EX-99.B 3 d63655_ex99b.htm PRESENTATION MADE ON EARNINGS

FY 2005 2^nd Quarter
Earnings Conference Call
Chip McClure, President, Chairman and CEO
Jim Donlon, Senior Vice President and CFO
Rakesh Sachdev, Senior Vice President Corporate Strategy

May 3, 2005

Forward-Looking Statements

This presentation contains “forward-looking statements” as defined in the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on currently available competitive,
financial and economic data and management’s views and assumptions regarding future events. Such
forward-looking statements are inherently uncertain, and 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 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; 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; achievement of 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; the 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
herein and from time to time in ArvinMeritor’s Securities and Exchange Commission filings.

2^nd Quarter Income Statement

(in millions, except per share amounts)

2005

2004

Sales

2,276

1,996

280

14%

Cost of Sales

(2,124)

(1,825)

(299)

-16%

GROSS MARGIN

152

171

(19)

-11%

SG&A

(100)

(99)

(1)

-1%

Gain on Divestitures

(20)

Customer Bankruptcy

(5)

Environmental Remediation Costs

(6)

(8)

Restructuring Costs

(64)

(6)

(58)

OPERATING INCOME (LOSS)

(23)

(101)

-129%

Equity in Earnings of Affiliates

40%

Interest Expense, Net and Other

(30)

(25)

(5)

-20%

INCOME (LOSS) BEFORE INCOME TAXES

(46)

(104)

-179%

Benefits (Provisions) for Income Taxes

(15)

187%

Minority Interests

(2)

(3)

33%

Income (Loss) From Continuing Operations

(35)

(75)

-188%

Income from Discontinued Operations

100%

NET INCOME (LOSS)

(33)

(74)

-180%

DILUTED EARNINGS (LOSS) PER SHARE

Continuing Operations

(0.51)

0.58

(1.09)

-188%

Discontinued Operations

0.03

0.01

0.02

200%

Diluted EPS

(0.48)

0.59

(1.07)

-181%

Three Months Ended March 31,

Better/(Worse)

Restructuring Actions

Annual savings estimated at $50 – $60 million.

($ in millions)

LVS

CVS

Total

YTD

New Actions

Salaried reduction in force

Facility rationalization

Employee severance

Shutdown costs and other

Total facility rationalization

Asset impairments

Total New Actions

107

135

Total Previous Actions

Total Estimated Restructuring Costs

123

151

Total Estimated Costs

Total Recorded Fiscal 2005

Segment Sales

(in millions)

2005

2004

Light Vehicle Systems

North America

537

511

Europe

576

606

(30)

-5%

South America

36%

Asia-Pacific and Other

Total Sales

1,244

1,227

Commercial Vehicle Systems

North America

618

471

147

31%

Europe

298

210

42%

South America

79%

Asia-Pacific and Other

Total Sales

1,032

769

263

34%

Reported Sales

2,276

1,996

280

14%

Better/(Worse)

Quarter Ended March 31,

Segment Operating Income

Total Operating Margins

2.4%

3.3%

(0.9)

(in millions)

2005

2004

Operating Income

Light Vehicle Systems

(54)

(104)

-208%

Commercial Vehicle Systems

Segment Operating Income

(17)

(103)

-120%

Environmental Remediation Costs

(6)

(8)

25%

Operating Income

(23)

(101)

-129%

Operating Margins

Light Vehicle Systems

-4.3%

4.1%

(8.4)

Commercial Vehicle Systems

3.6%

4.7%

(1.1)

Segment Operating Margins

-0.7%

4.3%

(5.0)

Total Operating Margins

-1.0%

3.9%

(4.9)

Operating Margins Before Special Items

Light Vehicle Systems

0.3%

2.4%

(2.1)

Commercial Vehicle Systems

4.8%

4.7%

0.1

Better/(Worse)

Quarter Ended March 31,

Balance Sheet Highlights

(1)

Net debt is calculated as total debt less fair value of interest rate swaps plus factored and securitized receivables less cash.

(2)

Includes accounts receivable securitization and factored receivables and excludes cash, short-term debt, and assets and liabilities

of discontinued operations.

(3)

Calculated using quarterly average working capital and current quarter annualized sales.

