<PAGE> 1
Filed by Arvin Industries, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under
the Securities and Exchange Act of 1934
Subject Company: Arvin Industries, Inc.
Commission File No. 001-00302
The following is a slide presentation made publicly available by Arvin
Industries, Inc. and Meritor Automotive, Inc. on Thursday, April 6, 2000:
ARVINMERITOR, INC.
LARRY YOST BILL HUNT TOM MADDEN
[Photographs and drawings of certain Meritor and Arvin products]
<PAGE> 2
[ARVIN LOGO] [MERITOR LOGO]
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
This presentation contains "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 those detailed from time to time in Arvin's and
Meritor's Securities and Exchange Commission filings. Such risks and
uncertainties also include: materially adverse changes in economic conditions in
the markets in which the companies operate; costs related to the merger;
substantial delay in the expected closing of the merger; and the risk that
Arvin's and Meritor's businesses will not be integrated successfully.
2
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[ARVIN LOGO] [MERITOR LOGO]
AGENDA
Topic Speakers
----- --------
- - Overview Larry Yost
- - Compelling Combination Bill Hunt
- - Financial Outlook Tom Madden
- - Integration Plan and Larry Yost
Conclusion
3
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[ARVIN LOGO] [MERITOR LOGO]
COMBINATION OVERVIEW
Name: ArvinMeritor, Inc.
Transaction Structure: Stock-for-stock merger of equals
Exchange Ratio: 1.00 share of ArvinMeritor for each
Arvin share
0.75 share of ArvinMeritor for each
Meritor share
Cash Consideration: $2.00 for each Arvin share
Resulting Ownership: Meritor 65.8% : Arvin 34.2%
Financial Structure: Share exchange is tax-free to
shareholders; purchase accounting
Expected Closing: July 31, 2000
4
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[ARVIN LOGO] [MERITOR LOGO]
ARVINMERITOR OVERVIEW
Corporate Headquarters: Troy, MI
Senior Management: Larry Yost, Chairman and CEO
Bill Hunt, Vice Chairman and
President
Others composed of Arvin and
Meritor Management
Board Composition: Initially 9 members from each
of Arvin and Meritor, 1 new
independent member already
agreed upon
Employees and 36,500 employees in 25 countries
Operations: 121 manufacturing facilities
5
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[ARVIN LOGO] [MERITOR LOGO]
POWERFUL STRATEGIC GROWTH PLATFORM
- - Strengthens financial positions
- - Expands addressable markets
- - Capitalizes on customer positioning
- - Enlarges diversified product, services and market portfolio
- - Generates significant sales, operating and
cost synergies
- - Creates strong strategic leadership team for
the future
- - Establishes greater capacity for strategic
growth initiatives
CREATES A POWERFUL GLOBAL ENTERPRISE
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[ARVIN LOGO] [MERITOR LOGO]
COMBINED STRENGTHS
Arvin Meritor
----- -------
Arvin Total Quality Production <=> Performance Management
System (ATQPS) and Process Improvement
Arvin Value Chain Management <=> Lean Manufacturing
Operational Excellence <=> Strong Financial Goals and
Proven Performance
Innovative Engineering <=> Engineering and Technology;
Solutions Intimate Customer Focus
Light Vehicle Growth Platforms <=> Financial Capacity and Strength
STRONG AND INCENTIVIZED LEADERSHIP TEAM
DRIVING SUPERIOR VALUE
7
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[ARVIN LOGO] [MERITOR LOGO]
KEY FINANCIAL ATTRIBUTES
- - Accretive to all shareholders assuming very conservative cost synergy
estimates
- - Higher earnings growth anticipated
- - Improved earnings balance and stability
- - Strong balance sheet and credit profile
- - Attractive dividend
- - Significantly improved shareholder liquidity
[Diagram of star]
Cost Synergies
2001 - $50m
2003 - $100m
[Diagram of star]
Sales Synergies
2004 - $450m
HIGHLY ATTRACTIVE INVESTMENT OPPORTUNITY
8
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[ARVIN LOGO] [MERITOR LOGO]
AGENDA
Topic Speakers
----- --------
- - Overview Larry Yost
- --------------------------------------------------------------------------------
- - Compelling Combination Bill Hunt
- --------------------------------------------------------------------------------
- - Financial Outlook Tom Madden
- - Integration Plan and Larry Yost
Conclusion
9
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[ARVIN LOGO] [MERITOR LOGO]
STRATEGIC OVERVIEW
- - Increased industry scale
- $7.6 billion global automotive supplier
- Leading positions in 11 major complementary product areas
- - Expanded addressable market and diversified customer base
- Light vehicle systems: potential to grow "corner module"
- Heavy vehicle systems / aftermarket: potential to expand Arvin product
lines / brands
- Enhanced customer relationships: DaimlerChrysler, Ford, VW
- - Ability to make systems-enhancing acquisitions
- - Combined company financial strength and flexibility
- - Meaningful cost and operating synergies
- Cost synergies: purchasing, corporate
- Operating synergies: implementation of ATQPS, facility optimization
- - Highly compatible cultures and management
