10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 29, 2015

Commission File No. 1-15983

MERITOR, INC.

(Exact name of registrant as specified in its charter)

Indiana	38-3354643
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification
organization)	No.)
2135 West Maple Road, Troy, Michigan	48084-7186
(Address of principal executive offices)	(Zip Code)

(248) 435-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Registration S-T during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	X	Accelerated filer
Non-accelerated filer		Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

97,637,773 shares of Common Stock, $1.00 par value, of Meritor, Inc. were outstanding on March 29, 2015.

INDEX

			Page No.
PART I.	FINANCIAL INFORMATION:
	Item 1.	Financial Statements:
		Condensed Consolidated Statement of Operations - - Three and Six Months Ended March 31, 2015 and 2014	3
		Condensed Consolidated Statement Of Comprehensive Income (Loss) - - Three and Six Months Ended March 31, 2015 and 2014	4
		Condensed Consolidated Balance Sheet - - March 31, 2015 and September 30, 2014	5
		Condensed Consolidated Statement of Cash Flows - - Six Months Ended March 31, 2015 and 2014	6
		Condensed Consolidated Statement of Equity (Deficit) - - Six Months Ended March 31, 2015 and 2014	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	49
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
	Item 4.	Controls and Procedures	67
PART II.	OTHER INFORMATION:
	Item 1.	Legal Proceedings	68
	Item 1A.	Risk Factors	68
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
	Item 5.	Other Information	70
	Item 6.	Exhibits	73
Signatures			74

2

MERITOR, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share amounts)

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014
	(Unaudited)
Sales	$	864		$	954		$	1,743		$	1,854
Cost of sales	(749		)	(836		)	(1,513		)	(1,631		)
GROSS MARGIN	115			118			230			223
Selling, general and administrative	(57		)	(66		)	(122		)	(125		)
Restructuring costs	(3		)	(2		)	(6		)	(3		)
Other operating income (expense), net	—			—			1			(1		)
OPERATING INCOME	55			50			103			94
Other income, net	2			—			4			—
Equity in earnings of affiliates	9			9			18			17
Interest expense, net	(21		)	(48		)	(40		)	(75		)
INCOME BEFORE INCOME TAXES	45			11			85			36
Provision for income taxes	(6		)	(8		)	(13		)	(19		)
INCOME FROM CONTINUING OPERATIONS	39			3			72			17
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	4			—			1			(1		)
NET INCOME	43			3			73			16
Less: Net income attributable to noncontrolling interests	—			(2		)	(1		)	(4		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	43		$	1		$	72		$	12
NET INCOME ATTRIBUTABLE TO MERITOR, INC.
Net income from continuing operations	$	39		$	1		$	71		$	13
Income (loss) from discontinued operations	4			—			1			(1		)
Net income	$	43		$	1		$	72		$	12
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations	$	0.40		$	0.01		$	0.73		$	0.13
Discontinued operations	0.04			—			0.01			(0.01		)
Basic earnings per share	$	0.44		$	0.01		$	0.74		$	0.12
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations	$	0.38		$	0.01		$	0.70		$	0.13
Discontinued operations	0.04			—			0.01			(0.01		)
Diluted earnings per share	$	0.42		$	0.01		$	0.71		$	0.12
Basic average common shares outstanding	97.9			97.6			97.9			97.5
Diluted average common shares outstanding	102.9			99.6			102.0			99.2

See notes to condensed consolidated financial statements.

Amounts for prior periods have been recast for discontinued operations.

3

MERITOR, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(in millions)

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014
	(Unaudited)
Net income	$	43		$	3		$	73		$	16
Other comprehensive income (loss):
Foreign currency translation adjustments:
Attributable to Meritor, Inc.	(33		)	10			(67		)	—
Attributable to noncontrolling interest	—			—			(1		)	—
Other reclassification adjustment	—			—			1			—
Pension and other postretirement benefit related adjustments	11			10			23			20
Unrealized gain (loss) on investments and foreign exchange contracts	—			2			(1		)	2
Other comprehensive income (loss), net of tax	(22		)	22			(45		)	22
Total comprehensive income	21			25			28			38
Less: Comprehensive income attributable to noncontrolling interest	—			(2		)	—			(4		)
Comprehensive income attributable to Meritor, Inc.	$	21		$	23		$	28		$	34

See notes to condensed consolidated financial statements.

4

MERITOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(in millions)

	March 31, 2015			September 30, 2014
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	207		$	247
Receivables, trade and other, net	545			610
Inventories	365			379
Other current assets	55			56
TOTAL CURRENT ASSETS	1,172			1,292
NET PROPERTY	387			424
GOODWILL	414			431
OTHER ASSETS	344			355
TOTAL ASSETS	$	2,317		$	2,502
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term debt	$	5		$	7
Accounts and notes payable	618			680
Other current liabilities	281			351
TOTAL CURRENT LIABILITIES	904			1,038
LONG-TERM DEBT	945			965
RETIREMENT BENEFITS	737			775
OTHER LIABILITIES	301			309
TOTAL LIABILITIES	2,887			3,087
COMMITMENTS AND CONTINGENCIES (See Note 19)
EQUITY (DEFICIT):
Common stock (March 31, 2015 and September 30, 2014, 97.6 and 97.8 shares issued and outstanding, respectively)	99			97
Additional paid-in capital	920			918
Accumulated deficit	(806		)	(878		)
Treasury stock, at cost (March 31, 2015 and September 30, 2014, 1.2 and 0.0 shares, respectively)	(16		)	—
Accumulated other comprehensive loss	(793		)	(749		)
Total deficit attributable to Meritor, Inc.	(596		)	(612		)
Noncontrolling interests	26			27
TOTAL DEFICIT	(570		)	(585		)
TOTAL LIABILITIES AND DEFICIT	$	2,317		$	2,502

See notes to condensed consolidated financial statements.

5

MERITOR, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)

	Six Months Ended March 31,
	2015			2014
	(Unaudited)
OPERATING ACTIVITIES
CASH PROVIDED BY OPERATING ACTIVITIES (See Note 9)	$	29		$	18
INVESTING ACTIVITIES
Capital expenditures	(23		)	(25		)
Net investing cash flows provided by discontinued operations	4			3
CASH USED FOR INVESTING ACTIVITIES	(19		)	(22		)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16		)	(308		)
Proceeds from debt issuance	—			225
Debt issuance costs	—			(9		)
Repurchase of common stock	(16		)	—
Other financing activities	(6		)	13
CASH USED FOR FINANCING ACTIVITIES	(38		)	(79		)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(12		)	(2		)
CHANGE IN CASH AND CASH EQUIVALENTS	(40		)	(85		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	247			318
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	207		$	233

See notes to condensed consolidated financial statements.

Amounts for prior periods have been recast for discontinued operations.

6

MERITOR, INC.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)

(In millions)

(Unaudited)

	Common Stock		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive Loss			Total Deficit Attributable to Meritor, Inc.			Noncontrolling Interests			Total
Beginning balance at September 30, 2014	$	97	$	918		$	(878	)	$	—		$	(749	)	$	(612	)	$	27		$	(585	)
Comprehensive income (loss)	—		—			72			—			(44		)	28			—			28
Equity based compensation expense	—		5			—			—			—			5			—			5
Vesting of restricted stock	2		(2		)	—			—			—			—			—			—
Repurchase of convertible notes	—		(2		)	—			—			—			(2		)	—			(2		)
Repurchase of common stock	—		—			—			(16		)	—			(16		)	—			(16		)
Noncontrolling interest dividend	—		—			—			—			—			—			(1		)	(1		)
Other equity adjustments	—		1			—			—			—			1			—			1
Ending Balance at March 31, 2015	$	99	$	920		$	(806	)	$	(16	)	$	(793	)	$	(596	)	$	26		$	(570	)
Beginning balance at September 30, 2013	$	97	$	914		$	(1,127	)	$	—		$	(734	)	$	(850	)	$	28		$	(822	)
Comprehensive income	—		—			12			—			22			34			4			38
Equity based compensation expense	—		3			—			—			—			3			—			3
Noncontrolling interest dividends	—		—			—			—			—			—			(1		)	(1		)
Ending Balance at March 31, 2014	$	97	$	917		$	(1,115	)	$	—		$	(712	)	$	(813	)	$	31		$	(782	)

See notes to condensed consolidated financial statements.

7

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Meritor, Inc. (the “company” or “Meritor”), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems, modules and components to original equipment manufacturers (“OEMs”) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The condensed consolidated financial statements are those of the company and its consolidated subsidiaries.

Certain businesses are reported in discontinued operations in the condensed consolidated statement of operations, statement of cash flows and related notes for all periods presented. In the fourth quarter of fiscal year 2014, the company exited its Mascot business, a remanufacturer and distributor of all makes differentials, transmissions and steering gears. The results of operations and cash flows of the company’s former Mascot business are presented in discontinued operations in the condensed consolidated statement of operations and condensed consolidated statement of cash flows, and prior period information has been recast to reflect this presentation. Additional information regarding discontinued operations is discussed in Note 4.

In the opinion of the company, the unaudited financial statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K, for the fiscal year ended September 30, 2014, as amended. The quarter end condensed balance sheet data was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and six months ended March 31, 2015, are not necessarily indicative of the results for the full year.

The company’s fiscal year ends on the Sunday nearest September 30. The second quarter of fiscal years 2015 and 2014 ended on March 29, 2015 and March 30, 2014, respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and March 31 are used consistently throughout this report to represent the fiscal year end and second quarter end, respectively.

2. Earnings per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share unit awards, and convertible securities, if applicable.

A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):

	Three Months Ended March 31,		Six Months Ended March 31,
	2015	2014	2015	2014
Basic average common shares outstanding	97.9	97.6	97.9	97.5
Impact of stock options	0.1	—	0.1	—
Impact of restricted shares, restricted share units and performance share units	1.9	2.0	2.0	1.7
Impact of convertible notes	3.0	—	2.0	—
Diluted average common shares outstanding	102.9	99.6	102.0	99.2

On November 8, 2014, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit is $13.74, which was the company’s share price on the grant date of December 1, 2014. The Board of Directors also approved a grant of 0.4 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit is $13.74, which was the company's share price on the grant date of December 1, 2014.

8

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2014 to September 30, 2017, measured at the end of the performance period. The number of performance share units will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 75% associated with achieving an Adjusted EBITDA margin target and 25% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million shares.

On November 7, 2013, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit is $7.97, which was the company’s share price on the grant date of December 1, 2013.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2016 goals for the three-year performance period of October 1, 2013 to September 30, 2016, measured at the end of the performance period. The number of performance share units will depend on meeting the established M2016 goals at the following weights: 50% associated with achieving an Adjusted EBITDA margin target, 25% associated with achieving a net debt including retirement benefit liabilities target, and 25% associated with achieving an incremental booked revenue target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 1.8 million units including incremental share units that were issued subsequent to the December 1, 2013 grant date. There were 1.0 million and 0.8 million shares related to these performance share units included in the diluted earnings per share calculation for the three and six months ended March 31, 2015, respectively, as certain payout thresholds were achieved in the second quarter of fiscal year 2015 relative to the Adjusted EBITDA, net debt reduction and incremental booked revenue targets. There were 0.6 million and 0.3 million shares related to these performance share units included in the diluted earnings per share calculation for the three and six months ended March 31, 2014, respectively, as certain payout thresholds were achieved in the second quarter of fiscal year 2014.

For the three months ended March 31, 2015, the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 1.9 million, compared to 2.0 million units for the same period in the prior fiscal year. For the six months ended March 31, 2015, the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 2.0 million shares, compared to 1.7 million shares for the same period in the prior fiscal year. For the three and six months ended March 31, 2015, compensation cost related to restricted shares, restricted share units, and performance share units were $3 million and $5 million, respectively, compared to $1 million for both the three and six months ended March 31, 2014.

For the three and six months ended March 31, 2014, options to purchase 0.8 million shares of common stock were excluded in the computation of diluted earnings per share because their exercise price exceeded the average market price for the periods and thus their inclusion would be anti-dilutive.

For the three and six months ended March 31, 2015, 3.0 million and 2.0 million shares, respectively, were included in the computation of diluted earnings per share because the average stock price exceeded the conversion price for the 7.875 percent convertible notes due 2026. For the three and six months ended March 31, 2014, the company's convertible senior unsecured notes were excluded from the computation of diluted earnings per share, as the company's average stock price, during these periods was less than the conversion price.

3. New Accounting Standards

Accounting standards to be implemented

    In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. A strategic shift could include a disposal of: (1) a major geographical area of operations; (2) a major line of business; and (3) a major equity method investment. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2015. The potential impact of this new guidance on its consolidated financial statements is dependent upon future business divestitures. Previous divestitures and amounts currently in discontinued operations will not be impacted.

9

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 merges revenue recognition standards of the FASB and International Accounting Standards Board (IASB). The FASB and IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS) that would: (1) remove inconsistencies and weaknesses in revenue requirements; (2) provide a more robust framework for addressing revenue issues; (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (4) provide more useful information to users of financial statements through improved disclosure requirements; and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The standard is required to be adopted by public business entities in annual periods beginning after December 15, 2016 and interim periods within those annual periods. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2017 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. That is the case when an employee is eligible to retire or otherwise terminate employment before the end of the period in which a performance target (for example, an initial public offering or a profitability target) could be achieved and still be eligible to vest in the award if and when the performance target is achieved. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2015 and interim periods within those annual periods. The company plans to implement this standard in the first quarter of the fiscal year beginning on October 1, 2016 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or are available to be issued). The standard is required to be adopted by public business entities in annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The company plans to implement this standard in the fiscal year beginning October 1, 2016 and currently expects this new guidance to have no impact on the company’s consolidated financial statements.

 In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 changes the presentation of debt issuance costs in the balance sheet by requiring the debt issuance costs to be presented as a direct deduction from the related debt liability, rather than recorded as an asset. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2015, and interim periods within those annual periods and will need to be applied retrospectively. Early adoption is permitted. The company is currently evaluating the timing of implementation of this standard, with the latest implementation date in the first quarter of the fiscal year beginning October 1, 2016. Debt issuance costs as of March 31, 2015 and September 30, 2014, were $27 million and $30 million, respectively.

10

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Discontinued Operations

Results of discontinued operations are summarized as follows (in millions):

	Three Months Ended March 31,					Six Months Ended March 31,
	2015		2014			2015		2014
Sales	$	—	$	8		$	1	$	15
Income (loss) before income taxes	$	3	$	(4	)	$	—	$	(6	)
Benefit from income taxes	1		4			1		5
Income (loss) from discontinued operations attributable to Meritor, Inc.	$	4	$	—		$	1	$	(1	)

Total discontinued operations assets as of March 31, 2015 and September 30, 2014 were $7 million and $8 million, respectively, and total discontinued operations liabilities as of March 31, 2015 and September 30, 2014 were $13 million and $21 million, respectively.

Income from discontinued operations attributable to the company for the three and six months ended March 31, 2015 were primarily attributable to the settlement of indemnities on certain contingencies of previously divested businesses.

Mascot Divestiture

In the fourth quarter of fiscal year 2014, the company disposed of its Mascot business which was part of the company’s Aftermarket & Trailer segment. The results of operations and cash flows of the company’s Mascot business are presented in discontinued operations in the condensed consolidated statements of operations and condensed consolidated statement of cash flows, and prior period information has been recast to reflect this presentation.

Sales for the three and six months ended March 31, 2014, were related to the company’s former Mascot business.

5. Goodwill

In accordance with FASB Accounting Standards Codification (ASC) Topic 350-20, “Intangibles - Goodwill and Other”, goodwill is reviewed for impairment annually during the fourth quarter of the fiscal year or more frequently if certain indicators arise. If business conditions or other factors cause the operating results and cash flows of a reporting unit to decline, the company may be required to record impairment charges for goodwill at that time. Given that the company’s primary military program is winding down, failure to secure new military contracts could result in a significant decline in the projected cash flows of the Defense reporting unit, which could require the company to impair goodwill. The Defense reporting unit is included within the Commercial Truck & Industrial segment and has $20 million of goodwill allocated to it.

The company tests goodwill for impairment at a level of reporting referred to as a reporting unit, which is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. When two or more components of an operating segment have similar economic characteristics, the components are aggregated and deemed a single reporting unit. An operating segment is deemed to be a reporting unit if all of its components are similar, if none of its components are a reporting unit, or if the segment comprises only a single component.

A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions):

	Commercial Truck & Industrial			Aftermarket & Trailer			Total
Beginning balance at September 30, 2014	$	261		$	170		$	431
Foreign currency translation	(9		)	(8		)	(17		)
Balance at March 31, 2015	$	252		$	162		$	414

11

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Restructuring Costs

     At March 31, 2015 and September 30, 2014,$12 million and $11 million, respectively, of restructuring reserves, primarily related to unpaid employee termination benefits, remained in the consolidated balance sheet. The changes in restructuring reserves for the six months ended March 31, 2015 and 2014 are as follows (in millions):

	Employee Termination Benefits			Asset Impairment		Plant Shutdown & Other		Total
Beginning balance at September 30, 2014	$	11		$	—	$	—	$	11
Activity during the period:
Charges to continuing operations	6			—		—		6
Cash payments – continuing operations	(3		)	—		—		(3		)
Other	(2		)	—		—		(2		)
Total restructuring reserves at March 31, 2015	12			—		—		12
Less: non-current restructuring reserves	(2		)	—		—		(2		)
Restructuring reserves – current, at March 31, 2015	$	10		$	—	$	—	$	10
Balance at September 30, 2013	$	12		$	—	$	—	$	12
Activity during the period:
Charges to continuing operations	3			—		—		3
Cash payments – continuing operations	(4		)	—		—		(4		)
Other	(1		)	—		—		(1		)
Total restructuring reserves at March 31, 2014	10			—		—		10
Less: non-current restructuring reserves	(3		)	—		—		(3		)
Restructuring reserves – current, at March 31, 2014	$	7		$	—	$	—	$	7

Closure of a Corporate Engineering Facility: In the second quarter of fiscal year 2015, the company notified 33 salaried and contract employees that their positions were being eliminated due to the planned closure of a corporate engineering facility. The company recorded severance expenses of $1 million associated with this plan. The company expects to incur approximately $2 million in lease termination and other exit costs in North America associated with this closure. Restructuring actions associated with this program are expected to be completed by the end of fiscal year 2015.

European Labor Reduction: During the second quarter of fiscal year 2015, the company initiated a European headcount reduction plan intended to reduce labor costs in response to continued soft markets in the region. The company plans to eliminate 21 hourly and 23 salaried positions and has recorded $2 million of expected severance expenses in the Commercial Truck & Industrial segment in the second quarter of fiscal year 2015. The company plans to incur an additional $1 million in severance costs by the end of the third quarter of fiscal year 2015.

M2016 Actions: The company continues to implement certain footprint actions as part of its M2016 strategy. In the first quarter of fiscal year 2015, the company recorded expected severance charges of $3 million associated with the elimination of 51 hourly and 19 salaried positions in the Commercial Truck & Industrial segment associated with the consolidation of certain gearing and machining operations in North America.

South America Labor Reduction: During the fourth quarter of fiscal year 2014, the company initiated a South America headcount reduction plan intended to reduce labor costs in response to decreasing production volumes in the region. The company eliminated approximately 190 hourly and 20 salaried positions and incurred $7 million of restructuring costs in the fourth quarter of fiscal year 2014, primarily severance benefits, in the Commercial Truck & Industrial segment.

12

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. Income Taxes

For each interim reporting period, the company makes an estimate of the effective tax rate expected to be applicable for the full fiscal year pursuant to FASB ASC Topic 740-270, “Accounting for Income Taxes in Interim Periods.” The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

Income tax expense (benefit) is allocated between continuing operations, discontinued operations and other comprehensive income (OCI). Such allocation is applied by tax jurisdiction, and in periods in which there is a pre-tax loss from continuing operations and pre-tax income in another category, such as discontinued operations or OCI, income tax expense is allocated to the other sources of income, with a related benefit recorded in continuing operations.

For the first six months of fiscal year 2015, the company had approximately $36 million of net pre-tax income compared to a net pre-tax loss of $34 million in the first six months of fiscal year 2014 in tax jurisdictions in which tax expense (benefit) is not recorded. Income or losses arising from these jurisdictions resulted in an adjustment to the valuation allowance, rather than an adjustment to income tax expense. If, in the future, the company is generating taxable income on a sustained basis in jurisdictions where it has recorded valuation allowances, the company's conclusion regarding the need for valuation allowances in these jurisdictions could change. This would result in a reversal of some or all of the valuation allowances.

8. Accounts Receivable Factoring and Securitization

Off-balance sheet arrangements 

Swedish Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo through one of its European subsidiaries. Under this arrangement, which terminates on June 28, 2015, the company can sell up to, at any point in time, €150 million ($163 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €117 million ($128 million) and €99 million ($127 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively.

U.S. Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its subsidiaries. Under this arrangement, which terminates on October 29, 2015, the company can sell up to, at any point in time, €65 million ($71 million) of eligible trade receivables. In December 2014, the company amended this agreement to allow for the sale of trade receivables to exceed Nordea Bank’s commitment at Nordea Bank’s discretion. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €78 million ($85 million) and €64 million ($81 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively. As of the end of the second quarter of fiscal year 2015, the company had utilized more than the committed eligible trade receivable amount of $71 million based on approval from the bank.

     The above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through September 2015. The commitments are subject to standard terms and conditions for these types of arrangements.

   United Kingdom Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement, which expires in February 2018, the company can sell up to, at any point in time, €25 million ($27 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €6 million ($6 million) and €6 million ($7 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program.

Italy Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement, which expires in June 2017, the company can sell up to, at any point in time, €30 million ($33 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €16 million ($18 million) and €8 million ($10 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program.

13

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

     In addition, several of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the condensed consolidated balance sheet. The amount of factored receivables excluded from accounts receivable was $17 million and $19 million at March 31, 2015 and September 30, 2014, respectively.

     Total costs associated with all of the off-balance sheet arrangements described above were $1 million and $2 million in the three months ended March 31, 2015 and 2014, respectively, and $3 million and $5 million in the six months ended March 31, 2015 and 2014, respectively, and are included in selling, general and administrative expenses in the condensed consolidated statement of operations.

On-balance sheet arrangements

The company has a $100 million U.S. accounts receivables securitization facility. On October 15, 2014, the company entered into an amendment which extends the facility expiration date to October 15, 2017 and sets the maximum permitted priority-debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility at 2.25 to 1.00. This program is provided by PNC Bank, National Association, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents from time to time (participating lenders), which are party to the agreement. Under this program, the company has the ability to sell an undivided percentage ownership interest in substantially all of its trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. accounts receivable factoring facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for the company’s U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the condensed consolidated balance sheet. At March 31, 2015 and September 30, 2014 , no amounts, including letters of credit, were outstanding under this program. This program contains a cross-default to the revolving credit facility. At certain times during any given month, the company may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, the company would then typically utilize the cash received from customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, the company may borrow under this program in amounts exceeding the amounts shown as outstanding at fiscal quarter ends.

14

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Operating Cash Flow

The reconciliation of net income to cash flows provided by operating activities is as follows (in millions):

	Six Months Ended March 31,
	2015			2014
OPERATING ACTIVITIES
Net income	$	73		$	16
Less: Income (loss) from discontinued operations, net of tax	1			(1		)
Income from continuing operations	72			17
Adjustments to income from continuing operations to arrive at cash provided by operating activities:
Depreciation and amortization	32			33
Restructuring costs	6			3
Loss on debt extinguishment	1			21
Equity in earnings of affiliates	(18		)	(17		)
Pension and retiree medical expense	14			20
Other adjustments to income from continuing operations	5			5
Dividends received from equity method investments	10			11
Pension and retiree medical contributions	(24		)	(19		)
Restructuring payments	(3		)	(4		)
Changes in off-balance sheet accounts receivable factoring	40			17
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations	(99		)	(60		)
Operating cash flows provided by continuing operations	36			27
Operating cash flows used for discontinued operations	(7		)	(9		)
CASH PROVIDED BY OPERATING ACTIVITIES	$	29		$	18

10. Inventories

Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Finished goods	$	142	$	146
Work in process	30		36
Raw materials, parts and supplies	193		197
Total	$	365	$	379

15

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

11. Other Current Assets

Other current assets are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Current deferred income tax assets	$	18	$	21
Asbestos-related recoveries (see Note 19)	14		15
Deposits and collateral	2		4
Prepaid and other	21		16
Other current assets	$	55	$	56

12. Net Property

Net property is summarized as follows (in millions):

	March 31, 2015			September 30, 2014
Property at cost:
Land and land improvements	$	32		$	34
Buildings	219			236
Machinery and equipment	860			906
Company-owned tooling	137			155
Construction in progress	49			66
Total	1,297			1,397
Less accumulated depreciation	(910		)	(973		)
Net property	$	387		$	424

13. Other Assets

Other assets are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Investments in non-consolidated joint ventures	$	101	$	106
Asbestos-related recoveries (see Note 19)	42		45
Unamortized debt issuance costs	27		30
Capitalized software costs, net	26		25
Non-current deferred income tax assets, net	17		15
Assets for uncertain tax positions	5		5
Prepaid pension costs	109		104
Other	17		25
Other assets	$	344	$	355

In accordance with FASB ASC Topic 350-40, costs relating to internally developed or purchased software in the preliminary project stage and the post-implementation stage are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software.

16

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 March 31, 2015 and September 30, 2014, the company’s investment in the joint venture was $41 million and $43 million, respectively. This amount is included in investments in non-consolidated joint ventures in the table above.

14. Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Compensation and benefits	$	111	$	146
Income taxes	9		8
Taxes other than income taxes	44		50
Accrued interest	15		15
Product warranties	23		27
Environmental reserves (see Note 19)	9		12
Restructuring (see Note 6)	10		9
Asbestos-related liabilities (see Note 19)	17		17
Indemnity obligations (see Note 19)	2		11
Other	41		56
Other current liabilities	$	281	$	351

The company records estimated product warranty costs at the time of shipment of products to customers. Warranty reserves are primarily based on factors that include past claims experience, sales history, product manufacturing and engineering changes and industry developments. Liabilities for product recall campaigns are recorded at the time the company’s obligation is probable and can be reasonably estimated. Policy repair actions to maintain customer relationships are recorded as other liabilities at the time an obligation is probable and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability.

A summary of the changes in product warranties is as follows (in millions):

	Six Months Ended March 31,
	2015			2014
Total product warranties – beginning of period	$	51		$	57
Accruals for product warranties	7			9
Payments	(9		)	(12		)
Change in estimates and other	—			3
Total product warranties – end of period	49			57
Less: Non-current product warranties	(26		)	(33		)
Product warranties – current	$	23		$	24

17

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

15. Other Liabilities

Other liabilities are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Asbestos-related liabilities (see Note 19)	$	105	$	105
Restructuring (see Note 6)	2		2
Non-current deferred income tax liabilities	103		103
Liabilities for uncertain tax positions	12		14
Product warranties (see Note 14)	26		24
Environmental (see Note 19)	7		7
Indemnity obligations (see Note 19)	14		17
Other	32		37
Other liabilities	$	301	$	309

16. Long-Term Debt

     Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions):

	March 31, 2015			September 30, 2014
4.625 percent convertible notes due 2026 (1)	55			55
4.0 percent convertible notes due 2027 (1)	147			162
7.875 percent convertible notes due 2026(net of issuance discount of $20 and $21, respectively) (1)	230			229
6.75 percent notes due 2021 (2)	275			275
6.25 percent notes due 2024 (2)	225			225
Capital lease obligation	22			26
Export financing arrangements	22			31
Unamortized discount on convertible notes	(26		)	(31		)
Subtotal	950			972
Less: current maturities	(5		)	(7		)
Long-term debt	$	945		$	965

⁽¹⁾ The 4.625 percent, 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016, 2019 and 2020, respectively.

⁽²⁾ The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption.

Revolving Credit Facility

On February 13, 2014, the company amended and restated its senior secured revolving credit facility. Pursuant to the revolving credit agreement as amended, the company has a $499 million revolving credit facility, $89 million of which matures in April 2017 for banks not electing to extend their commitments under the revolving credit facility, and $410 million of which matures in February 2019. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants as highlighted below.

The availability under the revolving credit facility is subject to certain financial covenants based on (i) the ratio of the company’s priority debt (consisting principally of amounts outstanding under the revolving credit facility, U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA and (ii) the amount of annual capital expenditures. The company is required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement.

18

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The availability under the revolving credit facility is also subject to a collateral test, pursuant to which borrowings on the revolving credit facility cannot exceed 1.0x the collateral test value. The collateral test is performed on a quarterly basis. At March 31, 2015, the revolving credit facility was collateralized by approximately $622 million of the company's assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and the company's investment in all or a portion of certain of its wholly-owned subsidiaries.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin and a commitment fee on undrawn amounts, both of which are based upon the company’s current corporate credit rating. At March 31, 2015, the margin over LIBOR rate was 325 basis points and the commitment fee was 50 basis points. Overnight revolving credit loans are at the prime rate plus a margin of 225 basis points.

Certain of the company’s subsidiaries, as defined in the revolving credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly held notes outstanding under the company’s indentures (see Note 22).

No borrowings were outstanding under the revolving credit facility at March 31, 2015 and September 30, 2014. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At March 31, 2015 and September 30, 2014, there were no letters of credit outstanding under the revolving credit facility.

Debt Securities

In December 2014, the company filed a shelf registration statement with the Securities and Exchange Commission, registering an unlimited amount of debt and/or equity securities that the company may offer in one or more offerings on terms to be determined at the time of sale. The December 2014 shelf registration statement superseded and replaced the shelf registration statement filed in February 2012, as amended.

Issuance of Debt Securities - 2024 Notes

On February 13, 2014 the company completed an offering of debt securities consisting of the issuance of $225 million principal amount of 10-year, 6.25 percent notes due February 15, 2024 (the "2024 Notes"). The offering and sale were made pursuant to the company's February 2012 shelf registration statement. The 2024 Notes were issued under the company's indenture dated as of April 1, 1998, as supplemented. The 2024 Notes were issued at 100 percent of their principal amount. The proceeds from the sale of the 2024 Notes were $225 million and, together with cash on hand, were primarily used to repurchase the company’s previously outstanding $250 million10.625 percent notes due 2018.

The 2024 Notes bear interest at a fixed rate of 6.25 percent per annum. The company pays interest on the 2024 Notes semi-annually, in arrears, on February 15 and August 15 of each year. The 2024 Notes constitute senior unsecured obligations of the company and rank equally in right of payment with existing and future senior unsecured indebtedness, and effectively junior to existing and future secured indebtedness to the extent of the security therefor. The 2024 Notes are guaranteed on a senior unsecured basis by each of the company's subsidiaries from time to time guaranteeing its senior secured credit facility. The guarantees rank equally with existing and future senior unsecured indebtedness of the guarantors and will be effectively subordinated to all of the existing and future secured indebtedness of the guarantors, to the extent of the value of the assets securing such indebtedness.

Prior to February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at a redemption price equal to 100 percent of the principal amount of the 2024 Notes to be redeemed plus an applicable premium (as defined in the indenture under which the 2024 Notes were issued) and any accrued and unpaid interest. On or after February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2024 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on February 15 of the years indicated below:

Year	Redemption Price
2019	103.125%
2020	102.083%
2021	101.042%
2022 and thereafter	100.000%

19

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Prior to February15, 2017, the company may redeem, at its option, from time to time, up to 35 percent of the aggregate principal amount of the 2024 Notes with the net cash proceeds of one or more public sales of the company's common stock at a redemption price equal to 106.25 percent of the principal amount, plus accrued and unpaid interest, if any, provided that at least 65 percent of the aggregate principal amount of 2024 Notes originally issued remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock.

If a Change of Control (as defined in the indenture under which the 2024 Notes were issued) occurs, unless the company has exercised its right to redeem the 2024 Notes, each holder of 2024 Notes may require the company to repurchase some or all of such holder's 2024 Notes at a purchase price equal to 101 percent of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest, if any.

Repurchase of Debt Securities

In February 2015, the company repurchased $15 million principal amount of the 4.0 percent convertible notes due February 15, 2027. The notes were purchased at a premium equal to 6 percent of their principal amount. The repurchase of the $15 million principal amount of the company's 4.0 percent convertible notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $1 million. The net loss on debt extinguishment is included in interest expense, net in the consolidated statement of operations. The repurchase was made under the company's equity and equity-linked repurchase authorization program.

On March 15, 2014, the company completed the redemption of its 10.625 percent notes due March 15, 2018. The notes were redeemed at a premium equal to 5.313 percent of their principal amount. The repurchase of $250 million of 10.625 percent notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $19 million, which consisted of $6 million of unamortized discount and deferred issuance costs and $13 million of premium. The net loss on debt extinguishment is included in interest expense, net in the consolidated statement of operations.

Capital Leases

On March 20, 2012, the company entered into an arrangement to finance equipment acquisitions for various U.S. locations. Under this arrangement, the company can request financing from GE Capital Commercial, Inc. (GE Capital) for progress payments for equipment under construction, not to exceed $10 million at any time. The financing rate is equal to the 30-day LIBOR plus 475 basis points per annum. Under this arrangement, the company can also enter into lease arrangements with GE Capital for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points. The company had $12 million and $13 million outstanding under this capital lease arrangement as of March 31, 2015 and September 30, 2014, respectively. In addition, the company had another $10 million and $13 million outstanding through other capital lease arrangements at March 31, 2015 and September 30, 2014, respectively.

Letter of Credit Facilities

On February 21, 2014, the company entered into an arrangement to amend and restate the letter of credit facility with Citicorp USA, Inc., as administrative agent and issuing bank, and the other lenders party thereto. Under the terms of this amended credit agreement, the company has the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $30 million through December 19, 2015. From December 20, 2015 through March 19, 2019, the aggregate availability is $25 million. This facility contains covenants and events of default generally similar to those existing in the company’s public debt indentures. There were $25 million of letters of credit outstanding under this facility at March 31, 2015 and September 30, 2014. In addition, the company had another $6 million and $9 million of letters of credit outstanding through other letter of credit facilities at March 31, 2015 and September 30, 2014, respectively.

Export financing arrangements

The company entered into a number of export financing arrangements through its Brazilian subsidiary during fiscal year 2014.  The export financing arrangements are issued under an incentive program of the Brazilian government to fund working capital for Brazilian companies in exportation programs.  The arrangements bear interest at 5.5 percent and have maturity dates in 2016 and 2017. There were $22 million and $29 million outstanding under these arrangements at March 31, 2015 and September 30, 2014, respectively. In addition, the company had another $2 million outstanding under a similar arrangement through its India subsidiary at September 30, 2014, which had no outstanding balance at March 31, 2015.

20

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other

One of the company's consolidated joint ventures in China participates in a bills of exchange program to settle its obligations with its trade suppliers. These programs are common in China and generally require the participation of local banks. Under these programs, the company's joint venture issues notes payable through the participating banks to its trade suppliers. If the issued notes payable remain unpaid on their respective due dates, this could constitute an event of default under the company’s revolving credit facility if the defaulted amount exceeds $35 million per bank. As of March 31, 2015 and September 30, 2014, the company had $20 million and $32 million, respectively, outstanding under this program at more than one bank.

17. Financial Instruments

Fair values of financial instruments are summarized as follows (in millions):

	March 31, 2015				September 30, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Cash and cash equivalents	$	207	$	207	$	247	$	247
Short-term debt	5		5		7		7
Long-term debt	945		1,131		965		1,143
Foreign exchange forward contracts (asset)	5		5		2		2
Short-term foreign currency option contracts (asset)	2		2		2		2
Long-term foreign currency option contracts (asset)	2		2		1		1

The following table reflects the offsetting of derivative assets and liabilities (in millions):

	March 31, 2015				September 30, 2014
	Gross Amounts Recognized	Gross Amounts Offset		Net Amounts Reported	Gross Amounts Recognized	Gross Amounts Offset	Net Amounts Reported
Derivative Asset
Foreign exchange forward contract	6	(1	)	5	2	—	2
Derivative Liabilities
Foreign exchange forward contract	1	(1	)	—	—	—	—

Fair Value

The current FASB guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical instruments (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

• Level 1 inputs use quoted prices in active markets for identical instruments.

• Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

• Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

21

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fair value of financial instruments by the valuation hierarchy at March 31, 2015 is as follows (in millions):

	Level 1		Level 2		Level 3
Cash and cash equivalents	$	207	$	—	$	—
Short-term debt	—		—		5
Long-term debt	—		1,093		38
Foreign exchange forward contracts (asset)	—		5		—
Short-term foreign currency option contracts (asset)	—		—		2
Long-term foreign currency option contracts (asset)	—		—		2

The table below provides a reconciliation of changes in fair value of the Level 3 financial assets and liabilities measured at fair value in the condensed consolidated balance sheet from September 30, 2014 to March 31, 2015. No transfers of assets between any of the Levels occurred during this period.

	Short-term foreign currency option contracts (asset)			Long-term foreign currency option contracts (asset)			Total
Fair Value as of September 30, 2014	$	2		$	1		$	3
Total unrealized gains (losses):
Included in other income	—			—			—
Included in cost of sales	—			—			—
Total realized gains (losses):
Included in other income	3			—			3
Included in cost of sales	3			—			3
Purchases, issuances, sales and settlements:
Purchases	5			—			5
Settlements	(10		)	(1		)	(11		)
Transfer in and / or out of Level 3 (1)	—			—			—
Reclass between short-term and long-term	(1		)	2			1
Fair Value as of March 31, 2015	$	2		$	2		$	4

⁽¹⁾ Transfers as of the last day of the reporting period

Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments. The company did not have any cash equivalents at March 31, 2015 or September 30, 2014.

Short- and Long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with terms of one year or less to hedge its exposure to changes in foreign currency exchange rates. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss (AOCL) in the statement of shareowners’ equity and is recognized in operating income when the underlying forecasted transaction impacts earnings.

Foreign currency option contracts — The company uses option contracts to mitigate foreign currency exposure on expected future Indian Rupee denominated purchases. The contracts were entered into during April 2014 with effective dates from the start of fiscal year 2015 through the end of fiscal year 2016. In February 2015, the company monetized its outstanding foreign currency option contracts and entered into a new series of foreign currency option contracts with effective dates from the start of the third quarter of fiscal year 2015 through the end of fiscal year 2017. In the second quarter of fiscal year 2015, the company recognized

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MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

a net gain of $3 million associated with the settlement and repurchase of the foreign currency option contracts. The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the consolidated statement of operations.

The company generally does not hedge against its foreign currency exposure related to translations to U.S. dollars of financial results denominated in foreign currencies. In November 2014, the company entered into a series of foreign currency option contracts with a total notional amount of $48 million to reduce volatility in the translation of Brazilian Real earnings to U.S. dollars. These foreign currency option contracts do not qualify for a hedge accounting election but are expected to mitigate foreign currency translation exposure of Brazilian Real earnings to U.S. dollars. In the second quarter of fiscal year 2015, the company monetized these outstanding foreign currency option contracts and entered into a new series of foreign currency option contracts with effective dates from the start of the third quarter of fiscal year 2015 through the end of fiscal year 2015. In the second quarter of fiscal year 2015, the company recognized a net gain of $3 million associated with the settlement and repurchase of these foreign currency option contracts. The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. Changes in fair value associated with these contracts are recorded in other income (expense), net, in the consolidated statement of operations.

23

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

18. Retirement Benefit Liabilities

Retirement benefit liabilities consisted of the following (in millions):

	March 31, 2015			September 30, 2014
Retiree medical liability	$	468		$	479
Pension liability	297			323
Other	15			16
Subtotal	780			818
Less: current portion (included in compensation and benefits, Note 14)	(43		)	(43		)
Retirement benefits	$	737		$	775

The components of net periodic pension and retiree medical expense included in continuing operations for the three months ended March 31 are as follows (in millions):

	2015					2014
	Pension			Retiree Medical		Pension			Retiree Medical
Interest cost	18			5		20			7
Assumed return on plan assets	(28		)	—		(26		)	—
Amortization of prior service costs	—			—		—			(2		)
Recognized actuarial loss	7			5		6			5
Total expense (income)	$	(3	)	$	10	$	—		$	10

The components of net periodic pension and retiree medical expense included in continuing operations for the six months ended March 31 are as follows (in millions):

	2015					2014
	Pension			Retiree Medical		Pension			Retiree Medical
Interest cost	36			10		40			13
Assumed return on plan assets	(56		)	—		(52		)	—
Amortization of prior service costs	—			—		—			(4		)
Recognized actuarial loss	14			10		12			11
Total expense	$	(6	)	$	20	$	—		$	20

19. Contingencies

Environmental

     Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties.

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MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

     The company has been designated as a potentially responsible party at nine Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Management estimates the total reasonably possible costs the company could incur for the remediation of Superfund sites at March 31, 2015 to be approximately $17 million, of which $2 million is probable and recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators.

     In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at March 31, 2015 to be approximately $32 million, of which $14 million is probable and recorded as a liability.

     Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 0.50 to 2.50 percent and is approximately $8 million at March 31, 2015. The undiscounted estimate of these costs is approximately $9 million.

     The following are the components of the Superfund and non-Superfund environmental reserves (in millions):

	Superfund Sites		Non-Superfund Sites			Total
Beginning balance at September 30, 2014	$	2	$	17		$	19
Payments and other	—		(3		)	(3		)
Accruals	—		—			—
Balance at March 31, 2015	$	2	$	14		$	16

Environmental reserves are included in Other Current Liabilities (see Note 14) and Other Liabilities (see Note 15) in the condensed consolidated balance sheet.

     The actual amount of costs or damages for which the company may be held responsible could materially exceed the foregoing estimates because of uncertainties, including the financial condition of other potentially responsible parties, the success of the remediation, discovery of new contamination and other factors that make it difficult to predict actual costs accurately. However, based on management’s assessment, after consulting with outside advisors that specialize in environmental matters, and subject to the difficulties inherent in estimating these future costs, the company believes that its expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on the company’s business, financial condition or results of operations. In addition, in future periods, new laws and regulations, changes in remediation plans, advances in technology and additional information about the ultimate clean-up remedies could significantly change the company’s estimates. Management cannot assess the possible effect of compliance with future requirements.

Asbestos

MaremontCorporation (“Maremont”), a subsidiary of Meritor, manufactured friction products containing asbestos from 1953 through 1977, when it sold its friction product business. Arvin Industries, Inc., a predecessor of the company, acquired Maremont in 1986. Maremont and many other companies are defendants in suits brought by individuals claiming personal injuries as a result of exposure to asbestos-containing products.

Maremont had approximately 5,600 and 5,700 pending asbestos-related claims at March 31, 2015 and September 30, 2014, respectively. Although Maremont has been named in these cases, in the cases where actual injury has been alleged, very few claimants have established that a Maremont product caused their injuries. Plaintiffs’ lawyers often sue dozens or even hundreds of defendants in individual lawsuits, seeking damages against all named defendants irrespective of the disease or injury and irrespective of any causal connection with a particular product. For these reasons, the total number of claims filed is not necessarily the most meaningful factor in determining Maremont's asbestos-related liability.

25

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

     Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Pending and future claims	$	73	$	73
Billed but unpaid claims	2		3
Asbestos-related liabilities	$	75	$	76
Asbestos-related insurance recoveries	$	45	$	49

A portion of the asbestos-related recoveries and reserves are included in Other Current Assets and Liabilities, with the majority of the amounts recorded in Other Assets and Liabilities (see Notes 11, 13, 14 and 15).

Pending and Future Claims: Maremont engages Bates White LLC (Bates White), a consulting firm with extensive experience estimating costs associated with asbestos litigation, to assist with determining the estimated cost of resolving pending and future asbestos-related claims that have been, and could reasonably be expected to be, filed against Maremont. Bates White prepares these cost estimates annually in September. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised Maremont that it would be possible to determine an estimate of a reasonable forecast of the cost of the probable settlement and defense costs of resolving pending and future asbestos-related claims, based on historical data and certain assumptions with respect to events that may occur in the future.

     Bates White provided a reasonable and probable estimate that consisted of a range of equally likely possibilities of Maremont's obligation for asbestos personal injury claims over the next ten years of $73 million to $105 million. Management recognized a liability of $73 million as of March 31, 2015 and September 30, 2014 for pending and future claims over the next ten years. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Maremont. Historically, Maremont has recognized incremental insurance receivables associated with recoveries expected for asbestos-related liabilities as the estimate of asbestos-related liabilities for pending and future claim changes. However, Maremont currently expects to exhaust the limits of its settled insurance coverage prior to the end of the ten-year forecasted liability period. Maremont believes it has additional insurance coverage; however, certain carriers have disputed coverage under policies they issued (see "Recoveries" below).

Assumptions: The following assumptions were made by Maremont after consultation with Bates White and are included in their study:

• Pending and future claims were estimated for a ten-year period ending in fiscal year 2024;

• Maremont believes that the litigation environment could change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims will decline for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain;

• On a per claim basis, defense and processing costs for pending and future claims will be at the level consistent with Maremont’s prior experience;

• Potential payments made to claimants from other sources, including other defendants and 524(g) trusts favorably impact Maremont's estimated liability in the future; and

• The ultimate indemnity cost of resolving nonmalignant claims with plaintiffs’ law firms in jurisdictions without an established history with Maremont cannot be reasonably estimated.

Recoveries: Maremont has insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The insurance receivable related to asbestos-related liabilities is $45 million and $49 million as of March 31, 2015 and September 30, 2014, respectively. The receivable is for coverage provided by one insurance carrier based on a coverage in place agreement. Maremont currently expects to exhaust the remaining limits provided by this coverage sometime in the next ten years. Maremont maintained insurance coverage with other insurance carriers that management believes covers indemnity and defense costs. Maremont has incurred liabilities allocable to these policies but has not yet billed these insurance carriers, and no receivable has been recorded for these policies. During fiscal year 2013, Maremont reinitiated a lawsuit against these carriers, seeking a declaration of its rights to insurance for asbestos claims and to facilitate an orderly and timely collection of insurance proceeds. The difference between the estimated liability and insurance receivable is primarily related to exhaustion of settled insurance coverage within the forecasted period and proceeds from settled insurance policies. Certain insurance policies have been settled in cash prior to the ultimate settlement of the related asbestos liabilities. Amounts received from insurance settlements generally reduce recorded insurance receivables.

26

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

     The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Maremont could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Maremont in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; Maremont’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the estimation period, the nature of pending and future claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Maremont’s asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations.

Rockwell International ("Rockwell") — ArvinMeritor, Inc. (AM), a subsidiary of Meritor, along with many other companies, has also been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred at the time of the spin-off of the automotive business from Rockwell in 1997. Rockwell had approximately 3,000 and 2,800 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at March 31, 2015 and September 30, 2014, respectively.

A significant portion of the claims do not identify any of Rockwell’s products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell’s products, and past experience has shown that the vast majority of the claimants will likely never identify any of Rockwell’s products. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants. For those claimants who do show that they worked with Rockwell’s products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved and the lack of any impairing medical condition on the part of many claimants.

     The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Pending and future claims	$	48	$	48
Billed but unpaid claims	2		2
Asbestos-related liabilities	$	50	$	50
Asbestos-related insurance recoveries	$	11	$	11

Pending and Future Claims: The company engages Bates White to assist with determining whether it would be possible to estimate the cost of resolving pending and future Rockwell legacy asbestos-related claims that have been, and could reasonably be expected to be, filed against the company. Bates White prepares these cost estimates annually in September. As of September 30, 2014, Bates White provided a reasonable and probable estimate that consisted of a range of equally likely possibilities of Rockwell’s obligation for asbestos personal injury claims over the next ten years of $48 million to $62 million. Management recognized a liability for the pending and future claims over the next ten years of $48 million as of March 31, 2015 and September 30, 2014. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Rockwell.

27

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Assumptions: The following assumptions were made by the company after consultation with Bates White and are included in their study:

• Pending and future claims were estimated for a ten-year period ending in fiscal year 2024;

• The company believes that the litigation environment could change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims will decline for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain;

• On a per claim basis, defense and processing costs for pending and future claims will be at the level consistent with the company's prior experience;

• Potential payments made to claimants from other sources, including other defendants and 524(g) trusts favorably impact the company's estimated liability in the future; and

• The ultimate indemnity cost of resolving nonmalignant claims with plaintiff’s law firms in jurisdictions without an established history with Rockwell cannot be reasonably estimated.

Recoveries: The insurance receivable related to asbestos-related liabilities is $11 million as of each of March 31, 2015 and September 30, 2014. Included in these amounts are insurance receivables of $8 million as of each of March 31, 2015 and September 30, 2014 that are associated with policies in dispute. Rockwell has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for most of these claims. The company has initiated claims against certain of these carriers to enforce the insurance policies, which are in various stages of the litigation process. The company expects to recover some portion of defense and indemnity costs it has incurred to date, over and above self-insured retentions, and some portion of the costs for defending asbestos claims going forward. The amounts recognized for policies in dispute are based on consultation with advisors, status of settlement negotiations with certain insurers and underlying analysis performed by management. The remaining receivable recognized is related to coverage provided by one carrier based on a coverage-in-place insurance arrangement. If the assumptions with respect to the estimation period, the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Rockwell asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations.

Indemnifications

The company has provided indemnifications in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos and employment-related matters, and the periods of indemnification vary in duration.

In December 2005, the company guaranteed a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees. The retirees were former employees of a wholly-owned subsidiary of the company prior to it being acquired by the company. The wholly-owned subsidiary, which was part of the company’s light vehicle aftermarket business, was sold by the company in fiscal year 2006. Prior to May 2009, except as set forth hereinafter, the third party met its obligations to reimburse the other party. In May 2009, the third party filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code requiring the company to recognize its obligations under the guarantee. The company recorded a $28 million liability in fiscal year 2009 for this matter. At March 31, 2015 and September 30, 2014, the remaining estimated liability for this matter was approximately $13 million and $14 million, respectively.

     On January 3, 2011, the company completed the sale of its Body Systems business. The sale agreement contains certain customary representations, warranties and covenants of the seller and the purchaser. The agreement also includes provisions governing post-closing indemnities between the seller and the purchaser for losses arising from specified events. At September 30, 2014, the company had an accrual of $6 million for such indemnities, of which $2 million was for a contingency-related income tax matter, which was included in other liabilities in the accompanying condensed consolidated balance sheet. In the second quarter of fiscal year 2015, the company settled all remaining matters related to the Body Systems business and recorded a net gain, after tax in discontinued operations of $6 million.

In connection with the sale of its interest in MSSC in October 2009, the company provided certain indemnifications to the buyer for its share of potential obligations related to pension funding shortfall, environmental and other contingencies, and valuation of certain accounts receivable and inventories. The company's estimated exposure under these indemnities at March 31, 2015 and September 30, 2014 is approximately $2 million and $5 million, respectively, and is included in other current liabilities and other liabilities in the condensed consolidated balance sheet.

28

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The company is not aware of any other claims or other information that would give rise to material payments under such indemnifications.

Other

As a result of performing ongoing product conformance testing in the ordinary course of business, the company identified a non-safety related, potential product performance issue arising from a defective supplier component. During fiscal year 2013, the company notified all major customers and initiated a sampling campaign. Management estimated the total costs the company could incur for a full campaign to be in the range of $12 million to $20 million, of which $12 million was recorded as a specific warranty contingency reserve. In the fourth quarter of fiscal year 2013, the company received $5 million of non-cash cost recovery from the component supplier. During the second half of fiscal year 2014, the company worked with customers to determine the appropriate next steps. As of September 30, 2014, no field failures were identified during the sampling campaign, and only minor defects were found in a small number of components tested. As a result, in the fourth quarter of fiscal year 2014, the company determined a full campaign to be unnecessary and moved to a fix-as-find approach with an extended warranty, thereby reducing the accrual significantly. As of March 31, 2015 and September 30, 2014, the estimated cost the company could incur for this non-safety related, potential product performance issue was $3 million.

The company identified certain sales transactions for which value added tax was required to be remitted to certain tax jurisdictions for tax years 2008 through 2014. At March 31, 2015 and September 30, 2014, the company’s estimates of the probable liability were $9 million and $11 million, respectively. The decrease in the probable liability is primarily due to the translation effect of foreign exchange rates.

In addition, various lawsuits, claims and proceedings, other than those specifically disclosed in the condensed consolidated financial statements, have been or may be instituted or asserted against the company, relating to the conduct of the company’s business, including those pertaining to product liability, warranty or recall claims, intellectual property, safety and health, contract and employment matters. Although the outcome of other litigation cannot be predicted with certainty, and some lawsuits, claims or proceedings may be disposed of unfavorably to the company, management believes the disposition of matters that are pending will not have a material effect on the company’s business, financial condition, results of operations or cash flows. 

