SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
COMMISSION FILE NO. 1-15983
ARVINMERITOR, INC. SAVINGS PLAN
(Full title of the plan)
ARVINMERITOR, INC.
2135 WEST MAPLE ROAD
TROY, MICHIGAN 48084
(Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office)
Table of Contents
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 31, 2002 and 2001 2
Statements of Changes in Net Assets Available
For Benefits for the Year ended December 31, 2002 3
Notes to Financial Statements 4-7
Supplemental Schedules as of and for the
Year ended December 31, 2002:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 8
Schedule H, Line 4j - Schedule of Reportable Transactions 9
Signatures 10
Exhibit:
Independent Auditors' Consent 11
INDEPENDENT AUDITORS' REPORT
To the ArvinMeritor, Inc. Savings Plan and to Participants therein:
We have audited the accompanying statements of net assets available for benefits
of the ArvinMeritor, Inc. Savings Plan (the "Plan") as of December 31, 2002 and
2001 and the related statement of changes in net assets available for benefits
for the year ended December 31, 2002. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002 and 2001, and the changes in net assets available for benefits for the year
ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
listed in the table of contents are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audit of the basic December 31, 2002
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
Deloitte & Touche LLP
Detroit, Michigan
June 13, 2003
1
ARVINMERITOR, INC. SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
2002 2001
---- ----
ASSETS - Investments $187,801,052 $196,077,033
LIABILITIES - Accrued expenses 35,140 85,083
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $187,765,912 $195,991,950
============ ============
See accompanying notes to financial statements.
2
ARVINMERITOR, INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
YEAR ENDED
DECEMBER 31, 2002
-----------------
ADDITIONS:
Employee contributions $ 23,787,816
Employer contributions 11,625,225
-------------
35,413,041
Dividends and interest 4,835,917
Net transfers 1,265,077
-------------
Total additions 41,514,035
DEDUCTIONS:
Net depreciation in fair value of investments (28,320,329)
Benefits paid to participants (21,245,944)
Administrative expenses (173,800)
-------------
Total deductions (49,740,073)
Net deductions (8,226,038)
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year 195,991,950
-------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $ 187,765,912
=============
See accompanying notes to financial statements.
3
ARVINMERITOR, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF THE PLAN
The following general description of the amended and restated
ArvinMeritor, Inc. Savings Plan (the "Plan"), as in effect at December
31, 2002, is provided for general information purposes only.
Participants should refer to the Plan document for more complete
information.
GENERAL - The Plan was established October 1, 1997. The Plan is a
defined contribution savings plan covering all eligible employees of
ArvinMeritor, Inc. and certain affiliated companies (the "Company").
Eligible employees may participate in the Plan immediately on the date
on which the individual becomes an employee. The Plan is administered
by the Company's Employee Benefit Plan Committee and the Plan
Administrator. The Trustee for the Plan assets is T. Rowe Price Trust
Company. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974.
Effective October 1, 2002, the employer matching account held under the
Plan was converted into an employee stock ownership plan (ESOP). As a
result, when participants accounts receive cash dividends on
ArvinMeritor stock they have the option of reinvesting the dividend in
ArvinMeritor stock or receiving the dividend as a cash distribution. In
addition, the conversion to an ESOP allows participants who have
attained either age 55 with 10 years of vesting service or age 60, the
right to transfer funds out of Company stock and into one of the other
investment options under the Plan.
Effective January 1, 2002 the plan was amended to allow participants
who are over age 50 by the end of the plan year to make additional
pre-tax contributions up to the limits prescribed under recent changes
to the Internal Revenue Code.
For the year ended December 31, 2002, various transfers to the Plan
occurred as a result of additional employees being transferred from the
ArvinMeritor, Inc. Hourly Employees Savings Plan. In addition,
$1,184,956 was transferred out to another plan as a result of the
dissolution of the Arvin Kayaba joint venture. These amounts have been
reflected in the net transfers on the Statement of Changes in Net
Assets Available for Benefits.
CONTRIBUTIONS - Eligible employees may elect to contribute up to 20% of
their base compensation, by electing to defer receipt of compensation
(pre-tax contribution) or authorizing deductions from compensation
(after-tax contribution). Participants can elect to have their
contributions invested in 5% increments in various investment funds.
The participants are immediately eligible for matching contributions.
