This excerpt taken from the ARM 10-K filed Nov 19, 2007.
Liquidity and Contractual Obligations
As of September 30, 2007 we are contractually obligated to make payments as follows (in millions):
We also sponsor defined benefit pension plans that cover most of our U.S. employees and certain non-U.S. employees. Our funding practice provides that annual contributions to the pension trusts will be at least equal to the minimum amounts required by ERISA in the U.S. and the actuarial recommendations or statutory requirements in other countries. Management expects funding for our retirement pension plans of approximately $44 million in fiscal year 2008.
We also sponsor retirement medical plans that cover the majority of our U.S. and certain non-U.S. employees and provide for medical payments to eligible employees and dependents upon retirement. Management expects retiree medical plan benefit payments of approximately $53 million in fiscal year 2008; $46 million in fiscal year 2009; $47 million in fiscal year 2010; $45 million in fiscal year 2011; and $44 million in fiscal year 2012.
Our outstanding debt, net of discounts where applicable, is summarized as follows (in millions). For a detailed discussion of terms and conditions related to this debt, see Note 16 in the Notes to Consolidated Financial Statements.
This excerpt taken from the ARM 10-Q filed Aug 1, 2006.
Liquidity and Contractual Obligations).
Our financial results in the third quarter of fiscal year 2006 were significantly impacted by a labor disruption and work stoppage at our commercial vehicle brakes facility in Tilbury, Ontario, Canada. The collective bargaining agreement with the Canadian Auto Workers (CAW) at Tilbury expired on June 3, 2006. On June 4, 2006, we announced that, after lengthy negotiations, a new tentative agreement with the CAW had not yet been reached and, as a result, operations at the facility had been suspended. On June 12, 2006, we reached a tentative agreement with the CAW, which was subsequently ratified on June 14, 2006, and resumed operations. As a result of this work stoppage, we experienced temporary manufacturing inefficiencies and incurred certain costs in order to return to normal production. We were temporarily unable to completely fulfill certain customer orders, resulting in temporary production interruptions at some customer manufacturing facilities. The impact of this labor disruption on operating income in the third quarter of fiscal year 2006 was $45 million. Included in this amount are premium labor costs, expedited freight and logistical costs and other costs associated with production disruptions at certain customers facilities. At June 30, 2006, $36 million is recorded as a contingent liability in the consolidated balance sheet. The ultimate settlement of this liability will be determinable over a period of time and may be negotiated, as a commercial matter, with the affected customers. The amount of this liability may change in future periods depending on our customers ability to schedule additional production to compensate for prior disruptions, the results of the negotiations with the affected customers and other factors. We believe that any future adjustments to this liability will not have a material effect on the companys results of operations and financial position.
We continue to execute our restructuring plans announced in early fiscal year 2005 and have recorded $19 million of restructuring costs, primarily in our LVS business segment, in the nine months ended June 30, 2006. To date we have consolidated, closed or sold 9 facilities, primarily in the LVS business segment.
We previously announced our intention to divest our Light Vehicle Aftermarket (LVA) businesses and therefore these businesses are reported as discontinued operations for all periods presented. We announced the sale, subject to regulatory approvals, of our Gabriel South Africa LVA ride control business in June 2006 and our LVA motion control business in July 2006. We expect to complete both of these transactions in the fourth quarter of fiscal year 2006. In March 2006, we completed the sale of our LVA North American filters and exhaust businesses. In November 2005 we sold our 39-percent equity ownership interest in our LVA joint venture, Purolator India. We expect to substantially complete the divestiture of our remaining LVA businesses in fiscal year 2006.
In December 2005, we sold our light vehicle ride control business located in Asti, Italy. This sale, along with the previous divestiture of our 75-percent shareholdings in AP Amortiguadores, S.A. (APA) in the second quarter of fiscal year 2004, substantially completed our plan to exit the LVS ride control business. Therefore, the results of operations of this business are included in discontinued operations at June 30, 2006 and all prior periods results of operations have been restated to reflect this presentation.
A summary of our results for the three months ended June 30, 2006, is as follows:
Higher raw material costs and intense competition, coupled with global excess capacity most notably in the light vehicle industry, have created pressure from customers to reduce our prices. We continuously work to address these competitive challenges and offset price decreases by reducing costs, improving productivity and restructuring operations. The companys cost reduction and productivity programs, including savings from our restructuring actions, more than offset the impact of lower selling prices to our customers.
Also impacting our industry is the rising cost of pension and other post-retirement benefits. To partially address this issue we approved amendments to certain retiree medical plans in fiscal years 2002 and 2004. The cumulative effect of these amendments was a reduction in the accumulated postretirement benefit obligation (APBO) of $293 million, which was being amortized as a reduction of retiree medical expense over the average remaining service period of approximately 12 years. These plan amendments have been challenged in three separate class action lawsuits that have been filed in the United States District Court for the Eastern District of Michigan (District Court). Plaintiffs sought injunctive relief requiring the company to provide lifetime retiree health care benefits under the applicable collective bargaining agreements. On December 22, 2005, the District Court issued an order granting a motion by the UAW for a preliminary injunction (the injunction). The order enjoins the company from implementing the changes to retiree health benefits that had been scheduled to become effective on January 1, 2006, and orders the company to reinstate and resume paying the full cost of health benefits for the UAW retirees at the levels existing prior to the changes approved in 2002 and 2004. Due to the uncertainty related to the ongoing lawsuits and since the injunction has the impact of at least temporarily changing the benefits provided under the existing postretirement medical plans, we have accounted for the injunction as a partial rescission of the 2002 and 2004 plan amendments. For accounting purposes, we began recording the impact of the injunction in March 2006, on a one-quarter lag from the December 22, 2005 injunction date, which is consistent with the 90-day lag between our plan measurement date and fiscal year-end. As a result of the injunction, we expect retiree medical expense to increase by approximately $12 million of which approximately $6 million was recorded in the third quarter ended June 30, 2006. We also expect retiree medical benefit payments to increase by approximately $10 million in fiscal year 2006 compared to previous estimates included in our Current Report on Form 8-K dated February 27, 2006. We continue to believe we have meritorious defenses to these actions and plan to defend these suits vigorously. The ultimate outcome of these three class action lawsuits may result in future plan amendments. The impact of any future plan amendments cannot be currently estimated.
Cash provided by operating activities for the nine months ended June 30, 2006 was $312 million, compared to $12 million of cash used by operating activities in the same period last year. The increase in cash flow was largely driven by a reduction in working capital and lower pension and retiree medical contributions of $62 million.