8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 24, 2006

ARVINMERITOR, INC.

(Exact name of registrant as specified in its charter)

Indiana	1-15983	38-3354643
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

2135 West Maple Road

Troy, Michigan

(Address of principal executive offices)

48084-7186

(Zip code)

Registrant’s telephone number, including area code: (248) 435-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On January 24, 2006, ArvinMeritor, Inc. issued a press release reporting its financial results for the fiscal quarter ended December 31, 2005. The release is furnished as Exhibit 99a to this Form 8-K.

On January 24, 2006, ArvinMeritor, Inc. held a web-cast conference call, available to the public, to discuss its financial results for the fiscal quarter ended December 31, 2005. The presentation made on the conference call is posted on the ArvinMeritor website (www.arvinmeritor.com) and is furnished as Exhibit 99b to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99a - Press release of ArvinMeritor, Inc., dated January 24, 2006

99b - Presentation made on earnings conference call, January 24, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ARVINMERITOR, INC.

By: /s/ Vernon G. Baker, II

Vernon G. Baker, II

Senior Vice President and General Counsel

Date: January 25, 2006

EXHIBIT INDEX

Exhibit No. Description

99a Press release of ArvinMeritor, Inc., dated January 24, 2006.

99b Presentation made on earnings conference call, January 24, 2006

EX-99.A

Exhibit 99a

CONTACTS: Media Inquiries
Lin Cummins
(248) 435-7112
linda.cummins@arvinmeritor.com
 
Investor Inquiries
Brian Casey
(248) 435-0015
brian.casey@arvinmeritor.com

ArvinMeritor Reports First-Quarter Fiscal Year 2006 Results

Company Meets First-Quarter Expectations and
Increases Outlook for Free Cash Flow

TROY, Mich. (Jan. 24, 2006) — ArvinMeritor, Inc. (NYSE: ARM) today reported financial results for its first fiscal quarter, ended Dec. 31, 2005.

First-Quarter Fiscal Year 2006 Highlights

• Net income was $34 million, or $0.49 per diluted share, compared to $18 million, or $0.26 per diluted share last year - an increase of 88 percent.

• Income from continuing operations, before special items, was $11 million, or $0.16 per diluted share - the higher end of the company’s previous guidance. On a GAAP basis, income from continuing operations was $27 million, or $0.39 per diluted share, compared to $14 million, or $0.20 per diluted share in the same period last year.

• Sales from continuing operations of $2.1 billion, up slightly from the same period last year.

• Free cash flow of $75 million - a significant improvement from the first quarter of fiscal year 2005.

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• Net debt as of Dec. 31, 2005 improved $120 million since Sept. 30, 2005 to the lowest level since the merger of Arvin and Meritor.

• Cash proceeds, resulting from the sale of the company’s off-highway brake assets and its 39-percent equity investment in Purolator India, were $48 million.

          “We delivered a good quarter and are pleased to have met first-quarter expectations at the higher end of our guidance, in addition to reporting another quarter of strong free cash flow. We are starting to see the benefits of the restructuring plan we announced in fiscal year 2005 and other aggressive cost reduction programs, which continue to strengthen our global businesses,” said Chairman, CEO and President Chip McClure.

          In December 2005, the company sold its Asti, Italy ride control business. This sale, along with the previous divestiture of its shareholdings in AP Amortiguadores, S.A. (APA) in fiscal year 2004, continues to move the company toward its plan to exit the Light Vehicle Systems (LVS) ride control business, and focus resources on its core operations. As a result, ride control is now reported as discontinued operations. All prior year results have been reclassified to conform to this presentation.

First-Quarter Fiscal Year 2006 Results

          For the first quarter of fiscal year 2006, the company posted sales of $2.1 billion, a one-percent increase when compared to the same period last year. Stronger volumes in its Commercial Vehicle Systems (CVS) business were largely offset by the loss of sales associated with divestitures and the impact of foreign currency translation, which lowered sales by approximately $65 million when compared to the same period last year.