10
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[ARVIN LOGO] [MERITOR LOGO]
ARVIN OVERVIEW AND HISTORY
- - 1999 revenue - $3.1 billion
- - 17,500 employees in 16 countries
- - 53 manufacturing facilities
- ---------------------------------------------------
Acquisitions and Divestitures
- ---------------------------------------------------
------------------------------------------
Creating the New Arvin
------------------------------------------
--------------------------------
Profitable Growth
--------------------------------
[TIMELINE 1985 -- 1990 -- 1995 -- 2000]
[Timeline illustrating Arvin overview and history]
- - Acquisitions and Divestitures: 1985 - 1995
- - Creating the New Arvin: 1991 - 1999
- - Profitable growth: 1994 through and beyond 2000
FOCUSED AUTOMOTIVE COMPANY WITH 80 YEAR HERITAGE
AND RECENT TRANSFORMATION
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[ARVIN LOGO] [MERITOR LOGO]
ARVIN PRODUCTS
ORIGINAL EQUIPMENT
- - Exhaust
- Mufflers
- Pipes
- Converters
- Manifolds
- - Ride and Motion Control
- Shocks
- Struts
- Lift Supports
- Vacuum Actuators
- - Filters
- Oil
- Air
- Fuel
REPLACEMENT
- - Exhaust
- Mufflers
- Pipes
- Converters
- - Ride and Motion Control
- Shocks
- Struts
- Lift Supports
- - Filters
- Oil
- Air
- Fuel
ROLL COATER
- - Coil Coating
- Appliances
- Automotive
- Construction
- Furniture
[Diagram of exhaust and ride control system]
GLOBAL LEADER IN EXHAUST AND RIDE CONTROL SYSTEMS
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[ARVIN LOGO] [MERITOR LOGO]
ARVIN SALES AND EPS
[ARVIN SALES AND EPS BAR CHART]
[Bar and line graph depicting Arvin sales and earnings per share]
<TABLE>
<CAPTION>
Sales (billions) EPS
<S> <C> <C>
1995 - $2.0 $1.08
1996 - $2.2 $1.75
1997 - $2.3 $2.66
1998 - $2.5 $3.19
1999 - $3.1 $3.72
</TABLE>
Note: EPS before one-time charges
FAVORABLE SALES AND EARNINGS GROWTH MOMENTUM
12% SALES AND 36% EPS CAGR
13
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[ARVIN LOGO] [MERITOR LOGO]
MERITOR OVERVIEW AND HISTORY
- - 1999 REVENUE - $4.5 BILLION
- - 19,000 EMPLOYEES IN 23 COUNTRIES
- - 68 MANUFACTURING FACILITIES
[TIMELINE]
[Timeline of Meritor History: Timken Roller Bearing Axle (1899) =>
Timken-Detroit Axle (1909) => combination with Wisconsin Parts (1919)
to become Timken-Detroit Axle & Wisconsin Axle (1929) => combination
with Standard Steel Spring (1914) to become Rockwell Spring & Axle
(1953) => Rockwell Standard (1958) => combination with North American
Aviation (1928) to become North American Rockwell (1967) [North
American Rockwell logo] => Rockwell International [Rockwell
International logo] => [arrow pointed up to indicate spin-off from
Rockwell International] => [Meritor logo] (Oct. 1, 1997) => purchase
of Euclid (Dec. 1998) => purchase of Volvo heavy truck axle business
(Dec. 1998) => purchase of LucasVarity heavy vehicle braking systems
business (Jan. 1999)]
"NEW" COMPANY WITH A PROUD, 100-YEAR HERITAGE
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[ARVIN LOGO] [MERITOR LOGO]
MERITOR PRODUCTS
<TABLE>
<CAPTION>
HEAVY VEHICLE SYSTEMS LIGHT VEHICLE SYSTEMS AFTERMARKET
- --------------------- --------------------- -----------
<S> <C> <C>
- AXLES - APERTURE SYSTEMS - HEAVY VEHICLE
- DOOR MODULES REPLACEMENT PARTS
- - BRAKE SYSTEMS / - ROOF SYSTEMS
ABS - ACCESS CONTROLS
- CLUTCHES - UNDERCARRIAGE
- COIL SPRINGS
- TRANSMISSIONS - STABILIZER / TORSION
BARS
- AIR SUSPENSION - WHEELS
SYSTEMS
- DRIVELINES
</TABLE>
[Drawings of vehicles and various automotive components]
DIVERSE PORTFOLIO OF HIGHLY ENGINEERED PRODUCTS
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[ARVIN LOGO] [MERITOR LOGO]
MERITOR SALES AND EPS
[Bar and line graph depicting Meritor sales and earnings per share]
<TABLE>
<CAPTION>
Sales (BILLIONS) EPS
<S> <C> <C>
1996 - $3.1 $1.74
1997 - $3.3 $1.74
1998 - $3.8 $2.40
1999 - $4.5 $2.79
</TABLE>
Note: EPS before special items
STRONG SALES AND EARNINGS GROWTH
13% SALES AND 17% EPS CAGR
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[ARVIN LOGO] [MERITOR LOGO]
GLOBAL SCALE
[Bar chart comparing 1999 automotive sales (in billions) of
ArvinMeritor, Meritor and Arvin with those of thirteen comparable companies]
1999 AUTOMOTIVE SALES
<TABLE>
<CAPTION>
BILLIONS
<S> <C>
Delphi .......................................... $29.2
Visteon ......................................... $19.4
Bosch ........................................... $19.1
Denso ........................................... $14.5
Lear ............................................ $13.4
TRW ............................................. $13.0
Dana ............................................ $12.7
JCI ............................................. $12.1
Magna ........................................... $9.3
Valeo ........................................... $7.7
ArvinMeritor .................................... $7.6
Aisin Seiki ..................................... $7.5
FMO ............................................. $6.5
Meritor ......................................... $4.5
Arvin ........................................... $3.1
</TABLE>
Note: Includes automotive sales only for selected comparable companies.
