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 commercial truck, trailer and specialty original equipment manufacturers, light vehicle markets and certain aftermarkets. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM.

Divestiture Activity

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 LVS business. In the second quarter of fiscal year 2009, we announced our intention to reorganize the LVS business into separate product lines consisting of Body Systems, Chassis and Wheels, with the intention to pursue exit strategies as market and other conditions support such actions. In the third quarter of fiscal year 2009, we completed (or entered into agreements to complete) the sale of most of the Chassis businesses, as discussed below. In August 2009, we also announced a definitive agreement to sell the Wheels business, also discussed below. We intend to pursue a sale of the Body Systems business separately when market conditions support such actions. 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 nine months of fiscal year 2009, we incurred approximately $9 million of costs associated with separation related activities, which are included in selling, general and administrative expenses in the consolidated statement of operations included in the Consolidated Financial Statements under Item 1. Financial Statements.

In the third quarter of fiscal year 2009, with respect to the Chassis businesses, we accomplished the following:

• completed the sale of our 51 percent interest in Gabriel de Venezuela to the joint venture partner;
• substantially completed the sale of our Gabriel Ride Control Products North America business;
• entered into a binding letter of intent to sell our 57 percent interest in Meritor Suspension Systems Company (MSSC) to the joint venture partner, a subsidiary of Mitsubishi Steel Mfg. Co., LTD
(MSM)

The results of operations and cash flows of these businesses are presented in discontinued operations in the consolidated statements of operations and cash flows and prior periods have been recasted to reflect this presentation. These transactions largely complete the divestiture of our Chassis product lines, representing 72 percent of total Chassis revenue based on 2008 sales, including $117 million of pass-through sales, and 87 percent of non-pass-through sales. The remaining Chassis businesses operate near breakeven and primarily support our suspension module assembly business which is expected to run-off over the next two years as various vehicle programs come to a conclusion.

On August 4, 2009, affiliates of ArvinMeritor (Seller) entered into a definitive purchase and sale agreement to divest the entirety of the Wheels business -a component of the company's LVS segment - to Iochpe-Maxion, S. A., a Brazilian producer of wheels and frames for commercial vehicles, railway freight cars and castings, and affiliates (Buyer). The purchase price is $180 million; actual proceeds may vary depending on taxes and the net cash or debt position of the business at closing. The Wheels business is included in continuing operations in the consolidated financial statements as it did not meet the criteria for classification as held for sale at June 30, 2009. The closing and funding of the entire purchase price is expected to occur on or before September 23, 2009, prior to the end of ArvinMeritor's fourth fiscal quarter. If the closing does not occur by November 16, 2009, the Agreement may be terminated in certain events. The agreement also requires certain true-up payments for working capital and other miscellaneous adjustments, on a post-closing basis. The completion of the transaction is subject to several conditions (including the clearance or waiver of applicable competition law waiting periods in the United States and Mexico), and to the availability of Buyer's financing. The Buyer will be pursuing corporate approvals, which are required under Brazilian law. The Buyer and the Seller have agreed to pay the other party $9 million in liquidated damages under certain conditions relating to a closing not occurring (one such condition being the Buyer's financing or other funds not being available).

Upon the completion of the Chassis and Wheels transactions (described above), our LVS segment will consist primarily of our Body Systems product line, whose fiscal year 2008 sales were approximately $1.4 billion.

OE Production

The following table reflects estimated automotive and commercial vehicle
production volumes for selected original equipment (OE) markets for the third
quarter ended June 30, 2009 and 2008 based on available sources and management's
estimates.

                                                 Quarter ended June 30,        Unit      Percent
                                                 2009             2008        Change      Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks                     21.9              55.1    (33.2)     (60 )%
North America, Trailers                              21.8              42.8    (21.0)     (49 )%
Europe, Heavy and Medium Duty Trucks                 38.3             149.0   (110.7)     (74 )%
Europe, Trailers                                     24.8              45.3    (20.5)     (45 )%
South America, Heavy and Medium Duty Trucks          25.6              39.9    (14.3)     (36 )%


Light Vehicles (in millions)
North America                                         1.8               3.5     (1.7)     (49 )%
Europe                                                4.3               5.9     (1.6)     (27 )%
South America                                         0.9               1.0     (0.1)     (10 )%

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 June 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 and nine months ended June 30, 2009 and are expected to continue to have a significant impact for the remainder of the fiscal year and possibly longer. Our CVS and LVS businesses were adversely affected in the third 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 actions to improve our market share and diversification strategies to help offset the decline. These strategies will also position us well as markets recover.

