INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES

The company’s non-consolidated joint ventures and related direct ownership interest are as follows:



	September 30,
	2014		2013		2012
Meritor WABCO Vehicle Control Systems (Commercial Truck & Industrial)	50	%	50	%	50	%
Master Sistemas Automotivos Ltda. (Commercial Truck & Industrial)	49	%	49	%	49	%
Suspensys Sistemas Automotivos Ltda. ⁽¹⁾ (Aftermarket & Trailer)	—	%	—	%	24	%
Sistemas Automotrices de Mexico S.A. de C.V. (Commercial Truck & Industrial)	50	%	50	%	50	%
Ege Fren Sanayii ve Ticaret A.S. (Commercial Truck & Industrial)	49	%	49	%	49	%
Automotive Axles Limited (Commercial Truck & Industrial)	36	%	36	%	36	%
ZF Meritor LLC (Commercial Truck & Industrial)	50	%	50	%	50	%

____________________

⁽¹⁾ Total direct and indirect ownership interest in fiscal year 2012 of 50 percent.

In June 2014, ZF Meritor LLC, a joint venture between ZF Friedrichshafen AG and the company's subsidiary, Meritor Transmission LLC, entered into a settlement agreement with Eaton Corporation relating to an antitrust lawsuit filed by ZF Meritor in 2006. Pursuant to the terms of the settlement agreement, Eaton agreed to pay $500 million to ZF Meritor. In July 2014, ZF Meritor received proceeds of $400 million net of attorney's contingency fees. In July 2014, the company received proceeds of $210 million representing its share based on the company's ownership interest in ZF Meritor and including a recovery of current and prior years' attorney expenses paid by Meritor. ZF Meritor and Meritor Transmission agreed to dismiss all pending antitrust litigation with Eaton. ZF Meritor does not have any operating activities.

The company's pre-tax share of the settlement was $210 million ($209 million after-tax), of which $190 million was recognized as equity in earnings of ZF Meritor, and $20 million for the recovery of legal expenses from ZF Meritor was recognized as a reduction of selling, general and administrative expenses in the consolidated statement of operations. The company recognized the recovery in SG&A as the historical incurrence of these costs was included in SG&A in the consolidated statement of operations in prior periods.

On July 30, 2013, subsidiaries of Meritor completed the sale of the company's overall 50-percent ownership interest in Suspensys Sistemas Automotivos LTDA (the “Suspensys joint venture”) to the company's joint venture partner, Randon S.A. Implementos E Participações (“Randon”). The Suspensys joint venture was formed in 2002 and is primarily engaged in the manufacture and sale of air and mechanical suspension systems for trucks, buses and trailers, trailer axles, third axles, hubs and drums for trucks, buses and trailers. The purchase price for the sale was $195 million, which was composed of $190 million in cash (approximately $4 million of which was in the form of a pre-closing cash dividend) and $5 million in lease abatements for a facility in Brazil leased to the company from the Suspensys joint venture. The sale was completed pursuant to a Purchase and Sale Agreement dated as of April 29, 2013. The company recognized a $125 million pre-tax ($92 million, after-tax) gain associated with this sale.

The company’s investments in non-consolidated joint ventures are as follows (in millions):



	September 30,
	2014		2013
Commercial Truck & Industrial	$	106	$	102
Aftermarket & Trailer	—		—
Total investments in non-consolidated joint ventures	$	106	$	102

The company’s equity in earnings of non-consolidated joint ventures is as follows (in millions):



	Year Ended September 30,
	2014		2013		2012
Commercial Truck & Industrial	$	38	$	36	$	45
Aftermarket & Trailer	—		6		7
Total equity in earnings of affiliates	$	38	$	42	$	52

The summarized financial information presented below represents the combined accounts of the company’s non-consolidated joint ventures related to its continuing operations (in millions):



	September 30,
	2014		2013
Current assets	$	441	$	382
Non-current assets	152		150
Total assets	$	593	$	532

Current liabilities	$	262	$	219
Non-current liabilities	127		118
Total liabilities	$	389	$	337



	Year Ended September 30,
	2014		2013		2012
Sales	$	1,268	$	1,552	$	1,787
Gross profit	167		201		215
Net income	458		96		123

Dividends received from the company’s non-consolidated joint ventures were $36 million in fiscal year 2014, $30 million in fiscal year 2013 and $47 million in fiscal year 2012.

The company had sales to its non-consolidated joint ventures of approximately $3 million, $11 million and $6 million in fiscal years 2014, 2013 and 2012, respectively. These sales exclude sales of $141 million, $151 million and $165 million in fiscal years 2014, 2013 and 2012, respectively, to a joint venture in the company’s Commercial Truck & Industrial segment, which are eliminated as the company purchases these components back after value add provided by the joint venture. The company had purchases from its non-consolidated joint ventures of approximately $760 million, $885 million and $973 million in fiscal years 2014, 2013 and 2012, respectively. Additionally, the company leases space and provides certain administrative and technical services to various non-consolidated joint ventures. The company collected $5 million, $8 million and $3 million for such leases and services during fiscal years 2014, 2013 and 2012, respectively.

Amounts due from the company’s non-consolidated joint ventures were $46 million and $38 million at September 30, 2014 and 2013, respectively, and are included in Receivables, trade and other, net in the consolidated balance sheet. Amounts due to the company’s non-consolidated joint ventures were $101 million and $94 million at September 30, 2014 and 2013, respectively, and are included in Accounts payable in the consolidated balance sheet.

The fair value of the company’s investment in its Automotive Axles Limited joint venture was approximately $59 million and $18 million at September 30, 2014 and 2013, respectively, based on quoted market prices as this joint venture is listed and publicly traded on the Bombay Stock Exchange in India.

The company holds a variable interest in a joint venture accounted for under the equity method of accounting. The joint venture manufactures components for commercial vehicle applications primarily on behalf of the company. The variable interest relates to a supply arrangement between the company and the joint venture whereby the company supplies certain components to the joint venture on a cost-plus basis. The company is not the primary beneficiary of the joint venture, as the joint venture partner has shared or absolute control over key manufacturing operations, labor relationships, financing activities and certain other functions of the joint venture. Therefore, the company does not consolidate the joint venture. At September 30, 2014 and 2013, the company’s investment in the joint venture was $43 million and $35 million, respectively, representing the company’s maximum exposure to loss. This amount is included in investments in non-consolidated joint ventures (see Note 11).