29

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

20. Shareowners' Equity

Equity and Equity-Linked Repurchase Authorization

In June 2014, the company's Board of Directors authorized the repurchase of up to $210 million of its equity and equity-linked securities (including convertible debt securities), subject to the achievement of its M2016 net debt reduction target and compliance with legal and regulatory requirements and its debt covenants. In September 2014, the company's Board authorized the repurchase of up to $40 million of its equity or equity-linked securities (including convertible debt securities) under the $210 million authorization that may be made annually without regard to achievement of the M2016 net debt reduction target. These authorizations have no stated expiration.

The equity and equity-linked securities repurchases are subject to prevailing market conditions and other considerations. Under the program, the company repurchased 1.2 million shares of its common stock for $16 million during the second quarter of fiscal year 2015 through open market transactions. Also, in the second quarter of fiscal year 2015, the company repurchased $15 million principal amount of its 4.0 percent convertible notes due 2027 for $16 million (see Note 16). The amount remaining available for repurchases under the authorization is $179 million at March 31, 2015.

Accumulated Other Comprehensive Loss (AOCL)

The components of AOCL and the changes in AOCL by components, net of tax, for three months ended March 31, 2015 and 2014 are as follows (in millions):

	Foreign Currency Translation			Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at December 31, 2014	$	8		$	(777	)	$	(2	)	$	(771	)
Other comprehensive loss before reclassification	(33		)	(1		)	—			(34		)
Amounts reclassified from accumulated other comprehensive loss - net of tax	—			12			—			12
Net current-period other comprehensive income (loss)	$	(33	)	$	11		$	—		$	(22	)
Balance at March 31, 2015	$	(25	)	$	(766	)	$	(2	)	$	(793	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Actuarial losses	$	12	(a)
	12		Total before tax
	—		Tax (benefit) expense
Total reclassifications for the period	$	12	Net of tax
(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

	Foreign Currency Translation		Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at December 31, 2013	$	51	$	(782	)	$	(3	)	$	(734	)
Other comprehensive income before reclassification	10		2			2			14
Amounts reclassified from accumulated other comprehensive income - net of tax	—		8			—			8
Net current-period other comprehensive income	$	10	$	10		$	2		$	22
Balance at March 31, 2014	$	61	$	(772	)	$	(1	)	$	(712	)

30

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Prior service costs	$	(2	)	(b)
Actuarial losses	11			(b)
	9			Total before tax
	(1		)	Tax benefit
	8			Net of tax
Total reclassifications for the period	$	8		Net of tax
(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

The components of AOCL and the changes in AOCL by components, net of tax, for six months ended March 31, 2015 and 2014 are as follows (in millions):

	Foreign Currency Translation			Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at September 30, 2014	$	41		$	(789	)	$	(1	)	$	(749	)
Other comprehensive loss before reclassification	(67		)	(1		)	(1		)	(69		)
Amounts reclassified from accumulated other comprehensive loss - net of tax	1			24			—			25
Net current-period other comprehensive income (loss)	$	(66	)	$	23		$	(1	)	$	(44	)
Balance at March 31, 2015	$	(25	)	$	(766	)	$	(2	)	$	(793	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Actuarial losses	$	24	(a)
	24		Total before tax
	—		Tax (benefit) expense
	24		Net of tax
Foreign Currency Translation Related Adjustment
Other reclassification adjustment	$	1	(b)
	1		Total before tax
	—		Tax (benefit) expense
	1		Net of tax
Total reclassifications for the period	$	25	Net of tax
(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).
(b)  These accumulated other comprehensive income components are included in the computation of loss from discontinued operations (see Note 4).

31

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Foreign Currency Translation		Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at September 30, 2013	$	61	$	(792	)	$	(3	)	$	(734	)
Other comprehensive income before reclassification	—		2			2			4
Amounts reclassified from accumulated other comprehensive income - net of tax	—		18			—			18
Net current-period other comprehensive income	$	—	$	20		$	2		$	22
Balance at March 31, 2014	$	61	$	(772	)	$	(1	)	$	(712	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Prior service costs	$	(4	)	(b)
Actuarial losses	23			(b)
	19			Total before tax
	(1		)	Tax benefit
	18			Net of tax
Total reclassifications for the period	$	18		Net of tax
(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

21. 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.

      The company has two reportable segments at March 31, 2015, 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, 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 businesses 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 expense 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 4).

32

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

     Segment information is summarized as follows (in millions):

	Commercial Truck & Industrial		Aftermarket & Trailer		Eliminations			Total
Three Months Ended March 31, 2015
External Sales	$	660	$	204	$	—		$	864
Intersegment Sales	21		8		(29		)	—
Total Sales	$	681	$	212	$	(29	)	$	864
Three Months Ended March 31, 2014
External Sales	$	736	$	218	$	—		$	954
Intersegment Sales	27		7		(34		)	—
Total Sales	$	763	$	225	$	(34	)	$	954
	Commercial Truck & Industrial		Aftermarket & Trailer		Eliminations			Total
Six Months Ended March 31, 2015
External Sales	$	1,338	$	405	$	—		$	1,743
Intersegment Sales	46		15		(61		)	—
Total Sales	$	1,384	$	420	$	(61	)	$	1,743
Six Months Ended March 31, 2014
External Sales	$	1,439	$	415	$	—		$	1,854
Intersegment Sales	51		12		(63		)	—
Total Sales	$	1,490	$	427	$	(63	)	$	1,854

33

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014 (2)			2015			2014 (2)
Segment EBITDA:
Commercial Truck & Industrial	$	57		$	57		$	113		$	110
Aftermarket & Trailer	30			24			55			45
Segment EBITDA	87			81			168			155
Unallocated legacy and corporate costs, net (1)	—			(1		)	(2		)	(3		)
Interest expense, net	(21		)	(48		)	(40		)	(75		)
Provision for income taxes	(6		)	(8		)	(13		)	(19		)
Depreciation and amortization	(17		)	(17		)	(32		)	(33		)
Noncontrolling interests	—			(2		)	(1		)	(4		)
Loss on sale of receivables	(1		)	(2		)	(3		)	(5		)
Restructuring costs	(3		)	(2		)	(6		)	(3		)
Income from continuing operations attributable to Meritor, Inc.	$	39		$	1		$	71		$	13

⁽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, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability.

⁽²⁾ Amounts for prior periods have been recast for discontinued operations.

Segment Assets:	March 31, 2015			September 30, 2014
Commercial Truck & Industrial	$	1,657		$	1,755
Aftermarket & Trailer	441			458
Total segment assets	2,098			2,213
Corporate (1)	473			533
Less: Accounts receivable sold under off-balance sheet factoring programs (2)	(254		)	(244		)
Total assets	$	2,317		$	2,502

⁽¹⁾  Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.

⁽²⁾  At March 31, 2015 and September 30, 2014, segment assets include $254 million and $244 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.

22. Supplemental Guarantor Condensed Consolidating Financial Statements

Article 3-10 of Regulation S-X (S-X Rule 3-10) requires that separate financial information for issuers and guarantors of registered securities be filed in certain circumstances. Certain of the company's 100% owned subsidiaries, as defined in the credit agreement (the Guarantors), irrevocably and unconditionally guarantee amounts outstanding under the senior secured revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the notes outstanding under the company's indentures (see Note 16).

Schedule I of Article 5-04 of Regulation S-X (S-X Rule 5-04) requires that condensed financial information of the registrant (Parent) be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

34

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In lieu of providing separate audited financial statements for the Parent and Guarantors, the company has included the accompanying condensed consolidating financial statements as permitted by S-X Rules 3-10 and 5-04. These condensed consolidating financial statements are presented on the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the Parent's share of the subsidiary's cumulative results of operations, capital contributions and distribution and other equity changes. The Guarantors are combined in the condensed consolidated financial statements. Certain subsidiaries in China and India are restricted by law from transfer of cash by dividends, loans or advances to Parent, which exceeded 25 percent of consolidated net assets of Parent as of September 30, 2014. As of March 31, 2015, the company’s proportionate share of net assets restricted from transfer by law was $31 million.

35

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In millions)

(Unaudited)

	Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	418		$	446		$	—		$	864
Subsidiaries	—			31			17			(48		)	—
Total sales	—			449			463			(48		)	864
Cost of sales	(10		)	(380		)	(407		)	48			(749		)
GROSS MARGIN	(10		)	69			56			—			115
Selling, general and administrative	(16		)	(26		)	(15		)	—			(57		)
Restructuring costs	(1		)	—			(2		)	—			(3		)
Other operating income	—			—			—			—			—
OPERATING INCOME (LOSS)	(27		)	43			39			—			55
Other income, net	37			(9		)	(26		)	—			2
Equity in earnings of affiliates	—			8			1			—			9
Interest income (expense), net	(29		)	6			2			—			(21		)
INCOME (LOSS) BEFORE INCOME TAXES	(19		)	48			16			—			45
Provision for income taxes	(1		)	—			(5		)	—			(6		)
Equity income from continuing operations of subsidiaries	59			8			—			(67		)	—
INCOME FROM CONTINUING OPERATIONS	39			56			11			(67		)	39
INCOME FROM DISCONTINUED OPERATIONS, net of tax	4			5			3			(8		)	4
NET INCOME	43			61			14			(75		)	43
Less: Net income attributable to noncontrolling interests	—			—			—			—			—
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	43		$	61		$	14		$	(75	)	$	43

36

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

	Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
Net income	$	43		$	61		$	14	$	(75	)	$	43
Other comprehensive income (loss)	(22		)	(65		)	27		38			(22		)
Total comprehensive income (loss)	21			(4		)	41		(37		)	21
Less: Comprehensive income attributable to noncontrolling interests	—			—			—		—			—
Comprehensive income (loss) attributable to Meritor, Inc.	$	21		$	(4	)	$	41	$	(37	)	$	21

37

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In millions)

(Unaudited)

	Three Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	348		$	606		$	—		$	954
Subsidiaries	—			33			15			(48		)	—
Total sales	—			381			621			(48		)	954
Cost of sales	(13		)	(326		)	(545		)	48			(836		)
GROSS MARGIN	(13		)	55			76			—			118
Selling, general and administrative	(23		)	(22		)	(21		)	—			(66		)
Restructuring costs	(1		)	—			(1		)	—			(2		)
OPERATING INCOME (LOSS)	(37		)	33			54			—			50
Other income (loss), net	39			(8		)	(31		)	—			—
Equity in earnings of affiliates	—			6			3			—			9
Interest income (expense), net	(54		)	8			(2		)	—			(48		)
INCOME (LOSS) BEFORE INCOME TAXES	(52		)	39			24			—			11
Provision for income taxes	—			1			(9		)	—			(8		)
Equity income from continuing operations of subsidiaries	53			10			—			(63		)	—
INCOME FROM CONTINUING OPERATIONS	1			50			15			(63		)	3
INCOME FROM DISCONTINUED OPERATIONS, net of tax	—			—			—			—			—
NET INCOME	1			50			15			(63		)	3
Less: Net income attributable to noncontrolling interests	—			—			(2		)	—			(2		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	1		$	50		$	13		$	(63	)	$	1

38

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

	Three Months Ended March 31, 2014
	Parent		Guarantors		Non- Guarantors			Elims			Consolidated
Net income	$	1	$	50	$	15		$	(63	)	$	3
Other comprehensive income	22		5		11			(16		)	22
Total comprehensive income	23		55		26			(79		)	25
Less: Comprehensive income attributable to noncontrolling interests	—		—		(2		)	—			(2		)
Comprehensive income attributable to Meritor, Inc.	$	23	$	55	$	24		$	(79	)	$	23

39

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In millions)

(Unaudited)

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	821		$	922		$	—		$	1,743
Subsidiaries	—			61			33			(94		)	—
Total sales	—			882			955			(94		)	1,743
Cost of sales	(24		)	(751		)	(832		)	94			(1,513		)
GROSS MARGIN	(24		)	131			123			—			230
Selling, general and administrative	(34		)	(54		)	(34		)	—			(122		)
Restructuring costs	(1		)	(3		)	(2		)	—			(6		)
Other operating income	—			—			1			—			1
OPERATING INCOME (LOSS)	(59		)	74			88			—			103
Other income, net	37			(9		)	(24		)	—			4
Equity in earnings of affiliates	—			15			3			—			18
Interest income (expense), net	(58		)	13			5			—			(40		)
INCOME (LOSS) BEFORE INCOME TAXES	(80		)	93			72			—			85
Provision for income taxes	(1		)	—			(12		)	—			(13		)
Equity income from continuing operations of subsidiaries	152			53			—			(205		)	—
INCOME FROM CONTINUING OPERATIONS	71			146			60			(205		)	72
INCOME FROM DISCONTINUED OPERATIONS, net of tax	1			2			—			(2		)	1
NET INCOME	72			148			60			(207		)	73
Less: Net income attributable to noncontrolling interests	—			—			(1		)	—			(1		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	72		$	148		$	59		$	(207	)	$	72

40

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
Net income	$	72		$	148		$	60	$	(207	)	$	73
Other comprehensive income (loss)	(44		)	(92		)	18		73			(45		)
Total comprehensive income	28			56			78		(134		)	28
Less: Comprehensive income attributable to noncontrolling interests	—			—			—		—			—
Comprehensive income attributable to Meritor, Inc.	$	28		$	56		$	78	$	(134	)	$	28

41

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In millions)

(Unaudited)

	Six Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	657		$	1,197		$	—		$	1,854
Subsidiaries	—			66			29			(95		)	—
Total sales	—			723			1,226			(95		)	1,854
Cost of sales	(26		)	(623		)	(1,077		)	95			(1,631		)
GROSS MARGIN	(26		)	100			149			—			223
Selling, general and administrative	(40		)	(45		)	(40		)	—			(125		)
Restructuring costs	(1		)	—			(2		)	—			(3		)
Other operating expense	—			(1		)	—			—			(1		)
OPERATING INCOME (LOSS)	(67		)	54			107			—			94
Other income (loss), net	39			(8		)	(31		)	—			—
Equity in earnings of affiliates	—			12			5			—			17
Interest income (expense), net	(88		)	17			(4		)	—			(75		)
INCOME (LOSS) BEFORE INCOME TAXES	(116		)	75			77			—			36
Provision for income taxes	—			(1		)	(18		)	—			(19		)
Equity income from continuing operations of subsidiaries	129			48			—			(177		)	—
INCOME FROM CONTINUING OPERATIONS	13			122			59			(177		)	17
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(1		)	(1		)	(1		)	2			(1		)
NET INCOME	12			121			58			(175		)	16
Less: Net income attributable to noncontrolling interests	—			—			(4		)	—			(4		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	12		$	121		$	54		$	(175	)	$	12

42

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

	Six Months Ended March 31, 2014
	Parent		Guarantors		Non- Guarantors			Elims			Consolidated
Net income	$	12	$	121	$	58		$	(175	)	$	16
Other comprehensive income	22		10		—			(10		)	22
Total comprehensive income	34		131		58			(185		)	38
Less: Comprehensive income attributable to noncontrolling interests	—		—		(4		)	—			(4		)
Comprehensive income attributable to Meritor, Inc.	$	34	$	131	$	54		$	(185	)	$	34

43

MERITOR, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

(In millions)

(Unaudited)

	March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	99		$	4		$	104	$	—		$	207
Receivables trade and other, net	1			43			501		—			545
Inventories	—			164			201		—			365
Other current assets	9			18			28		—			55
TOTAL CURRENT ASSETS	109			229			834		—			1,172
NET PROPERTY	13			153			221		—			387
GOODWILL	—			278			136		—			414
OTHER ASSETS	76			125			143		—			344
INVESTMENTS IN SUBSIDIARIES	2,230			341			—		(2,571		)	—
TOTAL ASSETS	$	2,428		$	1,126		$	1,334	$	(2,571	)	$	2,317
CURRENT LIABILITIES:
Short-term debt	$	1		$	3		$	1	$	—		$	5
Accounts and notes payable	48			227			343		—			618
Other current liabilities	98			65			118		—			281
TOTAL CURRENT LIABILITIES	147			295			462		—			904
LONG-TERM DEBT	907			9			29		—			945
RETIREMENT BENEFITS	636			—			101		—			737
INTERCOMPANY PAYABLE (RECEIVABLE)	1,287			(1,705		)	418					—
OTHER LIABILITIES	47			211			43		—			301
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.	(596		)	2,316			255		(2,571		)	(596		)
NONCONTROLLING INTERESTS	—			—			26		—			26
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,428		$	1,126		$	1,334	$	(2,571	)	$	2,317

44

MERITOR, INC.

CONDENSED CONSOLIDATING BALANCE SHEET

(In millions)

(Unaudited)

	September 30, 2014
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	71		$	5		$	171	$	—		$	247
Receivables trade and other, net	1			45			564		—			610
Inventories	—			151			228		—			379
Other current assets	9			18			29		—			56
TOTAL CURRENT ASSETS	81			219			992		—			1,292
NET PROPERTY	13			158			253		—			424
GOODWILL	—			277			154		—			431
OTHER ASSETS	75			128			152		—			355
INVESTMENTS IN SUBSIDIARIES	2,185			267			—		(2,452		)	—
TOTAL ASSETS	$	2,354		$	1,049		$	1,551	$	(2,452	)	$	2,502
CURRENT LIABILITIES:
Short-term debt	$	1		$	3		$	3	$	—		$	7
Accounts and notes payable	46			230			404		—			680
Other current liabilities	97			87			167		—			351
TOTAL CURRENT LIABILITIES	144			320			574		—			1,038
LONG-TERM DEBT	916			10			39		—			965
RETIREMENT BENEFITS	656			—			119		—			775
INTERCOMPANY PAYABLE (RECEIVABLE)	1,198			(1,736		)	538		—			—
OTHER LIABILITIES	52			208			49		—			309
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.	(612		)	2,247			205		(2,452		)	(612		)
NONCONTROLLING INTERESTS	—			—			27		—			27
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,354		$	1,049		$	1,551	$	(2,452	)	$	2,502

45

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$	7		$	10		$	12		$	—	$	29
INVESTING ACTIVITIES
Capital expenditures	(1		)	(10		)	(12		)	—		(23		)
Net investing cash flows provided by discontinued operations	—			1			3			—		4
CASH USED FOR INVESTING ACTIVITIES	(1		)	(9		)	(9		)	—		(19		)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16		)	—			—			—		(16		)
Repurchase of common stock	(16		)									(16		)
Intercompany advances	54			—			(54		)	—		—
Other financing activities	—			(2		)	(4		)	—		(6		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	22			(2		)	(58		)	—		(38		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—			—			(12		)	—		(12		)
CHANGE IN CASH AND CASH EQUIVALENTS	28			(1		)	(67		)	—		(40		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	71			5			171			—		247
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	99		$	4		$	104		$	—	$	207

46

MERITOR, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions)

(Unaudited)

	Six Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	(30	)	$	8		$	40		$	—	$	18
INVESTING ACTIVITIES
Capital expenditures	(2		)	(11		)	(12		)	—		(25		)
Net investing cash flows provided by discontinued operations	—			—			3			—		3
CASH USED FOR INVESTING ACTIVITIES	(2		)	(11		)	(9		)	—		(22		)
FINANCING ACTIVITIES
Repayment term loan	(308		)	—			—			—		(308		)
Proceeds from debt issuance	225			—			—			—		225
Debt issuance costs	(9		)	—			—			—		(9		)
Intercompany advances	92			—			(92		)	—		—
Other financing activities	—			—			13			—		13
CASH USED FOR FINANCING ACTIVITIES	—			—			(79		)	—		(79		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—			—			(2		)	—		(2		)
CHANGE IN CASH AND CASH EQUIVALENTS	(32		)	(3		)	(50		)	—		(85		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	144			6			168			—		318
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	112		$	3		$	118		$	—	$	233

Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. As of March 31, 2015 and September 30, 2014, Parent-only obligations included $662 million and $684 million of pension and retiree medical benefits, respectively, (see Note 18). All debt is debt of the Parent other than $42 million and $55 million at March 31, 2015 and September 30, 2014, respectively (see Note 16), and is primarily related to capital lease obligations and lines of credit. Cash dividends paid to the Parent by subsidiaries and investments accounted for by the equity method were $37 million and $5 million for the six months ended March 31, 2015 and 2014, respectively.

47

MERITOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

23. Subsequent Events

On April 14, 2015, the company notified approximately 40 hourly and salaried employees that their positions were being eliminated due to the planned closure of a North America manufacturing facility. The company expects to incur $3 million in costs associated with this restructuring action. Restructuring actions associated with this plan are expected to be completed by the end of fiscal year 2015.

On April 29, 2015, a restructuring plan to further reduce headcount in South America was approved by the local union. This restructuring plan is in response to the current economic environment in South America which has weakened in 2015. With this restructuring plan the company expects to eliminate up to 233 hourly and 21 salary positions and incur $9 million in employee separation costs in the Commercial Truck & Industrial segment.

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Item 2.Management’s Discussion and Analysis of Financial Conditions and Results of Operations

OVERVIEW

Meritor, Inc. (the "company", "our", "we" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems, modules and components to original equipment manufacturers (“OEMs”) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction, and other industrial OEMs and certain aftermarkets. Meritor common stock is traded on the New York Stock Exchange under the ticker symbol MTOR.

2nd Quarter Fiscal Year 2015 results

Our sales for the second quarter of fiscal year 2015 were $864 million, a decrease compared to $954 million in the same period in the prior fiscal year. Our sales decrease was primarily impacted by the unfavorable translation effect of the weaker Euro and Brazilian Real versus the U.S. dollar. Sales were also negatively impacted by lower production in South America and China and lower revenue from our Defense business. The decrease in sales was partially offset by higher sales in North America, as Class 8 truck market production continued to strengthen.

Net income attributable to the company for the second quarter of fiscal year 2015 was $43 million compared to $1 million in the same period in the prior fiscal year. Net income from continuing operations attributable to the company for the second quarter of fiscal year 2015 was $39 million, or $0.38 per diluted share, compared to $1 million, or $0.01 per diluted share, in the same period in the prior fiscal year. In the second quarter of fiscal year 2014, we recognized a $21 million loss on debt extinguishment primarily related to the repurchase of our 10.625 percent notes due 2018.

Adjusted EBITDA (see Non-GAAP Financial Measures below) for the second quarter of fiscal year 2015 was $87 million compared to $80 million in the same period in the prior fiscal year. Our Adjusted EBITDA margin in the second quarter of fiscal year 2015 was 10.1 percent compared to 8.4 percent in the same period a year ago. Despite lower revenue, Adjusted EBITDA and Adjusted EBITDA margin increased compared to the prior fiscal year primarily due to material, labor and burden performance and incremental pricing, which more than offset the unfavorable impact of foreign currency losses net of foreign currency option gains.

Cash flow provided by operating activities was $38 million in the second quarter of fiscal year 2015 compared to $22 million in the same period last year. This improvement is primarily due to increased earnings from operations and lower working capital requirements related primarily to factoring programs.

Equity and Equity-Linked Repurchase Authorization

Under our equity and equity-linked repurchase program, in the second quarter of fiscal year 2015, we repurchased 1.2 million shares of our common stock for $16 million and we repurchased $15 million principal amount of our 4.0 percent convertible notes due 2027 for $16 million pursuant to the equity repurchase program described in the "Liquidity" section below.

Discontinued Operations

In the fourth quarter of fiscal year 2014, we exited our former Mascot business, a remanufacturer and distributor of all makes differentials, transmissions and steering gears. The results of operations and cash flows of our former Mascot business are presented in discontinued operations in the condensed consolidated statement of operations, and condensed consolidated statement of cash flows, and prior period information has been recast to reflect this presentation.

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Trends and Uncertainties

Production Volumes

     The following table reflects estimated commercial truck production volumes for selected original equipment (OE) markets for the three and six months ended March 31, 2015 and 2014 based on available sources and management’s estimates.

	Three Months Ended March 31,		Percent		Six Months Ended March 31,		Percent
	2015	2014	Change		2015	2014	Change
Estimated Commercial Truck production (in thousands)
North America, Heavy-Duty Trucks	79	67	18	%	156	127	23	%
North America, Medium-Duty Trucks	57	51	12	%	115	102	13	%
Western Europe, Heavy- and Medium-Duty Trucks	95	92	3	%	194	221	(12	)%
South America, Heavy- and Medium-Duty Trucks	23	43	(47	)%	52	85	(39	)%

During fiscal year 2015, we expect an increase in production volumes in North America compared to the levels experienced in fiscal year 2014. We expect production volumes in Western Europe to weaken compared to the levels experienced in fiscal year 2014. We anticipate a significant decrease in production volumes in South America resulting from the difficult economic climate. Production volumes in China are expected to decrease during fiscal year 2015 compared to levels experienced in fiscal year 2014. We expect the market in India to be up in fiscal year 2015 due to an improving economic climate.

Sales for our primary military program were at their peak during the third quarter of fiscal year 2012 and began to decline in fiscal year 2013. The program is expected to continue to wind down in 2015, although a relatively modest level of production may continue beyond 2015. We are working to secure our participation in new military programs with various OEMs. However, if sales of our military programs do return to historical levels, the profitability on these sales could be lower than what we have recognized in recent periods.

Industry-Wide Issues

Our business continues to address a number of other challenging industry-wide issues including the following:

• Uncertainty around the global market outlook;

• Volatility in price and availability of steel, components and other commodities;

• Disruptions in the financial markets and their impact on the availability and cost of credit;

• Volatile energy and increasing transportation costs;

• Impact of currency exchange rate volatility;

• Consolidation and globalization of OEMs and their suppliers; and

• Significant pension and retiree medical health care costs.

Other

Other significant factors that could affect our results and liquidity in fiscal year 2015 and beyond include:

• Significant contract awards or losses of existing business or failure to negotiate acceptable terms in contract renewals;

• Failure to obtain new business;

• Failure to secure new military contracts as our primary military program winds down;

• Ability to manage possible adverse effects on our European operations, or financing arrangements related thereto, in the event one or more countries exit the European monetary union;

• Ability to work with our customers to manage rapidly changing production volumes;

• Ability to recover and timing of recovery of steel price and other cost increases from our customers;

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• Any unplanned extended shutdowns or production interruptions by us, our customers or our suppliers;

• A significant deterioration or slowdown in economic activity in the key markets in which we operate;

• Any costs associated with the divesture or wind down of any portion of our businesses;

• Higher-than-planned price reductions to our customers;

• Potential price increases from our suppliers;

• Additional restructuring actions and the timing and recognition of restructuring charges, including any actions associated with the prolonged softness in markets in which we operate;

• Higher-than-planned warranty expenses, including the outcome of known or potential recall campaigns;

• Our ability to implement planned productivity, cost reduction, and other margin improvement initiatives;

• Uncertainties of asbestos claim litigation and the outcome of litigation with insurance companies regarding the scope of coverage and the long-term solvency of our insurance carriers; and

• Restrictive government actions by foreign countries (such as restrictions on transfer of funds and trade protection measures, including export duties and quotas and customs duties and tariffs).

NON-GAAP FINANCIAL MEASURES

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP), we have provided information regarding non-GAAP financial measures. These non-GAAP financial measures include Adjusted income (loss) from continuing operations, Adjusted diluted earnings (loss) per share from continuing operations, Adjusted EBITDA, Adjusted EBITDA margin, and Free cash flow.

     Adjusted income (loss) from continuing operations and Adjusted diluted earnings (loss) per share from continuing operations are defined as reported income or loss from continuing operations and reported diluted earnings (loss) per share from continuing operations before restructuring expenses, asset impairment charges and other special items as determined by management. Adjusted EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring expenses, asset impairment charges and other special items as determined by management. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by consolidated sales from continuing operations. Free cash flow is defined as cash flows provided by (used for) operating activities less capital expenditures.

     Management believes these non-GAAP financial measures are useful to both management and investors in their analysis of the company's financial position and results of operations. In particular, management believes that Adjusted EBITDA, Adjusted EBITDA margin and Adjusted diluted earnings (loss) per share from continuing operations are meaningful measures of performance as they are commonly utilized by management and the investment community to analyze operating performance in our industry. Further, management uses Adjusted EBITDA for planning and forecasting future periods. In addition, we use Segment EBITDA as the primary basis for the Chief Operating Decision Maker (CODM) to evaluate the performance of each of our reportable segments. 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 expense and asset impairment charges. Segment EBITDA margin is defined as Segment EBITDA divided by consolidated sales from continuing operations. Management believes that Free cash flow is useful in analyzing our ability to service and repay debt and return value directly to shareholders.

     Adjusted income (loss) from continuing operations, Adjusted diluted earnings (loss) per share from continuing operations and Adjusted EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or to cash flows as a measure of liquidity. Free cash flow should not be considered a substitute for cash provided by (used for) operating activities, or other cash flow statement data prepared in accordance with GAAP, or as a measure of financial position or liquidity. In addition, these non-GAAP cash flow measures do not reflect cash used to repay debt or cash received from the divestitures of businesses or sales of other assets and thus do not reflect funds available for investment or other discretionary uses. These non-GAAP financial measures, as determined and presented by the company, may not be comparable to related or similarly titled measures reported by other companies. Set forth below are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.

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Adjusted income from continuing operations attributable to the company and adjusted diluted earnings per share from continuing operations are reconciled to income from continuing operations attributable to the company and diluted earnings per share from continuing operations below (in millions, except per share amounts).

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014 (1)			2015			2014 (1)
Adjusted income from continuing operations attributable to the company, net of tax	$	42		$	24		$	77		$	37
Loss on debt extinguishment	—			(21		)	—			(21		)
Restructuring costs	(3		)	(2		)	(6		)	(3		)
Income from continuing operations attributable to the company	$	39		$	1		$	71		$	13
Adjusted diluted earnings per share from continuing operations	$	0.41		$	0.24		$	0.75		$	0.37
Impact of adjustments on diluted earnings per share	(0.03		)	(0.23		)	(0.05		)	(0.24		)
Diluted earnings per share from continuing operations	$	0.38		$	0.01		$	0.70		$	0.13

⁽¹⁾ Amounts for prior periods have been recast for discontinued operations.

Free cash flow is reconciled to cash flows provided by operating activities below (in millions).

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014 (1)			2015			2014 (1)
Cash provided by operating activities	$	38		$	22		$	29		$	18
Capital expenditures	(11		)	(13		)	(23		)	(25		)
Free cash flow	$	27		$	9		$	6		$	(7	)

⁽¹⁾ Amounts for prior periods have been recast for discontinued operations.

Adjusted EBITDA is reconciled to net income attributable to Meritor, Inc. in “Results of Operations” below.

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Results of Operations

The following is a summary of our financial results is (in millions, except per share amounts):

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014 (2)			2015			2014 (2)
SALES:
Commercial Truck & Industrial	$	681		$	763		$	1,384		$	1,490
Aftermarket & Trailer	212			225			420			427
Intersegment Sales	(29		)	(34		)	(61		)	(63		)
SALES	$	864		$	954		$	1,743		$	1,854
SEGMENT EBITDA:
Commercial Truck & Industrial	$	57		$	57		$	113		$	110
Aftermarket & Trailer	30			24			55			45
SEGMENT EBITDA:	87			81			168			155
Unallocated legacy and corporate costs, net (1)	—			(1		)	(2		)	(3		)
ADJUSTED EBITDA:	87			80			166			152
Interest expense, net	(21		)	(48		)	(40		)	(75		)
Provision for income taxes	(6		)	(8		)	(13		)	(19		)
Depreciation and amortization	(17		)	(17		)	(32		)	(33		)
Noncontrolling interests	—			(2		)	(1		)	(4		)
Loss on sale of receivables	(1		)	(2		)	(3		)	(5		)
Restructuring costs	(3		)	(2		)	(6		)	(3		)
INCOME FROM CONTINUING OPERATIONS, net of tax, attributable to Meritor, Inc.	$	39		$	1		$	71		$	13
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax, attributable to Meritor, Inc.	4			—			1			(1		)
NET INCOME attributable to Meritor, Inc.	$	43		$	1		$	72		$	12
DILUTED EARNINGS (LOSS) PER SHARE attributable to Meritor, Inc.:
Continuing operations	$	0.38		$	0.01		$	0.70		$	0.13
Discontinued operations	0.04			—			0.01			(0.01		)
Diluted earnings per share	$	0.42		$	0.01		$	0.71		$	0.12
DILUTED AVERAGE COMMON SHARES OUTSTANDING	102.9			99.6			102.0			99.2

⁽¹⁾  Unallocated legacy and corporate costs, net represents items that are not directly related to our business segments. These costs primarily include asbestos-related charges, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability charges.

⁽²⁾  Amounts for prior periods have been recast for discontinued operations.

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Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Sales

The following table reflects total company and business segment sales for the three months ended March 31, 2015 and 2014 (dollars in millions). The reconciliation is intended to reflect the trend in business segment sales and to illustrate the impact that changes in foreign currency exchange rates, volumes and other factors had on sales. Business segment sales include intersegment sales.

	Three Months Ended											Dollar Change Due To
	March 31,						Dollar			%					Volume /
	2015			2014			Change			Change		Currency			Other
Sales:
Commercial Truck & Industrial	$	681		$	763		$	(82	)	(11	)%	$	(53	)	$	(29	)
Aftermarket & Trailer	212			225			(13		)	(6	)%	(15		)	2
Intersegment Sales	(29		)	(34		)	5			15	%	13			(8		)
TOTAL SALES	$	864		$	954		$	(90	)	(9	)%	$	(55	)	$	(35	)

Commercial Truck & Industrial sales were $681 million in the second quarter of fiscal year 2015, down 11 percent compared to the second quarter of fiscal year 2014. Increased sales in North America driven by the continued strengthening of the Class 8 truck market, were more than offset by the strengthening of the US dollar against most currencies, primarily the Brazilian Real and Euro, which unfavorably impacted sales by $53 million in the second quarter of fiscal year 2015 compared to the same period in the prior fiscal year. In addition, macro-economic conditions in South America and China resulted in lower production in these regions, and revenue from our Defense business was lower compared to the same period in the prior fiscal year.

Aftermarket & Trailer sales were $212 million in the second quarter of fiscal year 2015, down 6 percent compared to the second quarter of fiscal year 2014. The decrease was primarily due to lower revenue from our aftermarket business in Europe driven primarily by the unfavorable impact of the strengthening US dollar.

Cost of Sales and Gross Profit

     Cost of sales primarily represents materials, labor and overhead production costs associated with the company’s products and production facilities. Cost of sales for the three months ended March 31, 2015 was $749 million compared to $836 million in the same period in the prior fiscal year, representing a decrease of 10 percent. Total cost of sales was 86.7 percent and 87.6 percent of sales for the three month periods ended March 31, 2015 and 2014, respectively.

     The following table summarizes significant factors contributing to the changes in costs of sales during the second quarter of fiscal year 2015 compared to the same quarter in the prior year (in millions):

	Cost of Sales
Three months ended March 31, 2014	$	836
Volume, mix and other, net	(32		)
Foreign exchange	(55		)
Three months ended March 31, 2015	$	749

     Changes in the components of cost of sales year over year are summarized as follows (in millions):

	Change in Cost of Sales
Lower material costs	$	(47	)
Lower labor and overhead costs	(35		)
Other, net	(5		)
Total change in costs of sales	$	(87	)

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Material costs represent the majority of our cost of sales and include raw materials, composed primarily of steel and purchased components. Material costs for the three months ended March 31, 2015 decreased $47 million compared to the same period in the prior fiscal year primarily due to the movement in foreign currency rates, lower volume,and material cost savings.

Labor and overhead costs decreased $35 million compared to the same period in the prior fiscal year primarily due to the movement in foreign currency rates, lower revenue, and savings associated with labor and burden cost reduction programs.

Gross margin for the three months ended March 31, 2015 was $115 million compared to $118 million in the same period last year. Gross margin, as a percentage of sales, was 13.3 percent and 12.4 percent for the three months ended March 31, 2015 and 2014, respectively. This improvement in gross margin percentage was driven by material, labor and burden performance and pricing actions.

Other Income Statement Items

Selling, general and administrative expenses (SG&A) for the three months ended March 31, 2015 and 2014 are summarized as follows (dollars in millions):

	Three Months Ended					Three Months Ended
	March 31, 2015					March 31, 2014					Increase (Decrease)
SG&A	Amount			% of sales		Amount			% of sales
Loss on sale of receivables	$	(1	)	(0.1	)%	$	(2	)	(0.2	)%	$	(1	)	(0.1) pts
Short and long-term variable      compensation	(4		)	(0.5	)%	(8		)	(0.8	)%	(4		)	(0.3) pts
All other SG&A	(52		)	(6.0	)%	(56		)	(5.9	)%	(4		)	0.1 pts
Total SG&A	$	(57	)	(6.6	)%	$	(66	)	(6.9	)%	$	(9	)	(0.3) pts

All other SG&A represents normal selling, general and administrative expense and generally remained constant year over year.

Restructuring costs of $3 million were recorded during the three months ended March 31, 2015, compared to $2 million for the same period in the prior fiscal year. During the second quarter of fiscal year 2015, $2 million of restructuring costs were recognized by our Commercial Truck & Industrial segment and $1 million by our corporate locations primarily related to employee severance costs. During the second quarter of fiscal year 2014, $1 million of restructuring costs were recognized by our Commercial Truck & Industrial segment and $1 million by our corporate locations primarily related to employee severance costs.

Operating income for the second quarter of fiscal year 2015 was $55 million, compared to $50 million in the same period in the prior fiscal year. Key items affecting operating income are discussed above.

Equity in earnings of other affiliates was $9 million for both the second quarter of fiscal year 2015 and 2014.

Interest expense, net for the second quarter of fiscal year 2015 was $21 million, compared to $48 million in the same period in the prior fiscal year. The decrease was primarily attributable to the capital market transactions we executed in fiscal year 2014 that reduced our gross debt balances and lowered our cost of debt. Specifically, during the second quarter of fiscal year 2014, we exercised a call option to redeem $250 million principal amount of our 10.625 percent notes due 2018 at a premium of 5.313 percent of their principal amount and repaid the balance of our $41 million term loan, both of which were funded by cash and the issuance of $225 million principal amount of our 6.25 percent notes due 2024. We recognized a $21 million loss on debt extinguishment, which is included in interest expense, net, primarily related to the repurchase of our 10.625 percent notes due 2018.

Provision for income taxes was $6 million in the second quarter of fiscal year 2015 compared to $8 million in the same period in the prior fiscal year. The reduction in tax expense was primarily attributable to lower earnings in jurisdictions in which we recognize tax expense.

Income from continuing operations (before noncontrolling interests) for the second quarter of fiscal year 2015 was $39 million compared to $3 million in the same period in the prior fiscal year. The reasons for the improvement are discussed above.

  Income from discontinued operations, net of tax was $4 million for the three months ended March 31, 2015, primarily related to the resolution of indemnities from certain previously divested businesses.

Net income attributable to Meritor, Inc. was $43 million for the second quarter of fiscal year 2015 compared to $1 million in the same period in the prior fiscal year. The various factors affecting net income are discussed above.

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Segment EBITDA and EBITDA Margins

Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, noncontrolling interests in consolidated joint ventures, loss on sale of receivables, restructuring expense, and asset impairment charges. We use Segment EBITDA as the primary basis for the Chief Operating Decision Maker (CODM) to evaluate the performance of each of our reportable segments. Segment EBITDA margin is defined as Segment EBITDA divided by consolidated sales from continuing operations.

As discussed previously, we disposed of our Mascot business during the fourth quarter of fiscal year 2014. The Mascot business has been classified as part of discontinued operations at September 30, 2014, and all prior period amounts have been recast to reflect this presentation.

     The following table reflects Segment EBITDA and Segment EBITDA margins for the three months ended March 31, 2015 and 2014 (dollars in millions).

	Segment EBITDA						Segment EBITDA Margins
	Three Months Ended March 31,						Three Months Ended March 31,
	2015		2014		Change		2015		2014		Change
Commercial Truck & Industrial	$	57	$	57	$	—	8.4	%	7.5	%	0.9 pts
Aftermarket & Trailer	30		24		6		14.2	%	10.7	%	3.5 pts
Segment EBITDA	$	87	$	81	$	6	10.1	%	8.5	%	1.6 pts

     Significant items impacting year-over-year Segment EBITDA include the following (in millions):

	Commercial Truck & Industrial			Aftermarket & Trailer			TOTAL
Segment EBITDA– Quarter ended March 31, 2014	$	57		$	24		$	81
Impact of foreign currency exchange rates	(2		)	(1		)	(3		)
Volume, mix, pricing and other	2			7			9
Segment EBITDA – Quarter ended March 31, 2015	$	57		$	30		$	87

Commercial Truck & Industrial Segment EBITDA was $57 million in the second quarter of fiscal year 2015 and $57 million in the second quarter of fiscal year 2014. Segment EBITDA margin increased to 8.4 percent compared to 7.5 percent in the same period in the prior fiscal year. Segment EBITDA margin increased primarily due to material, labor and burden performance and incremental pricing, as well as the impact of a $5 million gain associated with our foreign currency option contracts which mitigated the foreign currency impact to the segment. These actions more than offset reduced revenue and unfavorable mix associated with lower commercial vehicle demand in South America and lower revenue from our Defense business.

  Aftermarket & Trailer Segment EBITDA was $30 million in the second quarter of fiscal year 2015 and $24 million in the second quarter of fiscal year 2014. Segment EBITDA margin increased to 14.2 percent compared to 10.7 percent in the same period in the prior fiscal year. The increase in Segment EBITDA and Segment EBITDA margin is primarily due to net material and operational performance, a $1 million gain associated with our foreign currency option contracts which mitigated the foreign currency impact to the segment, and pricing actions executed during the second quarter of fiscal year 2015.

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Six Months Ended March 31, 2015 Compared to Six Months Ended March 31, 2014

Sales

The following table reflects total company and business segment sales for the six months ended March 31, 2015 and 2014 (dollars in millions). The reconciliation is intended to reflect the trend in business segment sales and to illustrate the impact that changes in foreign currency exchange rates, volumes and other factors had on sales. Business segment sales include intersegment sales.

	Six Months Ended											Dollar Change Due To
	March 31,						Dollar			%					Volume /
	2015			2014			Change			Change		Currency			Other
Sales:
Commercial Truck & Industrial	$	1,384		$	1,490		$	(106	)	(7	)%	$	(88	)	$	(18	)
Aftermarket & Trailer	420			427			(7		)	(2	)%	(20		)	13
Intersegment Sales	(61		)	(63		)	2			3	%	23			(21		)
TOTAL SALES	$	1,743		$	1,854		$	(111	)	(6	)%	$	(85	)	$	(26	)

Commercial Truck & Industrial sales were $1,384 million in the first six months of fiscal year 2015, down 7 percent compared to the first six months of fiscal year 2014. The decrease in sales was the result of the strengthening of the US dollar against most currencies, primarily the Brazilian Real and Euro, which unfavorably impacted sales by $88 million in the first six months of fiscal year 2015 compared to the same period in fiscal year 2014. In addition, unfavorable macro-economic conditions in South America and China resulted in lower production in these regions, and we experienced lower revenue from our Defense business compared to the prior period. The decrease in revenue was partially offset by higher sales in North America, as the Class 8 truck market continued to strengthen and the Euro VI pre-buy favorably impacted European truck sales a year ago.

Aftermarket & Trailer sales were $420 million in first six months of fiscal year 2015, down 2 percent compared to the first six months of fiscal year 2014. The decrease was primarily due to lower revenue from our aftermarket business in Europe driven by the unfavorable impact of the strengthening US dollar, partially offset by higher revenue from our trailer business.

Cost of Sales and Gross Profit

     Cost of sales primarily represents materials, labor and overhead production costs associated with the company’s products and production facilities. Cost of sales for the six months ended March 31, 2015 was $1,513 million compared to $1,631 million in the prior year, representing a decrease of 7 percent. Total cost of sales was 86.8 percent and 88.0 percent of sales for the six month periods ended March 31, 2015 and 2014, respectively.

     The following table summarizes significant factors contributing to the changes in costs of sales during the first six months of fiscal year 2015 compared to the same period in the prior year (in millions):

	Cost of Sales
Six months ended March 31, 2014	$	1,631
Volume, mix and other, net	(34		)
Foreign exchange	(84		)
Six months ended March 31, 2015	$	1,513

     Changes in the components of cost of sales year over year are summarized as follows (in millions):

	Change in Cost of Sales
Lower material costs	$	(58	)
Lower labor and overhead costs	(56		)
Other, net	(4		)
Total change in costs of sales	$	(118	)

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Material costs represent the majority of our cost of sales and include raw materials, composed primarily of steel and purchased components. Material costs for the six months ended March 31, 2015 decreased $58 million compared to the same period in the prior fiscal year primarily due to the movement in foreign currency rates, lower volume, and material cost savings.

Labor and overhead costs for the six months ended March 31, 2015 decreased $56 million compared to the same period in the prior fiscal year primarily due to the movement in foreign currency rates, lower revenue, savings associated with labor and burden cost reduction programs.

Gross margin for the six months ended March 31, 2015 was $230 million compared to $223 million in the same period last year. Gross margin, as a percentage of sales, was 13.2 percent and 12.0 percent for the six months ended March 31, 2015 and 2014, respectively. This improvement in gross margin percentage was primarily driven by material, labor and burden performance and incremental pricing.

Other Income Statement Items

Selling, general and administrative expenses for the six months ended March 31, 2015 and 2014 are summarized as follows (dollars in millions):

	Six Months Ended					Six Months Ended
	March 31, 2015					March 31, 2014					Increase (Decrease)
SG&A	Amount			% of sales		Amount			% of sales
Loss on sale of receivables	$	(3	)	(0.2	)%	$	(5	)	(0.3	)%	$	(2	)	(0.1) pts
Short and long-term variable      compensation	(12		)	(0.7	)%	(14		)	(0.7	)%	(2		)	0.0 pts
Long-term liability reduction	—			—	%	5			0.3	%	5			0.3 pts
All other SG&A	(107		)	(6.1	)%	(111		)	(6.0	)%	(4		)	0.1 pts
Total SG&A	$	(122	)	(7.0	)%	$	(125	)	(6.7	)%	$	(3	)	0.3 pts

      In the first quarter of fiscal year 2014, we executed a change to our long-term disability benefit plan reducing the duration for which we provide medical and dental benefits to individuals on long-term disability to be more consistent with market practices. This resulted in a $5 million reduction in the liability associated with these benefits.

All other SG&A represents normal selling, general and administrative expense and generally remained constant year over year.

Restructuring costs of $6 million and $3 million were recorded during the first six months of March 31, 2015 and 2014, respectively. During the first six months of fiscal year 2015, $5 million of restructuring costs were recognized by our Commercial Truck & Industrial segment and $1 million by our corporate locations, primarily related to employee severance. The restructuring costs incurred in the first six months of fiscal year 2014 primarily relate to employee severance in our Commercial Truck & Industrial segment.

Operating income for the first six months of fiscal year 2015 was $103 million, compared to $94 million in the same period in the prior fiscal year. Key items affecting operating income are discussed above.

Equity in earnings of other affiliates was $18 million in the first six months of fiscal year 2015, compared to $17 million in the same period in the prior fiscal year.

Interest expense, net for the first six months of fiscal year 2015 was $40 million, compared to $75 million in the same period in the prior fiscal year. The decrease was primarily attributable to the capital market transactions we executed in fiscal year 2014 that reduced our gross debt balances and lowered our cost of debt. Specifically, during the first six months of fiscal year 2014, we exercised a call option to redeem $250 million principal amount of our 10.625 percent notes due 2018 at a premium of 5.313 percent of their principal amount and repaid the balance of our $45 million term loan, both of which were funded by cash and the issuance of $225 million principal amount of our 6.25 percent notes due 2024. We recognized a $21 million loss on debt extinguishment, which is included in interest expense, net, primarily related to the repurchase of our 10.625 percent notes due 2018.

Provision for income taxes was $13 million in the first six months of fiscal year 2015 compared to $19 million in the same period in the prior fiscal year. The reduction in tax expense was primarily attributable to a tax law change and lower earnings in jurisdictions in which we recognize tax expense.

Income from continuing operations (before noncontrolling interests) for the first six months of fiscal year 2015 was $72 million compared to $17 million in the same period in the prior fiscal year. The reasons for the improvement are discussed above.

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Income from discontinued operations, net of tax was $1 million for the first six months of fiscal year 2015, primarily related to the resolution of indemnities from certain previously divested businesses. Loss from discontinued operations, net of tax was $1 million for the same period in the prior fiscal year, primarily related to our former Mascot business.

Net income attributable to Meritor, Inc. was $72 million for the first six months of fiscal year 2015 compared to $12 million in the same period in the prior fiscal year. The various factors affecting net income are discussed above.

Segment EBITDA and EBITDA Margins

Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, noncontrolling interests in consolidated joint ventures, loss on sale of receivables, restructuring expense, and asset impairment charges. We use Segment EBITDA as the primary basis for the Chief Operating Decision Maker (CODM) to evaluate the performance of each of our reportable segments. Segment EBITDA margin is defined as Segment EBITDA divided by consolidated sales from continuing operations.

As discussed previously, we disposed of our Mascot business during the fourth quarter of fiscal year 2014. The Mascot business has been classified as part of discontinued operations at September 30, 2014, and all prior period amounts have been recast to reflect this presentation.

     The following table reflects Segment EBITDA and Segment EBITDA margins for the six months ended March 31, 2015 and 2014 (dollars in millions).

	Segment EBITDA						Segment EBITDA Margins
	Six Months Ended March 31,						Six Months Ended March 31,
	2015		2014		Change		2015		2014		Change
Commercial Truck & Industrial	$	113	$	110	$	3	8.2	%	7.4	%	0.8 pts
Aftermarket & Trailer	55		45		10		13.1	%	10.5	%	2.6 pts
Segment EBITDA	$	168	$	155	$	13	9.6	%	8.4	%	1.2 pts

     Significant items impacting year-over-year Segment EBITDA include the following (in millions):

	Commercial Truck & Industrial			Aftermarket & Trailer			TOTAL
Segment EBITDA– Six months ended March 31, 2014	$	110		$	45		$	155
Higher earnings from unconsolidated affiliates	1			—			1
Impact of foreign currency exchange rates	(5		)	(2		)	(7		)
Volume, mix, pricing and other	7			12			19
Segment EBITDA – Six months ended March 31, 2015	$	113		$	55		$	168

Commercial Truck & Industrial Segment EBITDA was $113 million in the first six months of fiscal year 2015 and $110 million in same period in the prior fiscal year. Segment EBITDA margin increased to 8.2 percent compared to 7.4 percent in the same period in the prior fiscal year. The increase in Segment EBITDA and Segment EBITDA margin reflects the continued execution of our M2016 initiatives, including material, labor and burden performance and incremental pricing, as well as the impact of a $5 million gain associated with our foreign currency option contracts which mitigated the foreign currency impact to the segment. Our results were partially offset by lower commercial vehicle demand in South America, Europe, and China, and lower revenue from our Defense business.

Aftermarket & Trailer Segment EBITDA was $55 million in the first six months of fiscal year 2015 and $45 million in the same period in the prior fiscal year. Segment EBITDA margin increased to 13.1 percent compared to 10.5 percent in the same period in the prior year. The increase in Segment EBITDA and Segment EBITDA margin is primarily due to net material and operational performance, a $1 million gain associated with our foreign currency option contracts which mitigated the foreign currency impact to the segment, and pricing actions executed in the second quarter of fiscal year 2015.

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Financial Condition

Cash Flows (in millions)

	Six Months Ended March 31,
	2015			2014
OPERATING CASH FLOWS
Income from continuing operations	$	72		$	17
Depreciation and amortization	32			33
Restructuring costs	6			3
Loss on debt extinguishment	1			21
Equity in earnings of affiliates	(18		)	(17		)
Pension and retiree medical expense	14			20
Dividends received from equity method investments	10			11
Pension and retiree medical contributions	(24		)	(19		)
Restructuring payments	(3		)	(4		)
Increase in working capital	(63		)	(58		)
Changes in off-balance sheet accounts receivable factoring	40			17
Other, net	(31		)	3
Cash flows provided by continuing operations	36			27
Cash flows used for discontinued operations	(7		)	(9		)
CASH PROVIDED BY OPERATING ACTIVITIES	$	29		$	18

Cash provided by operating activities in the first six months of fiscal year 2015 was $29 million compared to $18 million in the same period of fiscal year 2014 primarily due to improvement in earnings from operations and more cash provided by our accounts receivable factoring programs.

	Six Months Ended March 31,
	2015			2014
INVESTING CASH FLOWS
Capital expenditures	$	(23	)	$	(25	)
Net investing cash flows provided by discontinued operations	4			3
CASH USED FOR INVESTING ACTIVITIES	$	(19	)	$	(22	)

Cash used forinvesting activitieswas$19 millionin the first six months of fiscal year 2015compared to$22 million in the same period in fiscal year 2014.

	Six Months Ended March 31,
	2015			2014
FINANCING CASH FLOWS
Repayment of notes and term loan	$	(16	)	$	(308	)
Proceeds from debt issuance	—			225
Debt issuance costs	—			(9		)
Repurchase of common stock	(16		)	—
Other financing activities	(6		)	13
CASH USED FOR FINANCING ACTIVITIES	$	(38	)	$	(79	)

Cash used for financing activities was $38 million in the first six months of fiscal year 2015 compared to $79 million in the same period of fiscal year 2014. In the first six months of fiscal year 2015, we spent $16 million on the repurchase of our 4.0 percent convertible notes due 2027 and an additional $16 million on the repurchase of 1.2 million shares of our common stock (see Note 20 of the Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report).

