ArvinMeritor, Inc. today reported financial results for its first fiscal quarter ended Dec. 28, 2008, with sales from continuing operations of $1.4 billion, a decrease of approximately 18 percent from the same period last year.
The loss from continuing operations, before special items, was reported at $56 million, or $0.77 per diluted share, compared to income of $6 million, or $0.08 per diluted share, a year ago.
ArvinMeritor, Inc. today reported financial results for its first fiscal quarter ended Dec. 28, 2008, with sales from continuing operations of $1.4 billion, a decrease of approximately 18 percent from the same period last year.
The loss from continuing operations, before special items, was reported at $56 million, or $0.77 per diluted share, compared to income of $6 million, or $0.08 per diluted share, a year ago.
Special items for the quarter reflect non-cash charges including valuation reserves for certain deferred tax assets, other asset impairments primarily related to LVS, restructuring charges and certain costs incurred in anticipation of the previously planned spin-off or sale of the LVS business.
EBITDA, before special items, was $10 million, down $72 million from the same period last year. This decrease is primarily due to lower production volumes in most original equipment manufacturer market segments globally.
Free cash outflow was $386 million in the first quarter of fiscal year 2009 compared with free cash outflow of $305 million in the same period last year. The decrease in free cash flow reflects lower cash earnings, higher inventories due to the dramatic rate of unplanned production declines, and previously announced settlement payments to resolve claims with certain unions and customers.
"Although significant volume declines and charges associated with the LVS business negatively affected our results this quarter, we are aggressively executing a series of actions to help mitigate the effects of the ongoing economic crisis," said Chip McClure, chairman, CEO and president.
"Through continued focus on reducing costs, strengthening the aftermarket business and gaining new military contracts, the Commercial Vehicle Systems (CVS) business performed well. Despite the severe downturn in heavy truck markets in most regions of the world, the CVS team was able to offset the negative volumes with minimal impact on performance. These results clearly underscore the validity of our aggressive Performance Plus cost savings and growth initiatives."
ArvinMeritor has implemented a number of initiatives to help manage cash, and is prepared to take additional actions if needed. Initiatives in process include:
- Implemented workforce reductions of more than 1,500 employees.
- Extended shutdowns and reduced work weeks at all plants.
- Reduced and rebalanced capital spending.
- Initiated a 10-percent salary reduction for all U.S. executive-level employees; and a 5-percent reduction in salary for all other U.S. salaried employees, in addition to similar actions in other parts of the world.
- Eliminated matching contribution to the U.S. 401-K.
- Suspended merit increases for fiscal year 2009.
- Reduced discretionary spending by approximately 30 percent year-over- year.
- Reduced Board of Directors annual compensation by 10 percent.
- Suspended quarterly dividend.
As previously announced, economic conditions do not support the company's strategy to divest the entire LVS business at this time. "Due to continued deterioration in the global markets, it is now our priority to complete the divestiture of these businesses separately at acceptable returns to shareowners," said McClure.
In January, the company executed multiple actions to reduce fixed costs within the LVS business, which are expected to result in $57 million in annual savings. These actions included the elimination of the LVS divisional organization, resulting in a headcount reduction of more than 100 positions. The Body and Chassis businesses are now being managed to realize maximum cost efficiencies, with additional actions currently under consideration.
The Wheels business, located in Brazil and Mexico, will be retained by ArvinMeritor.