2. Forward-Looking Statements
This presentation 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
SHAREOWNERS MEETING 2009
by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. There are risks
and uncertainties relating to the planned disposition of ArvinMeritor’s LVS business, including the timing and certainty of completion and the terms
of any transaction or transactions. In addition, 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, including the recent global economic crisis; 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); whether our liquidity will
be affected by declining vehicle production volumes; availability and sharply rising cost of raw materials, including steel and oil; 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; potential adjustment of the value of deferred tax assets; 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; the outcome of actual and potential product liability and warranty and recall claims; 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.
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.
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3. Agenda
2008 Highlights
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2009 Challenges and
Opportunities
Product Focus and
Technology Innovation
2009 Priorities
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4. 2008 Financial Highlights (1)
($ in Millions, except EPS)
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Measure Full Yr. Q4 Comment
Up 11% for the year (4% at
Sales $7,167 $1,720
constant exchange rates)
EPS from Cont.
Met original and recent
Ops. Before $1.60 $0.38
guidance
Special Items(2)
Exceeded recent guidance
Free Cash
$(9) $103 and within $10 million of
Flow(1)
original guidance
See Appendix – “Non-GAAP Financial Information”
(1)
GAAP diluted loss per share from continuing operations was $(1.26) for FY 2008 and $(2.29) for Q4
(2)
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5. We Did What We Said We Would Do
2008 Promise Achievement Result
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Sales of $6,750 to $6,950 million $7,167 mil.
EBITDA(1) of $385 to $405 million $413 mil.
EPS(1) of $1.40 to $1.60 $1.60
–
Positive Free Cash Flow $(9) mil.
$75 million cost reduction from Performance
$75 mil.
Plus
$30 million contribution from Performance Plus
growth initiatives
Improve manufacturing efficiency
Strengthen remanufacturing
Customer sharing of premium costs
Constantly review portfolio of businesses for
optimal mix
EBITDA and EPS are from continuing operations before special items. See Appendix – “Non-GAAP Financial Information.” GAAP loss from
(1)
continuing operations was $(81) million or $(1.26) per share.
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6. Planning Assumptions Uncertain
Withdrawing guidance for FY 2009 due to inability to forecast industry production in the
second half of the year
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North America Other Regions/Metrics
U.S. GDP growth (0.4)% Europe GDP growth (0.1)%
400 - 450
Class 8 truck production 200 - 220 Europe medium & heavy
(000) (flat) truck production (000) (-25%)
Class 5-7 truck production 115 - 130 160 - 180
Europe trailer production
(000) (-8%) (flat)
170 - 190 Asia medium & heavy
Trailer production (000) -15%
(flat) truck production (000)
S. America M & H truck
CV aftermarket industry
Flat Flat
production (millions)
growth rate ex. pricing
Slightly
Steel price change
lower
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7. EUR Med. & Heavy Truck Industry(1)
2009 B/(W) than 2008 at Mid-point
30%
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20%
10%
0%
-10%
-20%
-30%
-40%
-50%
Oct 15 Nov 15 Dec 15 Jan 12
Build Expectations for Europe Continue to Decline
Source: Published forecasts of industry participants and investment banks
(1) Production levels represent external estimates only and are not intended to represent the Company’s production assumptions. The Company is unable to estimate full-
year industry production at this time.
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8. Difficult Light Vehicle Markets(1)
2009 CY North America Light Vehicle Production Forecast
Expectation for
14.5 (in millions)
15
13.5 13.5 32% 2009 North
13.0
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12.6 12.5 11.8
13
America
10.1 production has
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fallen 32% since
9
April
7
5
All other
Apr May Jul Aug Sep Oct Nov Dec.
markets are
deteriorating
2009 CY Europe Light Vehicle Production Forecast
simultaneously
(22)%
(in millions)
22.7 22.7
24 22.5 22.0 22.0 21.7
20.3
22
20
17.8
LVS will have a
18
significant cash
16
decrease in the
14
12
fiscal first
10
quarter
Apr May Jul Aug Sep Oct Nov Dec.
Source: CSM
(1) Production levels are provided for the purposes of this example only and are not intended to represent the Company’s production assumptions. The Company is unable to estimate
full-year industry production at this time.
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9. Necessary Cost Reduction Actions
In addition to actions undertaken on 10/31/08
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7% workforce reduction
30% reduction in discretionary spending
Travel and expense restrictions (Coach class)
10% reduction in salary for all U.S. salaried executive-level
5% reduction in salary / U.S. salaried and non-production hourly
Suspend merit increases for all U.S. employees
Temporary hold on U.S. 401-K matching program
Reduce company’s contribution to the charitable trust by 50%
Significantly reduce discretionary spend
Addressing Market Conditions
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10. Light Vehicle Systems Update
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Due to credit markets and volume weakness in the industry,
cannot capture value for LVS by selling as a whole
New LVS structure:
Body Systems – pursue sale separately
Chassis Systems – continue to explore and evaluate strategic alternatives
for timely and orderly exit from this business
Wheels – will retain this business
Remain firmly committed to our long-term strategy
of focusing on the commercial vehicle on- and
off-highway market segments for both OEMs
and aftermarket customers
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11. Key Growth Area – Military
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MRAP Service Future
FMTV
Family Orders Programs
2008 2009 2008 2009 2008 2009
Firm Orders
Anticipated Orders
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12. Advanced Technology Development
JLTV Program Innovations
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Electronically
Suspension
Biasing
Height Control
Differentials
Systems
Automatic Diff
Lock Controls
Titanium
Knuckles
Magnesium
Transfer Cases
Driving
Central Tire
Aluminum Adaptive Aluminum Carbon Fiber
Independent
Inflation Systems
Control Arms Damping Shocks Brake Calipers Rotors
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12
Suspensions
13. Key Growth Area – Off-Highway
Construction - China
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JV >20% market share in axles
China stimulus package
Includes infrastructure
Investment planned for off-
highway business
Re-entering market segment
(The Americas / Europe)
Customers
Kalmar
Terex Port Tractor Axle
Products
Planetary Axles
Disc Brakes Crane Axle
Xuzhou Joint Venture Facility
Wheel Ends
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14. Key Growth Area – Aftermarket
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ArvinMeritor N.A. Commercial Vehicle Aftermarket Sales
Up
Up
25%
Index (2006 = 100)
25%
100
Up to 60%
reduction
under
example
scenarios
North America Class 8 Production
0
2006 2007 2008 2009
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15. Key Growth Area – Aftermarket
Europe
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Remanufacturing
Emerging Markets
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16. Leading Drive Axle Technology
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17X - Europe
14X – North America
Invest in Innovation and Technology
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17. Class 8 Hybrid Program
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Invest in Innovation and Technology
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18. 2009 Priorities
1. Accelerate restructuring and other cost
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reductions
2. Continue operational performance
improvement
3. Execute Body and Chassis strategy
4. Continue to grow high-margin segments
5. Invest in innovation and technology
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19. 100 Years of Forward Thinking
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