          Operating income from continuing operations in the first quarter of fiscal year 2006 was $64 million, up $24 million from the prior year’s first quarter. Included in operating income in the first quarter of fiscal year 2006 was a gain on the sale of certain

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assets of the company’s off-highway brake business of $23 million. Excluding this gain and restructuring costs, operating income would have been $42 million. The benefits of stronger volumes in ArvinMeritor’s CVS business, and cost reductions resulting from restructuring programs, were largely offset by the loss of income from previous divestitures and higher energy and pension costs.

          Income from discontinued operations was $7 million, or $0.10 per diluted share, compared to $4 million, or $0.06 per diluted share in the same period last year.

          “We continue to make significant progress in our efforts to refocus and maximize our operational efficiencies through the sale of non-core assets,” McClure said. “In the first quarter of fiscal year 2006, we completed the divestiture of our off-highway brake assets and the sale of our 39-percent share in Purolator India, for total proceeds of $48 million.”

          He continued, “We are encouraged by the interest in our global Light Vehicle Aftermarket businesses, and continue to work diligently to divest these businesses at a fair market value.”

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 325,000 units in fiscal year 2006, up from the 305,000 units projected in our previous outlook.

          For the second quarter of fiscal year 2006, the sales forecast for continuing operations is $2.2 billion. The company’s outlook for diluted earnings per share from continuing operations for the second quarter is $0.35 to $0.40, before special items.

          McClure said, “Our sales from continuing operations in fiscal year 2006 are expected to be approximately $8.6 billion, unchanged from our previous outlook, and the outlook for full-year diluted earnings per share from continuing operations is in the range of $1.50 to $1.70, also unchanged. In addition, we now forecast free cash flow to be in the range of $120-170 million for fiscal year 2006.” This outlook includes higher

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production levels for commercial vehicles and a $13 million impact related to a recent preliminary injunction issued in connection with class-action lawsuits related to retiree medical benefits. It excludes gains or losses on divestitures, restructuring costs, other special items and the potential impact of any extended customer shutdowns or production interruptions.

          “In spite of continued challenges in the North American light vehicle market, including pricing pressures and rising energy costs, ArvinMeritor’s diverse mix of customers, geographic markets and products continues to differentiate us from our peers,” he continued. “Both financially and operationally, we are off to a good start.”

About ArvinMeritor

          ArvinMeritor, Inc. is a premier 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 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 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 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; 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.

Non-GAAP Measures

          In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”) included throughout this press release, the company has provided information regarding income from continuing operations, diluted earnings per share and operating income 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 operating income or loss 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 factored receivables, less cash. Free cash flow represents net cash provided by operating activities before the net change in factored accounts receivable, less capital expenditures. The company believes it is appropriate to exclude the net change in factored accounts receivable in the calculation of free cash flow since the factored receivables may be viewed as a substitute for borrowing activity.

          Management believes that the non-GAAP financial measures used in this press release 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 pages are reconciliations of these non-GAAP financial measures, if applicable, to the most directly comparable financial measures calculated and presented in accordance with GAAP.

First-Quarter Fiscal Year 2006 Conference Call

          The company will host a telephone conference call and Web cast to discuss the company’s fiscal year 2006 first-quarter financial results on Tuesday, Jan. 24, 2006, at 9 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 www.arvinmeritor.com.

          A replay of the call will be available from noon on Jan. 24, until 11:59 p.m. on Jan. 27, 2006, by calling (800) 642-1687 within the United States and Canada, or (706) 645-9291 for international calls. Please refer to conference ID number 4227897.

          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 investor page.

ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in millions, except per share amount)

	Three Months Ended December 31,
	2005			2004
	(Unaudited)
Sales	$	2,086		$	2,067
Cost of Sales		(1,957	)		(1,933	)
GROSS MARGIN		129			134
Selling, General, & Administrative		(87	)		(83	)
Restructuring Costs		(1	)		(10	)
Gain on Divestitures, Net		23			4
Customer Bankruptcies		—			(5	)
OPERATING INCOME		64			40
Equity in Earnings of Affiliates		7			6
Interest Expense, Net and Other		(32	)		(28	)
INCOME BEFORE TAXES		39			18
Provision for Income Taxes		(10	)		(6	)
Minority Interests		(2	)		2
Income From Continuing Operations		27			14
Income from Discontinued Operations		7			4
NET INCOME	$	34		$	18
DILUTED EARNINGS PER SHARE
Continuing Operations	$	0.39		$	0.20
Discontinued Operations		0.10			0.06
Diluted Earnings Per Share	$	0.49		$	0.26
Diluted Shares Outstanding		69.8			69.0

ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(In millions)

	Three Months Ended December 31,
	2005			2004
	(Unaudited)
Sales:
Light Vehicle Systems	$	1,150		$	1,160
Commercial Vehicle Systems		936			907
Total Sales	$	2,086		$	2,067
Operating Income (Loss):
Light Vehicle Systems	$	(3	)	$	3
Commercial Vehicle Systems		67			37
Total Operating Income	$	64		$	40

ARVINMERITOR, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(In millions)

	December 31, 2005		September 30, 2005
	(Unaudited)
ASSETS
Cash and Cash Equivalents	$	302	$	187
Receivables, Net		1,452		1,655
Inventories		550		541
Other Current Assets		256		256
Assets of Discontinued Operations		525		531
Net Property		982		1,013
Goodwill		787		801
Other Assets		875		886
TOTAL ASSETS	$	5,729	$	5,870
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-Term Debt	$	99	$	131
Accounts Payable		1,448		1,483
Other Current Liabilities		618		667
Liabilities of Discontinued Operations		221		242
Other Liabilities		968		963
Long-Term Debt		1,438		1,451
Minority Interests		60		58
Shareowners’ Equity		877		875
TOTAL LIABILITIES AND SHAREOWNERS’ EQUITY	$	5,729	$	5,870

ARVINMERITOR, INC.
SUMMARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)

	Three Months Ended December 31,
	2005			2004
OPERATING ACTIVITIES
Income from Continuing Operations	$	27		$	14
Adjustments to Income From Continuing Operations
Depreciation and Amortization		40			45
Gains on Divestitures, Net		(23	)		(4	)
Restructuring Costs, Net of Payments		(7	)		—
Pension and Retiree Medical Expense		33			27
Other Adjustments to Income		1			—
Pension and Retiree Medical Contributions		(28	)		(22	)
Changes in Receivable Securitization and Factoring		37			(41	)
Changes in Assets and Liabilities		83			(144	)
Cash Flows Provided By (Used For) Continuing Operations		163			(125	)
Cash Flows Used By Discontinued Operations		(12	)		(95	)
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES		151			(220	)
INVESTING ACTIVITIES
Capital Expenditures		(37	)		(27	)
Acquisitions of Businesses and Investments, Net of Cash Acquired		(1	)		(22	)
Proceeds from Disposition of Property and Businesses		39			33
Net Cash Flows Provided By Discontinued Operations		7			162
CASH PROVIDED BY INVESTING ACTIVITIES		8			146
FINANCING ACTIVITIES
Net Change in Revolving Credit Facilities		—			11
Borrowings on Accounts Receivable Securitization Program		(24	)		—
Purchase of Notes		(3	)		—
Net Change on Lines of Credit and Other		(14	)		20
Net Change in Debt		(41	)		31
Proceeds from Exercise of Stock Options		—			5
Cash Dividends		(7	)		(7	)
Net Financing Cash Flows Provided By Discontinued Operations		2			—
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES		(46	)		29
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH		2			4
CHANGE IN CASH AND CASH EQUIVALENTS		115			(41	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		187			132
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	302		$	91

ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited, in millions)