ArvinMeritor's Performance

Highlights of our consolidated results from continuing operations for the three months ended June 30, 2009, are as follows:

• Cash flows provided by operating activities were $117 million, compared to $121 million in the third fiscal quarter of 2008.
• Sales were $993 million, down 47 percent compared to the same period last year. Excluding the impact of foreign currency exchange rates, which decreased sales by $105 million, sales decreased by 42 percent year over year.
• Operating margins were 0.2 percent, down from 2.9 percent a year ago.
• Segment EBITDA margin for our reportable segments was 2.9 percent, down from 6.2 percent a year ago.
• Diluted loss per share from continuing operations was $0.39, compared to earnings per share of $0.66 in the third fiscal quarter of 2008.

Operating cash flows used for continuing operations for the nine months ended June 30, 2009 was $269 million (of which $386 million was in the first six months of fiscal year 2009), compared to operating cash flows provided by continuing operations of $70 million for the nine months ended June 30, 2008. The deterioration in cash flow during the first nine months of fiscal year 2009 is primarily attributable to lower earnings and certain working capital usage, including the reduction in off-balance sheet accounts receivable factoring and securitization balances, 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.

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.

Since October we have begun implementing a number of immediate restructuring and cost reduction initiatives aimed at mitigating current market conditions. These actions include:

• 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 have recognized approximately $44 million of restructuring costs in connection with these actions for severance and related benefits, of which $33 million was paid in the first nine 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. 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 (Tilbury). We recognized restructuring costs of approximately $30 million in the second quarter of fiscal year 2009 associated with the Tilbury closure for estimated employee severance benefits, including pension termination benefits under the terms of the Tilbury retirement plans and certain asset impairment charges. We expect a significant portion of the cash payments associated with this closure to be incurred in fiscal years 2010 and 2011. In the third fiscal quarter of 2009, the company announced the closure of its commercial vehicle facility in Carrollton, Kentucky and recognized approximately $2 of restructuring costs.

We also announced during the second quarter of fiscal year 2009 the closure of our coil spring operations in Milton, Ontario, Canada (Milton), which is part of MSSC. Costs associated with this closure were $8 million for employee severance benefits, and are included in loss from discontinued operations in the consolidated statement of operations. Liabilities associated with these charges are included in liabilities of discontinued operations and are approximately $8 million at June 30, 2009.

Liquidity

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 customers' 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

Cash flow in fiscal year 2009 for the first three quarters was negatively affected by decreased earnings due to lower sales and will continue to be negatively impacted during the fourth quarter due to continued lowered production 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 nine months of the fiscal year increase significantly to meet working capital and other operational needs. However, stronger cash flow and improved regional cash efficiencies allowed us to reduce usage of the revolver by $145 million at third quarter end as compared to second quarter end. At June 28, 2009, we had $76 million in cash and cash equivalents and an undrawn amount of $456 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. As long as we are in compliance with this covenant as of the quarter end, we have full availability under the revolving credit facility every other day during the quarter. We were in compliance with this covenant as of June 28, 2009.

Future Covenant Compliance

We have identified actions that, if completed, should allow us to meet the senior secured debt to EBITDA ratio covenant at the September measurement date and are working diligently to implement those actions. These include executing the sale of our Wheels business and replacing the U.S. accounts receivable securitization program, as well as continued improvements in working capital. We are currently in negotiations with potential lenders to replace our U.S. accounts receivable securitization program. If the company is unable to complete these actions by the September measurement date, it is likely that we will need to seek and obtain an amendment or waiver to our revolving credit line agreement.

If amendments or waivers are needed, we would negotiate with the lenders under these facilities and believe we will receive such an amendment or waiver if required. 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. Any amendment or waiver will contain commercial terms consistent with the current market which would likely include higher interest rates and an upfront amendment fee. 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.

