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) |
Yes | X | No |
Yes | X | No |
Large accelerated filer | X | Accelerated filer | ||
Non-accelerated filer | (Do not check if a smaller reporting company) | Smaller reporting company | ||
Emerging growth company |
Yes | No | X |
Page No. | |||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(Unaudited) | |||||||||||||||
Sales | $ | 920 | $ | 841 | $ | 2,425 | $ | 2,471 | |||||||
Cost of sales | (778 | ) | (714 | ) | (2,073 | ) | (2,119 | ) | |||||||
GROSS MARGIN | 142 | 127 | 352 | 352 | |||||||||||
Selling, general and administrative | (73 | ) | (59 | ) | (192 | ) | (175 | ) | |||||||
Restructuring costs | — | (6 | ) | (4 | ) | (9 | ) | ||||||||
Other operating expense, net | — | — | (5 | ) | (3 | ) | |||||||||
OPERATING INCOME | 69 | 62 | 151 | 165 | |||||||||||
Other income (expense), net | 1 | — | 1 | (1 | ) | ||||||||||
Equity in earnings of affiliates | 14 | 9 | 32 | 26 | |||||||||||
Interest expense, net | (21 | ) | (20 | ) | (63 | ) | (63 | ) | |||||||
INCOME BEFORE INCOME TAXES | 63 | 51 | 121 | 127 | |||||||||||
Provision for income taxes | (11 | ) | (8 | ) | (30 | ) | (22 | ) | |||||||
INCOME FROM CONTINUING OPERATIONS | 52 | 43 | 91 | 105 | |||||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (1 | ) | (1 | ) | (1 | ) | (4 | ) | |||||||
NET INCOME | 51 | 42 | 90 | 101 | |||||||||||
Less: Net income attributable to noncontrolling interests | (3 | ) | (1 | ) | (5 | ) | (2 | ) | |||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ | 48 | $ | 41 | $ | 85 | $ | 99 | |||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | |||||||||||||||
Net income from continuing operations | $ | 49 | $ | 42 | $ | 86 | $ | 103 | |||||||
Loss from discontinued operations | (1 | ) | (1 | ) | (1 | ) | (4 | ) | |||||||
Net income | $ | 48 | $ | 41 | $ | 85 | $ | 99 | |||||||
BASIC EARNINGS (LOSS) PER SHARE | |||||||||||||||
Continuing operations | $ | 0.55 | $ | 0.47 | $ | 0.98 | $ | 1.13 | |||||||
Discontinued operations | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.04 | ) | |||||||
Basic earnings per share | $ | 0.54 | $ | 0.46 | $ | 0.97 | $ | 1.09 | |||||||
DILUTED EARNINGS (LOSS) PER SHARE | |||||||||||||||
Continuing operations | $ | 0.52 | $ | 0.46 | $ | 0.94 | $ | 1.10 | |||||||
Discontinued operations | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.04 | ) | |||||||
Diluted earnings per share | $ | 0.51 | $ | 0.45 | $ | 0.93 | $ | 1.06 | |||||||
Basic average common shares outstanding | 88.4 | 89.8 | 87.9 | 91.2 | |||||||||||
Diluted average common shares outstanding | 93.3 | 92.0 | 91.4 | 93.1 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(Unaudited) | |||||||||||||||
Net income | $ | 51 | $ | 42 | $ | 90 | $ | 101 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||
Attributable to Meritor, Inc. | 17 | (10 | ) | 8 | (6 | ) | |||||||||
Attributable to noncontrolling interest | — | — | (1 | ) | — | ||||||||||
Pension and other postretirement benefit related adjustments | 11 | 7 | 33 | 25 | |||||||||||
Unrealized gain (loss) on investments and foreign exchange contracts | (2 | ) | 3 | — | 5 | ||||||||||
Other comprehensive income, net of tax | 26 | — | 40 | 24 | |||||||||||
Total comprehensive income | 77 | 42 | 130 | 125 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interest | (3 | ) | (1 | ) | (4 | ) | (2 | ) | |||||||
Comprehensive income attributable to Meritor, Inc. | $ | 74 | $ | 41 | $ | 126 | $ | 123 |
June 30, 2017 | September 30, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents (1) | $ | 231 | $ | 160 | |||
Receivables, trade and other, net (1) | 500 | 396 | |||||
Inventories (1) | 360 | 316 | |||||
Other current assets | 37 | 33 | |||||
TOTAL CURRENT ASSETS | 1,128 | 905 | |||||
NET PROPERTY (1) | 430 | 439 | |||||
GOODWILL (1) | 391 | 390 | |||||
OTHER ASSETS | 763 | 760 | |||||
TOTAL ASSETS | $ | 2,712 | $ | 2,494 | |||
LIABILITIES, MEZZANINE EQUITY AND EQUITY (DEFICIT) | |||||||
CURRENT LIABILITIES: | |||||||
Short-term debt | $ | 132 | $ | 14 | |||
Accounts and notes payable (1) | 602 | 475 | |||||
Other current liabilities | 277 | 268 | |||||
TOTAL CURRENT LIABILITIES | 1,011 | 757 | |||||
LONG-TERM DEBT | 858 | 982 | |||||
RETIREMENT BENEFITS | 667 | 703 | |||||
OTHER LIABILITIES | 220 | 238 | |||||
TOTAL LIABILITIES | 2,756 | 2,680 | |||||
COMMITMENTS AND CONTINGENCIES (See Note 20) | |||||||
MEZZANINE EQUITY: | |||||||
Convertible debt with cash settlement | 12 | — | |||||
EQUITY (DEFICIT): | |||||||
Common stock (June 30, 2017 and September 30, 2016, 101.4 and 99.6 shares issued and 88.6 and 86.8 shares outstanding, respectively) | 101 | 99 | |||||
Additional paid-in capital | 875 | 876 | |||||
Accumulated deficit | (156 | ) | (241 | ) | |||
Treasury stock, at cost (at both June 30, 2017 and September 30, 2016, 12.8 shares) | (136 | ) | (136 | ) | |||
Accumulated other comprehensive loss | (768 | ) | (809 | ) | |||
Total deficit attributable to Meritor, Inc. | (84 | ) | (211 | ) | |||
Noncontrolling interests (1) | 28 | 25 | |||||
TOTAL DEFICIT | (56 | ) | (186 | ) | |||
TOTAL LIABILITIES, MEZZANINE EQUITY AND DEFICIT | $ | 2,712 | $ | 2,494 |
Nine Months Ended June 30, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
OPERATING ACTIVITIES | |||||||
CASH PROVIDED BY OPERATING ACTIVITIES (See Note 10) | $ | 136 | $ | 144 | |||
INVESTING ACTIVITIES | |||||||
Capital expenditures | (52 | ) | (66 | ) | |||
Other investing activities | — | 3 | |||||
Net investing cash flows provided by discontinued operations | 2 | 4 | |||||
CASH USED FOR INVESTING ACTIVITIES | (50 | ) | (59 | ) | |||
FINANCING ACTIVITIES | |||||||
Repayment of notes | — | (55 | ) | ||||
Debt issuance costs | (4 | ) | — | ||||
Other financing activities | (12 | ) | (15 | ) | |||
Net change in debt | (16 | ) | (70 | ) | |||
Repurchase of common stock | — | (81 | ) | ||||
CASH USED FOR FINANCING ACTIVITIES | (16 | ) | (151 | ) | |||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | 2 | |||||
CHANGE IN CASH AND CASH EQUIVALENTS | 71 | (64 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 160 | 193 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 231 | $ | 129 |
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, 2016 | $ | 99 | $ | 876 | $ | (241 | ) | $ | (136 | ) | $ | (809 | ) | $ | (211 | ) | $ | 25 | $ | (186 | ) | ||||||||||
Comprehensive income | — | — | 85 | — | 41 | 126 | 4 | 130 | |||||||||||||||||||||||
Equity based compensation expense | — | 12 | — | — | — | 12 | — | 12 | |||||||||||||||||||||||
Vesting of equity based awards | 2 | (2 | ) | — | — | — | — | — | — | ||||||||||||||||||||||
Stock option exercises | — | 2 | — | — | — | 2 | — | 2 | |||||||||||||||||||||||
Convertible debt with cash settlement | — | (12 | ) | — | — | — | (12 | ) | — | (12 | ) | ||||||||||||||||||||
Noncontrolling interest dividend | — | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||||
Other equity adjustments | — | (1 | ) | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||
Ending Balance at June 30, 2017 | $ | 101 | $ | 875 | $ | (156 | ) | $ | (136 | ) | $ | (768 | ) | $ | (84 | ) | $ | 28 | $ | (56 | ) | ||||||||||
Beginning balance at September 30, 2015 | $ | 99 | $ | 865 | $ | (814 | ) | $ | (55 | ) | $ | (766 | ) | $ | (671 | ) | $ | 25 | $ | (646 | ) | ||||||||||
Comprehensive income | — | — | 99 | — | 24 | 123 | 2 | 125 | |||||||||||||||||||||||
Equity based compensation expense | — | 8 | — | — | — | 8 | — | 8 | |||||||||||||||||||||||
Repurchase of common stock | — | — | — | (81 | ) | — | (81 | ) | — | (81 | ) | ||||||||||||||||||||
Noncontrolling interest dividends | — | — | — | — | — | — | (2 | ) | (2 | ) | |||||||||||||||||||||
Ending Balance at June 30, 2016 | $ | 99 | $ | 873 | $ | (715 | ) | $ | (136 | ) | $ | (742 | ) | $ | (621 | ) | $ | 25 | $ | (596 | ) |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Basic average common shares outstanding | 88.4 | 89.8 | 87.9 | 91.2 | |||||||
Impact of restricted shares, restricted share units and performance share units | 1.8 | 2.2 | 1.4 | 1.9 | |||||||
Impact of convertible notes | 3.1 | — | 2.1 | — | |||||||
Diluted average common shares outstanding | 93.3 | 92.0 | 91.4 | 93.1 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sales | $ | — | $ | — | $ | — | $ | — | |||||||
Loss before income taxes | $ | (1 | ) | $ | (1 | ) | $ | (1 | ) | $ | (5 | ) | |||
Benefit from income taxes | — | — | — | 1 | |||||||||||
Loss from discontinued operations attributable to Meritor, Inc. | $ | (1 | ) | $ | (1 | ) | $ | (1 | ) | $ | (4 | ) |
Commercial Truck & Industrial | Aftermarket & Trailer | Total | |||||||||
Goodwill | $ | 245 | $ | 160 | $ | 405 | |||||
Accumulated impairment losses | (15 | ) | — | (15 | ) | ||||||
Beginning balance at September 30, 2016 | 230 | 160 | 390 | ||||||||
Foreign currency translation | — | 1 | 1 | ||||||||
Balance at June 30, 2017 | $ | 230 | $ | 161 | $ | 391 |
Employee Termination Benefits | Plant Shutdown & Other | Total | |||||||||
Beginning balance at September 30, 2016 | $ | 15 | $ | 1 | $ | 16 | |||||
Activity during the period: | |||||||||||
Charges to continuing operations | 4 | — | 4 | ||||||||
Cash payments – continuing operations | (10 | ) | (1 | ) | (11 | ) | |||||
Other | (1 | ) | — | (1 | ) | ||||||
Total restructuring reserves at June 30, 2017 | 8 | — | 8 | ||||||||
Less: non-current restructuring reserves | (1 | ) | — | (1 | ) | ||||||
