OVERVIEW

ArvinMeritor, Inc. is a global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM.

In 2008, we announced our intention to separate our Light Vehicle Systems (LVS) and Commercial Vehicle Systems (CVS) businesses. We subsequently attempted to complete the separation through a spin-off of the LVS business via a tax-free distribution to ArvinMeritor stockholders. The unprecedented challenges in the credit markets, deterioration in the automotive markets and other factors prompted us to investigate other alternatives for the separation, including a potential sale of all or portions of the business. In the second quarter of fiscal year 2009, we announced that we will reorganize the LVS business into separate product lines consisting of Body Systems, Chassis and Wheels. We intend to pursue a sale of the Body Systems business separately when market conditions support such actions. We are exploring immediate strategic alternatives for a timely and orderly disposition of the Chassis business. We believe the separation of LVS and CVS represents a major step in our corporate transformation and will improve corporate clarity and management focus. There are risks to the timing and certainty of completing any transaction, including the terms upon which any sale agreement with respect to any portion of the business may be entered into and the amount of any exit costs. During the first six months of fiscal year 2009, we incurred approximately $8 million of costs associated with separation related activities, which are included in the selling, general and administrative expenses in the consolidated statement of operations included in the Consolidated Financial Statements under Item 1. Financial Statements.

The following table reflects estimated automotive and commercial vehicle production volumes for selected original equipment (OE) markets for the second quarter ended March 31, 2009 and 2008 based on available sources and management's estimates.

                                          Quarter ended March 31,        Unit     Percent
                                           2009            2008         Change     Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks               27.5             46.4    (18.9)     (41 )%
North America, Trailers                        19.6             40.1    (20.5)     (51 )%
Europe, Heavy and Medium Duty Trucks           67.0            158.6    (91.6)     (58 )%
Europe, Trailers                               25.3             51.5    (26.2)     (51 )%
South America, Heavy and Medium Duty
Trucks                                         21.0             35.0    (14.0)     (40 )%

Light Vehicles (in millions)
North America                                   1.7              3.5     (1.8)     (51 )%
Europe                                          3.3              5.8     (2.5)     (43 )%
South America                                   0.7              0.9     (0.2)     (22 )%

We believe that the substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have, as shown in the above table, impacted the demand for the products of our customers. Many of our customers have experienced sharp declines in production and sales volumes, which started in November 2008 and have continued through March 2009 and are expected to continue at reduced levels in the near term with recovery varying by region. These decreases in production and sales volumes had a significant impact on our revenues and profitability in the three months ended March 31, 2009 and is expected to continue to have a significant impact for the remainder of the fiscal year. Our CVS and LVS businesses were adversely affected in the second quarter of fiscal year 2009 by decreased volumes in all of our major markets with most of the declines occurring in North America and Europe. While we have been unable to fully offset these market declines, we are focused on market share improvement and diversification strategies to help offset the decline. These strategies will also position us well as markets recover. OEM production declines during the second quarter were partially offset by higher sales in our specialty and aftermarket product lines compared to the prior year reflecting our efforts to diversify product offerings.

• Sales were $1,110 million, down 38 percent compared to the same period last year. Excluding the impact of foreign currency exchange rates, which decreased sales by $101 million, sales decreased by 32 percent year over year.
• Segment EBITDA margin for our reportable segments was negative 1.3 percent, down from positive 5.8 percent a year ago.
• Operating margins were negative 3.4 percent, down from positive 3.1 percent a year ago.
• Diluted loss per share from continuing operations was $0.72, compared to earnings per share of $0.33 in the second fiscal quarter of 2008.

Cash used for operating activities for the six months ended March 31, 2009 was $440 million (of which $338 million was in the first quarter of fiscal year 2009), compared to $108 million in the same period of last fiscal year. The deterioration in cash flow is primarily attributable to lower earnings and certain working capital usage during the period. Changes in working capital balances (accounts receivable, inventories, accounts payable, and other current assets and liabilities) were in line with the overall sales volume reductions compared to the prior year. However, cash flows generated by working capital during 2009 were more than offset by reductions in accounts receivable securitization and factoring programs. In addition, investments in inventory remain at higher levels relative to current sales volumes due to volatility in customer order and production schedules.

In the first quarter of fiscal year 2009, management determined that an impairment review of goodwill and certain long-lived assets was required due to recent declines in overall economic conditions including tightening credit markets, stock market declines and significant reductions in current and forecasted production volumes for light and commercial vehicles. As a result, we recognized in the first quarter of fiscal year 2009 pre-tax, non-cash asset impairment charges of $279 million, primarily related to our LVS segment. In addition to these asset impairment charges, we established valuation allowances against deferred tax assets in certain tax jurisdictions, primarily the United States, resulting in a non-cash charge of $665 million in the first quarter of fiscal year 2009.

