Welcome to the fiscal year 2008 fourth quarter and full year results conference call. My name is Katie and I’ll be your coordinator for today. At this time all participants will be in a listen-only mode. We will be conducting a question and answer session towards the end of this conference. (Operator Instructions) I would like to now turn the call over to your host for today, Mr. Terry Huch, Senior Director, Investor Relations.

Welcome to the ArvinMeritor fourth quarter and full year 2008 earnings call. On the call today we have Chip McClure, our Chairman, CEO and President, and Jeff Craig, our CFO. The slides accompanying today’s call are available at arvinmeritor.com. We’ll refer to the slides in our discussions this morning. The content of this conference call which we’re recording is the property of ArvinMeritor, Inc. It’s protected by US and international copyright law and may not be rebroadcast without the express written consent of ArvinMeritor. We consider your continued participation to be your consent to our recording. Our discussion will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Let me refer you to slide 2 for a more complete disclosure of the risks that could affect our results. To the extent we refer to any non-GAAP measures in our call you’ll find the reconciliation to GAAP in the slides on our website. Now I’d like to turn the call over to Chip.

I’d like to first take a moment to recognize our team for the outstanding financial performance they delivered in 2008. What I’m most proud of is that we achieved what we set out to do during the year. We had an aggressive strategy in place and our people succeeded in executing on it. Let’s turn to slide 3 to review some of these accomplishments. As you can see our sales were $7.2 billion, up 11% compared to full fiscal year 2007 which was driven by higher volumes in Europe and South America, gains in market share in certain segments and stronger currencies outside of North America. Despite difficult industry conditions in the US, our commercial vehicle system sales were up 15%. If you exclude the benefit of the stronger currencies outside of North America, CVS sales improved by 8%. This business group benefited from greater volumes in off-highway, military and after-market units as well as increased revenues in regions outside of North America. Sales in our light vehicle systems business increased by 5% which was due to foreign exchange. Without the benefit of stronger exchange rates for foreign currency our light vehicle business would have been down by the year by 4% primarily due to lower production in North America. We’re pleased to report that we were able to meet our most recent full year guidance range of $1.55 to $1.65 before special items. As you read in this morning’s news release, our earnings per share for the full fiscal year 2008 was $1.60 from continuing operations before special items. This is up significantly from the $0.53 reported for full fiscal year 2007 and in spite of severe headwinds in North America as well as unprecedented material cost increases is at the high end of the $1.40 to $1.60 guidance…

On today’s call I’m going to review results for our fiscal fourth quarter very briefly. Then I’ll go into more detail on the full year. Slide 10 provides our income statement for continuing operations before special items. We earned $0.38 per share which corresponded to the midpoint of our most recent guidance. Our effective tax rate for the quarter was 34% which was a little higher than we expected but pre-tax operating income was strong enough to offset some bad news in taxes. Sales in the quarter were 8% higher than the fourth quarter of last year. On a constant currency basis sales were up 3% due largely to stronger sales in South America, Europe, military and after-market products. Operating income increased to $52 million compared to $8 million last year which shows the power of the improvements we were able to make in operations. In last year’s fourth quarter we were struggling with operational issues in our truck business in Europe including part shortages, supplier disruptions and inefficiencies in our own plants. This year things were running pretty smoothly despite record volumes. We’ll have a new set of challenges to face as production volumes decline in Europe throughout 2009. Slide 11 shows EBITDA by segment. CVS earned $98 million of EBITDA in the fourth quarter which is more than double last year’s results. The EBITDA margin for CVS was 8.2%, the best quarterly results in several years. LVS EBITDA was up 46% year-over-year with margins 130 basis points higher than the same period last year. Total EBITDA was $106 million with margins of 6.2%. Slide 12 shows the income statement for the full year. Gross margin of $653 million was up 31% from 2007. SG&A as a percent of revenue was up 0.2% for the year due to higher…

(Operator Instructions) Our first question comes from Brian Johnson - Barclays Capital.

Can you give us a sense of how Performance Plus 2 is dealing with the lower volumes especially in Europe, and in particular are there assumptions you’d baked into Performance Plus that were dependent on a certain level of staffing and volume that would actually result in lower savings, and then how are you offsetting that to keep on the track you’ve outlined?

Let me start and I’ll obviously let Jay weigh in a little bit more on the details. As we kind of indicated, we did at a previous earnings call indicate that our wave two of Performance Plus would focus on Europe and some of that we’re doing with our overhead structure and SG&A as we indicated is one of the pillars that way which is somewhat volume independent, and I think some of what you saw with the actions we even indicated on October 31 are some of the actions we’ve pulled ahead that way. Secondly, as we look at it in the direct material side, some of that obviously is volume related and with the current downturn it does allow us to better focus resources on that so that if the market does pick back up we’ll see the opportunity that way.