Reported fiscal years.
CREATES A TOP TIER GLOBAL AUTOMOTIVE SUPPLIER
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[ARVIN LOGO] [MERITOR LOGO]
GLOBAL GROWTH PLATFORM
[Graphic of map of six continents indicating global platform]
North America
Sales: $5.1 billion
Employees: 20,000
Mfg. Plants: 58 Europe
Sales: $2.1 billion
Employees: 12,400
Mfg. Plants: 44
Asia / Pacific
Sales: $200 million
Employees: 1,800
South America Mfg. Plants: 14
Sales: $200 million
Employees: 2,300
Mfg. Plants 5
Note: Manufacturing plants and other facilities include consolidated joint
ventures Sept. 30 for Meritor, Dec. 31 for Arvin
GEOGRAPHIC DIVERSITY WITH PRESENCE IN HIGH GROWTH REGIONS
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[ARVIN LOGO] [MERITOR LOGO]
LEADING POSITIONS
<TABLE>
<CAPTION>
Light Vehicle OE Light Vehicle Aftermarket
- ---------------- -------------------------
<S> <C>
Integrated Undercarriage Systems #1 Filters [ARVIN LOGO]
#1 Suspension [MERITOR LOGO] #2 Exhaust [ARVIN LOGO]
#2 Ride Control [ARVIN LOGO] #2 Ride Control [ARVIN LOGO]
#2 Wheels [MERITOR LOGO]
Heavy Vehicle
#1 Exhaust Systems [ARVIN LOGO] #1 Truck / Trailer Axles [MERITOR LOGO]
#1 Truck / Trailer Brake [MERITOR LOGO]
Aperture Systems Systems
#2 Roofs [MERITOR LOGO]
#2 Doors [MERITOR LOGO]
</TABLE>
Note: Exhaust, Roof, Door, and Aftermarket-N.A./Europe. Suspensions
(Springs/Stab. Bars), Ride Control, Wheels- N.A. Brake-N.A./S.A.
Sept. 30 for Meritor, Dec. 31 for Arvin
LEADING POSITION IN 11 MAJOR PRODUCT AREAS
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[ARVIN LOGO] [MERITOR LOGO]
LEADING LIGHT VEHICLE POSITIONS
Aperture | Exhaust
|
|
|
|
|
|
- --------------------------------------------------------------------------------
Undercarriage
[Photographs and drawings of light vehicle aperture, exhaust
and undercarriage parts]
WELL-POSITIONED TO BENEFIT FROM SYSTEMS INTEGRATION
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[ARVIN LOGO] [MERITOR LOGO]
LEADING HEAVY VEHICLE POSITIONS
- - Integrated Drivetrain
Systems
- Axles -Drivelines
- Brakes -Transmissions
- ABS -Clutches
- Trailer Systems
- Axles
- Brakes
- ABS
- Air Suspension
[Picture of heavy vehicle integrated drive train system and
trailer system and picture of a heavy vehicle]
ATTRACTIVE NORTH AMERICAN POSITIONS
AND WELL-SITUATED TO GROW INTERNATIONALLY
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[ARVIN LOGO] [MERITOR LOGO]
LEADING COMPLEMENTARY
AFTERMARKET POSITIONS
[MERITOR LOGO] Strong [ARVIN LOGO] [ANSA LOGO]
[EUCLID LOGO] <= Customer => [GABRIEL LOGO] [PUROLATOR LOGO]
Recognition [STRONG ARM LOGO] [ROSI LOGO]
[TESH LOGO] [MAREMONT LOGO]
[Three pictures of various vehicles]
SOME OF THE MOST RECOGNIZABLE BRANDS IN BOTH
THE LIGHT AND HEAVY VEHICLE AFTERMARKETS
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[ARVIN LOGO] [MERITOR LOGO]
GEOGRAPHIC DIVERSITY
[Pie chart illustrating Meritor's geographic diversity]
North America ........................... 65%
Europe .................................. 28%
The rest of the world.................... 7%
[Pie chart illustrating Arvin's geographic diversity]
North America ........................... 70%
Europe .................................. 27%
The rest of the world ................... 3%
[Pie chart illustrating combined company's geographic diversity]
North America ........................... 67%
Europe .................................. 27%
The rest of the world ................... 6%
Note: Sept. 30 for Meritor, Dec. 31 for Arvin
GLOBAL STRENGTH AND BALANCE
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[ARVIN LOGO] [MERITOR LOGO]
SECTOR DIVERSITY
[Pie chart illustrating Meritor's sector diversity]
Light Vehicle Original Equipment ................... 35%
