BUSINESS SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company’s Chief Operating Decision Maker (CODM) is the Chief Executive Officer. On November 12, 2012, the company announced a revised management reporting structure resulting in two business segments. Prior period segment financial information presented has been recast to reflect the revised reporting structure.

The company has two reportable segments at September 30, 2014, as follows:

• The Commercial Truck & Industrial segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks, off-highway, military, construction, bus and coach, fire and emergency and other applications in North America, South America, Europe and Asia-Pacific. This segment also includes the company's aftermarket business in Asia-Pacific and South America; and 

• The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers. This segment also supplies a wide variety of undercarriage products and systems for trailer applications in North America.

Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring costs and asset impairment charges. The company uses Segment EBITDA as the primary basis for the CODM to evaluate the performance of each of its reportable segments.

The accounting policies of the segments are the same as those applied in the Consolidated Financial Statements, except for the use of Segment EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the Segments’ EBITDA. Amounts related to prior quarters have been recast to reflect Mascot in discontinued operations (see Note 3).

Segment information is summarized as follows (in millions):

	Commercial Truck & Industrial		Aftermarket & Trailer		Elims			Total
Fiscal year 2014 Sales:
External Sales	$	2,876	$	890	$	—		$	3,766
Intersegment Sales	104		30		(134		)	—
Total Sales	$	2,980	$	920	$	(134	)	$	3,766
Fiscal year 2013 Sales:
External Sales	$	2,825	$	847	$	—		$	3,672
Intersegment Sales	95		24		(119		)	—
Total Sales	$	2,920	$	871	$	(119	)	$	3,672
Fiscal year 2012 Sales:
External Sales	$	3,508	$	876	$	—		$	4,384
Intersegment Sales	105		30		(135		)	—
Total Sales	$	3,613	$	906	$	(135	)	$	4,384

Segment EBITDA:	2014			2013			2012
Commercial Truck & Industrial	$	218		$	192		$	270
Aftermarket & Trailer	106			87			81
Segment EBITDA	324			279			351
Unallocated legacy and corporate expense, net (1)	(10		)	(15		)	(24		)
Interest expense, net	(130		)	(126		)	(95		)
Provision for income taxes	(31		)	(64		)	(57		)
Depreciation and amortization	(67		)	(67		)	(63		)
Loss on sale of receivables	(8		)	(6		)	(9		)
Restructuring costs	(10		)	(23		)	(39		)
Antitrust settlement with Eaton, net of tax (2)	208			—			—
Specific warranty contingency, net of supplier recovery	8			(7		)	—
Pension settlement losses	—			(109		)	—
Gain on sale of equity investment	—			125			—
Gain on sale of property	—			—			16
Noncontrolling interests	(5		)	(2		)	(11		)
Income (loss) from continuing operations attributable to Meritor, Inc.	$	279		$	(15	)	$	69

(1) Unallocated legacy and corporate costs, net represents items that are not directly related to the company's business segments. These costs primarily include asbestos-related charges associated with the company's year-end liability remeasurement, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability. In fiscal year 2013, unallocated legacy and corporate costs, net includes approximately $4 million of executive severance related to the company's former Chief Executive Officer.

(2) Adjustment associated with the company's share of the antitrust settlement with Eaton less legal expenses incurred in fiscal year 2014.

Depreciation and Amortization:	2014			2013			2012
Commercial Truck & Industrial (1)	$	61		$	60		$	58
Aftermarket & Trailer (1)	6			7			5
Total depreciation and amortization	$	67		$	67		$	63
Capital Expenditures:	2014			2013			2012
Commercial Truck & Industrial (1)	$	71		$	46		$	79
Aftermarket & Trailer (1)	6			8			10
Total capital expenditures	$	77		$	54		$	89
Segment Assets:	2014			2013			2012
Commercial Truck & Industrial (1)	$	1,755		$	1,822		$	1,799
Aftermarket & Trailer (1)	458			485			470
Total segment assets	2,213			2,307			2,269
Corporate(2)	533			568
Less: Accounts receivable sold under off-balance sheet factoring programs(3)	(244		)	(305		)
Total assets	$	2,502		$	2,570

(1) In fiscal year 2013, the company reorganized its management structure resulting in two reportable segments. Prior period segment financial information presented has been recast to reflect the revised reporting structure.

(2) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.

(3) At September 30, 2014 and September 30, 2013, segment assets include $244 million and $305 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (See Note 6). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.

Sales by geographic area are based on the location of the selling unit. Information on the company’s geographic areas is summarized as follows (in millions): 

Sales by Geographic Area:
	2014		2013		2012
U.S.	$	1,466	$	1,408	$	1,679
Canada	68		68		72
Mexico	652		615		726
Total North America	2,186		2,091		2,477
Sweden	369		366		403
Italy	234		216		189
United Kingdom	82		82		84
Other Europe	111		108		198
Total Europe	796		772		874
Brazil	408		449		470
China	146		138		255
India	114		114		194
Other Asia-Pacific	116		108		114
Total sales	$	3,766	$	3,672	$	4,384

Assets by Geographic Area:
	2014		2013
U.S.	$	1,067	$	1,130
Canada	50		81
Mexico	251		240
Total North America	1,368		1,451
Sweden	104		125
United Kingdom	216		157
Italy	81		86
Other Europe	182		192
Total Europe	583		560
Brazil	272		297
China	154		153
Other Asia-Pacific	125		109
Total	$	2,502	$	2,570

Sales to AB Volvo represented approximately 27 percent, 24 percent and 22 percent of the company’s sales in each of fiscal years 2014, 2013 and 2012, respectively. Sales to Daimler AG represented approximately 18 percent, 15 percent and 15 percent of the company’s sales in fiscal years 2014, 2013 and 2012, respectively. Sales to Navistar International Corporation represented approximately 12 percent of the company’s sales in fiscal year 2014, 10 percent in fiscal year 2013 and 11 percent in fiscal year 2012, respectively. No other customer comprised 10 percent or more of the company’s sales in any of the three fiscal years ended September 30, 2014.