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In the second quarter of fiscal year 2014, we issued $225 million of 6.25 percent senior unsecured notes due in 2024. Net proceeds from the issuance of these notes were used along with available cash to retire the $250 million 10.625 percent notes due in 2018 at a premium of $13 million. The outstanding term loan balance of $45 million was paid in the first six months of fiscal year 2014.

Liquidity

Our outstanding debt, net of discounts where applicable, is summarized as follows (in millions).

	March 31,			September 30,
	2015			2014
Fixed-rate debt securities	$	500		$	500
Fixed-rate convertible notes	432			446
Unamortized discount on convertible notes	(26		)	(31		)
Other borrowings	44			57
Total debt	$	950		$	972

Overview – Our principal operating and capital requirements are for working capital needs, capital expenditure requirements, debt service requirements, funding of pension and retiree medical costs, restructuring and product development programs. We expect fiscal year 2015 capital expenditures for our business segments to be in the range of $80 million to $90 million.

     We generally fund our operating and capital needs with cash on hand, cash flow from operations, our various accounts receivable securitization and factoring arrangements and availability under our revolving credit facility. Cash in excess of local operating needs is generally used to reduce amounts outstanding, if any, under our revolving credit facility or U.S. accounts receivable securitization program. Our ability to access additional capital in the long term will depend on availability of capital markets and pricing on commercially reasonable terms as well as our credit profile at the time we are seeking funds. We continuously evaluate our capital structure to ensure the most appropriate and optimal structure and may, from time to time, retire, repurchase, exchange or redeem outstanding indebtedness, issue new equity or debt securities or enter into new lending arrangements if conditions warrant.

In December 2014, we filed a shelf registration statement with the Securities and Exchange Commission, registering an unlimited amount of debt and/or equity securities that we may offer in one or more offerings on terms to be determined at the time of sale.  The December 2014 shelf registration statement superseded and replaced the shelf registration statement filed in February 2012, as amended.

     We believe our current financing arrangements provide us with the financial flexibility required to maintain our operations and fund future growth, including actions required to improve our market share and further diversify our global operations, through the term of our revolving credit facility, which matures in February 2019.

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     Sources of liquidity as of March 31, 2015, in addition to cash on hand, are as follows (in millions):

	Total Facility Size		Utilized as of 3/31/15		Readily Available as of 3/31/15		Current Expiration
On-balance sheet arrangements:
Revolving credit facility (1)	$	499	$	—	$	499	February 2019
Committed U.S. accounts receivable securitization (2)	100		—		69		October 2017
Total on-balance sheet arrangements	$	599	$	—	$	568
Off-balance sheet arrangements: (2)
Swedish Factoring Facility	$	163	$	128	$	—	June 2015
U.S. Factoring Facility	71		85		—		October 2015
U.K. Factoring Facility	27		6		—		February 2018
Italy Factoring Facility	33		18		—		June 2017
Other uncommitted factoring facilities	22		17		—		Various
Letter of credit facility	30		25		5		March 2019
Total off-balance sheet arrangements	346		279		5
Total available sources	$	945	$	279	$	573

(1) The availability under the revolving credit facility is subject to a collateral test and a priority debt-to-EBITDA ratio covenant and a reduction to $410 million in April 2017 as discussed under “Revolving Credit Facility” below.

(2) Availability subject to adequate eligible accounts receivable available for sale.

Cash and Liquidity Needs – Our cash and liquidity needs have been affected by the level, variability and timing of our customers’ worldwide vehicle production and other factors outside of our control. At March 31, 2015, we had $207 million in cash and cash equivalents.

     Our availability under the revolving credit facility is subject to a collateral test and a priority debt-to-EBITDA ratio covenant, as defined in the agreement, which may limit our borrowings under the agreement as of each quarter end. As long as we are in compliance with those covenants as of the quarter end, we have full availability (up to the amount of collateral under the collateral test) under the revolving credit facility every other day during the quarter. Our future liquidity is subject to a number of factors, including access to adequate funding under our revolving credit facility, access to other borrowing arrangements such as factoring or securitization facilities, vehicle production schedules and customer demand. Even taking into account these and other factors, management expects to have sufficient liquidity to fund our operating requirements through the term of our revolving credit facility. At March 31, 2015, we were in compliance with all covenants under our credit agreement.

Equity and Equity-Linked Repurchase Authorization – In June 2014, our Board of Directors authorized the repurchase of up to $210 million of our equity and equity-linked securities (including convertible debt securities), subject to the achievement of our M2016 net debt reduction target and compliance with legal and regulatory requirements and our debt covenants. In September 2014, our Board authorized the repurchase of up to $40 million of our equity or equity-linked securities (including convertible debt securities) under the $210 million authorization that may be made annually without regard to achievement of the M2016 net debt reduction target. These authorizations have no stated expiration. Under the program, the company repurchased 1.2 million shares of its common stock for $16 million during the second quarter of fiscal year 2015 through open market transactions. Also, in the second quarter of fiscal year 2015, the company repurchased $15 million principal amount of its 4.0 percent convertible notes due 2027 for $16 million (see Note 16 of the Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report)). The amount remaining available for repurchases under the authorization is $179 million at March 31, 2015.

Debt Repurchase Program - On January 22, 2015, the Offering Committee of our Board of Directors approved a repurchase program for up to $150 million of any of our public debt securities (including convertible debt securities) from time to time through open market purchases or privately negotiated transactions or otherwise, until September 30, 2016, subject to compliance with legal and regulatory requirements and our debt covenants. This repurchase program is in addition to the equity and equity-linked repurchase authorizations described above.

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Issuance of 2024 Notes - On February 13, 2014, we completed a public offering of debt securities consisting of the issuance of $225 million principal amount of 10-year, 6.25 percent notes due February 15, 2024 (the "2024 Notes"). The 2024 Notes were offered and sold pursuant to our February 2012 shelf registration statement. The proceeds from the sale of the 2024 Notes, net of fees, were $221 million and, together with cash on hand, were used to repurchase $250 million of our outstanding 10.625 percent notes due 2018. The 2024 Notes constitute senior unsecured obligations of Meritor and rank equally in right of payment with its existing and future senior unsecured indebtedness, and effectively junior to existing and future secured indebtedness to the extent of the security therefor. They are guaranteed on a senior unsecured basis by each of our subsidiaries from time to time guaranteeing the senior secured credit facility. Prior to February 15, 2017, we may redeem up to 35 percent of the aggregate principal amount of the 2024 Notes with the net cash proceeds of one or more public sales of our common stock at a redemption price equal to 106.25 percent of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest, if any, on the 2024 Notes to be redeemed provided that at least 65 percent of the aggregate principal amount of 2024 Notes originally issued remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock. Prior to February 15, 2019, we may redeem up to 100 percent of the aggregate principal amount of the 2024 Notes issued on the initial issue date at a redemption price equal to the sum of 100% of principal amount of the 2024 Notes to be redeemed, plus the applicable premium as of the redemption date on the 2024 Notes to be redeemed, plus accrued and unpaid interest, if any. On or after February 15, 2019, 2020, 2021 and 2022, we have the option to redeem the 2024 Notes, in whole or in part, at the redemption price of 103.125 percent, 102.083 percent, 101.042 percent, and 100.000 percent, respectively.

If a Change of Control (as defined in the indenture under which the 2024 Notes were issued) occurs, unless we have exercised our right to redeem the securities, each holder of the 2024 Notes may require us to repurchase some or all of such holder's securities at a purchase price equal to 101 percent of the principal amount to be repurchased, plus accrued and unpaid interest, if any.

Repurchase of 2027 Notes - In February 2015, we repurchased $15 million of our 4.0 percent convertible notes due February 15, 2027. The notes were purchased at a premium equal to 6 percent of their principal amount. The repurchase of $15 million of 4.0 percent convertible notes was accounted for as an extinguishment of debt, and accordingly, we recognized a net loss on debt extinguishment of $1 million, the majority of which is premium. The net loss on debt extinguishment is included in interest expense, net in the consolidated statement of operations.

Redemption of 2018 Notes - On March 15, 2014, we exercised a call option on our 10.625 percent notes due March 15, 2018. These notes were redeemed at a premium of 5.313 percent of their principal amount. The repurchase of our $250 million 10.625 percent notes was accounted for as an extinguishment of debt and, accordingly, we recognized a net loss on debt extinguishment of $19 million, which consist of $6 million of unamortized discount and deferred issuance costs, and $13 million of premium. The net loss on debt extinguishment is included in interest expense, net in the consolidated statement of operations.

Revolving Credit Facility – On February 13, 2014, we amended and restated our senior secured revolving credit facility. Pursuant to the revolving credit agreement as amended, we have a $499 million revolving credit facility, $89 million of which matures in April 2017 for banks that elected not to extend their commitments under the revolving credit facility, and $410 million of which matures in February 2019. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants as highlighted below.

  The availability under the revolving credit facility is subject to certain financial covenants based on (i) the ratio of our priority debt (consisting principally of amounts outstanding under the revolving credit facility, U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA and (ii) the amount of annual capital expenditures. We are required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement. At March 31, 2015, we were in compliance with all covenants under the revolving credit facility with a ratio of approximately 0.34 for the priority debt-to-EBITDA ratio covenant.

     The availability under the revolving credit facility is also subject to a collateral test, pursuant to which borrowings on the revolving credit facility cannot exceed 1.0x the collateral test value. The collateral test is performed on a quarterly basis. At March 31, 2015, the revolving credit facility was collateralized by approximately $622 million of our assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and our investment in all or a portion of certain of its wholly-owned subsidiaries.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin and a commitment fee on undrawn amounts, both of which are based upon our current corporate credit rating. At March 31, 2015, the margin over LIBOR rate was 325 basis points, and the commitment fee was 50 basis points. Overnight revolving credit loans are at the prime rate plus a margin of 225 basis points.

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Certain of our subsidiaries, as defined in the revolving credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly-held notes outstanding under our indentures (see Note 22 of the Notes to to the Condensed Consolidated Financial Statements in Part I of this Quarterly Report).

No borrowings were outstanding under the revolving credit facility at March 31, 2015 and September 30, 2014. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At March 31, 2015 and September 30, 2014, there were no letters of credit outstanding under the revolving credit facility.

U.S. Securitization Program – We have a $100 million U.S. accounts receivables securitization facility. On October 15, 2014, we entered into an amendment which extends the facility expiration date to October 15, 2017 and sets the maximum permitted priority-debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility at 2.25 to 1.00. This program is provided by PNC Bank, National Association, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents from time to time (participating lenders), which are party to the agreement. Under this program, we have the ability to sell an undivided percentage ownership interest in substantially all of our trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. accounts receivable factoring facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for our U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the condensed consolidated balance sheet. At March 31, 2015 and September 30, 2014, no amounts, including letters of credit, were outstanding under this program. This securitization program contains a cross default to our revolving credit facility. At March 31, 2015, we were in compliance with all covenants under our credit agreement (see Note 16). At certain times during any given month, we may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, we would then typically utilize the cash we receive from our customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, we may borrow under this program in amounts exceeding the amounts shown as outstanding at fiscal quarter ends.

Capital Leases – On March 20, 2012, we entered into an arrangement to finance equipment acquisitions at our various U.S. locations. Under this arrangement, we can request financing from GE Capital Commercial, Inc. (GE Capital) for progress payments for equipment under construction, not to exceed $10 million at any time. The financing rate is equal to the 30-day LIBOR plus 475 basis points per annum. Under this arrangement, we can also enter into lease arrangements with GE Capital for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points. We had $12 million and $13 million outstanding under this capital lease arrangement as of March 31, 2015 and September 30, 2014, respectively. In addition, we had another $10 million and $13 million outstanding through other capital lease arrangements at March 31, 2015 and September 30, 2014, respectively.

Export financing arrangements – We entered into a number of export financing arrangements through our Brazilian subsidiary during fiscal year 2014. The export financing arrangements are issued under an incentive program of the Brazilian government to fund working capital for Brazilian companies in exportation programs. The arrangements bear interest at 5.5 percent and have maturity dates in 2016 and 2017. There were $22 million and $29 million outstanding under these arrangements at March 31, 2015 and September 30, 2014, respectively. In addition, we had another $2 million outstanding under a similar arrangement through an India subsidiary at September 30, 2014, which had no outstanding balance at March 31, 2015.

Other – One of our consolidated joint ventures in China participates in a bills of exchange program to settle its obligations with its trade suppliers. These programs are common in China and generally require the participation of local banks. Under these programs, our joint venture issues notes payable through the participating banks to its trade suppliers. If the issued notes payable remain unpaid on their respective due dates, this could constitute an event of default under our revolving credit facility if the defaulted amount exceeds $35 million per bank. As of March 31, 2015 and September 30, 2014, we had $20 million and $32 million, respectively, outstanding under this program at more than one bank.

Credit Ratings – At March 31, 2015, our Standard & Poor’s corporate credit rating, senior secured credit rating, and senior unsecured credit rating were B+, BB and B, respectively. On March 9, 2015, Moody’s Investors Service upgraded our corporate credit rating, senior secured credit rating, and senior unsecured credit rating to B1, Ba1 and B2, respectively. Any lowering of our credit ratings could increase our cost of future borrowings and could reduce our access to capital markets and result in lower trading prices for our securities.

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Off-Balance Sheet Arrangements

Accounts Receivable Factoring Arrangements – We participate in accounts receivable factoring programs with total amounts utilized at March 31, 2015, of $254 million, of which $213 million was attributable to committed factoring facilities involving the sale of AB Volvo accounts receivables. The remaining amount of $41 million was related to factoring by certain of our European subsidiaries under uncommitted factoring facilities with financial institutions. The receivables under all of these programs are sold at face value and are excluded from the consolidated balance sheet. Total facility size, utilized amounts, readily available amounts and expiration dates for each of these programs are shown in the table above under “Liquidity.”

The Swedish and U.S. factoring facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through September 2015. Commitments under all of our factoring facilities are subject to standard terms and conditions for these types of arrangements (including, in case of the U.K. and Italy commitments, a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the respective programs).

Letter of Credit Facilities – On February 21, 2014, we amended and restated our letter of credit facility with Citicorp USA, Inc., as administrative agent and issuing bank, and the other lenders party thereto. Under the terms of this amended credit agreement, we have the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $30 million through December 19, 2015. From December 20, 2015 through March 19, 2019, the aggregate availability is $25 million. This facility contains covenants and events of default generally similar to those existing in our public debt indentures. At March 31, 2015 and September 30, 2014, we had $25 million of letters of credit outstanding under this facility. In addition, we had another $6 million and $9 million of letters of credit outstanding through other letter of credit facilities at March 31, 2015 and September 30, 2014, respectively.

Contingencies

Contingencies related to environmental, asbestos and other matters are discussed in Note 19 of the Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report.

Critical Accounting Policies

Our defined benefit pension plans and retirement medical plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including the mortality of participants. The mortality assumptions for participants in our U.S. plans incorporates future mortality improvements from tables published by the Society of Actuaries (SOA). We periodically review the mortality experience of our U.S. plans’ participants against these assumptions.

In October 2014, the SOA issued new mortality and mortality improvement tables that raised the life expectancies, which could have the effect of increasing the amount of estimated aggregate benefit payments to our U.S. plans' participants. If we determine that the tables represent the best estimate of our plans' mortality, we would incorporate the tables into our 2015 year-end measurement of the plans’ benefit obligations. This would result in an increase to our U.S. pension and OPEB obligations.

New Accounting Pronouncements

New Accounting Pronouncements are discussed in Note 3 of the Notes to Condensed Consolidated Financial Statements in Item 1. Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     We are exposed to certain global market risks, including foreign currency exchange risk and interest rate risk associated with our debt.

     As a result of our substantial international operations, we are exposed to foreign currency risks that arise from our normal business operations, including in connection with our transactions that are denominated in foreign currencies. In addition, we translate sales and financial results denominated in foreign currencies into U.S. dollars for purposes of our consolidated financial statements. As a result, appreciation of the U.S. dollar against these foreign currencies generally will have a negative impact on our reported revenues and operating income while depreciation of the U.S. dollar against these foreign currencies will generally have a positive effect on reported revenues and operating income. For the second quarter of fiscal year 2015, our reported financial results were adversely affected by the appreciation of the U.S. dollar against foreign currencies relative to the prior year. We generally do not hedge against our foreign currency exposure related to translations to U.S. dollars of our financial results denominated in foreign currencies. In the first quarter of fiscal year 2015, due to the volatility of the Brazilian Real as compared to the U.S. dollar, we entered into a series of foreign currency option contracts that do not qualify for hedge accounting but are expected to mitigate foreign currency translation exposureof Brazilian Real earnings to U.S. dollars. In the second quarter of

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fiscal year 2015, we monetized these outstanding foreign currency option contracts and entered into a new series of foreign currency option contracts with effective dates from the start of the third quarter of fiscal year 2015 through the end of fiscal year 2015. Changes in fair value associated with these contracts are recorded in other income (expense), net, in the consolidated statement of operations.

     We use foreign currency forward contracts to minimize the earnings exposures arising from foreign currency exchange risk on foreign currency purchases and sales. Gains and losses on the underlying foreign currency exposures are partially offset with gains and losses on the foreign currency forward contracts. Under this cash flow hedging program, we designate the foreign currency contracts (the contracts) as cash flow hedges of underlying foreign currency forecasted purchases and sales. The effective portion of changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss (AOCL) in the statement of shareowners’ equity and is recognized in operating income when the underlying forecasted transaction impacts earnings. The contracts generally mature within 12 months.

 We use foreign currency option contracts to mitigate foreign currency exposure on expected future Indian Rupee denominated purchases. In the second quarter of fiscal year 2015, we monetized our outstanding foreign currency option contracts and entered into a new series of foreign currency option contracts with effective dates from the start of the third quarter of fiscal year 2015 through the end of fiscal year 2017. Changes in fair value associated with these contracts are recorded in cost of sales in the consolidated statement of operations.

Interest rate risk relates to the gain/increase or loss/decrease we could incur in our debt balances and interest expense associated with changes in interest rates. To manage this risk, we enter into interest rate swaps from time to time to economically convert portions of our fixed-rate debt into floating rate exposure, ensuring that the sensitivity of the economic value of debt falls within our corporate risk tolerances. It is our policy not to enter into derivative instruments for speculative purposes, and therefore, we hold no derivative instruments for trading purposes.

Included below is a sensitivity analysis to measure the potential gain (loss) in the fair value of financial instruments with exposure to market risk (in millions). The model assumes a 10 percent hypothetical change (increase or decrease) in exchange rates and instantaneous, parallel shifts of 50 basis points in interest rates.

Market Risk

	Assuming a 10% Increase in Rates			Assuming a 10% Decrease in Rates			Increase (Decrease) in
Foreign Currency Sensitivity:
Forward contracts in USD	$	1.1		$	(1.1	)	Fair Value
Forward contracts in Euro	(2.3		)	2.3			Fair Value
Foreign currency denominated debt (1)	3.0			(3.0		)	Fair Value
Foreign currency option contracts in USD	(0.1		)	2.3			Fair Value
Foreign currency option contracts in Euro	(1.5		)	3.5			Fair Value
	Assuming a 50 BPS Increase in Rates			Assuming a 50  BPS Decrease in Rates			Increase (Decrease) in
Interest Rate Sensitivity:
Debt - fixed rate (2)	$	(38.6	)	$	40.4		Fair Value
Debt – variable rate	—			—			Cash flow
Interest rate swaps	—			—			Fair Value

(1) Includes only the risk related to the derivative instruments and does not include the risk related to the underlying exposure. The analysis assumes overall derivative instruments and debt levels remain unchanged for each hypothetical scenario.

At March 31, 2015, a 10% decrease in quoted currency exchange rates would result in a potential loss of $3 million in foreign currency denominated debt. At March 31, 2015, a 10% increase in quoted currency exchange rates would result in a potential gain of $3 million in foreign currency denominated debt.

(2) At March 31, 2015, the fair value of outstanding debt was $1,136 million. A 50 basis points decrease in quoted interest rates would result in an increase of $40 million in the fair value of fixed rate debt. A 50 basis points increase in quoted interest rates would result in an decrease of $39 million in the fair value of fixed rate debt.

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Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), management, with the participation of the chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2015. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of March 31, 2015, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

     There have been no changes in the company’s internal control over financial reporting that occurred during the quarter ended March 31, 2015 that materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

     In connection with the rule, the company continues to review and document its disclosure controls and procedures, including the company’s internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and ensuring that the company’s systems evolve with the business.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Except as set forth in this Quarterly Report below and under Note 19 “Contingencies,” there have been no material developments in legal proceedings involving the company or its subsidiaries since those reported in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014, as amended.

On July 10, 2014, Sistemas Automotrices de Mexico, S.A. de C.V. (“Sisamex”), a Mexican joint venture between our subsidiary Meritor Heavy Vehicle Systems, LLC (“Meritor HVS”) and Quimmco, S.A. de C.V. ("Quimmco"), filed a lawsuit against Meritor HVS in the Northern District of Illinois, seeking, among other relief, a declaration of Sisamex’s exclusive right to manufacture certain products and the components thereof for sale in Mexico. On July 13, 2014, Meritor HVS filed a lawsuit against Sisamex and Quimmco in the Northern District of Illinois, seeking, among other relief, a declaration that Sisamex may not manufacture without Meritor HVS's consent the components at issue in Sisamex's lawsuit and that Sisamex must instead purchase those components from Meritor HVS. On July 23, 2014, the parties to the two actions filed a joint motion seeking an order that the two actions are related and that both actions be heard before the same judge. The motion was granted. Shortly after the cases were filed, both parties filed cross motions to dismiss the other party’s complaint. The Court heard oral arguments on the motions on November 24, 2014 and on January 28, 2015 denied both parties' motions. The case is currently in discovery.

Item 1A. Risk Factors

There have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014, as amended, except as follows:

Our liquidity, including our access to capital markets and financing, could be constrained by limitations in the overall credit market, our credit ratings, our ability to comply with financial covenants in our debt instruments, and our suppliers suspending normal trade credit terms on our purchases, or by other factors beyond our control.

Our current revolving credit facility matures in February 2019. Upon expiration of this facility, we will require a new or renegotiated facility (which may be smaller and have less favorable terms than our current facility) or other financing arrangements. Our ability to access additional capital in the long term will depend on availability of capital markets and pricing on commercially reasonable terms as well as our credit profile at the time we are seeking funds, and there is no guarantee that we will be able to access additional capital.

At March 31, 2015, our Standard & Poor’s corporate credit rating, senior secured credit rating, and senior unsecured credit rating were B+, BB and B, respectively. On March 9, 2015, Moody’s Investors Service upgraded our corporate credit rating, senior secured credit rating, and senior unsecured credit rating to B1, Ba1 and B2, respectively. There are a number of factors, including our ability to achieve the intended benefits from restructuring and other strategic activities on a timely basis, that could result in lowering of our credit ratings. The rating agencies' opinions about our creditworthiness may also be affected by their views of industry conditions generally, including their views concerning the financial condition of our major OEM customers. If the credit rating agencies perceive further weakening in the industry, they could lower our ratings. Declines in our ratings could reduce our access to capital markets, further increase our borrowing costs and result in lower trading prices for our securities.

 Our liquidity could also be adversely impacted if our suppliers were to suspend normal trade credit terms and require more accelerated payment terms, including payment in advance or payment on delivery of purchases. If this were to occur, we would be dependent on other sources of financing to bridge the additional period between payment of our suppliers and receipt of payments from our customers.

In December 2012, the SEC brought administrative proceedings against five accounting firms, including the Chinese affiliate of our independent registered public accounting firm, alleging that they had refused to produce audit work papers and other documents related to certain other China-based companies under investigation by the SEC for potential accounting fraud. On January 22, 2014, an initial administrative law decision was issued, censuring these Chinese accounting firms and suspending four of the five firms from practicing before the SEC for a period of six months.

On February 6, 2015, the Chinese accounting firms agreed to a censure and to pay $500,000 each to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC and audit U.S.-listed companies. The settlement requires the Chinese accounting firms to follow specific procedures to provide the SEC with access to these Chinese accounting firms’ audit documents via the China Securities Regulatory Commission. If the Chinese accounting firms do not comply with the specified procedures, the SEC could impose penalties including suspensions or recommence the administrative proceedings.

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As our independent registered public accounting firm utilizes the work of its Chinese affiliate in auditing our Chinese operations, we may be adversely affected if the Chinese affiliate of our independent registered public accounting firm fails to comply with the specified procedures, and the SEC suspends the Chinese affiliate or recommences the administrative proceedings. If we (like other U.S. multinational companies similarly situated) were not able to timely file our periodic reports with the SEC because our independent registered public accounting firm concludes that a scope limitation exists with respect to the audit of our annual financial statements or the review of our quarterly financial statements, this could adversely impact our ability to raise capital in the U.S. public markets.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer repurchases

The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common stock during the three months ended March 31, 2015:

Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchases as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1 - 31, 2015	205,900	$	12.86	205,900	$	207,351,302
February 1 - 28, 2015	968,150	$	13.33	968,150	$	179,446,878
Total	1,174,050			1,174,050	$	179,446,878

(1) Average price paid per share.

(2) On June 23, 2014, we announced that our Board of Directors authorized the repurchase of up to $210 million of our equity and equity-linked securities (including convertible debt securities), subject to the achievement of our M2016 net debt reduction target and compliance with legal and regulatory requirements and our debt covenants. In September 2014, our Board authorized the repurchase of up to $40 million of our equity or equity-linked securities (including convertible debt securities) under the $210 million authorization that may be made annually without regard to achievement of the M2016 net debt reduction target. These authorizations have no stated expiration. Under the program, we repurchased 1.2 million shares of our common stock for $16 million during the second quarter of fiscal year 2015 through open market transactions. Also, in the second quarter of fiscal year 2015, we repurchased $15 million principal amount of our 4.0 percent convertible notes due 2027 for $16 million (see Note 16). The amounts shown in this column give effect to the repurchase of $15 million principal amount of our convertible notes under the repurchase authorization during February 2015 that are in addition to the repurchases of our common stock shown in this table. The amount remaining available for repurchases under the authorization is $179 million at March 31, 2015.

     The independent trustee of our 401(k) plans purchases shares in the open market to fund investments by employees in our common stock, one of the investment options available under such plans, and any matching contributions in company stock we provide under certain of such plans. In addition, our stock incentive plans permit payment of an option exercise price by means of cashless exercise through a broker and permit the satisfaction of the minimum statutory tax obligations upon exercise of options and the vesting of restricted stock units through stock withholding. However, the company does not believe such purchases or transactions are issuer repurchases for the purposes of this Item 2 of Part II of this Quarterly Report on Form 10-Q. In addition, our stock incentive plans also permit the satisfaction of tax obligations upon the vesting of restricted stock through stock withholding. There were no shares withheld in the second quarter of fiscal 2015.

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Item 5. Other Information

Cautionary Statement

This Quarterly Report on Form 10-Q contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to reduced production for certain military programs and our ability to secure new military programs as our primary military program winds down by design through 2015; reliance on major original equipment manufacturer (“OEM”) customers and possible negative outcomes from contract negotiations with our major customers, including failure to negotiate acceptable terms in contract renewal negotiations and our ability to obtain new customers; the outcome of actual and potential product liability, warranty and recall claims; our ability to successfully manage rapidly changing volumes in the commercial truck markets and work with our customers to manage demand expectations in view of rapid changes in production levels; global economic and market cycles and conditions; availability and sharply rising costs of raw materials, including steel, and our ability to manage or recover such costs; our ability to manage possible adverse effects on our European operations, or financing arrangements related thereto, in the event one or more countries exit the European monetary union; risks inherent in operating abroad (including foreign currency exchange rates, implications of foreign regulations relating to pensions and potential disruption of production and supply due to terrorist attacks or acts of aggression); rising costs of pension and other postemployment benefits; the ability to achieve the expected benefits of restructuring actions; the demand for commercial and specialty vehicles for which we supply products; whether our liquidity will be affected by declining vehicle productions in the future; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; labor relations of our company, our suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of our suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; potential impairment of long-lived assets, including goodwill; potential adjustment of the value of deferred tax assets; competitive product and pricing pressures; the amount of our debt; our ability to continue to comply with covenants in our financing agreements; our ability to access capital markets; credit ratings of our debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; possible changes in accounting rules; and other substantial costs, risks and uncertainties, including but not limited to those detailed herein and from time to time in other filings of the company with the SEC. See also the following portions of our Annual Report on Form 10-K for the year ended September 30, 2014, as amended: Item 1. Business, “Customers; Sales and Marketing”; “Competition”; “Raw Materials and Supplies”; “Employees”; “Environmental Matters”; “International Operations”; and “Seasonality; Cyclicality”; Item 1A.Risk Factors; Item 3.Legal Proceedings; and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Amendments to By-laws

On April 28, 2015, our Board of Directors approved and adopted the Amended and Restated By-Laws of the company, which includes, among other things, the following amendments:

i. creating the office of Executive Chairman of the Board of Directors in lieu of the office of Chairman of the Board of Directors, who will be responsible for the general oversight of the operation and affairs of the company;

ii. creating the office of Chief Executive Officer and President in lieu of the office of President, who will, subject to the general oversight of the Executive Chairman of the Board of Directors, be responsible for the day-to-day management and overall charge of the administration and operation of the company’s business and the general supervision of the policies and affairs of the company;

iii. providing that the Chief Executive Officer and President may appoint and remove certain officers and agents, prescribe such person’s powers and duties, and may authorize any officer to appoint and remove agents and employees and to prescribe their powers and duties;

iv. providing that officers may resign by giving written notice to, among others, the Chief Executive Officer and President;

v. providing that the Executive Chairman of the Board of Directors or the Chief Executive Officer and President may designate any Vice Presidents as executive, senior or assistant Vice Presidents;

vi. amending the references to the Chairman of the Board of Directors and the President in the By-Laws to reflect their redesignation as Executive Chairman of the Board of Directors and Chief Executive Officer and President, respectively;

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vii. eliminating the office of Vice Chairman of the Board of Directors and all references thereto in the By-Laws;

viii. changing the deadline for a public announcement by the company of an increase in the size of the Board or the nomination by the Board of new candidates for election, from 70 to 100 days before the anniversary date of the preceding year’s annual meeting - any such public announcement by the company after such deadline would allow shareholders 10 additional days from the date of such public announcement to submit timely nominations for nominees for the election of directors - and clarifying that the number of nominees that may be nominated by any shareholder pursuant to the additional 10-day period described above is limited to a number equal to the number of new candidates nominated by the Board; and

ix. other minor and conforming changes.

The Amended and Restated By-Laws were effective on April 29, 2015, following adoption by the Board. The foregoing description of the amendments is qualified in its entirety by reference to the full text of the amendments to the By-Laws filed as Exhibit 3-b-1 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

Appointment of Executive Chairman of the Board of Directors

On April 29, 2015, we announced that effective immediately, the Board had appointed Ivor J. Evans, age 72, our Chairman of the Board of Directors and Chief Executive Officer, to the new position of Executive Chairman of the Board of Directors. Effective on that date, Mr. Evans will no longer serve as our Chief Executive Officer. A copy of the company’s press release dated April 29, 2015 is filed as Exhibit 99 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

In connection with Mr. Evans’s new role with the company, his annual base salary will be reduced to $800,000 effective May 1, 2015.

Appointment of Chief Executive Officer and President and New Director

On April 29, 2015, we announced that effective immediately, the Board had appointed Jeffrey A. Craig, age 54, our President and Chief Operating Officer, as Chief Executive Officer and President, succeeding Mr. Evans as Chief Executive Officer. In addition, effective April 29, 2015, following the expansion of the Board to ten members, Mr. Craig was elected by the Board as a Director to fill the vacancy created by such expansion and to serve as a Class II Director until our 2017 Annual Meeting of Shareowners and until his successor is duly elected and qualified. A copy of the company’s press release dated April 29, 2015 is filed as Exhibit 99 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

Mr. Craig served as our President and Chief Operating Officer from June 2014 to April 2015, as our Senior Vice President and President of Commercial Truck and Industrial from February 2013 until May 2014, as our Senior Vice President and Chief Financial Officer from January 2009 to January 2013, as our Acting Controller from May 2008 to January 2009, as our Senior Vice President and Controller from July 2007 to May 2008 and as our Vice President and Controller from May 2006 to July 2007. Mr. Craig also served as the President and Chief Executive Officer of GMAC Commercial Finance (commercial lending business) from 2001 to May 2006. There are no relationships or arrangements regarding Mr. Craig that are disclosable pursuant to Items 401(b), 401(d) or 404(a) of Regulation S-K.

In consideration of his increased responsibilities, Mr. Craig’s compensation will be changed as follows: (i) his annual base salary will increase to $850,000 effective May 1, 2015; (ii) his 2015 target award (as a percentage of his annual base salary) under the Incentive Compensation Plan, as amended (the “ICP”), will be 100%; (iii) he will receive an additional long-term incentive award under the 2010 Long-Term Incentive Plan, as amended (the “2010 LTIP”), with respect to the fiscal 2015-2017 cycle with a grant date value of $1.7 million to be granted on August 1, 2015, provided that he continues to serve as our Chief Executive Officer and President on the date of grant; and (iv) his long-term incentive award under the 2010 LTIP with respect to the fiscal 2016-2018 cycle to be granted on December 1, 2015 will have a grant date value of $3.5 million, provided that he continues to serve as our Chief Executive Officer and President on the date of grant.

In addition, we entered into an amended and restated employment letter with Mr. Craig in connection with his appointment as Chief Executive Officer and President, which replaces his previous employment letter. The amended and restated employment letter provides for, among other things: (i) base salary; (ii) participation in annual incentive awards under the ICP; (iii) eligibility for equity and cash awards under the 2010 LTIP; (iv) participation in our employee health and welfare benefit plans; (v) eligibility to receive a car allowance, a financial counseling allowance and personal excess liability coverage; (vi) participation in our 401(k) plan and supplemental savings plan; (vii) eligibility for certain severance benefits payable in connection with a separation of service with the company (A) without Cause (as defined in the amended and restated employment letter), (B) in the event of Mr. Craig’s death or disability or (C) in connection with a Change in Control (as defined in the 2010 LTIP).

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The terms of Mr. Craig’s amended and restated employment letter are substantially the same as his prior employment letter, except as described below:

• if we terminate Mr. Craig’s employment without Cause: (i) his severance pay, at his then-current salary, would be for a severance period of 12 months, rather than 30 months, (ii) his participation in the current year annual incentive would be on a full yearbasis, based on actual performance, rather than a pro rata portion based on his actual time worked and (iii) his life insurance coverage, short and long-term disability coverage and health insurance coverage would be for the shorter 12-month severance period.

• if Mr. Craig’s employment is terminated as a result of a Change in Control (or within one year after a Change in Control (other than for Cause)), he would receive the same severance benefits as described above for a termination without Cause for a severance period of 24 months, rather than 30 months, except that (i) he would receive the full target amount of the current year annual incentive within 30 days of his separation of service and (ii) his life insurance coverage, short and long-term disability coverage and health insurance coverage would be for the shorter 24-month severance period.

• if Mr. Craig’s employment is terminated due to his death, in addition to the death benefits under this prior employment letter, (i) any forfeiture or vesting of restricted shares, RSUs, performance shares and stock options and payouts under cash performance shares will be in accordance with the terms of the 2010 LTIP and any applicable award agreements, (ii) his spouse and other dependents will receive continued medical, dental and/or vision coverage for a six-month period and (iii) his beneficiaries would be entitled to payments of all death benefits under our 401(k) and supplemental 401(k) plans and pension plans, if applicable, in accordance with their terms.

The descriptions of the amended and restated employment letter and Mr. Craig’s revised compensation as Chief Executive Officer and President are qualified in their entirety by reference to the full text of the compensation letter dated April 29, 2015 from the company and the amended and restated employment letter, copies of which are filed as Exhibits 10-a-1 and 10-a-2 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

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Item 6. Exhibits

3-a	Restated Articles of Incorporation of Meritor, filed as Exhibit 4.01 to Meritor’s Registration Statement on Form S-4, as amended (Registration Statement No. 333-36448) ("Form S-4"), is incorporated herein by reference.
3-a-1	Articles of Amendment of Restated Articles of Incorporation of Meritor filed as exhibit 3-a-1 to Meritor’s Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2011, is incorporated herein by reference.
3-b	By-laws of Meritor, filed as Exhibit 3 to Meritor's Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2003 (File No. 1-15983), is incorporated by reference.
3-b-1	Amendments to By-laws of Meritor effective April 29, 2015**
3-b-2	Amended and Restated By-laws of Meritor effective April 29, 2015**
10-a-1	Compensation Letter for Jeffrey A. Craig dated April 29, 2015**
10-a-2	Amended and Restated Employment Letter between Meritor and Jeffrey A. Craig dated April 29, 2015**
12	Computation of ratio of earnings to fixed charges**
23	Consent of Bates White LLC**
31-a	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act**
31-b	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act**
32-a	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350**
32-b	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350**
99	Press release of Meritor dated April 29, 2015**
101.INS	XBRL INSTANCE DOCUMENT
101.SCH	XBRL TAXONOMY EXTENSION SCHEMA
101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

** Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MERITOR, INC.
Date:	April 30, 2015	By:	/s/	Sandra J. Quick
				Sandra J. Quick
				Senior Vice President, General Counsel, and Corporate Secretary
				(For the registrant)
Date:	April 30, 2015	By:	/s/	Kevin A. Nowlan
				Kevin A. Nowlan
				Senior Vice President and Chief Financial Officer

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EX-3.B-2

Exhibit-3-b-2

AMENDED AND RESTATED BY-LAWS

OF

MERITOR, INC.

(As of April 29, 2015)

ARTICLE 1

OFFICE

SECTION 1.1. Registered Office. The registered office of Meritor, Inc. (the "Corporation") in the State of Indiana shall be in the City of Indianapolis, County of Marion.

SECTION 1.2. Principal Business Office. The principal business office of the Corporation shall be in the City of Troy, County of Oakland, in the State of Michigan.

SECTION 1.3. Other Offices. The Corporation may also have an office or offices at such other place or places either in or outside the State of Indiana as the Board of Directors may from time to time determine or the business of the Corporation requires.

ARTICLE 2

MEETING OF SHAREHOLDERS

SECTION 2.1. Place of Meetings. Each meeting of shareholders of the Corporation shall be held at such place, in or outside of the State of Indiana, as the Board of Directors may designate in the notice of such meeting, but if no such designation is made, then at the principal business office of the Corporation.

SECTION 2.2. Annual Meetings. An annual meeting of shareholders for the purpose of electing directors and transacting such other business as may properly be brought before the meeting, notice of which was given in the notice of meeting, shall be held on a date and time as the Board of Directors may determine.

If for any reason any annual meeting shall not be held at the time herein provided, the same may be held at any time thereafter, upon notice as hereinafter provided, or the business thereof may be transacted at any special meeting of shareholders called for that purpose.

The Board of Directors may, upon public notice given prior to the scheduled meeting date, postpone, for as long as and to the extent permitted by the Indiana Business Corporation Law, as amended (the "Act"), any previously scheduled annual or special meeting of shareholders.

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SECTION 2.3. Special Meetings. Special meetings of shareholders, unless otherwise required by statute and subject to the rights of holders of any class of Preferred Stock of the Corporation, may be called only by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the "Whole Board"). Business transacted at any special meeting shall be confined to the purpose or purposes stated in the notice of such special meeting. Meetings may be held without notice if all shareholders entitled to vote are present or if notice is waived by those not present.

SECTION 2.4. Notice of Shareholders' Meetings. Notice of each meeting of shareholders, whether annual or special, stating the date, time and place, and, in the case of special meetings, the purpose or purposes for which such meeting is called, shall be mailed, postage prepaid, to each shareholder entitled to vote thereat, at the shareholder's address as it appears on the records of the Corporation, not less than 10 nor more than 60 days before the date of the meeting unless otherwise prescribed by statute. Notice of any adjourned meeting of shareholders shall not be required to be given, except when expressly required by law.

SECTION 2.5. Record Dates.

(a)    In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the Board of Directors may designate a date as the record date which, for purposes of a meeting of shareholders or other event requiring shareholder action, shall not be more than 70 nor less than 10 days before the date of such meeting or event.

(b)    If a record date has not been fixed as provided in the preceding paragraph (a), then:

(i)    The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders of the Corporation shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and

(ii)    The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

(c)    Only those who shall be shareholders of record on the record date so fixed as aforesaid shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend or other distribution, or to

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receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding the transfer of any shares on the books of the Corporation after the applicable record date, provided, however, the Board of Directors may fix a new record date for any adjourned meeting and shall fix a new record date if a meeting is adjourned to a date more than 120 days after the date originally fixed for the meeting.

SECTION 2.6. List of Shareholders. The Secretary of the Corporation shall, from information obtained from the transfer agent, prepare and make, before each meeting of shareholders, an alphabetical list of shareholders entitled to vote thereat, arranged by voting group, showing the address and number of shares registered in the name of each shareholder. Such list shall be open to the examination of any such shareholder or such shareholder's agent or attorney authorized in writing ("shareholder agent"), for any purpose germane to the meeting, during ordinary business hours, for a period of at least 5 days prior to the meeting for which the list was prepared and continuing through the meeting, either at a place in the city where the meeting is being held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Such list shall be produced and kept at the time and place of meeting during the whole time thereof for inspection by any such shareholder or shareholder agent who is present. The stock ledger shall be the only evidence as to who are the shareholders entitled to examine the stock ledger, the list referred to in this section or the books of the Corporation, or to vote in person or by proxy at any meeting of shareholders.

SECTION 2.7. Quorum and Adjournments. At each meeting of shareholders, the holders of a majority of the voting power of the shares of the Corporation entitled to vote, present in person or by proxy, shall constitute a quorum of shareholders for all purposes unless the presence of a larger proportion is required by statute or by the Corporation's Articles of Incorporation (the "Articles of Incorporation"), and, in such cases, the presence of the proportion so required shall constitute a quorum. Whether or not there is such a quorum, the Chairman of the meeting or the shareholders present in person or by proxy constituting a majority of the shares present may adjourn the meeting from time to time without notice other than an announcement at the meeting. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting, and only those shareholders entitled to vote at the meeting as originally called shall be entitled to vote at any adjournment or adjournments thereof. The absence from any meeting of the number of shareholders required by law or by the Articles of Incorporation or by these By-Laws for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if the number of shareholders required in respect of such other matter or matters shall be present.

SECTION 2.8. Voting by Shareholders; Proxies. Except as otherwise provided by law, the Articles of Incorporation or these By‑Laws, each shareholder entitled to vote shall at every meeting of the shareholders have one vote for each share entitled to vote held by such shareholder. Any vote on shares may be given by the shareholder entitled

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thereto in person or by proxy appointed by an instrument in writing, subscribed (or transmitted by electronic means and authenticated as provided by law) by such shareholder or by the shareholder's attorney thereunto authorized, and delivered to the Secretary; provided, however, that no proxy shall be voted after 11 months from its date unless the proxy provides for a shorter or longer period. Except as otherwise set forth in the Articles of Incorporation with respect to the right of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances, election of directors at all meetings of shareholders at which directors are to be elected shall be by a plurality of the votes cast for the election of directors at the meeting. If a quorum exists, action on a matter (other than the election of directors) submitted to shareholders entitled to vote thereon at any meeting shall be approved if the votes cast favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law, the Articles of Incorporation or these By-Laws.

SECTION 2.8A. Participation in Meetings by Means of Conference or Similar Communications. Any shareholder may participate in an annual or special meeting of shareholders by or through use of any means of communications by which all shareholders participating may simultaneously hear each other during the meeting.

A shareholder participating in such a meeting by this means is deemed to be present at the meeting.

SECTION 2.9. Conduct of Business.

(a)    Presiding Officer. The Executive Chairman of the Board of Directors shall preside as Chairman of shareholder meetings and shall determine the order and conduct of business and all matters of procedure at such meetings. The Executive Chairman shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at the meeting. In the absence of the Executive Chairman, the Chief Executive Officer and President, shall assume the duties of the Chairman of the shareholder meeting specified in this paragraph (a) of Section 2.9. If each of the Executive Chairman and the Chief Executive Officer and President is absent, a director or an officer of the Corporation chosen by the Board of Directors shall assume the duties of the Chairman of the shareholder meeting specified in this paragraph (a) of Section 2.9.

(b)    Secretary. The Secretary, or, in his or her absence, an Assistant Secretary, shall act as Secretary at all meetings of the shareholders. In the absence from any such meeting of the Secretary and the Assistant Secretaries, the Chairman of the shareholder meeting may appoint any person to act as Secretary of the meeting.

(c)    Annual Meetings of Shareholders.

(i)    Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (A) pursuant to the Corporation's notice of

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meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Section 2.9, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.9.

(ii)    For nominations or other business to be properly brought before any annual meeting by a shareholder pursuant to clause (C) of paragraph (c)(i) of this Section 2.9, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder's notice as described above. Such shareholder's notice shall set forth (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (C) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (x) the name and address of such shareholder, as they appear on the Corporation's books, and of such beneficial owner and (y) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.

(iii)    Notwithstanding anything in the second sentence of paragraph (c)(ii) of this Section 2.9 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this Section 2.9 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive

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offices of the Corporation not later than the close of business on the 10th day following the day on which public announcement is first made by the Corporation.

(iv)    Notwithstanding anything in the second sentence of paragraph (c)(ii) of this Section 2.9 to the contrary, in the event that any person nominated by the Board of Directors for election as a director (other than a person nominated to fill a vacancy created by the death of a director) was not a director or nominee named (A) in the Corporation's proxy statement for the preceding annual meeting or (B) in a public announcement made by the Corporation at least 100 days prior to the first anniversary of the preceding year's annual meeting (a "New Nominee"), a shareholder's notice required by this Section 2.9 shall also be considered timely, but only with respect to nominees for election as director equal in number to the number of New Nominees, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which public announcement is first made by the Corporation of the election or nomination of such New Nominee to the Board of Directors.

(d)    Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation's notice of meeting (A) by or at the direction of the Board of Directors or (B) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Section 2.9, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.9. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder's notice required by paragraph (c)(ii) of this Section 2.9 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the date on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder's notice as described above.

(e) General.

(i)    Except where the terms of any class or series of Preferred Stock of the Corporation require the election of one or more directors by the holders of such Preferred Stock voting as a single class and except as provided in Section 3.2 of these By-Laws, only such persons who are nominated in accordance with the procedures set forth in this Section 2.9 shall be eligible to serve as directors and only such business shall

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be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.9. Except as otherwise provided by law, the Articles of Incorporation of these By-Laws, the person presiding at the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed in accordance with the procedures set forth in this Section 2.9 and, if any nomination or business proposed is not in compliance with this Section 2.9, to declare that such defective nomination or proposal shall be disregarded.

(ii)    For purposes of this Section 2.9, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(iii)    Notwithstanding the foregoing provisions of this Section 2.9, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect any rights of (x) shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or (y) holders of any series of Preferred Stock to elect directors under specified circumstances.

SECTION 2.10. Inspectors. There shall be appointed by the Board of Directors, before each meeting of shareholders, two inspectors of the vote. Such inspectors shall first take and subscribe an oath or affirmation faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of their ability. If two inspectors are not appointed in advance of any such meeting by the Board of Directors or one or both appointed inspectors fail or refuse to act, then one or both inspectors, as the case may be, shall be appointed for the meeting by the person presiding thereat. Such inspectors shall be responsible for tallying and certifying the vote taken on any matter at each meeting which is required to be tallied and certified by them in the resolution of the Board of Directors appointing them or the appointment of the person presiding at such meeting as the case may be. Except as otherwise provided by these By-Laws or the laws of the State of Indiana, such inspectors shall also decide all questions touching upon the qualification of voters, the validity of proxies and ballots, and the acceptance and rejection of votes. In the case of a tie vote by the inspectors on any question, the person presiding at the meeting shall decide such question. The Board of Directors shall have the authority to make rules establishing presumptions as to the validity and sufficiency of proxies.

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ARTICLE 3

DIRECTORS

SECTION 3.1. Number. Subject to the rights of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances, the number of directors shall be set, and from time to time may be increased or decreased to the extent provided for in the Articles of Incorporation, exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. A director need not be a shareholder.

SECTION 3.2. Vacancies. Except where the terms of any class or series of Preferred Stock of the Corporation require the election of one or more directors by the holders of such Preferred Stock voting as a single class and except to the extent the Board of Directors determines otherwise, vacancies occurring on the Board of Directors and newly-created directorships resulting from any increase in the number of directors may be filled only by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and any director so chosen shall hold office for a term expiring at the annual meeting of shareholders at which the term of office of the class of directors to which such director has been elected expires and until his or her successor is duly elected and qualified or until the earlier of his or her death, resignation or removal in a manner permitted by statute or these By-Laws. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

SECTION 3.3. Powers. The property, affairs and business of the Corporation shall be managed by the Board of Directors which may exercise all powers of the Corporation and do all lawful acts and things not by statute or by the Articles of Incorporation or these By-Laws directed or required to be exercised or done by the shareholders.

SECTION 3.4. Place of Meetings. The place of any meeting of the Board of Directors may be either in or outside the State of Indiana as the Board may from time to time determine or as shall be specified or fixed in the respective notices or waivers of notice thereof.

SECTION 3.5. Annual Meetings. Annual meetings of the Board of Directors shall be held each year on the same day as the shareholder's annual meeting for such year, at the time and place determined by the Board of Directors. Notice of such meeting need not be given. Such meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors.

SECTION 3.6. Regular Meetings. Regular meetings of the Board of Directors shall be held at the dates, times and places designated by the Board of Directors from

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time to time. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day not a legal holiday. Notice of regular meetings need not be given.

SECTION 3.7. Special Meetings. Special meetings of the Board of Directors may be called by the Executive Chairman of the Board; and shall be called by the Executive Chairman of the Board or the Secretary upon the written request of three directors of the Corporation.

SECTION 3.8. Notice of Special Meetings. Notice of each special meeting of the Board of Directors shall be given to each director. The notice shall state the principal purpose or purposes of the meeting.

SECTION 3.9. Quorum. Except as provided in Section 3.2, a whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business at all meetings of the Board of Directors, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors unless otherwise provided by law, the Articles of Incorporation or these By‑Laws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. Notice of any adjourned meeting need not be given. The directors shall act only as a board and the individual directors shall have no power as such.

SECTION 3.10. Informal Action. Unless otherwise restricted by statute, the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all directors or by all members of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee.

SECTION 3.11. Attendance by Conference Telephone. Members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of such Board of Directors or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

SECTION 3.12. Order of Business. At all meetings of the Board of Directors, business shall be transacted in the order determined by the Board.

SECTION 3.13. Resignations. Any director of the Corporation may resign at any time by giving written notice to the Executive Chairman of the Board or the Secretary of the Corporation. The resignation of any director shall take effect at the time of the receipt

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of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 3.14. Committees.

(a)    The Board of Directors may from time to time, in its discretion, by resolution passed by a majority of the Whole Board, designate, and appoint, from the directors, committees of one or more persons which shall have and may exercise such lawfully delegable powers and duties conferred or authorized by the resolutions of designation and appointment.

(b)    Each member of a committee shall continue in office until a director to succeed him or her shall have been elected and shall have qualified, or until he or she ceases to be a director or until he or she shall have resigned or shall have been removed in the manner hereinafter provided. Any vacancy in a committee shall be filled by the vote of a majority of the Whole Board at any regular or special meeting thereof.

(c)    The Board of Directors may, by resolution passed by a majority of the Whole Board, designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

(d)    Unless otherwise provided by the Board of Directors, each committee shall appoint a chairman. Each committee shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors.

(e)    Any regular or alternate member of a committee may resign at any time by giving written notice to the Executive Chairman of the Board or the Secretary of the Corporation. Such resignation shall take effect at the time of the receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(f)    Any regular or alternate member of a committee may be removed with or without cause at any time by resolution passed by a majority of the Whole Board at any regular or special meeting.

(g)    Regular meetings of each committee, of which no notice shall be necessary, shall be held on such days and at such places as the chairman of the committee shall determine or as shall be fixed by a resolution passed by a majority of all the members of such committee. Special meetings of each committee will be called by the Secretary at the request of any two members of such committee (or the sole member, if a committee of one), or in such other manner as may be determined by the committee. Notice of each special meeting of a committee shall be mailed to each member thereof at least two days before the meeting or shall be given personally or by telephone or other electronic transmission at least one day before the meeting. Every such notice shall state

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the time and place, but need not state the purposes of the meeting. No notice of any meeting of a committee shall be required to be given to any alternate.