North American Trucks .............................. 28%
International Trucks ............................... 8%
Trailers ........................................... 9%
Heavy Vehicle Other ................................ 11%
Heavy Vehicle Aftermarket .......................... 9%
[Pie chart illustrating Arvin's sector diversity]
Original Equipment ................................. 64%
Light Vehicle Aftermarket .......................... 30%
Coil Coating ....................................... 6%
[Pie chart illustrating combined company's sector diversity]
Light Vehicle Original Equipment ................... 46%
North American Trucks .............................. 17%
Trailers ........................................... 5%
International Trucks ............................... 5%
Aftermarkets ....................................... 18%
Heavy Vehicle Other and Coil Coating ............... 9%
Note: Sept. 30 for Meritor, Dec. 31 for Arvin
STRENGTH, BALANCE AND DIVERSITY TO GROW THROUGH CYCLES
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[ARVIN LOGO] [MERITOR LOGO]
CUSTOMER DIVERSITY
25
[DaimlerChrystler logo] [Nissan logo] [Volkswagen logo]
[Partco logo] [SEAT logo] [Volvo logo] [Nissan logo]
[Discount Auto Parts logo] [Alfa Romeo logo] [Citroen logo]
[GM logo] [Vauxhall logo] [Oldsmobile logo]
[Buick logo] [Isuzu logo] [Cadillac logo] [Dodge logo]
[Jeep logo] [Renault logo] [Honda logo] [Autozone logo]
[BMW logo] [Saturn logo] [Opel logo] [Rover logo] [GMC logo]
[Peugeot logo] [Mazda logo] [Ford logo] [Kwik-fit logo]
[Mitsubishi Motors logo] [Skoda Auto logo] [Toyota logo]
[Jaguar logo] [Fiat logo] [Audi logo] [Carquest logo]
<PAGE> 26
[ARVIN LOGO] [MERITOR LOGO]
[Bar graph illustrating 1999 combined revenue of Meritor and Arvin (in millions)
from top 10 customers of Meritor and Arvin]
<TABLE>
<CAPTION>
Meritor Arvin Combined
<S> <C> <C> <C>
DCX .............. $1,032 $267 $1,299
Ford ............. $ 189 $528 $ 717
GM ............... $ 205 $342 $ 547
VW ............... $ 378 $ 73 $ 451
Volvo ............ $ 320 $ 7 $ 327
Renault .......... $ 164 $130 $ 294
Navistar ......... $ 240 $ 0 $ 240
Fiat ............. $ 116 $ 88 $ 204
Paccar ........... $ 101 $ 9 $ 110
Toyota ........... $ 20 $ 81 $ 101
</TABLE>
Top 10 Customers =
57% of Total Sales
1999 Revenue (millions)
Note: Sept. 30 for Meritor, Dec. 31 for Arvin
SIGNIFICANT AND COMPLEMENTARY RELATIONSHIPS WITH ALL MAJOR CUSTOMERS
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[ARVIN LOGO] [MERITOR LOGO]
PLATFORM DIVERSITY
[Ten photographs showing the diversity of
light vehicle and heavy vehicle platforms]
PRESENT ON ALL LEADING LIGHT VEHICLE
AND HEAVY VEHICLE PLATFORMS
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[ARVIN LOGO] [MERITOR LOGO]
ACCELERATED GROWTH OPPORTUNITIES
- - Capitalize on combined capabilities
- Technology
- Engineering
- Procurement
- Sales / marketing
- Distribution
- Administration
- New geographic markets
- - Utilize established customer base
- - Build upon full systems initiatives
- Corner Modules
- Integrated Undercarriage
- Apertures
- Air-to-Air
- - Apply light vehicle technology to heavy vehicles
- Exhaust
- Ride Control
- Filters
CREATES STRATEGIC PLATFORM FOR GROWTH
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[ARVIN LOGO] [MERITOR LOGO]
ACCELERATING REVENUE GROWTH
<TABLE>
<CAPTION>
New Paths To Existing Customers
-------------------------------
Light Vehicles Truck / Trailer
-------------- ---------------
<S> <C> <C>
ArvinMeritor corner modules X
Arvin exhaust systems X X
Arvin ride control systems X X
Meritor aperture and undercarriage systems X
Arvin aftermarket X
Potential revenue 2004 $300 mil.+ $150 mil.+
========== ==========
Potential operating margins 9%+ 9%+
