28th July 2005 - ArvinMeritor Reports Fiscal Year 2005 Third-Quarter Results

ArvinMeritor, Inc. today reported financial results for its third fiscal quarter ended June 30, 2005.

"We had a strong third quarter, despite difficult industry conditions," said Chairman, CEO and President Charles G. "Chip" McClure. "Continued strong volumes in our CVS business, along with a well-balanced product, customer and geographic mix, drove increased sales. The restructuring actions we announced in May are beginning to produce results and strengthen our overall financial position. I am proud of our entire organization and what we have been able to accomplish during an exceptionally demanding time."

Third-Quarter Results 2005

For the third quarter of fiscal year 2005, ArvinMeritor posted sales of $2.4 billion, a 15-percent increase when compared to the same period last year. The primary factors that contributed to this increase were higher volumes in CVS and sales from the company's new commercial vehicle axle joint ventures with the Volvo Group in Europe. In addition, currency translation, primarily due to the stronger euro in relation to the U.S. dollar, increased sales approximately $60 million.

Operating income was $90 million, up $8 million or 10 percent, compared to $82 million in the prior year's third quarter. Operating income for the quarter includes $6 million of restructuring costs associated with programs announced in May. The increase in operating income was driven primarily by increased volumes in CVS and a continued focus on reducing cost and improving productivity.

Income from continuing operations was $44 million, or $0.64 per diluted share, compared to $42 million, or $0.61 per diluted share a year ago. Excluding the $4 million of after-tax restructuring costs associated with programs announced in May, income from continuing operations was $48 million, or $0.70 per diluted share. These results are in line with the guidance the company provided in June.

James Donlon, ArvinMeritor's chief financial officer, said, "Although the cost of steel continued to have a negative impact on our financial performance this quarter, we're beginning to see some moderation in the higher costs for steel." Steel costs, net of recovery, were approximately $20 million higher in the third quarter than in the same period last year.

Income from discontinued operations was $2 million, or $0.02 per diluted share, compared to $9 million, or $0.13 per diluted share last year. This decline is largely attributable to $6 million of after-tax costs associated with the company's new supply agreement with Midas announced in May, and the loss of income resulting from the sale of Roll Coater in November 2004.

Net income was $46 million, or $0.66 per diluted share, compared to net income of $51 million, or $0.74 per diluted share last year.

Rationalize and Refocus

As part of its ongoing efforts to rationalize and refocus its business, ArvinMeritor is on track with its previously announced workforce reductions and facility closures. In large part, these actions affect the global operations of the Light Vehicle Systems (LVS) business. Recently, the company announced the closing of a light vehicle exhaust operation in Mosciano, Italy. It also announced its intention to move the manufacturing of trailer axles from Wrexham, U.K., to a more cost efficient location. This move will potentially affect about 200 employees.

The company also announced today that it is extending the timeframe for completion of the proposed sale of its Light Vehicle Aftermarket (LVA) business into fiscal year 2006. "We remain committed to becoming a more focused company, said McClure. "We are approaching the sale of LVA in a disciplined manner, and we are determined to achieve fair market value and a favorable return for ArvinMeritor and its shareowners."

Fourth-Quarter and Fiscal Year 2005 Outlook

ArvinMeritor's forecast for North American Class 8 truck production is 310,000 units in fiscal year 2005, up from the previous outlook of 307,000 units. The company's outlook for Western European heavy and medium truck volumes is 420,000 units, down slightly from the previous outlook of 421,000 units.

For light vehicle production, the company's fiscal year 2005 outlook is 15.6 million vehicles in North America, unchanged from our previous forecast, and 16.4 million vehicles in Western Europe, down from 16.9 million units.

"Our sales outlook for fiscal year 2005 remains strong and is expected to be approximately $8.8 billion," said McClure. The company expects its income from continuing operations for fiscal year 2005 to be at the higher end of the previously forecasted range of $1.40 to $1.60 per diluted share, before special items.

"We are encouraged by the early results of our restructuring plan," McClure continued. "Moving quickly is imperative in today's automotive industry, and we intend to continue our efforts to evaluate all areas of the company. We will work diligently as a team to take the necessary actions to remove excess capacity, reduce fixed costs and increase our operational efficiencies."

About ArvinMeritor

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., ArvinMeritor employs approximately 31,000 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: www.arvinmeritor.com.

Forward-Looking Statements

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 and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and cost of raw materials, including steel; 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; the financial condition of the company's suppliers and customers, including potential bankruptcies; 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.

Source: ArvinMeritor Press Release