ArvinMeritor reported that its Commercial Vehicle Systems business did well, considering the economy, in its first fiscal quarter, but its Light Vehicle Systems business dragged down its numbers.
For the first fiscal quarter ended Dec. 28, 2008, sales from continuing operations of $1.4 billion were down $293 million, or 18 percent, from the same period last year (down 11 percent on a constant currency basis).
On a GAAP basis, net loss from continuing operations was $991 million or $13.71 per diluted share, compared to a net loss from continuing operations of $1 million or $0.01 per diluted share in the same period last year.
Loss from continuing operations, before special items, of $56 million compared to income of $6 million in the same period last year.
Free cash outflow of $386 million compared to an outflow of $305 million in the first quarter of fiscal year 2008.
"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.
ArvinMeritor has been trying to divest much of the light-vehicle business, but recently announced that because of the economic situation, it was giving up on selling the LVS business as a whole.
"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.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.
"Through continued focus on reducing costs, strengthening the aftermarket business and gaining new military contracts, the Commercial Vehicle Systems 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.
ArvinMeritor has implemented a number of initiatives to help manage cash, including workforce reductions of more than 1,500 employees; extended shutdowns and reduced work weeks at all plants; reduced and rebalanced capital spending; 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, and suspended quarterly dividends.
"ArvinMeritor is operating with the expectation that global markets will remain weak for an extended period of time," said McClure. "Given the deterioration of the market environment and the current global constraints on credit, the management team remains intensely focused on maintaining the liquidity necessary to operate our business. We expect to be in compliance with the financial covenants in our material borrowing arrangements for the remainder of the year and believe that the actions we are taking today will help position the company well when economics and volumes improve."
For the first fiscal quarter ended Dec. 28, 2008, sales from continuing operations of $1.4 billion were down $293 million, or 18 percent, from the same period last year (down 11 percent on a constant currency basis).
On a GAAP basis, net loss from continuing operations was $991 million or $13.71 per diluted share, compared to a net loss from continuing operations of $1 million or $0.01 per diluted share in the same period last year.
Loss from continuing operations, before special items, of $56 million compared to income of $6 million in the same period last year.
Free cash outflow of $386 million compared to an outflow of $305 million in the first quarter of fiscal year 2008.
"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.
ArvinMeritor has been trying to divest much of the light-vehicle business, but recently announced that because of the economic situation, it was giving up on selling the LVS business as a whole.
"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.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.
"Through continued focus on reducing costs, strengthening the aftermarket business and gaining new military contracts, the Commercial Vehicle Systems 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.
ArvinMeritor has implemented a number of initiatives to help manage cash, including workforce reductions of more than 1,500 employees; extended shutdowns and reduced work weeks at all plants; reduced and rebalanced capital spending; 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, and suspended quarterly dividends.
"ArvinMeritor is operating with the expectation that global markets will remain weak for an extended period of time," said McClure. "Given the deterioration of the market environment and the current global constraints on credit, the management team remains intensely focused on maintaining the liquidity necessary to operate our business. We expect to be in compliance with the financial covenants in our material borrowing arrangements for the remainder of the year and believe that the actions we are taking today will help position the company well when economics and volumes improve."
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