The Company matches 100% of the participant's contribution up to the
first 3% of eligible compensation and 50% of the participant's
contribution on the next 3% of eligible compensation. Company
contributions may be in the form of ArvinMeritor common stock or cash
4
invested in ArvinMeritor common stock. The Company match for employees
in a joint venture is payable in cash.
VESTING - Amounts attributable to participant contributions and Company
contributions are fully vested at all times.
PLAN WITHDRAWALS - Amounts contributed may be withdrawn by, or
distributed to, a participant only upon (1) termination of employment
or (2) attaining the age of 59 1/2. Withdrawals prior to attaining age
59 1/2 are not permitted except in the event of retirement, disability
or as a hardship distribution. Certain income tax penalties may apply
to withdrawals or distributions prior to age 59 1/2.
PAYMENT OF BENEFITS - On termination of service due to death,
disability or retirement, a participant generally receives an amount
equal to the value of the participant's vested interest in their
account in a lump-sum amount. For termination of service due to other
reasons, a participant may receive the value of the vested interest in
their account as a lump-sum distribution.
LOANS TO PARTICIPANTS - Participants may borrow from the Plan an amount
not less than $1,000 and not greater than the lessor of (i) $50,000
less the amount of loans outstanding during the preceding 12-month
period, (ii) amounts in the participant's account attributable to
participant contributions, or (iii) one-half of the participant's
vested account balance.
Interest is charged at 1% over the prime rate, which is defined as the
base rate on corporate loans posted by at least 75% of the 30 largest
U.S. banks. The loans are repaid through payroll deductions over
periods generally not to exceed 60 months. Payments of principal and
interest are reinvested under the participant's current investment
election for new contributions.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and an allocation of the Company's
contribution and Plan earnings and charged with an allocation of
administrative expenses. Allocations are based on a participant's
earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
PLAN TERMINATION - Although the Company has not expressed any intent to
terminate the Plan, it reserves the right to do so at any time.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared
under the accrual method of accounting.
INVESTMENT VALUATION - Investments, other than benefit-responsive
investment contracts, are stated at fair value as measured by readily
available market prices. The T. Rowe Price Stable Value Common Trust
Fund is comprised of individual investment contracts, including
synthetic investment contracts and are stated at contract value. The
investment contracts are nontransferable, but provide for
benefit-responsive withdrawals by plan participants at contract value.
Benefit-responsive withdrawals are provided for on a proportional basis
by the issuers of the investment contracts. The trustee's valuation
committee primarily considers factors such as the benefit
3
responsiveness of the investment contract and the ability of the
parties to the investment contract to perform in accordance with the
terms of the contract. Generally, contract value approximates fair
value (contributions made plus interest accrued at the contract rate,
less withdrawals and fees). If, however an event has occurred that may
impair the ability of the contract issuer to perform in accordance with
the contract term, fair value may be less than the contract terms.
SECURITY TRANSACTIONS AND INVESTMENT INCOME - Purchases and sales of
securities are reported on a trade date basis. Dividends are recorded
on the ex-dividend date and interest income is recorded on the accrual
basis.
PLAN EXPENSES - Administrative expenses of the Plan are paid by the
Plan or the Company, as provided by the Plan document.
BENEFIT PAYMENTS - Benefits are recorded when paid.
USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and changes
therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates. The Plan utilizes various
investments, which are exposed to various risks such as interest rate,
foreign currency, credit and overall market volatility. Due to the
level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment
securities, will occur in the near term and that such changes could
materially affect the amounts reported in the Statement of Net Assets
Available for Benefits.
3. INVESTMENTS
The following presents investments that represent 5 percent or more of
the Plan's net assets:
DECEMBER 31, DECEMBER 31,
2002 2001
---- ----
Mutual Funds:
T. Rowe Price Growth and Income Fund $15,271,653 $17,009,672
T. Rowe Price Balanced Fund 10,907,184 11,921,425
Common Stock:
ArvinMeritor * 44,680,663 45,110,777
ArvinMeritor 11,863,364 14,695,288
T. Rowe Price Stable Value Common Trust Fund - at contract value 45,101,485 43,683,110
T. Rowe Price Equity Index Trust Fund 26,204,480 33,994,298
* Nonparticipant - directed
6
The Plan's investments (including gains and losses on investments
bought and sold, as well as held during the period) depreciated in
value as follows:
YEAR ENDED
DECEMBER 31, 2002
-----------------
Common Stock $ (8,954,999)
Mutual Funds (19,365,330)
------------
Net depreciation $(28,320,329)
============
4. NONPARTICIPANT - DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments is as
follows:
YEAR ENDED
DECEMBER 31, 2002
-------------------
Net assets - ArvinMeritor Common Stock Fund $ 44,680,663
Changes in net assets - ArvinMeritor Common Stock Fund:
Employer contributions 11,440,074
Net depreciation (7,961,898)
Dividends 948,675
Benefits paid to participants or beneficiaries (4,392,522)
Other (464,443)
-----------
Total $ (430,114)
===========
5. TAX STATUS
The Internal Revenue Service determined and informed the Company by a
letter dated January 17, 2002, that the Plan was designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan
has been amended since receiving the determination letter.