Restructuring reserves – current, at June 30, 2017 | $ | 7 | $ | — | $ | 7 | |||||
Balance at September 30, 2015 | $ | 10 | $ | — | $ | 10 | |||||
Activity during the period: | |||||||||||
Charges to continuing operations | 8 | 1 | 9 | ||||||||
Cash payments – continuing operations | (8 | ) | — | (8 | ) | ||||||
Total restructuring reserves at June 30, 2016 | 10 | 1 | 11 | ||||||||
Less: non-current restructuring reserves | (2 | ) | — | (2 | ) | ||||||
Restructuring reserves – current, at June 30, 2016 | $ | 8 | $ | 1 | $ | 9 |
Nine Months Ended June 30, | |||||||
2017 | 2016 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 90 | $ | 101 | |||
Less: Loss from discontinued operations, net of tax | (1 | ) | (4 | ) | |||
Income from continuing operations | 91 | 105 | |||||
Adjustments to income from continuing operations to arrive at cash provided by operating activities: | |||||||
Depreciation and amortization | 55 | 48 | |||||
Deferred income tax expense | 19 | 2 | |||||
Restructuring costs | 4 | 9 | |||||
Asset impairment charges | 2 | — | |||||
Gain on sale of property | — | (2 | ) | ||||
Equity in earnings of affiliates | (32 | ) | (26 | ) | |||
Pension and retiree medical expense | 11 | 15 | |||||
Other adjustments to income from continuing operations | 12 | 5 | |||||
Dividends received from equity method investments | 25 | 29 | |||||
Pension and retiree medical contributions | (28 | ) | (32 | ) | |||
Restructuring payments | (11 | ) | (8 | ) | |||
Changes in off-balance sheet accounts receivable factoring | 62 | (30 | ) | ||||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations | (73 | ) | 31 | ||||
Operating cash flows provided by continuing operations | 137 | 146 | |||||
Operating cash flows used for discontinued operations | (1 | ) | (2 | ) | |||
CASH PROVIDED BY OPERATING ACTIVITIES | $ | 136 | $ | 144 |
June 30, 2017 | September 30, 2016 | ||||||
Finished goods | $ | 142 | $ | 125 | |||
Work in process | 33 | 26 | |||||
Raw materials, parts and supplies | 185 | 165 | |||||
Total | $ | 360 | $ | 316 |
June 30, 2017 | September 30, 2016 | ||||||
Asbestos-related recoveries (see Note 20) | $ | 10 | $ | 10 | |||
Prepaid and other | 27 | 23 | |||||
Other current assets | $ | 37 | $ | 33 |
June 30, 2017 | September 30, 2016 | ||||||
Property at cost: | |||||||
Land and land improvements | $ | 29 | $ | 30 | |||
Buildings | 234 | 231 | |||||
Machinery and equipment | 867 | 839 | |||||
Company-owned tooling | 122 | 113 | |||||
Construction in progress | 38 | 56 | |||||
Total | 1,290 | 1,269 | |||||
Less: accumulated depreciation | (860 | ) | (830 | ) | |||
Net property | $ | 430 | $ | 439 |
June 30, 2017 | September 30, 2016 | ||||||
Investments in non-consolidated joint ventures | $ | 108 | $ | 100 | |||
Asbestos-related recoveries (see Note 20) | 44 | 49 | |||||
Unamortized revolver debt issuance costs | 8 | 7 | |||||
Capitalized software costs, net | 28 | 29 | |||||
Non-current deferred income tax assets, net | 395 | 413 | |||||
Assets for uncertain tax positions | 37 | 35 | |||||
Prepaid pension costs | 138 | 123 | |||||
Other | 5 | 4 | |||||
Other assets | $ | 763 | $ | 760 |
June 30, 2017 | September 30, 2016 | ||||||
Compensation and benefits | $ | 121 | $ | 115 | |||
Income taxes | 4 | 8 | |||||
Taxes other than income taxes | 24 | 21 | |||||
Accrued interest | 15 | 14 | |||||
Product warranties | 18 | 18 | |||||
Environmental reserves (see Note 20) | 5 | 7 | |||||
Restructuring (see Note 7) | 7 | 14 | |||||
Asbestos-related liabilities (see Note 20) | 18 | 18 | |||||
Indemnity obligations (see Note 20) | 2 | 2 | |||||
Other | 63 | 51 | |||||
Other current liabilities | $ | 277 | $ | 268 |
Nine Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Total product warranties – beginning of period | $ | 44 | $ | 48 | |||
Accruals for product warranties | 8 | 11 | |||||
Payments | (10 | ) | (13 | ) | |||
Change in estimates and other | 1 | (1 | ) | ||||
Total product warranties – end of period | 43 | 45 | |||||
Less: Non-current product warranties | (25 | ) | (27 | ) | |||
Product warranties – current | $ | 18 | $ | 18 |
June 30, 2017 | September 30, 2016 | ||||||
Asbestos-related liabilities (see Note 20) | $ | 122 | $ | 136 | |||
Restructuring (see Note 7) | 1 | 2 | |||||
Non-current deferred income tax liabilities | 13 | 12 | |||||
Liabilities for uncertain tax positions | 15 | 16 | |||||
Product warranties (see Note 15) | 25 | 26 | |||||
Environmental (see Note 20) | 6 | 6 | |||||
Indemnity obligations (see Note 20) | 11 | 11 | |||||
Other | 27 | 29 | |||||
Other liabilities | $ | 220 | $ | 238 |
June 30, 2017 | September 30, 2016 | ||||||
4.0 percent convertible notes due 2027(1)(3) | $ | 142 | $ | 142 | |||
7.875 percent convertible notes due 2026(1)(4) | 131 | 129 | |||||
6.75 percent notes due 2021(2)(5) | 271 | 271 | |||||
6.25 percent notes due 2024(2)(6) | 443 | 442 | |||||
Capital lease obligation | 13 | 16 | |||||
Export financing arrangements and other | — | 10 | |||||
Unamortized discount on convertible notes (7) | (10 | ) | (14 | ) | |||
Subtotal | 990 | 996 | |||||
Less: current maturities | (132 | ) | (14 | ) | |||
Long-term debt | $ | 858 | $ | 982 |
June 30, 2017 | September 30, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Cash and cash equivalents | $ | 231 | $ | 231 | $ | 160 | $ | 160 | |||||||
Short-term debt | 132 | 245 | 14 | 14 | |||||||||||
Long-term debt | 858 | 912 | 982 | 1,051 | |||||||||||
Foreign exchange forward contracts (other assets) | — | — | 1 | 1 | |||||||||||
Foreign exchange forward contracts (other liabilities) | — | — | 2 | 2 | |||||||||||
Short-term foreign currency option contracts (other assets) | 1 | 1 | — | — | |||||||||||
Long-term foreign currency option contracts (other assets) | 1 | 1 | 2 | 2 |
June 30, 2017 | September 30, 2016 | ||||||||||||||||
Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Reported | Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Reported | ||||||||||||
Derivative Asset | |||||||||||||||||
Foreign exchange forward contract | 1 | (1 | ) | — | 1 | — | 1 | ||||||||||
Derivative Liabilities | |||||||||||||||||
Foreign exchange forward contract | 1 | (1 | ) | — | 2 | — | 2 |
• | 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. |
Level 1 | Level 2 | Level 3 | |||||||||
Cash and cash equivalents | $ | 231 | $ | — | $ | — | |||||
Short-term debt | — | 241 | 4 | ||||||||
Long-term debt | — | 903 | 9 | ||||||||
Foreign exchange forward contracts (asset) | — | — | — | ||||||||
Foreign exchange forward contracts (liability) | — | — | — | ||||||||
Short-term foreign currency option contracts (asset) | — | — | 1 | ||||||||
Long-term foreign currency option contracts (asset) | — | — | 1 |
Level 1 | Level 2 | Level 3 | |||||||||
Cash and cash equivalents | $ | 160 | $ | — | $ | — | |||||
Short-term debt | — | — | 14 | ||||||||
Long-term debt | — | 1,040 | 11 | ||||||||
Foreign exchange forward contracts (asset) | — | 1 | — | ||||||||
Foreign exchange forward contracts (liability) | — | 2 | — | ||||||||
Short-term foreign currency option contracts (asset) | — | — | — | ||||||||
Long-term foreign currency option contracts (asset) | — | — | 2 |
Three months ended June 30, 2017 (in millions) | Short-term foreign currency option contracts (asset) | Long-term foreign currency option contracts (asset) | Total | |||||||||
Fair Value as of March 31, 2017 | $ | 3 | $ | 2 | $ | 5 | ||||||
Total unrealized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | (1 | ) | — | (1 | ) | |||||||
Total realized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | — | — | — | |||||||||
Purchases, issuances, sales and settlements: | ||||||||||||
Purchases | — | 1 | 1 | |||||||||
Settlements | (2 | ) | (1 | ) | (3 | ) | ||||||
Transfer in and / or out of Level 3 (1) | — | — | — | |||||||||
Reclass between short-term and long-term | 1 | (1 | ) | — | ||||||||
Fair Value as of June 30, 2017 | $ | 1 | $ | 1 | $ | 2 |
Three months ended June 30, 2016 (in millions) | Short-term foreign currency option contracts (asset) | Long-term foreign currency option contracts (asset) | Total | |||||||||
Fair Value as of March 31, 2016 | $ | — | $ | — | $ | — | ||||||
Total unrealized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | — | — | — | |||||||||
Total realized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | — | — | — | |||||||||
Purchases, issuances, sales and settlements: | ||||||||||||
Purchases | — | — | — | |||||||||
Settlements | — | — | — | |||||||||
Transfer in and / or out of Level 3 (1) | — | — | — | |||||||||
Reclass between short-term and long-term | — | — | — | |||||||||
Fair Value as of June 30, 2016 | $ | — | $ | — | $ | — |
Nine months ended June 30, 2017 (in millions) | Short-term foreign currency option contracts (asset) | Long-term foreign currency option contracts (asset) | Total | |||||||||
Fair Value as of September 30, 2016 | $ | — | $ | 2 | $ | 2 | ||||||
Total unrealized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | — | 2 | 2 | |||||||||
Total realized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | — | — | — | |||||||||
Purchases, issuances, sales and settlements: | ||||||||||||
Purchases | — | 1 | 1 | |||||||||
Settlements | (2 | ) | (1 | ) | (3 | ) | ||||||
Transfer in and / or out of Level 3 (1) | — | — | — | |||||||||
Reclass between short-term and long-term | 3 | (3 | ) | — | ||||||||