(in millions, except per share amounts)	Q1 FY 06 Reported			Restructuring Actions			Gain on Divestiture			Income Taxes			Q1 FY06 Adjusted
Sales		$	2,086		$	—	$	—		$	—		$	2,086
Gross Margin			129			—		—			—			129
Operating Income			64			1		(23	)		—			42
Income from Continuing Operations			27			1		(14	)		(3	)		11
Diluted Earnings Per Share - Continuing Operations		$	0.39		$	0.01	$	(0.20	)	$	(0.04	)	$	0.16
Segment Operating Income
LVS Operating Loss		$	(3	)	$	—	$	—		$	—		$	(3	)
CVS Operating Income			67			1		(23	)		—			45
Total Operating Income		$	64		$	1	$	(23	)	$	—		$	42
Operating Margins
LVS			-0.3	%										-0.3	%
CVS			7.2	%										4.8	%
Total Operating Margins			3.1	%										2.0	%

ARVINMERITOR, INC.
FREE CASH FLOW - RECONCILIATION
Non-GAAP
(Unaudited, in millions)

	Three Months Ended December 31,
	2005			2004
Cash Provided by (Used for) Operating Activities	$	151		$	(220	)
Changes in Receivables Securitization and Factoring		(37	)		41
Cash Provided by (Used for) Operations before Receivables
Securitization and Factoring		114			(179	)
Capital Expenditures (1)		(39	)		(27	)
Free Cash Flow	$	75		$	(206	)

(1) Includes capital expenditures of discontinued operations.

ARVINMERITOR, INC.
NET DEBT COMPOSITION
Non-GAAP
(Unaudited, in millions)

	December 31, 2005			September 30, 2005
Total debt	$	1,537		$	1,582
Fair value of interest rate swaps		(14	)		(17	)
Receivable factoring		60			23
Subtotal		1,583			1,588
Less: cash		(302	)		(187	)
Net Debt	$	1,281		$	1,401

EX-99.B

FY 2006 First Quarter
Earnings Conference Call
Chip McClure, President, Chairman and CEO
Jim Donlon, Senior Vice President and CFO
Rakesh Sachdev, Senior Vice President Corporate Strategy

January 24, 2006

1

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; 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; 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.

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

2

Fiscal Year 2006 First Quarter Highlights

Delivered $0.16 EPS from continuing operations before special
items, meeting high end of guidance

Increased sales from continuing operations to $2.1 billion, an
increase of $19 million

Reduced net debt to $1.28 billion, the lowest level since Arvin and
Meritor merger in 2000

Delivered strong free cash flow of $75 million

Completed the sale of certain assets in our Commercial Vehicle off-
highway brake business

Reaffirming fiscal full-year 2006 guidance in the range of $1.50 –
$1.70

Increasing fiscal year free cash flow guidance by $20 million to a
range of $120 million - $170 million

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

3

First Quarter Income Statement

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

(in millions, except per share amounts)

2005

2004

$

%

Sales

2,086

$               

2,067

$                  

19

$                     

1%

Cost of Sales

(1,957)

(1,933)

(24)

-1%

GROSS MARGIN

129

134

(5)

-4%

SG&A

(87)

(83)

(4)

-5%

Customer Bankruptcies

-

(5)

5

Gain on Sale of Business

23

4

19

Restructuring Costs

(1)

(10)

9

OPERATING INCOME

64

40

24

60%

Equity in Earnings of Affiliates

7

6

1

17%

Interest Expense, Net and Other

(32)

(28)

(4)

-14%

INCOME BEFORE INCOME TAXES

39

18

21

117%

Provision for Income Taxes

(10)

(6)

(4)

-67%

Minority Interests

(2)

2

(4)

Income From Continuing Operations

27

14

13

93%

Income from Discontinued Operations

7

4

3

75%

NET INCOME

34

$                     

18

$                     

16

$                     

89%

DILUTED EARNINGS PER SHARE

Continuing Operations

0.39

$                  

0.20

$                  

0.19

$                  

95%

Discontinued Operations

0.10

0.06

0.04

67%

Diluted EPS

0.49

$                  

0.26

$                  

0.23

$                  

88%

Three Months Ended December 31,

Better/(Worse)

