<PAGE> 1
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 SEPTEMBER 30, 1998
COMMISSION FILE NO. 1-13093
MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
(Full title of the plan)
MERITOR AUTOMOTIVE, 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)
<PAGE> 2
Index
<TABLE>
<CAPTION>
<S> <C>
Financial Statements:
Independent Auditors' Report 1
Statement of Net Assets Available for Benefits,
September 30, 1998 2
Statement of Changes in Net Assets Available
For Benefits for the year ended September 30, 1998 3
Notes to Financial Statements 4
Schedule of Assets Held for Investment Purposes,
September 30, 1998 9
Schedule of Reportable Transactions for the
year ended September 30, 1998 10
Signatures S-1
Exhibit:
Independent Auditors' Consent S-2
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Meritor Automotive, Inc. Savings Plan and to Participants therein:
We have audited the financial statements of the Meritor Automotive, Inc.,
Savings Plan (the "Plan") as of and for the year ended September 30, 1998, as
listed in the accompanying Table of Contents. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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 September 30,
1998, and the changes in net assets available for benefits for the year then
ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) assets held for investment purposes as of September 30, 1998 and (2)
reportable transactions for the year ended September 30, 1998 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 schedules are the
responsibility of the Plan's management. Such supplemental schedules have been
subjected to the auditing procedures applied in our audit of the basic 1998
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.
March 29, 1999
<PAGE> 4
MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
INVESTMENTS - At fair value (Notes 1 and 2):
Equity Fund $ 5,538,071
Stock Fund A 3,868,278
Stock Fund B 2,281,951
Money Market Fund 1,853,554
Loan Fund 433,758
Intermediate Bond Fund 420,773
Other 45,576
Stable Value Fund - At contract value (Note 2) 465,229
-----------
Total investments 14,907,190
LIABILITIES
ACCRUED EXPENSES 16,000
-----------
NET ASSETS AVAILABLE FOR BENEFITS $14,891,190
===========
</TABLE>
See notes to financial statements.
2
<PAGE> 5
MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR $ 0
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Contributions:
Employer (Note 1) 5,899,604
Participants (Note 1) 9,900,753
Investment income (loss):
Net depreciation in fair value of investments (Note 4) (3,432,908)
Interest and dividends 249,895
Other income 77,995
------------
Total additions 12,695,339
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Benefits paid to participants or beneficiaries 455,438
Administrative expenses 175,687
Other 266,921
------------
Total deductions 898,046
------------
NET INCREASE PRIOR TO TRANSFERS 11,797,293
------------
Transfers to the plan 3,093,897
------------
Net increase 14,891,190
------------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 14,891,190
============
</TABLE>
See notes to financial statements.
3
<PAGE> 6
MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 30, 1998
1. DESCRIPTION OF THE PLAN
The following general description of the Meritor Automotive, Inc.
Savings Plan (the "Plan"), as in effect at September 30, 1998, 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
Meritor Automotive, Inc. and certain affiliated companies (the
"Company"). Eligible employees may participate in the Plan as of the
first day of the month following the completion of one month of
employment. The Plan is administered by the Company's Employee Benefit
Plan Committee and the Plan Administrator. At September 30, 1998, the
Trustee for the Plan assets was Wells Fargo Bank, N.A. The Plan is
subject to the provisions of the Employment Retirement Income Security
Act of 1974.
CONTRIBUTIONS - Eligible employees may elect to contribute from 1% to
11% of their base compensation, through payroll deductions (after-tax
contributions) or through compensation deferrals (before-tax
contributions). After-tax contributions are included in the
participant's taxable income in the period of the contribution, and
before-tax contributions are excluded from the participant's taxable
income until such amounts are received by the participant as a
distribution from the Plan. Participants can elect to have their
contributions invested in 5% increments in various investment funds.
After a participant has completed 52 weeks of employment with the
Company, the Company matches 75% of the participant's contributions up
to 8% of the participant's base compensation. Company contributions are
deposited in Stock Fund A, which is invested in Meritor Automotive,
Inc. common stock.
VESTING - Amounts attributable to participant contributions are fully
vested at all times. Amounts attributable to Company contributions are
fully vested after the participant has completed five years of service,
or upon the participant's death, retirement, layoff, inability to meet
Company medical standards, disability which has continued for six
months, entry into the armed forces or employment by the United States
government, or in connection with a divestiture of a component of the
Company.
PLAN WITHDRAWALS - An active participant may withdraw amounts
attributable to the participant contributions made through payroll
deductions and the vested portion of Company contributions related to
those participant contributions. All amounts that have vested may be
withdrawn upon termination of employment or attaining age 59-1/2. In
addition, amounts contributed by the participant through compensation
deferrals may be withdrawn upon a demonstration of financial hardship.
There were no benefit claims payable at September 30, 1998.