========== ==========
</TABLE>
ACCELERATING REVENUE GROWTH THROUGH BROADER PRODUCTS
AND LEVERAGED INDUSTRY AND CUSTOMER POSITIONS
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[ARVIN LOGO] [MERITOR LOGO]
INTEGRATED UNDERCARRIAGE SYSTEMS POTENTIAL
Light Vehicle
[Arvin]
[Meritor]
SUSPENSIONS
Shocks [Arvin]
Struts [Arvin]
Dampers [Arvin]
- - Hubs / knuckles
Coil springs [Meritor]
Torsion bars [Meritor]
Stabilizer bars [Meritor]
- - Mounts / joints
- - Structural
Modules [Arvin]
$400 per vehicle
STEERING
Dampers [Arvin]
- - Column
- - Rack and pinion
- - Links
- - Power system
Pump [Arvin]
$375 per vehicle
BRAKES
- - Rotors
- - Master cylinder
- - Booster
- - Drum brakes
- - Disc brakes
- - Proportioning valves
- - ABS
$325 per vehicle
WHEELS
Wheels [Meritor]
- - Tires
- - Covers
$200 per vehicle
[Drawing of light vehicle undercarriage]
TOTAL CURRENT ARVINMERITOR CONTENT PER VEHICLE = $15
TOTAL CONTENT PER VEHICLE POTENTIAL = $1,300
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[ARVIN LOGO] [MERITOR LOGO]
TRUCK EXHAUST SYSTEMS POTENTIAL
CONTENT PER VEHICLE POTENTIAL INCLUDING EMISSIONS
[STARBURST GRAPHIC]
NOMINAL TODAY-
$1.6 BILLION
OPPORTUNITY
[Bar chart illustrating truck exhaust systems potential]
<TABLE>
<S> <C>
Heavy -- North America $2,465
Heavy -- Europe $1,900
Medium -- North America $1,380
Medium -- Europe $1,500
</TABLE>
Heavy Medium
Total Market: $950 million $650 million
TRUCK EXHAUST SYSTEMS IS A MAJOR AREA FOR EXPANSION
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[ARVIN LOGO] [MERITOR LOGO]
AFTERMARKET OPPORTUNITIES
Heavy Truck Replacement Products: Exhaust Ride Control Filters
[Pie chart illustrating aftermarket opportunities in
North America, Europe and the rest of the world]
<TABLE>
<S> <C>
North America 40%
Europe 40%
Rest of the World 20%
</TABLE>
[Diagram of heavy truck replacement parts]
This sector not currently addressed
$1 BILLION POTENTIAL ADDRESSABLE MARKET
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[ARVIN LOGO] [MERITOR LOGO]
PLATFORM FOR GROWTH
<TABLE>
<CAPTION>
LIGHT VEHICLE HEAVY VEHICLE
<S> <C> <C>
Air-to-Air Exhaust [ARVIN LOGO]
Intake / Fuel
CORNER / CHASSIS SUSPENSION [ARVIN LOGO] [MERITOR LOGO] [ARVIN LOGO] [MERITOR LOGO]
Brakes [MERITOR LOGO]
Wheels [MERITOR LOGO]
Steering
Undercarriage Structural
Axles [MERITOR LOGO]
Transmissions / Other [MERITOR LOGO]
Aperture Door Modules [MERITOR LOGO]
Roof Modules [MERITOR LOGO]
Aftermarket Replacement:
Exhaust [ARVIN LOGO]
Suspension [ARVIN LOGO] [MERITOR LOGO] [ARVIN LOGO]
Brakes [MERITOR LOGO]
Filters [ARVIN LOGO]
</TABLE>
GREAT POTENTIAL FOR SYSTEMS EXPANSION
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[ARVIN LOGO] [MERITOR LOGO]
AGENDA
TOPIC SPEAKERS
----- --------
- - Overview Larry Yost
- - Compelling Combination Bill Hunt
- - Financial Outlook Tom Madden
- - Integration Plan and Closing Larry Yost
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[ARVIN LOGO] [MERITOR LOGO]
FINANCIAL HIGHLIGHTS
($ IN MILLIONS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1999
--------------------------------------
MERITOR ARVIN COMBINED
------- ----- --------
<S> <C> <C> <C>
Sales $4,450 $3,010 $7,460
EBIT $ 382 $ 180 $ 562
EBIT Margin 8.6% 6.0% 7.5%
Net Income $ 194 $ 91 $ 285
Operating Cash Flow $ 254 $ 157 $ 411
Long-term Debt to Capital 67.7% 43.7% 55.8%
Pre-tax Interest Coverage 5.9x 3.9x 5.1x
Pro Forma Shares Outstanding 71.0m
</TABLE>
$7.5 BILLION AUTOMOTIVE SUPPLIER WITH SUPERIOR
CASH GENERATION
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[ARVIN LOGO] [MERITOR LOGO]
WORLDWIDE VEHICLE PRODUCTION
<TABLE>
<CAPTION>
FY 1999 FY 2000e FY 2001e
------- -------- --------
<S> <C> <C> <C>
Light Vehicles (millions)