(h)    Unless the Board of Directors shall provide otherwise, the presence of a majority of the total membership of any committee of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of such committee and the act of a majority of those present shall be necessary and sufficient for the taking of any action thereat.

SECTION 3.16. Compensation of Directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and at each meeting of a committee of the Board of Directors of which they are members. Unless otherwise provided in these By-Laws, the Board of Directors shall have the authority to fix compensation of all directors for their services to the Corporation as directors and for their services to the Corporation as regular or alternate members of committees of the Board of Directors.

SECTION 3.17. Removal. Subject to the rights of the holders of any class or series of Preferred Stock, any director or the entire Board of Directors may be removed from office at any time, but only for cause and only by the affirmative vote by the holders of at least 80 percent of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote at an election of directors, voting together as a single class.

ARTICLE 4

NOTICES

SECTION 4.1. Notices. Notices to directors and shareholders shall be in writing and delivered personally or mailed to their addresses appearing on the records of the Corporation or, if to directors, by telegram, cable, telephone, telecopy, facsimile, other electronic transmission, wireless or a nationally recognized overnight delivery service or personally. Notice to directors by mail shall be given at least five days before the meeting. Notice to directors by telegram, cable, telephone, telecopy, facsimile, other electronic transmission, wireless or personal delivery, shall be given a reasonable time before the meeting, but in no event less than two days before the meeting. Notice by mail shall be deemed to be given when mailed to the director at his or her address appearing on the records of the Corporation. Notice by telegram or cable shall be deemed to be given when the telegram or cable addressed to the director at his or her address appearing on the records of the Corporation is delivered to the telegraph company. Notice by telephone, telecopy, facsimile, other electronic transmission or wireless shall be deemed to be given when transmitted by telephone, telecopy, facsimile, other electronic transmission or wireless to the number, electronic address or wireless call designation appearing on the records of the Corporation for the director (regardless of whether the

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director shall have personally received such telephone call or wireless message), provided confirmation of transmission shall be made promptly by telegram or cable in the manner specified above.

SECTION 4.2. Waiver of Notice. Whenever any notice is required, a waiver thereof signed by the person entitled to such notice and filed with the minutes or corporate records, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of any person at any meeting of shareholders or directors shall constitute a waiver of notice of such meeting, except when such person attends only for the express purpose of objecting, at the beginning of the meeting (or in the case of a director's meeting, promptly upon such director's arrival), to the transaction of any business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

ARTICLE 5

OFFICERS

SECTION 5.1. Designation; Number; Election. The Board of Directors shall elect the officers of the Corporation. Such officers shall be an executive chairman of the Board of Directors, a chief executive officer and president, one or more vice presidents as the Board of Directors shall determine from time to time, a controller, a treasurer and a secretary.

In addition to any officer elected by the Board of Directors, the Board of Directors, the Executive Chairman or the Chief Executive Officer and President, at any time, may appoint and remove such additional officers and agents as the Board of Directors, the Executive Chairman or the Chief Executive Officer and President may determine from time to time. Such persons shall have such authority, and perform such duties as provided in these By‑Laws or as the Board of Directors, the Executive Chairman or the Chief Executive Officer and President may from time to time prescribe. The Board of Directors, the Executive Chairman or the Chief Executive Officer and President may from time to time authorize any officer to appoint and remove agents and employees and to prescribe their powers and duties.

One person may hold more than one office at the same time provided the duties of such officers as prescribed by these By-Laws may be properly and consistently performed by one person.

SECTION 5.2. Term of Office; Removal; Resignations; Vacancies. The term of each officer shall be for one year and continue until his or her successor is chosen and qualified or until the earlier of his or her death, resignation or removal, except that any such officer elected by the Board of Directors, excluding the Executive Chairman and the Chief Executive Officer and President, at any time, may be suspended by the Executive

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Chairman or the Chief Executive Officer and President until the Board of Directors convenes, and any such officer, including the Executive Chairman and the Chief Executive Officer and President, may be removed at any time by the affirmative vote of a majority of the members of the Whole Board.

All appointed officers, agents and representatives of the Corporation shall hold office only during the pleasure of the Board of Directors or the officer appointing them.

Any officer elected by the Board of Directors may resign at any time by giving written notice to the Executive Chairman of the Board, the Chief Executive Officer and President or the Secretary. Any other officer may resign at any time by giving written notice to the Executive Chairman of the Board or the Chief Executive Officer and President. Any such resignation shall take effect at the date of receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

A vacancy in any office because of death, resignation, removal or otherwise, shall be filled for the unexpired portion of the term in the manner provided in these By‑Laws for regular election or appointment to such office.

SECTION 5.3. Compensation of Officers. The Board of Directors or the compensation committee of the Board of Directors shall have the authority to fix compensation of all officers elected by the Board. The Executive Chairman and/or such officer as the Executive Chairman may designate shall have the authority to fix compensation of all other officers of the Corporation.

SECTION 5.4. Executive Chairman of the Board of Directors. The Executive Chairman of the Board of Directors shall, subject to the Board of Directors, be responsible for the general oversight of the operation of the business and affairs of the Corporation. He or she shall report to the Board of Directors.

He or she shall (a) preside at all meetings of the shareholders and of the Board of Directors, and shall have plenary power to set the agenda, determine the procedure and rules of order and make definitive rulings at meetings of shareholders; (b) work with the Chief Executive Officer and President to develop corporate strategies, make key business decisions and develop management talent; (c) work with the Lead Director to organize and set the agenda for regular and special meetings of the Board of Directors based on input from senior management of the Corporation; (d) ensure that the Board of Directors receives accurate, timely and clear information on: (i) the Corporation’s performance, (ii) the issues, challenges and opportunities facing the Corporation, and (iii) matters reserved to the Board of Directors for decision; (e) represent the Corporation (together with the Chief Executive Officer and President) to external constituencies, including shareholders and other investors, as required; (f) advise and support the Chief Executive Officer and President, including performing the duties of the Chief Executive Officer and President in the absence or disability of the Chief Executive Officer and President; and (g) have such

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other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these By-Laws.

SECTION 5.5. Chief Executive Officer and President. The Chief Executive Officer and President shall, subject to the general oversight of the Executive Chairman, be responsible for the day-to-day management and overall charge of the administration and operation of the Corporation’s business and the general supervision of the policies and affairs of the Corporation. He or she shall report to the Executive Chairman (acting on behalf of the Board of Directors) and to the Board of Directors directly.

He or she shall (a) see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect or otherwise implemented; (b) have the power to appoint officers for any division who, as such, shall not be officers of the Corporation; (c) in the absence or disability of the Executive Chairman, preside at meetings of the Board of Directors and perform such other duties of the Executive Chairman as may be assigned to him or her by the Board of Directors; and (d) have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these By-Laws.

In the absence or disability of the Executive Chairman and the Chief Executive Officer and President, on assembling for a regular or special meeting of the Board of Directors, the directors shall choose another member of the Board of Directors or another officer in attendance to preside at such meeting.

SECTION 5.6. Vice Presidents. Each Vice President shall have the powers and duties prescribed in these By-Laws or assigned to him or her by the Board of Directors, the Executive Chairman or the Chief Executive Officer and President. The Board of Directors, the Executive Chairman or the Chief Executive Officer and President may designate one or more of such Vice Presidents as executive, senior or assistant Vice Presidents.

SECTION 5.7. Controller. Subject to control and supervision by the Executive Chairman, the Chief Executive Officer and President and the Board of Directors, the Controller shall be in charge of the accounts of the Corporation and its subsidiaries; maintain adequate records of all assets, liabilities and business transactions; and have the other powers and duties prescribed by these By-Laws or by the Board of Directors, the Executive Chairman or the Chief Executive Officer and President, and the usual powers and duties pertaining to his or her office.

SECTION 5.8. Assistant Controllers. The Assistant Controllers shall have the powers and duties prescribed by these By-Laws or assigned by the Controller. In the absence or disability of the Controller, they shall have all his or her other powers and duties.

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SECTION 5.9. Treasurer. Subject to control and supervision by the Executive Chairman, the Chief Executive Officer and President and the Board of Directors, the Treasurer shall have charge of and shall be responsible for the receipt, disbursement and safekeeping of all funds and securities of the Corporation (and shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these By-Laws), propose financial policies, negotiate loans, be responsible for the maintenance of proper insurance coverages and from time to time and whenever requested to do so, render statements of the condition of the finances of the Corporation to the Board of Directors; and have the other powers and duties prescribed by these By-Laws or by the Board of Directors, the Executive Chairman or the Chief Executive Officer and President, and the usual powers and duties pertaining to his or her office.

SECTION 5.10. Assistant Treasurers. The Assistant Treasurers shall have the powers and duties prescribed by these By-Laws or assigned by the Treasurer. In the absence of the Treasurer, they shall have all his or her other powers and duties.

SECTION 5.11. Secretary. Subject to control and supervision by the Board of Directors, the Executive Chairman and the Chief Executive Officer and President, the Secretary shall attend and record proceedings of meetings of shareholders, the Board of Directors and any committee of the Board of Directors, keep or cause to be kept in books provided for such purpose such records of proceedings and have the other powers and duties prescribed by these By-Laws or by the Board of Directors, the Executive Chairman or the Chief Executive Officer and President, and the usual powers and duties pertaining to his or her office, including having custody of the corporate seal, if any, and affixing it to all documents as required to attest the same.

SECTION 5.12. Assistant Secretaries. The Assistant Secretaries shall have the powers and duties prescribed by these By-Laws or assigned by the Secretary. In the absence or disability of the Secretary, they shall have all his or her powers and duties.

SECTION 5.13. Certain Agreements. The Board of Directors shall have power to authorize or direct the proper officers of the Corporation, on behalf of the Corporation, to enter into valid and binding agreements in respect of employment, incentive or deferred compensation, stock options, and similar or related matters, notwithstanding the fact that a person with whom the Corporation so contracts may be a member of its Board of Directors. Any such agreement may validly and lawfully bind the Corporation for a term of more than one year, in accordance with its terms, notwithstanding the fact that one of the elements of any such agreement may involve the employment by the Corporation of an officer, as such, for such term.

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ARTICLE 6

CONDUCT OF BUSINESS

SECTION 6.1. Contracts; Loans. The Board of Directors, except as in these By-Laws otherwise provided, may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

No loan shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name, unless authorized by the Board of Directors.

SECTION 6.2. Checks. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, employee or employees, of the Corporation as shall from time to time be determined in accordance with authorization of the Board of Directors.

SECTION 6.3. Banking. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may from time to time designate, or as may be designated by any officer or officers of the Corporation to whom such power may be delegated by the Board, and for the purpose of such deposit the officers and employees who have been authorized to do so in accordance with the determinations of the Board may endorse, assign and deliver checks, drafts, and other orders for the payment of money which are payable to the order of the Corporation.

SECTION 6.4. Voting of Stock. Except as otherwise provided in these By‑Laws or in the Articles of Incorporation, and unless otherwise provided by resolution of the Board of Directors, the Executive Chairman or any other officer elected by the Board of Directors may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation to cast the votes which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such vote or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises.

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ARTICLE 7

SHARE CERTIFICATES AND THEIR TRANSFER

SECTION 7.1. Share Certificates. Certificates for shares of the Corporation shall be in such form as shall be approved by the Board of Directors and shall be signed by the Executive Chairman and the Chief Executive Officer and President, and by the Secretary or any Assistant Secretary, and shall not be valid unless so signed. Such certificates shall be appropriately numbered in order of issue, by class and series, and contain the name of the registered holder, the number of shares and the date of issue. If such certificates are countersigned (a) by a transfer agent other than the Corporation or its employee, or (b) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile.

In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he, she or it were such officer, transfer agent, or registrar at the date of issue.

The Board of Directors may by resolution or resolutions provide that some or all of any or all classes or series of the shares of stock of the Corporation shall be uncertificated shares. Notwithstanding the preceding sentence, every holder of uncertificated shares, upon request, shall be entitled to receive from the Corporation a certificate representing the number of shares registered in such shareholder's name on the books of the Corporation.

During any period when more than one class of shares of the Corporation is authorized, there shall be set forth on the face or back of certificates issued to represent each class or series of shares, a statement that the Corporation will furnish without charge to each shareholder who so requests, the designation, preferences and relative, participating, optional or other special rights of each class of shares or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

SECTION 7.2. Transfer of Shares. Upon surrender to the Corporation or a transfer agent of the Corporation by the holder of record or by such person's attorney or other duly constituted representative of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, as the Corporation may reasonably require, it shall be the duty of the Corporation and such transfer agent to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction on the books of the Corporation. No certificate shall be issued in exchange for any certificate until the former certificate for the same number of shares of the same class and series shall have been surrendered and canceled, except as provided in Section 7.4.

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SECTION 7.3. Regulations. The Board of Directors shall have authority to make rules and regulations concerning the issue, transfer and registration of certificates for shares of the Corporation and concerning the registration of pledges of uncertificated shares.

SECTION 7.4. Lost, Stolen and Destroyed Certificates. The Corporation may issue a new certificate or certificates for shares or may register uncertificated shares, if then authorized by the Board of Directors, in place of any issued certificate alleged to have been lost, stolen or destroyed upon such terms and conditions as the Board of Directors may prescribe.

SECTION 7.5. Record Ownership; Registered Shareholders. A record of the name and address of each holder of the shares of the Corporation, the number of shares held by such shareholder, the number or numbers of any share certificate or certificates issued to such shareholder and the number of shares represented thereby, and the date of issuance of the shares held by such shareholder shall be made on the Corporation's books. The Corporation shall be entitled to treat the holder of record (according to the books of the Corporation) of any share or shares (including any holder registered in a book‑entry or direct registration system maintained by the Corporation or a transfer agent or a registrar designated by the Board of Directors) as the holder in fact thereof and owner for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as expressly provided by applicable law.

SECTION 7.6. Transfer Agents and Registrars. The Board of Directors may from time to time appoint a transfer agent and a registrar in one or more cities, may require all certificates evidencing shares of the Corporation to bear the signatures of a transfer agent and a registrar, may provide that such certificates shall be transferable in more than one city, and may provide for the functions of transfer agent and registrar to be combined in one agency.

ARTICLE 8

INDEMNIFICATION

SECTION 8.1. Litigation Brought By Third Parties. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, formal or informal (other than an action by or in the right of the Corporation) (an "Action") by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation (a "Corporate Person"), or is or was serving at the request of the Corporation as a director, officer, employee, agent, partner, trustee or member or in another authorized capacity (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions

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that supersede or abrogate indemnification under this Section 8.1) (collectively, an "Authorized Capacity") of or for another corporation, unincorporated association, business trust, estate, partnership, joint venture, individual, trust, employee benefit plan, or other legal entity, whether or not organized or formed for profit (collectively, "Another Entity"), against expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such Action ("Expenses") if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Action by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe his or her conduct was unlawful.

SECTION 8.2. Litigation by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any Action by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a Corporate Person, or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against Expenses actually and reasonably incurred by him or her in connection with that defense or settlement of such Action if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or willful misconduct in the performance of his or her duty to the Corporation unless and only to the extent that a court of equity or the court in which such Action was pending shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court of equity or other court shall deem proper.

SECTION 8.3. Successful Defense. To the extent that a person who is or was a Corporate Person or serving at the request of the Corporation in an Authorized Capacity of or for Another Entity has been successful on the merits or otherwise in defense of any Action, referred to in Section 8.1 and 8.2 of this Article, or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by or on behalf of him or her in connection therewith. If any such person is not wholly successful in any such Action but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters therein, the Corporation shall indemnify such person against all Expenses actually and reasonably incurred by or on behalf of such person in connection with each claim, issue or matter that is successfully resolved. For purposes of this Section 8.3 and without limitation, the termination of any claim, issue or matter by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

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Notwithstanding any other provision of this section, to the extent any person is a witness in, but not a party to, any Action, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a Corporate Person or serving at the request of the Corporation in an Authorized Capacity of or for Another Entity, he or she shall be indemnified against all Expenses actually and reasonably incurred by or on behalf of him or her in connection therewith.

SECTION 8.4. Determination of Conduct.

(a) Any indemnification under Section 8.1 or 8.2 of this Article (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of the person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 8.1 or 8.2. Such determination shall be made (1) if a Change of Control (as hereinafter defined) shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of the Disinterested Directors (as hereinafter defined) or, if such a quorum cannot be obtained, by majority vote of a committee duly designated by the Board of Directors consisting solely of two (2) or more Disinterested Directors or (B) if there are no Disinterested Directors or, even if there are Disinterested Directors and a majority of such Disinterested Directors so directs, by (i) Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (ii) the shareholders of the Corporation, provided, however, that shares owned by or voted under the control of directors who are at the time not Disinterested Directors may not be voted on the determination; or (2) if a Change of Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, unless the claimant shall request that such determination be made by or at the direction of the Board of Directors, in which case it shall be made in accordance with clause (1) of this sentence. Any claimant shall be entitled to be indemnified against the Expenses actually and reasonably incurred by such claimant in cooperating with the person or entity making the determination of entitlement to indemnification (irrespective of the determination as to the claimant's entitlement to indemnification) and, to the extent successful, in connection with any litigation or arbitration with respect to such claim or the enforcement thereof.

(b)    If a Change of Control shall not have occurred, or if a Change of Control shall have occurred and a director, officer, employee or agent requests pursuant to clause (2) of the second sentence in Section 8.4(a) that the determination whether the claimant is entitled to indemnification be made by or at the direction of the Board of Directors, the claimant shall be conclusively presumed to have been determined pursuant to Section 8.4(a) to be entitled to indemnification if (1)(a) within fifteen days after the next regularly scheduled meeting of the Board of Directors following receipt by the Corporation of the request therefor, the Board of Directors shall not have resolved by majority vote of the Disinterested Directors to submit such determination to (i) Independent Counsel for its determination or (ii) the shareholders for their determination at the next annual meeting,

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or any special meeting that may be held earlier, after such receipt, and (b) within sixty days after receipt by the Corporation of the request therefor (or within ninety days after such receipt if the Board of Directors in good faith determines that additional time is required by it for the determination and, prior to expiration of such sixty‑day period, notifies the claimant thereof), the Board of Directors shall not have made the determination by a majority vote of the Disinterested Directors, or (2) after a resolution of the Board of Directors, timely made pursuant to clause (1)(a)(ii) above, to submit the determination to the shareholders, the shareholders meeting at which the determination is to be made shall not have been held on or before the date prescribed (or on or before a later date, not to exceed sixty days beyond the original date, to which such meeting may have been postponed or adjourned on good cause by the Board of Directors acting in good faith); provided, however, that this sentence shall not apply if the claimant has misstated or failed to state a material fact in connection with his or her request for indemnification. Such presumed determination that a claimant is entitled to indemnification shall be deemed to have been made (I) at the end of the sixty‑day or ninety‑day period (as the case may be) referred to in clause (1)(b) of the immediately preceding sentence or (II) if the Board of Directors has resolved on a timely basis to submit the determination to the shareholders, on the last date within the period prescribed by law for holding such shareholders meeting (or a postponement or adjournment thereof as permitted above).

SECTION 8.5. Advance Payment. Expenses incurred in defending an Action shall be paid by the Corporation in advance of the final disposition of such Action to a director or officer, promptly after receipt of a request therefor stating in reasonable detail the expenses incurred, and to an employee or agent as authorized by the Board of Directors; provided that in each case (a) the Corporation shall have received an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation hereunder, (b) the indemnitee furnishes the Corporation a written affirmation of his or her good faith belief that he or she has satisfied the standard of conduct in Section 8.1 or 8.2 and (c) a determination is made by those making the decision pursuant to Section 8.4 that the facts then known would not preclude indemnification under these By-Laws.

SECTION 8.6. Procedures for Determination. The Board of Directors shall establish reasonable procedures for the submission of claims for indemnification hereunder, determination of the entitlement of any person thereto and review of any such determination. Such procedures shall be set forth in an appendix to these By‑Laws and shall be deemed for all purposes to be a part hereof.

SECTION 8.7. By-Law Not Exclusive. The indemnification provided by this Article 8 shall not be deemed exclusive of any other rights to which any person may be entitled under any by-law, agreement, vote of shareholders or Disinterested Directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be

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a director, officer, employee, agent or participant and shall inure to the benefit of the heirs, executors and administrators of such a person. Notwithstanding any amendment, alteration or repeal of this section or any of its provisions, or of any of the procedures established by the Board of Directors pursuant to Section 8.6, any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity shall be entitled to indemnification in accordance with the provisions hereof and thereof with respect to any action taken or omitted prior to such amendment, alteration or repeal except to the extent otherwise required by law.

SECTION 8.8. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article or the Business Corporation Law of the State of Indiana.

SECTION 8.9. Effect of Invalidity. The invalidity or unenforceability of any provision of this Article 8 shall not affect the validity or enforceability of the remaining provisions of this Article 8.

SECTION 8.10. Definitions. For purposes of this Article 8:

(a) "Change of Control" means a change of control of the Corporation at any time after the effective time of the merger of Arvin Industries, Inc. with and into the Corporation of a nature that would be required to be reported in a proxy statement pursuant to Section 14(a) of the Exchange Act or in a Form 8-K pursuant to Section 13 of the Exchange Act (or in any similar form or schedule under either of those provisions or any successor provision), whether or not the Corporation is then subject to such reporting requirement; provided, however, that, without limitation, a Change of Control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d‑3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two‑thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors immediately thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any director whose election became effective prior to or at the time of the merger of Arvin Industries, Inc. with and into the Corporation and any new director whose election or nomination for election by the Corporation's shareholders was approved by a vote of at least two‑thirds of the

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directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

(b)    "the Corporation" shall include, in addition to the surviving or resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify a director, officer, employee or agent of such constituent corporation, or any director, officer, employee or agent of such constituent corporation who is or was serving at the request of such constituent corporation as a director, officer, employee or agent of Another Entity shall stand in the same position under the provisions of this Article 8 with respect to the surviving or resulting corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

(c)    "Disinterested Director" means a director of the Corporation who is not and was not a party to an action, suit or proceeding in respect of which indemnification is sought by a director, officer, employee or agent.

(d)    "Independent Counsel" means a law firm, or a member of a law firm, that (i) is experienced in matters of corporation law; (ii) neither presently is, nor in the past five years has been, retained to represent the Corporation, the director, officer, employee or agent claiming indemnification or any other party to the Action giving rise to a claim for indemnification under this section, in any matter material to the Corporation, the claimant or any such other party; and (iii) would not, under applicable standards of professional conduct then prevailing, have a conflict of interest in representing either the Corporation or such director, officer, employee or agent in an action to determine the Corporation's or such person's rights under this Article 8.

SECTION 8.11. Actions Against the Corporation. No indemnification shall be payable to an officer, director, employee or agent pursuant to this Article 8 with respect to any action against the Corporation commenced by such officer, director, employee or agent unless the Board of Directors shall have authorized the commencement thereof or unless and to the extent that this Article 8 or the procedures established pursuant to Section 8.6 shall specifically provide for indemnification of expenses relating to the enforcement of rights under this Article 8 and such procedures.

SECTION 8.12. Change in Law. Notwithstanding the foregoing provisions of Article 8, the Corporation shall indemnify any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity to the full extent permitted by the Act or by any other applicable law, as may from time to time be in effect.

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ARTICLE 9

GENERAL

SECTION 9.1. Dividends. Subject to any provisions of any applicable statute or of the Articles of Incorporation, dividends may be declared upon the capital stock of the Corporation by the Board of Directors at any regular or special meeting thereof; and such dividends may be paid in cash, property or shares of the Corporation.

SECTION 9.2. Fiscal Year. The fiscal year of the Corporation shall be the fifty-two or fifty-three week period beginning on the Monday following the Sunday closest to the last day of September of each year and ending on the Sunday closest to the last day of September of the following year.

SECTION 9.3. Severability. If any provision of these By-Laws, or its application thereof to any person or circumstances, is held invalid, the remainder of these By- Laws and the application of such provision to other persons or circumstances shall not be affected thereby.

SECTION 9.4. Amendments. These By-Laws may be amended, added to, rescinded or repealed only by an affirmative vote of at least a majority of the directors then in office at any meeting of the Board of Directors.

SECTION 9.5     Control Shares. Chapter 42 of the Indiana Business Corporation Law (IBCL § 23-1-42-1 et. seq.) shall not apply to the acquisition of shares of voting stock of the Corporation.

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APPENDIXPROCEDURES FOR SUBMISSION AND
DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE 8 OF THE BY‑LAWS.

SECTION 1. Purpose. The Procedures for Submission and Determination of Claims for Indemnification Pursuant to Article 8 of the By-Laws (the "Procedures") are to implement the provisions of Article 8 of the By-Laws of the Corporation (the "By-Laws") in compliance with the requirement of Section 8.6 thereof.

SECTION 2. Definitions. For purposes of these Procedures:

(A) All terms that are defined in Article 8 of the By-Laws shall have the meanings ascribed to them therein when used in these Procedures unless otherwise defined herein.

(B) "Expenses" include all reasonable attorneys' fees, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in, a Proceeding; and shall also include such retainers as counsel may reasonably require in advance of undertaking the representation of an indemnitee in a Proceeding.

(C) "Indemnitee" includes any person who was or is, or is threatened to be made, a witness in or a party to any Proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under Article 8 of the By-Laws) of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise.

(D) "Proceeding" includes any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee unless the Board of Directors shall have authorized the commencement thereof.

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SECTION 3. Submission and Determination of Claims.

(A) To obtain indemnification or advancement of Expenses under Article 8 of the By-Laws, an Indemnitee shall submit to the Secretary of the Corporation a written request therefor, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to permit a determination as to whether and what extent the Indemnitee is entitled to indemnification or advancement of Expenses, as the case may be. The Secretary shall, promptly upon receipt of a request for indemnification, advise the Board of Directors thereof in writing if a determination in accordance with Section 8.4 of the By-Laws is required.

(B) Upon written request by an Indemnitee for indemnification pursuant to Section 3(A) hereof, a determination with respect to the Indemnitee's entitlement thereto in the specific case, if required by the By-Laws, shall be made in accordance with Section 8.4 of the By-Laws, and, if it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within ten days after such determination. The Indemnitee shall cooperate with the person, persons or entity making such determination, with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination.

(C) If entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8.4 of the By-Laws, the Independent Counsel shall be selected as provided in this Section 3(C). The Independent Counsel shall be selected by the Board of Directors by majority vote of a quorum consisting of Disinterested Directors, or, if such a quorum cannot be obtained, by majority vote of a committee duly designated by the Board of Directors consisting solely of two or more Disinterested Directors, or, if such a quorum cannot be obtained and such a committee cannot be designated, by a majority vote of the full Board of Directors (in which selection Directors who are not Disinterested Directors may participate), and the Corporation shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. The Indemnitee may, within seven days after such written notice of selection shall have been given, deliver to the Corporation a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Article 8 of the By-Laws, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within twenty days after the next regularly scheduled Board of Directors meeting following

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submission by the Indemnitee of a written request for indemnification pursuant to Section 3(A) hereof, no Independent Counsel shall have been selected and not objected to, either the Corporation or the Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is favorably resolved or the person so appointed shall act as Independent Counsel under Section 8.4 of the By-Laws. The Corporation shall pay any and all reasonable fees and expenses (including without limitation any advance retainers reasonably required by counsel) of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8.4 of the By-Laws, and the Corporation shall pay all reasonable fees and expenses (including without limitation any advance retainers reasonably required by counsel) incident to the procedures of Section 8.4 of the By-Laws and this Section 3(C), regardless of the manner in which Independent Counsel was selected or appointed. Upon the delivery of its opinion pursuant to Article 8 of the By-Laws or, if earlier, the due commencement of any judicial proceeding or arbitration pursuant to Section 4(A)(3) of these Procedures, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(D) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification under the By-Laws, the person, persons or entity making such determination shall presume that an Indemnitee is entitled to indemnification under the By-Laws if the Indemnitee has submitted a request for indemnification in accordance with Section 3(A) hereof, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.

SECTION 4. Review and Enforcement of Determination.

(A) In the event that (1) advancement of Expenses is not timely made pursuant to Section 8.5 of the By-Laws, (2) payment of indemnification is not made pursuant to Section 8.3 of the By-Laws within ten days after receipt by the Corporation of written request therefor, (3) a determination is made pursuant to Section 8.4 of the By-Laws that an Indemnitee is not entitled to indemnification under the By-Laws, (4) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8.4 of the By-Laws and such determination shall not have been made and delivered in a written opinion within ninety days after receipt by the Corporation of the written request for indemnification, or (5) payment of indemnification is not made within ten days after a determination has been made pursuant to Section 8.4 of the By-Laws that an Indemnitee is entitled to indemnification or within ten days after such

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determination is deemed to have been made pursuant to Section 8.4 of the By-Laws, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Indiana, or in any other court of competent jurisdiction, of the Indemnitee's entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one year following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 4(A). The Corporation shall not oppose the Indemnitee's right to seek any such adjudication or award in arbitration.

(B) In the event that a determination shall have been made pursuant to Section 8.4 of the By-Laws that an Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 4 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, the Corporation shall have the burden of proving in any judicial proceeding or arbitration commenced pursuant to this Section 4 that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(C) If a determination shall have been made or deemed to have been made pursuant to Section 8.4 of the By-Laws that an Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 4, absent (1) a misstatement or omission of a material fact in connection with the Indemnitee's request for indemnification, or (2) a prohibition of such indemnification under applicable law.

(D) The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 4 that the procedures and presumptions of these Procedures are not valid, binding and enforceable, and shall stipulate in any such judicial proceeding or arbitration that the Corporation is bound by all the provisions of these Procedures.

(E) In the event that an Indemnitee, pursuant to this Section 4, seeks to enforce the Indemnitee's rights under, or to recover damages for breach of, Article 8 of the By-Laws or these Procedures in a judicial proceeding or arbitration, the Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all expenses (of the types described in the definition of Expenses in Section 2 of these Procedures) actually and reasonably incurred in such judicial proceeding or arbitration, but only if the Indemnitee prevails therein. If it shall be determined in such judicial proceeding or arbitration that the Indemnitee is entitled to receive part but not all of the

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indemnification or advancement of Expenses sought, the expenses incurred by the Indemnitee in connection with such judicial proceeding or arbitration shall be appropriately prorated.

SECTION 5. Amendments. These Procedures may be amended at any time and from time to time in the same manner as any By‑Law of the Corporation in accordance with the Articles of Incorporation, the By-Laws and the Act; provided, however, that notwithstanding any amendment, alteration or repeal of these Procedures or any provision hereof, any Indemnitee shall be entitled to utilize these Procedures with respect to any claim for indemnification arising out of any action taken or omitted prior to such amendment, alteration or repeal except to the extent otherwise required by law.

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EX-3.B-1

Exhibit 3-b-1

AMENDED AND RESTATEDBY-LAWS

OF

ARVINMERITORMERITOR, INC.

(As of July 16, 2003April 29, 2015)

ARTICLE 1

OFFICE

SECTION 1.1. Registered Office. The registered office of ArvinMeritorMeritor, Inc. (the "Corporation") in the State of Indiana shall be in the City of Indianapolis, County of Marion.

SECTION 1.2. Principal Business Office. The principal business office of the Corporation shall be in the City of Troy, County of Oakland, in the State of Michigan.

SECTION 1.3. Other Offices. The Corporation may also have an office or offices at such other place or places either in or outside the State of Indiana as the Board of Directors may from time to time determine or the business of the Corporation requires.

ARTICLE 2

MEETING OF SHAREHOLDERS

SECTION 2.1. Place of Meetings. Each meeting of shareholders of the Corporation shall be held at such place, in or outside of the State of Indiana, as the Board of Directors may designate in the notice of such meeting, but if no such designation is made, then at the principal business office of the Corporation.

SECTION 2.2. Annual Meetings. An annual meeting of shareholders for the purpose of electing directors and transacting such other business as may properly be brought before the meeting, notice of which was given in the notice of meeting, shall be held on a date and time as the Board of Directors may determine.

If for any reason any annual meeting shall not be held at the time herein provided, the same may be held at any time thereafter, upon notice as hereinafter provided, or the business thereof may be transacted at any special meeting of shareholders called for that purpose.

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The Board of Directors may, upon public notice given prior to the scheduled meeting date, postpone, for as long as and to the extent permitted by the Indiana Business Corporation Law, as amended (the "Act"), any previously scheduled annual or special meeting of shareholders.

SECTION 2.3. Special Meetings. Special meetings of shareholders, unless otherwise required by statute and subject to the rights of holders of any class of Preferred Stock of the Corporation, may be called only by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the "Whole Board"). Business transacted at any special meeting shall be confined to the purpose or purposes stated in the notice of such special meeting. Meetings may be held without notice if all shareholders entitled to vote are present or if notice is waived by those not present.

SECTION 2.4. Notice of Shareholders' Meetings. Notice of each meeting of shareholders, whether annual or special, stating the date, time and place, and, in the case of special meetings, the purpose or purposes for which such meeting is called, shall be mailed, postage prepaid, to each shareholder entitled to vote thereat, at the shareholder's address as it appears on the records of the Corporation, not less than 10 nor more than 60 days before the date of the meeting unless otherwise prescribed by statute. Notice of any adjourned meeting of shareholders shall not be required to be given, except when expressly required by law.

SECTION 2.5. Record Dates.

(a)    In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the Board of Directors may designate a date as the record date which, for purposes of a meeting of shareholders or other event requiring shareholder action, shall not be more than 70 nor less than 10 days before the date of such meeting or event.

(b)    If a record date has not been fixed as provided in the preceding paragraph (a), then:

(i)    The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders of the Corporation shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and

(ii)    The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

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(c)    Only those who shall be shareholders of record on the record date so fixed as aforesaid shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend or other distribution, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding the transfer of any shares on the books of the Corporation after the applicable record date, provided, however, the Board of Directors may fix a new record date for any adjourned meeting and shall fix a new record date if a meeting is adjourned to a date more than 120 days after the date originally fixed for the meeting.

SECTION 2.6. List of Shareholders. The Secretary of the Corporation shall, from information obtained from the transfer agent, prepare and make, before each meeting of shareholders, an alphabetical list of shareholders entitled to vote thereat, arranged by voting group, showing the address and number of shares registered in the name of each shareholder. Such list shall be open to the examination of any such shareholder or such shareholder's agent or attorney authorized in writing ("shareholder agent"), for any purpose germane to the meeting, during ordinary business hours, for a period of at least 5 days prior to the meeting for which the list was prepared and continuing through the meeting, either at a place in the city where the meeting is being held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Such list shall be produced and kept at the time and place of meeting during the whole time thereof for inspection by any such shareholder or shareholder agent who is present. The stock ledger shall be the only evidence as to who are the shareholders entitled to examine the stock ledger, the list referred to in this section or the books of the Corporation, or to vote in person or by proxy at any meeting of shareholders.

SECTION 2.7. Quorum and Adjournments. At each meeting of shareholders, the holders of a majority of the voting power of the shares of the Corporation entitled to vote, present in person or by proxy, shall constitute a quorum of shareholders for all purposes unless the presence of a larger proportion is required by statute or by the Corporation's Articles of Incorporation (the "Articles of Incorporation"), and, in such cases, the presence of the proportion so required shall constitute a quorum. Whether or not there is such a quorum, the Chairman of the meeting or the shareholders present in person or by proxy constituting a majority of the shares present may adjourn the meeting from time to time without notice other than an announcement at the meeting. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting, and only those shareholders entitled to vote at the meeting as originally called shall be entitled to vote at any adjournment or adjournments thereof. The absence from any meeting of the number of shareholders required by law or by the Articles of Incorporation or by these By-Laws for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if the number of shareholders required in respect of such other matter or matters shall be present.

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SECTION 2.8. Voting by Shareholders; Proxies. Except as otherwise provided by law, the Articles of Incorporation or these By‑Laws, each shareholder entitled to vote shall at every meeting of the shareholders have one vote for each share entitled to vote held by such shareholder. Any vote on shares may be given by the shareholder entitled thereto in person or by proxy appointed by an instrument in writing, subscribed (or transmitted by electronic means and authenticated as provided by law) by such shareholder or by the shareholder's attorney thereunto authorized, and delivered to the Secretary; provided, however, that no proxy shall be voted after 11 months from its date unless the proxy provides for a shorter or longer period. Except as otherwise set forth in the Articles of Incorporation with respect to the right of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances, election of directors at all meetings of shareholders at which directors are to be elected shall be by a plurality of the votes cast for the election of directors at the meeting. If a quorum exists, action on a matter (other than the election of directors) submitted to shareholders entitled to vote thereon at any meeting shall be approved if the votes cast favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law, the Articles of Incorporation or these By-Laws.

SECTION 2.8A. Participation in Meetings by Means of Conference or Similar Communications. Any shareholder may participate in an annual or special meeting of shareholders by or through use of any means of communications by which all shareholders participating may simultaneously hear each other during the meeting.

A shareholder participating in such a meeting by this means is deemed to be present at the meeting.

SECTION 2.9. Conduct of Business.

(a)    Presiding Officer. The ExecutiveChairman of the Board of Directors shall preside as Chairman of shareholder meetings and shall determine the order and conduct of business and all matters of procedure at such meetings. The ExecutiveChairman shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at the meeting. In the absence of the Chairman, the Vice Chairman of the Board of Directors (the "Vice Chairman"), or if the Vice Chairman is also absent, theExecutive Chairman, the Chief Executive Officer and President, shall assume the duties of the Chairmanof the shareholder meeting specified in this paragraph (a) of Section 2.9. If each of the Chairman, the ViceExecutive Chairman and theChief Executive Officer and President is absent, a director or an officer of the Corporation chosen by the Board of Directors shall assume the duties of the Chairmanof the shareholder meeting specified in this paragraph (a) of Section 2.9.

(b)    Secretary. The Secretary, or, in his or her absence, an Assistant Secretary, shall act as Secretary at all meetings of the shareholders. In the absence from any such

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meeting of the Secretary and the Assistant Secretaries, the Chairmanof the shareholder meeting may appoint any person to act as Secretary of the meeting.

(c)    Annual Meetings of Shareholders.

(i)    Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (A) pursuant to the Corporation's notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Section 2.9, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.9.

(ii)    For nominations or other business to be properly brought before any annual meeting by a shareholder pursuant to clause (C) of paragraph (c)(i) of this Section 2.9, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, thatin the case of the annual meeting to be held in 2001 or in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder's notice as described above. Such shareholder's notice shall set forth (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (C) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (x) the name and address of such shareholder, as they appear on the Corporation's books, and of such beneficial owner and (y) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.

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(iii)    Notwithstanding anything in the second sentence of paragraph (c)(ii) of this Section 2.9 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 70100 days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this Section 2.9 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which public announcement is first made by the Corporation.

(iv)    Notwithstanding anything in the second sentence of paragraph (c)(ii) of this Section 2.9 to the contrary, in the event that any person nominated by the Board of Directors for election as a director (other than a person nominated to fill a vacancy created by the death of a director) was not a director or nominee named (A) in the Corporation's proxy statement for the preceding annual meeting or (B) in a public announcement made by the Corporation at least 70100 days prior to the first anniversary of the preceding year's annual meeting (a "New Nominee"), a shareholder's notice required by this Section 2.9 shall also be considered timely, but only with respect to nominees for election as director equal in number to the number of New Nominees, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which public announcement is first made by the Corporation of the election or nomination of such New Nominee to the Board of Directors.

(d)    Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation's notice of meeting (A) by or at the direction of the Board of Directors or (B) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Section 2.9, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.9. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder's notice required by paragraph (c)(ii) of this Section 2.9 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the date on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder's notice as described above.

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(e) General.

(i)    Except where the terms of any class or series of Preferred Stock of the Corporation require the election of one or more directors by the holders of such Preferred Stock voting as a single class and except as provided in Section 3.2 of these By-Laws, only such persons who are nominated in accordance with the procedures set forth in this Section 2.9 shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.9. Except as otherwise provided by law, the Articles of Incorporation of these By-Laws, the person presiding at the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed in accordance with the procedures set forth in this Section 2.9 and, if any nomination or business proposed is not in compliance with this Section 2.9, to declare that such defective nomination or proposal shall be disregarded.

(ii)    For purposes of this Section 2.9, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(iii)    Notwithstanding the foregoing provisions of this Section 2.9, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect any rights of (x) shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or (y) holders of any series of Preferred Stock to elect directors under specified circumstances.

SECTION 2.10. Inspectors. There shall be appointed by the Board of Directors, before each meeting of shareholders, two inspectors of the vote. Such inspectors shall first take and subscribe an oath or affirmation faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of their ability. If two inspectors are not appointed in advance of any such meeting by the Board of Directors or one or both appointed inspectors fail or refuse to act, then one or both inspectors, as the case may be, shall be appointed for the meeting by the person presiding thereat. Such inspectors shall be responsible for tallying and certifying the vote taken on any matter at each meeting which is required to be tallied and certified by them in the resolution of the Board of Directors appointing them or the appointment of the person presiding at such meeting as the case may be. Except as otherwise provided by these By-Laws or the laws of the State of Indiana, such inspectors shall also decide all questions touching upon the qualification of voters, the validity of proxies and ballots, and the acceptance and rejection of votes. In the case of a tie vote by the inspectors on any question, the person

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presiding at the meeting shall decide such question. The Board of Directors shall have the authority to make rules establishing presumptions as to the validity and sufficiency of proxies.

ARTICLE 3

DIRECTORS

SECTION 3.1. Number. Subject to the rights of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances, the number of directors shall be set, and from time to time may be increased or decreased to the extent provided for in the Articles of Incorporation, exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board. A director need not be a shareholder.

SECTION 3.2. Vacancies. Except where the terms of any class or series of Preferred Stock of the Corporation require the election of one or more directors by the holders of such Preferred Stock voting as a single class and except to the extent the Board of Directors determines otherwise, vacancies occurring on the Board of Directors and newly-created directorships resulting from any increase in the number of directors may be filled only by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and any director so chosen shall hold office for a term expiring at the annual meeting of shareholders at which the term of office of the class of directors to which such director has been elected expires and until his or her successor is duly elected and qualified or until the earlier of his or her death, resignation or removal in a manner permitted by statute or these By-Laws. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

SECTION 3.3. Powers. The property, affairs and business of the Corporation shall be managed by the Board of Directors which may exercise all powers of the Corporation and do all lawful acts and things not by statute or by the Articles of Incorporation or these By-Laws directed or required to be exercised or done by the shareholders.

SECTION 3.4. Place of Meetings. The place of any meeting of the Board of Directors may be either in or outside the State of Indiana as the Board may from time to time determine or as shall be specified or fixed in the respective notices or waivers of notice thereof.

SECTION 3.5. Annual Meetings. Annual meetings of the Board of Directors shall be held each year on the same day as the shareholder's annual meeting for such year, at the time and place determined by the Board of Directors. Notice of such meeting need not be given. Such meeting may be held at any other time or place which shall be

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specified in a notice given as hereinafter provided for special meetings of the Board of Directors.

SECTION 3.6. Regular Meetings. Regular meetings of the Board of Directors shall be held at the dates, times and places designated by the Board of Directors from time to time. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day not a legal holiday. Notice of regular meetings need not be given.

SECTION 3.7. Special Meetings. Special meetings of the Board of Directors may be called by the ExecutiveChairmanof the Board; and shall be called by the ExecutiveChairmanof the Board or the Secretary upon the written request of three directors of the Corporation.

SECTION 3.8. Notice of Special Meetings. Notice of each special meeting of the Board of Directors shall be given to each director. The notice shall state the principal purpose or purposes of the meeting.

SECTION 3.9. Quorum. Except as provided in Section 3.2, a whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business at all meetings of the Board of Directors, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors unless otherwise provided by law, the Articles of Incorporation or these By‑Laws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. Notice of any adjourned meeting need not be given. The directors shall act only as a board and the individual directors shall have no power as such.

SECTION 3.10. Informal Action. Unless otherwise restricted by statute, the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all directors or by all members of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee.

SECTION 3.11. Attendance by Conference Telephone. Members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of such Board of Directors or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

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SECTION 3.12. Order of Business. At all meetings of the Board of Directors, business shall be transacted in the order determined by the Board.

SECTION 3.13. Resignations. Any director of the Corporation may resign at any time by giving written notice to the ExecutiveChairman of the Board or the Secretary of the Corporation. The resignation of any director shall take effect at the time of the receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 3.14. Committees.

(a)    The Board of Directors may from time to time, in its discretion, by resolution passed by a majority of the Whole Board, designate, and appoint, from the directors, committees of one or more persons which shall have and may exercise such lawfully delegable powers and duties conferred or authorized by the resolutions of designation and appointment.

(b)    Each member of a committee shall continue in office until a director to succeed him or her shall have been elected and shall have qualified, or until he or she ceases to be a director or until he or she shall have resigned or shall have been removed in the manner hereinafter provided. Any vacancy in a committee shall be filled by the vote of a majority of the Whole Board at any regular or special meeting thereof.

(c)    The Board of Directors may, by resolution passed by a majority of the Whole Board, designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

(d)    Unless otherwise provided by the Board of Directors, each committee shall appoint a chairman. Each committee shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors.

(e)    Any regular or alternate member of a committee may resign at any time by giving written notice to the ExecutiveChairman of the Board or the Secretary of the Corporation. Such resignation shall take effect at the time of the receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(f)    Any regular or alternate member of a committee may be removed with or without cause at any time by resolution passed by a majority of the Whole Board at any regular or special meeting.

(g)    Regular meetings of each committee, of which no notice shall be necessary, shall be held on such days and at such places as the chairman of the committee shall determine or as shall be fixed by a resolution passed by a majority of all the members of such committee. Special meetings of each committee will be called by the

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Secretary at the request of any two members of such committee (or the sole member, if a committee of one), or in such other manner as may be determined by the committee. Notice of each special meeting of a committee shall be mailed to each member thereof at least two days before the meeting or shall be given personally or by telephone or other electronic transmission at least one day before the meeting. Every such notice shall state the time and place, but need not state the purposes of the meeting. No notice of any meeting of a committee shall be required to be given to any alternate.

(h)    Unless the Board of Directors shall provide otherwise, the presence of a majority of the total membership of any committee of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of such committee and the act of a majority of those present shall be necessary and sufficient for the taking of any action thereat.

SECTION 3.16. Compensation of Directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and at each meeting of a committee of the Board of Directors of which they are members. Unless otherwise provided in these By-Laws, the Board of Directors shall have the authority to fix compensation of all directors for their services to the Corporation as directors and for their services to the Corporation as regular or alternate members of committees of the Board of Directors.

SECTION 3.17. Removal. Subject to the rights of the holders of any class or series of Preferred Stock, any director or the entire Board of Directors may be removed from office at any time, but only for cause and only by the affirmative vote by the holders of at least 80 percent of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote at an election of directors, voting together as a single class.

ARTICLE 4

NOTICES

SECTION 4.1. Notices. Notices to directors and shareholders shall be in writing and delivered personally or mailed to their addresses appearing on the records of the Corporation or, if to directors, by telegram, cable, telephone, telecopy, facsimile, other electronic transmission, wireless or a nationally recognized overnight delivery service or personally. Notice to directors by mail shall be given at least five days before the meeting. Notice to directors by telegram, cable, telephone, telecopy, facsimile, other electronic transmission, wireless or personal delivery, shall be given a reasonable time before the meeting, but in no event less than two days before the meeting. Notice by mail shall be deemed to be given when mailed to the director at his or her address appearing on the records of the Corporation. Notice by telegram or cable shall be deemed to be given when the telegram or cable addressed to the director at his or her address appearing

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on the records of the Corporation is delivered to the telegraph company. Notice by telephone, telecopy, facsimile, other electronic transmission or wireless shall be deemed to be given when transmitted by telephone, telecopy, facsimile, other electronic transmission or wireless to the number, electronic address or wireless call designation appearing on the records of the Corporation for the director (regardless of whether the director shall have personally received such telephone call or wireless message), provided confirmation of transmission shall be made promptly by telegram or cable in the manner specified above.

SECTION 4.2. Waiver of Notice. Whenever any notice is required, a waiver thereof signed by the person entitled to such notice and filed with the minutes or corporate records, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of any person at any meeting of shareholders or directors shall constitute a waiver of notice of such meeting, except when such person attends only for the express purpose of objecting, at the beginning of the meeting (or in the case of a director's meeting, promptly upon such director's arrival), to the transaction of any business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

ARTICLE 5

OFFICERS

SECTION 5.1. Designation; Number; Election. The Board of Directors shall elect the officers of the Corporation. Such officers shall be aan executive chairman of the Board of Directors, a vice chairman of the Board of Directors, achief executive officer and president, one or more vice presidents as the Board of Directors shall determine from time to time, a controller, a treasurer, and a secretary.

In addition to any officer elected by the Board of Directors, the Board of Directorsor, the ExecutiveChairmanor the Chief Executive Officer and President, at any time, may appoint and remove such additional officers and agents as the Board of Directorsor, the ExecutiveChairmanor the Chief Executive Officer and President may determine from time to time. Such persons shall have such authority, and perform such duties as provided in these By‑Laws or as the Board of Directorsor, the ExecutiveChairmanor the Chief Executive Officer and President may from time to time prescribe. The Board of Directorsor, the ExecutiveChairmanor the Chief Executive Officer and President may from time to time authorize any officer to appoint and remove agents and employees and to prescribe their powers and duties.

One person may hold more than one office at the same time provided the duties of such officers as prescribed by these By-Laws may be properly and consistently performed by one person.

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SECTION 5.2. Term of Office; Removal; Resignations; Vacancies. The term of each officer shall be for one year and continue until his or her successor is chosen and qualified or until the earlier of his or her death, resignation or removal, except that any such officer elected by the Board of Directors, excluding the Chairman, the ViceExecutive Chairman and theChief Executive Officer and President, at any time, may be suspended by the Chairman, the ViceExecutive Chairman or theChief Executive Officer and President until the Board of Directors convenes, and any such officer, including the Chairman, the ViceExecutive Chairman and theChief Executive Officer and President, may be removed at any time by the affirmative vote of a majority of the members of the Whole Board.

All appointed officers, agents and representatives of the Corporation shall hold office only during the pleasure of the Board of Directors or the officer appointing them.

Any officer elected by the Board of Directors may resign at any time by giving written notice to the ExecutiveChairman of the Board, the Chief Executive Officer and President or the Secretary. Any other officer may resign at any time by giving written notice to the ExecutiveChairman of the Boardor the Chief Executive Officer and President. Any such resignation shall take effect at the date of receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

A vacancy in any office because of death, resignation, removal or otherwise, shall be filled for the unexpired portion of the term in the manner provided in these By‑Laws for regular election or appointment to such office.

SECTION 5.3. Compensation of Officers. The Board of Directors or the compensation committee of the Board of Directors shall have the authority to fix compensation of all officers elected by the Board. The ExecutiveChairman and/or such officer as the ExecutiveChairman may designate shall have the authority to fix compensation of all other officers of the Corporation.

SECTION 5.4. Executive Chairman of the Board of Directors. The ExecutiveChairman of the Board of Directors shall, subject to the Board of Directors, havebe responsible for the generalmanagement and oversight of the administration andoperation of the Corporation'sbusiness and general supervision of its policies and affairsaffairs of the Corporation. He or she shall see that all orders and resolutions ofreport to the Board of Directorsand of any committee thereof are carried into effect.

He or she shall (a) preside at all meetings of the shareholders and of the Board of Directors, and shall have plenary power to set the agenda, determine the procedure and rules of order and make definitive rulings at meetings of shareholders; (b) have power to appoint officers for any division who, as such, shall not be officers of the Corporation; (c) subject to the Board of Directors, be in general and active charge of the entire business and all the affairs of the Corporation; andwork with the Chief Executive Officer and

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President to develop corporate strategies, make key business decisions and develop management talent; (c) work with the Lead Director to organize and set the agenda for regular and special meetings of the Board of Directors based on input from senior management of the Corporation; (d) ensure that the Board of Directors receives accurate, timely and clear information on: (i) the Corporation’s performance, (ii) the issues, challenges and opportunities facing the Corporation, and (iii) matters reserved to the Board of Directors for decision; (e) represent the Corporation (together with the Chief Executive Officer and President) to external constituencies, including shareholders and other investors, as required; (f) advise and support the Chief Executive Officer and President, including performing the duties of the Chief Executive Officer and President in the absence or disability of the Chief Executive Officer and President; and (g) have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these By-Laws.

SECTION 5.5. Vice Chairman of the Board of Directors. The Vice Chairman shall have the powers and duties prescribed in these By-Laws or assigned to him or her by the Board of Directors. In the absence or disability of the Chairman, the Vice Chairman shall preside at meetings of the Board of Directors and shall perform such other duties of the Chairman as may be assigned to him or her by the Board of Directors.Chief Executive Officer and President. The Chief Executive Officer and President shall, subject to the general oversight of the Executive Chairman, be responsible for the day-to-day management and overall charge of the administration and operation of the Corporation’s business and the general supervision of the policies and affairs of the Corporation. He or she shall report to the Executive Chairman (acting on behalf of the Board of Directors) and to the Board of Directors directly.