On April 30, 2009, Chrysler LLC (Chrysler) filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. At April 29, 2009, we had approximately $7 million of outstanding receivables subject to Chrysler's U.S. bankruptcy proceedings. Of that amount, only $3 million are expected to be outside of administrative claim status, which traditionally are collectible under the bankruptcy process. We have determined that if some or all of the receivables outside of the administrative claims process are ultimately not collectible, the impact on our second-quarter results would not be material. We will be impacted by Chrysler's announcement to idle its facilities during the bankruptcy process. The company anticipates a 30-60 day shutdown to have a negative impact on EBITDA in the range of $2 million to $5 million.

COMPANY OUTLOOK

Our business continues to address a number of challenging industry-wide issues including the following:

• Severely reduced production volumes in the light and commercial vehicle industries;
• Weakened financial condition (including bankruptcies or potential bankruptcies) of most of the original equipment manufacturers and some suppliers;
• Excess capacity;
• Changes in product mix in North America;
• Disruptions in the financial markets and its impact on the availability and cost of credit;
• Higher energy and transportation costs;
• OE pricing pressures;
• Fluctuating costs for steel and other raw materials;
• Pension and retiree medical health care costs; and
• Currency exchange rate volatility.

• Temporary or permanent workforce reductions of approximately 3,000 employees, including full-time, contract and temporary workers;
• Plant level furlough programs, including government supported programs;
• Extended shutdowns at all plants;
• Pay reductions for salaried employees worldwide, which was achieved through base salary adjustments and/or curtailed production schedules;
• Elimination of the matching contribution for the U.S. 401(k) plan;
• Suspension of fiscal year 2009 merit increases for all employees; and
• Reduction of Board of Directors annual compensation by 10 percent.

In fiscal year 2009, we expect to achieve an estimated $235 million in savings related to these significant actions of which $140 million is expected to be in our CVS business and $95 million is expected to be in our LVS business. The majority of these actions have already been completed; while the remainder are in process. We expect to incur approximately $38 million of cash expenditures in connection with these actions for severance and related benefits, of which $24 million was paid in the first six months of fiscal year 2009. We continue to implement and execute our profit improvement and cost reduction initiative called "Performance Plus", which was launched in fiscal year 2007. Including cost reductions identified as part of our "Performance Plus" initiative, we expect these actions will result in savings of approximately $311 million in fiscal year 2009 and $430 million on an annual basis. In addition, we continue to focus on improving cash flow by maintaining tight controls on global inventory, pursuing working capital improvements, reducing capital spending and significantly reducing discretionary spending.

As part of Performance Plus, in the second quarter of fiscal year 2009, we announced the closure of our commercial vehicle manufacturing facility in Tilbury, Ontario, Canada and our light vehicle manufacturing facility in Milton, Ontario, Canada. We recognized restructuring costs of approximately $38 million in the second quarter of fiscal year 2009 related to these actions. Restructuring costs consist of estimated employee severance benefits, including termination benefits under the terms of the Tilbury retirement plans. In addition, we expect that the range of pension termination benefits related to the closure of our light vehicle systems coil spring operation in Milton, Ontario, Canada to be between zero and $5 million. We expect a significant portion of the cash payments associated with these closures to be incurred in fiscal years 2010 and 2011.

The substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have severely diminished demand for our customer's products. As a result, commercial and light vehicle production and sales volumes have declined significantly in most markets. We believe volumes will continue to be at severely depressed levels and that the impact of these lower volumes will continue to impact our profitability and cash flow for the remainder of fiscal year 2009 and possibly longer. Our cash and liquidity needs have been impacted by the level, variability and timing of our customers' worldwide vehicle production and other factors outside of our control. In addition, although we are pursuing a long term strategy to become primarily a commercial vehicle systems business, the financial and economic environment has made this difficult to accomplish in the short term and has left us with servicing the cash outflows of certain of our light vehicle businesses, which have been substantial. Cash flow in the first half of fiscal year 2009 was negatively affected by decreased earnings due to lower sales and will continue to be negatively impacted during the remainder of fiscal year 2009 due to expected production declines, the resulting restructurings and the current volatility in the financial markets, which could affect certain of our customers or vendors. We saw our usage of the revolving credit facility under our senior secured credit facility throughout the first half of the fiscal year increase significantly to meet working capital and other operational needs. At March 29, 2009, we had $165 million in cash and cash equivalents and an undrawn amount of $311 million under the revolving credit facility. Our availability under the revolving credit facility is subject to a senior secured debt to EBITDA ratio covenant, as defined in the agreement, which may limit our borrowings under the agreement as of each quarter end. In addition to the factors described above, in the second quarter, our credit rating was downgraded by credit rating agencies and there were significant declines in our stock price. It is possible we may be required to obtain an amendment to our senior secured credit facility and our U.S. securitization facility by the end of our third fiscal quarter to allow us additional flexibility under the senior secured debt to EBITDA covenant contained therein and, in the absence of a waiver, to prevent a default under such facilities. If such amendments or waivers are not necessary before the end of the third quarter, it is increasingly likely that we will require them prior to the end of the fiscal year. If such amendments or waivers are needed and are not obtained, the lenders under these facilities could accelerate our obligations, which, through cross defaults, could allow acceleration of obligations under certain of our other debt arrangements, including our outstanding convertible notes. If amendments or waivers are needed, we would negotiate with the lenders under these facilities in order to obtain an amendment or waiver which would allow us the required additional financial flexibility. We have had initial communications with the agent bank regarding a possible amendment or waiver consistent with others accomplished in the industry. However, there can be no assurances as to whether any such amendment or waiver may be obtained or, if obtained, whether the terms and restrictions of such amendment or waiver will be as favorable as current arrangements.