North America (3) 16.9 17.0 16.5
Western Europe (3) 16.2 16.4 16.2
Asia / Pacific (2) 15.6 17.1 18.1
Heavy Vehicles (thousands)
U.S. and Canada (1)
Class 8 trucks 292 284 235
Medium trucks 223 207 200
Trailers 368 379 349
Western Europe (2)
Heavy and medium trucks 376 385 344
Trailers 123 116 119
</TABLE>
Note: (1) ACT (2) DRI (3) CSM
RESEARCH FIRMS EXPECT ADDRESSED MARKETS
TO REMAIN RELATIVELY STRONG OVER THE NEAR TERM
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[ARVIN LOGO] [MERITOR LOGO]
HISTORY OF REVENUE GROWTH
[Diagram of star]
13% CAGR
[Bar chart illustrating history of revenue (in billions) of Arvin and Meritor
combined]
<TABLE>
<CAPTION>
Meritor Arvin Combined
<S> <C> <C> <C>
1996 .......... $3.1 $2.1 $5.2
1997 .......... $3.3 $2.3 $5.6
1998 .......... $3.8 $2.4 $6.2
1999 .......... $4.5 $3.0 $7.5
</TABLE>
Note: Year ended Sept. 30
PROVEN TRACK RECORD SUSTAINABLE OVER THE LONG TERM
37
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[ARVIN LOGO] [MERITOR LOGO]
ADDITIONAL MARGIN IMPROVEMENT POTENTIAL
[Bar chart illustrating Arvin's operating income (in millions)]:
1996 .............. $132.8
1997 .............. $166.2
1998 .............. $165.6
1999 .............. $198.3
[Line chart, superimposed on above bar chart, illustrating
Arvin's operating margin (percentage)]:
1996 .............. 6.0%
1997 .............. 7.1%
1998 .............. 6.6%
1999 .............. 6.0%
[Bar chart illustrating Meritor's operating income (in millions)]:
Pro forma 1996 .... $192
Pro forma 1997 .... $221
1998 .............. $299
1999 .............. $366
[Line chart, superimposed on above bar chart, illustrating
Meritor's operating margin (percentage)]:
Pro forma 1996 .... 6.1%
Pro forma 1997 .... 6.7%
1998 .............. 7.8%
1999 .............. 8.0%
Note: Amounts are before restructuring, spin-off and other special costs
Sept. 30 for Meritor, Dec. 31 for Arvin
STRONG OPERATING MARGIN PERFORMANCE
WITH SIGNIFICANT UPSIDE POTENTIAL
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[ARVIN LOGO] [MERITOR LOGO]
STRONG OPERATING CASH GENERATION
[Bar graph illustrating operating cash generation (in millions) of Arvin and
Meritor combined]
Meritor Arvin Combined
1996......... $197 $126 $323
1997......... $208 $192 $400
1998......... $278 $126 $404
1999......... $254 $157 $411
Note: Year ended Sept. 30
INTENSE FOCUS ON CASH TRANSLATES TO SHAREOWNER VALUE
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[ARVIN LOGO] [MERITOR LOGO]
HISTORICAL COMBINED PROFITABILITY
[Bar chart illustrating historical combined profitability of Arvin and Meritor]:
1997 return on assets........................................ 6.2%
1997 return on capital....................................... 14.8%
1998 return on assets........................................ 7.7%
1998 return on capital....................................... 18.6%
1999 return on assets........................................ 8.4%
1999 return on capital....................................... 18.9%
Peer group average return on assets.......................... 4.7%
Peer group average return on capital......................... 12.0%
Note: Sept. 30 for Meritor, Dec. 31 for Arvin
Peer group is three-year average for DPH, LEA, JCI, FMO, Valeo and TRW
EXCEPTIONAL RETURNS ON CAPITAL AND ASSETS
CREATES SHAREOWNER VALUE
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[ARVIN LOGO] [MERITOR LOGO]
ACCELERATING GROWTH
- - FINANCIAL STRENGTH TO CAPITALIZE ON GROWTH OPPORTUNITIES
- - ENHANCED COST COMPETITIVENESS
- - BROADER PRODUCT PORTFOLIO
- - BUILD UPON COMPLEMENTARY CUSTOMER POSITIONS
- - BUILD UPON INDUSTRY POSITION
COMBINED COMPANIES OFFER SIGNIFICANT
GROWTH SYNERGIES
41
<PAGE> 42
[ARVIN LOGO] [MERITOR LOGO]
COST SYNERGY OPPORTUNITIES
