EX-99.B 4 d66548_ex99b.htm PRESENTATION

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

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

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

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

Cost of Sales

(1,957)

(1,933)

(24)

-1%

GROSS MARGIN

129

134

(5)

-4%

SG&A

(87)

(83)

(4)

-5%

Customer Bankruptcies

(5)

Gain on Sale of Business

Restructuring Costs

(1)

(10)

OPERATING INCOME

60%

Equity in Earnings of Affiliates

17%

Interest Expense, Net and Other

(32)

(28)

(4)

-14%

INCOME BEFORE INCOME TAXES

117%

Provision for Income Taxes

(10)

(6)

(4)

-67%

Minority Interests

(2)

(4)

Income From Continuing Operations

93%

Income from Discontinued Operations

75%

NET INCOME

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)

Segment Sales

(in millions)

2005

2004

Light Vehicle Systems

North America

472

507

(35)

-7%

Europe

545

541

South America

24%

Asia-Pacific and Other

15%

Total Sales

1,150

1,160

(10)

-1%

Commercial Vehicle Systems

North America

566

530

Europe

259

278

(19)

-7%

South America

11%

Asia-Pacific and Other

13%

Total Sales

936

907

Reported Sales

2,086

2,067

Better/(Worse)

Quarter Ended December 31,

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

Segment Operating Income

(in millions)

2005

2004

Operating Income

Light Vehicle Systems (1)

(3)

(6)

-200%

Commercial Vehicle Systems (2)

81%

Operating Income

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

Balance Sheet Highlights

(in millions)

12/31/05

09/30/05

06/30/05

03/31/05

12/31/04

Cash

302

187

180

Short-term Debt (1)

131

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

Equity

877

875

1,032

1,062

1,170

Total Debt to Capital

62%

63%

58%

55%

Factored Receivables

Securitized Receivables (1)

156

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

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

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

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

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%

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.

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%

Income from Continuing Operations

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.

Non-GAAP Financial Information

FY 2006 First Quarter Earnings Conference Call

January 24, 2006

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.

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

Gross Margin

129

Operating Income

(23)

Income Before Income Taxes

(23)

Income From Continuing Operations

(14)

(3)

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)

Commercial Vehicle Systems

(23)

Total Operating Income

(23)

Operating Margins

Light Vehicle Systems

-0.3%

Commercial Vehicle Systems

7.2%

4.8%

Total Operating Margins

3.1%

2.0%

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)

131

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

Plus:

Factored receivables

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.

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)

Cash Provided by (Used for) Operations before

Receivables Securitization and Factoring

114

(179)

Capital Expenditures (1)

(39)

(27)

Free Cash Flow (Total Company)

(206)

(1) Includes capital expenditures of discontinued operations.

Three Months Ended December 31,