SECTION 5.6.President. The President shall have the powers and duties prescribed in these By-Laws or assigned to him or her by the Board of Directors. InHe or she shall (a) see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect or otherwise implemented; (b) have the power to appoint officers for any division who, as such, shall not be officers of the Corporation; (c) in the absence or disability of the Chairman and the ViceExecutive Chairman,the President shall preside at meetings of the Board of Directors and shallperform such other duties of theExecutive Chairman as may be assigned to him or her by the Board of Directors; and (d) have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these By-Laws.

In the absence or disability of the Chairman, the ViceExecutive Chairman and theChief Executive Officer and President, on assembling for a regular or special meeting of the Board of Directors, the directors shall choose another member of the Board of Directors or another officer in attendance to preside at such meeting.

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SECTION 5.7.5.6. Vice Presidents. Each Vice President shall have the powers and duties prescribed in these By-Laws or assigned to him or her by the Board of Directors, the ExecutiveChairman or theChief Executive Officer and President. The Board of Directors, the Executive Chairman or the Chief Executive Officer and President may designate one or more of such Vice Presidents as executive, senior or assistant Vice Presidents.

    SECTION 5.8.5.7.Controller. Subject to control and supervision by the ExecutiveChairman, theChief Executive Officer and President and the Board of Directors, the Controller shall be in charge of the accounts of the Corporation and its subsidiaries; maintain adequate records of all assets, liabilities and business transactions; and have the other powers and duties prescribed by these By-Laws or by the Board of Directors, the ExecutiveChairman or theChief Executive Officer and President, and the usual powers and duties pertaining to his or her office.

SECTION 5.9.5.8.Assistant Controllers. The Assistant Controllers shall have the powers and duties prescribed by these By-Laws or assigned by the Controller. In the absence or disability of the Controller, they shall have all his or her other powers and duties.

SECTION 5.10.5.9.Treasurer. Subject to control and supervision by the ExecutiveChairman, theChief Executive Officer and President and the Board of Directors, the Treasurer shall have charge of and shall be responsible for the receipt, disbursement and safekeeping of all funds and securities of the Corporation (and shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these By-Laws), propose financial policies, negotiate loans, be responsible for the maintenance of proper insurance coverages and from time to time and whenever requested to do so, render statements of the condition of the finances of the Corporation to the Board of Directors; and have the other powers and duties prescribed by these By-Laws or by the Board of Directors, the ExecutiveChairman or theChief Executive Officer and President, and the usual powers and duties pertaining to his or her office.

SECTION 5.11.5.10.Assistant Treasurers. The Assistant Treasurers shall have the powers and duties prescribed by these By-Laws or assigned by the Treasurer. In the absence of the Treasurer, they shall have all his or her other powers and duties.

SECTION 5.12.5.11.Secretary. Subject to control and supervision by the Board of Directorsand, theExecutive Chairmanand the Chief Executive Officer and President, the Secretary shall attend and record proceedings of meetings of shareholders, the Board of Directors and any committee of the Board of Directors, keep or cause to be kept in books provided for such purpose such records of proceedings and have the other powers and duties prescribed by these By-Laws or by the Board of Directors, the ExecutiveChairman or theChief Executive Officer and President, and the usual powers

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and duties pertaining to his or her office, including having custody of the corporate seal, if any, and affixing it to all documents as required to attest the same.

SECTION 5.13.5.12. Assistant Secretaries. The Assistant Secretaries shall have the powers and duties prescribed by these By-Laws or assigned by the Secretary. In the absence or disability of the Secretary, they shall have all his or her powers and duties.

SECTION 5.14.5.13. Certain Agreements. The Board of Directors shall have power to authorize or direct the proper officers of the Corporation, on behalf of the Corporation, to enter into valid and binding agreements in respect of employment, incentive or deferred compensation, stock options, and similar or related matters, notwithstanding the fact that a person with whom the Corporation so contracts may be a member of its Board of Directors. Any such agreement may validly and lawfully bind the Corporation for a term of more than one year, in accordance with its terms, notwithstanding the fact that one of the elements of any such agreement may involve the employment by the Corporation of an officer, as such, for such term.

ARTICLE 6

CONDUCT OF BUSINESS

SECTION 6.1. Contracts; Loans. The Board of Directors, except as in these By-Laws otherwise provided, may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

No loan shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name, unless authorized by the Board of Directors.

SECTION 6.2. Checks. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, employee or employees, of the Corporation as shall from time to time be determined in accordance with authorization of the Board of Directors.

SECTION 6.3. Banking. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may from time to time designate, or as may be designated by any officer or officers of the Corporation to whom such power may be delegated by the Board, and for the purpose of such deposit the officers and employees who have been authorized to do so in accordance with the determinations of the Board may endorse, assign and deliver checks, drafts, and other orders for the payment of money which are payable to the order of the Corporation.

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SECTION 6.4. Voting of Stock. Except as otherwise provided in these By‑Laws or in the Articles of Incorporation, and unless otherwise provided by resolution of the Board of Directors, the ExecutiveChairman or any other officer elected by the Board of Directors may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation to cast the votes which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such vote or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises.

ARTICLE 7

SHARE CERTIFICATES AND THEIR TRANSFER

SECTION 7.1. Share Certificates. Certificates for shares of the Corporation shall be in such form as shall be approved by the Board of Directors and shall be signed by the ExecutiveChairman, the Vice Chairman or theand the Chief Executive Officer and President, and by the Secretary or any Assistant Secretary, and shall not be valid unless so signed. Such certificates shall be appropriately numbered in order of issue, by class and series, and contain the name of the registered holder, the number of shares and the date of issue. If such certificates are countersigned (a) by a transfer agent other than the Corporation or its employee, or (b) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile.

In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he, she or it were such officer, transfer agent, or registrar at the date of issue.

The Board of Directors may by resolution or resolutions provide that some or all of any or all classes or series of the shares of stock of the Corporation shall be uncertificated shares. Notwithstanding the preceding sentence, every holder of uncertificated shares, upon request, shall be entitled to receive from the Corporation a certificate representing the number of shares registered in such shareholder's name on the books of the Corporation.

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During any period when more than one class of shares of the Corporation is authorized, there shall be set forth on the face or back of certificates issued to represent each class or series of shares, a statement that the Corporation will furnish without charge to each shareholder who so requests, the designation, preferences and relative, participating, optional or other special rights of each class of shares or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

SECTION 7.2. Transfer of Shares. Upon surrender to the Corporation or a transfer agent of the Corporation by the holder of record or by such person's attorney or other duly constituted representative of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, as the Corporation may reasonably require, it shall be the duty of the Corporation and such transfer agent to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction on the books of the Corporation. No certificate shall be issued in exchange for any certificate until the former certificate for the same number of shares of the same class and series shall have been surrendered and canceled, except as provided in Section 7.4.

SECTION 7.3. Regulations. The Board of Directors shall have authority to make rules and regulations concerning the issue, transfer and registration of certificates for shares of the Corporation and concerning the registration of pledges of uncertificated shares.

SECTION 7.4. Lost, Stolen and Destroyed Certificates. The Corporation may issue a new certificate or certificates for shares or may register uncertificated shares, if then authorized by the Board of Directors, in place of any issued certificate alleged to have been lost, stolen or destroyed upon such terms and conditions as the Board of Directors may prescribe.

SECTION 7.5. Record Ownership; Registered Shareholders. A record of the name and address of each holder of the shares of the Corporation, the number of shares held by such shareholder, the number or numbers of any share certificate or certificates issued to such shareholder and the number of shares represented thereby, and the date of issuance of the shares held by such shareholder shall be made on the Corporation's books. The Corporation shall be entitled to treat the holder of record (according to the books of the Corporation) of any share or shares (including any holder registered in a book‑entry or direct registration system maintained by the Corporation or a transfer agent or a registrar designated by the Board of Directors) as the holder in fact thereof and owner for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as expressly provided by applicable law.

SECTION 7.6. Transfer Agents and Registrars. The Board of Directors may from time to time appoint a transfer agent and a registrar in one or more cities, may

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require all certificates evidencing shares of the Corporation to bear the signatures of a transfer agent and a registrar, may provide that such certificates shall be transferable in more than one city, and may provide for the functions of transfer agent and registrar to be combined in one agency.

ARTICLE 8

INDEMNIFICATION

SECTION 8.1. Litigation Brought By Third Parties. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, formal or informal (other than an action by or in the right of the Corporation) (an "Action") by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation (a "Corporate Person"), or is or was serving at the request of the Corporation as a director, officer, employee, agent, partner, trustee or member or in another authorized capacity (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under this Section 8.1) (collectively, an "Authorized Capacity") of or for another corporation, unincorporated association, business trust, estate, partnership, joint venture, individual, trust, employee benefit plan, or other legal entity, whether or not organized or formed for profit (collectively, "Another Entity"), against expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such Action ("Expenses") if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Action by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe his or her conduct was unlawful.

SECTION 8.2. Litigation by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any Action by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a Corporate Person, or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against Expenses actually and reasonably incurred by him or her in connection with that defense or settlement of such Action if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or willful misconduct in the performance of his or her duty to the Corporation unless and only to

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the extent that a court of equity or the court in which such Action was pending shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court of equity or other court shall deem proper.

SECTION 8.3. Successful Defense. To the extent that a person who is or was a Corporate Person or serving at the request of the Corporation in an Authorized Capacity of or for Another Entity has been successful on the merits or otherwise in defense of any Action, referred to in Section 8.1 and 8.2 of this Article, or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by or on behalf of him or her in connection therewith. If any such person is not wholly successful in any such Action but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters therein, the Corporation shall indemnify such person against all Expenses actually and reasonably incurred by or on behalf of such person in connection with each claim, issue or matter that is successfully resolved. For purposes of this Section 8.3 and without limitation, the termination of any claim, issue or matter by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Notwithstanding any other provision of this section, to the extent any person is a witness in, but not a party to, any Action, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a Corporate Person or serving at the request of the Corporation in an Authorized Capacity of or for Another Entity, he or she shall be indemnified against all Expenses actually and reasonably incurred by or on behalf of him or her in connection therewith.

SECTION 8.4. Determination of Conduct.

(a) Any indemnification under Section 8.1 or 8.2 of this Article (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of the person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 8.1 or 8.2. Such determination shall be made (1) if a Change of Control (as hereinafter defined) shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of the Disinterested Directors (as hereinafter defined) or, if such a quorum cannot be obtained, by majority vote of a committee duly designated by the Board of Directors consisting solely of two (2) or more Disinterested Directors or (B) if there are no Disinterested Directors or, even if there are Disinterested Directors and a majority of such Disinterested Directors so directs, by (i) Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (ii) the shareholders of the Corporation, provided, however, that shares owned by or voted under the control of directors who are at the time not Disinterested Directors may not be voted on the determination; or (2) if a Change of Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, unless the claimant shall request that such determination be

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made by or at the direction of the Board of Directors, in which case it shall be made in accordance with clause (1) of this sentence. Any claimant shall be entitled to be indemnified against the Expenses actually and reasonably incurred by such claimant in cooperating with the person or entity making the determination of entitlement to indemnification (irrespective of the determination as to the claimant's entitlement to indemnification) and, to the extent successful, in connection with any litigation or arbitration with respect to such claim or the enforcement thereof.

(b)    If a Change of Control shall not have occurred, or if a Change of Control shall have occurred and a director, officer, employee or agent requests pursuant to clause (2) of the second sentence in Section 8.4(a) that the determination whether the claimant is entitled to indemnification be made by or at the direction of the Board of Directors, the claimant shall be conclusively presumed to have been determined pursuant to Section 8.4(a) to be entitled to indemnification if (1)(a) within fifteen days after the next regularly scheduled meeting of the Board of Directors following receipt by the Corporation of the request therefor, the Board of Directors shall not have resolved by majority vote of the Disinterested Directors to submit such determination to (i) Independent Counsel for its determination or (ii) the shareholders for their determination at the next annual meeting, or any special meeting that may be held earlier, after such receipt, and (b) within sixty days after receipt by the Corporation of the request therefor (or within ninety days after such receipt if the Board of Directors in good faith determines that additional time is required by it for the determination and, prior to expiration of such sixty‑day period, notifies the claimant thereof), the Board of Directors shall not have made the determination by a majority vote of the Disinterested Directors, or (2) after a resolution of the Board of Directors, timely made pursuant to clause (1)(a)(ii) above, to submit the determination to the shareholders, the shareholders meeting at which the determination is to be made shall not have been held on or before the date prescribed (or on or before a later date, not to exceed sixty days beyond the original date, to which such meeting may have been postponed or adjourned on good cause by the Board of Directors acting in good faith); provided, however, that this sentence shall not apply if the claimant has misstated or failed to state a material fact in connection with his or her request for indemnification. Such presumed determination that a claimant is entitled to indemnification shall be deemed to have been made (I) at the end of the sixty‑day or ninety‑day period (as the case may be) referred to in clause (1)(b) of the immediately preceding sentence or (II) if the Board of Directors has resolved on a timely basis to submit the determination to the shareholders, on the last date within the period prescribed by law for holding such shareholders meeting (or a postponement or adjournment thereof as permitted above).

SECTION 8.5. Advance Payment. Expenses incurred in defending an Action shall be paid by the Corporation in advance of the final disposition of such Action to a director or officer, promptly after receipt of a request therefor stating in reasonable detail the expenses incurred, and to an employee or agent as authorized by the Board of Directors; provided that in each case (a) the Corporation shall have received an undertaking by or on behalf of the director, officer, employee or agent to repay such

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amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation hereunder, (b) the indemnitee furnishes the Corporation a written affirmation of his or her good faith belief that he or she has satisfied the standard of conduct in Section 8.1 or 8.2 and (c) a determination is made by those making the decision pursuant to Section 8.4 that the facts then known would not preclude indemnification under these By-Laws.

SECTION 8.6. Procedures for Determination. The Board of Directors shall establish reasonable procedures for the submission of claims for indemnification hereunder, determination of the entitlement of any person thereto and review of any such determination. Such procedures shall be set forth in an appendix to these By‑Laws and shall be deemed for all purposes to be a part hereof.

SECTION 8.7. By-Law Not Exclusive. The indemnification provided by this Article 8 shall not be deemed exclusive of any other rights to which any person may be entitled under any by-law, agreement, vote of shareholders or Disinterested Directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, agent or participant and shall inure to the benefit of the heirs, executors and administrators of such a person. Notwithstanding any amendment, alteration or repeal of this section or any of its provisions, or of any of the procedures established by the Board of Directors pursuant to Section 8.6, any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity shall be entitled to indemnification in accordance with the provisions hereof and thereof with respect to any action taken or omitted prior to such amendment, alteration or repeal except to the extent otherwise required by law.

SECTION 8.8. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article or the Business Corporation Law of the State of Indiana.

SECTION 8.9. Effect of Invalidity. The invalidity or unenforceability of any provision of this Article 8 shall not affect the validity or enforceability of the remaining provisions of this Article 8.

SECTION 8.10. Definitions. For purposes of this Article 8:

(a) "Change of Control" means a change of control of the Corporation at any time after the effective time of the merger of Arvin Industries, Inc. with and into the Corporation of a nature that would be required to be reported in a proxy statement pursuant to Section 14(a) of the Exchange Act or in a Form 8-K pursuant to Section 13 of

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the Exchange Act (or in any similar form or schedule under either of those provisions or any successor provision), whether or not the Corporation is then subject to such reporting requirement; provided, however, that, without limitation, a Change of Control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d‑3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two‑thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors immediately thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any director whose election became effective prior to or at the time of the merger of Arvin Industries, Inc. with and into the Corporation and any new director whose election or nomination for election by the Corporation's shareholders was approved by a vote of at least two‑thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

(b)    "the Corporation" shall include, in addition to the surviving or resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify a director, officer, employee or agent of such constituent corporation, or any director, officer, employee or agent of such constituent corporation who is or was serving at the request of such constituent corporation as a director, officer, employee or agent of Another Entity shall stand in the same position under the provisions of this Article 8 with respect to the surviving or resulting corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

(c)    "Disinterested Director" means a director of the Corporation who is not and was not a party to an action, suit or proceeding in respect of which indemnification is sought by a director, officer, employee or agent.

(d)    "Independent Counsel" means a law firm, or a member of a law firm, that (i) is experienced in matters of corporation law; (ii) neither presently is, nor in the past five years has been, retained to represent the Corporation, the director, officer, employee or agent claiming indemnification or any other party to the Action giving rise to a claim for indemnification under this section, in any matter material to the Corporation, the claimant or any such other party; and (iii) would not, under applicable standards of professional conduct then prevailing, have a conflict of interest in representing either the Corporation or such director, officer, employee or agent in an action to determine the Corporation's or such person's rights under this Article 8.

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SECTION 8.11. Actions Against the Corporation. No indemnification shall be payable to an officer, director, employee or agent pursuant to this Article 8 with respect to any action against the Corporation commenced by such officer, director, employee or agent unless the Board of Directors shall have authorized the commencement thereof or unless and to the extent that this Article 8 or the procedures established pursuant to Section 8.6 shall specifically provide for indemnification of expenses relating to the enforcement of rights under this Article 8 and such procedures.

SECTION 8.12. Change in Law. Notwithstanding the foregoing provisions of Article 8, the Corporation shall indemnify any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity to the full extent permitted by the Act or by any other applicable law, as may from time to time be in effect.

ARTICLE 9

GENERAL

SECTION 9.1. Dividends. Subject to any provisions of any applicable statute or of the Articles of Incorporation, dividends may be declared upon the capital stock of the Corporation by the Board of Directors at any regular or special meeting thereof; and such dividends may be paid in cash, property or shares of the Corporation.

SECTION 9.2. Fiscal Year. The fiscal year of the Corporation shall be the fifty-two or fifty-three week period beginning on the Monday following the Sunday closest to the last day of September of each year and ending on the Sunday closest to the last day of September of the following year.

SECTION 9.3. Severability. If any provision of these By-Laws, or its application thereof to any person or circumstances, is held invalid, the remainder of these By- Laws and the application of such provision to other persons or circumstances shall not be affected thereby.

SECTION 9.4. Amendments. These By-Laws may be amended, added to, rescinded or repealed only by an affirmative vote of at least a majority of the directors then in office at any meeting of the Board of Directors.

SECTION 9.5     Control Shares. Chapter 42 of the Indiana Business Corporation Law (IBCL § 23-1-42-1 et. seq.) shall not apply to the acquisition of shares of voting stock of the Corporation.

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APPENDIXPROCEDURES FOR SUBMISSION AND
DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE 8 OF THE BY‑LAWS.

SECTION 1. Purpose. The Procedures for Submission and Determination of Claims for Indemnification Pursuant to Article 8 of the By-Laws (the "Procedures") are to implement the provisions of Article 8 of the By-Laws of the Corporation (the "By-Laws") in compliance with the requirement of Section 8.6 thereof.

SECTION 2. Definitions. For purposes of these Procedures:

(A) All terms that are defined in Article 8 of the By-Laws shall have the meanings ascribed to them therein when used in these Procedures unless otherwise defined herein.

(B) "Expenses" include all reasonable attorneys' fees, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in, a Proceeding; and shall also include such retainers as counsel may reasonably require in advance of undertaking the representation of an indemnitee in a Proceeding.

(C) "Indemnitee" includes any person who was or is, or is threatened to be made, a witness in or a party to any Proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under Article 8 of the By-Laws) of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise.

(D) "Proceeding" includes any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, except one

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initiated by an Indemnitee unless the Board of Directors shall have authorized the commencement thereof.

SECTION 3. Submission and Determination of Claims.

(A) To obtain indemnification or advancement of Expenses under Article 8 of the By-Laws, an Indemnitee shall submit to the Secretary of the Corporation a written request therefor, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to permit a determination as to whether and what extent the Indemnitee is entitled to indemnification or advancement of Expenses, as the case may be. The Secretary shall, promptly upon receipt of a request for indemnification, advise the Board of Directors thereof in writing if a determination in accordance with Section 8.4 of the By-Laws is required.

(B) Upon written request by an Indemnitee for indemnification pursuant to Section 3(A) hereof, a determination with respect to the Indemnitee's entitlement thereto in the specific case, if required by the By-Laws, shall be made in accordance with Section 8.4 of the By-Laws, and, if it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within ten days after such determination. The Indemnitee shall cooperate with the person, persons or entity making such determination, with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination.

(C) If entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8.4 of the By-Laws, the Independent Counsel shall be selected as provided in this Section 3(C). The Independent Counsel shall be selected by the Board of Directors by majority vote of a quorum consisting of Disinterested Directors, or, if such a quorum cannot be obtained, by majority vote of a committee duly designated by the Board of Directors consisting solely of two or more Disinterested Directors, or, if such a quorum cannot be obtained and such a committee cannot be designated, by a majority vote of the full Board of Directors (in which selection Directors who are not Disinterested Directors may participate), and the Corporation shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. The Indemnitee may, within seven days after such written notice of selection shall

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have been given, deliver to the Corporation a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Article 8 of the By-Laws, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within twenty days after the next regularly scheduled Board of Directors meeting following submission by the Indemnitee of a written request for indemnification pursuant to Section 3(A) hereof, no Independent Counsel shall have been selected and not objected to, either the Corporation or the Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is favorably resolved or the person so appointed shall act as Independent Counsel under Section 8.4 of the By-Laws. The Corporation shall pay any and all reasonable fees and expenses (including without limitation any advance retainers reasonably required by counsel) of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8.4 of the By-Laws, and the Corporation shall pay all reasonable fees and expenses (including without limitation any advance retainers reasonably required by counsel) incident to the procedures of Section 8.4 of the By-Laws and this Section 3(C), regardless of the manner in which Independent Counsel was selected or appointed. Upon the delivery of its opinion pursuant to Article 8 of the By-Laws or, if earlier, the due commencement of any judicial proceeding or arbitration pursuant to Section 4(A)(3) of these Procedures, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(D) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification under the By-Laws, the person, persons or entity making such determination shall presume that an Indemnitee is entitled to indemnification under the By-Laws if the Indemnitee has submitted a request for indemnification in accordance with Section 3(A) hereof, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.

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SECTION 4. Review and Enforcement of Determination.

(A) In the event that (1) advancement of Expenses is not timely made pursuant to Section 8.5 of the By-Laws, (2) payment of indemnification is not made pursuant to Section 8.3 of the By-Laws within ten days after receipt by the Corporation of written request therefor, (3) a determination is made pursuant to Section 8.4 of the By-Laws that an Indemnitee is not entitled to indemnification under the By-Laws, (4) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8.4 of the By-Laws and such determination shall not have been made and delivered in a written opinion within ninety days after receipt by the Corporation of the written request for indemnification, or (5) payment of indemnification is not made within ten days after a determination has been made pursuant to Section 8.4 of the By-Laws that an Indemnitee is entitled to indemnification or within ten days after such determination is deemed to have been made pursuant to Section 8.4 of the By-Laws, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Indiana, or in any other court of competent jurisdiction, of the Indemnitee's entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one year following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 4(A). The Corporation shall not oppose the Indemnitee's right to seek any such adjudication or award in arbitration.

(B) In the event that a determination shall have been made pursuant to Section 8.4 of the By-Laws that an Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 4 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, the Corporation shall have the burden of proving in any judicial proceeding or arbitration commenced pursuant to this Section 4 that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(C) If a determination shall have been made or deemed to have been made pursuant to Section 8.4 of the By-Laws that an Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 4, absent

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(1) a misstatement or omission of a material fact in connection with the Indemnitee's request for indemnification, or (2) a prohibition of such indemnification under applicable law.

(D) The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 4 that the procedures and presumptions of these Procedures are not valid, binding and enforceable, and shall stipulate in any such judicial proceeding or arbitration that the Corporation is bound by all the provisions of these Procedures.

(E) In the event that an Indemnitee, pursuant to this Section 4, seeks to enforce the Indemnitee's rights under, or to recover damages for breach of, Article 8 of the By-Laws or these Procedures in a judicial proceeding or arbitration, the Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all expenses (of the types described in the definition of Expenses in Section 2 of these Procedures) actually and reasonably incurred in such judicial proceeding or arbitration, but only if the Indemnitee prevails therein. If it shall be determined in such judicial proceeding or arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the expenses incurred by the Indemnitee in connection with such judicial proceeding or arbitration shall be appropriately prorated.

SECTION 5. Amendments. These Procedures may be amended at any time and from time to time in the same manner as any By‑Law of the Corporation in accordance with the Articles of Incorporation, the By-Laws and the Act; provided, however, that notwithstanding any amendment, alteration or repeal of these Procedures or any provision hereof, any Indemnitee shall be entitled to utilize these Procedures with respect to any claim for indemnification arising out of any action taken or omitted prior to such amendment, alteration or repeal except to the extent otherwise required by law.

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EX-10.A-2

Exhibit 10-a-2

Meritor, Inc. 2135 West Maple Road Troy, Michigan 48084-7121 USA 800-535-5560 Tel meritor.com

Jeffrey A. Craig

Troy, MI

April 29, 2015

Dear Jay:

This letter confirms our mutual understanding of your employment as an elected officer and Chief Executive Officer and President (“you” or the “Executive”) with Meritor, Inc. (“Company” or “Meritor”).

If you accept the terms of this letter, please return a signed copy to me.

1.    Base Salary

You will continue to receive your current monthly base salary in accordance with Company payroll practices. Your performance will be assessed at the end of each performance year against both your annual goals and objectives and the Company’s performance. Based on your performance and the Company’s performance, your salary will be reviewed each year by the Compensation and Management Development Committee of the Board of Directors (“Committee”) which may, at its discretion, adjust your base salary as a direct result of your performance. Any annual adjustments are typically effective the following December. (Nothing herein shall preclude the Executive Chairman of the Board of Directors (“Executive Chairman”) from effecting a downward adjustment of your salary if in his judgment and the judgment of the Compensation Committee, such adjustment is warranted as a result of the Company’s poor performance or other economic/business related factors or your individual performance.)

2.    Annual Incentive Plans

You will be eligible to participate in the Company’s annual incentive plan (“Incentive Compensation Plan” or “ICP”) on a basis consistent with those of comparable executives. Your target award will be based upon the Incentive Compensation Plan target percentage for your position within the Company multiplied by your base salary at the end of the fiscal year. Actual award payments will be in accordance with the terms of the Incentive Compensation Plan and may be adjusted to reflect Company performance and your individual performance as approved by the Committee.

3.    Long-Term Incentives

Your outstanding equity awards are subject to the provisions in your grant letters as well as any related equity award agreements and plan terms.

You will continue to participate in the Company’s Long-Term Incentive Plan (“LTIP”) cash performance plan cycles that are underway at the target cash award level contained in your employment or notification letters for those cycles.

Jeffrey Craig

April 29, 2015

2 of 8

In addition, you will be eligible to participate in the Company’s LTIP cycles in future years in accordance with the provisions of the LTIP and as determined by the Committee. Your LTIP target levels are based upon your position within the Company at the beginning of the three-year performance cycle.

Payment of any awards under the LTIP will be made in accordance with the terms and conditions of the LTIP and any related award agreements.

4.    Stock Ownership Guideline

In order to assure your long term interest in the Company’s success, as an officer of the Company you are expected to acquire and retain shares of Meritor stock in the amount required for your level and position in the Company. This amount will be determined by the Committee and re-evaluated from time to time. You will be notified of this requirement annually. The stock ownership guidelines provide a transition period within which to achieve compliance. This period ends five years after the date the ownership guidelines become applicable to you (i.e., five years after the date of your hire, becoming an officer or a change in the ownership requirement).

5.    Benefits

You will be eligible to participate in all employee retirement and health and welfare benefit plans maintained by the Company and offered to all full time employees of the Company, including medical, disability, life insurance and vacation, to the extent permitted by the terms of the plans and by the law, subject to the Company’s rights to amend or terminate such plans as set forth in those plans.

As an officer of the Company, you will continue to be eligible for the following additional benefits, payable in accordance with the terms of the applicable policies, subject to the Company’s rights to modify or terminate such benefits:

• Car Allowance

• Financial Counseling Allowance

• Personal Excess Liability Coverage

6. Severance Benefits

If you incur a separation from service with the Company within the meaning of Section 409A (as defined below) (“Separation from Service”), you will be eligible for certain severance benefits as follows:

A.    By the Company Without Cause.

• Any accrued and unpaid salary and vacation pay through your date of Separation from Service with the Company (“Accrued Obligations”) paid in a lump sum within thirty (30) calendar days following your Separation from Service or such earlier date as may be required by law.

• Severance pay (annualized base salary at time of separation) over a period of twelve months commencing on the date of your Separation from Service (“Severance Period”) payable in accordance with the following paragraphs. Notwithstanding any other provision of this letter to the contrary, in no event will any payments extend beyond the Severance Period.

• Notwithstanding any Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), and the final regulations and other guidance thereunder (“Section 409A”) restrictions, your severance pay will be paid in equal semi-monthly installments beginning with the first payroll cycle that includes the Release Effective Date (as defined in paragraph 19 herein). You will receive any amount due for the period from the date of your Separation from Service through the Release Effective Date in a lump sum within one week of the Release Effective Date.

• Notwithstanding the foregoing, if you are a “specified employee” within the meaning of Section 409A, you will be required to wait to receive any portion of your severance pay that is not exempt from Section 409A.

Jeffrey Craig

April 29, 2015

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• A portion of your severance pay may be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii). The amount that is exempt under Section 409A is the amount of separation pay that does not exceed two times the lesser of (1) your annualized compensation determined in accordance with Section 409A regulations and (2) the maximum amount that may be taken into account under Code Section 401(a)(17) for the year in which you separate from service (the “409A Exempt Amount”).

• Any portion of your severance pay that is not exempt under the Section 409A exemption that would otherwise have been paid during the first six months following your Separation from Service will be paid in a lump sum the first payroll cycle following the six month anniversary of your Separation from Service.

• The balance of your severance pay that is not exempt under the Section 409A exemption will be paid in equal semi-monthly payments beginning with the later of (1) the first payroll cycle after the payroll cycle in which the 409A Exempt Amount has been completely paid and (2) the first payroll cycle after your six month anniversary of your Separation from Service.

• Actual annual incentive bonus participation for the then-current fiscal year, as if you had been employed for the full fiscal year, subject to achievement of any required performance goals, paid after the end of the fiscal year, in accordance with the terms of the Incentive Compensation Plan.

• Continued health coverage through the end of the Severance Period, provided that (A) to the extent any such benefit is provided via reimbursement to you, no such reimbursement will be made by the Company later than the end of the year following the year in which the underlying expense is incurred, (B) any such benefit provided by the Company in any year will not be affected by the amount of any such benefit provided by the Company in any other year, subject to any maximum benefit limitations under the applicable plan's terms, and (C) under no circumstances will you be permitted to liquidate or exchange any such benefit for cash or any other benefit. Moreover, if you become subsequently employed and covered by a health insurance plan of a new employer, your coverage under the Company’s health plans will cease as of the date you become covered under such other employer’s health plan. Notwithstanding any other provision of this letter, the Company reserves the right to amend, modify or terminate the provisions regarding such continued health coverage to the extent necessary to comply with applicable law.

• Continued life insurance coverage through the end of the Severance Period.

• Short and Long-Term Disability coverage will remain in effect through the last day actually worked prior to the start of the Severance Period.

• Vesting or forfeiture of any special or other long-term incentive awards, restricted shares, restricted share units (“RSUs”), performance share units (“PSUs”), stock options and cash payouts of long-term incentive awards will be determined in accordance with the terms of the LTIP and/or applicable award agreements.

• Payment of all vested benefits under the Company’s savings plans and pension plan if applicable, in accordance with the terms of such plans.

• Reasonable outplacement services for a period of twelve (12) months from the date of your Separation from Service at a cost not to exceed $10,000.

B. By the Company for Cause (Cause is defined as continued and willful failure to perform duties, provided that you have been given written notice and an opportunity to cure the failure within five business days of receipt; gross misconduct which is materially and demonstrably injuriousto the Company; or conviction of or pleading guilty or no contest to a (a) felony or (b) other crime which materially and adversely affects the Company):

• Accrued Obligations paid within thirty days following your Separation from Service or such earlier date as may be required by law.

Jeffrey Craig

April 29, 2015

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• Any vested plan benefits under the Company’s savings plans, payable in accordance with the terms of such plans.

• Forfeit all unvested special or other long-term incentive awards, restricted shares, RSUs, PSUs, stock options and cash payouts of long-term incentive awards.

• Forfeit eligibility to receive an annual incentive award.

C. By the Executive for any reason (other than death or disability):

• Accrued Obligations paid within thirty days following your Separation from Service or such earlier date as may be required by law.

• Any vested plan benefits under the Company’s savings plans, payable in accordance with the terms of such plans.

7.    Change in Control

In the event of a Change in Control (as defined in the LTIP), you will be eligible for vesting and payment of equity grants and awards under cash performance plans under the LTIP in accordance with the terms of that plan and the related grants and agreements.

In the event of your Separation from Service as a result of a Change in Control (as defined in the LTIP) but no later than one year thereafter (except for Cause), the severance benefit provisions of paragraph 6.A. shall apply except that the:

• The severance pay described in the second bullet under paragraph 6.A. shall be for a twenty-four month period instead of a twelve month period;

• “Severance Period” shall mean the twenty-four month period commencing with the date of your Separation from Service; and

• full target amount of any annual incentive bonus under the Incentive Compensation Plan for the then-current fiscal year will be paid to you within thirty days of your Separation from Service.

If payments and benefits to or for the benefit of you, whether pursuant to this letter or otherwise, would result in total Parachute Payments (defined under Code Section 280G as all compensatory payments or benefits that would not have been paid if no change in control had occurred) to you with a value equal to or greater than one hundred percent (100%) of the Parachute Payment Limit (defined as 3x the individual’s 5-year average taxable income (Box 1 of Internal Revenue Service Form W2)), the amount payable to you, shall be reduced so that the value of all Parachute Payments to you, whether or not made pursuant to this letter, is equal to the Parachute Payment Limit minus one dollar ($1.00).

This will be accomplished by first reducing any amounts payable pursuant to this letter, including other amounts of compensation to the extent necessary.

No such reduction shall be taken, however, if the total Parachute Payments accruing to you would be more than the amount of the total Parachute Payments after:

• taking the reduction for any applicable federal excise tax imposed on you by Code Section 4999; and

• further reducing such payment by any federal, state and local income taxes imposed on you with respect to the total Parachute Payments.

The Company agrees to undertake such reasonable efforts as it may determine in its sole discretion to prevent any payment or benefit under this letter (or any portion thereof) from constituting an “excess parachute payment,” as defined under Code Section 280G(b)(I). Notwithstanding any other provision of this letter to the contrary, the Company will not pay any “gross up” amount in connection with any “excess parachute payment”.

Jeffrey Craig

April 29, 2015

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8.    Death Benefits

• Accrued Obligations paid within thirty days following your death or such earlier date as may be required by law.

• Pro-rata actual annual incentive bonus participation for the time actually worked in the year of death paid in accordance with the terms of the Incentive Compensation Plan.

• Vesting or forfeiture of any special or other long-term incentive awards, restricted shares, RSUs, PSUs, stock options and cash payouts of long-term incentive awards will be determined in accordance with the terms of the LTIP and/or applicable award agreements.

• Continued medical, dental and/or vision plan coverage for your spouse and other dependents for six months following your death and at the end of this six month period your spouse and dependents may be eligible for coverage under COBRA (for an additional period not to exceed thirty months).

• Payment of all death benefits under the Company’s 401(k) Plan and pension plans, if applicable, in accordance with the terms of such plans.

9.    Disability

Disabilityis initially defined as the inability to perform the duties of your current job as a result of disease or injury. Based on your years of service, your first six months of disability (“Short-Term Disability”) will result in either full salary continuation for the entire six-month period or a combination of full salary continuation and reduced salary continuation for said six-month period. Following Short-Term Disability, if you are unable to perform your job duties and otherwise meet the requirements for benefits under the Company’s Long-Term Disability Plan, you will be placed on a leave of absence due to “Long-Term Disability” and will receive benefits under the provisions of the Company’s Long-Term Disability Plan. Following a one and one-half year period on Long-Term Disability, eligibility for continued coverage under the Company’s Long-Term Disability Plan will be based on your inability to perform any job for which you are qualified by education, training or experience. While you are on Long-Term Disability, you will:

• Be eligible to receive a pro rata annual incentive bonus based on the time that you were actively at work, paid in accordance with the terms of the Incentive Compensation Plan.

• Forfeit or vest in any special or other long-term incentive awards, restricted shares, RSUs, PSUs, stock options and cash payouts of long-term incentive awards in accordance with the terms of the LTIP and/or applicable award agreements.

• Be entitled to medical, dental, vision and life insurance coverage on the same terms as if you were actively employed while you are on Long-Term Disability.

• If you participate in the Company’s defined benefit pension plans, continue to earn vesting service but you will not receive credited service for the purpose of determining your plan benefit; and if you are eligible to receive Company pension contributions to the Company’s 401(k) Plan and the Company’s Supplemental 401(k) Plan, you will continue to earn vesting service, but Company contributions to such plans will cease.

10.    Deferred Compensation

If you incur a Separation from Service with the Company, any amounts deferred by or on your behalf under the Company’s Deferred Compensation Plan, the Company’s Supplemental 401(k) Plan or the Company’s Supplemental Pension Plan, if applicable, will be paid in accordance with the terms of such plans.

11.    Retirement Benefits

You are eligible to participate in the Company’s 401(k) Plan, which has discretionary matching company contributions, and the Company’s Supplemental 401(k) Plan. In addition, you are eligible to receive the pension contribution in accordance with the terms of the Company’s 401(k) Plan and the Company’s

Jeffrey Craig

April 29, 2015

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Supplemental 401(k) Plan, which is a percentage of base pay and ICP varying by age that is available under those plans.

12.    Indemnification

The Company will provide indemnification and defend you with regard to any claims arising from any decision made by you in good faith, while performing services for the Company, in accordance with the provisions of the Company’s by-laws.

13.    Clawback of Incentive-Based Compensation

Notwithstanding any other provision in this letter to the contrary, you agree that any “incentive-based compensation” within the meaning of Section 10D of the Securities Exchange Act of 1934, as amended (“Exchange Act”), will be subject to clawback by the Company in the manner required by Section 10D(b)(2) of the Exchange Act including any future requirements determined by the U.S. Securities and Exchange Commission and implemented by the Compensation Committee of the Board of Directors.

14.    Director’s and Officer’s Insurance

The Company shall provide you with reasonable Director’s and Officer’s liability insurance coverage.

15.    Non-Compete/Non-Solicitation

For the duration of the applicable Severance Period, except as permitted by the Company’s prior written consent, you are restricted from, in any capacity in which Proprietary Information (as defined in paragraph 17) or the Company’s trade secrets would reasonably be regarded as useful, engaging in, being employed by, or in any way advising or acting for any business which is a competitor of the Company with respect to the products or services provided by any business unit within the Company to which you devoted substantial attention in the year preceding termination of employment with the Company, and within the national and international geographic markets served by any such business unit. Depending on the scope of your responsibilities in the year preceding termination of employment with the Company, this restriction could potentially apply to a geographic area co-extensive with the Company’s operations, which are worldwide. You will be expected to confirm the terms of this section in writing at the time of your Separation from Service. You also agree that if your employment is terminated by the Company, whether with or without Cause, the consideration provided in paragraph 6 of this letter is sufficient for the restriction described in this paragraph.

You agree that for a period of eighteen months following your Separation from Service for any reason, you will not solicit for employment any Meritor employee, unless permission to do so is granted to you in writing by the Executive Chairman or his designee.

16.    Arbitration

You have previously agreed to sign the Company’s “Mutual Agreement to Arbitrate Claims” and the Company’s “Standards of Business Conduct and Conflict of Interest Certificate.” Any controversy involving the construction or application of any terms, covenants or conditions of this letter, or any claims arising out of any alleged breach of this letter, will be submitted to and resolved by final and binding arbitration in Oakland County, Michigan (conducted pursuant to the rules of the American Arbitration Association).

17.    Proprietary Information

In the event you leave employment of the Company for any reason, you agree that you will not disclose, nor will you use, any Company Proprietary Information after you leave employment of the Company. Proprietary information is any sensitive information owned by the Company and which gives or potentially gives the Company certain competitive advantages and is not widely known to the public. Proprietary information can include secret formulas, processes, and methods used in production. It can also include

Jeffrey Craig

April 29, 2015

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the Company's business and marketing plans, salary structure, customer lists, contracts, and details of its computer systems.  Special knowledge and skills that an employee has learned on the job are considered to be the Company's proprietary information.

18.    Survival of Restrictive Covenants

You acknowledge that the restrictive covenants shall survive the termination of your employment for any reason. You further acknowledge that any alleged breach by the Company of any contractual, statutory or other obligation shall not excuse or terminate your obligations under the restrictive covenants or preclude the Company from seeking appropriate legal relief. You acknowledge that such obligations are independent and separate covenants undertaken by you for the benefit of the Company.

19.    Waiver and Release

You agree that, as a condition to receive any amounts or benefits payable upon your Separation from Service (other than Accrued Obligations and benefits in which you are otherwise vested under the terms of the applicable benefit plans), you will execute a release agreement within the applicable time period from the date of your Separation from Service and not revoke such acceptance of the release agreement within any revocation period prescribed by law. The scope of the release agreement will include causes of action of every kind, nature and description whatsoever, arising out of your employment by or affiliation with Meritor or the separation of such employment, including any dispute having to do with any contract, agreement or implied agreement between you and Meritor. The date the release agreement becomes irrevocable will be the Release Effective Date. If you do not sign a general release agreement within the applicable time period or if you sign such agreement and revoke it within the applicable revocation period, any amounts and benefits (other than Accrued Obligations and benefits in which you are otherwise vested under terms of the applicable benefit plans) will cease as of the last day of the applicable time periods and will not resume unless and until the Release Effective Date. In such case any unpaid amounts for the period from the day after the end of the applicable time period following your Separation from Service to the Release Effective Date will be paid on the first payroll date that includes the Release Effective Date. Notwithstanding any other provision of this letter to the contrary, if you do not sign the general release agreement within the applicable time period no amounts or benefits will be payable upon your Separation from Service (other than Accrued Obligations and benefits in which you are otherwise vested under the terms of the applicable benefit plans).

20.    Review by Counsel

You acknowledge and agree that you have been advised to consult with an attorney prior to signing this letter. You also acknowledge and agree that this letter is voluntarily entered into by you in consideration of the undertakings by the Company as set forth in this letter and is consistent in all respects with discussions by the Company’s personnel with you.

21.    Entire Agreement

Except with respect to provisions regarding vesting or forfeiture of certain equity grants and payout of cash plans that are specifically referred to above, this letter supersedes the provisions of any prior employment letter between you and the Company. Notwithstanding the foregoing, the Invention Assignment and Arbitration Agreements remain in full force and effect.

22.    Successors and Assigns

This letter will be binding upon and inure to the benefit of any successors to the Company.

23.    Counterparts

Jeffrey Craig

April 29, 2015

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This letter may be executed in several counterparts, each of which will be deemed to be an original, and all such counterparts when taken together will constitute one and the same original.

24.    Governing Law

This letter will be governed by the laws of the State of Michigan.

Sincerely,

/s/ Ivor J. Evans     

Ivor J. Evans

Executive Chairman of the Board of Directors

Meritor, Inc.

Accepted:

/s/ Jeffrey A. Craig     April 27, 2015

Jeffrey A. Craig                 Date

EX-10.A-1

Exhibit 10-a-1

Meritor, Inc. 2135 West Maple Road Troy, Michigan 48084-7121 USA 800-535-5560 Tel meritor.com

Jeffrey A. Craig

Troy, MI

April 29, 2015

Dear Jay:

In connection with your appointment as Chief Executive Officer and President of Meritor, Inc. (“Company” or “Meritor”), this letter confirms the specific terms of your annual base salary, annual incentive plan award and long-term incentives for fiscal year 2015 under your employment letter dated as of April 29, 2015 (the “2015 Employment Letter”).

1.     Base Salary

Your annual base salary will be $850,000 effective May 1, 2015.

2.    Annual Incentive Plans

Your target award under the Company’s annual incentive plan (“Incentive Compensation Plan” or “ICP”) for fiscal 2015 will be based on 100% multiplied by your base salary at the end of the fiscal year.

3.    Long-Term Incentives

You will participate in the Company’s Long-Term Incentive Plan (“LTIP”) performance cycle for fiscal 2015-2017, and in addition to the LTIP award you were granted in December 1, 2014 with respect to the fiscal 2015-2017 performance cycle, you will receive a grant on August 1, 2015 of additional LTIP awards for the fiscal 2015-2017 performance cycle with an aggregate target award opportunity of $1,700,000, provided that you continue to be employed by the Company as Chief Executive Officer and President on the grant date. The LTIP awards will be composed of (i) performance share units with a grant date cash value of $1,190,000 subject to the achievement of the same performance objectives over the three-year performance period for the fiscal 2015-2017 performance cycle as apply to your December 1, 2014 grant of performance share units, which will be subject to the terms of a Performance Share Unit Agreement in the form previously approved by the Compensation and Management Development Committee (the “Committee”) and the LTIP and will vest on August 1, 2018, provided that you are still employed by the Company or a subsidiary or affiliate of the Company on that date and (ii) restricted share units with a grant date cash value of $510,000, which will be subject to the terms of a Restricted Share Unit Agreement in the form previously approved by the Committee and the LTIP and will vest on August 1, 2018, provided that you are still employed by the Company or a subsidiary or affiliate of the Company on that date.

In addition, you will be eligible to participate in the Company’s fiscal 2016-2018 LTIP cycle with a target award opportunity of $3,500,000 in accordance with the provisions of the LTIP and as approved by the Committee, provided that you continue to be employed by the Company as Chief Executive Officer and President on the grant date.

Jeffrey Craig

April 29, 2015

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Payment of any awards under the LTIP will be made in accordance with the terms and conditions of the LTIP and any related award agreements.

The foregoing is subject in all respects to the terms of the 2015 Employment Letter.

Sincerely,

/s/ Ivor J. Evans     

Ivor J. Evans

Executive Chairman of the Board of Directors

Meritor, Inc.

Accepted:

/s/ Jeffrey A. Craig     April 27, 2015

Jeffrey A. Craig                 Date

EX-12

Exhibit 12

Meritor, Inc.

Computation of Ratio of Earnings to Fixed Charges

Three Months Ended March 31, 2015

(Amounts in millions, except the ratio)

Earnings Available for Fixed Charges (A):
Pre-tax income from continuing operations	$	85
Less:
Equity in earnings of affiliates, net of dividends		(8	)
		77
Add: fixed charges included in earnings:
Interest expense		40
Interest element of rentals		1
Total		41
Total earnings available for fixed charges:	$	118
Fixed Charges (B):
Fixed charges included in earnings	$	41
Capitalized interest		—
Total fixed charges	$	41
Ratio of Earnings to Fixed Charges		2.88

(A) “Earnings” are defined as pre-tax income from continuing operations, adjusted for undistributed earnings of less than majority owned subsidiaries and fixed charges excluding capitalized interest.

(B) “Fixed charges” are defined as interest on borrowings (whether expensed or capitalized), the portion of rental expense applicable to interest, and amortization of debt issuance costs.

EX-23

Exhibit 23

CONSENT OF EXPERT

We consent to the references to our firm and to our reports with respect to estimation of the liability for pending and reasonably estimable unasserted future asbestos-related claims, which are included or incorporated by reference in Note 19 of the Notes to Condensed Consolidated Financial Statements in the Quarterly Report on Form 10-Q of Meritor, Inc. (“Meritor”) for the fiscal quarter ended March 29, 2015 and to the incorporation by reference of such reference into the following Registration Statements of Meritor:

Form	Registrations No.	Purpose
S-3	333-200858	Registration of common stock, preferred stock, warrants, debt securities and guarantees
S-8	333-192458	Amended and Restated 2010 Long-Term Incentive Plan
S-8	333-171713	Amended 2010 Long-Term Incentive Plan
S-8	333-164333	2010 Long-Term Incentive Plan
S-8	333-141186	2007 Long-Term Incentive Plan
S-8	333-107913	Meritor, Inc. Savings Plan
S-8	333-123103	Meritor, Inc. Hourly Employees Savings Plan
S-8	333-49610	1997 Long-Term Incentives Plan
S-3	333-43116	Meritor, Inc. 1998 Stock Benefit Plan
S-3	333-43112	Meritor, Inc. Employee Stock Benefit Plan
S-8	333-42012	Employee Stock Benefit Plan, 1988 Stock Benefit Plan and 1998 Employee Stock Benefit Plan

BATES WHITE LLC
By:	/s/ Charles E. Bates
		Charles E. Bates, Ph.D.
		Chairman

Date: April 30, 2015

EX-31.A

Exhibit 31-a

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

RULE 13a-14(a) UNDER THE EXCHANGE ACT

I, Jeffrey A. Craig, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Meritor, Inc. for the quarterly period ended March 29, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 30, 2015

/s/ Jeffrey A. Craig

Jeffrey A. Craig

Chief Executive Officer and President

EX-31.B

Exhibit 31-b

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(a) UNDER THE EXCHANGE ACT

I, Kevin A. Nowlan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Meritor, Inc. for the quarterly period ended March 29, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 30, 2015

/s/ Kevin A. Nowlan

Kevin A. Nowlan

Senior Vice President and Chief Financial Officer

EX-32.A

Exhibit 32-a

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE

13a-14(b) UNDER THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

As required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, I, Jeffrey A. Craig, hereby certify that:

1. The Quarterly Report of Meritor, Inc. on Form 10-Q for the quarterly period ended March 29, 2015 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and

2. The information contained in that report fairly presents, in all material respects, the financial condition and results of operations of Meritor, Inc.

/s/ Jeffrey A. Craig

Jeffrey A. Craig

Chief Executive Officer and

President

Date: April 30, 2015

EX-32.B

Exhibit 32-b

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(b) UNDER THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

As required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, I, Kevin A. Nowlan, hereby certify that:

1. The Quarterly Report of Meritor, Inc. on Form 10-Q for the quarterly period ended March 29, 2015 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and

2. The information contained in that report fairly presents, in all material respects, the financial condition and results of operations of Meritor, Inc.

/s/ Kevin A. Nowlan

Kevin A. Nowlan

Senior Vice President and

Chief Financial Officer

Date: April 30, 2015

EX-99

Exhibit-99

Media Inquiries

Cheryl Kilborn

(248) 435-7907

cheryl.kilborn@meritor.com

Investor Inquiries

Carl Anderson

(248) 435-1588

carl.anderson@meritor.com

Meritor Board of Directors Names Ivor Evans Executive Chairman; Jeffrey Craig as Chief Executive Officer

TROY, Mich., April 29, 2015 – The Board of Directors of Meritor, Inc. (NYSE: MTOR) announced that effective today, Ivor J. (“Ike”) Evans, Chairman of the Board of Directors and Chief Executive Officer, has been appointed to the role of Executive Chairman. Jeffrey A. (“Jay”) Craig, President and Chief Operating Officer, succeeds Evans as Chief Executive Officer and will remain President. Craig has also been appointed to the Board of Directors, effective immediately.

“Under Ike’s leadership, Meritor has made significant progress towards the execution of its strategic vision and we are pleased that he will remain actively involved in the Company’s leadership as Executive Chairman,” said William R. Newlin, Meritor’s Lead Independent Director. “We are enthusiastic about Meritor’s prospects for continued growth and shareholder value creation as we work to extend the Company’s positive trajectory and achieve M2016 goals.”

“We have made tremendous progress in advancing and executing our M2016 strategy,” said Evans. “It has been a privilege to serve as Meritor’s CEO, leading an incredibly talented global team in the Company’s transformation. Succession planning has been a priority of mine during my tenure as CEO, and the Board and I agree that now is the right time to name Jay as Meritor’s next CEO. I look forward to remaining actively involved in the company and working closely with Jay and the rest of the management team in my role as Executive Chairman.”

Evans continued, “Jay is a strong leader who possesses a unique combination of commercial expertise and financial acumen with a relentless focus on execution and performance. Jay is ideally suited to lead Meritor as its next CEO as we continue to drive toward achievement of our M2016 targets and create even more value for Meritor’s shareholders.”

“I am honored to succeed Ike as Meritor’s CEO,” said Craig. “With an experienced leadership team and 9,000 hard-working and dedicated employees around the world, Meritor is well positioned to capitalize on numerous growth opportunities that will allow the Company to remain an industry leader for years to come. I look forward to continue building Meritor’s customer relationships, investing strategically in our product portfolio and maintaining operational excellence as we grow our core business.”

Craig continued, “I would like to thank Ike, who has been an important mentor to me in our pursuit of excellence. I am pleased to have his continued support and guidance in his role as Executive Chairman.”