As Chip mentioned we’ve now headquartered wave two of Performance Plus in Europe and Carsten and I are attending monthly meetings there. I would say the first material outcome of that exercise was the announcements we made on October 31. The majority of those cost reductions were actually in Europe and did take our capacity down from a labor perspective almost 20% to 25% just based on those announcements. We’ve taken the cost reduction actions already to be in line with the guidance we provided today so those have already been executed. We’ve also gone through as I mentioned in my presentation all the Performance Plus initiatives, particularly those that we thought would be volume dependent to make certain that the guidance we provided today on our expected $75 million of savings, $50 million of which will be in continuing operations, that we have assurance that we believe we’ll achieve that number. So we have gone through those issues to look at the ones that might be volume dependent.

Around page 25, if we want to compare the sales number and EBITDA number to a ’08 as if the LVS ex-Wheels with discontinued ops, what numbers would we be looking at?

We are not providing the LVS guidance today other than to say that we expect that it will be included in discontinued operations when we report our first quarter results.

We’ll see it for the year then or just for the quarter?

It’s obviously dependent on the progress of our process that we disclosed today of the [inaudible] sale.

I was actually trying to go back and say is it possible to restate fiscal year ’08 with LVS ex-Wheels as a discontinued operation?

We will in the first quarter have all the historical numbers restated to show CVS and Wheels in continuing operations so we will provide that data.

So it won’t be in the K; it’ll be in 1Q.

It will not be in the 10K because we did not classify it at 9/30 as a discontinued operation. We’re only able to make that classification for the first quarter.

Our next question comes from John Murphy - Merrill Lynch.

On the light vehicle systems business what kind of interest you’re getting there? Is it strategic or financial buyers, if there’s the potential to sell this in parts maybe to different strategic suppliers? How’s that process developing, if you can give us any color around that?

I obviously can’t give you a lot of detail, and as we just announced back on October 31 we’re continuing strategic alternatives of which we’re just starting that and kind of indicated that the primary path as we indicated today is with a sale. But really what we are looking at is the sale of the complete entity except Wheels going forward and I would envision that obviously as our prime path at this point.

But you’re comfortable putting it in disc ops assuming that you’re going to have it sold within 12 months, right?

We are.

Then just touching on the balance sheet as far as factoring, you had $521 million in your factoring facilities at the end of the year. I’m just wondering what that was at the end of the third quarter and what it was at the end of last year.

We’re just pulling that data together. I want to say it was the low $400s at the end of the third quarter 4/10 but we’re just getting that data.

If you would add the year end ’07 also that would be great?

We’re pulling that together.

Chip, can I ask you another question while you’re looking for that Jay?

Sure.

As far as the supply base in the commercial vehicle business, tier 2 and 3 suppliers that are supplying in to you, there’s been a lot of news and hubbub about the stress in the tier 2 suppliers on the light vehicle side of the business. How are the commercial vehicle suppliers faring in this kind of environment where volumes are down and they’re really having a tough time? I mean, the market is generally pretty tough right now.

Well, there’s no question it’s tough on the commercial vehicle side just like it is on the light vehicle side and as I think was indicated in previous calls, we do have a troubled supplier group. We actually work with a number of suppliers. We have a fairly robust process as part of our enterprise risk management system to continue to track suppliers. And clearly when I look at it, suppliers both here and North America where the Class 8 market has been down essentially for the last year and a half and then more recently in Europe, suffice it to say we are having to work with several suppliers on both continents to make sure that we can continue to support our customers’ needs in these challenging times. So it’s similar to the light vehicle side. We are seeing some of that on the commercial vehicle side. I am pleased with what we’re able to do on our manufacturing, our purchasing, our shared services group to make sure that we are being aware of that, reacting to it proactively and if necessary, making sure we’ve got other actions in place to make sure we’ve been able to support our customers going forward.

How many of those suppliers cross over to light vehicle business that might have an impact or be impacted by a GM bankruptcy or slowdown?

Actually it’s a fairly small group but we watch that too because when you look at it the kind of production volumes we’re looking at here in the commercial vehicle side rather than measuring it in terms of millions of parts, it tends to be tens to hundreds of thousands of parts. So by and large they tend to be different but there is some crossover and again to the other part of your question, we do continue to follow on the LVS side to make sure that if there’s distress caused by the ongoing challenges on the light vehicle side, if it affects some of those suppliers, we’re factoring that in too.

