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. HOURLY EMPLOYEES 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 ArvinMeritor, Inc.
Hourly Employees Savings Plan and Participants:
We have audited the accompanying statements of net assets available for benefits
of ArvinMeritor, Inc. Hourly Employees Savings (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 conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The 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. These supplemental schedules have been subjected to the auditing
procedures applied in our audit of the basic 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.
HOURLY EMPLOYEES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
2002 2001
ASSETS - Investments $44,538,679 $57,729,957
LIABILITIES - Accrued expenses 32,780 34,475
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $44,505,899 $57,695,482
=========== ===========
See accompanying notes to financial statements.
2
ARVINMERITOR, INC.
HOURLY EMPLOYEES SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
2002
----
ADDITIONS:
Employee contributions $ 2,145,538
Employer contributions 672,881
------------
2,818,419
Dividends and interest 1,574,214
------------
Total additions 4,392,633
DEDUCTIONS:
Benefits paid to participants (9,666,720)
Net depreciation in fair value of investments (4,621,861)
Transfers out (3,206,023)
Administrative expenses (87,612)
------------
Total deductions (17,582,216)
------------
Net decrease in net assets available for benefits (13,189,583)
------------
NET ASSETS AVAILABLE FOR BENEFITS,
beginning of year $ 57,695,482
------------
NET ASSETS AVAILABLE FOR BENEFITS,
end of year $ 44,505,899
============
See accompanying notes to financial statements.
3
ARVINMERITOR, INC.
HOURLY EMPLOYEES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF THE PLAN
The following general description of the ArvinMeritor, Inc., Hourly
Employees Savings Plan (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document for
complete information.
GENERAL - The Plan is a defined contribution retirement savings plan
covering all eligible hourly employees of ArvinMeritor, Inc. 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 out of the Plan
occurred as a result of additional employees being transferred to the
ArvinMeritor, Inc. Savings Plan. In addition, $756,471 was transferred
out to another plan as a result of the dissolution of the Arvin Kayaba
joint venture. These amounts have been reflected as transfers out on
the Statement of Changes in Net Assets Available for Benefits.
CONTRIBUTIONS AND VESTING - Eligible employees may elect to contribute
up to 20% of pay, both before and after tax or a combination of both.
The participants are immediately eligible for company matching
contributions and these matching contributions are immediately vested.
The Company's match calculation varies by location within the Plan. All
Company match contributions are payable in Company stock, except for a
joint venture whereby the contribution match for employees is made in
cash.
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
4
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, retirement or other, 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 PARTICIPANT - A participant may obtain a loan in an amount as
defined by the Plan document (not less than $1,000 and not greater than
the lessor of $50,000 or 50% of the participants' vested account
balance) from the balance of his/her account. Interest is charged at a
rate, which is comparable to rates charged by commercial lending
institutions. The loans are repaid through payroll deductions generally
over periods not to exceed 60 months. Payments of principal and
interest are reinvested into the participants' current investment
options. Participants may have only one outstanding loan at a time.
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
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 terms, fair value may be less than contract value.
5
SECURITY TRANSACTIONS AND INVESTMENT INCOME - Purchases and sales of
securities are reported on the 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 either
the Company or the Plan, as provided by the Plan document.
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 net assets available for benefits
as of December 31, 2002 and 2001, and the reported amounts of changes
in net assets available for benefits for the year ended December 31,
2002. 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 Balanced Fund $ 3,804,986 $ 4,601,813
Common Stock:
ArvinMeritor* 4,138,379 5,565,360
ArvinMeritor 573,850 1,328,628
T. Rowe Price Stable Value Common Trust Fund - at contract value 22,562,708 26,831,496
T. Rowe Price Equity Index Trust Fund 8,581,759 12,781,922
* Nonparticipant - directed
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
depreciated in value as follows:
Year Ended
December 31, 2002
-----------------
Mutual Funds $(4,249,094)
Common Stock (372,767)
-----------
Net depreciation $(4,621,861)
===========
6
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 $ 4,138,379
Changes in net assets - ArvinMeritor Common Stock Fund:
Employer contributions 635,635
Net depreciation (745,890)
Dividends 99,890
Benefits paid to participants or beneficiaries (1,355,290)
Other (61,325)
-----------
Total $(1,426,980)
===========
5. TAX STATUS
The Internal Revenue Service determined and informed the Company by a
letter dated July 15, 2002, that the Plan was designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). Based on
this, the Plan 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. SUBSEQUENT EVENT
On April 1, 2003, total assets related to Roll Coater Retirement and
Savings Plan for Bargaining Unit Associates of $1,756,959 were
transferred into the Plan, in connection with a merger of the plans.
Effective May 1, 2003, hourly employees of the Kenton, Ohio facility
became eligible for participation in the Plan. The Kenton hourly
employees will be eligible for a company match beginning January 1,
2005 calculated as 25% of employee contributions up to 6% of salary.
7
ARVINMERITOR, INC. HOURLY EMPLOYEES SAVINGS PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF 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 Stable Value Common Trust Fund $ 22,562,708
Franklin Small-Cap Stock Fund 1,098,999
* T. Rowe Price Equity Index Trust Fund 8,581,759
* T. Rowe Price International Stock Fund 496,277
* T. Rowe Price Growth and Income Fund 520,968
* T. Rowe Price Mid-Cap Growth Fund 437,607
Janus Fund Large-Cap Growth Fund 760,151
Pimco U.S. Treasury Intermediate Fund 790,053
* T. Rowe Price Balanced Fund 3,804,986
* ArvinMeritor Stock 4,712,229
* Participant loans Rates ranging from 6.5% to 10.5%,
maturities up to 60 months 772,942
------------
$ 44,538,679
============
* Party-in-interest.
8
ARVINMERITOR, INC. HOURLY EMPLOYEES SAVINGS PLAN
SCHEDULE H, LINE 4J - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE 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
OF PARTY (b) PURCHASE SELLING COST OF TRANSACTION (l)
INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE LOSS
T. Rowe Price Stable Value Common Trust Fund $ 3,133,026 $ - $ 3,133,026 $ 3,133,026 $ -
(73 purchases)
T. Rowe Price Stable Value Common Trust Fund $ - $ 5,851,631 $ 5,851,631 $ 5,851,631 $ -
(161 sales)
T. Rowe Price Equity Index Trust Fund $ 1,072,612 $ - $ 1,072,612 $ 1,072,612 $ -
(71 purchases)
T. Rowe Price Equity Index Trust Fund $ - $ 2,411,530 $ 2,912,929 $ 2,411,530 $ (501,399)
(136 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. HOURLY
EMPLOYEES SAVINGS PLAN
By: /s/ Richard D. Greb
---------------------------------------
Richard D. Greb, Plan Administrator
June 27, 2003
10
Exhibit Index
Number Description
23 Independent Auditors' Consent