Fair Value as of June 30, 2017 | $ | 1 | $ | 1 | $ | 2 |
Nine months ended June 30, 2016 (in millions) | Short-term foreign currency option contracts (asset) | Long-term foreign currency option contracts (asset) | Total | |||||||||
Fair Value as of September 30, 2015 | $ | 1 | $ | 1 | $ | 2 | ||||||
Total unrealized gains (losses): | ||||||||||||
Included in other income | (2 | ) | — | (2 | ) | |||||||
Included in cost of sales | — | (1 | ) | (1 | ) | |||||||
Total realized gains (losses): | ||||||||||||
Included in other income | — | — | — | |||||||||
Included in cost of sales | — | — | — | |||||||||
Purchases, issuances, sales and settlements: | ||||||||||||
Purchases | 1 | — | 1 | |||||||||
Settlements | — | — | — | |||||||||
Transfer in and / or out of Level 3 (1) | — | — | — | |||||||||
Reclass between short-term and long-term | — | — | — | |||||||||
Fair Value as of June 30, 2016 | $ | — | $ | — | $ | — |
June 30, 2017 | September 30, 2016 | ||||||
Retiree medical liability | $ | 432 | $ | 447 | |||
Pension liability | 261 | 283 | |||||
Other | 13 | 13 | |||||
Subtotal | 706 | 743 | |||||
Less: current portion (included in compensation and benefits, Note 15) | (39 | ) | (40 | ) | |||
Retirement benefits | $ | 667 | $ | 703 |
2017 | 2016 | ||||||||||||||
Pension | Retiree Medical | Pension | Retiree Medical | ||||||||||||
Interest cost | $ | 13 | $ | 4 | $ | 16 | $ | 4 | |||||||
Assumed return on plan assets | (24 | ) | — | (24 | ) | — | |||||||||
Amortization of prior service costs | — | (1 | ) | — | — | ||||||||||
Recognized actuarial loss | 8 | 4 | 6 | 3 | |||||||||||
Total expense (income) | $ | (3 | ) | $ | 7 | $ | (2 | ) | $ | 7 |
2017 | 2016 | ||||||||||||||
Pension | Retiree Medical | Pension | Retiree Medical | ||||||||||||
Interest cost | $ | 39 | $ | 11 | $ | 49 | $ | 13 | |||||||
Assumed return on plan assets | (71 | ) | — | (74 | ) | — | |||||||||
Amortization of prior service costs | — | (2 | ) | — | — | ||||||||||
Recognized actuarial loss | 23 | 11 | 18 | 9 | |||||||||||
Total expense (income) | $ | (9 | ) | $ | 20 | $ | (7 | ) | $ | 22 |
Superfund Sites | Non-Superfund Sites | Total | |||||||||
Beginning balance at September 30, 2016 | $ | 2 | $ | 11 | $ | 13 | |||||
Payments and other | — | (4 | ) | (4 | ) | ||||||
Accruals | — | 2 | 2 | ||||||||
Balance at June 30, 2017 | $ | 2 | $ | 9 | $ | 11 |
June 30, 2017 | September 30, 2016 | ||||||
Pending and future claims | $ | 70 | $ | 70 | |||
Billed but unpaid claims | 3 | 2 | |||||
Asbestos-related liabilities | $ | 73 | $ | 72 | |||
Asbestos-related insurance recoveries | $ | 27 | $ | 32 |
• | Pending and future claims were estimated for a ten-year period ending in fiscal year 2026; |
• | 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. |
June 30, 2017 | September 30, 2016 | ||||||
Pending and future claims | $ | 60 | $ | 60 | |||
Billed but unpaid claims | 4 | 1 | |||||
Asbestos-related liabilities | $ | 64 | $ | 61 | |||
Asbestos-related insurance recoveries | $ | 27 | $ | 27 |
• | Pending and future claims were estimated for a ten-year period ending in fiscal year 2026; |
• | 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. |
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Loss, net of tax | Total | ||||||||||||
Balance at March 31, 2017 | $ | (75 | ) | $ | (718 | ) | $ | (1 | ) | $ | (794 | ) | |||
Other comprehensive income (loss) before reclassification | 17 | — | (2 | ) | 15 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 11 | — | 11 | |||||||||||
Net current-period other comprehensive income (loss) | $ | 17 | $ | 11 | $ | (2 | ) | $ | 26 | ||||||
Balance at June 30, 2017 | $ | (58 | ) | $ | (707 | ) | $ | (3 | ) | $ | (768 | ) |
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 | $ | (1 | ) | (a) | |||
Actuarial losses | $ | 12 | (a) | ||||
11 | Total before tax | ||||||
(3 | ) | Tax benefit | |||||
Total reclassifications for the period | $ | 8 | 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 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. | |||||||
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Loss, net of tax | Total | ||||||||||||
Balance at March 31, 2016 | $ | (50 | ) | $ | (687 | ) | $ | (5 | ) | $ | (742 | ) | |||
Other comprehensive income (loss) before reclassification | (10 | ) | (2 | ) | 3 | (9 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss - net of tax | — | 9 | — | 9 | |||||||||||
Net current-period other comprehensive income (loss) | $ | (10 | ) | $ | 7 | $ | 3 | $ | — | ||||||
Balance at June 30, 2016 | $ | (60 | ) | $ | (680 | ) | $ | (2 | ) | $ | (742 | ) |
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 | $ | 9 | (b) | ||||
9 | Total before tax | ||||||
— | Tax expense | ||||||
Total reclassifications for the period | $ | 9 | 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 19 for additional details). | |||||||
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Loss, net of tax | Total | ||||||||||||
Balance at September 30, 2016 | $ | (66 | ) | $ | (740 | ) | $ | (3 | ) | $ | (809 | ) | |||
Other comprehensive income (loss) before reclassification | 8 | 1 | — | 9 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 32 | — | 32 | |||||||||||
Net current-period other comprehensive income (loss) | $ | 8 | $ | 33 | $ | — | $ | 41 | |||||||
Balance at June 30, 2017 | $ | (58 | ) | $ | (707 | ) | $ | (3 | ) | $ | (768 | ) |
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 | ) | (a) | |||
Actuarial losses | 34 | (a) | |||||
32 | Total before tax | ||||||
(10 | ) | Tax benefit | |||||
Total reclassifications for the period | $ | 22 | 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 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. | |||||||
Foreign Currency Translation | Employee Benefit Related Adjustments | Unrealized Loss, net of tax | Total | ||||||||||||
Balance at September 30, 2015 | $ | (54 | ) | $ | (705 | ) | $ | (7 | ) | $ | (766 | ) | |||
Other comprehensive income (loss) before reclassification | (6 | ) | (2 | ) | 5 | (3 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss - net of tax | — | 27 | — | 27 | |||||||||||
Net current-period other comprehensive income (loss) | $ | (6 | ) | $ | 25 | $ | 5 | $ | 24 | ||||||
Balance at June 30, 2016 | $ | (60 | ) | $ | (680 | ) | $ | (2 | ) | $ | (742 | ) |
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 | $ | 27 | (b) | ||||
27 | Total before tax | ||||||
— | Tax expense | ||||||
Total reclassifications for the period | $ | 27 | 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 19 for additional details). | |||||||
• | 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, primarily in North America and Europe. This segment also supplies a wide variety of undercarriage products and systems for trailer applications in North America. |
Commercial Truck & Industrial | Aftermarket & Trailer | Eliminations | Total | ||||||||||||
Three Months Ended June 30, 2017 | |||||||||||||||
External Sales | $ | 704 | $ | 216 | $ | — | $ | 920 | |||||||
Intersegment Sales | 24 | 12 | (36 | ) | — | ||||||||||
Total Sales | $ | 728 | $ | 228 | $ | (36 | ) | $ | 920 | ||||||
Three Months Ended June 30, 2016 | |||||||||||||||
External Sales | $ | 623 | $ | 218 | $ | — | $ | 841 | |||||||
Intersegment Sales | 17 | 9 | (26 | ) | — | ||||||||||
Total Sales | $ | 640 | $ | 227 | $ | (26 | ) | $ | 841 | ||||||
Commercial Truck & Industrial | Aftermarket & Trailer | Eliminations | Total | ||||||||||||
Nine Months Ended June 30, 2017 | |||||||||||||||
External Sales | $ | 1,826 | $ | 599 | $ | — | $ | 2,425 | |||||||
Intersegment Sales | 61 | 28 | (89 | ) | — | ||||||||||
Total Sales | $ | 1,887 | $ | 627 | $ | (89 | ) | $ | 2,425 | ||||||
Nine Months Ended June 30, 2016 | |||||||||||||||
External Sales | $ | 1,846 | $ | 625 | $ | — | $ | 2,471 | |||||||
Intersegment Sales | 58 | 23 | (81 | ) | — | ||||||||||
Total Sales | $ | 1,904 | $ | 648 | $ | (81 | ) | $ | 2,471 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Segment adjusted EBITDA: | |||||||||||||||
Commercial Truck & Industrial | $ | 75 | $ | 61 | $ | 171 | $ | 169 | |||||||
Aftermarket & Trailer | 26 | 38 | 78 | 86 | |||||||||||
Segment adjusted EBITDA | 101 | 99 | 249 | 255 | |||||||||||
Unallocated legacy and corporate income (expense), net (1) | 2 | (3 | ) | — | (2 | ) | |||||||||
Interest expense, net | (21 | ) | (20 | ) | (63 | ) | (63 | ) | |||||||
Provision for income taxes | (11 | ) | (8 | ) | (30 | ) | (22 | ) | |||||||
Depreciation and amortization | (18 | ) | (17 | ) | (55 | ) | (48 | ) | |||||||
Noncontrolling interests | (3 | ) | (1 | ) | (5 | ) | (2 | ) | |||||||
Loss on sale of receivables | (2 | ) | (2 | ) | (4 | ) | (6 | ) | |||||||
Asset impairment charges | 1 | — | (2 | ) | — | ||||||||||
Restructuring costs | — | (6 | ) | (4 | ) | (9 | ) | ||||||||
Income from continuing operations attributable to Meritor, Inc. | $ | 49 | $ | 42 | $ | 86 | $ | 103 |
(1) | Unallocated legacy and corporate income (expense), net represents items that are not directly related to the company's business segments. These items primarily include asbestos-related charges and settlements, pension and retiree medical costs associated with sold businesses, and other legacy costs for environmental and product liability. |
June 30, 2017 | September 30, 2016 | ||||||
Segment Assets: | |||||||
Commercial Truck & Industrial | $ | 1,618 | $ | 1,433 | |||