LOANS TO PARTICIPANTS - Participants may borrow from the Plan an amount
not less than $1,000 and not greater than the least of (i) $50,000 less
the amount of loans outstanding during the preceding 12-month period,
(ii) amounts in the participant's accounts attributable to participant
contributions, or (iii) one-half of the participant's vested account
balance.
4
<PAGE> 7
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 not to exceed 60 months for loans other than for the purpose of
purchasing a primary residence, which is permitted for a term of 120
months. Payments of principal and interest are reinvested under the
participants' current investment election for new contributions.
Participants may have only one outstanding loan at a time.
FORFEITURES - When certain terminations of participation in the Plan
occur, the nonvested portion of the participant's account represents a
forfeiture. Forfeitures shall be used to reduce future Company
contributions to the Plan.
INVESTMENT OPTIONS - The assets of the Plan are maintained and
transactions therein are executed by the Trustee. At September 30,
1998, the Trustee maintained the following funds under the Plan:
- - An Equity Fund, which was invested in stocks, convertible bonds
and other corporate securities, as well as in cash equivalents and
other miscellaneous securities, or in investment vehicles, such as
mutual funds, which themselves invest in the said forms of
securities;
- - A Money Market Fund, which was invested in debt instruments with
maturity dates of 13 months or less, which such instruments shall
include treasury bills, treasury notes, treasury bonds, federal
agency obligations, other instruments of government debt,
commercial paper and other short-term corporate securities, asset
backed securities, repurchase agreements, bankers' acceptances and
bank certificates of deposit or in investment vehicles, such as
mutual funds, which themselves invest in the said forms of debt
instruments;
- - An Intermediate Bond Fund, which was invested in debt instruments
with a combined average maturity of three to seven years,
including treasury bills, treasury notes, treasury bonds, federal
agency obligations and other instruments of government debt or in
investment vehicles, such as mutual funds, which themselves invest
in the said forms of debt instruments;
- - A Stable Value Fund consisting of the Trust Fund's interest in
contracts issued by one or more insurance companies or commercial
banks, or similar types of fixed principal investment vehicles,
which contracts or investment vehicles guarantee the principal and
fixed interest thereon for a specified period of time, and accrue
such fixed interest on a monthly basis. Participants'
contributions to the Stable Value Fund were invested with John
Hancock or Prudential Insurance Company of America, with
guaranteed annual returns to participants for the contract
periods. Such contracts guarantee the following annual returns:
<TABLE>
<CAPTION>
PERIODS OF GUARANTEED CONTRACT
CONTRACT CONTRIBUTIONS ANNUAL RETURN EXPIRATION DATE
<S> <C> <C> <C> <C>
John Hancock 10/01/97 - 03/31/98 6.70% March 31, 2000
Prudential 04/01/98 - 03/31/99 5.82% April 2, 2001
</TABLE>
- - Stock Fund A, which consisted of all cash, the Company's common
stock and the proceeds and income from that stock, which are
attributable to Company Contributions, provided, however, that the
dividends or other proceeds or income received by Stock Fund A are
invested by the Trustee in the Company's common stock and remain
in the said Stock Fund A; and
5
<PAGE> 8
- - Stock Fund B, which consisted of all cash, the Company's common stock
and the proceeds and income on such cash and stock attributable to
contributions made by or on behalf of Participants under the Plan and
designated as contributions to Stock Fund B, provided, however, that
the dividends or other proceeds or income otherwise received by Stock
Fund B are invested by the Trustee in the Company's common stock and
remain in the said Stock Fund B.
PARTICIPANT ACCOUNTS - Each participant's account is credited or charged with
the participant's contributions and withdrawals, as applicable, and allocations
of the Company's contributions. Investment earnings and expenses are allocated
proportionately based on account balances.
UNIT VALUEs - Participants do not own specific securities or other assets in the
various funds, but have an interest therein represented by units valued on a
daily basis. However, voting rights are extended to participants in proportion
to their interest in common stock held in Stock Funds A and B. Contributions to
and withdrawal payments from each fund are converted to units by dividing the
amounts of such transactions by the unit value as last determined, and the
participants' accounts are charged or credited with the number of units properly
attributable to each participant. The number of units and related net asset
value per unit at the end of each quarter within the fiscal year for each
investment fund are as follows:
<TABLE>
<CAPTION>
MONEY INTERMEDIATE STABLE
EQUITY MARKET BOND VALUE STOCK STOCK
FUND FUND FUND FUND FUND A FUND B
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding,
September 30, 1998 5,626,743 1,787,601 374,488 450,038 5,712,135 3,372,478
Net Asset Value Per Unit at:
September 30, 1998 $ 0.98 $ 1.04 $ 1.12 $ 1.03 $ 0.68 $ 0.68
June 30, 1998 1.10 1.04 1.06 1.03 1.08 1.08
March 31, 1998 1.12 1.02 1.04 1.03 1.19 1.19
December 31, 1997 1.01 1.01 1.02 1.01 0.95 0.95
</TABLE>
PLAN TERMINATION - Although the Company has not expressed any intent to
terminate the Plan, it reserves the right to do so at any time. In the event of
termination, the interests of each participant with respect to Company
contributions will vest immediately and be nonforfeitable.