As Executive Chairman, Evans will report directly to the Board of Directors and work closely with Craig and the full Board in the general oversight, succession planning, leadership and setting the strategic direction of the Company.

In a separate press release issued today, Meritor announced the Company's second quarter fiscal 2015 financial results. To view the release, or for more information, please visit the Company's investor relations website at investors.meritor.com.

Ivor J. Evans

Ivor J. ("Ike") Evans has been Chairman and Chief Executive Officer of Meritor, Inc. since 2013, and a member of the Board of Directors since 2005.

Prior to this position, Evans served as president and chief operating officer of Union Pacific Railroad from 1998 until 2004 and as vice chairman of Union Pacific Corporation from January 2004 until his retirement in March 2005.

From 1989 to 1998, he served in various executive positions at Emerson Electric Company, including senior vice president, Industrial Components and Equipment. Prior to that, he was president of Blackstone Corp., an automotive component and systems manufacturer, from 1985 to 1989. He also spent 21 years serving in key operations roles for General Motors Corporation.

Evans is on the board of directors of Textron, Inc.

Jeffrey A. Craig

Jeffrey (“Jay”) Craig has been Meritor’s President and Chief Operating Officer since 2014. In this position, Craig provides oversight to Meritor’s business segments – Commercial Truck & Industrial and Aftermarket & Trailer – and helps lead the company toward the successful execution of its strategic M2016 initiatives. Prior to taking on this position, he was Senior Vice President and President of Meritor’s Commercial Truck & Industrial segment. He served as Senior Vice President and Chief Financial Officer at Meritor from 2009 to 2013 and has held various positions at the company since 2006.

Before joining Meritor, Craig served as president and CEO of General Motors Acceptance Corp.’s (GMAC) Commercial Finance organization from 2001 to 2006. Prior to that, he served

as President and CEO of GMAC’s Business Credit division from 1999 until 2001. He joined GMAC as a general auditor in 1997 from Deloitte & Touche, where he served as an audit partner. Craig holds a Bachelor of Science in accounting from Michigan State University and a Master of Business Administration from Duke University in Durham, N.C.

About MeritorMeritor, Inc. is a leading global supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets. With more than a 100-year legacy of providing innovative products that offer superior performance, efficiency and reliability, the company serves commercial truck, trailer, off-highway, defense, specialty and aftermarket customers around the world. Meritor is based in Troy, Mich., United States, and is made up of more than 9,000 diverse employees who apply their knowledge and skills in manufacturing facilities, engineering centers, joint ventures, distribution centers and global offices in 18 countries. Common stock is traded on the New York Stock Exchange under the ticker symbol MTOR. For important information, visit the company's website at meritor.com.

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Net Property (Tables)

6 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of Net Property

Net property is summarized as follows (in millions):

	March 31, 2015			September 30, 2014
Property at cost:
Land and land improvements	$	32		$	34
Buildings	219			236
Machinery and equipment	860			906
Company-owned tooling	137			155
Construction in progress	49			66
Total	1,297			1,397
Less accumulated depreciation	(910		)	(973		)
Net property	$	387		$	424

XML

Goodwill (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015
Changes in Goodwill
Beginning balance	$ 431
Foreign currency translation	(17)
Ending balance	414
Commercial Truck & Industrial
Changes in Goodwill
Beginning balance	261
Foreign currency translation	(9)
Ending balance	252
Commercial Truck & Industrial | Defense Reporting Unit
Changes in Goodwill
Ending balance	20
Aftermarket & Trailer
Changes in Goodwill
Beginning balance	170
Foreign currency translation	(8)
Ending balance	$ 162

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Business Segment Information (Tables)

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summary of segment information

Segment information is summarized as follows (in millions):

	Commercial Truck & Industrial		Aftermarket & Trailer		Eliminations			Total
Three Months Ended March 31, 2015
External Sales	$	660	$	204	$	—		$	864
Intersegment Sales	21		8		(29		)	—
Total Sales	$	681	$	212	$	(29	)	$	864
Three Months Ended March 31, 2014
External Sales	$	736	$	218	$	—		$	954
Intersegment Sales	27		7		(34		)	—
Total Sales	$	763	$	225	$	(34	)	$	954
	Commercial Truck & Industrial		Aftermarket & Trailer		Eliminations			Total
Six Months Ended March 31, 2015
External Sales	$	1,338	$	405	$	—		$	1,743
Intersegment Sales	46		15		(61		)	—
Total Sales	$	1,384	$	420	$	(61	)	$	1,743
Six Months Ended March 31, 2014
External Sales	$	1,439	$	415	$	—		$	1,854
Intersegment Sales	51		12		(63		)	—
Total Sales	$	1,490	$	427	$	(63	)	$	1,854

Segment reconciliation to income

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014 (2)			2015			2014 (2)
Segment EBITDA:
Commercial Truck & Industrial	$	57		$	57		$	113		$	110
Aftermarket & Trailer	30			24			55			45
Segment EBITDA	87			81			168			155
Unallocated legacy and corporate costs, net (1)	—			(1		)	(2		)	(3		)
Interest expense, net	(21		)	(48		)	(40		)	(75		)
Provision for income taxes	(6		)	(8		)	(13		)	(19		)
Depreciation and amortization	(17		)	(17		)	(32		)	(33		)
Noncontrolling interests	—			(2		)	(1		)	(4		)
Loss on sale of receivables	(1		)	(2		)	(3		)	(5		)
Restructuring costs	(3		)	(2		)	(6		)	(3		)
Income from continuing operations attributable to Meritor, Inc.	$	39		$	1		$	71		$	13

⁽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, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability.

⁽²⁾ Amounts for prior periods have been recast for discontinued operations.

Reconciliation of assets from segment to consolidated

Segment Assets:	March 31, 2015			September 30, 2014
Commercial Truck & Industrial	$	1,657		$	1,755
Aftermarket & Trailer	441			458
Total segment assets	2,098			2,213
Corporate (1)	473			533
Less: Accounts receivable sold under off-balance sheet factoring programs (2)	(254		)	(244		)
Total assets	$	2,317		$	2,502

⁽¹⁾  Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.

⁽²⁾  At March 31, 2015 and September 30, 2014, segment assets include $254 million and $244 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.

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Long-Term Debt - Issuance of Debt Securities - 2024 Notes (Details) (USD $)	6 Months Ended		0 Months Ended				1 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	May 31, 2013	Mar. 15, 2014	Feb. 13, 2014	Mar. 15, 2015	Feb. 28, 2015	Sep. 30, 2014
Debt Instrument [Line Items]
Proceeds from debt issuance	$ 0	$ 225,000,000
6.25 percent notes due 2024
Debt Instrument [Line Items]
Proceeds from debt issuance			225,000,000
Interest rate	6.25%							6.25%
Percentage of principal amount redeemed	35.00%
6.25 percent notes due 2024 | Redemption period, equity clawback
Debt Instrument [Line Items]
Redemption price, percentage	106.25%
10.625% Notes Due 2018
Debt Instrument [Line Items]
Redemption price, percentage				105.313%
Notes | 6.25 percent notes due 2024
Debt Instrument [Line Items]
Principal amount					225,000,000
Term of notes					10 years
Issuance price percentage of the debt instrument					100.00%
Percentage of principal amount outstanding	65.00%
Redemption, written notice period	90 days
Notes | 6.25 percent notes due 2024 | 2019
Debt Instrument [Line Items]
Redemption price, percentage	103.125%
Notes | 6.25 percent notes due 2024 | 2020
Debt Instrument [Line Items]
Redemption price, percentage	102.083%
Notes | 6.25 percent notes due 2024 | 2021
Debt Instrument [Line Items]
Redemption price, percentage	101.042%
Notes | 6.25 percent notes due 2024 | 2022 and thereafter
Debt Instrument [Line Items]
Redemption price, percentage	100.00%
Notes | 10.625% Notes Due 2018
Debt Instrument [Line Items]
Principal amount of convertible notes repurchased						250,000,000
Interest rate						10.625%
Repurchase price percentage						5.313%
Net loss on debt extinguishment						19,000,000
Unamortized discount and deferred issuance costs						6,000,000
Debt redemption premium						13,000,000
Corporate Debt Securities | 6.25 percent notes due 2024 | Change in control redemption
Debt Instrument [Line Items]
Redemption price, percentage	101.00%
Corporate Debt Securities | 10.625% Notes Due 2018
Debt Instrument [Line Items]
Principal amount of convertible notes repurchased			250,000,000
Interest rate			10.625%
Convertible Notes Payable | 4.0 percent convertible notes due 2027
Debt Instrument [Line Items]
Principal amount of convertible notes repurchased	15,000,000						15,000,000
Interest rate	4.00%						4.00%	4.00%
Repurchase price percentage							6.00%
Net loss on debt extinguishment							$ 1,000,000

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Restructuring Costs (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014		Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Restructuring Reserve [Roll Forward]
Beginning balance				$ 11	$ 12
Charges to continuing operations	3	2	[1]	6	3
Cash payments – continuing operations				(3)	(4)
Other				(2)	(1)
Total restructuring reserves	12	10		12	10
Less: non-current restructuring reserves	(2)	(3)		(2)	(3)	(2)
Restructuring reserves – current	10	7		10	7	9
Employee Termination Benefits
Restructuring Reserve [Roll Forward]
Beginning balance				11	12
Charges to continuing operations				6	3
Cash payments – continuing operations				(3)	(4)
Other				(2)	(1)
Total restructuring reserves	12	10		12	10
Less: non-current restructuring reserves	(2)	(3)		(2)	(3)
Restructuring reserves – current	10	7		10	7
Asset Impairment
Restructuring Reserve [Roll Forward]
Beginning balance				0	0
Charges to continuing operations				0	0
Cash payments – continuing operations				0	0
Other				0
Total restructuring reserves	0	0		0	0
Less: non-current restructuring reserves	0	0		0	0
Restructuring reserves – current	0	0		0	0
Plant Shutdown & Other
Restructuring Reserve [Roll Forward]
Beginning balance				0	0
Charges to continuing operations				0	0
Cash payments – continuing operations				0	0
Other				0	0
Total restructuring reserves	0	0		0	0
Less: non-current restructuring reserves	0	0		0	0
Restructuring reserves – current	$ 0	$ 0		$ 0	$ 0

[1] Amounts for prior periods have been recast for discontinued operations.

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Contingencies (Details 1) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Loss Contingencies [Line Items]
Asbestos-related liabilities	$ 16	$ 19
Maremont Asbestos
Loss Contingencies [Line Items]
Pending and future claims	73	73
Billed but unpaid claims	2	3
Asbestos-related liabilities	75	76
Asbestos-related insurance recoveries	45	49
Rockwell Asbestos
Loss Contingencies [Line Items]
Pending and future claims	48	48
Billed but unpaid claims	2	2
Asbestos-related liabilities	50	50
Asbestos-related insurance recoveries	$ 11	$ 11

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Contingencies (Tables)

6 Months Ended

Mar. 31, 2015

Loss Contingencies [Line Items]

Schedule of Environmental Loss Contingencies by Site

The following are the components of the Superfund and non-Superfund environmental reserves (in millions):

	Superfund Sites		Non-Superfund Sites			Total
Beginning balance at September 30, 2014	$	2	$	17		$	19
Payments and other	—		(3		)	(3		)
Accruals	—		—			—
Balance at March 31, 2015	$	2	$	14		$	16

Maremont Asbestos

Loss Contingencies [Line Items]

Asbestos Related Reserves and Recoveries

Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Pending and future claims	$	73	$	73
Billed but unpaid claims	2		3
Asbestos-related liabilities	$	75	$	76
Asbestos-related insurance recoveries	$	45	$	49

Rockwell Asbestos

Loss Contingencies [Line Items]

Asbestos Related Reserves and Recoveries

The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Pending and future claims	$	48	$	48
Billed but unpaid claims	2		2
Asbestos-related liabilities	$	50	$	50
Asbestos-related insurance recoveries	$	11	$	11

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Discontinued Operations (Tables)

6 Months Ended

Mar. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Summary of Discontinued Operations

Results of discontinued operations are summarized as follows (in millions):

	Three Months Ended March 31,					Six Months Ended March 31,
	2015		2014			2015		2014
Sales	$	—	$	8		$	1	$	15
Income (loss) before income taxes	$	3	$	(4	)	$	—	$	(6	)
Benefit from income taxes	1		4			1		5
Income (loss) from discontinued operations attributable to Meritor, Inc.	$	4	$	—		$	1	$	(1	)

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Contingencies (Details Textuals) (USD $) In Millions, unless otherwise specified	6 Months Ended	3 Months Ended		12 Months Ended
	Mar. 31, 2015 claim	Mar. 31, 2015	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2009
Loss Contingencies [Line Items]
Environmental accrual balance	$ 16	$ 16			$ 19
Discounted amount environmental accrual for ongoing operations maintenance and monitoring	8	8
Undiscounted amount environmental accrual for ongoing operations maintenance and monitoring	9	9
Rockwell Asbestos
Loss Contingencies [Line Items]
Environmental accrual balance	50	50			50
Number of pending claims	3,000	3,000			2,800
Obligation period for asbestos personal injury claims	10 years
Estimated insurance recoveries	11	11			11
Pending and future claims	48	48			48
Maremont Asbestos
Loss Contingencies [Line Items]
Environmental accrual balance	75	75			76
Number of pending claims	5,600	5,600			5,700
Obligation period for asbestos personal injury claims	10 years
Estimated insurance recoveries	45	45			49
Pending and future claims	73	73			73
Insurance Receivables | Rockwell Asbestos
Loss Contingencies [Line Items]
Estimated insurance recoveries	8	8			8
Rockwell Asbestos
Loss Contingencies [Line Items]
Range of possible loss, minimum	48	48
Range of possible loss, maximum	62	62
Superfund Sites
Loss Contingencies [Line Items]
Number of Superfund environmental sites	9	9
Environmental costs reasonably possible	17	17
Environmental accrual balance	2	2			2
Non-Superfund Sites
Loss Contingencies [Line Items]
Environmental costs reasonably possible	32	32
Environmental accrual balance	14	14			17
Maremont Asbestos
Loss Contingencies [Line Items]
Obligation period for asbestos personal injury claims	10 years
Range of possible loss, minimum	73	73
Range of possible loss, maximum	105	105
Indemnity Obligations
Loss Contingencies [Line Items]
Guarantee obligations recorded	13	13			14	28
Body Systems
Loss Contingencies [Line Items]
Increased liability					6
Indemnity obligations liability					2
Gain related to litigation settlement		6
MSSC
Loss Contingencies [Line Items]
Indemnity obligations liability	2	2			5
Potential Product Performance Issue
Loss Contingencies [Line Items]
Range of possible loss, minimum			12	12
Range of possible loss, maximum	3	3	20	20	3
Loss contingency accrual, provision				12
Non-cash cost recovery			5
Low Range
Loss Contingencies [Line Items]
Site contingency, accrual, discount rate	0.50%	0.50%
High Range
Loss Contingencies [Line Items]
Site contingency, accrual, discount rate	2.50%	2.50%
Tax Years 2008 Through 2014 | Value Added Tax
Loss Contingencies [Line Items]
Increased liability	$ 9	$ 9			$ 11

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Financial Instruments (Details 2) (USD $)	Mar. 31, 2015	Nov. 30, 2014
Level 1
Cash and cash equivalents	$ 207,000,000
Short-term debt	0
Long-term debt	0
Level 1 | Foreign exchange forward contracts
Foreign exchange forward contracts (asset)	0
Level 1 | Foreign currency option contracts | Short-term
Foreign currency option contracts (asset)	0
Level 1 | Foreign currency option contracts | Long-term
Foreign currency option contracts (asset)	0
Level 2
Cash and cash equivalents	0
Short-term debt	0
Long-term debt	1,093,000,000
Level 2 | Foreign exchange forward contracts
Foreign exchange forward contracts (asset)	5,000,000
Level 2 | Foreign currency option contracts | Short-term
Foreign currency option contracts (asset)	0
Level 2 | Foreign currency option contracts | Long-term
Foreign currency option contracts (asset)	0
Level 3
Cash and cash equivalents	0
Short-term debt	5,000,000
Long-term debt	38,000,000
Level 3 | Foreign exchange forward contracts
Foreign exchange forward contracts (asset)	0
Level 3 | Foreign currency option contracts | Short-term
Foreign currency option contracts (asset)	2,000,000
Level 3 | Foreign currency option contracts | Long-term
Foreign currency option contracts (asset)	2,000,000
Brazil, Brazil Real | Foreign currency option contracts
Notional amount		$ 48,000,000

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details 3) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	$ 29	$ 18
INVESTING ACTIVITIES
Capital expenditures	(23)	(25)
Net investing cash flows provided by discontinued operations	4	3
CASH USED FOR INVESTING ACTIVITIES	(19)	(22)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16)	(308)
Proceeds from debt issuance	0	225
Debt issuance costs	0	(9)
Repurchase of common stock	(16)	0
Debt issuance costs	0	0
Other financing activities	(6)	13
CASH USED FOR FINANCING ACTIVITIES	(38)	(79)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(12)	(2)
CHANGE IN CASH AND CASH EQUIVALENTS	(40)	(85)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	247	318
CASH AND CASH EQUIVALENTS AT END OF PERIOD	207	233
Parent
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	7	(30)
INVESTING ACTIVITIES
Capital expenditures	(1)	(2)
Net investing cash flows provided by discontinued operations	0	0
CASH USED FOR INVESTING ACTIVITIES	(1)	(2)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16)	(308)
Proceeds from debt issuance		225
Debt issuance costs		(9)
Repurchase of common stock	(16)
Debt issuance costs	54	92
Other financing activities	0	0
CASH USED FOR FINANCING ACTIVITIES	22	0
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	0	0
CHANGE IN CASH AND CASH EQUIVALENTS	28	(32)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	71	144
CASH AND CASH EQUIVALENTS AT END OF PERIOD	99	112
Guarantors
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	10	8
INVESTING ACTIVITIES
Capital expenditures	(10)	(11)
Net investing cash flows provided by discontinued operations	1	0
CASH USED FOR INVESTING ACTIVITIES	(9)	(11)
FINANCING ACTIVITIES
Repayment of notes and term loan	0	0
Proceeds from debt issuance		0
Debt issuance costs		0
Debt issuance costs	0	0
Other financing activities	(2)	0
CASH USED FOR FINANCING ACTIVITIES	(2)	0
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	0	0
CHANGE IN CASH AND CASH EQUIVALENTS	(1)	(3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	5	6
CASH AND CASH EQUIVALENTS AT END OF PERIOD	4	3
Non-Guarantors
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	12	40
INVESTING ACTIVITIES
Capital expenditures	(12)	(12)
Net investing cash flows provided by discontinued operations	3	3
CASH USED FOR INVESTING ACTIVITIES	(9)	(9)
FINANCING ACTIVITIES
Repayment of notes and term loan	0	0
Proceeds from debt issuance		0
Debt issuance costs		0
Debt issuance costs	(54)	(92)
Other financing activities	(4)	13
CASH USED FOR FINANCING ACTIVITIES	(58)	(79)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(12)	(2)
CHANGE IN CASH AND CASH EQUIVALENTS	(67)	(50)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	171	168
CASH AND CASH EQUIVALENTS AT END OF PERIOD	104	118
Elims
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	0	0
INVESTING ACTIVITIES
Capital expenditures	0	0
Net investing cash flows provided by discontinued operations	0	0
CASH USED FOR INVESTING ACTIVITIES	0	0
FINANCING ACTIVITIES
Repayment of notes and term loan	0	0
Proceeds from debt issuance		0
Debt issuance costs		0
Debt issuance costs	0	0
Other financing activities	0	0
CASH USED FOR FINANCING ACTIVITIES	0	0
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	0	0
CHANGE IN CASH AND CASH EQUIVALENTS	0	0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	0	0
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 0	$ 0

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Income Taxes (Details Textuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Net pre-tax income (loss) in which a tax benefit is not recorded	$ 36	$ (34)

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Retirement Benefit Liabilities (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Pension
Interest cost	$ 18	$ 20	$ 36	$ 40
Assumed return on plan assets	(28)	(26)	(56)	(52)
Amortization of prior service costs	0	0	0	0
Recognized actuarial loss	7	6	14	12
Total expense (income)	(3)	0	(6)	0
Retiree Medical
Interest cost	5	7	10	13
Assumed return on plan assets	0	0	0	0
Amortization of prior service costs	0	(2)	0	(4)
Recognized actuarial loss	5	5	10	11
Total expense (income)	$ 10	$ 10	$ 20	$ 20

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014		Mar. 31, 2015	Mar. 31, 2014
Amount of restricted net assets for consolidated and unconsolidated subsidiaries	$ 31			$ 31
Sales
Total Sales	864	954		1,743	1,854
Cost of sales	(749)	(836)		(1,513)	(1,631)
GROSS MARGIN	115	118		230	223
Selling, general and administrative	(57)	(66)		(122)	(125)
Restructuring costs	(3)	(2)	[1]	(6)	(3)
Other operating expense	0	0		1	(1)
OPERATING INCOME (LOSS)	55	50		103	94
Other income, net	2	0		4	0
Equity in earnings of affiliates	9	9		18	17
Interest expense, net	(21)	(48)	[1]	(40)	(75)
INCOME BEFORE INCOME TAXES	45	11		85	36
Provision for income taxes	(6)	(8)	[1]	(13)	(19)
Equity income from continuing operations of subsidiaries	0	0		0	0
INCOME FROM CONTINUING OPERATIONS	39	3		72	17
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	4	0		1	(1)
NET INCOME	43	3		73	16
Less: Net income attributable to noncontrolling interests	0	(2)	[1]	(1)	(4)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	43	1		72	12
External Sales
Sales
Total Sales	864	954		1,743	1,854
Subsidiaries Sales
Sales
Total Sales	0	0		0	0
Parent
Sales
Total Sales	0	0		0	0
Cost of sales	(10)	(13)		(24)	(26)
GROSS MARGIN	(10)	(13)		(24)	(26)
Selling, general and administrative	(16)	(23)		(34)	(40)
Restructuring costs	(1)	(1)		(1)	(1)
Other operating expense	0				0
OPERATING INCOME (LOSS)	(27)	(37)		(59)	(67)
Other income, net	37	39		37	39
Equity in earnings of affiliates	0	0		0	0
Interest expense, net	(29)	(54)		(58)	(88)
INCOME BEFORE INCOME TAXES	(19)	(52)		(80)	(116)
Provision for income taxes	(1)	0		(1)	0
Equity income from continuing operations of subsidiaries	59	53		152	129
INCOME FROM CONTINUING OPERATIONS	39	1		71	13
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	4	0		1	(1)
NET INCOME	43	1		72	12
Less: Net income attributable to noncontrolling interests	0	0		0	0
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	43	1		72	12
Parent | External Sales
Sales
Total Sales	0	0		0	0
Parent | Subsidiaries Sales
Sales
Total Sales	0	0		0	0
Guarantors
Sales
Total Sales	449	381		882	723
Cost of sales	(380)	(326)		(751)	(623)
GROSS MARGIN	69	55		131	100
Selling, general and administrative	(26)	(22)		(54)	(45)
Restructuring costs	0	0		(3)	0
Other operating expense	0				(1)
OPERATING INCOME (LOSS)	43	33		74	54
Other income, net	(9)	(8)		(9)	(8)
Equity in earnings of affiliates	8	6		15	12
Interest expense, net	6	8		13	17
INCOME BEFORE INCOME TAXES	48	39		93	75
Provision for income taxes	0	1		0	(1)
Equity income from continuing operations of subsidiaries	8	10		53	48
INCOME FROM CONTINUING OPERATIONS	56	50		146	122
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	5	0		2	(1)
NET INCOME	61	50		148	121
Less: Net income attributable to noncontrolling interests	0	0		0	0
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	61	50		148	121
Guarantors | External Sales
Sales
Total Sales	418	348		821	657
Guarantors | Subsidiaries Sales
Sales
Total Sales	31	33		61	66
Non-Guarantors
Sales
Total Sales	463	621		955	1,226
Cost of sales	(407)	(545)		(832)	(1,077)
GROSS MARGIN	56	76		123	149
Selling, general and administrative	(15)	(21)		(34)	(40)
Restructuring costs	(2)	(1)		(2)	(2)
Other operating expense	0			1	0
OPERATING INCOME (LOSS)	39	54		88	107
Other income, net	(26)	(31)		(24)	(31)
Equity in earnings of affiliates	1	3		3	5
Interest expense, net	2	(2)		5	(4)
INCOME BEFORE INCOME TAXES	16	24		72	77
Provision for income taxes	(5)	(9)		(12)	(18)
Equity income from continuing operations of subsidiaries	0	0		0	0
INCOME FROM CONTINUING OPERATIONS	11	15		60	59
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	3	0		0	(1)
NET INCOME	14	15		60	58
Less: Net income attributable to noncontrolling interests	0	(2)		(1)	(4)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	14	13		59	54
Non-Guarantors | External Sales
Sales
Total Sales	446	606		922	1,197
Non-Guarantors | Subsidiaries Sales
Sales
Total Sales	17	15		33	29
Elims
Sales
Total Sales	(48)	(48)		(94)	(95)
Cost of sales	48	48		94	95
GROSS MARGIN	0	0		0	0
Selling, general and administrative	0	0		0	0
Restructuring costs	0	0		0	0
Other operating expense	0				0
OPERATING INCOME (LOSS)	0	0		0	0
Other income, net	0	0		0	0
Equity in earnings of affiliates	0	0		0	0
Interest expense, net	0	0		0	0
INCOME BEFORE INCOME TAXES	0	0		0	0
Provision for income taxes	0	0		0	0
Equity income from continuing operations of subsidiaries	(67)	(63)		(205)	(177)
INCOME FROM CONTINUING OPERATIONS	(67)	(63)		(205)	(177)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	(8)	0		(2)	2
NET INCOME	(75)	(63)		(207)	(175)
Less: Net income attributable to noncontrolling interests	0	0		0	0
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	(75)	(63)		(207)	(175)
Elims | External Sales
Sales
Total Sales	0	0		0	0
Elims | Subsidiaries Sales
Sales
Total Sales	$ (48)	$ (48)		$ (94)	$ (95)

[1] Amounts for prior periods have been recast for discontinued operations.

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Shareowners' Equity (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward]
Beginning balance	$ (771)	$ (734)	$ (749)	$ (734)
Other comprehensive loss before reclassification	(34)	14	(69)	4
Amounts reclassified from accumulated other comprehensive loss - net of tax	12	8	25	18
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(22)	22	(44)	22
Ending balance	(793)	(712)	(793)	(712)
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward]
Beginning balance	8	51	41	61
Other comprehensive loss before reclassification	(33)	10	(67)	0
Amounts reclassified from accumulated other comprehensive loss - net of tax	0	0	1	0
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(33)	10	(66)	0
Ending balance	(25)	61	(25)	61
Employee Benefit Related Adjustments
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward]
Beginning balance	(777)	(782)	(789)	(792)
Other comprehensive loss before reclassification	(1)	2	(1)	2
Amounts reclassified from accumulated other comprehensive loss - net of tax	12	8	24	18
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	11	10	23	20
Ending balance	(766)	(772)	(766)	(772)
Unrealized Loss, net of tax
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward]
Beginning balance	(2)	(3)	(1)	(3)
Other comprehensive loss before reclassification	0	2	(1)	2
Amounts reclassified from accumulated other comprehensive loss - net of tax	0	0	0	0
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	0	2	(1)	2
Ending balance	$ (2)	$ (1)	$ (2)	$ (1)

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Condensed Statement Of Income Captions [Line Items]
Net income	$ 43	$ 3	$ 73	$ 16
Other comprehensive income (loss)	(22)	22	(45)	22
Total comprehensive income	21	25	28	38
Less: Comprehensive income attributable to noncontrolling interests	0	(2)	0	(4)
Comprehensive income attributable to Meritor, Inc.	21	23	28	34
Parent
Condensed Statement Of Income Captions [Line Items]
Net income	43	1	72	12
Other comprehensive income (loss)	(22)	22	(44)	22
Total comprehensive income	21	23	28	34
Less: Comprehensive income attributable to noncontrolling interests	0	0	0	0
Comprehensive income attributable to Meritor, Inc.	21	23	28	34
Guarantors
Condensed Statement Of Income Captions [Line Items]
Net income	61	50	148	121
Other comprehensive income (loss)	(65)	5	(92)	10
Total comprehensive income	(4)	55	56	131
Less: Comprehensive income attributable to noncontrolling interests	0	0	0	0
Comprehensive income attributable to Meritor, Inc.	(4)	55	56	131
Non-Guarantors
Condensed Statement Of Income Captions [Line Items]
Net income	14	15	60	58
Other comprehensive income (loss)	27	11	18	0
Total comprehensive income	41	26	78	58
Less: Comprehensive income attributable to noncontrolling interests	0	(2)	0	(4)
Comprehensive income attributable to Meritor, Inc.	41	24	78	54
Elims
Condensed Statement Of Income Captions [Line Items]
Net income	(75)	(63)	(207)	(175)
Other comprehensive income (loss)	38	(16)	73	(10)
Total comprehensive income	(37)	(79)	(134)	(185)
Less: Comprehensive income attributable to noncontrolling interests	0	0	0	0
Comprehensive income attributable to Meritor, Inc.	$ (37)	$ (79)	$ (134)	$ (185)

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Contingencies (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning balance	$ 19
Payments and other	(3)
Accruals	0
Ending balance	16
Superfund Sites
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning balance	2
Payments and other	0
Accruals	0
Ending balance	2
Non-Superfund Sites
Accrual for Environmental Loss Contingencies [Roll Forward]
Beginning balance	17
Payments and other	(3)
Accruals	0
Ending balance	$ 14

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Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 207	$ 247
Short-term debt	5	7
Long-term debt	945	965
Carrying Value | Foreign exchange forward contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreign exchange forward contracts (asset)	5	2
Carrying Value | Foreign currency option contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Short-term foreign currency option contracts (asset)	2	2
Long-term foreign currency option contracts (asset)	2	1
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	207	247
Short-term debt	5	7
Long-term debt	1,131	1,143
Fair Value | Foreign exchange forward contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreign exchange forward contracts (asset)	5	2
Fair Value | Foreign currency option contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Short-term foreign currency option contracts (asset)	2	2
Long-term foreign currency option contracts (asset)	$ 2	$ 1

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Retirement Benefit Liabilities

6 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Retirement Benefit Liabilities

Retirement Benefit Liabilities

Retirement benefit liabilities consisted of the following (in millions):

	March 31, 2015			September 30, 2014
Retiree medical liability	$	468		$	479
Pension liability	297			323
Other	15			16
Subtotal	780			818
Less: current portion (included in compensation and benefits, Note 14)	(43		)	(43		)
Retirement benefits	$	737		$	775

The components of net periodic pension and retiree medical expense included in continuing operations for the three months ended March 31 are as follows (in millions):

	2015					2014
	Pension			Retiree Medical		Pension			Retiree Medical
Interest cost	18			5		20			7
Assumed return on plan assets	(28		)	—		(26		)	—
Amortization of prior service costs	—			—		—			(2		)
Recognized actuarial loss	7			5		6			5
Total expense (income)	$	(3	)	$	10	$	—		$	10

The components of net periodic pension and retiree medical expense included in continuing operations for the six months ended March 31 are as follows (in millions):

	2015					2014
	Pension			Retiree Medical		Pension			Retiree Medical
Interest cost	36			10		40			13
Assumed return on plan assets	(56		)	—		(52		)	—
Amortization of prior service costs	—			—		—			(4		)
Recognized actuarial loss	14			10		12			11
Total expense	$	(6	)	$	20	$	—		$	20

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Earnings Per Share (Details) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Basic average common shares outstanding	97.9	97.6	97.9	97.5
Impact of stock options	0.1	0	0.1	0
Impact of restricted shares, restricted share units and performance share units	1.9	2.0	2.0	1.7
Impact of convertible notes	3.0	0	2.0	0
Diluted average common shares outstanding	102.9	99.6	102.0	99.2

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Other Liabilities (Tables)

6 Months Ended

Mar. 31, 2015

Other Liabilities Disclosure [Abstract]

Schedule Of Other Liabilities Noncurrent

Other liabilities are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Asbestos-related liabilities (see Note 19)	$	105	$	105
Restructuring (see Note 6)	2		2
Non-current deferred income tax liabilities	103		103
Liabilities for uncertain tax positions	12		14
Product warranties (see Note 14)	26		24
Environmental (see Note 19)	7		7
Indemnity obligations (see Note 19)	14		17
Other	32		37
Other liabilities	$	301	$	309

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Retirement Benefit Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Compensation and Retirement Disclosure [Abstract]
Retiree medical liability	$ 468	$ 479
Pension liability	297	323
Other	15	16
Subtotal	780	818
Less: current portion (included in compensation and benefits, Note 14)	(43)	(43)
Retirement benefits	$ 737	$ 775

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Inventories (Tables)

6 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Finished goods	$	142	$	146
Work in process	30		36
Raw materials, parts and supplies	193		197
Total	$	365	$	379

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New Accounting Standards - Narrative (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Mar. 31, 2015	Sep. 30, 2014
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Debt issuance cost	$ 27	$ 30

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Other Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014	Mar. 31, 2014
Other Liabilities Disclosure [Abstract]
Asbestos-related liabilities (see Note 19)	$ 105	$ 105
Restructuring (see Note 6)	2	2	3
Non-current deferred income tax liabilities	103	103
Liabilities for uncertain tax positions	12	14
Product warranties (see Note 14)	26	24	33
Environmental (see Note 19)	7	7
Indemnity obligations (see Note 19)	14	17
Other	32	37
Other liabilities	$ 301	$ 309

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Other Current Assets (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Other Current Assets Disclosure [Abstract]
Current deferred income tax assets	$ 18	$ 21
Asbestos-related recoveries (see Note 19)	14	15
Deposits and collateral	2	4
Prepaid and other	21	16
Other current assets	$ 55	$ 56

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Shareowners' Equity (Tables)

6 Months Ended

Mar. 31, 2015

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

The components of AOCL and the changes in AOCL by components, net of tax, for six months ended March 31, 2015 and 2014 are as follows (in millions):

	Foreign Currency Translation			Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at September 30, 2014	$	41		$	(789	)	$	(1	)	$	(749	)
Other comprehensive loss before reclassification	(67		)	(1		)	(1		)	(69		)
Amounts reclassified from accumulated other comprehensive loss - net of tax	1			24			—			25
Net current-period other comprehensive income (loss)	$	(66	)	$	23		$	(1	)	$	(44	)
Balance at March 31, 2015	$	(25	)	$	(766	)	$	(2	)	$	(793	)

	Foreign Currency Translation		Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at December 31, 2013	$	51	$	(782	)	$	(3	)	$	(734	)
Other comprehensive income before reclassification	10		2			2			14
Amounts reclassified from accumulated other comprehensive income - net of tax	—		8			—			8
Net current-period other comprehensive income	$	10	$	10		$	2		$	22
Balance at March 31, 2014	$	61	$	(772	)	$	(1	)	$	(712	)

In June 2014, the company's Board of Directors authorized the repurchase of up to $210 million of its equity and equity-linked securities (including convertible debt securities), subject to the achievement of its M2016 net debt reduction target and compliance with legal and regulatory requirements and its debt covenants. In September 2014, the company's Board authorized the repurchase of up to $40 million of its equity or equity-linked securities (including convertible debt securities) under the $210 million authorization that may be made annually without regard to achievement of the M2016 net debt reduction target. These authorizations have no stated expiration.

The equity and equity-linked securities repurchases are subject to prevailing market conditions and other considerations. Under the program, the company repurchased 1.2 million shares of its common stock for $16 million during the second quarter of fiscal year 2015 through open market transactions. Also, in the second quarter of fiscal year 2015, the company repurchased $15 million principal amount of its 4.0 percent convertible notes due 2027 for $16 million (see Note 16). The amount remaining available for repurchases under the authorization is $179 million at March 31, 2015.

Accumulated Other Comprehensive Loss (AOCL)

The components of AOCL and the changes in AOCL by components, net of tax, for three months ended March 31, 2015 and 2014 are as follows (in millions):

	Foreign Currency Translation			Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at December 31, 2014	$	8		$	(777	)	$	(2	)	$	(771	)
Other comprehensive loss before reclassification	(33		)	(1		)	—			(34		)
Amounts reclassified from accumulated other comprehensive loss - net of tax	—			12			—			12
Net current-period other comprehensive income (loss)	$	(33	)	$	11		$	—		$	(22	)
Balance at March 31, 2015	$	(25	)	$	(766	)	$	(2	)	$	(793	)

	Foreign Currency Translation		Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at September 30, 2013	$	61	$	(792	)	$	(3	)	$	(734	)
Other comprehensive income before reclassification	—		2			2			4
Amounts reclassified from accumulated other comprehensive income - net of tax	—		18			—			18
Net current-period other comprehensive income	$	—	$	20		$	2		$	22
Balance at March 31, 2014	$	61	$	(772	)	$	(1	)	$	(712	)

Reclassification out of accumulated other comprehensive income

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Prior service costs	$	(2	)	(b)
Actuarial losses	11			(b)
	9			Total before tax
	(1		)	Tax benefit
	8			Net of tax
Total reclassifications for the period	$	8		Net of tax
(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Actuarial losses	$	12	(a)
	12		Total before tax
	—		Tax (benefit) expense
Total reclassifications for the period	$	12	Net of tax
(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Actuarial losses	$	24	(a)
	24		Total before tax
	—		Tax (benefit) expense
	24		Net of tax
Foreign Currency Translation Related Adjustment
Other reclassification adjustment	$	1	(b)
	1		Total before tax
	—		Tax (benefit) expense
	1		Net of tax
Total reclassifications for the period	$	25	Net of tax
(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).
(b)  These accumulated other comprehensive income components are included in the computation of loss from discontinued operations (see Note 4).

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Prior service costs	$	(4	)	(b)
Actuarial losses	23			(b)
	19			Total before tax
	(1		)	Tax benefit
	18			Net of tax
Total reclassifications for the period	$	18		Net of tax
(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

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Earnings per Share

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share unit awards, and convertible securities, if applicable.

A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):

	Three Months Ended March 31,		Six Months Ended March 31,
	2015	2014	2015	2014
Basic average common shares outstanding	97.9	97.6	97.9	97.5
Impact of stock options	0.1	—	0.1	—
Impact of restricted shares, restricted share units and performance share units	1.9	2.0	2.0	1.7
Impact of convertible notes	3.0	—	2.0	—
Diluted average common shares outstanding	102.9	99.6	102.0	99.2

On November 8, 2014, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit is $13.74, which was the company’s share price on the grant date of December 1, 2014. The Board of Directors also approved a grant of 0.4 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit is $13.74, which was the company's share price on the grant date of December 1, 2014.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2014 to September 30, 2017, measured at the end of the performance period. The number of performance share units will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 75% associated with achieving an Adjusted EBITDA margin target and 25% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million shares.

On November 7, 2013, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit is $7.97, which was the company’s share price on the grant date of December 1, 2013.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2016 goals for the three-year performance period of October 1, 2013 to September 30, 2016, measured at the end of the performance period. The number of performance share units will depend on meeting the established M2016 goals at the following weights: 50% associated with achieving an Adjusted EBITDA margin target, 25% associated with achieving a net debt including retirement benefit liabilities target, and 25% associated with achieving an incremental booked revenue target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 1.8 million units including incremental share units that were issued subsequent to the December 1, 2013 grant date. There were 1.0 million and 0.8 million shares related to these performance share units included in the diluted earnings per share calculation for the three and six months ended March 31, 2015, respectively, as certain payout thresholds were achieved in the second quarter of fiscal year 2015 relative to the Adjusted EBITDA, net debt reduction and incremental booked revenue targets. There were 0.6 million and 0.3 million shares related to these performance share units included in the diluted earnings per share calculation for the three and six months ended March 31, 2014, respectively, as certain payout thresholds were achieved in the second quarter of fiscal year 2014.

For the three months ended March 31, 2015, the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 1.9 million, compared to 2.0 million units for the same period in the prior fiscal year. For the six months ended March 31, 2015, the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 2.0 million shares, compared to 1.7 million shares for the same period in the prior fiscal year. For the three and six months ended March 31, 2015, compensation cost related to restricted shares, restricted share units, and performance share units were $3 million and $5 million, respectively, compared to $1 million for both the three and six months ended March 31, 2014.

For the three and six months ended March 31, 2014, options to purchase 0.8 million shares of common stock were excluded in the computation of diluted earnings per share because their exercise price exceeded the average market price for the periods and thus their inclusion would be anti-dilutive.

For the three and six months ended March 31, 2015, 3.0 million and 2.0 million shares, respectively, were included in the computation of diluted earnings per share because the average stock price exceeded the conversion price for the 7.875 percent convertible notes due 2026. For the three and six months ended March 31, 2014, the company's convertible senior unsecured notes were excluded from the computation of diluted earnings per share, as the company's average stock price, during these periods was less than the conversion price.

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Net Property (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Property, Plant and Equipment [Line Items]
Property at cost	$ 1,297	$ 1,397
Less accumulated depreciation	(910)	(973)
Net property	387	424
Land and land improvements
Property, Plant and Equipment [Line Items]
Property at cost	32	34
Buildings
Property, Plant and Equipment [Line Items]
Property at cost	219	236
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property at cost	860	906
Company-owned tooling
Property, Plant and Equipment [Line Items]
Property at cost	137	155
Construction in progress
Property, Plant and Equipment [Line Items]
Property at cost	$ 49	$ 66

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Long-Term Debt (Tables)

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions):

	March 31, 2015			September 30, 2014
4.625 percent convertible notes due 2026 (1)	55			55
4.0 percent convertible notes due 2027 (1)	147			162
7.875 percent convertible notes due 2026(net of issuance discount of $20 and $21, respectively) (1)	230			229
6.75 percent notes due 2021 (2)	275			275
6.25 percent notes due 2024 (2)	225			225
Capital lease obligation	22			26
Export financing arrangements	22			31
Unamortized discount on convertible notes	(26		)	(31		)
Subtotal	950			972
Less: current maturities	(5		)	(7		)
Long-term debt	$	945		$	965

⁽¹⁾ The 4.625 percent, 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016, 2019 and 2020, respectively.

⁽²⁾ The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption.

Debt instrument redemption

On or after February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2024 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on February 15 of the years indicated below:

Year	Redemption Price
2019	103.125%
2020	102.083%
2021	101.042%
2022 and thereafter	100.000%

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Supplemental Guarantor Condensed Consolidating Financial Statements

6 Months Ended

Mar. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Condensed Consolidating Financial Statements

Supplemental Guarantor Condensed Consolidating Financial Statements

Article 3-10 of Regulation S-X (S-X Rule 3-10) requires that separate financial information for issuers and guarantors of registered securities be filed in certain circumstances. Certain of the company's 100% owned subsidiaries, as defined in the credit agreement (the Guarantors), irrevocably and unconditionally guarantee amounts outstanding under the senior secured revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the notes outstanding under the company's indentures (see Note 16).

Schedule I of Article 5-04 of Regulation S-X (S-X Rule 5-04) requires that condensed financial information of the registrant (Parent) be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

In lieu of providing separate audited financial statements for the Parent and Guarantors, the company has included the accompanying condensed consolidating financial statements as permitted by S-X Rules 3-10 and 5-04. These condensed consolidating financial statements are presented on the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the Parent's share of the subsidiary's cumulative results of operations, capital contributions and distribution and other equity changes. The Guarantors are combined in the condensed consolidated financial statements. Certain subsidiaries in China and India are restricted by law from transfer of cash by dividends, loans or advances to Parent, which exceeded 25 percent of consolidated net assets of Parent as of September 30, 2014. As of March 31, 2015, the company’s proportionate share of net assets restricted from transfer by law was $31 million.

	Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	418		$	446		$	—		$	864
Subsidiaries	—			31			17			(48		)	—
Total sales	—			449			463			(48		)	864
Cost of sales	(10		)	(380		)	(407		)	48			(749		)
GROSS MARGIN	(10		)	69			56			—			115
Selling, general and administrative	(16		)	(26		)	(15		)	—			(57		)
Restructuring costs	(1		)	—			(2		)	—			(3		)
Other operating income	—			—			—			—			—
OPERATING INCOME (LOSS)	(27		)	43			39			—			55
Other income, net	37			(9		)	(26		)	—			2
Equity in earnings of affiliates	—			8			1			—			9
Interest income (expense), net	(29		)	6			2			—			(21		)
INCOME (LOSS) BEFORE INCOME TAXES	(19		)	48			16			—			45
Provision for income taxes	(1		)	—			(5		)	—			(6		)
Equity income from continuing operations of subsidiaries	59			8			—			(67		)	—
INCOME FROM CONTINUING OPERATIONS	39			56			11			(67		)	39
INCOME FROM DISCONTINUED OPERATIONS, net of tax	4			5			3			(8		)	4
NET INCOME	43			61			14			(75		)	43
Less: Net income attributable to noncontrolling interests	—			—			—			—			—
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	43		$	61		$	14		$	(75	)	$	43

	Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
Net income	$	43		$	61		$	14	$	(75	)	$	43
Other comprehensive income (loss)	(22		)	(65		)	27		38			(22		)
Total comprehensive income (loss)	21			(4		)	41		(37		)	21
Less: Comprehensive income attributable to noncontrolling interests	—			—			—		—			—
Comprehensive income (loss) attributable to Meritor, Inc.	$	21		$	(4	)	$	41	$	(37	)	$	21

	Three Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	348		$	606		$	—		$	954
Subsidiaries	—			33			15			(48		)	—
Total sales	—			381			621			(48		)	954
Cost of sales	(13		)	(326		)	(545		)	48			(836		)
GROSS MARGIN	(13		)	55			76			—			118
Selling, general and administrative	(23		)	(22		)	(21		)	—			(66		)
Restructuring costs	(1		)	—			(1		)	—			(2		)
OPERATING INCOME (LOSS)	(37		)	33			54			—			50
Other income (loss), net	39			(8		)	(31		)	—			—
Equity in earnings of affiliates	—			6			3			—			9
Interest income (expense), net	(54		)	8			(2		)	—			(48		)
INCOME (LOSS) BEFORE INCOME TAXES	(52		)	39			24			—			11
Provision for income taxes	—			1			(9		)	—			(8		)
Equity income from continuing operations of subsidiaries	53			10			—			(63		)	—
INCOME FROM CONTINUING OPERATIONS	1			50			15			(63		)	3
INCOME FROM DISCONTINUED OPERATIONS, net of tax	—			—			—			—			—
NET INCOME	1			50			15			(63		)	3
Less: Net income attributable to noncontrolling interests	—			—			(2		)	—			(2		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	1		$	50		$	13		$	(63	)	$	1

	Three Months Ended March 31, 2014
	Parent		Guarantors		Non- Guarantors			Elims			Consolidated
Net income	$	1	$	50	$	15		$	(63	)	$	3
Other comprehensive income	22		5		11			(16		)	22
Total comprehensive income	23		55		26			(79		)	25
Less: Comprehensive income attributable to noncontrolling interests	—		—		(2		)	—			(2		)
Comprehensive income attributable to Meritor, Inc.	$	23	$	55	$	24		$	(79	)	$	23

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	821		$	922		$	—		$	1,743
Subsidiaries	—			61			33			(94		)	—
Total sales	—			882			955			(94		)	1,743
Cost of sales	(24		)	(751		)	(832		)	94			(1,513		)
GROSS MARGIN	(24		)	131			123			—			230
Selling, general and administrative	(34		)	(54		)	(34		)	—			(122		)
Restructuring costs	(1		)	(3		)	(2		)	—			(6		)
Other operating income	—			—			1			—			1
OPERATING INCOME (LOSS)	(59		)	74			88			—			103
Other income, net	37			(9		)	(24		)	—			4
Equity in earnings of affiliates	—			15			3			—			18
Interest income (expense), net	(58		)	13			5			—			(40		)
INCOME (LOSS) BEFORE INCOME TAXES	(80		)	93			72			—			85
Provision for income taxes	(1		)	—			(12		)	—			(13		)
Equity income from continuing operations of subsidiaries	152			53			—			(205		)	—
INCOME FROM CONTINUING OPERATIONS	71			146			60			(205		)	72
INCOME FROM DISCONTINUED OPERATIONS, net of tax	1			2			—			(2		)	1
NET INCOME	72			148			60			(207		)	73
Less: Net income attributable to noncontrolling interests	—			—			(1		)	—			(1		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	72		$	148		$	59		$	(207	)	$	72

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
Net income	$	72		$	148		$	60	$	(207	)	$	73
Other comprehensive income (loss)	(44		)	(92		)	18		73			(45		)
Total comprehensive income	28			56			78		(134		)	28
Less: Comprehensive income attributable to noncontrolling interests	—			—			—		—			—
Comprehensive income attributable to Meritor, Inc.	$	28		$	56		$	78	$	(134	)	$	28

	Six Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	657		$	1,197		$	—		$	1,854
Subsidiaries	—			66			29			(95		)	—
Total sales	—			723			1,226			(95		)	1,854
Cost of sales	(26		)	(623		)	(1,077		)	95			(1,631		)
GROSS MARGIN	(26		)	100			149			—			223
Selling, general and administrative	(40		)	(45		)	(40		)	—			(125		)
Restructuring costs	(1		)	—			(2		)	—			(3		)
Other operating expense	—			(1		)	—			—			(1		)
OPERATING INCOME (LOSS)	(67		)	54			107			—			94
Other income (loss), net	39			(8		)	(31		)	—			—
Equity in earnings of affiliates	—			12			5			—			17
Interest income (expense), net	(88		)	17			(4		)	—			(75		)
INCOME (LOSS) BEFORE INCOME TAXES	(116		)	75			77			—			36
Provision for income taxes	—			(1		)	(18		)	—			(19		)
Equity income from continuing operations of subsidiaries	129			48			—			(177		)	—
INCOME FROM CONTINUING OPERATIONS	13			122			59			(177		)	17
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(1		)	(1		)	(1		)	2			(1		)
NET INCOME	12			121			58			(175		)	16
Less: Net income attributable to noncontrolling interests	—			—			(4		)	—			(4		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	12		$	121		$	54		$	(175	)	$	12

	Six Months Ended March 31, 2014
	Parent		Guarantors		Non- Guarantors			Elims			Consolidated
Net income	$	12	$	121	$	58		$	(175	)	$	16
Other comprehensive income	22		10		—			(10		)	22
Total comprehensive income	34		131		58			(185		)	38
Less: Comprehensive income attributable to noncontrolling interests	—		—		(4		)	—			(4		)
Comprehensive income attributable to Meritor, Inc.	$	34	$	131	$	54		$	(185	)	$	34

	March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	99		$	4		$	104	$	—		$	207
Receivables trade and other, net	1			43			501		—			545
Inventories	—			164			201		—			365
Other current assets	9			18			28		—			55
TOTAL CURRENT ASSETS	109			229			834		—			1,172
NET PROPERTY	13			153			221		—			387
GOODWILL	—			278			136		—			414
OTHER ASSETS	76			125			143		—			344
INVESTMENTS IN SUBSIDIARIES	2,230			341			—		(2,571		)	—
TOTAL ASSETS	$	2,428		$	1,126		$	1,334	$	(2,571	)	$	2,317
CURRENT LIABILITIES:
Short-term debt	$	1		$	3		$	1	$	—		$	5
Accounts and notes payable	48			227			343		—			618
Other current liabilities	98			65			118		—			281
TOTAL CURRENT LIABILITIES	147			295			462		—			904
LONG-TERM DEBT	907			9			29		—			945
RETIREMENT BENEFITS	636			—			101		—			737
INTERCOMPANY PAYABLE (RECEIVABLE)	1,287			(1,705		)	418					—
OTHER LIABILITIES	47			211			43		—			301
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.	(596		)	2,316			255		(2,571		)	(596		)
NONCONTROLLING INTERESTS	—			—			26		—			26
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,428		$	1,126		$	1,334	$	(2,571	)	$	2,317

	September 30, 2014
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	71		$	5		$	171	$	—		$	247
Receivables trade and other, net	1			45			564		—			610
Inventories	—			151			228		—			379
Other current assets	9			18			29		—			56
TOTAL CURRENT ASSETS	81			219			992		—			1,292
NET PROPERTY	13			158			253		—			424
GOODWILL	—			277			154		—			431
OTHER ASSETS	75			128			152		—			355
INVESTMENTS IN SUBSIDIARIES	2,185			267			—		(2,452		)	—
TOTAL ASSETS	$	2,354		$	1,049		$	1,551	$	(2,452	)	$	2,502
CURRENT LIABILITIES:
Short-term debt	$	1		$	3		$	3	$	—		$	7
Accounts and notes payable	46			230			404		—			680
Other current liabilities	97			87			167		—			351
TOTAL CURRENT LIABILITIES	144			320			574		—			1,038
LONG-TERM DEBT	916			10			39		—			965
RETIREMENT BENEFITS	656			—			119		—			775
INTERCOMPANY PAYABLE (RECEIVABLE)	1,198			(1,736		)	538		—			—
OTHER LIABILITIES	52			208			49		—			309
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.	(612		)	2,247			205		(2,452		)	(612		)
NONCONTROLLING INTERESTS	—			—			27		—			27
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,354		$	1,049		$	1,551	$	(2,452	)	$	2,502

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$	7		$	10		$	12		$	—	$	29
INVESTING ACTIVITIES
Capital expenditures	(1		)	(10		)	(12		)	—		(23		)
Net investing cash flows provided by discontinued operations	—			1			3			—		4
CASH USED FOR INVESTING ACTIVITIES	(1		)	(9		)	(9		)	—		(19		)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16		)	—			—			—		(16		)
Repurchase of common stock	(16		)									(16		)
Intercompany advances	54			—			(54		)	—		—
Other financing activities	—			(2		)	(4		)	—		(6		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	22			(2		)	(58		)	—		(38		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—			—			(12		)	—		(12		)
CHANGE IN CASH AND CASH EQUIVALENTS	28			(1		)	(67		)	—		(40		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	71			5			171			—		247
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	99		$	4		$	104		$	—	$	207

	Six Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	(30	)	$	8		$	40		$	—	$	18
INVESTING ACTIVITIES
Capital expenditures	(2		)	(11		)	(12		)	—		(25		)
Net investing cash flows provided by discontinued operations	—			—			3			—		3
CASH USED FOR INVESTING ACTIVITIES	(2		)	(11		)	(9		)	—		(22		)
FINANCING ACTIVITIES
Repayment term loan	(308		)	—			—			—		(308		)
Proceeds from debt issuance	225			—			—			—		225
Debt issuance costs	(9		)	—			—			—		(9		)
Intercompany advances	92			—			(92		)	—		—
Other financing activities	—			—			13			—		13
CASH USED FOR FINANCING ACTIVITIES	—			—			(79		)	—		(79		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—			—			(2		)	—		(2		)
CHANGE IN CASH AND CASH EQUIVALENTS	(32		)	(3		)	(50		)	—		(85		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	144			6			168			—		318
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	112		$	3		$	118		$	—	$	233

Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. As of March 31, 2015 and September 30, 2014, Parent-only obligations included $662 million and $684 million of pension and retiree medical benefits, respectively, (see Note 18). All debt is debt of the Parent other than $42 million and $55 million at March 31, 2015 and September 30, 2014, respectively (see Note 16), and is primarily related to capital lease obligations and lines of credit. Cash dividends paid to the Parent by subsidiaries and investments accounted for by the equity method were $37 million and $5 million for the six months ended March 31, 2015 and 2014, respectively.