Aftermarket & Trailer | 466 | 436 | |||||
Total segment assets | 2,084 | 1,869 | |||||
Corporate (1) | 916 | 845 | |||||
Less: Accounts receivable sold under off-balance sheet factoring programs(2) | (288 | ) | (220 | ) | |||
Total assets | $ | 2,712 | $ | 2,494 |
(1) | Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. |
(2) | At June 30, 2017 and September 30, 2016, segment assets include $288 million and $220 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 9). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances. |
Three Months Ended June 30, 2017 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Sales | |||||||||||||||||||
External | $ | — | $ | 528 | $ | 392 | $ | — | $ | 920 | |||||||||
Subsidiaries | — | 33 | 77 | (110 | ) | — | |||||||||||||
Total sales | — | 561 | 469 | (110 | ) | 920 | |||||||||||||
Cost of sales | (13 | ) | (480 | ) | (395 | ) | 110 | (778 | ) | ||||||||||
GROSS MARGIN | (13 | ) | 81 | 74 | — | 142 | |||||||||||||
Selling, general and administrative | (34 | ) | (14 | ) | (25 | ) | — | (73 | ) | ||||||||||
Restructuring costs | — | 1 | (1 | ) | — | — | |||||||||||||
Other operating income (expense), net | (1 | ) | — | 1 | — | — | |||||||||||||
OPERATING INCOME (LOSS) | (48 | ) | 68 | 49 | — | 69 | |||||||||||||
Other income (expense), net | 12 | (7 | ) | (4 | ) | — | 1 | ||||||||||||
Equity in earnings of affiliates | — | 12 | 2 | — | 14 | ||||||||||||||
Interest income (expense), net | (32 | ) | 8 | 3 | — | (21 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (68 | ) | 81 | 50 | — | 63 | |||||||||||||
Benefit (provision) for income taxes | 19 | (21 | ) | (9 | ) | — | (11 | ) | |||||||||||
Equity income from continuing operations of subsidiaries | 98 | 34 | — | (132 | ) | — | |||||||||||||
INCOME FROM CONTINUING OPERATIONS | 49 | 94 | 41 | (132 | ) | 52 | |||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (1 | ) | — | — | — | (1 | ) | ||||||||||||
NET INCOME | 48 | 94 | 41 | (132 | ) | 51 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (3 | ) | — | (3 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ | 48 | $ | 94 | $ | 38 | $ | (132 | ) | $ | 48 |
Three Months Ended June 30, 2017 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Net income | $ | 48 | $ | 94 | $ | 41 | $ | (132 | ) | $ | 51 | ||||||||
Other comprehensive income, net of tax | 26 | — | 18 | (18 | ) | 26 | |||||||||||||
Total comprehensive income | 74 | 94 | 59 | (150 | ) | 77 | |||||||||||||
Less: Comprehensive loss (income) attributable to noncontrolling interests | 1 | — | (4 | ) | — | (3 | ) | ||||||||||||
Comprehensive income attributable to Meritor, Inc. | $ | 75 | $ | 94 | $ | 55 | $ | (150 | ) | $ | 74 |
Three Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Sales | |||||||||||||||||||
External | $ | — | $ | 410 | $ | 431 | $ | — | $ | 841 | |||||||||
Subsidiaries | — | 30 | 14 | (44 | ) | — | |||||||||||||
Total sales | — | 440 | 445 | (44 | ) | 841 | |||||||||||||
Cost of sales | (14 | ) | (361 | ) | (383 | ) | 44 | (714 | ) | ||||||||||
GROSS MARGIN | (14 | ) | 79 | 62 | — | 127 | |||||||||||||
Selling, general and administrative | (23 | ) | (20 | ) | (16 | ) | — | (59 | ) | ||||||||||
Restructuring costs | — | (3 | ) | (3 | ) | — | (6 | ) | |||||||||||
Other operating income, net | — | — | — | — | — | ||||||||||||||
OPERATING INCOME (LOSS) | (37 | ) | 56 | 43 | — | 62 | |||||||||||||
Other income (expense), net | 8 | (48 | ) | 40 | — | — | |||||||||||||
Equity in earnings of affiliates | — | 8 | 1 | — | 9 | ||||||||||||||
Interest income (expense), net | (29 | ) | 8 | 1 | — | (20 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (58 | ) | 24 | 85 | — | 51 | |||||||||||||
Provision for income taxes | (1 | ) | — | (7 | ) | — | (8 | ) | |||||||||||
Equity income from continuing operations of subsidiaries | 101 | 74 | — | (175 | ) | — | |||||||||||||
INCOME FROM CONTINUING OPERATIONS | 42 | 98 | 78 | (175 | ) | 43 | |||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (1 | ) | — | — | — | (1 | ) | ||||||||||||
NET INCOME | 41 | 98 | 78 | (175 | ) | 42 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (1 | ) | — | (1 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ | 41 | $ | 98 | $ | 77 | $ | (175 | ) | $ | 41 |
Three Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Net income | $ | 41 | $ | 98 | $ | 78 | $ | (175 | ) | $ | 42 | ||||||||
Other comprehensive income (loss) | — | 44 | (50 | ) | 6 | — | |||||||||||||
Total comprehensive income | 41 | 142 | 28 | (169 | ) | 42 | |||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Comprehensive income attributable to Meritor, Inc. | $ | 41 | $ | 142 | $ | 27 | $ | (169 | ) | $ | 41 |
Nine Months Ended June 30, 2017 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Sales | |||||||||||||||||||
External | $ | — | $ | 1,244 | $ | 1,181 | $ | — | $ | 2,425 | |||||||||
Subsidiaries | — | 89 | 103 | (192 | ) | — | |||||||||||||
Total sales | — | 1,333 | 1,284 | (192 | ) | 2,425 | |||||||||||||
Cost of sales | (42 | ) | (1,122 | ) | (1,101 | ) | 192 | (2,073 | ) | ||||||||||
GROSS MARGIN | (42 | ) | 211 | 183 | — | 352 | |||||||||||||
Selling, general and administrative | (77 | ) | (67 | ) | (48 | ) | — | (192 | ) | ||||||||||
Restructuring costs | 2 | (1 | ) | (5 | ) | — | (4 | ) | |||||||||||
Other operating expense, net | (3 | ) | — | (2 | ) | — | (5 | ) | |||||||||||
OPERATING INCOME (LOSS) | (120 | ) | 143 | 128 | — | 151 | |||||||||||||
Other income (expense), net | 36 | (12 | ) | (23 | ) | — | 1 | ||||||||||||
Equity in earnings of affiliates | — | 27 | 5 | — | 32 | ||||||||||||||
Interest income (expense), net | (99 | ) | 27 | 9 | — | (63 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (183 | ) | 185 | 119 | — | 121 | |||||||||||||
Benefit (provision) for income taxes | 54 | (56 | ) | (28 | ) | — | (30 | ) | |||||||||||
Equity income from continuing operations of subsidiaries | 215 | 75 | — | (290 | ) | — | |||||||||||||
INCOME FROM CONTINUING OPERATIONS | 86 | 204 | 91 | (290 | ) | 91 | |||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (1 | ) | — | — | — | (1 | ) | ||||||||||||
NET INCOME | 85 | 204 | 91 | (290 | ) | 90 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (5 | ) | — | (5 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ | 85 | $ | 204 | $ | 86 | $ | (290 | ) | $ | 85 |
Nine Months Ended June 30, 2017 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Net income | $ | 85 | $ | 204 | $ | 91 | $ | (290 | ) | $ | 90 | ||||||||
Other comprehensive income, net of tax | 40 | 2 | 12 | (14 | ) | 40 | |||||||||||||
Total comprehensive income | 125 | 206 | 103 | (304 | ) | 130 | |||||||||||||
Less: Comprehensive loss (income) attributable to noncontrolling interests | 1 | — | (5 | ) | — | (4 | ) | ||||||||||||
Comprehensive income attributable to Meritor, Inc. | $ | 126 | $ | 206 | $ | 98 | $ | (304 | ) | $ | 126 |
Nine Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Sales | |||||||||||||||||||
External | $ | — | $ | 1,247 | $ | 1,224 | $ | — | $ | 2,471 | |||||||||
Subsidiaries | — | 85 | 46 | (131 | ) | — | |||||||||||||
Total sales | — | 1,332 | 1,270 | (131 | ) | 2,471 | |||||||||||||
Cost of sales | (40 | ) | (1,107 | ) | (1,103 | ) | 131 | (2,119 | ) | ||||||||||
GROSS MARGIN | (40 | ) | 225 | 167 | — | 352 | |||||||||||||
Selling, general and administrative | (62 | ) | (62 | ) | (51 | ) | — | (175 | ) | ||||||||||
Restructuring costs | — | (4 | ) | (5 | ) | — | (9 | ) | |||||||||||
Other operating expense, net | (3 | ) | — | — | — | (3 | ) | ||||||||||||
OPERATING INCOME (LOSS) | (105 | ) | 159 | 111 | — | 165 | |||||||||||||
Other income (expense), net | 42 | (57 | ) | 14 | — | (1 | ) | ||||||||||||
Equity in earnings of affiliates | — | 24 | 2 | — | 26 | ||||||||||||||
Interest income (expense), net | (88 | ) | 23 | 2 | — | (63 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (151 | ) | 149 | 129 | — | 127 | |||||||||||||
Provision for income taxes | (1 | ) | — | (21 | ) | — | (22 | ) | |||||||||||
Equity income from continuing operations of subsidiaries | 255 | 95 | — | (350 | ) | — | |||||||||||||
INCOME FROM CONTINUING OPERATIONS | 103 | 244 | 108 | (350 | ) | 105 | |||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (4 | ) | (5 | ) | (4 | ) | 9 | (4 | ) | ||||||||||
NET INCOME | 99 | 239 | 104 | (341 | ) | 101 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (2 | ) | — | (2 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ | 99 | $ | 239 | $ | 102 | $ | (341 | ) | $ | 99 |
Nine Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
Net income | $ | 99 | $ | 239 | $ | 104 | $ | (341 | ) | $ | 101 | ||||||||
Other comprehensive income (loss), net of tax | 24 | 56 | (52 | ) | (4 | ) | 24 | ||||||||||||
Total comprehensive income | 123 | 295 | 52 | (345 | ) | 125 | |||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | — | — | (2 | ) | — | (2 | ) | ||||||||||||
Comprehensive income attributable to Meritor, Inc. | $ | 123 | $ | 295 | $ | 50 | $ | (345 | ) | $ | 123 |
June 30, 2017 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||
Cash and cash equivalents (1) | $ | 150 | $ | 4 | $ | 77 | $ | — | $ | 231 | |||||||||
Receivables trade and other, net (1) | 1 | 43 | 456 | — | 500 | ||||||||||||||
Inventories (1) | — | 165 | 195 | — | 360 | ||||||||||||||
Other current assets | 5 | 14 | 18 | — | 37 | ||||||||||||||