4

Segment Sales

(in millions)

2005

2004

$

%

Light Vehicle Systems

North America

472

$         

507

$         

(35)

$         

-7%

Europe

545

541

4

1%

South America

62

50

12

24%

Asia-Pacific and Other

71

62

9

15%

Total Sales

1,150

1,160

(10)

-1%

Commercial Vehicle Systems

North America

566

530

36

7%

Europe

259

278

(19)

-7%

South America

50

45

5

11%

Asia-Pacific and Other

61

54

7

13%

Total Sales

936

907

29

3%

Reported Sales

2,086

$      

2,067

$      

19

$           

1%

Better/(Worse)

Quarter Ended December 31,

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

5

Segment Operating Income  

(in millions)

2005

2004

$

%

Operating Income

Light Vehicle Systems (1)

(3)

$              

3

$               

(6)

$              

-200%

Commercial Vehicle Systems (2)

67

37

30

81%

Operating Income

64

$            

40

$            

24

$            

60%

Operating Margins

Light Vehicle Systems

-0.3%

0.3%

(0.6)

pts

Commercial Vehicle Systems

7.2%

4.1%

3.1

pts

Total Operating Margins

3.1%

1.9%

1.2

pts

(1) Includes a $4 million gain on sale of Columbus, Indiana automotive stamping and components

     operation (17th Street) and $10 million of restructuring costs in the three months ended December 31, 2004.

(2) Includes a $23 million gain on sale of Off-Highway Brakes.

Better/(Worse)

Quarter Ended December 31,

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

6

Balance Sheet Highlights

(in millions)

12/31/05

09/30/05

06/30/05

03/31/05

12/31/04

Cash

302

$                           

187

$                           

180

$                           

99

$                             

91

$                             

Short-term Debt (1)

99

$                             

131

$                           

40

$                             

7

$                              

7

$                              

Long-term Debt

1,438

1,451

1,472

1,537

1,516

  Total Debt

1,537

$                        

1,582

$                        

1,512

$                        

1,544

$                        

1,523

$                        

Minority Interests

60

58

58

59

62

Equity

877

875

1,032

1,062

1,170

Total Debt to Capital

62%

63%

58%

58%

55%

Factored Receivables

60

23

23

15

-

Securitized Receivables (1)

-

-

156

65

1

Net Debt (2)

1,281

1,401

1,484

1,504

1,396

Working Capital  (3)

252

325

413

465

469

Working Capital % of Sales (4)

3.5%

4.4%

4.6%

5.2%

4.6%

(1)

(2)

(3)

(4)

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

See Appendix

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

New accounts receivable securitization program in September 2005.  Borrowings under new program are included in short-term debt
beginning  9/30/05.

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

7

Commercial Vehicle Production Outlook

421

325

FY06

Heavy- and Medium-Duty
Trucks

(Western Europe)

Class 8 Trucks (North America)

Commercial Vehicle Production

(thousands of units)

-

-

% Change

421

324

FY05

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

8

Light Vehicle Production Outlook

16.4

15.6

FY06

Western Europe

(including Czech Republic)

North America

Light Vehicle Production

(millions of units)

-

-

% Change

16.4

15.6

FY05

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

9

Retiree Medical Actions

Preliminary injunction issued in December 2005 in connection with
class action lawsuits challenging changes in retiree medical benefits

Company has accounted for the injunction as a partial rescission of
the 2002 and 2004 plan amendments

Accumulated Post-retirement Benefit Obligation was recalculated as
of December 22, 2005

2006 retiree medical expense expected to increase by
approximately $13 million

Under current assumptions, if the injunction were to continue, the
annualized effect on retiree medical expense would be $22 million

