005 effective tax rate to approximate 27 percent.
Sales from discontinued operations for fiscal year 2004 were $1.1 billion,
flat with the same period last year. Excluding the goodwill impairment
charge, income from discontinued operations was $21 million, net of tax, down
$16 million from the same period last year.
Net loss including discontinued operations, for fiscal year 2004 was
$42 million, or $0.61 per diluted share. Net loss includes the non-cash
goodwill impairment charge of $190 million, or $2.77 per diluted share. In
the fourth quarter of fiscal year 2004, the company changed its method of
accounting for certain CVS inventories. This change unfavorably impacted our
previously reported results in the third quarter of fiscal year 2004 by $0.03
per diluted share. Excluding the goodwill charge and the impact of the
inventory accounting change, diluted earnings per share would have been $2.19
for fiscal year 2004.
Outlook
The company's fiscal year 2005 outlook for light vehicle production is
15.9 million vehicles in North America and 16.8 million vehicles in Western
Europe. The forecast for North American Class 8 truck production is 275,000
units in fiscal year 2005, McClure said, "Our sales outlook for continuing
operations in fiscal year 2005 is approximately $8.4 billion, up about five
percent from fiscal year 2004.
"While we believe our CVS business group will benefit from higher volumes,
we will continue to face challenges posed by the availability and higher price
of steel. We anticipate full-year diluted earnings per share from continuing
operations in the range of $1.60 to $1.80.
"For the first quarter of fiscal year 2005, our sales forecast for
continuing operations is $2.0 billion, and our outlook for diluted earnings
per share from continuing operations is $0.15 to $0.20," McClure continued.
"ArvinMeritor has a great tradition of technological innovation and
exceptional customer service," said McClure. "We have embarked on a path to
focus our efforts and resources on our core competencies in the global
automotive and commercial truck markets, where we can better add value for our
customers and operate profitably for our shareowners. Our recent decision to
divest our Light Vehicle Aftermarket and Roll Coater businesses reflects our
commitment to focus on what we do best, while applying our traditional
strengths in engineering and design to provide innovative solutions for our
customers.
"We will strive to meet our short-term financial and customer commitments,
while at the same time providing long-term sustainability and creating
opportunities to prosper. We will do this by executing a clear direction,
aligning the organization to the right goals and objectives, and holding
everyone accountable. While we will no doubt face some tough challenges ahead
and the need to make decisions based on the realities of the market, we remain
committed to exceeding the performance expectations of our customers,
shareowners and employees."
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:
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 certain non-GAAP financial measures including
net debt (1) and free cash flow (2). Such measures should not be considered
substitutes for any measures derived in accordance with generally accepted
accounting principles, and may also be inconsistent with similar measures
presented by other companies. Reconciliation of these non-GAAP measures to
the most nearly comparable GAAP measures, if applicable, is presented on our
website, http://www.arvinmeritor.com, in the fiscal year fourth quarter
earnings conference call presentation.
Notes
(1) The company defines net debt as balance sheet debt less the fair value
adjustment of debt due to interest rate swaps plus amounts outstanding
under its accounts receivable securitization and factoring programs
less cash.
(2) The company defines free cash flow as cash flow from operations before
the change in accounts receivable securitization and factoring
programs less capital expenditures.
This press release also 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; availability and
cost of raw materials; 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; success and timing of potential divestitures;
potential impairment of long-lived assets, including goodwill; 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.
The company will host a telephone conference call and Web cast to discuss
the company's fiscal year 2004 fourth-quarter financial results on Monday,
Nov. 15, 2004, at 11:00 a.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 1:00 p.m., Nov. 15, until
midnight, Nov. 17, 2004, 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 1163265.
To access the listen-only audio Web cast, visit the ArvinMeritor Web site
at http://www.arvinmeritor.com/ and click on the Web cast link on either the
home page or the investor page.
ARVINMERITOR, INC.