TOTAL CURRENT ASSETS | 156 | 226 | 746 | — | 1,128 | ||||||||||||||
NET PROPERTY (1) | 21 | 201 | 208 | — | 430 | ||||||||||||||
GOODWILL (1) | — | 219 | 172 | — | 391 | ||||||||||||||
OTHER ASSETS | 437 | 129 | 197 | — | 763 | ||||||||||||||
INVESTMENTS IN SUBSIDIARIES | 2,866 | 769 | — | (3,635 | ) | — | |||||||||||||
TOTAL ASSETS | $ | 3,480 | $ | 1,544 | $ | 1,323 | $ | (3,635 | ) | $ | 2,712 | ||||||||
CURRENT LIABILITIES: | |||||||||||||||||||
Short-term debt | $ | 128 | $ | 3 | $ | 1 | $ | — | $ | 132 | |||||||||
Accounts and notes payable (1) | 51 | 230 | 321 | — | 602 | ||||||||||||||
Other current liabilities | 103 | 70 | 104 | — | 277 | ||||||||||||||
TOTAL CURRENT LIABILITIES | 282 | 303 | 426 | — | 1,011 | ||||||||||||||
LONG-TERM DEBT | 850 | 1 | 7 | — | 858 | ||||||||||||||
RETIREMENT BENEFITS | 645 | — | 22 | — | 667 | ||||||||||||||
INTERCOMPANY PAYABLE (RECEIVABLE) | 1,744 | (1,966 | ) | 222 | — | — | |||||||||||||
OTHER LIABILITIES | 31 | 146 | 43 | — | 220 | ||||||||||||||
MEZZANINE EQUITY | 12 | — | — | — | 12 | ||||||||||||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | (84 | ) | 3,060 | 575 | (3,635 | ) | (84 | ) | |||||||||||
NONCONTROLLING INTERESTS (1) | — | — | 28 | — | 28 | ||||||||||||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND DEFICIT | $ | 3,480 | $ | 1,544 | $ | 1,323 | $ | (3,635 | ) | $ | 2,712 |
September 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||
Cash and cash equivalents (1) | $ | 90 | $ | 4 | $ | 66 | $ | — | $ | 160 | |||||||||
Receivables trade and other, net (1) | 1 | 39 | 356 | — | 396 | ||||||||||||||
Inventories (1) | — | 143 | 173 | — | 316 | ||||||||||||||
Other current assets | 5 | 12 | 16 | — | 33 | ||||||||||||||
TOTAL CURRENT ASSETS | 96 | 198 | 611 | — | 905 | ||||||||||||||
NET PROPERTY (1) | 22 | 198 | 219 | — | 439 | ||||||||||||||
GOODWILL | — | 219 | 171 | — | 390 | ||||||||||||||
OTHER ASSETS | 447 | 132 | 181 | — | 760 | ||||||||||||||
INVESTMENTS IN SUBSIDIARIES | 2,575 | 679 | — | (3,254 | ) | — | |||||||||||||
TOTAL ASSETS | $ | 3,140 | $ | 1,426 | $ | 1,182 | $ | (3,254 | ) | $ | 2,494 | ||||||||
CURRENT LIABILITIES: | |||||||||||||||||||
Short-term debt | $ | 1 | $ | 4 | $ | 9 | $ | — | $ | 14 | |||||||||
Accounts and notes payable (1) | 42 | 172 | 261 | — | 475 | ||||||||||||||
Other current liabilities | 90 | 74 | 104 | — | 268 | ||||||||||||||
TOTAL CURRENT LIABILITIES | 133 | 250 | 374 | — | 757 | ||||||||||||||
LONG-TERM DEBT | 971 | 3 | 8 | — | 982 | ||||||||||||||
RETIREMENT BENEFITS | 680 | — | 23 | — | 703 | ||||||||||||||
INTERCOMPANY PAYABLE (RECEIVABLE) | 1,534 | (1,768 | ) | 234 | — | — | |||||||||||||
OTHER LIABILITIES | 34 | 162 | 42 | — | 238 | ||||||||||||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | (212 | ) | 2,779 | 476 | (3,254 | ) | (211 | ) | |||||||||||
NONCONTROLLING INTERESTS (1) | — | — | 25 | — | 25 | ||||||||||||||
TOTAL LIABILITIES AND EQUITY (DEFICIT) | $ | 3,140 | $ | 1,426 | $ | 1,182 | $ | (3,254 | ) | $ | 2,494 |
Nine Months Ended June 30, 2017 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | $ | (24 | ) | $ | 28 | $ | 132 | $ | — | $ | 136 | ||||||||
INVESTING ACTIVITIES | |||||||||||||||||||
Capital expenditures | (8 | ) | (27 | ) | (17 | ) | — | (52 | ) | ||||||||||
Net investing cash flows provided by discontinued operations | — | 2 | — | — | 2 | ||||||||||||||
CASH USED FOR INVESTING ACTIVITIES | (8 | ) | (25 | ) | (17 | ) | — | (50 | ) | ||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||
Debt issuance costs | (4 | ) | — | — | — | (4 | ) | ||||||||||||
Intercompany advances | 96 | — | (96 | ) | — | — | |||||||||||||
Other financing activities | — | (3 | ) | (9 | ) | — | (12 | ) | |||||||||||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 92 | (3 | ) | (105 | ) | — | (16 | ) | |||||||||||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | — | — | 1 | — | 1 | ||||||||||||||
CHANGE IN CASH AND CASH EQUIVALENTS | 60 | — | 11 | — | 71 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 90 | 4 | 66 | — | 160 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 150 | $ | 4 | $ | 77 | $ | — | $ | 231 |
Nine Months Ended June 30, 2016 | |||||||||||||||||||
Parent | Guarantors | Non- Guarantors | Elims | Consolidated | |||||||||||||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | $ | 124 | $ | 25 | $ | (5 | ) | $ | — | $ | 144 | ||||||||
INVESTING ACTIVITIES | |||||||||||||||||||
Capital expenditures | (16 | ) | (29 | ) | (21 | ) | — | (66 | ) | ||||||||||
Other investing activities | — | 4 | (1 | ) | — | 3 | |||||||||||||
Net investing cash flows provided by discontinued operations | — | 1 | 3 | — | 4 | ||||||||||||||
CASH USED FOR INVESTING ACTIVITIES | (16 | ) | (24 | ) | (19 | ) | — | (59 | ) | ||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||
Repayment of notes | (55 | ) | — | — | — | (55 | ) | ||||||||||||
Repurchase of common stock | (81 | ) | — | — | — | (81 | ) | ||||||||||||
Intercompany advances | (10 | ) | — | 10 | — | — | |||||||||||||
Other financing activities | — | (4 | ) | (11 | ) | — | (15 | ) | |||||||||||
CASH USED FOR FINANCING ACTIVITIES | (146 | ) | (4 | ) | (1 | ) | — | (151 | ) | ||||||||||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | — | — | 2 | — | 2 | ||||||||||||||
CHANGE IN CASH AND CASH EQUIVALENTS | (38 | ) | (3 | ) | (23 | ) | — | (64 | ) | ||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 73 | 6 | 114 | — | 193 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 35 | $ | 3 | $ | 91 | $ | — | $ | 129 |
Three Months Ended June 30, | Percent | Nine Months Ended June 30, | Percent | |||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||
Estimated Commercial Truck production (in thousands): | ||||||||||||||||
North America, Heavy-Duty Trucks | 66 | 63 | 5 | % | 164 | 199 | (18 | )% | ||||||||
North America, Medium-Duty Trucks | 67 | 63 | 6 | % | 184 | 187 | (2 | )% | ||||||||
North America, Trailers | 73 | 74 | (1 | )% | 205 | 219 | (6 | )% | ||||||||
Western Europe, Heavy- and Medium-Duty Trucks | 117 | 114 | 3 | % | 352 | 335 | 5 | % | ||||||||
South America, Heavy- and Medium-Duty Trucks | 20 | 16 | 25 | % | 50 | 46 | 9 | % | ||||||||
India, Heavy- and Medium-Duty Trucks | 67 | 87 | (23 | )% | 240 | 257 | (7 | )% |
• | 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 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. |
• | Significant contract awards or losses of existing contracts or failure to negotiate acceptable terms in contract renewals; |
• | Ability to successfully launch a significant number of new products, including potential product quality issues, and obtain new business; |
• | Ability to manage possible adverse effects on our European operations, or financing arrangements related thereto, following the United Kingdom's decision to exit the European Union, or in the event one or more other countries exit the European monetary union; |
• | Ability to further implement planned productivity, cost reduction, and other margin improvement initiatives; |
• | Ability to successfully execute strategic initiatives; |
• | 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; |
• | 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; |
• | Competitively driven 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; |
• | Uncertainties of asbestos claim and other litigation, including the outcome of litigation with insurance companies regarding scope of asbestos coverage, and the long-term solvency of our insurance carriers; and |
• | Restrictive government actions (such as restrictions on transfer of funds and trade protection measures, including import and export duties, quotas and customs duties and tariffs). |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income from continuing operations attributable to the company | $ | 49 | $ | 42 | $ | 86 | $ | 103 | |||||||
Restructuring costs | — | 6 | 4 | 9 | |||||||||||
Asset impairment charges, net of noncontrolling interests | — | — | 2 | — | |||||||||||
Non-cash tax expense (1) | 11 | 5 | 22 | 10 | |||||||||||
Income tax benefits | — | (1 | ) | — | (1 | ) | |||||||||
Adjusted income from continuing operations attributable to the company | $ | 60 | $ | 52 | $ | 114 | $ | 121 | |||||||
Diluted earnings per share from continuing operations | $ | 0.52 | $ | 0.46 | $ | 0.94 | $ | 1.10 | |||||||
Impact of adjustments on diluted earnings per share | 0.12 | 0.11 | 0.31 | 0.20 | |||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 0.64 | $ | 0.57 | $ | 1.25 | $ | 1.30 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash provided by operating activities | $ | 106 | $ | 105 | $ | 136 | $ | 144 | |||||||
Capital expenditures | (12 | ) | (19 | ) | (52 | ) | (66 | ) | |||||||
Free cash flow | $ | 94 | $ | 86 | $ | 84 | $ | 78 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income attributable to Meritor, Inc. | $ | 48 | $ | 41 | $ | 85 | $ | 99 | |||||||
Loss from discontinued operations, net of tax, attributable to Meritor, Inc. | 1 | 1 | 1 | 4 | |||||||||||
Income from continuing operations, net of tax, attributable to Meritor, Inc. | $ | 49 | $ | 42 | $ | 86 | $ | 103 | |||||||
Interest expense, net | 21 | 20 | 63 | 63 | |||||||||||
Provision for income taxes | 11 | 8 | 30 | 22 | |||||||||||
Depreciation and amortization | 18 | 17 | 55 | 48 | |||||||||||
Noncontrolling interests | 3 | 1 | 5 | 2 | |||||||||||