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Business Segment Information

6 Months Ended

Mar. 31, 2015

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.

      The company has two reportable segments at March 31, 2015, 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, 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 businesses 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 expense 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 4).

     Segment information is summarized as follows (in millions):

	Commercial Truck & Industrial		Aftermarket & Trailer		Eliminations			Total
Three Months Ended March 31, 2015
External Sales	$	660	$	204	$	—		$	864
Intersegment Sales	21		8		(29		)	—
Total Sales	$	681	$	212	$	(29	)	$	864
Three Months Ended March 31, 2014
External Sales	$	736	$	218	$	—		$	954
Intersegment Sales	27		7		(34		)	—
Total Sales	$	763	$	225	$	(34	)	$	954
	Commercial Truck & Industrial		Aftermarket & Trailer		Eliminations			Total
Six Months Ended March 31, 2015
External Sales	$	1,338	$	405	$	—		$	1,743
Intersegment Sales	46		15		(61		)	—
Total Sales	$	1,384	$	420	$	(61	)	$	1,743
Six Months Ended March 31, 2014
External Sales	$	1,439	$	415	$	—		$	1,854
Intersegment Sales	51		12		(63		)	—
Total Sales	$	1,490	$	427	$	(63	)	$	1,854

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014 (2)			2015			2014 (2)
Segment EBITDA:
Commercial Truck & Industrial	$	57		$	57		$	113		$	110
Aftermarket & Trailer	30			24			55			45
Segment EBITDA	87			81			168			155
Unallocated legacy and corporate costs, net (1)	—			(1		)	(2		)	(3		)
Interest expense, net	(21		)	(48		)	(40		)	(75		)
Provision for income taxes	(6		)	(8		)	(13		)	(19		)
Depreciation and amortization	(17		)	(17		)	(32		)	(33		)
Noncontrolling interests	—			(2		)	(1		)	(4		)
Loss on sale of receivables	(1		)	(2		)	(3		)	(5		)
Restructuring costs	(3		)	(2		)	(6		)	(3		)
Income from continuing operations attributable to Meritor, Inc.	$	39		$	1		$	71		$	13

⁽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, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability.

⁽²⁾ Amounts for prior periods have been recast for discontinued operations.

Segment Assets:	March 31, 2015			September 30, 2014
Commercial Truck & Industrial	$	1,657		$	1,755
Aftermarket & Trailer	441			458
Total segment assets	2,098			2,213
Corporate (1)	473			533
Less: Accounts receivable sold under off-balance sheet factoring programs (2)	(254		)	(244		)
Total assets	$	2,317		$	2,502

⁽¹⁾  Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.

⁽²⁾  At March 31, 2015 and September 30, 2014, segment assets include $254 million and $244 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.

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Restructuring Costs (Details Textuals) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended		3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014		Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014	Dec. 31, 2014 position	Jun. 30, 2015	Sep. 30, 2015
Charges to continuing operations	$ 3	$ 2	[1]	$ 6	$ 3
Employee Severance
Charges to continuing operations				6	3
South America Labor Reductions | Commercial Truck and Industrial
Charges to continuing operations						7
South America Labor Reductions | Hourly Positions | Commercial Truck and Industrial
Number of positions eliminated						190
South America Labor Reductions | Salaried Position | Commercial Truck and Industrial
Number of positions eliminated						20
M2016 Strategy | Commercial Truck and Industrial
Cumulative restructuring costs							3
M2016 Strategy | Hourly Positions | Commercial Truck and Industrial
Number of positions eliminated							51
M2016 Strategy | Salaried Position | Commercial Truck and Industrial
Number of positions eliminated							19
European Labor Reduction | Commercial Truck and Industrial
Cumulative restructuring costs	2			2
European Labor Reduction | Commercial Truck and Industrial | Scenario, Forecast
Expected restructuring cost								1
European Labor Reduction | Hourly Positions | Commercial Truck and Industrial
Expected number of positions eliminated							21
European Labor Reduction | Salaried Position | Commercial Truck and Industrial
Expected number of positions eliminated							23
Closure Of Corporate Engineering Facility
Expected number of positions eliminated	30
Closure Of Corporate Engineering Facility | Employee Severance
Cumulative restructuring costs	1			1
Closure Of Corporate Engineering Facility | Lease Termination | Scenario, Forecast
Expected restructuring cost									$ 2

[1] Amounts for prior periods have been recast for discontinued operations.

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Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair value of financial instruments

Fair values of financial instruments are summarized as follows (in millions):

	March 31, 2015				September 30, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Cash and cash equivalents	$	207	$	207	$	247	$	247
Short-term debt	5		5		7		7
Long-term debt	945		1,131		965		1,143
Foreign exchange forward contracts (asset)	5		5		2		2
Short-term foreign currency option contracts (asset)	2		2		2		2
Long-term foreign currency option contracts (asset)	2		2		1		1

Offsetting of derivative assets and liabilities

The following table reflects the offsetting of derivative assets and liabilities (in millions):

	March 31, 2015				September 30, 2014
	Gross Amounts Recognized	Gross Amounts Offset		Net Amounts Reported	Gross Amounts Recognized	Gross Amounts Offset	Net Amounts Reported
Derivative Asset
Foreign exchange forward contract	6	(1	)	5	2	—	2
Derivative Liabilities
Foreign exchange forward contract	1	(1	)	—	—	—	—

Fair value of financial instruments by the valuation hierarchy

Fair value of financial instruments by the valuation hierarchy at March 31, 2015 is as follows (in millions):

	Level 1		Level 2		Level 3
Cash and cash equivalents	$	207	$	—	$	—
Short-term debt	—		—		5
Long-term debt	—		1,093		38
Foreign exchange forward contracts (asset)	—		5		—
Short-term foreign currency option contracts (asset)	—		—		2
Long-term foreign currency option contracts (asset)	—		—		2

Reconciliation of changes in fair value of Level 3 financial assets and liabilities

The table below provides a reconciliation of changes in fair value of the Level 3 financial assets and liabilities measured at fair value in the condensed consolidated balance sheet from September 30, 2014 to March 31, 2015. No transfers of assets between any of the Levels occurred during this period.

	Short-term foreign currency option contracts (asset)			Long-term foreign currency option contracts (asset)			Total
Fair Value as of September 30, 2014	$	2		$	1		$	3
Total unrealized gains (losses):
Included in other income	—			—			—
Included in cost of sales	—			—			—
Total realized gains (losses):
Included in other income	3			—			3
Included in cost of sales	3			—			3
Purchases, issuances, sales and settlements:
Purchases	5			—			5
Settlements	(10		)	(1		)	(11		)
Transfer in and / or out of Level 3 (1)	—			—			—
Reclass between short-term and long-term	(1		)	2			1
Fair Value as of March 31, 2015	$	2		$	2		$	4

⁽¹⁾ Transfers as of the last day of the reporting period

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Subsequent Events

6 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On April 14, 2015, the company notified approximately 40 hourly and salaried employees that their positions were being eliminated due to the planned closure of a North America manufacturing facility. The company expects to incur $3 million in costs associated with this restructuring action. Restructuring actions associated with this plan are expected to be completed by the end of fiscal year 2015.

On April 29, 2015, a restructuring plan to further reduce headcount in South America was approved by the local union. This restructuring plan is in response to the current economic environment in South America which has weakened in 2015. With this restructuring plan the company expects to eliminate up to 233 hourly and 21 salary positions and incur $9 million in employee separation costs in the Commercial Truck & Industrial segment.

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Basis of Presentation (Policies)

6 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventory

Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values)

Environmental costs

Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties.

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Basis of Presentation

6 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Meritor, Inc. (the “company” or “Meritor”), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems, modules and components to original equipment manufacturers (“OEMs”) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The condensed consolidated financial statements are those of the company and its consolidated subsidiaries.

Certain businesses are reported in discontinued operations in the condensed consolidated statement of operations, statement of cash flows and related notes for all periods presented. In the fourth quarter of fiscal year 2014, the company exited its Mascot business, a remanufacturer and distributor of all makes differentials, transmissions and steering gears. The results of operations and cash flows of the company’s former Mascot business are presented in discontinued operations in the condensed consolidated statement of operations and condensed consolidated statement of cash flows, and prior period information has been recast to reflect this presentation. Additional information regarding discontinued operations is discussed in Note 4.

In the opinion of the company, the unaudited financial statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K, for the fiscal year ended September 30, 2014, as amended. The quarter end condensed balance sheet data was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and six months ended March 31, 2015, are not necessarily indicative of the results for the full year.

The company’s fiscal year ends on the Sunday nearest September 30. The second quarter of fiscal years 2015 and 2014 ended on March 29, 2015 and March 30, 2014, respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and March 31 are used consistently throughout this report to represent the fiscal year end and second quarter end, respectively.

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Earnings per Share (Tables)

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Reconciliation of basic average common shares outstanding

A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):

	Three Months Ended March 31,		Six Months Ended March 31,
	2015	2014	2015	2014
Basic average common shares outstanding	97.9	97.6	97.9	97.5
Impact of stock options	0.1	—	0.1	—
Impact of restricted shares, restricted share units and performance share units	1.9	2.0	2.0	1.7
Impact of convertible notes	3.0	—	2.0	—
Diluted average common shares outstanding	102.9	99.6	102.0	99.2

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Business Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015 segment	Mar. 31, 2014
Number of reportable segments			2
External Sales	$ 864	$ 954	$ 1,743	$ 1,854
Intersegment Sales	0	0	0	0
Total Sales	864	954	1,743	1,854
Operating Segments | Commercial Truck & Industrial
External Sales	660	736	1,338	1,439
Intersegment Sales	21	27	46	51
Total Sales	681	763	1,384	1,490
Operating Segments | Aftermarket & Trailer
External Sales	204	218	405	415
Intersegment Sales	8	7	15	12
Total Sales	212	225	420	427
Eliminations
External Sales	0	0	0	0
Intersegment Sales	(29)	(34)	(61)	(63)
Total Sales	$ (29)	$ (34)	$ (61)	$ (63)

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Other Assets (Tables)

6 Months Ended

Mar. 31, 2015

Other Assets, Noncurrent [Abstract]

Summary of other assets

Other assets are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Investments in non-consolidated joint ventures	$	101	$	106
Asbestos-related recoveries (see Note 19)	42		45
Unamortized debt issuance costs	27		30
Capitalized software costs, net	26		25
Non-current deferred income tax assets, net	17		15
Assets for uncertain tax positions	5		5
Prepaid pension costs	109		104
Other	17		25
Other assets	$	344	$	355

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Discontinued Operations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Discontinued Operations and Disposal Groups [Abstract]
Sales	$ 0	$ 8	$ 1	$ 15
Income (loss) before income taxes	3	(4)	0	(6)
Benefit from income taxes	1	4	1	5
Income (loss) from discontinued operations attributable to Meritor, Inc.	4	0	1	(1)
Discontinued operations, assets	7		7		8
Discontinued operations, liabilities	$ 13		$ 13		$ 21

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Financial Instruments (Details 1) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Offsetting Derivative Assets
Gross Amounts Recognized	$ 6	$ 2
Gross Amounts Offset	(1)	0
Net Amounts Reported	5	2
Offsetting Derivative Liabilities
Gross Amounts Recognized	1	0
Gross Amounts Offset	(1)	0
Net Amounts Reported	$ 0	$ 0

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended			6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014		Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Sales	$ 864	$ 954		$ 1,743	$ 1,854
Cost of sales	(749)	(836)		(1,513)	(1,631)
GROSS MARGIN	115	118		230	223
Selling, general and administrative	(57)	(66)		(122)	(125)
Restructuring costs	(3)	(2)	[1]	(6)	(3)
Other operating income (expense), net	0	0		1	(1)
OPERATING INCOME (LOSS)	55	50		103	94
Other income, net	2	0		4	0
Equity in earnings of affiliates	9	9		18	17
Interest expense, net	(21)	(48)	[1]	(40)	(75)
INCOME BEFORE INCOME TAXES	45	11		85	36
Provision for income taxes	(6)	(8)	[1]	(13)	(19)
INCOME FROM CONTINUING OPERATIONS	39	3		72	17
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	4	0		1	(1)
NET INCOME	43	3		73	16
Less: Net income attributable to noncontrolling interests	0	(2)	[1]	(1)	(4)
Net income	43	1		72	12
NET INCOME ATTRIBUTABLE TO MERITOR, INC.
Net income from continuing operations	39	1	[1]	71	13
Income (loss) from discontinued operations	4	0		1	(1)
Net income	$ 43	$ 1		$ 72	$ 12
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ 0.40	$ 0.01		$ 0.73	$ 0.13
Discontinued operations (in dollars per share)	$ 0.04	$ 0.00		$ 0.01	$ (0.01)
Basic earnings per share (in dollars per share)	$ 0.44	$ 0.01		$ 0.74	$ 0.12
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ 0.38	$ 0.01		$ 0.70	$ 0.13
Discontinued operations (in dollars per share)	$ 0.04	$ 0.00		$ 0.01	$ (0.01)
Diluted earnings per share (in dollars per share)	$ 0.42	$ 0.01		$ 0.71	$ 0.12
Basic average common shares outstanding (in shares)	97.9	97.6		97.9	97.5
Diluted average common shares outstanding (in shares)	102.9	99.6		102.0	99.2

[1] Amounts for prior periods have been recast for discontinued operations.

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Retirement Benefit Liabilities (Tables)

6 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Summary of retirement benefit liabilities

Retirement benefit liabilities consisted of the following (in millions):

	March 31, 2015			September 30, 2014
Retiree medical liability	$	468		$	479
Pension liability	297			323
Other	15			16
Subtotal	780			818
Less: current portion (included in compensation and benefits, Note 14)	(43		)	(43		)
Retirement benefits	$	737		$	775

Components of net periodic pension and retiree medical expense

The components of net periodic pension and retiree medical expense included in continuing operations for the three months ended March 31 are as follows (in millions):

	2015					2014
	Pension			Retiree Medical		Pension			Retiree Medical
Interest cost	18			5		20			7
Assumed return on plan assets	(28		)	—		(26		)	—
Amortization of prior service costs	—			—		—			(2		)
Recognized actuarial loss	7			5		6			5
Total expense (income)	$	(3	)	$	10	$	—		$	10

The components of net periodic pension and retiree medical expense included in continuing operations for the six months ended March 31 are as follows (in millions):

	2015					2014
	Pension			Retiree Medical		Pension			Retiree Medical
Interest cost	36			10		40			13
Assumed return on plan assets	(56		)	—		(52		)	—
Amortization of prior service costs	—			—		—			(4		)
Recognized actuarial loss	14			10		12			11
Total expense	$	(6	)	$	20	$	—		$	20

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
OPERATING ACTIVITIES
CASH PROVIDED BY OPERATING ACTIVITIES (See Note 9)	$ 29	$ 18
INVESTING ACTIVITIES
Capital expenditures	(23)	(25)
Net investing cash flows provided by discontinued operations	4	3
CASH USED FOR INVESTING ACTIVITIES	(19)	(22)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16)	(308)
Proceeds from debt issuance	0	225
Debt issuance costs	0	(9)
Repurchase of common stock	(16)	0
Other financing activities	(6)	13
CASH USED FOR FINANCING ACTIVITIES	(38)	(79)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(12)	(2)
CHANGE IN CASH AND CASH EQUIVALENTS	(40)	(85)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	247	318
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 207	$ 233

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Operating Cash Flow (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014		Mar. 31, 2015	Mar. 31, 2014
OPERATING ACTIVITIES
Net income	$ 43	$ 3		$ 73	$ 16
Less: Income (loss) from discontinued operations, net of tax	4	0		1	(1)
Income from continuing operations	39	3		72	17
Adjustments to income from continuing operations to arrive at cash provided by operating activities:
Depreciation and amortization	17	17	[1]	32	33
Restructuring costs	3	2	[1]	6	3
Loss on debt extinguishment				1	21
Equity in earnings of affiliates	(9)	(9)		(18)	(17)
Pension and retiree medical expense				14	20
Other adjustments to income from continuing operations				5	5
Dividends received from equity method investments				10	11
Pension and retiree medical contributions				(24)	(19)
Restructuring payments				(3)	(4)
Changes in off-balance sheet accounts receivable factoring				40	17
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations				(99)	(60)
Operating cash flows provided by continuing operations				36	27
Operating cash flows used for discontinued operations				(7)	(9)
CASH PROVIDED BY OPERATING ACTIVITIES				$ 29	$ 18

[1] Amounts for prior periods have been recast for discontinued operations.

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Restructuring Costs (Tables)

6 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Schedule of changes in restructuring reserves

The changes in restructuring reserves for the six months ended March 31, 2015 and 2014 are as follows (in millions):

	Employee Termination Benefits			Asset Impairment		Plant Shutdown & Other		Total
Beginning balance at September 30, 2014	$	11		$	—	$	—	$	11
Activity during the period:
Charges to continuing operations	6			—		—		6
Cash payments – continuing operations	(3		)	—		—		(3		)
Other	(2		)	—		—		(2		)
Total restructuring reserves at March 31, 2015	12			—		—		12
Less: non-current restructuring reserves	(2		)	—		—		(2		)
Restructuring reserves – current, at March 31, 2015	$	10		$	—	$	—	$	10
Balance at September 30, 2013	$	12		$	—	$	—	$	12
Activity during the period:
Charges to continuing operations	3			—		—		3
Cash payments – continuing operations	(4		)	—		—		(4		)
Other	(1		)	—		—		(1		)
Total restructuring reserves at March 31, 2014	10			—		—		10
Less: non-current restructuring reserves	(3		)	—		—		(3		)
Restructuring reserves – current, at March 31, 2014	$	7		$	—	$	—	$	7

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Other Current Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014	Mar. 31, 2014
Other Current Liabilities Disclosure [Abstract]
Compensation and benefits	$ 111	$ 146
Income taxes	9	8
Taxes other than income taxes	44	50
Accrued interest	15	15
Product warranties	23	27	24
Environmental reserves (see Note 19)	9	12
Restructuring (see Note 6)	10	9	7
Asbestos-related liabilities (see Note 19)	17	17
Indemnity obligations (see Note 19)	2	11
Other	41	56
Other current liabilities	$ 281	$ 351

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Other Liabilities

6 Months Ended

Mar. 31, 2015

Other Liabilities Disclosure [Abstract]

Other Liabilities

Other Liabilities

Other liabilities are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Asbestos-related liabilities (see Note 19)	$	105	$	105
Restructuring (see Note 6)	2		2
Non-current deferred income tax liabilities	103		103
Liabilities for uncertain tax positions	12		14
Product warranties (see Note 14)	26		24
Environmental (see Note 19)	7		7
Indemnity obligations (see Note 19)	14		17
Other	32		37
Other liabilities	$	301	$	309

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Operating Cash Flow (Tables)

6 Months Ended

Mar. 31, 2015

Operating Cash Flow Disclosure [Abstract]

Schedule Of Operating Cash Flow

The reconciliation of net income to cash flows provided by operating activities is as follows (in millions):

	Six Months Ended March 31,
	2015			2014
OPERATING ACTIVITIES
Net income	$	73		$	16
Less: Income (loss) from discontinued operations, net of tax	1			(1		)
Income from continuing operations	72			17
Adjustments to income from continuing operations to arrive at cash provided by operating activities:
Depreciation and amortization	32			33
Restructuring costs	6			3
Loss on debt extinguishment	1			21
Equity in earnings of affiliates	(18		)	(17		)
Pension and retiree medical expense	14			20
Other adjustments to income from continuing operations	5			5
Dividends received from equity method investments	10			11
Pension and retiree medical contributions	(24		)	(19		)
Restructuring payments	(3		)	(4		)
Changes in off-balance sheet accounts receivable factoring	40			17
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations	(99		)	(60		)
Operating cash flows provided by continuing operations	36			27
Operating cash flows used for discontinued operations	(7		)	(9		)
CASH PROVIDED BY OPERATING ACTIVITIES	$	29		$	18

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Financial Instruments

6 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

Fair values of financial instruments are summarized as follows (in millions):

	March 31, 2015				September 30, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Cash and cash equivalents	$	207	$	207	$	247	$	247
Short-term debt	5		5		7		7
Long-term debt	945		1,131		965		1,143
Foreign exchange forward contracts (asset)	5		5		2		2
Short-term foreign currency option contracts (asset)	2		2		2		2
Long-term foreign currency option contracts (asset)	2		2		1		1

The following table reflects the offsetting of derivative assets and liabilities (in millions):

	March 31, 2015				September 30, 2014
	Gross Amounts Recognized	Gross Amounts Offset		Net Amounts Reported	Gross Amounts Recognized	Gross Amounts Offset	Net Amounts Reported
Derivative Asset
Foreign exchange forward contract	6	(1	)	5	2	—	2
Derivative Liabilities
Foreign exchange forward contract	1	(1	)	—	—	—	—

Fair Value

The current FASB guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical instruments (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

• Level 1 inputs use quoted prices in active markets for identical instruments.

• Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

• Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

Fair value of financial instruments by the valuation hierarchy at March 31, 2015 is as follows (in millions):

	Level 1		Level 2		Level 3
Cash and cash equivalents	$	207	$	—	$	—
Short-term debt	—		—		5
Long-term debt	—		1,093		38
Foreign exchange forward contracts (asset)	—		5		—
Short-term foreign currency option contracts (asset)	—		—		2
Long-term foreign currency option contracts (asset)	—		—		2

The table below provides a reconciliation of changes in fair value of the Level 3 financial assets and liabilities measured at fair value in the condensed consolidated balance sheet from September 30, 2014 to March 31, 2015. No transfers of assets between any of the Levels occurred during this period.

	Short-term foreign currency option contracts (asset)			Long-term foreign currency option contracts (asset)			Total
Fair Value as of September 30, 2014	$	2		$	1		$	3
Total unrealized gains (losses):
Included in other income	—			—			—
Included in cost of sales	—			—			—
Total realized gains (losses):
Included in other income	3			—			3
Included in cost of sales	3			—			3
Purchases, issuances, sales and settlements:
Purchases	5			—			5
Settlements	(10		)	(1		)	(11		)
Transfer in and / or out of Level 3 (1)	—			—			—
Reclass between short-term and long-term	(1		)	2			1
Fair Value as of March 31, 2015	$	2		$	2		$	4

⁽¹⁾ Transfers as of the last day of the reporting period

Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments. The company did not have any cash equivalents at March 31, 2015 or September 30, 2014.

Short- and Long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with terms of one year or less to hedge its exposure to changes in foreign currency exchange rates. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss (AOCL) in the statement of shareowners’ equity and is recognized in operating income when the underlying forecasted transaction impacts earnings.

Foreign currency option contracts — The company uses option contracts to mitigate foreign currency exposure on expected future Indian Rupee denominated purchases. The contracts were entered into during April 2014 with effective dates from the start of fiscal year 2015 through the end of fiscal year 2016. In February 2015, the company monetized its outstanding foreign currency option contracts and entered into a new series of foreign currency option contracts with effective dates from the start of the third quarter of fiscal year 2015 through the end of fiscal year 2017. In the second quarter of fiscal year 2015, the company recognized a net gain of $3 million associated with the settlement and repurchase of the foreign currency option contracts. The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the consolidated statement of operations.

The company generally does not hedge against its foreign currency exposure related to translations to U.S. dollars of financial results denominated in foreign currencies. In November 2014, the company entered into a series of foreign currency option contracts with a total notional amount of $48 million to reduce volatility in the translation of Brazilian Real earnings to U.S. dollars. These foreign currency option contracts do not qualify for a hedge accounting election but are expected to mitigate foreign currency translation exposure of Brazilian Real earnings to U.S. dollars. In the second quarter of fiscal year 2015, the company monetized these outstanding foreign currency option contracts and entered into a new series of foreign currency option contracts with effective dates from the start of the third quarter of fiscal year 2015 through the end of fiscal year 2015. In the second quarter of fiscal year 2015, the company recognized a net gain of $3 million associated with the settlement and repurchase of these foreign currency option contracts. The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. Changes in fair value associated with these contracts are recorded in other income (expense), net, in the consolidated statement of operations.

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Long-Term Debt (Details) (USD $)	Mar. 31, 2015		Feb. 28, 2015	Sep. 30, 2014
Debt Instrument [Line Items]
Capital lease obligation	$ 22,000,000			$ 26,000,000
Long-term debt and capital lease obligations	950,000,000			972,000,000
Less: current maturities	(5,000,000)			(7,000,000)
Long-term debt	945,000,000			965,000,000
4.625 percent convertible notes due 2026 | Convertible Notes Payable
Debt Instrument [Line Items]
Debt	55,000,000	[1]		55,000,000	[1]
Interest rate	4.625%			4.625%
4.0 percent convertible notes due 2027 | Convertible Notes Payable
Debt Instrument [Line Items]
Debt	147,000,000	[1]		162,000,000	[1]
Interest rate	4.00%		4.00%	4.00%
7.875 percent convertible notes due 2026 (net of issuance discount of $20 and $21, respectively) | Convertible Notes Payable
Debt Instrument [Line Items]
Debt	230,000,000	[1]		229,000,000	[1]
Unamortized discount	(20,000,000)			(21,000,000)
Interest rate	7.875%			7.875%
6.75 percent notes due 2021
Debt Instrument [Line Items]
Debt	275,000,000	[2]		275,000,000	[2]
Interest rate	6.75%			6.75%
6.25 percent notes due 2024
Debt Instrument [Line Items]
Debt	225,000,000	[2]		225,000,000	[2]
Interest rate	6.25%			6.25%
Export financing arrangements
Debt Instrument [Line Items]
Debt	22,000,000			31,000,000
Unamortized discount on convertible notes
Debt Instrument [Line Items]
Unamortized discount	$ (26,000,000)			$ (31,000,000)

[1] The 4.625 percent, 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016, 2019 and 2020, respectively.

[2] The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption

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CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (Unaudited) (USD $) In Millions, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock	Accumulated Other Comprehensive Loss	Total Deficit Attributable to Meritor, Inc.	Noncontrolling Interests
Beginning balance at Sep. 30, 2013	$ (822)	$ 97	$ 914	$ (1,127)	$ 0	$ (734)	$ (850)	$ 28
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	38			12		22	34	4
Equity based compensation expense	3		3				3
Noncontrolling interest dividends	(1)							(1)
Ending Balance at Mar. 31, 2014	(782)	97	917	(1,115)	0	(712)	(813)	31
Beginning balance at Sep. 30, 2014	(585)	97	918	(878)	0	(749)	(612)	27
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	28			72		(44)	28	0
Equity based compensation expense	5		5				5
Vesting of restricted stock	0	2	(2)
Repurchase of convertible notes	(2)		(2)				(2)
Repurchase of common stock	(16)				(16)		(16)
Noncontrolling interest dividends	(1)							(1)
Other equity adjustments	1		1				1
Ending Balance at Mar. 31, 2015	$ (570)	$ 99	$ 920	$ (806)	$ (16)	$ (793)	$ (596)	$ 26

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 43	$ 3	$ 73	$ 16
Foreign currency translation adjustments:
Attributable to Meritor, Inc.	(33)	10	(67)	0
Attributable to noncontrolling interest	0	0	(1)	0
Other reclassification adjustment	0	0	1	0
Pension and other postretirement benefit related adjustments	11	10	23	20
Unrealized gain (loss) on investments and foreign exchange contracts	0	2	(1)	2
Other comprehensive income (loss), net of tax	(22)	22	(45)	22
Total comprehensive income	21	25	28	38
Less: Comprehensive income attributable to noncontrolling interest	0	(2)	0	(4)
Comprehensive income attributable to Meritor, Inc.	$ 21	$ 23	$ 28	$ 34

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Inventories

6 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Finished goods	$	142	$	146
Work in process	30		36
Raw materials, parts and supplies	193		197
Total	$	365	$	379

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Subsequent Events (Details) (Subsequent Event, USD $) In Millions, unless otherwise specified	0 Months Ended
	Apr. 14, 2015 position	Apr. 29, 2015 position
Facility Closing
Subsequent Event [Line Items]
Expected number of positions eliminated	40
Expected restructuring cost	$ 3
Commercial Truck & Industrial | South America Labor Reductions | Hourly Positions | Employee Termination Benefits
Subsequent Event [Line Items]
Expected number of positions eliminated		233
Commercial Truck & Industrial | South America Labor Reductions | Salaried Position
Subsequent Event [Line Items]
Expected restructuring cost		9
Commercial Truck & Industrial | South America Labor Reductions | Salaried Position | Employee Termination Benefits
Subsequent Event [Line Items]
Expected number of positions eliminated		21

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DOCUMENT AND ENTITY INFORMATION	6 Months Ended
	Mar. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	MERITOR INC
Entity Central Index Key	0001113256
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Trading Symbol	MTOR
Entity Common Stock, Shares Outstanding	97,637,773
Document Period End Date	Mar. 31, 2015
Document Type	10-Q
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015
Amendment Flag	false

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Other Current Assets

6 Months Ended

Mar. 31, 2015

Other Current Assets Disclosure [Abstract]

Other Current Assets

Other Current Assets

Other current assets are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Current deferred income tax assets	$	18	$	21
Asbestos-related recoveries (see Note 19)	14		15
Deposits and collateral	2		4
Prepaid and other	21		16
Other current assets	$	55	$	56

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Shareowners' Equity - Equity and Equity-Linked Repurchase Authorization (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2015	Sep. 30, 2014	Jun. 30, 2014	Feb. 28, 2015
Class of Stock [Line Items]
Shares of common stock repurchased	1.2
Repurchase of common stock	$ 16,000,000	$ 16,000,000
Equity and Equity-Linked Securities (Including Convertible Debt Securities) | M2016 Strategy
Class of Stock [Line Items]
Authorized repurchase of securities			40,000,000	210,000,000
Convertible Notes Payable | 4.0 percent convertible notes due 2027
Class of Stock [Line Items]
Principal amount of convertible notes repurchased	15,000,000	15,000,000			15,000,000
Interest rate	4.00%	4.00%	4.00%		4.00%
Repurchase amount, debt	16,000,000	16,000,000
Remaining authorized repurchase amount available	$ 179,000,000	$ 179,000,000

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2015	Sep. 30, 2014
Condensed Financial Statements, Captions [Line Items]
Company's overall ownership, as a percentage		100.00%
Threshold for reporting consolidating financial statements		25.00%
Amount of restricted net assets for consolidated and unconsolidated subsidiaries		$ 31
Parent
Condensed Financial Statements, Captions [Line Items]
Pension and retiree medical benefit obligations		662	684
Cash dividends paid to the Parent	5	37
Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Debt and capital lease obligations		$ 42	$ 55

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CONDENSED CONSOLIDATED BALANCE SHEET (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
ASSETS
Cash and cash equivalents	$ 207	$ 247
Receivables, trade and other, net	545	610
Inventories	365	379
Other current assets	55	56
TOTAL CURRENT ASSETS	1,172	1,292
NET PROPERTY	387	424
GOODWILL	414	431
OTHER ASSETS	344	355
TOTAL ASSETS	2,317	2,502
LIABILITIES AND EQUITY (DEFICIT)
Short-term debt	5	7
Accounts and notes payable	618	680
Other current liabilities	281	351
TOTAL CURRENT LIABILITIES	904	1,038
LONG-TERM DEBT	945	965
RETIREMENT BENEFITS	737	775
OTHER LIABILITIES	301	309
TOTAL LIABILITIES	2,887	3,087
COMMITMENTS AND CONTINGENCIES (See Note 19)
EQUITY (DEFICIT):
Common stock (March 31, 2015 and September 30, 2014, 97.6 and 97.8 shares issued and outstanding, respectively)	99	97
Additional paid-in capital	920	918
Accumulated deficit	(806)	(878)
Treasury stock, at cost (March 31, 2015 and September 30, 2014, 1.2 and 0.0 shares, respectively)	(16)	0
Accumulated other comprehensive loss	(793)	(749)
Total deficit attributable to Meritor, Inc.	(596)	(612)
Noncontrolling interests	26	27
TOTAL DEFICIT	(570)	(585)
TOTAL LIABILITIES AND DEFICIT	$ 2,317	$ 2,502

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Goodwill

6 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

In accordance with FASB Accounting Standards Codification (ASC) Topic 350-20, “Intangibles - Goodwill and Other”, goodwill is reviewed for impairment annually during the fourth quarter of the fiscal year or more frequently if certain indicators arise. If business conditions or other factors cause the operating results and cash flows of a reporting unit to decline, the company may be required to record impairment charges for goodwill at that time. Given that the company’s primary military program is winding down, failure to secure new military contracts could result in a significant decline in the projected cash flows of the Defense reporting unit, which could require the company to impair goodwill. The Defense reporting unit is included within the Commercial Truck & Industrial segment and has $20 million of goodwill allocated to it.

The company tests goodwill for impairment at a level of reporting referred to as a reporting unit, which is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. When two or more components of an operating segment have similar economic characteristics, the components are aggregated and deemed a single reporting unit. An operating segment is deemed to be a reporting unit if all of its components are similar, if none of its components are a reporting unit, or if the segment comprises only a single component.

A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions):

	Commercial Truck & Industrial			Aftermarket & Trailer			Total
Beginning balance at September 30, 2014	$	261		$	170		$	431
Foreign currency translation	(9		)	(8		)	(17		)
Balance at March 31, 2015	$	252		$	162		$	414

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Discontinued Operations

6 Months Ended

Mar. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Results of discontinued operations are summarized as follows (in millions):

	Three Months Ended March 31,					Six Months Ended March 31,
	2015		2014			2015		2014
Sales	$	—	$	8		$	1	$	15
Income (loss) before income taxes	$	3	$	(4	)	$	—	$	(6	)
Benefit from income taxes	1		4			1		5
Income (loss) from discontinued operations attributable to Meritor, Inc.	$	4	$	—		$	1	$	(1	)

Total discontinued operations assets as of March 31, 2015 and September 30, 2014 were $7 million and $8 million, respectively, and total discontinued operations liabilities as of March 31, 2015 and September 30, 2014 were $13 million and $21 million, respectively.

Income from discontinued operations attributable to the company for the three and six months ended March 31, 2015 were primarily attributable to the settlement of indemnities on certain contingencies of previously divested businesses.

Mascot Divestiture

In the fourth quarter of fiscal year 2014, the company disposed of its Mascot business which was part of the company’s Aftermarket & Trailer segment. The results of operations and cash flows of the company’s Mascot business are presented in discontinued operations in the condensed consolidated statements of operations and condensed consolidated statement of cash flows, and prior period information has been recast to reflect this presentation.

Sales for the three and six months ended March 31, 2014, were related to the company’s former Mascot business.

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Long-Term Debt

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

     Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions):

	March 31, 2015			September 30, 2014
4.625 percent convertible notes due 2026 (1)	55			55
4.0 percent convertible notes due 2027 (1)	147			162
7.875 percent convertible notes due 2026(net of issuance discount of $20 and $21, respectively) (1)	230			229
6.75 percent notes due 2021 (2)	275			275
6.25 percent notes due 2024 (2)	225			225
Capital lease obligation	22			26
Export financing arrangements	22			31
Unamortized discount on convertible notes	(26		)	(31		)
Subtotal	950			972
Less: current maturities	(5		)	(7		)
Long-term debt	$	945		$	965

⁽¹⁾ The 4.625 percent, 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016, 2019 and 2020, respectively.

⁽²⁾ The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption.

Revolving Credit Facility

On February 13, 2014, the company amended and restated its senior secured revolving credit facility. Pursuant to the revolving credit agreement as amended, the company has a $499 million revolving credit facility, $89 million of which matures in April 2017 for banks not electing to extend their commitments under the revolving credit facility, and $410 million of which matures in February 2019. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants as highlighted below.

The availability under the revolving credit facility is subject to certain financial covenants based on (i) the ratio of the company’s priority debt (consisting principally of amounts outstanding under the revolving credit facility, U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA and (ii) the amount of annual capital expenditures. The company is required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement.

The availability under the revolving credit facility is also subject to a collateral test, pursuant to which borrowings on the revolving credit facility cannot exceed 1.0x the collateral test value. The collateral test is performed on a quarterly basis. At March 31, 2015, the revolving credit facility was collateralized by approximately $622 million of the company's assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and the company's investment in all or a portion of certain of its wholly-owned subsidiaries.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin and a commitment fee on undrawn amounts, both of which are based upon the company’s current corporate credit rating. At March 31, 2015, the margin over LIBOR rate was 325 basis points and the commitment fee was 50 basis points. Overnight revolving credit loans are at the prime rate plus a margin of 225 basis points.

Certain of the company’s subsidiaries, as defined in the revolving credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly held notes outstanding under the company’s indentures (see Note 22).

No borrowings were outstanding under the revolving credit facility at March 31, 2015 and September 30, 2014. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At March 31, 2015 and September 30, 2014, there were no letters of credit outstanding under the revolving credit facility.

Debt Securities

In December 2014, the company filed a shelf registration statement with the Securities and Exchange Commission, registering an unlimited amount of debt and/or equity securities that the company may offer in one or more offerings on terms to be determined at the time of sale. The December 2014 shelf registration statement superseded and replaced the shelf registration statement filed in February 2012, as amended.

Issuance of Debt Securities - 2024 Notes

On February 13, 2014 the company completed an offering of debt securities consisting of the issuance of $225 million principal amount of 10-year, 6.25 percent notes due February 15, 2024 (the "2024 Notes"). The offering and sale were made pursuant to the company's February 2012 shelf registration statement. The 2024 Notes were issued under the company's indenture dated as of April 1, 1998, as supplemented. The 2024 Notes were issued at 100 percent of their principal amount. The proceeds from the sale of the 2024 Notes were $225 million and, together with cash on hand, were primarily used to repurchase the company’s previously outstanding $250 million10.625 percent notes due 2018.

The 2024 Notes bear interest at a fixed rate of 6.25 percent per annum. The company pays interest on the 2024 Notes semi-annually, in arrears, on February 15 and August 15 of each year. The 2024 Notes constitute senior unsecured obligations of the company and rank equally in right of payment with existing and future senior unsecured indebtedness, and effectively junior to existing and future secured indebtedness to the extent of the security therefor. The 2024 Notes are guaranteed on a senior unsecured basis by each of the company's subsidiaries from time to time guaranteeing its senior secured credit facility. The guarantees rank equally with existing and future senior unsecured indebtedness of the guarantors and will be effectively subordinated to all of the existing and future secured indebtedness of the guarantors, to the extent of the value of the assets securing such indebtedness.

Prior to February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at a redemption price equal to 100 percent of the principal amount of the 2024 Notes to be redeemed plus an applicable premium (as defined in the indenture under which the 2024 Notes were issued) and any accrued and unpaid interest. On or after February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2024 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on February 15 of the years indicated below:

Year	Redemption Price
2019	103.125%
2020	102.083%
2021	101.042%
2022 and thereafter	100.000%

Prior to February15, 2017, the company may redeem, at its option, from time to time, up to 35 percent of the aggregate principal amount of the 2024 Notes with the net cash proceeds of one or more public sales of the company's common stock at a redemption price equal to 106.25 percent of the principal amount, plus accrued and unpaid interest, if any, provided that at least 65 percent of the aggregate principal amount of 2024 Notes originally issued remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock.

If a Change of Control (as defined in the indenture under which the 2024 Notes were issued) occurs, unless the company has exercised its right to redeem the 2024 Notes, each holder of 2024 Notes may require the company to repurchase some or all of such holder's 2024 Notes at a purchase price equal to 101 percent of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest, if any.

Repurchase of Debt Securities

In February 2015, the company repurchased $15 million principal amount of the 4.0 percent convertible notes due February 15, 2027. The notes were purchased at a premium equal to 6 percent of their principal amount. The repurchase of the $15 million principal amount of the company's 4.0 percent convertible notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $1 million. The net loss on debt extinguishment is included in interest expense, net in the consolidated statement of operations. The repurchase was made under the company's equity and equity-linked repurchase authorization program.

On March 15, 2014, the company completed the redemption of its 10.625 percent notes due March 15, 2018. The notes were redeemed at a premium equal to 5.313 percent of their principal amount. The repurchase of $250 million of 10.625 percent notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $19 million, which consisted of $6 million of unamortized discount and deferred issuance costs and $13 million of premium. The net loss on debt extinguishment is included in interest expense, net in the consolidated statement of operations.

Capital Leases

On March 20, 2012, the company entered into an arrangement to finance equipment acquisitions for various U.S. locations. Under this arrangement, the company can request financing from GE Capital Commercial, Inc. (GE Capital) for progress payments for equipment under construction, not to exceed $10 million at any time. The financing rate is equal to the 30-day LIBOR plus 475 basis points per annum. Under this arrangement, the company can also enter into lease arrangements with GE Capital for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points. The company had $12 million and $13 million outstanding under this capital lease arrangement as of March 31, 2015 and September 30, 2014, respectively. In addition, the company had another $10 million and $13 million outstanding through other capital lease arrangements at March 31, 2015 and September 30, 2014, respectively.

Letter of Credit Facilities

On February 21, 2014, the company entered into an arrangement to amend and restate the letter of credit facility with Citicorp USA, Inc., as administrative agent and issuing bank, and the other lenders party thereto. Under the terms of this amended credit agreement, the company has the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $30 million through December 19, 2015. From December 20, 2015 through March 19, 2019, the aggregate availability is $25 million. This facility contains covenants and events of default generally similar to those existing in the company’s public debt indentures. There were $25 million of letters of credit outstanding under this facility at March 31, 2015 and September 30, 2014. In addition, the company had another $6 million and $9 million of letters of credit outstanding through other letter of credit facilities at March 31, 2015 and September 30, 2014, respectively.

Export financing arrangements

The company entered into a number of export financing arrangements through its Brazilian subsidiary during fiscal year 2014.  The export financing arrangements are issued under an incentive program of the Brazilian government to fund working capital for Brazilian companies in exportation programs.  The arrangements bear interest at 5.5 percent and have maturity dates in 2016 and 2017. There were $22 million and $29 million outstanding under these arrangements at March 31, 2015 and September 30, 2014, respectively. In addition, the company had another $2 million outstanding under a similar arrangement through its India subsidiary at September 30, 2014, which had no outstanding balance at March 31, 2015.

Other

One of the company's consolidated joint ventures in China participates in a bills of exchange program to settle its obligations with its trade suppliers. These programs are common in China and generally require the participation of local banks. Under these programs, the company's joint venture issues notes payable through the participating banks to its trade suppliers. If the issued notes payable remain unpaid on their respective due dates, this could constitute an event of default under the company’s revolving credit facility if the defaulted amount exceeds $35 million per bank. As of March 31, 2015 and September 30, 2014, the company had $20 million and $32 million, respectively, outstanding under this program at more than one bank.

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Net Property

6 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Net Property

Net Property

Net property is summarized as follows (in millions):

	March 31, 2015			September 30, 2014
Property at cost:
Land and land improvements	$	32		$	34
Buildings	219			236
Machinery and equipment	860			906
Company-owned tooling	137			155
Construction in progress	49			66
Total	1,297			1,397
Less accumulated depreciation	(910		)	(973		)
Net property	$	387		$	424

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Business Segment Information (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Mar. 31, 2015		Mar. 31, 2014		Mar. 31, 2015		Mar. 31, 2014
Segment Reporting Information [Line Items]
Segment EBITDA	$ 87		$ 81	[1]	$ 168		$ 155
Unallocated legacy and corporate costs, net	0	[2]	(1)	[1],[2]	(2)	[2]	(3)	[2]
Interest expense, net	(21)		(48)	[1]	(40)		(75)
Provision for income taxes	(6)		(8)	[1]	(13)		(19)
Depreciation and amortization	(17)		(17)	[1]	(32)		(33)
Noncontrolling interests	0		(2)	[1]	(1)		(4)
Loss on sale of receivables	(1)		(2)	[1]	(3)		(5)
Restructuring costs	(3)		(2)	[1]	(6)		(3)
Income (loss) from continuing operations attributable to Meritor, Inc.	39		1	[1]	71		13
Commercial Truck & Industrial
Segment Reporting Information [Line Items]
Segment EBITDA	57		57	[1]	113		110
Aftermarket & Trailer
Segment Reporting Information [Line Items]
Segment EBITDA	$ 30		$ 24	[1]	$ 55		$ 45

[1] Amounts for prior periods have been recast for discontinued operations.

[2] 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, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability.

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Accounts Receivable Factoring and Securitization

6 Months Ended

Mar. 31, 2015

Accounts Receivable Securitization and Factoring Disclosure [Abstract]

Accounts Receivable Factoring and Securitization

Accounts Receivable Factoring and Securitization

Off-balance sheet arrangements 

Swedish Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo through one of its European subsidiaries. Under this arrangement, which terminates on June 28, 2015, the company can sell up to, at any point in time, €150 million ($163 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €117 million ($128 million) and €99 million ($127 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively.

U.S. Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its subsidiaries. Under this arrangement, which terminates on October 29, 2015, the company can sell up to, at any point in time, €65 million ($71 million) of eligible trade receivables. In December 2014, the company amended this agreement to allow for the sale of trade receivables to exceed Nordea Bank’s commitment at Nordea Bank’s discretion. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €78 million ($85 million) and €64 million ($81 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively. As of the end of the second quarter of fiscal year 2015, the company had utilized more than the committed eligible trade receivable amount of $71 million based on approval from the bank.

     The above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through September 2015. The commitments are subject to standard terms and conditions for these types of arrangements.

   United Kingdom Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement, which expires in February 2018, the company can sell up to, at any point in time, €25 million ($27 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €6 million ($6 million) and €6 million ($7 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program.

Italy Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement, which expires in June 2017, the company can sell up to, at any point in time, €30 million ($33 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €16 million ($18 million) and €8 million ($10 million) of this accounts receivable factoring facility as of March 31, 2015 and September 30, 2014, respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program.

     In addition, several of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the condensed consolidated balance sheet. The amount of factored receivables excluded from accounts receivable was $17 million and $19 million at March 31, 2015 and September 30, 2014, respectively.

     Total costs associated with all of the off-balance sheet arrangements described above were $1 million and $2 million in the three months ended March 31, 2015 and 2014, respectively, and $3 million and $5 million in the six months ended March 31, 2015 and 2014, respectively, and are included in selling, general and administrative expenses in the condensed consolidated statement of operations.

On-balance sheet arrangements

The company has a $100 million U.S. accounts receivables securitization facility. On October 15, 2014, the company entered into an amendment which extends the facility expiration date to October 15, 2017 and sets the maximum permitted priority-debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility at 2.25 to 1.00. This program is provided by PNC Bank, National Association, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents from time to time (participating lenders), which are party to the agreement. Under this program, the company has the ability to sell an undivided percentage ownership interest in substantially all of its trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. accounts receivable factoring facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for the company’s U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the condensed consolidated balance sheet. At March 31, 2015 and September 30, 2014 , no amounts, including letters of credit, were outstanding under this program. This program contains a cross-default to the revolving credit facility. At certain times during any given month, the company may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, the company would then typically utilize the cash received from customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, the company may borrow under this program in amounts exceeding the amounts shown as outstanding at fiscal quarter ends.

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Inventories (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Inventory Disclosure [Abstract]
Finished goods	$ 142	$ 146
Work in process	30	36
Raw materials, parts and supplies	193	197
Total	$ 365	$ 379

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Restructuring Costs

6 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring Costs

Restructuring Costs

     At March 31, 2015 and September 30, 2014,$12 million and $11 million, respectively, of restructuring reserves, primarily related to unpaid employee termination benefits, remained in the consolidated balance sheet. The changes in restructuring reserves for the six months ended March 31, 2015 and 2014 are as follows (in millions):

	Employee Termination Benefits			Asset Impairment		Plant Shutdown & Other		Total
Beginning balance at September 30, 2014	$	11		$	—	$	—	$	11
Activity during the period:
Charges to continuing operations	6			—		—		6
Cash payments – continuing operations	(3		)	—		—		(3		)
Other	(2		)	—		—		(2		)
Total restructuring reserves at March 31, 2015	12			—		—		12
Less: non-current restructuring reserves	(2		)	—		—		(2		)
Restructuring reserves – current, at March 31, 2015	$	10		$	—	$	—	$	10
Balance at September 30, 2013	$	12		$	—	$	—	$	12
Activity during the period:
Charges to continuing operations	3			—		—		3
Cash payments – continuing operations	(4		)	—		—		(4		)
Other	(1		)	—		—		(1		)
Total restructuring reserves at March 31, 2014	10			—		—		10
Less: non-current restructuring reserves	(3		)	—		—		(3		)
Restructuring reserves – current, at March 31, 2014	$	7		$	—	$	—	$	7

Closure of a Corporate Engineering Facility: In the second quarter of fiscal year 2015, the company notified 33 salaried and contract employees that their positions were being eliminated due to the planned closure of a corporate engineering facility. The company recorded severance expenses of $1 million associated with this plan. The company expects to incur approximately $2 million in lease termination and other exit costs in North America associated with this closure. Restructuring actions associated with this program are expected to be completed by the end of fiscal year 2015.

European Labor Reduction: During the second quarter of fiscal year 2015, the company initiated a European headcount reduction plan intended to reduce labor costs in response to continued soft markets in the region. The company plans to eliminate 21 hourly and 23 salaried positions and has recorded $2 million of expected severance expenses in the Commercial Truck & Industrial segment in the second quarter of fiscal year 2015. The company plans to incur an additional $1 million in severance costs by the end of the third quarter of fiscal year 2015.

M2016 Actions: The company continues to implement certain footprint actions as part of its M2016 strategy. In the first quarter of fiscal year 2015, the company recorded expected severance charges of $3 million associated with the elimination of 51 hourly and 19 salaried positions in the Commercial Truck & Industrial segment associated with the consolidation of certain gearing and machining operations in North America.

South America Labor Reduction: During the fourth quarter of fiscal year 2014, the company initiated a South America headcount reduction plan intended to reduce labor costs in response to decreasing production volumes in the region. The company eliminated approximately 190 hourly and 20 salaried positions and incurred $7 million of restructuring costs in the fourth quarter of fiscal year 2014, primarily severance benefits, in the Commercial Truck & Industrial segment.

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Income Taxes

6 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For each interim reporting period, the company makes an estimate of the effective tax rate expected to be applicable for the full fiscal year pursuant to FASB ASC Topic 740-270, “Accounting for Income Taxes in Interim Periods.” The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

Income tax expense (benefit) is allocated between continuing operations, discontinued operations and other comprehensive income (OCI). Such allocation is applied by tax jurisdiction, and in periods in which there is a pre-tax loss from continuing operations and pre-tax income in another category, such as discontinued operations or OCI, income tax expense is allocated to the other sources of income, with a related benefit recorded in continuing operations.