Our future liquidity is subject to a number of factors, including access to adequate funding under our senior secured credit facility, vehicle production schedules and customer demand and access to other borrowing arrangements such as factoring or securitization facilities. Even taking into account these and other factors, and with the assumption that the current trends in the automotive and commercial vehicle industries continue, management expects to have sufficient liquidity for the next twelve months if the sale of the Wheels business is completed as contemplated and the U.S. accounts receivable securitization facility is replaced. The completion of even one of these actions, combined with additional working capital reductions, may allow us to meet the senior secured debt to EBITDA covenant and to have sufficient liquidity for the next twelve months. However, if we are not successful and neither of these actions are completed, we expect that our future levels of liquidity may not be sufficient to offset unforeseen negative trends or developments even if we see improvement in the current industry and financial environment. We may be required to take additional liquidity enhancing actions, including, without limitation, exploring further asset sales or obtaining additional external sources of liquidity. There can be no assurances that we will be able to execute these actions or that these actions will be sufficient if our end markets do not recover. See "Part II. Item 1A. Risk Factors." The accompanying financial statements have been prepared on a going concern basis which assumes that the company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should the company be unable to continue as a going concern.

• 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 businesses from our commercial vehicle business, in particular the closing of sale transactions for MSSC and the Wheels businesses;
• 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 our recent 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;
• The impact of any new accounting rules; and.
• Replacement of the U.S. accounts receivable securitization facility.

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 income (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         Nine Months Ended
                                            June 30,                   June 30,
                                        2009         2008         2009          2008
SALES:
Commercial Vehicle Systems           $      683    $   1,356   $     2,378    $   3,628
Light Vehicle Systems                       310          521           902        1,473
TOTAL SALES                          $      993    $   1,877   $     3,280    $   5,101
SEGMENT EBITDA:
Commercial Vehicle Systems           $       30    $     101   $        75    $     256
Light Vehicle Systems                        (1 )         16          (268 )         38
SEGMENT EBITDA (1)                           29          117          (193 )        294
Unallocated legacy and corporate
costs (2)                                    (3 )        (13 )         (25 )        (19 )
Depreciation and amortization               (19 )        (34 )         (66 )        (96 )
Loss on sale of receivables                  (1 )         (6 )          (7 )        (15 )
Interest expense, net                       (22 )        (19 )         (65 )        (65 )
Benefit (provision) for income
taxes                                       (12 )          3          (665 )        (20 )
Income (loss) from continuing
operations                           $      (28 )  $      48   $    (1,021 )  $      79
LOSS FROM DISCONTINUED OPERATIONS,
net of tax                                 (134 )         (4 )        (179 )        (27 )
NET INCOME (LOSS)                    $     (162 )  $      44   $    (1,200 )  $      52

DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations                $    (0.39 )  $    0.66   $    (14.08 )  $    1.09
Discontinued operations                   (1.84 )      (0.06 )       (2.47 )      (0.37 )
Diluted earnings (loss) per share    $    (2.23 )  $    0.60   $    (16.55 )  $    0.72

DILUTED AVERAGE COMMON SHARES
OUTSTANDING                                72.7         72.9          72.5         72.6

(1) Segment EBITDA results reflect $217 million ($209 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 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 third quarter of fiscal year 2009 include $1 million of costs associated with the separation of the LVS business and $2 million of costs associated with legacy pension and retiree medical benefits. Unallocated legacy and corporate costs for the first nine months of fiscal year 2009 include $9 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 $4 million of costs associated with legacy pension and retiree medical benefits.

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Sales

The following table reflects total company and geographic business segment sales
for the three months ended June 30, 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
                   June 30,       Dollar      %                           Volume
                2009     2008     Change    Change     Currency          / Other
CVS:
North America   $ 409   $   603    $ (194 )    (32 )%  $      (4 )         $ (190 )
Europe            127       483      (356 )    (74 )%        (27 )           (329 )
South America      70       120       (50 )    (42 )%        (15 )            (35 )
Asia-Pacific       77       150       (73 )    (49 )%         (5 )            (68 )
                  683     1,356      (673 )    (50 )%        (51 )           (622 )
LVS:
North America   $  46   $   113    $  (67 )    (59 )%  $      (7 )         $  (60 )
Europe            184       293      (109 )    (37 )%        (39 )            (70 )
South America      43        70       (27 )    (39 )%         (9 )            (18 )
. . .