(in millions)

03/31/05

12/31/04

09/30/04

06/30/04

03/31/04

Cash

132

122

119

Short-term Debt

Long-term Debt

1,537

1,516

1,487

1,585

1,527

Total Debt

1,544

1,523

1,490

1,588

1,529

Minority Interests

Equity

1,062

1,170

988

1,123

1,076

Total Debt to Capital

58%

55%

59%

57%

Factored Receivables

Securitized Receivables

142

225

Net Debt (1)

1,504

1,396

1,364

1,588

1,600

Working Capital (2)

465

469

293

553

570

Working Capital % of Sales (3)

5.1%

4.6%

5.3%

6.7%

7.2%

Six Months Ended

(in millions)

2005

2004

OPERATING ACTIVITIES

Income (loss) from continuing operations

Adjustments to income (loss) from continuing operations:

Depreciation and amortization

Other non-cash adjustments

(30)

Pension and retiree medical expense

Pension and retiree medical contributions

(46)

(44)

Changes in assets and liabilities

(244)

(84)

Net cash flows provided by (used for) continuing operations

(111)

Net cash flows provided by (used for) discontinued operations

(130)

Cash provided by (used for) operations (excluding securitization and factoring)

(241)

Changes in receivables securitization and factoring

(27)

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

INVESTING ACTIVITIES

Capital expenditures

Other investing cash flows provided by continuing operations

Net investing cash flows provided by (used for) discontinued operations

159

(7)

CASH PROVIDED BY INVESTING ACTIVITIES

107

FINANCING ACTIVITIES

Net change in debt

Proceeds from exercise of stock options

Cash dividends

(14)

CASH PROVIDED BY FINANCING ACTIVITIES

March 31,

Cash Flow Highlights

(23)

(203)

(63)

(32)

(41)

Light Vehicle Systems Net New Business

Implied

Actual

Annual

2004

2005

2006

2007

2008

Cumulative

Growth

January 2005 Guidance

4,818

260

(20)

130

370

1.9%

Pass Through Sales

(3)

Other Changes, Net (1)

Revised Guidance

4,818

291

159

500

2.5%

(1) Primarily Emissions Technologies

Sales (in millions)

Incremental

FY 2005 Commercial Vehicle Production Outlook

(in thousands)

Calendar

Full Year

Year

North America - Class 8 Trucks (1)

2005 Outlook

307

304

2004 Actual

235

262

Change

57%

46%

27%

31%

16%

Western Europe - Heavy & Medium Trucks

2005 Outlook

108

117

100

421

425

2004 Actual

376

377

Change

16%

19%

11%

12%

13%

(1) - Includes U.S., Canada and Mexico

Source: Western Europe - Global Insight

Fiscal Year Ended September 30

FY 2005 Light Vehicle Production Outlook

(in millions)

Calendar

Full Year

Year

North America

2005 Outlook

3.8

4.0

4.2

3.6

15.6

15.7

2004 Actual

3.9

4.2

3.6

15.9

15.8

Change

-3%

-5%

-2%

-1%

Western Europe (1)

2005 Outlook

4.2

4.3

4.6

3.8

16.9

17.1

2004 Actual

4.3

4.6

3.7

16.9

16.8

Change

-2%

(1) - Includes Czech Republic

Source: CSM Worldwide, Inc.

Fiscal Year Ended September 30

FY 2004 Results and FY 2005 Outlook – Continuing Operations

(in millions, except EPS)

FY 2004

Full Year

Sales

8,033

Light Vehicle Systems

4,818

(30)

(5)

Commercial Vehicle Systems

3,215

800

825

770

820

Sales

8,033

8,803

8,853

Operating Margin

3.2%

2.6%

2.8%

Interest Expense

(107)

(120)

(119)

Effective Tax Rate

25%

27%

Income from Continuing Operations

127

110

Diluted Earnings Per Share

1.85

1.40

1.60

Full Year Outlook (1)

FY 2005

(1) Outlook does not include the impact of any future acquisitions or divestitures, or the impact of additional

restructuring actions. Outlook also excludes $0.10 per diluted share of customer bankruptcy write offs, $0.06 per diluted

share of environmental remediation costs and $0.65 of restructuring charges, each of which were recorded in the second

quarter of fiscal 2005.

FY 2004 3^rd Quarter Results and FY 2005 3^rd Quarter Outlook –
Continuing Operations

(in millions, except EPS)

FY 2004

3rd Quarter

Sales

2,099

Light Vehicle Systems

1,237

Commercial Vehicle Systems

862

225

230

265

280

Sales

2,099

2,364

2,379

Operating Margin

4.0%

3.7%

4.0%

Interest Expense

(26)

(30)

(31)

Effective Tax Rate

27%

Income from Continuing Operations

Diluted Earnings Per Share

0.61

0.60

0.70

(1) Outlook does not include the impact of any future acquisitions or divestitures, or the impact of additional restructuring actions.

FY 2005

3rd Quarter Outlook (1)

FY 2005 Cash Flow Outlook – Continuing Operations

(in millions)

Income From Continuing Operations

110

Adjustments to Income

Depreciation and Other Amortization

190

195

Pension and Retiree Medical Expense

110

Pension and Retiree Medical Contributions

(160)

(170)

Changes in Assets and Liabilities

(157)

(180)

Cash Provided by Operations

Capital Expenditures

(155)

(165)

Free Cash Flow

(75)

(100)

Net Proceeds from Acquisitions and Divestitures (1)

195

Cash Dividends ($0.40 per share)

(28)

(1) Includes sale of Roll Coater and the Automotive Stamping and Components businesses.