For the first six months of fiscal year 2015, the company had approximately $36 million of net pre-tax income compared to a net pre-tax loss of $34 million in the first six months of fiscal year 2014 in tax jurisdictions in which tax expense (benefit) is not recorded. Income or losses arising from these jurisdictions resulted in an adjustment to the valuation allowance, rather than an adjustment to income tax expense. If, in the future, the company is generating taxable income on a sustained basis in jurisdictions where it has recorded valuation allowances, the company's conclusion regarding the need for valuation allowances in these jurisdictions could change. This would result in a reversal of some or all of the valuation allowances.

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Operating Cash Flow

6 Months Ended

Mar. 31, 2015

Operating Cash Flow Disclosure [Abstract]

Operating Cash Flow

Operating Cash Flow

The reconciliation of net income to cash flows provided by operating activities is as follows (in millions):

	Six Months Ended March 31,
	2015			2014
OPERATING ACTIVITIES
Net income	$	73		$	16
Less: Income (loss) from discontinued operations, net of tax	1			(1		)
Income from continuing operations	72			17
Adjustments to income from continuing operations to arrive at cash provided by operating activities:
Depreciation and amortization	32			33
Restructuring costs	6			3
Loss on debt extinguishment	1			21
Equity in earnings of affiliates	(18		)	(17		)
Pension and retiree medical expense	14			20
Other adjustments to income from continuing operations	5			5
Dividends received from equity method investments	10			11
Pension and retiree medical contributions	(24		)	(19		)
Restructuring payments	(3		)	(4		)
Changes in off-balance sheet accounts receivable factoring	40			17
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations	(99		)	(60		)
Operating cash flows provided by continuing operations	36			27
Operating cash flows used for discontinued operations	(7		)	(9		)
CASH PROVIDED BY OPERATING ACTIVITIES	$	29		$	18

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Other Assets (Details Textuals) (Equity Method Joint Venture, USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Equity Method Joint Venture
Investments in joint venture	$ 41	$ 43

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Business Segment Information (Details 2) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015		Sep. 30, 2014
Segment Reporting Information [Line Items]
Total assets	$ 2,317		$ 2,502
Less: Accounts receivable sold under off-balance sheet factoring programs	(254)	[1]	(244)	[1]
Commercial Truck & Industrial
Segment Reporting Information [Line Items]
Total assets	1,657		1,755
Aftermarket & Trailer
Segment Reporting Information [Line Items]
Total assets	441		458
Total segment assets
Segment Reporting Information [Line Items]
Total assets	2,098		2,213
Corporate
Segment Reporting Information [Line Items]
Total assets	$ 473	[2]	$ 533	[2]

[1] At March 31, 2015 and September 30, 2014, segment assets include $254 million and $244 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.

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

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Other Current Liabilities (Details 1) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Movement in Standard Product Warranty Accrual [Roll Forward]
Total product warranties – beginning of period	$ 51	$ 57
Accruals for product warranties	7	9
Payments	(9)	(12)
Change in estimates and other	0	3
Total product warranties – end of period	49	57
Less: Non-current product warranties	(26)	(33)	(24)
Product warranties – current	$ 23	$ 24	$ 27

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Other Assets (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Other Assets, Noncurrent [Abstract]
Investments in non-consolidated joint ventures	$ 101	$ 106
Asbestos-related recoveries (see Note 19)	42	45
Unamortized debt issuance costs	27	30
Capitalized software costs, net	26	25
Non-current deferred income tax assets, net	17	15
Assets for uncertain tax positions	5	5
Prepaid pension costs	109	104
Other	17	25
Other assets	$ 344	$ 355

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Goodwill (Tables)

6 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

A summary of the changes in goodwill

A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions):

	Commercial Truck & Industrial			Aftermarket & Trailer			Total
Beginning balance at September 30, 2014	$	261		$	170		$	431
Foreign currency translation	(9		)	(8		)	(17		)
Balance at March 31, 2015	$	252		$	162		$	414

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Earnings per Share (Details Textuals) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended		3 Months Ended		6 Months Ended
	Dec. 01, 2014	Dec. 02, 2013	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Dec. 01, 2014	Sep. 30, 2014	Nov. 07, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Impact of restricted shares, restricted share units and performance share units			1,900,000	2,000,000	2,000,000	1,700,000
Impact of convertible notes			3,000,000	0	2,000,000	0
Performance Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share-based compensation expense						1
Restricted Shares, Restricted Share Units and Performance Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share-based compensation expense			3	1	5
Executive Officer [Member] | Performance Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number or shares issuable per performance share unit	1						1		1
Exercise price	$ 13.74	$ 7.97
Performance period				3 years	3 years
Shares authorized for grant			600,000		600,000			1,800,000
Impact of convertible notes			1,000,000	600,000	800,000	300,000
Executive Officer [Member] | Performance Shares | Minimum
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Performance-based vesting percentage				0.00%	0.00%
Executive Officer [Member] | Performance Shares | Maximum
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Performance-based vesting percentage				200.00%	200.00%
Executive Officer [Member] | Performance Shares | Performance Objective One
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Award vesting rights percentage				50.00%	75.00%
Executive Officer [Member] | Performance Shares | Performance Objective Two
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Award vesting rights percentage				25.00%	25.00%
Executive Officer [Member] | Performance Shares | Performance Objective Three
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Award vesting rights percentage				25.00%
Executive Officer [Member] | Restricted Share Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exercise price	$ 13.74
Shares granted	400,000
Vesting period	3 years
Stock Options, Out-of-the-Money
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of earnings per share				800,000
7.875% Convertible Notes Due 2026 | Convertible Notes Payable
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Interest rate			7.875%		7.875%			7.875%

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Other Current Liabilities

6 Months Ended

Mar. 31, 2015

Other Current Liabilities Disclosure [Abstract]

Other Current Liabilities

Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Compensation and benefits	$	111	$	146
Income taxes	9		8
Taxes other than income taxes	44		50
Accrued interest	15		15
Product warranties	23		27
Environmental reserves (see Note 19)	9		12
Restructuring (see Note 6)	10		9
Asbestos-related liabilities (see Note 19)	17		17
Indemnity obligations (see Note 19)	2		11
Other	41		56
Other current liabilities	$	281	$	351

The company records estimated product warranty costs at the time of shipment of products to customers. Warranty reserves are primarily based on factors that include past claims experience, sales history, product manufacturing and engineering changes and industry developments. Liabilities for product recall campaigns are recorded at the time the company’s obligation is probable and can be reasonably estimated. Policy repair actions to maintain customer relationships are recorded as other liabilities at the time an obligation is probable and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability.

A summary of the changes in product warranties is as follows (in millions):

	Six Months Ended March 31,
	2015			2014
Total product warranties – beginning of period	$	51		$	57
Accruals for product warranties	7			9
Payments	(9		)	(12		)
Change in estimates and other	—			3
Total product warranties – end of period	49			57
Less: Non-current product warranties	(26		)	(33		)
Product warranties – current	$	23		$	24

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Contingencies

6 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Environmental

     Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties.

     The company has been designated as a potentially responsible party at nine Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Management estimates the total reasonably possible costs the company could incur for the remediation of Superfund sites at March 31, 2015 to be approximately $17 million, of which $2 million is probable and recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators.

     In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at March 31, 2015 to be approximately $32 million, of which $14 million is probable and recorded as a liability.

     Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 0.50 to 2.50 percent and is approximately $8 million at March 31, 2015. The undiscounted estimate of these costs is approximately $9 million.

     The following are the components of the Superfund and non-Superfund environmental reserves (in millions):

	Superfund Sites		Non-Superfund Sites			Total
Beginning balance at September 30, 2014	$	2	$	17		$	19
Payments and other	—		(3		)	(3		)
Accruals	—		—			—
Balance at March 31, 2015	$	2	$	14		$	16

Environmental reserves are included in Other Current Liabilities (see Note 14) and Other Liabilities (see Note 15) in the condensed consolidated balance sheet.

     The actual amount of costs or damages for which the company may be held responsible could materially exceed the foregoing estimates because of uncertainties, including the financial condition of other potentially responsible parties, the success of the remediation, discovery of new contamination and other factors that make it difficult to predict actual costs accurately. However, based on management’s assessment, after consulting with outside advisors that specialize in environmental matters, and subject to the difficulties inherent in estimating these future costs, the company believes that its expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on the company’s business, financial condition or results of operations. In addition, in future periods, new laws and regulations, changes in remediation plans, advances in technology and additional information about the ultimate clean-up remedies could significantly change the company’s estimates. Management cannot assess the possible effect of compliance with future requirements.

Asbestos

MaremontCorporation (“Maremont”), a subsidiary of Meritor, manufactured friction products containing asbestos from 1953 through 1977, when it sold its friction product business. Arvin Industries, Inc., a predecessor of the company, acquired Maremont in 1986. Maremont and many other companies are defendants in suits brought by individuals claiming personal injuries as a result of exposure to asbestos-containing products.

Maremont had approximately 5,600 and 5,700 pending asbestos-related claims at March 31, 2015 and September 30, 2014, respectively. Although Maremont has been named in these cases, in the cases where actual injury has been alleged, very few claimants have established that a Maremont product caused their injuries. Plaintiffs’ lawyers often sue dozens or even hundreds of defendants in individual lawsuits, seeking damages against all named defendants irrespective of the disease or injury and irrespective of any causal connection with a particular product. For these reasons, the total number of claims filed is not necessarily the most meaningful factor in determining Maremont's asbestos-related liability.

     Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Pending and future claims	$	73	$	73
Billed but unpaid claims	2		3
Asbestos-related liabilities	$	75	$	76
Asbestos-related insurance recoveries	$	45	$	49

A portion of the asbestos-related recoveries and reserves are included in Other Current Assets and Liabilities, with the majority of the amounts recorded in Other Assets and Liabilities (see Notes 11, 13, 14 and 15).

Pending and Future Claims: Maremont engages Bates White LLC (Bates White), a consulting firm with extensive experience estimating costs associated with asbestos litigation, to assist with determining the estimated cost of resolving pending and future asbestos-related claims that have been, and could reasonably be expected to be, filed against Maremont. Bates White prepares these cost estimates annually in September. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised Maremont that it would be possible to determine an estimate of a reasonable forecast of the cost of the probable settlement and defense costs of resolving pending and future asbestos-related claims, based on historical data and certain assumptions with respect to events that may occur in the future.

     Bates White provided a reasonable and probable estimate that consisted of a range of equally likely possibilities of Maremont's obligation for asbestos personal injury claims over the next ten years of $73 million to $105 million. Management recognized a liability of $73 million as of March 31, 2015 and September 30, 2014 for pending and future claims over the next ten years. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Maremont. Historically, Maremont has recognized incremental insurance receivables associated with recoveries expected for asbestos-related liabilities as the estimate of asbestos-related liabilities for pending and future claim changes. However, Maremont currently expects to exhaust the limits of its settled insurance coverage prior to the end of the ten-year forecasted liability period. Maremont believes it has additional insurance coverage; however, certain carriers have disputed coverage under policies they issued (see "Recoveries" below).

Assumptions: The following assumptions were made by Maremont after consultation with Bates White and are included in their study:

• Pending and future claims were estimated for a ten-year period ending in fiscal year 2024;

• Maremont believes that the litigation environment could change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims will decline for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain;

• On a per claim basis, defense and processing costs for pending and future claims will be at the level consistent with Maremont’s prior experience;

• Potential payments made to claimants from other sources, including other defendants and 524(g) trusts favorably impact Maremont's estimated liability in the future; and

• The ultimate indemnity cost of resolving nonmalignant claims with plaintiffs’ law firms in jurisdictions without an established history with Maremont cannot be reasonably estimated.

Recoveries: Maremont has insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The insurance receivable related to asbestos-related liabilities is $45 million and $49 million as of March 31, 2015 and September 30, 2014, respectively. The receivable is for coverage provided by one insurance carrier based on a coverage in place agreement. Maremont currently expects to exhaust the remaining limits provided by this coverage sometime in the next ten years. Maremont maintained insurance coverage with other insurance carriers that management believes covers indemnity and defense costs. Maremont has incurred liabilities allocable to these policies but has not yet billed these insurance carriers, and no receivable has been recorded for these policies. During fiscal year 2013, Maremont reinitiated a lawsuit against these carriers, seeking a declaration of its rights to insurance for asbestos claims and to facilitate an orderly and timely collection of insurance proceeds. The difference between the estimated liability and insurance receivable is primarily related to exhaustion of settled insurance coverage within the forecasted period and proceeds from settled insurance policies. Certain insurance policies have been settled in cash prior to the ultimate settlement of the related asbestos liabilities. Amounts received from insurance settlements generally reduce recorded insurance receivables.

     The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Maremont could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Maremont in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; Maremont’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the estimation period, the nature of pending and future claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Maremont’s asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations.

Rockwell International ("Rockwell") — ArvinMeritor, Inc. (AM), a subsidiary of Meritor, along with many other companies, has also been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred at the time of the spin-off of the automotive business from Rockwell in 1997. Rockwell had approximately 3,000 and 2,800 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at March 31, 2015 and September 30, 2014, respectively.

A significant portion of the claims do not identify any of Rockwell’s products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell’s products, and past experience has shown that the vast majority of the claimants will likely never identify any of Rockwell’s products. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants. For those claimants who do show that they worked with Rockwell’s products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved and the lack of any impairing medical condition on the part of many claimants.

     The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Pending and future claims	$	48	$	48
Billed but unpaid claims	2		2
Asbestos-related liabilities	$	50	$	50
Asbestos-related insurance recoveries	$	11	$	11

Pending and Future Claims: The company engages Bates White to assist with determining whether it would be possible to estimate the cost of resolving pending and future Rockwell legacy asbestos-related claims that have been, and could reasonably be expected to be, filed against the company. Bates White prepares these cost estimates annually in September. As of September 30, 2014, Bates White provided a reasonable and probable estimate that consisted of a range of equally likely possibilities of Rockwell’s obligation for asbestos personal injury claims over the next ten years of $48 million to $62 million. Management recognized a liability for the pending and future claims over the next ten years of $48 million as of March 31, 2015 and September 30, 2014. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Rockwell.

Assumptions: The following assumptions were made by the company after consultation with Bates White and are included in their study:

• Pending and future claims were estimated for a ten-year period ending in fiscal year 2024;

• The company believes that the litigation environment could change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims will decline for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain;

• On a per claim basis, defense and processing costs for pending and future claims will be at the level consistent with the company's prior experience;

• Potential payments made to claimants from other sources, including other defendants and 524(g) trusts favorably impact the company's estimated liability in the future; and

• The ultimate indemnity cost of resolving nonmalignant claims with plaintiff’s law firms in jurisdictions without an established history with Rockwell cannot be reasonably estimated.

Recoveries: The insurance receivable related to asbestos-related liabilities is $11 million as of each of March 31, 2015 and September 30, 2014. Included in these amounts are insurance receivables of $8 million as of each of March 31, 2015 and September 30, 2014 that are associated with policies in dispute. Rockwell has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for most of these claims. The company has initiated claims against certain of these carriers to enforce the insurance policies, which are in various stages of the litigation process. The company expects to recover some portion of defense and indemnity costs it has incurred to date, over and above self-insured retentions, and some portion of the costs for defending asbestos claims going forward. The amounts recognized for policies in dispute are based on consultation with advisors, status of settlement negotiations with certain insurers and underlying analysis performed by management. The remaining receivable recognized is related to coverage provided by one carrier based on a coverage-in-place insurance arrangement. If the assumptions with respect to the estimation period, the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Rockwell asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations.

Indemnifications

The company has provided indemnifications in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos and employment-related matters, and the periods of indemnification vary in duration.

In December 2005, the company guaranteed a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees. The retirees were former employees of a wholly-owned subsidiary of the company prior to it being acquired by the company. The wholly-owned subsidiary, which was part of the company’s light vehicle aftermarket business, was sold by the company in fiscal year 2006. Prior to May 2009, except as set forth hereinafter, the third party met its obligations to reimburse the other party. In May 2009, the third party filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code requiring the company to recognize its obligations under the guarantee. The company recorded a $28 million liability in fiscal year 2009 for this matter. At March 31, 2015 and September 30, 2014, the remaining estimated liability for this matter was approximately $13 million and $14 million, respectively.

     On January 3, 2011, the company completed the sale of its Body Systems business. The sale agreement contains certain customary representations, warranties and covenants of the seller and the purchaser. The agreement also includes provisions governing post-closing indemnities between the seller and the purchaser for losses arising from specified events. At September 30, 2014, the company had an accrual of $6 million for such indemnities, of which $2 million was for a contingency-related income tax matter, which was included in other liabilities in the accompanying condensed consolidated balance sheet. In the second quarter of fiscal year 2015, the company settled all remaining matters related to the Body Systems business and recorded a net gain, after tax in discontinued operations of $6 million.

In connection with the sale of its interest in MSSC in October 2009, the company provided certain indemnifications to the buyer for its share of potential obligations related to pension funding shortfall, environmental and other contingencies, and valuation of certain accounts receivable and inventories. The company's estimated exposure under these indemnities at March 31, 2015 and September 30, 2014 is approximately $2 million and $5 million, respectively, and is included in other current liabilities and other liabilities in the condensed consolidated balance sheet.

The company is not aware of any other claims or other information that would give rise to material payments under such indemnifications.

Other

As a result of performing ongoing product conformance testing in the ordinary course of business, the company identified a non-safety related, potential product performance issue arising from a defective supplier component. During fiscal year 2013, the company notified all major customers and initiated a sampling campaign. Management estimated the total costs the company could incur for a full campaign to be in the range of $12 million to $20 million, of which $12 million was recorded as a specific warranty contingency reserve. In the fourth quarter of fiscal year 2013, the company received $5 million of non-cash cost recovery from the component supplier. During the second half of fiscal year 2014, the company worked with customers to determine the appropriate next steps. As of September 30, 2014, no field failures were identified during the sampling campaign, and only minor defects were found in a small number of components tested. As a result, in the fourth quarter of fiscal year 2014, the company determined a full campaign to be unnecessary and moved to a fix-as-find approach with an extended warranty, thereby reducing the accrual significantly. As of March 31, 2015 and September 30, 2014, the estimated cost the company could incur for this non-safety related, potential product performance issue was $3 million.

The company identified certain sales transactions for which value added tax was required to be remitted to certain tax jurisdictions for tax years 2008 through 2014. At March 31, 2015 and September 30, 2014, the company’s estimates of the probable liability were $9 million and $11 million, respectively. The decrease in the probable liability is primarily due to the translation effect of foreign exchange rates.

In addition, various lawsuits, claims and proceedings, other than those specifically disclosed in the condensed consolidated financial statements, have been or may be instituted or asserted against the company, relating to the conduct of the company’s business, including those pertaining to product liability, warranty or recall claims, intellectual property, safety and health, contract and employment matters. Although the outcome of other litigation cannot be predicted with certainty, and some lawsuits, claims or proceedings may be disposed of unfavorably to the company, management believes the disposition of matters that are pending will not have a material effect on the company’s business, financial condition, results of operations or cash flows.

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Supplemental Guarantor Condensed Consolidating Financial Statements (Tables)

6 Months Ended

Mar. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Statement Of Income

	Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	418		$	446		$	—		$	864
Subsidiaries	—			31			17			(48		)	—
Total sales	—			449			463			(48		)	864
Cost of sales	(10		)	(380		)	(407		)	48			(749		)
GROSS MARGIN	(10		)	69			56			—			115
Selling, general and administrative	(16		)	(26		)	(15		)	—			(57		)
Restructuring costs	(1		)	—			(2		)	—			(3		)
Other operating income	—			—			—			—			—
OPERATING INCOME (LOSS)	(27		)	43			39			—			55
Other income, net	37			(9		)	(26		)	—			2
Equity in earnings of affiliates	—			8			1			—			9
Interest income (expense), net	(29		)	6			2			—			(21		)
INCOME (LOSS) BEFORE INCOME TAXES	(19		)	48			16			—			45
Provision for income taxes	(1		)	—			(5		)	—			(6		)
Equity income from continuing operations of subsidiaries	59			8			—			(67		)	—
INCOME FROM CONTINUING OPERATIONS	39			56			11			(67		)	39
INCOME FROM DISCONTINUED OPERATIONS, net of tax	4			5			3			(8		)	4
NET INCOME	43			61			14			(75		)	43
Less: Net income attributable to noncontrolling interests	—			—			—			—			—
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	43		$	61		$	14		$	(75	)	$	43

	Three Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	348		$	606		$	—		$	954
Subsidiaries	—			33			15			(48		)	—
Total sales	—			381			621			(48		)	954
Cost of sales	(13		)	(326		)	(545		)	48			(836		)
GROSS MARGIN	(13		)	55			76			—			118
Selling, general and administrative	(23		)	(22		)	(21		)	—			(66		)
Restructuring costs	(1		)	—			(1		)	—			(2		)
OPERATING INCOME (LOSS)	(37		)	33			54			—			50
Other income (loss), net	39			(8		)	(31		)	—			—
Equity in earnings of affiliates	—			6			3			—			9
Interest income (expense), net	(54		)	8			(2		)	—			(48		)
INCOME (LOSS) BEFORE INCOME TAXES	(52		)	39			24			—			11
Provision for income taxes	—			1			(9		)	—			(8		)
Equity income from continuing operations of subsidiaries	53			10			—			(63		)	—
INCOME FROM CONTINUING OPERATIONS	1			50			15			(63		)	3
INCOME FROM DISCONTINUED OPERATIONS, net of tax	—			—			—			—			—
NET INCOME	1			50			15			(63		)	3
Less: Net income attributable to noncontrolling interests	—			—			(2		)	—			(2		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	1		$	50		$	13		$	(63	)	$	1

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	821		$	922		$	—		$	1,743
Subsidiaries	—			61			33			(94		)	—
Total sales	—			882			955			(94		)	1,743
Cost of sales	(24		)	(751		)	(832		)	94			(1,513		)
GROSS MARGIN	(24		)	131			123			—			230
Selling, general and administrative	(34		)	(54		)	(34		)	—			(122		)
Restructuring costs	(1		)	(3		)	(2		)	—			(6		)
Other operating income	—			—			1			—			1
OPERATING INCOME (LOSS)	(59		)	74			88			—			103
Other income, net	37			(9		)	(24		)	—			4
Equity in earnings of affiliates	—			15			3			—			18
Interest income (expense), net	(58		)	13			5			—			(40		)
INCOME (LOSS) BEFORE INCOME TAXES	(80		)	93			72			—			85
Provision for income taxes	(1		)	—			(12		)	—			(13		)
Equity income from continuing operations of subsidiaries	152			53			—			(205		)	—
INCOME FROM CONTINUING OPERATIONS	71			146			60			(205		)	72
INCOME FROM DISCONTINUED OPERATIONS, net of tax	1			2			—			(2		)	1
NET INCOME	72			148			60			(207		)	73
Less: Net income attributable to noncontrolling interests	—			—			(1		)	—			(1		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	72		$	148		$	59		$	(207	)	$	72

	Six Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	657		$	1,197		$	—		$	1,854
Subsidiaries	—			66			29			(95		)	—
Total sales	—			723			1,226			(95		)	1,854
Cost of sales	(26		)	(623		)	(1,077		)	95			(1,631		)
GROSS MARGIN	(26		)	100			149			—			223
Selling, general and administrative	(40		)	(45		)	(40		)	—			(125		)
Restructuring costs	(1		)	—			(2		)	—			(3		)
Other operating expense	—			(1		)	—			—			(1		)
OPERATING INCOME (LOSS)	(67		)	54			107			—			94
Other income (loss), net	39			(8		)	(31		)	—			—
Equity in earnings of affiliates	—			12			5			—			17
Interest income (expense), net	(88		)	17			(4		)	—			(75		)
INCOME (LOSS) BEFORE INCOME TAXES	(116		)	75			77			—			36
Provision for income taxes	—			(1		)	(18		)	—			(19		)
Equity income from continuing operations of subsidiaries	129			48			—			(177		)	—
INCOME FROM CONTINUING OPERATIONS	13			122			59			(177		)	17
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(1		)	(1		)	(1		)	2			(1		)
NET INCOME	12			121			58			(175		)	16
Less: Net income attributable to noncontrolling interests	—			—			(4		)	—			(4		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	12		$	121		$	54		$	(175	)	$	12

Consolidating Statement of Comprehensive Income

	Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
Net income	$	43		$	61		$	14	$	(75	)	$	43
Other comprehensive income (loss)	(22		)	(65		)	27		38			(22		)
Total comprehensive income (loss)	21			(4		)	41		(37		)	21
Less: Comprehensive income attributable to noncontrolling interests	—			—			—		—			—
Comprehensive income (loss) attributable to Meritor, Inc.	$	21		$	(4	)	$	41	$	(37	)	$	21

	Three Months Ended March 31, 2014
	Parent		Guarantors		Non- Guarantors			Elims			Consolidated
Net income	$	1	$	50	$	15		$	(63	)	$	3
Other comprehensive income	22		5		11			(16		)	22
Total comprehensive income	23		55		26			(79		)	25
Less: Comprehensive income attributable to noncontrolling interests	—		—		(2		)	—			(2		)
Comprehensive income attributable to Meritor, Inc.	$	23	$	55	$	24		$	(79	)	$	23

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
Net income	$	72		$	148		$	60	$	(207	)	$	73
Other comprehensive income (loss)	(44		)	(92		)	18		73			(45		)
Total comprehensive income	28			56			78		(134		)	28
Less: Comprehensive income attributable to noncontrolling interests	—			—			—		—			—
Comprehensive income attributable to Meritor, Inc.	$	28		$	56		$	78	$	(134	)	$	28

	Six Months Ended March 31, 2014
	Parent		Guarantors		Non- Guarantors			Elims			Consolidated
Net income	$	12	$	121	$	58		$	(175	)	$	16
Other comprehensive income	22		10		—			(10		)	22
Total comprehensive income	34		131		58			(185		)	38
Less: Comprehensive income attributable to noncontrolling interests	—		—		(4		)	—			(4		)
Comprehensive income attributable to Meritor, Inc.	$	34	$	131	$	54		$	(185	)	$	34

Guarantor Consolidating Balance Sheet

	March 31, 2015
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	99		$	4		$	104	$	—		$	207
Receivables trade and other, net	1			43			501		—			545
Inventories	—			164			201		—			365
Other current assets	9			18			28		—			55
TOTAL CURRENT ASSETS	109			229			834		—			1,172
NET PROPERTY	13			153			221		—			387
GOODWILL	—			278			136		—			414
OTHER ASSETS	76			125			143		—			344
INVESTMENTS IN SUBSIDIARIES	2,230			341			—		(2,571		)	—
TOTAL ASSETS	$	2,428		$	1,126		$	1,334	$	(2,571	)	$	2,317
CURRENT LIABILITIES:
Short-term debt	$	1		$	3		$	1	$	—		$	5
Accounts and notes payable	48			227			343		—			618
Other current liabilities	98			65			118		—			281
TOTAL CURRENT LIABILITIES	147			295			462		—			904
LONG-TERM DEBT	907			9			29		—			945
RETIREMENT BENEFITS	636			—			101		—			737
INTERCOMPANY PAYABLE (RECEIVABLE)	1,287			(1,705		)	418					—
OTHER LIABILITIES	47			211			43		—			301
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.	(596		)	2,316			255		(2,571		)	(596		)
NONCONTROLLING INTERESTS	—			—			26		—			26
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,428		$	1,126		$	1,334	$	(2,571	)	$	2,317

	September 30, 2014
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	71		$	5		$	171	$	—		$	247
Receivables trade and other, net	1			45			564		—			610
Inventories	—			151			228		—			379
Other current assets	9			18			29		—			56
TOTAL CURRENT ASSETS	81			219			992		—			1,292
NET PROPERTY	13			158			253		—			424
GOODWILL	—			277			154		—			431
OTHER ASSETS	75			128			152		—			355
INVESTMENTS IN SUBSIDIARIES	2,185			267			—		(2,452		)	—
TOTAL ASSETS	$	2,354		$	1,049		$	1,551	$	(2,452	)	$	2,502
CURRENT LIABILITIES:
Short-term debt	$	1		$	3		$	3	$	—		$	7
Accounts and notes payable	46			230			404		—			680
Other current liabilities	97			87			167		—			351
TOTAL CURRENT LIABILITIES	144			320			574		—			1,038
LONG-TERM DEBT	916			10			39		—			965
RETIREMENT BENEFITS	656			—			119		—			775
INTERCOMPANY PAYABLE (RECEIVABLE)	1,198			(1,736		)	538		—			—
OTHER LIABILITIES	52			208			49		—			309
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.	(612		)	2,247			205		(2,452		)	(612		)
NONCONTROLLING INTERESTS	—			—			27		—			27
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,354		$	1,049		$	1,551	$	(2,452	)	$	2,502

Guarantor Consolidating Statement Of Cash Flows

	Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$	7		$	10		$	12		$	—	$	29
INVESTING ACTIVITIES
Capital expenditures	(1		)	(10		)	(12		)	—		(23		)
Net investing cash flows provided by discontinued operations	—			1			3			—		4
CASH USED FOR INVESTING ACTIVITIES	(1		)	(9		)	(9		)	—		(19		)
FINANCING ACTIVITIES
Repayment of notes and term loan	(16		)	—			—			—		(16		)
Repurchase of common stock	(16		)									(16		)
Intercompany advances	54			—			(54		)	—		—
Other financing activities	—			(2		)	(4		)	—		(6		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	22			(2		)	(58		)	—		(38		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—			—			(12		)	—		(12		)
CHANGE IN CASH AND CASH EQUIVALENTS	28			(1		)	(67		)	—		(40		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	71			5			171			—		247
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	99		$	4		$	104		$	—	$	207

	Six Months Ended March 31, 2014
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	(30	)	$	8		$	40		$	—	$	18
INVESTING ACTIVITIES
Capital expenditures	(2		)	(11		)	(12		)	—		(25		)
Net investing cash flows provided by discontinued operations	—			—			3			—		3
CASH USED FOR INVESTING ACTIVITIES	(2		)	(11		)	(9		)	—		(22		)
FINANCING ACTIVITIES
Repayment term loan	(308		)	—			—			—		(308		)
Proceeds from debt issuance	225			—			—			—		225
Debt issuance costs	(9		)	—			—			—		(9		)
Intercompany advances	92			—			(92		)	—		—
Other financing activities	—			—			13			—		13
CASH USED FOR FINANCING ACTIVITIES	—			—			(79		)	—		(79		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—			—			(2		)	—		(2		)
CHANGE IN CASH AND CASH EQUIVALENTS	(32		)	(3		)	(50		)	—		(85		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	144			6			168			—		318
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	112		$	3		$	118		$	—	$	233

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Other Current Liabilities (Tables)

6 Months Ended

Mar. 31, 2015

Other Current Liabilities Disclosure [Abstract]

Schedule Of Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Compensation and benefits	$	111	$	146
Income taxes	9		8
Taxes other than income taxes	44		50
Accrued interest	15		15
Product warranties	23		27
Environmental reserves (see Note 19)	9		12
Restructuring (see Note 6)	10		9
Asbestos-related liabilities (see Note 19)	17		17
Indemnity obligations (see Note 19)	2		11
Other	41		56
Other current liabilities	$	281	$	351

Schedule of Product Warranty Liability

A summary of the changes in product warranties is as follows (in millions):

	Six Months Ended March 31,
	2015			2014
Total product warranties – beginning of period	$	51		$	57
Accruals for product warranties	7			9
Payments	(9		)	(12		)
Change in estimates and other	—			3
Total product warranties – end of period	49			57
Less: Non-current product warranties	(26		)	(33		)
Product warranties – current	$	23		$	24

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CONDENSED CONSOLIDATED BALANCE SHEET (PARENTHETICAL) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Balance Sheet Paranthetical [Abstract]
Common stock, shares issued	97.6	97.8
Common stock, shares outstanding	97.6	97.8
Treasury Stock, Shares	1.2	0

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details 2) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2013
CURRENT ASSETS
Cash and cash equivalents	$ 207	$ 247	$ 233	$ 318
Receivables trade and other, net	545	610
Inventories	365	379
Other current assets	55	56
TOTAL CURRENT ASSETS	1,172	1,292
NET PROPERTY	387	424
GOODWILL	414	431
OTHER ASSETS	344	355
INVESTMENTS IN SUBSIDIARIES	0	0
TOTAL ASSETS	2,317	2,502
CURRENT LIABILITIES
Short-term debt	5	7
Accounts and notes payable	618	680
Other current liabilities	281	351
TOTAL CURRENT LIABILITIES	904	1,038
LONG-TERM DEBT	945	965
RETIREMENT BENEFITS	737	775
INTERCOMPANY PAYABLE (RECEIVABLE)	0	0
OTHER LIABILITIES	301	309
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(596)	(612)
NONCONTROLLING INTERESTS	26	27
TOTAL LIABILITIES AND DEFICIT	2,317	2,502
Parent
CURRENT ASSETS
Cash and cash equivalents	99	71	112	144
Receivables trade and other, net	1	1
Inventories	0	0
Other current assets	9	9
TOTAL CURRENT ASSETS	109	81
NET PROPERTY	13	13
GOODWILL	0	0
OTHER ASSETS	76	75
INVESTMENTS IN SUBSIDIARIES	2,230	2,185
TOTAL ASSETS	2,428	2,354
CURRENT LIABILITIES
Short-term debt	1	1
Accounts and notes payable	48	46
Other current liabilities	98	97
TOTAL CURRENT LIABILITIES	147	144
LONG-TERM DEBT	907	916
RETIREMENT BENEFITS	636	656
INTERCOMPANY PAYABLE (RECEIVABLE)	1,287	1,198
OTHER LIABILITIES	47	52
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(596)	(612)
NONCONTROLLING INTERESTS	0	0
TOTAL LIABILITIES AND DEFICIT	2,428	2,354
Guarantors
CURRENT ASSETS
Cash and cash equivalents	4	5	3	6
Receivables trade and other, net	43	45
Inventories	164	151
Other current assets	18	18
TOTAL CURRENT ASSETS	229	219
NET PROPERTY	153	158
GOODWILL	278	277
OTHER ASSETS	125	128
INVESTMENTS IN SUBSIDIARIES	341	267
TOTAL ASSETS	1,126	1,049
CURRENT LIABILITIES
Short-term debt	3	3
Accounts and notes payable	227	230
Other current liabilities	65	87
TOTAL CURRENT LIABILITIES	295	320
LONG-TERM DEBT	9	10
RETIREMENT BENEFITS	0	0
INTERCOMPANY PAYABLE (RECEIVABLE)	(1,705)	(1,736)
OTHER LIABILITIES	211	208
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	2,316	2,247
NONCONTROLLING INTERESTS	0	0
TOTAL LIABILITIES AND DEFICIT	1,126	1,049
Non-Guarantors
CURRENT ASSETS
Cash and cash equivalents	104	171	118	168
Receivables trade and other, net	501	564
Inventories	201	228
Other current assets	28	29
TOTAL CURRENT ASSETS	834	992
NET PROPERTY	221	253
GOODWILL	136	154
OTHER ASSETS	143	152
INVESTMENTS IN SUBSIDIARIES	0	0
TOTAL ASSETS	1,334	1,551
CURRENT LIABILITIES
Short-term debt	1	3
Accounts and notes payable	343	404
Other current liabilities	118	167
TOTAL CURRENT LIABILITIES	462	574
LONG-TERM DEBT	29	39
RETIREMENT BENEFITS	101	119
INTERCOMPANY PAYABLE (RECEIVABLE)	418	538
OTHER LIABILITIES	43	49
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	255	205
NONCONTROLLING INTERESTS	26	27
TOTAL LIABILITIES AND DEFICIT	1,334	1,551
Elims
CURRENT ASSETS
Cash and cash equivalents	0	0	0	0
Receivables trade and other, net	0	0
Inventories	0	0
Other current assets	0	0
TOTAL CURRENT ASSETS	0	0
NET PROPERTY	0	0
GOODWILL	0	0
OTHER ASSETS	0	0
INVESTMENTS IN SUBSIDIARIES	(2,571)	(2,452)
TOTAL ASSETS	(2,571)	(2,452)
CURRENT LIABILITIES
Short-term debt	0	0
Accounts and notes payable	0	0
Other current liabilities	0	0
TOTAL CURRENT LIABILITIES	0	0
LONG-TERM DEBT	0	0
RETIREMENT BENEFITS	0	0
INTERCOMPANY PAYABLE (RECEIVABLE)		0
OTHER LIABILITIES	0	0
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(2,571)	(2,452)
NONCONTROLLING INTERESTS	0	0
TOTAL LIABILITIES AND DEFICIT	$ (2,571)	$ (2,452)

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New Accounting Standards

6 Months Ended

Mar. 31, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Standards

New Accounting Standards

Accounting standards to be implemented

    In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. A strategic shift could include a disposal of: (1) a major geographical area of operations; (2) a major line of business; and (3) a major equity method investment. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2015. The potential impact of this new guidance on its consolidated financial statements is dependent upon future business divestitures. Previous divestitures and amounts currently in discontinued operations will not be impacted.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 merges revenue recognition standards of the FASB and International Accounting Standards Board (IASB). The FASB and IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS) that would: (1) remove inconsistencies and weaknesses in revenue requirements; (2) provide a more robust framework for addressing revenue issues; (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (4) provide more useful information to users of financial statements through improved disclosure requirements; and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The standard is required to be adopted by public business entities in annual periods beginning after December 15, 2016 and interim periods within those annual periods. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2017 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. That is the case when an employee is eligible to retire or otherwise terminate employment before the end of the period in which a performance target (for example, an initial public offering or a profitability target) could be achieved and still be eligible to vest in the award if and when the performance target is achieved. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2015 and interim periods within those annual periods. The company plans to implement this standard in the first quarter of the fiscal year beginning on October 1, 2016 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or are available to be issued). The standard is required to be adopted by public business entities in annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The company plans to implement this standard in the fiscal year beginning October 1, 2016 and currently expects this new guidance to have no impact on the company’s consolidated financial statements.

 In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 changes the presentation of debt issuance costs in the balance sheet by requiring the debt issuance costs to be presented as a direct deduction from the related debt liability, rather than recorded as an asset. The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2015, and interim periods within those annual periods and will need to be applied retrospectively. Early adoption is permitted. The company is currently evaluating the timing of implementation of this standard, with the latest implementation date in the first quarter of the fiscal year beginning October 1, 2016. Debt issuance costs as of March 31, 2015 and September 30, 2014, were $27 million and $30 million, respectively.

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Accounts Receivable Factoring and Securitization (Details)	3 Months Ended		6 Months Ended						6 Months Ended														0 Months Ended
	Mar. 31, 2015 USD ($)	Mar. 31, 2014 USD ($)	Mar. 31, 2015 USD ($)	Mar. 31, 2014 USD ($)	Mar. 31, 2015 Swedish Factoring Facility USD ($)	Mar. 31, 2015 Swedish Factoring Facility EUR (€)	Sep. 30, 2014 Swedish Factoring Facility USD ($)	Sep. 30, 2014 Swedish Factoring Facility EUR (€)	Mar. 31, 2015 U.S Factoring Facility USD ($)	Mar. 31, 2015 U.S Factoring Facility EUR (€)	Sep. 30, 2014 U.S Factoring Facility USD ($)	Sep. 30, 2014 U.S Factoring Facility EUR (€)	Mar. 31, 2015 United Kingdom Factoring Facility USD ($)	Mar. 31, 2015 United Kingdom Factoring Facility EUR (€)	Sep. 30, 2014 United Kingdom Factoring Facility USD ($)	Sep. 30, 2014 United Kingdom Factoring Facility EUR (€)	Mar. 31, 2015 Italy Factoring Facility USD ($)	Mar. 31, 2015 Italy Factoring Facility EUR (€)	Sep. 30, 2014 Italy Factoring Facility USD ($)	Sep. 30, 2014 Italy Factoring Facility EUR (€)	Mar. 31, 2015 Other Factoring Facility USD ($)	Sep. 30, 2014 Other Factoring Facility USD ($)	Oct. 15, 2014 U.S. Securitization Financing Facility	Mar. 31, 2015 U.S. Securitization Financing Facility USD ($)	Sep. 30, 2014 U.S. Securitization Financing Facility USD ($)
Maximum limit for sale of eligible trade receivables					$ 163,000,000	€ 150,000,000			$ 71,000,000	€ 65,000,000			$ 27,000,000	€ 25,000,000			$ 33,000,000	€ 30,000,000
Utilization of accounts receivable factoring facility under arrangement					128,000,000	117,000,000	127,000,000	99,000,000	85,000,000	78,000,000	81,000,000	64,000,000	6,000,000	6,000,000	7,000,000	6,000,000	18,000,000	16,000,000	10,000,000	8,000,000	17,000,000	19,000,000
Liquidity commitment on facilities									364 days	364 days
Costs associated with off balance sheet factoring arrangements	1,000,000	2,000,000	3,000,000	5,000,000
Maximum limit for securitization financing arrangement																								100,000,000
Ratio of total priority debt to EBITDA through period end																							2.25
Outstanding balance under accounts receivable securitization program																								$ 0	$ 0

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Shareowners' Equity (Reclassifications from AOCI) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Mar. 31, 2015		Mar. 31, 2014		Mar. 31, 2015	Mar. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
INCOME FROM CONTINUING OPERATIONS	$ 39		$ 3		$ 72	$ 17
Provision for income taxes	(6)		(8)	[1]	(13)	(19)
NET INCOME	43		3		73	16
Amount Reclassified from Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
NET INCOME			8		25	18
Amount Reclassified from Accumulated Other Comprehensive Income | Employee Benefit Related Adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Prior service costs			(2)			(4)
Actuarial losses	12	[2]	11		24	23
INCOME FROM CONTINUING OPERATIONS	12		9		24	19
Provision for income taxes	0		(1)		0	(1)
NET INCOME	12		8		24	18
Amount Reclassified from Accumulated Other Comprehensive Income | Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other reclassification adjustment					1
INCOME FROM CONTINUING OPERATIONS					1
Provision for income taxes					0
NET INCOME					$ 1

[1] Amounts for prior periods have been recast for discontinued operations.

[2] These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

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Long-Term Debt (Details Textuals) (USD $)	6 Months Ended		0 Months Ended
	Mar. 31, 2015		Mar. 15, 2014	Sep. 30, 2014		Feb. 13, 2014	Feb. 21, 2014	Dec. 20, 2015	Mar. 15, 2015
Debt Instrument [Line Items]
Outstanding capital lease obligations	$ 22,000,000			$ 26,000,000
Financing Arrangements For Capital Leases
Debt Instrument [Line Items]
Maximum amount of progress payments for equipment under construction	10,000,000
Capital Lease Arrangements
Debt Instrument [Line Items]
Capital leases term	60 months
Outstanding capital lease obligations	12,000,000			13,000,000
Other Capital Lease Arrangements
Debt Instrument [Line Items]
Outstanding capital lease obligations	10,000,000			13,000,000
Five-Year Swap Rate | Financing Arrangements For Capital Leases
Debt Instrument [Line Items]
Basis spread on variable rate	5.64%
30-Day LIBOR | Capital Lease Arrangements
Debt Instrument [Line Items]
Basis spread on variable rate	4.75%
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						499,000,000
Borrowings outstanding	0			0
Amount of letters of credit outstanding	0			0
Revolving Credit Facility | Triggering Event One
Debt Instrument [Line Items]
Ratio of total priority debt to EBITDA through period end	2.25
Revolving Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	3.25%
Unused capacity, commitment fee percentage	0.50%
Standby Letters of Credit
Debt Instrument [Line Items]
Maximum limit on the issuance of letters of credit							30,000,000
Amount of letters of credit outstanding	25,000,000			25,000,000
Standby Letters of Credit | Scenario, Forecast
Debt Instrument [Line Items]
Maximum limit on the issuance of letters of credit								25,000,000
Revolving Credit Facility - Amended - Matures In April 2017 | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						89,000,000
Revolving Credit Facility - Amended - Matures In February 2019 | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						410,000,000
Amended Revolving Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum collateral test value	1.0
Value of company assets collateralized	622,000,000
Maximum limit on the issuance of letters of credit	100,000,000
Overnight Revolving Credit Loans | Revolving Credit Facility | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%
6.25 percent notes due 2024
Debt Instrument [Line Items]
Long-term debt outstanding	225,000,000	[1]		225,000,000	[1]
Interest rate	6.25%			6.25%
6.75 percent notes due 2021
Debt Instrument [Line Items]
Long-term debt outstanding	275,000,000	[1]		275,000,000	[1]
Interest rate	6.75%			6.75%
10.625% Notes Due 2018
Debt Instrument [Line Items]
Redemption price, percentage			105.313%
Unamortized discount				3,000,000
10.625% Notes Due 2018 | Financing Arrangement
Debt Instrument [Line Items]
Interest rate									10.625%
Other Borrowings
Debt Instrument [Line Items]
Long-term debt outstanding	22,000,000			31,000,000
Other Letters of Credit Arrangements
Debt Instrument [Line Items]
Amount of letters of credit outstanding	6,000,000			9,000,000
BRAZIL | Export Financing Arrangement | Financing Arrangement
Debt Instrument [Line Items]
Long-term debt outstanding	22,000,000			29,000,000
Interest rate	5.50%
INDIA | Export Financing Arrangement | Financing Arrangement
Debt Instrument [Line Items]
Long-term debt outstanding	0			2,000,000
CHINA | Other Export Financing Arrangements | Notes Payable to Banks
Debt Instrument [Line Items]
Long-term debt outstanding	20,000,000			32,000,000
Debt default, amount	$ 35,000,000

[1] The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption

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Shareowners' Equity

6 Months Ended

Mar. 31, 2015

Equity [Abstract]

Shareowners' Equity

Shareowners' Equity

Equity and Equity-Linked Repurchase Authorization

In June 2014, the company's Board of Directors authorized the repurchase of up to $210 million of its equity and equity-linked securities (including convertible debt securities), subject to the achievement of its M2016 net debt reduction target and compliance with legal and regulatory requirements and its debt covenants. In September 2014, the company's Board authorized the repurchase of up to $40 million of its equity or equity-linked securities (including convertible debt securities) under the $210 million authorization that may be made annually without regard to achievement of the M2016 net debt reduction target. These authorizations have no stated expiration.

The equity and equity-linked securities repurchases are subject to prevailing market conditions and other considerations. Under the program, the company repurchased 1.2 million shares of its common stock for $16 million during the second quarter of fiscal year 2015 through open market transactions. Also, in the second quarter of fiscal year 2015, the company repurchased $15 million principal amount of its 4.0 percent convertible notes due 2027 for $16 million (see Note 16). The amount remaining available for repurchases under the authorization is $179 million at March 31, 2015.

Accumulated Other Comprehensive Loss (AOCL)

The components of AOCL and the changes in AOCL by components, net of tax, for three months ended March 31, 2015 and 2014 are as follows (in millions):

	Foreign Currency Translation			Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at December 31, 2014	$	8		$	(777	)	$	(2	)	$	(771	)
Other comprehensive loss before reclassification	(33		)	(1		)	—			(34		)
Amounts reclassified from accumulated other comprehensive loss - net of tax	—			12			—			12
Net current-period other comprehensive income (loss)	$	(33	)	$	11		$	—		$	(22	)
Balance at March 31, 2015	$	(25	)	$	(766	)	$	(2	)	$	(793	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Actuarial losses	$	12	(a)
	12		Total before tax
	—		Tax (benefit) expense
Total reclassifications for the period	$	12	Net of tax
(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

	Foreign Currency Translation		Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at December 31, 2013	$	51	$	(782	)	$	(3	)	$	(734	)
Other comprehensive income before reclassification	10		2			2			14
Amounts reclassified from accumulated other comprehensive income - net of tax	—		8			—			8
Net current-period other comprehensive income	$	10	$	10		$	2		$	22
Balance at March 31, 2014	$	61	$	(772	)	$	(1	)	$	(712	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Prior service costs	$	(2	)	(b)
Actuarial losses	11			(b)
	9			Total before tax
	(1		)	Tax benefit
	8			Net of tax
Total reclassifications for the period	$	8		Net of tax
(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

The components of AOCL and the changes in AOCL by components, net of tax, for six months ended March 31, 2015 and 2014 are as follows (in millions):

	Foreign Currency Translation			Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at September 30, 2014	$	41		$	(789	)	$	(1	)	$	(749	)
Other comprehensive loss before reclassification	(67		)	(1		)	(1		)	(69		)
Amounts reclassified from accumulated other comprehensive loss - net of tax	1			24			—			25
Net current-period other comprehensive income (loss)	$	(66	)	$	23		$	(1	)	$	(44	)
Balance at March 31, 2015	$	(25	)	$	(766	)	$	(2	)	$	(793	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Actuarial losses	$	24	(a)
	24		Total before tax
	—		Tax (benefit) expense
	24		Net of tax
Foreign Currency Translation Related Adjustment
Other reclassification adjustment	$	1	(b)
	1		Total before tax
	—		Tax (benefit) expense
	1		Net of tax
Total reclassifications for the period	$	25	Net of tax
(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).
(b)  These accumulated other comprehensive income components are included in the computation of loss from discontinued operations (see Note 4).

	Foreign Currency Translation		Employee Benefit Related Adjustments			Unrealized Loss, net of tax			Total
Balance at September 30, 2013	$	61	$	(792	)	$	(3	)	$	(734	)
Other comprehensive income before reclassification	—		2			2			4
Amounts reclassified from accumulated other comprehensive income - net of tax	—		18			—			18
Net current-period other comprehensive income	$	—	$	20		$	2		$	22
Balance at March 31, 2014	$	61	$	(772	)	$	(1	)	$	(712	)

Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statement of Operations
Employee Benefit Related Adjustment
Prior service costs	$	(4	)	(b)
Actuarial losses	23			(b)
	19			Total before tax
	(1		)	Tax benefit
	18			Net of tax
Total reclassifications for the period	$	18		Net of tax
(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 18 for additional details).

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Financial Instruments - Changes in fair value Level 3 assets and liabilities (Details) (Level 3, USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2015
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair Value as of September 30, 2014		$ 3
Purchases, issuances, sales and settlements:
Purchases		5
Settlements		(11)
Transfer in and / or out of Level 3		0
Reclass between short-term and long-term		1
Fair Value as of March 31, 2015	4	4
Short-term | Foreign currency option contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair Value as of September 30, 2014		2
Purchases, issuances, sales and settlements:
Purchases		5
Settlements		(10)
Transfer in and / or out of Level 3		0
Reclass between short-term and long-term		(1)
Fair Value as of March 31, 2015	2	2
Long-term | Foreign currency option contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Fair Value as of September 30, 2014		1
Purchases, issuances, sales and settlements:
Purchases		0
Settlements		(1)
Transfer in and / or out of Level 3		0
Reclass between short-term and long-term		2
Fair Value as of March 31, 2015	2	2
Included in other income
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Total unrealized gains (losses):		0
Total realized gains (losses):		3
Included in other income | Short-term | Foreign currency option contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Total unrealized gains (losses):		0
Total realized gains (losses):		3
Included in other income | Long-term | Foreign currency option contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Total unrealized gains (losses):		0
Total realized gains (losses):		0
Included in cost of sales
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Total unrealized gains (losses):		0
Total realized gains (losses):	3	3
Included in cost of sales | Short-term | Foreign currency option contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Total unrealized gains (losses):		0
Total realized gains (losses):		3
Included in cost of sales | Long-term | Foreign currency option contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Total unrealized gains (losses):		0
Total realized gains (losses):		$ 0

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Other Current Assets (Tables)

6 Months Ended

Mar. 31, 2015

Other Current Assets Disclosure [Abstract]

Summary of other current assets

Other current assets are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Current deferred income tax assets	$	18	$	21
Asbestos-related recoveries (see Note 19)	14		15
Deposits and collateral	2		4
Prepaid and other	21		16
Other current assets	$	55	$	56

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Other Assets

6 Months Ended

Mar. 31, 2015

Other Assets, Noncurrent [Abstract]

Other Assets

Other Assets

Other assets are summarized as follows (in millions):

	March 31, 2015		September 30, 2014
Investments in non-consolidated joint ventures	$	101	$	106
Asbestos-related recoveries (see Note 19)	42		45
Unamortized debt issuance costs	27		30
Capitalized software costs, net	26		25
Non-current deferred income tax assets, net	17		15
Assets for uncertain tax positions	5		5
Prepaid pension costs	109		104
Other	17		25
Other assets	$	344	$	355

In accordance with FASB ASC Topic 350-40, costs relating to internally developed or purchased software in the preliminary project stage and the post-implementation stage are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software.

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 March 31, 2015 and September 30, 2014, the company’s investment in the joint venture was $41 million and $43 million, respectively. This amount is included in investments in non-consolidated joint ventures in the table above.