ArvinMeritor (ARM)

Item 1A. Risk Factors

Except as set forth below, there have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

It is possible we may be required to obtain an amendment or waiver to our senior secured credit facility before the end of our 2009 fiscal year and if an amendment or waiver is needed and not obtained, we could be in violation of the financial covenant therein, which would result in a default thereunder and could lead to an acceleration of our obligations under this facility and, potentially, other indebtedness.

It is possible that we may need an amendment or waiver to our senior secured credit facility before the end of our 2009 fiscal year in order to increase the flexibility afforded to us pursuant to the senior secured debt-to-EBITDA covenant of the facility. Under the current terms, beginning at the end of our third fiscal quarter, this ratio changes from having to be no greater than 2.50 to 1 to having to be no greater than 2.00 to 1 on the last day of the quarter. If an amendment or waiver is not needed prior to the end of our third fiscal quarter, it is increasingly likely that an amendment or waiver will be needed before the end of the fiscal year. If an amendment or waiver is needed and not obtained, we would be in violation of that covenant and the lenders would have the right to accelerate the obligations upon the vote of the lenders holding at least 51% of outstanding loans thereunder. A default under the senior secured credit facility could also constitute a default under our outstanding convertible notes as well as our U.S. receivables facility and could result in the acceleration of these obligations. In addition, a default under our senior secured credit facility could result in a cross-default or the acceleration of our payment obligations under other financing agreements. If our obligations under our senior secured credit facility and other financing arrangements are accelerated as described above, our assets and cash flow may be insufficient to fully repay these obligations, and the lenders under our senior secured credit facility could institute foreclosure proceedings against our assets.

Even if an amendment or waiver to our senior secured credit facility is needed and is obtained, the terms and restrictions of such amendment or waiver may not be as favorable as current arrangements and the level of liquidity afforded by such amendment, combined with negative industry factors (including the impact on our ability to generate cash flow from operations), may not be sufficient to fund the cash requirements of our business, which have been substantial, and to offset possible future negative developments.

Given the severely diminished demand for our light vehicle and commercial vehicle customers’ products in view of the world wide economic crisis and the uncertainty of an economic recovery, our ability to generate cash flow from our ongoing operations is being severely challenged. We expect this to continue to be negatively affected for the remainder of the fiscal year and possibly longer. 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. Consequently, in the first half of the fiscal year, our cash flow from operations has been a use of $440 million. We have attempted to minimize this cash use through cost cutting measures and working capital improvement programs. However, even with an amendment or waiver to our senior secured credit facility to prevent default and allow further financial flexibility, our financing arrangements may not be sufficient to fund our on-going operations, debt service requirements, restructuring activities, and planned investments for the next 12 months. We may be required to take additional liquidity enhancing actions, including, without limitation, exploring 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.

The same financial covenant that is in our senior secured credit facility is contained in our U.S. receivables facility. A violation of that financial covenant could result in a loss of this facility even if an amendment or waiver to the senior secured credit facility is obtained.

The same financial covenant in our senior secured credit facility is contained in our U.S. receivables facility and the lender under our U.S. receivables facility may choose not to grant a waiver or amendment if such covenant is violated, even if the lenders under the senior secured credit facility choose to do so. In that event, the financing available to us under our U.S. receivables facility may not be available to us and we may not be able to replace such facility, which could further erode our liquidity.

We have been notified that the lender under our U.S. receivables facility will not be renewing the facility in September 2009. If we are not able to replace this facility, we expect our borrowings under the revolving credit facility of our senior secured facility to be more extensive, which may lead to capacity issues under that facility.

The lender under our U.S. receivables facility has notified us that they will not be renewing the facility when it expires in September 2009. There can be no assurances that we will be able to find a lender to arrange a similar receivables facility. If we do not have a receivables facility available to us in the U.S., we expect to borrow more under the revolving credit facility of our senior secured facility, which facility may not have adequate capacity following any potential amendment to our senior secured facility.

Our common stock may be delisted from the New York Stock Exchange (NYSE). 

On March 17, 2009, we were notified by the NYSE that we had fallen below NYSE’s continued listing standard related to total market capitalization and stockholders’ equity. The NYSE requires, among other things, that the average market capitalization of a listed company be not less than $75 million over a consecutive 30 trading-day period when, at the same time, stockholders’ equity is less than $75 million. On April 28, 2009, we submitted a plan to the NYSE to demonstrate our ability to achieve compliance with the continued listing standards within the allotted 18-month cure period. It is not certain that the NYSE will approve this plan or that we will be able to successfully implement this plan within the time allotted. In addition, it is possible that we may fall below other continued listing standards. Delisting would have an adverse effect on the liquidity of our common stock and, as a result, the market price for our common stock might be adversely affected.

Item 1A. Risk Factors

There have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.

Item 1A. Risk Factors

There have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

Item 1A. Risk Factors

There have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

     Our business, financial condition and results of operations can be impacted by a number of risks, including those described below and elsewhere in this Annual Report on Form 10-K, any one of which could cause our actual results to vary materially from recent results or from anticipated future results. Any of these individual risks could materially and adversely affect our business, financial condition and results of operations. This effect could be compounded if multiple risks were to occur.