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 are stated at fair value as measured
by readily available market prices. Investments in contracts with
insurance companies included in general accounts, are considered fully
benefit-responsive based upon the provisions of Statement of Position
94-4 and therefore are stated at contract value. The crediting interest
rates at September 30, 1998 for the contracts ranged from 5.82% to
6.70%. Upon complete or partial termination of the plan, investments
held with insurance companies are subject to certain limitations, as
provided by the investment contracts.
6
<PAGE> 9
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 generally accepted accounting principles requires Plan
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and deductions to the
Plan's net assets available for benefits during the reporting period.
Actual results could differ from those estimates.
3. TAX STATUS
The Company will request a determination letter from the Internal
Revenue Service that the Plan, as it is proposed to be amended,
qualifies under Section 401(a) of the Internal Revenue Code and is
exempt from federal income taxes as of September 30, 1998. Therefore,
no provision for income taxes has been included in the Plan's financial
statements.
4. FUND INFORMATION
The following is a summary of financial information, by fund, of
amounts included on the statement of changes in net assets available
for benefits for the year ended September 30, 1998:
<TABLE>
<CAPTION>
<S> <C>
Contributions - employee -
Stock Fund A $5,899,604
----------
Total $5,899,604
----------
Contributions - participants:
Equity Fund $5,542,123
Money Market Fund 509,399
Intermediate Bond Fund 399,696
Stable Value Fund 497,334
Stock Fund B 2,952,201
----------
Total $9,900,753
==========
Investment income - interest and dividends:
Equity Fund $ 72,831
Money Market Fund 60,336
Stable Value Fund 13,866
Stock Fund A 57,543
Stock Fund B 33,946
Intermediate Bond Fund 10,264
Loan Fund 210
Other 899
----------
Total $ 249,895
==========
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C>
Investment income - net (depreciation) appreciation in fair value of
investments:
Equity Fund $ (356,107)
Intermediate Bond Fund 22,151
Stock Fund A (1,912,123)
Stock Fund B (1,186,504)
Other (325)
-----------
Total $(3,432,908)
===========
Withdrawals:
Equity Fund $ (190,689)
Money Market Fund (225,097)
Intermediate Bond Fund (7,683)
Stable Value Fund (40,803)
Stock Fund A (1,581)
Stock Fund B (834)
Other 11,249
-----------
Total $ (455,438)
===========
</TABLE>
5. CHANGES IN THE PLAN
During February 1999, the Board of Directors of Meritor Automotive,
Inc. approved an amendment to the Plan effective April 1, 1999. The
amendment includes an increase in the Plan's investment options and
allows for greater participant flexibility. Further, effective March 1,
1999, the Employee Benefit Plan Committee approved the replacement of
the trustee and recordkeeper with T. Rowe Price Trust Company and T.
Rowe Price Retirement Plan Services, Inc., respectively.
******
8
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MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUE, INCLUDING MATURITY DATE,
BORROWER, LESSOR RATE OF INTEREST, COLLATERAL, CURRENT
OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
<S> <C> <C> <C> <C>
* Wells Fargo Equity Fund $ 5,968,530 $ 5,538,071
* Wells Fargo Money Market Fund 1,853,554 1,853,554
* Wells Fargo Intermediate Bond Fund 398,720 420,773
* Wells Fargo Stable Value Fund 452,399 465,229
* Wells Fargo Meritor Stock Fund A 5,715,740 3,868,278
* Wells Fargo Meritor Stock Fund B 3,433,262 2,281,951
* Participant loans Rates recorded at 1% over prime
rate, and maturities up to 120 months 433,747 433,758
Other Clearing Account, Forfeiture Account,
and Expense Account 48,518 45,576
------------ -------------
$ 18,304,470 $ 14,907,190
============ =============
</TABLE>
* Party-in-interest
9
<PAGE> 12
MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Refer to Exhibit A for a complete listing of transactions for the period October
1, 1997 through September 30, 1998 (available from the Company upon request).
10
<PAGE> 13
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.
MERITOR AUTOMOTIVE, INC. SAVINGS PLAN
By: /s/ Richard D. Greb
---------------------------------------
Richard D. Greb, Plan Administrator
March 29, 1999
S-1
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EXHIBIT
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Meritor Automotive, Inc. Savings Plan on Form S-8 (registration number
333-35403) of our report dated March 29, 1999, appearing in this Annual Report
on Form 11-K of the Meritor Automotive, Inc. Savings Plan for the year ended
September 30, 1998.
DELOITTE & TOUCHE LLP
Detroit, Michigan
March 29, 1999
S-2
