28th April 2006 - ArvinMeritor Reports Second-Quarter Net Income of $45 Million - Up $78 Million

Achieves Second-Quarter Earnings Per Share at Top End of Range and Updates Full-Year Outlook

ArvinMeritor today reported financial results for its second fiscal quarter ended March 31, 2006.

Second-Quarter Fiscal Year 2006 Highlights

ArvinMeritor Chairman, CEO and President Chip McClure said, “The actions we implemented to retire debt strengthened our balance sheet, improved liquidity and positioned the company for sustained financial stability. We are very pleased with the results of these efforts, and will continue to work on improving the company’s performance by completing our restructuring actions and focusing on strong operational performance.”

Second-Quarter 2006 Results

ArvinMeritor posted sales of $2.3 billion in the second quarter of fiscal year 2006, up three percent from the same period last year.  Operating income was $50 million, up $55 million compared to the same period last year. Excluding $17 million of restructuring costs, operating income would have been $67 million in the second quarter of fiscal year 2006.

Income from continuing operations, before special items, was $28 million or $0.40 per diluted share. Special items consisted of $10 million of after- tax restructuring costs, $6 million of after-tax costs associated with the company’s $600 million debt tender offer, and $19 million of tax benefits primarily resulting from the resolution of various worldwide tax audits.

Income from discontinued operations was $14 million, or $0.20 per diluted share. Included in income from discontinued operations was an after-tax net gain on the sale of the Purolator filters business and aftermarket exhaust business of $22 million. The company also recorded $12 million of after-tax impairment charges in certain other LVA businesses.

Loss from discontinued operations was $12 million in the same period last year.  Net income for the total company was $45 million, or $0.64 per diluted share, compared to a net loss of $33 million in the second quarter of last year.

Outlook

The company’s fiscal year 2006 outlook for light vehicle production is 15.6 million vehicles in North America and 16.4 million vehicles in Western Europe. The forecast for North American Class 8 truck production is 340,000 units for fiscal year 2006, up from our prior guidance of 325,000 units.

The forecast for heavy and medium truck volumes in Western Europe is 425,000 units, up from our previous forecast of 421,000 units.  For the third quarter of fiscal year 2006, the sales forecast for continuing operations is $2.4 billion. The company’s outlook for diluted earnings per share from continuing operations for the third quarter is $0.60 to $0.70, before special items.

ArvinMeritor is updating its full-year guidance for fiscal year 2006.  Sales from continuing operations are expected to be approximately $8.8 billion. Earnings per diluted share, before special items, are expected to be in the range of $1.60 to $1.70, revised from the previous guidance of $1.50 to $1.70. The outlook for free cash flow remains in the range of $120 million to $170 million for fiscal year 2006.

McClure said, “Continued high volumes in the commercial vehicle market and interest expense savings from the debt reduction actions we completed in the second quarter are the primary drivers for revising our full-year forecast. “Looking forward, we are taking steps to minimize the effect on our future earnings and free cash flow related to the anticipated decline in the 2007 North American heavy truck market,” he continued. “We expect improved productivity in our trailer business, continued growth in the commercial aftermarket business and increased sales from our Commercial Vehicle Emissions group.”

About ArvinMeritor

ArvinMeritor, Inc. is a premier $8.8 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 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/ .

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. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. 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 cycles and 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 suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of the company’s suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations and the ability to achieve the expected benefits of restructuring actions; 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 continue to comply with covenants in its financing agreements; 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; rising costs of pension and other post-retirement benefits and possible changes in pension and other accounting rules; as well as other risks and uncertainties, including but not limited to those detailed from time to time in filings of the company with the SEC. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Source: ArvinMeritor Press Release