Other significant factors that could affect our results and liquidity in fiscal year 2009 include:

• Volatility in financial markets around the world;
• Timing and extent of recovery of the production and sales volumes in commercial and light vehicle markets around the world;
• Our ability to successfully separate our light vehicle's Body Systems and Chassis businesses from our commercial vehicle business;
• Higher than planned price reductions to our customers;
• Additional restructuring actions and the timing and recognition of restructuring charges;
• The financial strength of our suppliers and customers, including potential bankruptcies;
• Any unplanned extended shutdowns or production interruptions;
• Our ability to implement planned productivity and cost reduction initiatives;
• The impact of any acquisitions or divestitures;
• Significant awards or losses of existing contracts;
• The impact of currency fluctuations on sales and operating income;
• Higher than planned warranty expenses, including the outcome of known or potential recall campaigns;
• A significant further deterioration or slow down in economic activity in the key markets we operate;
• Further lower volume of orders from key customers;
• Ability to implement enterprise resource planning systems at our locations successfully;
• Our continued ability to recover steel price increases from our customers; and
• The impact of any new accounting rules.

NON-GAAP MEASURES

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP), we have provided information regarding "segment EBITDA". Segment EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation and amortization and loss on sale of receivables. We use segment EBITDA as the primary basis to evaluate the performance of each of our reportable segments. For a reconciliation of segment EBITDA to loss from continuing operations see "Results of Operations" below.

Management believes segment EBITDA is a meaningful measure of performance as it is commonly utilized by management and investors to analyze operating performance and entity valuation. Management, the investment community and banking institutions routinely use segment EBITDA, together with other measures, to measure operating performance in our industry. Further, management uses segment EBITDA for planning and forecasting future periods.

Segment EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or to cash flows as a measure of liquidity. Segment EBITDA, as determined and presented by the company, may not be comparable to related or similarly titled measures reported by other companies.

Results of Operations

The following is a summary of our financial results (in millions, except per
share amounts):

                                               Three Months Ended       Six Months Ended
                                                   March 31,               March 31,
                                                2009         2008        2009       2008
SALES:
Commercial Vehicle Systems                   $      739    $  1,192   $    1,695   $ 2,272
Light Vehicle Systems                               371         589          785     1,172
TOTAL SALES                                  $    1,110    $  1,781   $    2,480   $ 3,444
SEGMENT EBITDA:
Commercial Vehicle Systems                   $       15    $     84   $       45   $   155
Light Vehicle Systems                               (29 )        19         (331 )      21
SEGMENT EBITDA (1)                                  (14 )       103         (286 )     176
Unallocated legacy and corporate costs (2)           (7 )        (4 )        (23 )      (5 )
Depreciation and amortization                       (18 )       (36 )        (50 )     (68 )
Loss on sale of receivables                          (2 )        (5 )         (6 )      (9 )
Interest expense, net                               (23 )       (20 )        (45 )     (47 )
Benefit (provision) for income taxes                 12         (14 )       (633 )     (24 )
Income (loss) from continuing operations     $      (52 )  $     24   $   (1,043 ) $    23
INCOME (LOSS) FROM DISCONTINUED OPERATIONS            5          (4 )          5       (15 )
NET INCOME (LOSS)                            $      (47 )  $     20   $   (1,038 ) $     8

DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations                        $    (0.72 )  $   0.33   $   (14.41 ) $  0.32
Discontinued operations                            0.07       (0.05 )       0.07     (0.21 )
Diluted earnings (loss) per share            $    (0.65 )  $   0.28   $   (14.34 ) $  0.11