Lastly, on the GM and Chrysler receivables in North America you mentioned they were about $50 million. It sounds like a pretty small portion of your business. Given the increasing risk there, are you considering shortening terms or trying to collect on that money sooner or going COD just to protect yourselves in the event that there is this cataclysmic event?

Clearly what we’re doing is monitoring it very closely and as Jay and I indicated, the amount that we’ve got that way, I’m pleased to say that our past dues are down. We continue to track that, and I’ll also tell you that it’s a pay on time, but as far as anything specific between ourselves and any of our customers, whether it’s on the light vehicle side or the commercial vehicle side, we do have to respect the confidentiality we have between our customers on that.

I have the answer to your previous question on securitization. Actually at this yearend we were at $519 million. At the end of the third quarter we were at $609 million outstanding under those programs. At the end of ’07 we had $282 million outstanding. A couple of other points I’d make is that of the $519 million at the end of the year $419 million are committed for 364-day facilities. Also the growth you’ve seen from ’07 to ’08 obviously is due to two reasons. One, the growth of our European business where most of these programs reside and also we have some customer sponsored programs that were made available to us in some of the negotiations with those customers.

Our next question comes from Himanshu Patel - J.P. Morgan.

I’m sorry. I missed an earlier part of the call. On slide 24 is the impact of the businesses that are now going to be discontinued ops, I didn’t notice that in the walk for slide 24. Does that mean they’re basically neutral to earnings?

No, I wouldn’t necessarily imply that. We’re just doing a walk here of what we expect to be included in continuing operations.

But the ’08 starting point does include those businesses?

Yes, the ’08 number includes the entire ArvinMeritor business including the portions of our light vehicle business we expect to be classified in discontinued operations.

And the ’09 does not. So where is the profit impact of that divestiture on the walk?

At this point given where we are in the process of the sale, we are not providing that data today.

Chip, can you give a little bit more color? I know LVS is smaller and smaller for you guys but what’s been happening to production schedules there? It was our understanding that particularly in October it looked like the rate of incoming forward production schedules from carmakers was changing pretty fast. Where are things now? Have they sort of stabilized or are you guys still feeling like the OEMs are still trying to find their way to a bottom?

I think it’s safe to say that it still is quite choppy. Really on the two continents, I’ll talk about in particular North America and in Europe, I think there’s been a steady decline over a number of months here in the US, somewhat exacerbated if you will by what took place with the credit crisis. So it’s been fairly weak for a while here in the US. Quite frankly, in Europe it had been fairly strong up until late September and then literally in the September timeframe it started dropping off fairly precipitously there. So if I look at it, in Europe I think there’s been probably a bigger drop more recently on that just because it was taking place that way. But in both cases I think that there is still a lot of choppiness that as you had indicated in October we continue to see that in production schedules as we look at November going forward. Suffice it to say that really when you look at Europe in particular I think they’re still trying to go through that adjustment there.

On the steel recovery discussions I know you guys had been making some pretty good progress on that, particularly on the commercial side. What’s the status of those discussions now just given what we’ve seen with spot prices? Have they become more difficult or would you say you still feel pretty confident that whatever you had expected on recoveries a few months ago is still sort of what you’d see now?

Just a couple points I’d make on that. One, you’ll probably notice in our ’08 walk for CBS we do not show steel as a negative item which should indicate we’ve been successful there. We’ve also been successful in our light vehicle side. Obviously with the prices declining now as we stated previously we don’t view this as a profit-making opportunity for us and we’ll be adjusting some of our prices to allow our customers to receive the benefit of declining steel prices. But the main part of our initiative was really to put in a much more rapidly adjusting surcharge process which we are continuing now into the future.

Our next question comes from Brett Hoselton - KeyBanc Capital Markets.

Just for clarification. I think this is pretty obvious but it sounds like as far as your earnings per share guidance and to your cash flow guidance you are excluding anything to do with the light vehicle operations with the exception of the Wheels?

That is correct.

Obviously you’re making some adjustment in your restructuring to account for the variable portion there but what would you say the CVS contribution margins would be given that adjustment?

I’ll have to get back to you on that because the data I have in front of me includes the EBITDA from Wheels and the revenue from our Wheels operations as well. I’ll see if we can compute that and if we can provide it later in the call, I’ll make sure we do that.

Then as far as the impact of Wheels either this past year or the future year in terms of revenue or earnings, any guidance there?