The company estimates the annual cash impact to be
approximately $10 million

Company will begin recording impact in March, 2006

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

10

FY 2006 Outlook –
Continuing Operations before special items

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

(in millions, except EPS)

Sales

8,550

$                 

-

8,625

$                  

Operating Margin

2.9%

-

3.1%

Interest Expense

(125)

-

(123)

Effective Tax Rate

24%

-

24%

Income from Continuing Operations

107

$                    

-

121

$                     

Diluted Earnings Per Share

1.50

$                  

-

1.70

$                    

Free Cash Flow (Total Company)

120

$                    

-

170

$                     

Full Year Outlook (1)

FY 2006

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

of additional restructuring actions.  

11

FY 2006 Second Quarter Outlook –
Continuing Operations before special items

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

(in millions, except EPS)

Sales

2,125

$                 

-

2,225

$                  

Operating Margin

2.9%

-

3.0%

Interest Expense

(34)

-

(33)

Effective Tax Rate

24%

-

24%

Income from Continuing Operations

25

$                     

-

28

$                       

Diluted Earnings Per Share

0.35

$                  

-

0.40

$                    

Second Quarter Outlook (1)

FY 2006

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

of additional restructuring actions.  

12

Non-GAAP Financial Information

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

13

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.

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

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.

14

Non-GAAP Financial Information –

First Quarter FY 06 Results before Special Items

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

3 Months

Before

Ended

Gain on Sale

Special Items

12/31/05

Restructuring

of Business

Taxes

12/31/05

Sales

2,086

$              

-

$                     

-

$                     

-

$                     

2,086

$              

Gross Margin

129

-

-

-

129

Operating Income

64

1

(23)

-

42

Income Before Income Taxes

39

1

(23)

-

17

Income From Continuing Operations

27

1

(14)

(3)

11

Diluted Earnings Per Share -

Continuing Operations

0.39

$               

0.01

$               

(0.20)

$               

(0.04)

$               

0.16

$               

Guidance

$0.13 - $0.17

Operating Income (Loss)

Light Vehicle Systems

(3)

$                    

-

$                     

-

$                     

-

$                     

(3)

$                    

Commercial Vehicle Systems

67

1

(23)

-

45

Total Operating Income

64

$                  

1

$                     

(23)

$                  

-

$                     

42

$                  

Operating Margins

Light Vehicle Systems

-0.3%

-0.3%

Commercial Vehicle Systems

7.2%

4.8%

Total Operating Margins

3.1%

2.0%

15

Non-GAAP Financial Information – Net Debt

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

(in millions)

12/31/05

09/30/05

06/30/05

03/31/05

12/31/04

Short-term debt (1)

99

$                  

131

$                 

40

$                  

7

$                     

7

$                     

Long-term debt

1,438

1,451

1,472

1,537

1,516

Total Debt

1,537

1,582

1,512

1,544

1,523

Less:

Fair value adjustment

(14)

(17)

(27)

(21)

(37)

Plus:  

Receivable securitization (1)

-

-

156

65

1

Plus:  

Factored receivables

60

23

23

15

-

   Subtotal

1,583

1,588

1,664

1,603

1,487

Less:

Cash

(302)

(187)

(180)

(99)

(91)

    Net Debt

1,281

$              

1,401

$              

1,484

$              

1,504

$              

1,396

$              

(1)

New accounts receivable securitization program in September 2005.  Borrowings under new program are
included in short-term debt beginning 9/30/05.

16

Non-GAAP Free Cash Flow

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

(in millions)

2005

2004

Cash Provided by (Used for) Operating Activities

151

$                 

(220)

$               

Changes in Receivables Securitization and Factoring

(37)

41

Cash Provided by (Used for) Operations before

   Receivables Securitization and Factoring

114

(179)

Capital Expenditures (1)

(39)

(27)

Free Cash Flow (Total Company)

75

$                  

(206)

$               

(1) Includes capital expenditures of discontinued operations.

Three Months Ended December 31,

17

18