STATEMENT OF OPERATIONS
(In millions, except per share amounts)
Quarter Ended Fiscal Year Ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited)
Sales $2,014 $1,698 $8,033 $6,723
Cost of Sales (1,853) (1,568) (7,366) (6,132)
GROSS MARGIN 161 130 667 591
SG&A (96) (85) (385) (340)
Gain on Divestitures -- 20 20 15
Environmental Remediation Costs (3) -- (11) --
Restructuring Costs (5) (5) (15) (20)
Costs for Withdrawn Tender Offer -- -- (16) --
OPERATING INCOME 57 60 260 246
Equity in Earnings of Affiliates 7 2 19 8
Gain on Sale of Marketable
Securities -- -- 7 --
Interest Expense, Net and Other (30) (26) (107) (104)
INCOME BEFORE TAXES 34 36 179 150
Provision for Income Taxes (4) (11) (44) (45)
Minority Interests -- 1 (8) (5)
Income From Continuing Operations 30 26 127 100
Discontinued Operations
Income from Discontinued Operations 8 12 24 37
Goodwill Impairment (190) -- (190) --
Minority Interests (1) -- (3) --
Income (Loss) from Discontinued
Operations (183) 12 (169) 37
Income (Loss) Before Cumulative
Effect of Accounting Change (153) 38 (42) 137
Cumulative Effect of Accounting
Change -- (4) -- (4)
NET INCOME (LOSS) $(153) $34 $(42) $133
DILUTED EARNINGS PER SHARE
Continuing Operations $0.44 $0.38 $1.85 $1.48
Discontinued Operations (2.67) 0.18 (2.46) 0.54
Cumulative Effect of Accounting
Change -- (0.06) -- (0.06)
Diluted Earnings Per Share $(2.23) $0.50 $(0.61) $1.96
Diluted Shares Outstanding 68.7 68.1 68.6 67.9
Note: Prior periods have been restated for discontinued operations and
the change in the method of accounting for certain inventories.
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(In millions)
Quarter Ended Fiscal Year Ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited)
Sales:
Light Vehicle Systems $1,115 $1,082 $4,818 $4,301
Commercial Vehicle Systems 899 616 3,215 2,422
Total Sales $2,014 $1,698 $8,033 $6,723
Operating Income:
Light Vehicle Systems $9 $28 $112 $135
Commercial Vehicle Systems 48 32 164 111
Segment Operating Income 57 60 276 246
Costs for Withdrawn Tender Offer -- -- (16) --
Total Operating Income $57 $60 $260 $246
Note: Prior periods have been restated for discontinued operations and
the change in the method of accounting for certain inventories.
ARVINMERITOR, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(In millions)
September 30, September 30,
ASSETS 2004 2003
Cash $132 $103
Receivables 1,478 1,208
Inventories 523 461
Other current assets 218 224
Assets of discontinued operations 615 744
Net property 1,032 1,081
Goodwill 808 776
Other assets 754 795
TOTAL ASSETS $5,560 $5,392
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term debt $3 $18
Accounts payable 1,366 1,143
Accrued and other current liabilities 602 534
Liabilities of discontinued operations 282 281
Other liabilities 771 889
Long-term debt 1,487 1,541
Minority interest 61 61
Equity 988 925
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $5,560 $5,392
Note: Prior periods have been restated for discontinued operations and
the change in the method of accounting for certain inventories.
ARVINMERITOR, INC.
STATEMENT OF CONSOLIDATED CASH FLOWS
(in millions)
Twelve Months Ended
September 30,
2004 2003
OPERATING ACTIVITIES
Income from continuing operations $127 $100
Adjustments to income from continuing operations
Depreciation and other amortization 183 185
Gain on divestitures (20) (15)
Gain on sale of marketable securities (7) --
Restructuring costs, net of expenditures (3) 8
Pension and retiree medical expense 130 99
Pension and retiree medical contributions (212) (163)
Changes in receivables
securitization and factoring (187) 90
Changes in assets and liabilities 164 (72)
Net cash flows provided by continuing operations 175 232
Net cash flows provided by discontinued operations 44 42
CASH PROVIDED BY OPERATING ACTIVITIES 219 274
INVESTING ACTIVITIES
Capital expenditures (152) (173)
Acquisitions of businesses and
investments, net of cash acquired (3) (107)
Proceeds from dispositions of
property and businesses 85 104
Proceeds from sale of marketable securities 18 --
Net investing cash flows used by
discontinued operations (68) (15)
CASH USED FOR INVESTING ACTIVITIES (120) (191)
FINANCING ACTIVITIES
Net change in revolving debt (53) 26
Net change in other debt (2) (55)
Net change in debt (55) (29)
Proceeds from exercise of stock options 6 --
Cash dividends (28) (27)
CASH PROVIDED BY FINANCING ACTIVITIES (77) (56)
IMPACT OF CURRENCY ON CASH 7 20
CHANGE IN CASH 29 47
CASH AT BEGINNING OF PERIOD 103 56
CASH AT END OF PERIOD $132 $103
Note: Prior periods have been restated for discontinued operations and
the change in the method of accounting for certain inventories.
SOURCE ArvinMeritor, Inc.
CONTACT: Media
Lin Cummins
+1-248-435-7112
linda.cummins@arvinmeritor.com
or
Investors
Alice McGuire
+1-248-655-2159
alice.mcguire@arvinmeritor.com
both of ArvinMeritor, Inc.
Web site: http://www.arvinmeritor.com
(ARM)
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