DILUTED AVERAGE COMMON SHARES OUTSTANDING          72.6        72.5         72.4      72.5

(1) Segment EBITDA results reflect $273 million ($265 million and $8 million in LVS and CVS, respectively) of non-cash impairment charges recognized in the first quarter of fiscal year 2009.
(2) Unallocated legacy and corporate costs represent items that are not directly related to our business segments. These costs include pension and retiree medical costs associated with recently sold businesses, legacy costs for environmental and product liability and certain corporate costs not specifically allocable to any of our segments. Unallocated legacy and corporate costs for the second quarter of fiscal year 2009 include $2 million of costs associated with the separation of the LVS business, $1 million of restructuring costs at certain corporate locations, $2 million of costs related to asbestos liabilities and $2 million of costs associated with legacy pension and retiree medical. Unallocated legacy and corporate costs for the first six months of fiscal year 2009 include $8 million of costs associated with the separation of the LVS business, $4 million of restructuring costs at certain corporate locations, $2 million of costs related to asbestos liabilities, $6 million of impairment charges related to certain tax credits and $3 million of costs associated with legacy pension and retiree medical.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Sales

The following table reflects total company and geographic business segment sales
for the three months ended March 31, 2009 and 2008. The reconciliation is
intended to reflect the trend in business segment sales and to illustrate the
impact that changes in foreign currency exchange rates, volumes and other
factors had on sales (in millions).

                                                           Dollar Change Due To
                    March 31,       Dollar      %                           Volume
                 2009      2008     Change    Change     Currency          / Other
CVS:
North America   $   477   $   525    $  (48 )     (9 )%  $      (5 )         $  (43 )
Europe              154       432      (278 )    (64 )%        (28 )           (250 )
South America        57       108       (51 )    (47 )%        (19 )            (32 )
Asia-Pacific         51       127       (76 )    (60 )%         (9 )            (67 )
                    739     1,192      (453 )    (38 )%        (61 )           (392 )
LVS:
North America   $   117   $   187    $  (70 )    (37 )%  $     (11 )         $  (59 )
Europe              147       271      (124 )    (46 )%        (22 )           (102 )
South America        81        91       (10 )    (11 )%         (8 )             (2 )
Asia-Pacific         26        40       (14 )    (35 )%          1              (15 )
                    371       589      (218 )    (37 )%        (40 )           (178 )
TOTAL SALES     $ 1,110   $ 1,781    $ (671 )    (38 )%  $    (101 )         $ (570 )

The following table reflects estimated automotive and commercial vehicle production volumes for selected OE markets for the second quarter ended March 31, 2009 and 2008 based on available sources and management's estimates.

                                           Quarter ended March 31,       Unit      Percent
                                           2009             2008        Change      Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks               27.5              46.4     (18.9 )   (41 )%
North America, Trailers                        19.6              40.1     (20.5 )   (51 )%
Europe, Heavy and Medium Duty Trucks           67.0             158.6     (91.6 )   (58 )%
Europe, Trailers                               25.3              51.5     (26.2 )   (51 )%
South America, Heavy and Medium Duty
Trucks                                         21.0              35.0     (14.0 )   (40 )%

Light Vehicles (in millions)
North America                                   1.7               3.5      (1.8 )   (51 )%
Europe                                          3.3               5.8      (2.5 )   (43 )%
South America                                   0.7               0.9      (0.2 )   (22 )%

Commercial Vehicle Systems (CVS) sales were $739 million in the second quarter of fiscal year 2009, down 38 percent from the same period in fiscal year 2008. The effect of foreign currency translation decreased sales by $61 million. Excluding the effects of foreign currency, sales decreased by $392 million or 33 percent, primarily due to significantly lower OE production volumes in substantially all of the markets we participate in. European heavy- and medium-duty truck production volumes decreased 58 percent compared to the prior year. Production volumes in the North American Class 8 commercial vehicle truck markets were lower by 41 percent compared to the prior year. Continuing weakness in the global economy has also impacted our sales volumes adversely in other regions of the world. Higher sales in our aftermarket and specialty product lines, primarily related to our military and remanufactured products, partially offset the sales declines in our OE truck and trailers businesses. The increase in sales of military products was related to a higher level of initial service orders on recent military programs which are currently expected to be at

Light Vehicle Systems (LVS) sales were $371 million in the second quarter of fiscal year 2009, compared to $589 million in the same period last year. The effect of foreign currency translation decreased sales by $40 million. Excluding the impact of foreign currency translation, sales decreased by $178 million or 30 percent compared to the prior year. We believe that the substantial . . .