Loss on sale of receivables | 2 | 2 | 4 | 6 | |||||||||||
Asset impairment charges | (1 | ) | — | 2 | — | ||||||||||
Restructuring costs | — | 6 | 4 | 9 | |||||||||||
Adjusted EBITDA | $ | 103 | $ | 96 | $ | 249 | $ | 253 | |||||||
Adjusted EBITDA margin (1) | 11.2 | % | 11.4 | % | 10.3 | % | 10.2 | % | |||||||
Unallocated legacy and corporate expense (income), net (2) | (2 | ) | 3 | — | 2 | ||||||||||
Segment adjusted EBITDA | $ | 101 | $ | 99 | $ | 249 | $ | 255 | |||||||
Commercial Truck & Industrial | |||||||||||||||
Segment adjusted EBITDA | $ | 75 | $ | 61 | $ | 171 | $ | 169 | |||||||
Segment adjusted EBITDA margin (3) | 10.3 | % | 9.5 | % | 9.1 | % | 8.9 | % | |||||||
Aftermarket & Trailer | |||||||||||||||
Segment adjusted EBITDA | $ | 26 | $ | 38 | $ | 78 | $ | 86 | |||||||
Segment adjusted EBITDA margin (3) | 11.4 | % | 16.7 | % | 12.4 | % | 13.3 | % |
June 30, 2017 | September 30, 2016 | ||||||
Short-term debt | $ | 132 | $ | 14 | |||
Long-term debt | 858 | 982 | |||||
Total debt | 990 | 996 | |||||
Less: Cash and cash equivalents | (231 | ) | (160 | ) | |||
Net debt | $ | 759 | $ | 836 |
Twelve Months Ended (1) | Twelve Months Ended | ||||||
June 30, 2017 | September 30, 2016 | ||||||
Net income attributable to Meritor, inc. | $ | 559 | $ | 573 | |||
Loss from discontinued operations, net of tax, attributable to Meritor, Inc. | 1 | 4 | |||||
Income from continuing operations, net of tax, attributable to Meritor, inc. | $ | 560 | $ | 577 | |||
Interest expense, net | 84 | 84 | |||||
Benefit for income taxes | (416 | ) | (424 | ) | |||
Depreciation and amortization | 74 | 67 | |||||
Noncontrolling interests | 5 | 2 | |||||
Loss on sale of receivables | 3 | 5 | |||||
Asset impairment charges | 2 | — | |||||
Restructuring costs | 11 | 16 | |||||
Adjusted EBITDA | $ | 323 | $ | 327 | |||
Net debt over Adjusted EBITDA | 2.3 | 2.6 |
Three Months Ended June 30, | Dollar Change Due To | |||||||||||||||||||||
2017 | 2016 | Dollar Change | % Change | Currency | Volume/ Other | |||||||||||||||||
Sales: | ||||||||||||||||||||||
Commercial Truck & Industrial | ||||||||||||||||||||||
North America | $ | 384 | $ | 335 | $ | 49 | 15 | % | $ | — | $ | 49 | ||||||||||
Europe | 175 | 160 | 15 | 9 | % | (5 | ) | 20 | ||||||||||||||
South America | 46 | 38 | 8 | 21 | % | 4 | 4 | |||||||||||||||
China | 38 | 24 | 14 | 58 | % | (2 | ) | 16 | ||||||||||||||
India | 44 | 43 | 1 | 2 | % | 2 | (1 | ) | ||||||||||||||
Other | 17 | 23 | (6 | ) | (26 | )% | 1 | (7 | ) | |||||||||||||
Total External Sales | $ | 704 | $ | 623 | $ | 81 | 13 | % | $ | — | $ | 81 | ||||||||||
Intersegment Sales | 24 | 17 | 7 | 41 | % | (1 | ) | 8 | ||||||||||||||
Total Sales | $ | 728 | $ | 640 | $ | 88 | 14 | % | $ | (1 | ) | $ | 89 | |||||||||
Aftermarket & Trailer | ||||||||||||||||||||||
North America | $ | 185 | $ | 188 | $ | (3 | ) | (2 | )% | $ | (1 | ) | $ | (2 | ) | |||||||
Europe | 31 | 30 | 1 | 3 | % | (1 | ) | 2 | ||||||||||||||
Total External Sales | $ | 216 | $ | 218 | $ | (2 | ) | (1 | )% | $ | (2 | ) | $ | — | ||||||||
Intersegment Sales | 12 | 9 | 3 | 33 | % | — | 3 | |||||||||||||||
Total Sales | $ | 228 | $ | 227 | $ | 1 | — | % | $ | (2 | ) | $ | 3 | |||||||||
Total External Sales | $ | 920 | $ | 841 | $ | 79 | 9 | % | $ | (2 | ) | $ | 81 |
Cost of Sales | |||
Three Months Ended June 30, 2016 | $ | 714 | |
Volume, mix and other, net | 70 | ||
Foreign exchange | (6 | ) | |
Three Months Ended June 30, 2017 | $ | 778 |
Change in Cost of Sales | |||
Higher material costs | $ | 45 | |
Higher labor and overhead costs | 20 | ||
Other, net | (1 | ) | |
Total change in costs of sales | $ | 64 |
Three Months Ended | |||||||||||||||||||
June 30, 2017 | June 30, 2016 | Increase (Decrease) | |||||||||||||||||
SG&A | Amount | % of sales | Amount | % of sales | Amount | % of sales | |||||||||||||
Loss on sale of receivables | $ | (2 | ) | (0.2 | )% | $ | (2 | ) | (0.2 | )% | $ | — | 0.0 pts | ||||||
Short and long-term variable compensation | (18 | ) | (2.0 | )% | (9 | ) | (1.1 | )% | 9 | 0.9 pts | |||||||||
Asbestos-related expense, net of asbestos-related insurance recoveries | (2 | ) | (0.2 | )% | (4 | ) | (0.5 | )% | (2 | ) | (0.3) pts | ||||||||
Supplier litigation settlement | — | — | % | 6 | 0.7 | % | 6 | 0.7 pts | |||||||||||
All other SG&A | (51 | ) | (5.5 | )% | (50 | ) | (5.9 | )% | 1 | (0.4) pts | |||||||||
Total SG&A | $ | (73 | ) | (7.9 | )% | $ | (59 | ) | (7.0 | )% | $ | 14 | 0.9 pts |
Segment adjusted EBITDA | Segment adjusted EBITDA margins | ||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Commercial Truck & Industrial | $ | 75 | $ | 61 | $ | 14 | 10.3 | % | 9.5 | % | 0.8 pts | ||||||||
Aftermarket & Trailer | 26 | 38 | (12 | ) | 11.4 | % | 16.7 | % | (5.3) pts | ||||||||||
Segment adjusted EBITDA | $ | 101 | $ | 99 | $ | 2 | 11.0 | % | 11.8 | % | (0.8) pts |
Commercial Truck & Industrial | Aftermarket & Trailer | TOTAL | ||||||||||
Segment adjusted EBITDA– Quarter ended June 30, 2016 | $ | 61 | $ | 38 | $ | 99 | ||||||
Higher earnings from unconsolidated affiliates | 5 | — | 5 | |||||||||
Short-and long-term variable compensation | (8 | ) | — | (4 | ) | (12 | ) | |||||
Impact of foreign currency exchange rates | (1 | ) | — | (1 | ) | |||||||
2016 Supplier litigation settlement | — | (6 | ) | (6 | ) | |||||||
Allocated asbestos-related expense, net of allocated asbestos-related insurance recoveries | 1 | — | 1 | |||||||||
Volume, mix, pricing and other | 17 | (2 | ) | 15 | ||||||||
Segment adjusted EBITDA – Quarter ended June 30, 2017 | $ | 75 | $ | 26 | $ | 101 |
Nine Months Ended June 30, | Dollar Change Due To | |||||||||||||||||||||
2017 | 2016 | Dollar Change | % Change | Currency | Volume/ Other | |||||||||||||||||
Sales: | ||||||||||||||||||||||
Commercial Truck & Industrial | ||||||||||||||||||||||
North America | $ | 960 | $ | 1,057 | $ | (97 | ) | (9 | )% | $ | — | $ | (97 | ) | ||||||||
Europe | 464 | 446 | 18 | 4 | % | (19 | ) | 37 | ||||||||||||||
South America | 113 | 94 | 19 | 20 | % | 15 | 4 | |||||||||||||||
China | 90 | 63 | 27 | 43 | % | (5 | ) | 32 | ||||||||||||||
India | 139 | 121 | 18 | 15 | % | 1 | 17 | |||||||||||||||
Other | 60 | 65 | (5 | ) | (8 | )% | 2 | (7 | ) | |||||||||||||
Total External Sales | $ | 1,826 | $ | 1,846 | $ | (20 | ) | (1 | )% | $ | (6 | ) | $ | (14 | ) | |||||||
Intersegment Sales | 61 | 58 | 3 | 5 | % | (4 | ) | 7 | ||||||||||||||
Total Sales | $ | 1,887 | $ | 1,904 | $ | (17 | ) | (1 | )% | $ | (10 | ) | $ | (7 | ) | |||||||
Aftermarket & Trailer | ||||||||||||||||||||||
North America | $ | 521 | $ | 538 | $ | (17 | ) | (3 | )% | $ | (2 | ) | $ | (15 | ) | |||||||
Europe | 78 | 87 | (9 | ) | (10 | )% | (2 | ) | (7 | ) | ||||||||||||
Total External Sales | $ | 599 | $ | 625 | $ | (26 | ) | (4 | )% | $ | (4 | ) | $ | (22 | ) | |||||||
Intersegment Sales | 28 | 23 | 5 | 22 | % | (1 | ) | 6 | ||||||||||||||
Total Sales | $ | 627 | $ | 648 | $ | (21 | ) | (3 | )% | $ | (5 | ) | $ | (16 | ) | |||||||
Total External Sales | $ | 2,425 | $ | 2,471 | $ | (46 | ) | (2 | )% | $ | (10 | ) | $ | (36 | ) |
Cost of Sales | |||
Nine Months Ended June 30, 2016 | $ | 2,119 | |
Volume, mix and other, net | (28 | ) | |
Foreign exchange | (18 | ) | |
Nine Months Ended June 30, 2017 | $ | 2,073 |
Change in Cost of Sales | |||
Lower material costs | $ | (48 | ) |
Higher labor and overhead costs | 7 | ||
Other, net | (5 | ) | |
Total change in costs of sales | $ | (46 | ) |
Nine Months Ended | |||||||||||||||||||
June 30, 2017 | June 30, 2016 | Increase (Decrease) | |||||||||||||||||
SG&A | Amount | % of sales | Amount | % of sales | Amount | % of sales | |||||||||||||
Loss on sale of receivables | $ | (4 | ) | (0.2 | )% | $ | (6 | ) | (0.2 | )% | $ | (2 | ) | 0.0 pts | |||||
Short-and long-term variable compensation | (35 | ) | (1.4 | )% | (24 | ) | (1.0 | )% | 11 | 0.4 pts | |||||||||
Asbestos-related expense, net of asbestos-related insurance recoveries | (3 | ) | (0.1 | )% | (10 | ) | (0.4 | )% | (7 | ) | (0.3) pts | ||||||||
2016 Supplier litigation settlement | — | — | % | 6 | 0.2 | % | 6 | 0.2 pts | |||||||||||
Legal settlement charge | (10 | ) | (0.4 | )% | — | — | % | 10 | 0.4 pts | ||||||||||
All other SG&A | (140 | ) | (5.8 | )% | (141 | ) | (5.7 | )% | (1 | ) | 0.1 pts | ||||||||
Total SG&A | $ | (192 | ) | (7.9 | )% | $ | (175 | ) | (7.1 | )% | $ | 17 | 0.8 pts |
Segment adjusted EBITDA | Segment adjusted EBITDA margins | ||||||||||||||||||
Nine Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Commercial Truck & Industrial | $ | 171 | $ | 169 | $ | 2 | 9.1 | % | 8.9 | % | 0.2 pts | ||||||||
Aftermarket & Trailer | 78 | 86 | (8 | ) | 12.4 | % | 13.3 | % | (0.9) pts | ||||||||||
Segment adjusted EBITDA | $ | 249 | $ | 255 | $ | (6 | ) | 10.3 | % | 10.3 | % | 0.0 pts |
Commercial Truck & Industrial | Aftermarket & Trailer | TOTAL | ||||||||||
Segment adjusted EBITDA– Nine months ended June 30, 2016 | $ | 169 | $ | 86 | $ | 255 | ||||||
Higher earnings from unconsolidated affiliates | 6 | — | 6 | |||||||||
Short-and long-term variable compensation | (10 | ) | — | (4 | ) | (14 | ) | |||||
Impact of foreign currency exchange rates | 6 | 1 | 7 | |||||||||
2016 Supplier litigation settlement | — | (6 | ) | (6 | ) | |||||||
Allocated asbestos-related expense, net of allocated asbestos-related insurance recoveries | 7 | 2 | 9 | |||||||||
Legal settlement charge | (10 | ) | — | (10 | ) | |||||||