Note: Does not include the effects of any changes in A/R securitization and factoring or any future

acquisitions or divestitures.

Full Year

FY 2005

Non-GAAP Financial Information

Use of Non-GAAP Financial Information

In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”)
included throughout this presentation, the Company has provided information regarding income from continuing operations,
diluted earnings per share and segment operating income and margins before special items which are non-GAAP financial
measures.  These non-GAAP measures are defined as reported income or loss from continuing operations, reported diluted
earnings or loss per share and segment operating income plus or minus special items.  Other non-GAAP financial measures
include “net debt” and “free cash flow”.  Net debt is defined as total debt less the fair value adjustment of debt due to interest
rate swaps, plus securitized and factored receivables, less cash.  Free cash flow represents net cash provided by operating
activities before the net change in accounts receivable securitized or factored, less capital expenditures.  The Company
believes it is appropriate to exclude the net change in securitized and factored accounts receivable in the calculation of free
cash flow since the sale of receivables may be viewed as a substitute for borrowing activity.

Management believes that the non-GAAP financial measures used in this presentation are useful to both management and
investors in their analysis of the Company’s financial position and results of operations. In particular, management believes
that net debt is an important indicator of the Company’s overall leverage and free cash flow is useful in analyzing the
Company’s ability to service and repay its debt. Further, management uses these non-GAAP measures for planning and
forecasting in future periods.

These non-GAAP measures should not be considered a substitute for the reported results prepared in accordance with GAAP.
Neither, net debt nor free cash flow should be considered substitutes for debt, cash provided by operating activities or other
balance sheet or cash flow statement data prepared in accordance with GAAP or as a measure of financial position or liquidity.
In addition, the calculation of free cash flow does not reflect cash used to service debt and thus, does not reflect funds
available for investment or other discretionary uses. These non-GAAP financial measures, as determined and presented by
the Company, may not be comparable to related or similarly titled measures reported by other companies.

Set forth on the following slides are reconciliations of these non-GAAP financial measures, if applicable, to the most directly
comparable financial measures calculated and presented in accordance with GAAP.

Non-GAAP Financial Information – Net Debt

(in millions)

03/31/05

12/31/04

09/30/04

06/30/04

03/31/04

Short-term debt

Long-term debt

1,537

1,516

1,487

1,585

1,527

Total Debt

1,544

1,523

1,490

1,588

1,529

Less:

Fair value of interest rate swaps

(21)

(37)

(36)

(29)

(51)

Plus:

Receivable securitization

142

225

Plus:

Receivable factorization

Subtotal

1,603

1,487

1,496

1,710

1,719

Less:

Cash

(99)

(91)

(132)

(122)

(119)

Net Debt

1,504

1,396

1,364

1,588

1,600

Net debt is calculated as total debt less fair value of interest rate swaps plus factored and securitized receivables less cash.

Non-GAAP Financial Information –

2^nd Qtr FY 05 Results before Special Items

Q2 FY 05

Reported

Customer

Bankruptcy

Environmental

New

Restructuring

Actions

Q2 FY05

Adjusted

Sales

2,276

Gross Margin

152

156

Operating Income (Loss)

(23)

Income (Loss) from Continuing Operations

(35)

Diluted Earnings (Loss) Per Share -

Continuing Operations

(0.51)

0.10

0.06

0.65

0.30

Guidance

$0.30 - $0.35

Segment Operating Income (Loss)

LVS Operating Income (Loss)

(54)

CVS Operating Income (Loss)

Segment Operating Income (Loss)

(17)

Environmental remediation costs

(6)

Total Operating Income (Loss)

(23)

Operating Margins

LVS

-4.3%

0.3%

CVS

3.6%

4.8%

Segment Operating Margins

-0.7%

Total Operating Margins

-1.0%

2.4%

Non-GAAP Financial Information –

2^nd Qtr FY 04 Results before Special Items

Q2 FY 04

Reported

Gain on Sale

of Business

Environmental

Q2 FY04

Adjusted

Sales

1,996

Gross Margin

171

Operating Income (Loss)

(20)

Income (Loss) from Continuing

Operations

(15)

Diluted Earnings (Loss) Per Share -

Continuing Operations

0.58

(0.22)

0.09

0.45

Segment Operating Income (Loss)

LVS Operating Income (Loss)

(20)

CVS Operating Income (Loss)

Segment Operating Income (Loss)

(20)

Environmental remediation costs

(8)

Total Operating Income (Loss)

(20)

Operating Margins

LVS

4.1%

2.4%

CVS

4.7%

Segment Operating Margins

4.3%

Total Operating Margins

3.9%

3.3%