(MILLIONS)
<TABLE>
<CAPTION>
2001 2003
---- ----
<S> <C> <C>
BEST PRACTICES:
PROCUREMENT $15 + $ 30 +
PRODUCTIVITY ACCELERATION 15 + 30 +
FACILITIES OPTIMIZATION 10 + 20 +
CORPORATE/SHARED SERVICES 10 + 20 +
----- ------
TOTAL COST SYNERGIES $50 + $100 +
===== ======
</TABLE>
$100 MILLION IS REALISTIC AND ACHIEVABLE
42
<PAGE> 43
[ARVIN LOGO] [MERITOR LOGO]
PROCUREMENT SAVINGS
[Bar chart illustrating procurement expenses for Meritor and Arvin, separately
and combined, and savings of $0.03 billion for combined company]
<TABLE>
<S> <C>
Meritor 2.80
Arvin 1.50
Combined 4.27
Savings 0.03
</TABLE>
[Diagram of Star]
$30 MILLION
OF SAVINGS
SOURCES OF SAVINGS
- - COMBINED GLOBAL PURCHASING POWER
- - SUPPLY BASE RATIONALIZATION
- - SUPPLIER DEVELOPMENT
- - SYSTEMS INTEGRATION
- - SUPPLY CHAIN DATA BASE MANAGEMENT
Note: Sept. 30 for Meritor, Dec. 31 for Arvin
SIGNIFICANT UPSIDE POTENTIAL
43
<PAGE> 44
[ARVIN LOGO] [MERITOR LOGO]
[OVAL GRAPHIC]
Best Practices
[Diagram of oval with text: "Best Practices"; each item from each of the two
lists set forth below points toward the oval]
<TABLE>
<S> <C>
Productivity Facilities
Acceleration Optimization
Arvin Total Quality Plant Consolidation
Production System (ATQPS)
Value Chain Outsourcing
Management
Lean Manufacturing Systems
Commonization
Shared Services Overhead Reductions
</TABLE>
COMBINATION WILL ENHANCE AND
ACCELERATE BEST PRACTICES
44
<PAGE> 45
[ARVIN LOGO] [MERITOR LOGO]
CORPORATE COSTS
FY 1999 (MILLIONS)
[Diagram of star]
$20 Million
of Annual Savings
[Bar chart of separate and combined corporate costs (in millions) for fiscal
year 1999]
Arvin ................. $29
Meritor ............... $36
Combined .............. $45
Note: Sept. 30 for Meritor, Dec. 31 for Arvin
NEAR TERM IMPLEMENTATION
45
<PAGE> 46
[ARVIN LOGO] [MERITOR LOGO]
FINANCIAL GOALS
- - Grow sales by 10% compounded annually
- - Grow EPS by 15-18% compounded annually
- - Strong emphasis on cash generation
- Target Non-Cash Working Capital at 2% of sales
- Target Cash Flow Return on Investment of 20%
- - Strong investment grade company
Management Is Committed to
Aggressive But Achievable Goals
46
<PAGE> 47
[ARVIN LOGO] [MERITOR LOGO]
SIGNIFICANT NON-CONSOLIDATED
INVESTMENTS
<TABLE>
<CAPTION>
Fy 1999(1) Ownership
(millions) %
---------- ---------
<S> <C> <C>
Sales:
Zeuna Starker (Exhaust) $460 49
Meritor WABCO (Truck ABS) 271 50
Arvin Sango (Exhaust) 228 50
183(2) 50
ZF Meritor (Truck Transmission, Clutch)
16 Others 481 --
------ ---
$1,623
======
Invested Capital $207
======
Dividend Income $35
======
</TABLE>
(1) Sept. 30 for Meritor, Dec. 31 for Arvin
(2) Pro forma for full year, actual amount was $17
INVESTMENTS GENERATE SUBSTANTIAL INCOME AND HIGH ROIC
47
<PAGE> 48
[ARVIN LOGO] [MERITOR LOGO]
ARVINMERITOR DIVIDEND POLICY
[Diagram of star]
ARV Dividend
Maintained;
MRA Dividend
Increased 57%
<TABLE>
<CAPTION>
Peer Proposed
Arvin Meritor Group Policy
<S> <C> <C> <C> <C>
Annualized
Dividend $0.88 $0.42 $ 0.88
Payout 19.5% 12.6% 19.8% 20.5%
Yield 3.6% 2.7% 2.5% 3.6%
Growth 2.5% 0.0% 8.6%
</TABLE>
PROPOSED DIVIDEND POLICY IN LINE WITH PEER GROUP
48
<PAGE> 49
[ARVIN LOGO] [MERITOR LOGO]
AGENDA
<TABLE>
<CAPTION>
TOPIC SPEAKERS
----- --------
<S> <C>
- - Overview Larry Yost
- - Compelling Combination Bill Hunt
- - Financial Outlook Tom Madden
- - Integration Plan and Larry Yost
Conclusion
</TABLE>
49
<PAGE> 50
[ARVIN LOGO] [MERITOR LOGO]
ArvinMeritor Officers
<TABLE>
<CAPTION>
<S> <C> <C>
CORPORATE STAFFS OFFICE OF THE CHAIRMAN CORPORATE STAFFS
Chairman and
Chief Financial Officer Chief Executive Officer General Counsel
T.A. Madden L.D. Yost and Secretary
V.G. Baker
Controller
W.M. Lowe Vice Chairman and Administration
President L.D. Blair
Treasurer V.W. Hunt