Volume, mix, pricing and other | 3 | (1 | ) | 2 | ||||||||
Segment adjusted EBITDA – Nine months ended June 30, 2017 | $ | 171 | $ | 78 | $ | 249 |
Nine Months Ended June 30, | |||||||
2017 | 2016 | ||||||
OPERATING CASH FLOWS | |||||||
Income from continuing operations | $ | 91 | $ | 105 | |||
Depreciation and amortization | 55 | 48 | |||||
Deferred income tax expense | 19 | 2 | |||||
Restructuring costs | 4 | 9 | |||||
Gain from sale of property | — | (2 | ) | ||||
Asset impairment charges | 2 | — | |||||
Equity in earnings of affiliates | (32 | ) | (26 | ) | |||
Pension and retiree medical expense | 11 | 15 | |||||
Dividends received from equity method investments | 25 | 29 | |||||
Pension and retiree medical contributions | (28 | ) | (32 | ) | |||
Restructuring payments | (11 | ) | (8 | ) | |||
Decrease (increase) in working capital | (75 | ) | 20 | ||||
Changes in off-balance sheet accounts receivable factoring | 62 | (30 | ) | ||||
Other, net | 14 | 16 | |||||
Cash flows provided by continuing operations | 137 | 146 | |||||
Cash flows used for discontinued operations | (1 | ) | (2 | ) | |||
CASH PROVIDED BY OPERATING ACTIVITIES | $ | 136 | $ | 144 |
Nine Months Ended June 30, | |||||||
2017 | 2016 | ||||||
INVESTING CASH FLOWS | |||||||
Capital expenditures | $ | (52 | ) | $ | (66 | ) | |
Other investing activities | — | 3 | |||||
Net investing cash flows provided by discontinued operations | 2 | 4 | |||||
CASH USED FOR INVESTING ACTIVITIES | $ | (50 | ) | $ | (59 | ) |
Nine Months Ended June 30, | |||||||
2017 | 2016 | ||||||
FINANCING CASH FLOWS | |||||||
Repayment of notes | $ | — | $ | (55 | ) | ||
Debt issuance costs | (4 | ) | — | ||||
Other financing activities | (12 | ) | (15 | ) | |||
Net change in debt | (16 | ) | (70 | ) | |||
Repurchase of common stock | — | (81 | ) | ||||
CASH USED FOR FINANCING ACTIVITIES | $ | (16 | ) | $ | (151 | ) |
June 30, | September 30, | ||||||
2017 | 2016 | ||||||
Fixed-rate debt securities | $ | 714 | $ | 713 | |||
Fixed-rate convertible notes | 273 | 271 | |||||
Unamortized discount on convertible notes | (10 | ) | (14 | ) | |||
Other borrowings | 13 | 26 | |||||
Total debt | $ | 990 | $ | 996 |
Total Facility Size | Utilized as of 6/30/17 | Readily Available as of 6/30/17 | Current Expiration | ||||||||||
On-balance sheet arrangements: | |||||||||||||
Revolving credit facility (1) | $ | 525 | $ | — | $ | 525 | March 2022 (1) | ||||||
Committed U.S. accounts receivable securitization (2) | 100 | — | 88 | December 2019 | |||||||||
Total on-balance sheet arrangements | $ | 625 | $ | — | $ | 613 | |||||||
Off-balance sheet arrangements: (2) | |||||||||||||
Committed Swedish factoring facility (3) | $ | 177 | $ | 186 | $ | — | March 2020 | ||||||
Committed U.S. factoring facility | 91 | 43 | — | February 2019 | |||||||||
Uncommitted U.K. factoring facility | 29 | 5 | — | February 2018 | |||||||||
Uncommitted Italy factoring facility | 34 | 33 | — | June 2022 | |||||||||
Other uncommitted factoring facilities | 23 | 21 | — | None | |||||||||
Letter of credit facility | 25 | 18 | 7 | March 2019 | |||||||||
Total off-balance sheet arrangements | 379 | 306 | 7 | ||||||||||
Total available sources | $ | 1,004 | $ | 306 | $ | 620 |
Assuming a 10% Increase in Rates | Assuming a 10% Decrease in Rates | Increase (Decrease) in | |||||||
Foreign Currency Sensitivity: | |||||||||
Forward contracts in USD (1) | $ | 5.2 | $ | (5.2 | ) | Fair Value | |||
Forward contracts in Euro (1) | (5.3 | ) | 5.3 | Fair Value | |||||
Foreign currency denominated debt (2) | 0.8 | (0.8 | ) | Fair Value | |||||
Foreign currency option contracts in USD | 4.8 | 0.1 | Fair Value | ||||||
Foreign currency option contracts in Euro | 4.5 | (0.8 | ) | 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 (3) | $ | (31.5 | ) | $ | 32.6 | 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. |
(2) | At June 30, 2017, the fair value of outstanding foreign currency denominated debt was $8 million. A 10% decrease in quoted currency exchange rates would result in a decrease of $1 million in foreign currency denominated debt. At June 30, 2017, a 10% increase in quoted currency exchange rates would result in an increase of $1 million in foreign currency denominated debt. |
(3) | At June 30, 2017, the fair value of outstanding debt was $1,157 million. A 50 basis points decrease in quoted interest rates would result in an increase of $33 million in the fair value of fixed rate debt. A 50 basis points increase in quoted interest rates would result in a decrease of $32 million in the fair value of fixed rate debt. |
• | ensuring completeness and accuracy of the global list of UTPs |
• | enhanced communication through formal periodic meetings attended by accounting, tax, finance, business and strategy leaders |
• | updates to control design to incorporate detailed steps related to the preparation, detailed review, and overriding review of UTPs and income tax calculations, including inputs and assumptions |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||
April 1- 30, 2017 | — | $ | — | — | $ | — | ||||
May 1- 31, 2017 | — | $ | — | — | $ | — | ||||
June 1- 30, 2017 | 7,933 | $ | 15.00 | 7,933 | $ | 99,881,011 | ||||
Total | 7,933 | 7,933 |
(1) | On July 21, 2016, the Board of Directors authorized the repurchase of up to $100 million of the company’s common stock and up to $150 million aggregate principal amount of any of the company’s debt securities (including convertible debt securities), in each case from time to time through open market purchases, privately negotiated transactions or otherwise, until September 30, 2019, subject to compliance with legal and regulatory requirements and the company's debt covenants. As part of the equity and equity-linked repurchase authorization, we entered into a 10b5-1 common stock repurchase plan. |
3-a | Amended and Restated Articles of Incorporation of Meritor, filed as Exhibit 3-a to Meritor’s Annual Report on Form 10-K for the fiscal year ended September 27, 2015, is incorporated herein by reference. |
3-b | Amended and Restated By-laws of Meritor, filed as Exhibit 3-b to Meritor’s Annual Report on Form 10-K for the fiscal year ended October 2, 2016, is incorporated herein by reference. |
10-a** | Extension Letter dated June 8, 2017, from Meritor Heavy Vehicle Systems Cameri S.P.A. to Nordea Bank AB (pbl). |
10-b** | Seventh Amendment to the Receivables Purchase Agreement dated as of June 22, 2017, by and among ArvinMeritor Receivables Corporation, as Seller, Meritor, Inc., as Initial Servicer, and PNC Bank, National Association, as a Related Committed Purchaser, as an LC Participant, as a Purchaser Agent, as LC Bank and as Administrator. |
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 |
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 |
MERITOR, INC. | ||||
Date: | August 3, 2017 | By: | /s/ | April Miller Boise |
April Miller Boise | ||||
Senior Vice President, General Counsel and Corporate Secretary | ||||
(For the registrant) | ||||
Date: | August 3, 2017 | By: | /s/ | Paul D. Bialy |
Paul D. Bialy | ||||
Vice President, Controller and Principal Accounting Officer | ||||
Date: | August 3, 2017 | By: | /s/ | Kevin A. Nowlan |
Kevin A. Nowlan | ||||
Senior Vice President and Chief Financial Officer |
(i) | ARVINMERITOR RECEIVABLES CORPORATION, a Delaware corporation, as Seller; |
(ii) | MERITOR, INC., an Indiana corporation, as Servicer; and |
(iii) | PNC BANK, NATIONAL ASSOCIATION (“PNC”), as a Related Committed Purchaser, as an LC Participant, as a Purchaser Agent, as LC Bank and as Administrator. |
Special Obligor | Special Concentration Limit |
Oshkosh Corporation | 20.00% |
Daimler Trucks North America LLC | 30.00% |
Navistar Companies (collectively) | 25.00% |
Earnings Available for Fixed Charges (A): | |||||
Pre-tax income from continuing operations | $ | 121 | |||
Add: | |||||
Distributed income of affiliates | 25 | ||||
Less: | |||||
Equity in earnings of affiliates | (32 | ) | |||
114 | |||||
Add: fixed charges included in earnings: | |||||
Interest expense | 65 | ||||
Interest element of rentals | 4 | ||||
Total | 69 | ||||
Total earnings available for fixed charges: | $ | 183 | |||
Fixed Charges (B): | |||||
Fixed charges included in earnings | $ | 69 | |||
Capitalized interest | — | ||||
Total fixed charges | $ | 69 | |||
Ratio of Earnings to Fixed Charges | 2.65 |
Form | Registrations No. | Purpose |
S-3 | 333-200858 | Registration of common stock, preferred stock, warrants, debt securities and guarantees |
S-8 | 333-215874 | Amended and Restated 2010 Long-Term Incentive Plan |
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-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: August 3, 2017 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Meritor, Inc. for the quarterly period ended July 2, 2017; |
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. |
/s/ Jeffrey A. Craig | |
Jeffrey A. Craig | |
Chief Executive Officer and President |
1. | I have reviewed this Quarterly Report on Form 10-Q of Meritor, Inc. for the quarterly period ended July 2, 2017; |
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. |
/s/ Kevin A. Nowlan | |
Kevin A. Nowlan | |
Senior Vice President and Chief Financial Officer |
1. | The Quarterly Report of Meritor, Inc. on Form 10-Q for the quarterly period ended July 2, 2017 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 |