The Plan has requested an updated determination letter based on current
year Plan amendments. The Company believes that the Plan qualifies
under Section 401(a) of the IRC and is exempt from federal income taxes
as of December 31, 2002. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
6. RELATED PARTY TRANSACTIONS
Plan investments are shares of mutual funds managed by T. Rowe Price.
T. Rowe Price is the trustee as defined by the Plan and, therefore,
these transactions qualify as party-in-interest transactions.
7
ARVINMERITOR, INC. SAVINGS PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT YEAR END)
DECEMBER 31, 2002
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUER, INCLUDING MATURITY DATE,
BORROWER, LESSOR RATE OF INTEREST, COLLATERAL, CURRENT
OR SIMILAR PARTY PAR OR MATURITY VALUE VALUE
* T. Rowe Price International Stock Fund $ 2,373,807
* T. Rowe Price Equity Index Trust Fund 26,204,480
* T. Rowe Price Growth and Income Fund 15,271,653
* T. Rowe Price Mid-Cap Growth Fund 8,343,992
Franklin Small-Cap Stock Fund 6,750,209
* T. Rowe Price Balanced Fund 10,907,184
* T. Rowe Price Stable Value Common Trust Fund 45,101,485
Janus Fund Large-Cap Growth Fund 3,281,314
Pimco US Treasury Intermediate Fund 6,233,464
Cash 14,129
* ArvinMeritor Common Stock 56,544,027
* Participant loans Rates recorded at 1% over prime
rate, and maturities up to
120 months 6,775,308
------------
$187,801,052
============
* Party-in-interest.
8
ARVINMERITOR, INC. SAVINGS PLAN
SCHEDULE H, LINE 4J - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2002
Series of transactions, when aggregated, involving an amount in excess of 5% of
beginning plan net assets.
(h)
(a) CURRENT VALUE
IDENTITY (c) (d) (g) OF ASSET ON (l)
OF PARTY (b) PURCHASE SELLING COST OF TRANSACTION NET GAIN/
INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS)
T. Rowe Price ArvinMeritor Common Stock $ 16,242,165 $ - $ 16,242,165 $ 16,242,165 $ -
(143 purchases)
T. Rowe Price ArvinMeritor Common Stock $ - $ 10,750,514 $ 9,042,275 $ 10,750,514 $ 1,708,239
(333 sales)
T. Rowe Price Equity Index Trust Fund $ 4,751,619 $ - $ 4,751,619 $ 4,751,619 $ -
(109 purchases)
T. Rowe Price Equity Index Trust Fund $ - $ 5,263,439 $ 6,376,693 $ 5,263,439 $ (1,113,254)
(139 sales)
Franklin Small-Cap Stock Fund $ 6,395,395 $ - $ 6,395,395 $ 6,395,395 $ -
(121 purchases)
Franklin Small-Cap Stock Fund $ - $ 6,416,756 $ 6,395,395 $ 6,416,756 $ 21,361
(112 sales)
T. Rowe Price Stable Value Common Trust Fund $ 8,617,184 $ - $ 8,617,184 $ 8,617,184 $ -
(108 purchases)
T. Rowe Price Stable Value Common Trust Fund $ - $ 8,753,375 $ 8,753,375 $ 8,753,375 $ -
(144 sales)
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange
Act of 1934, the Plan Administrator has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
ARVINMERITOR, INC. SAVINGS PLAN
By: /s/ Richard D. Greb
----------------------------------------
Richard D. Greb, Plan Administrator
June 27, 2003
10
Exhibit Index
Number Description
23 Independent Auditors' Consent