In terms of revenue I think we previously stated it’s about $300 million. As far as profitability I think what we’ve stated is it’s one of our more profitable businesses particularly to its very favorable footprint with manufacturing facilities in Brazil and Mexico.

As far as the cash flow guidance, I’m just wondering about some of the components. For example, depreciation and amortization and cap ex for next year? I mean, you’re excluding light vehicles so obviously it’s going to be lower.

We expect cap ex of around $100 million. As far as depreciation, it should be around $90 million.

Then just a few other components there. As far as the accounts receivable securitization it sounds like you’re essentially assuming that that comes down next year but it’s a wash given working capital. Is that correct?

That’s correct.

Restructuring expense and restructuring cash flow next year.

Just to make one point on the securitization coming down. Our receivables, corresponding receivables balances come down as well so it’s relatively neutral. The receivables decline obviously in Europe will not be a benefit to us in working capital but it should be neutral.

Restructuring expense and restructuring cash for 2009?

We have not disclosed that here today for continuing operations and we will update that on our December 9 analyst meeting.

As far as restructuring expense is concerned, I assume that continues to be excluded from your earnings guidance. Is that correct?

That’s correct.

Our next question comes from Patrick Archambault - Goldman Sachs.

I just actually wanted to follow up on Himanshu’s question. Can you give us a sense of at least historically on an earnings basis what the impact of the LVS business has been year-to-date or for 2008?

We haven’t disclosed that data in the past relative to segmenting the business the way it’s being segmented currently with Wheels being excluded. At this point in the sale process we will not be providing that data.

Just to sort of follow up on his question, it does seem the way you have the walk set up that it would be that the foregone revenue or foregone profit and whatever unabsorbed overhead impact there is from that, it seems like the way you’ve got it set up in the walk that it would be relatively neutral. Is that completely off base?

No, that’s absolutely correct.

Can you give us a little bit of a sense of how some of the commercial end markets are holding up in emerging markets? I saw that you’ve gone down 15% for Asia, medium and flat for South America. Can you just kind of mark us to market as to how those end markets performed in the quarter and how much downside or upside risk there may be around those?

Yes. Let me kind of walk through that. Let me start in Asia and then I’ll move to South America after that and I think we’ve kind of talked a little bit that Eastern Europe as it is part of Europe. We can certainly do that at the end. If you look at it within Asia Pacific, and really the two major markets we serve are India and China. In India there’s no question there’s been a significant decline if you will in the on-highway market in the last period of time that we’ve seen in our joint venture there and do kind of envision that carrying forward for the next quarter or two. Then obviously looking beyond that for it to start picking back up again that way. But if I look at it on the heavy truck side in India, it’s certainly been down. If I look at China, actually the majority of our business in China is on the off-highway side and has been going very strong. If you think about that within China, there is still a lot of infrastructure being built as they continue to move westward into China. The most recent thing done by the Central Bank with the capital infusion, I think part of that’ll go toward infrastructure. So for us on the off-highway side in particular we see China with new roads being built as a very positive that way but on the truck side it’s a little bit of wait and see on that one. If you look at other parts of Asia, they’re essentially holding up better. I think India was the one that probably went the softest that way. Within South America it continues to be strong on the commercial vehicle side. I know there was some softness on…

And specific to Europe, you guys used to talk about layered capacity in the sense that the first 10% to 15% call it might roll off at much lower margins and have much less of a headwind given some of the supply chain constraints there. How should we be thinking about the overall wholistic margin impact from that 25% decline? Would that still be below historical contribution margins in terms of the headwinds just because of some of those supply chain issues?

I believe the 25% reduction, the variable labor component or the cost reduction component was primarily contractually employed labor. So the severance cost was quite diminimus for us as you probably saw in the October 31 release. At that point the margin impact was not as significantly. Clearly if we see a decline that’s larger, it may become more costly for us at that point to eat into more costly layers of capacity.

The other thing we should mention when you look at Europe in particular, there are some parts of it as I indicated earlier there was a real rush to get orders in because it was a fairly tight order board earlier this year because volumes were so high. I think we’re actually seeing essentially in this quarter is we still do have some of the OEMs working down their backlog for support either in Eastern or Western Europe. So I think we’re seeing a bit of that anomaly in this quarter that as that backlog gets worked down we may see some of that continued softness going into future quarters.

Due to time constraints, that is all the time we have for questions. I would now like to turn the call back over to Mr. Terry Huch for closing remarks.

I would just like to thank you all for joining us today and invite you to call your communications or investor relations contact if you have further questions.

Ladies and Gentlemen, thank you for your participation in today’s conference call. You may now disconnect. Have a wonderful day.