A.R. Sales Human Resources
G.L. Collins
Business Development
and Strategy Communications
J.L. De La Riva L.M. Cummins
Corporate Development
D.M. Stelfox
</TABLE>
OPERATING GROUPS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
President President President President President President Engineering,
Exhaust LVS Aftermarket HVS Aftermarket LVS HVS Roll Coater Quality and
Systems Products Products Procurement
W.B. Vance W.K. Daniel T.A. Gosnell T.E. O'Rourke P.R. Mulchandani D.E. Ebert S.C. Soderstrom
</TABLE>
STRONG AND INCENTIVIZED LEADERSHIP FROM COMBINED COMPANIES
50
<PAGE> 51
INTEGRATION PLAN
<TABLE>
<CAPTION>
Success Factors Principles and Actions
<S> <C>
- - Clear vision - Target value drivers
- - Comprehensive plan - Integration teams with
- - Accountability corporate officers
- - Focus on processes/ - 100-day action plan,
culture 1-year vision
- - Effective - Weekly assessment
communication meetings
- - Act quickly, start early - Integration workshops
- Focus on financial
commitments
</TABLE>
INTENSIVE PROGRAM DESIGNED TO RAPIDLY
ALIGN ARVINMERITOR WITH VALUE CREATION
51
<PAGE> 52
[ARVIN LOGO] [MERITOR LOGO]
INTEGRATION TIMELINE
[Timeline illustrating integration schedule]
<TABLE>
<CAPTION>
Pre-Close First Week First 100-Days First Year
- --------- ---------- -------------- ----------
<S> <C> <C> <C>
- - Select Integration Weekly Reviews Bi-Weekly Reviews
Teams and Managers
- - Conduct Integration Additional Workshops
Workshops
Realignment Actions
- - Establish Vision Communicate and Implement Vision
- - Set 100-Day Plan Implement 100-Day Plan
- Employee meetings
- Customer meetings
- Supplier meetings
</TABLE>
RIGOROUS AND DISCIPLINED PLAN IMPLEMENTS STRATEGIC VISION
52
<PAGE> 53
[ARVIN LOGO] [MERITOR LOGO]
ARVINMERITOR, INC.
- - Financially strong, strategically well-
positioned
- - Great potential to approach larger
addressable market
- - Able to expand excellent and
complementary customer relationships
- - Diversified business portfolio
- - Achievable and meaningful operating
synergy plan
- - Proven management teams and stable
leadership
- - Attractive strategic growth opportunities
INCREASED VALUE CREATION FOR SHAREHOLDERS
53
<PAGE> 54
[ARVIN LOGO] [MERITOR LOGO]
INVESTOR AND SECURITYHOLDER ADVICE
Meritor and Arvin plan to file a joint proxy statement/prospectus and other
relevant documents concerning the merger with the Securities and Exchange
Commission (the "Commission"). WE URGE INVESTORS AND SECURITYHOLDERS TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED
WITH THE COMMISSION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors
and securityholders will be able to obtain free copies of these documents at the
Commission's website at www.sec.gov. In addition, documents filed with the
Commission by Meritor will be available free of charge from Meritor (at
Meritor's website at www.meritorauto.com) or by contacting Bonnie Wilkinson,
2135 W. Maple Road, Troy, MI 48084; telephone (248) 435-0762. Documents filed
with the Commission by Arvin will be available free of charge from Arvin (at
Arvin's website at www.arvin.com) or by contacting Ronald R. Snyder, One Noblitt
Plaza, Columbus, IN 47202; telephone (812) 379-3982.
INVESTORS AND SECURITYHOLDERS SHOULD READ THE JOINT PROXY STATEMENT/PROSPECTUS
CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
Meritor, Arvin and their respective officers and directors may be deemed to be
participants in the solicitation of proxies from their shareholders with respect
to the transactions contemplated by the agreement and plan of reorganization.
Information concerning the participants in the solicitation will be set forth in
the joint proxy statement/prospectus when it is filed with the Commission.
54
