Financial Overview

(in million dollars)

	FY2009	FY2008	Rate of change (%)	Factors
Overall
Sales	11,873	15,376	(23)	-
Gross profit	3,091	4,185	(26)	-
Net income	383	1,058	(64)	-
Automotive
Sales	1,229	1,871	(34)	-The reduction included 28% from core sales and 6% from foreign exchange. The decline in core sales was primarily attributable to a contraction in global automotive end markets that began in 2008 and worsened in 2009 due to the global economic recession.
Operating profit	(10)	59	-	-The reduction was primarily due to the significant decline in sales and operating inefficiencies related to the difficulty in absorbing fixed manufacturing costs resulting from reduced sales in 2009, partially offset by net savings resulting from the workforce reductions and other cost containment actions.
Truck
Sales	1,457	2,251	(35)	-The reduction included 30% from core sales and 5% from foreign exchange. Orders in the North American Class 8 truck market improved marginally in the second half of 2009.
Operating profit	39	315	(88)	-The reduction was primarily due to the significant decline in sales and operating inefficiencies related to the difficulty in absorbing fixed manufacturing costs resulting from reduced sales in 2009, partially offset by net savings resulting from the workforce reductions and other cost containment actions.

Divestitures

-In Jan. 2009, the Company announced that it would to sell its VORAD(R) (Vehicle On-Board Radar) system to Bendix Commercial Vehicle Systems LLC in Ohio, USA. The VORAD system is a radar-based collision warning system used by commercial vehicle original equipment manufacturers, major trucking fleets and specialty vehicle manufacturers. In connection with the transaction, the Company's Roadranger Marketing organization has entered into an agreement with Bendix to continue to market and support the VORAD system in the North American marketplace. (From a press release on Jan. 5, 2009)

Outlook for 2010

-As of late February 2010, the Company estimates that its end markets for all of 2010 will grow by between 5% and 6%, and expects to outgrow end markets in 2010 by approximately $300 million dollars in net sales. The Company also expects approximately $225 million dollars of sales growth from foreign exchange in 2010. In total, it is anticipated that net sales in 2010 will likely grow by approximately 10% compared to 2009.

-End markets for the Automotive segment are expected to grow about 8% in 2010. Growth is expected in U.S. Automotive production of about 20% and growth in non-U.S. production of about 2%.

-For the Truck segment, good market growth is expected in 2010, although volumes are likely to still be at depressed levels. It is anticipated that overall truck markets will grow about 19% in 2010, with U.S. markets up about 27% and non-U.S. markets up about 10%.

R&D Expenditures

(in million dollars)

	FY2009	FY2008	FY2007
Overall	395	417	335

-Over the past five years, the Company has invested approximately 1.6 billion USD in R&D.

 

Technological Alliance

-In Aug. 2009, the Company announced that it would participate in the project to develop plug-in hybrid electric commercial vehicles. The Company will work with Ford Motor Company and other affiliates including South Coast Air Quality Management District (SCAQMD) and Electrical Power Research Institute (EPRI) in the production of 378 demonstration vehicles based on the Ford F550 chassis. The Company will be involved in providing the hybrid systems, as well as infrastructure for plug-in charging. The development and production of these vehicles will take place over 18 months, and they will be evaluated over a two year period. This project has won a grant of 45.4 million USD by the U.S. Department of Energy, as part of a 2.4 billion USD grant package in the American Recovery and Reinvestment Act. (From a press release on Aug 12, 2009)

-In Jan. 2010, the Company announced that it was chosen by Cummins to participate in the SuperTruck program. The program focuses on the development of efficient and clean diesel engines for Class 8 trucks. Cummins already secured 39 million dollars in funding from the Department of Energy (DOE) to engage in the project with a truck manufacturer Peterbilt Motors Company, a division of PACCAR. The Company will supply automated transmissions for this project. (From a press release on January 22, 2010)

Capital Expenditure

(in million dollars)

	FY2009	FY2008	FY2007
Overall	195	448	354
Automotive	24	54	79
Truck	30	69	62