1. | The Quarterly Report of Meritor, Inc. on Form 10-Q for the quarterly period ended July 2, 2017 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 |
DOCUMENT AND ENTITY INFORMATION - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 31, 2017 |
|
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 | 88,565,934 | |
Document period end date | Jun. 30, 2017 | |
Document fiscal year focus | 2017 | |
Document type | 10-Q | |
Document fiscal period focus | Q3 | |
Amendment flag | false |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 51 | $ 42 | $ 90 | $ 101 |
Foreign currency translation adjustments: | ||||
Attributable to Meritor, Inc. | 17 | (10) | 8 | (6) |
Attributable to noncontrolling interest | 0 | 0 | (1) | 0 |
Pension and other postretirement benefit related adjustments | 11 | 7 | 33 | 25 |
Unrealized gain (loss) on investments and foreign exchange contracts | (2) | 3 | 0 | 5 |
Other comprehensive income, net of tax | 26 | 0 | 40 | 24 |
Total comprehensive income | 77 | 42 | 130 | 125 |
Less: Comprehensive income attributable to noncontrolling interest | (3) | (1) | (4) | (2) |
Comprehensive income attributable to Meritor, Inc. | $ 74 | $ 41 | $ 126 | $ 123 |
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
|||
---|---|---|---|---|---|
CURRENT ASSETS: | |||||
Cash and cash equivalents | [1] | $ 231 | $ 160 | ||
Receivables trade and other, net | [1] | 500 | 396 | ||
Inventories | [1] | 360 | 316 | ||
Other current assets | 37 | 33 | |||
TOTAL CURRENT ASSETS | 1,128 | 905 | |||
NET PROPERTY | [1] | 430 | 439 | ||
GOODWILL | [1] | 391 | 390 | ||
OTHER ASSETS | 763 | 760 | |||
TOTAL ASSETS | 2,712 | 2,494 | |||
CURRENT LIABILITIES: | |||||
Short-term debt | 132 | 14 | |||
Accounts and notes payable | [1] | 602 | 475 | ||
Other current liabilities | 277 | 268 | |||
TOTAL CURRENT LIABILITIES | 1,011 | 757 | |||
LONG-TERM DEBT | 858 | 982 | |||
RETIREMENT BENEFITS | 667 | 703 | |||
OTHER LIABILITIES | 220 | 238 | |||
TOTAL LIABILITIES | 2,756 | 2,680 | |||
COMMITMENTS AND CONTINGENCIES (See Note 20) | |||||
MEZZANINE EQUITY: | |||||
Convertible debt with cash settlement | 12 | 0 | |||
EQUITY (DEFICIT): | |||||
Common stock (June 30, 2017 and September 30, 2016, 101.4 and 99.6 shares issued and 88.6 and 86.8 shares outstanding, respectively) | 101 | 99 | |||
Additional paid-in capital | 875 | 876 | |||
Accumulated deficit | (156) | (241) | |||
Treasury stock, at cost (at both June 30, 2017 and September 30, 2016, 12.8 shares) | (136) | (136) | |||
Accumulated other comprehensive loss | (768) | (809) | |||
Total deficit attributable to Meritor, Inc. | (84) | (211) | |||
Noncontrolling interests | [1] | 28 | 25 | ||
TOTAL DEFICIT | (56) | (186) | |||
TOTAL LIABILITIES, MEZZANINE EQUITY AND DEFICIT | 2,712 | 2,494 | |||
ASSETS, LIABILITIES, AND EQUITY HELD-FOR-SALE | |||||
Cash and cash equivalents | 1 | 1 | |||
Receivables, trade and other, net | 11 | 8 | |||
Inventories | 2 | 1 | |||
Net property | 3 | 5 | |||
Goodwill | 1 | ||||
Accounts and notes payable | 10 | 5 | |||
Noncontrolling interests | $ 2 | $ 3 | |||
|
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares issued (in shares) | 101.4 | 99.6 |
Common shares outstanding (in shares) | 88.6 | 86.8 |
Treasury stock (in shares) | 12.8 | 12.8 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
||||
OPERATING ACTIVITIES | |||||
CASH PROVIDED BY OPERATING ACTIVITIES (See Note 10) | $ 136 | $ 144 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (52) | (66) | |||
Other investing activities | 0 | 3 | |||
Net investing cash flows provided by discontinued operations | 2 | 4 | |||
CASH USED FOR INVESTING ACTIVITIES | (50) | (59) | |||
FINANCING ACTIVITIES | |||||
Repayment of notes | 0 | (55) | |||
Debt issuance costs | (4) | 0 | |||
Other financing activities | (12) | (15) | |||
Net change in debt | (16) | (70) | |||
Repurchase of common stock | 0 | (81) | |||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | (16) | (151) | |||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | 2 | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 71 | (64) | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 160 | [1] | 193 | ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 231 | [1] | $ 129 | ||
|
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - USD ($) $ in Millions |
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, 2015 | $ (646) | $ 99 | $ 865 | $ (814) | $ (55) | $ (766) | $ (671) | $ 25 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 125 | 99 | 24 | 123 | 2 | |||
Equity based compensation expense | 8 | 8 | 8 | |||||
Repurchase of common stock | (81) | (81) | (81) | |||||
Noncontrolling interest dividends | (2) | (2) | ||||||
Ending Balance at Jun. 30, 2016 | (596) | 99 | 873 | (715) | (136) | (742) | (621) | 25 |
Beginning balance at Sep. 30, 2016 | (186) | 99 | 876 | (241) | (136) | (809) | (211) | 25 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 130 | 85 | 41 | 126 | 4 | |||
Equity based compensation expense | 12 | 12 | 12 | |||||
Vesting of equity based awards | 0 | 2 | (2) | |||||
Stock option exercises | 2 | 2 | 2 | |||||
Convertible debt with cash settlement | (12) | (12) | (12) | |||||
Noncontrolling interest dividends | (1) | (1) | ||||||
Other equity adjustments | (1) | (1) | (1) | |||||
Ending Balance at Jun. 30, 2017 | $ (56) | $ 101 | $ 875 | $ (156) | $ (136) | $ (768) | $ (84) | $ 28 |
Basis of Presentation |
9 Months Ended |
---|---|
Jun. 30, 2017 | |
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, condensed consolidated statement of cash flows and related notes for all periods presented. Additional information regarding discontinued operations is discussed in Note 4. In the opinion of the company, the unaudited condensed consolidated 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 company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016, as amended. The condensed consolidated balance sheet data as of September 30, 2016 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 nine months ended June 30, 2017 are not necessarily indicative of the results for the full year. The company’s fiscal year ends on the Sunday nearest September 30, and its fiscal quarters generally end on the Sundays nearest December 31, March 31 and June 30. The third quarter of fiscal years 2017 and 2016 ended on July 2, 2017 and July 3, 2016, 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 June 30 are used consistently throughout this report to represent the fiscal year end and third fiscal quarter end, respectively. |
Earnings per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
In November 2016, 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 was $12.77, which was the company’s share price on the grant date of December 1, 2016. The Board of Directors also approved a grant of 0.5 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 was $12.77, which was the company's share price on the grant date of December 1, 2016. The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2019 goals for the three-year performance period of October 1, 2016 to September 30, 2019, measured at the end of the performance period. The number of performance share units will depend on meeting the established M2019 goals at the following weights: 50% associated with achieving an Adjusted diluted earnings per share from continuing operations target, 25% associated with achieving revenue growth above market and 25% associated with achieving a Net debt to Adjusted EBITDA target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million performance share units. In November 2015, 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 was $10.51, which was the company’s share price on the grant date of December 1, 2015. The Board of Directors also approved a grant of 0.5 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 was $10.51, which was the company's share price on the grant date of December 1, 2015. 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, 2015 to September 30, 2018, measured at the end of the performance period. The number of performance share units that vest will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 50% associated with achieving an Adjusted EBITDA margin target and 50% 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 0.7 million performance share units. In November 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 was $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 was $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 that vest 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 performance share units. In November 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 represented 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 was $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 vested on December 1, 2016 depended 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, which was measured after the end of the performance period. The company's performance resulted in the vesting of the performance share units at 112% of the grant date amounts. There were 0.1 million and 0.4 million shares related to these performance share units included in the diluted earnings per share calculation for the three and nine months ended June 30, 2017, respectively, as certain payout thresholds were achieved relative to the established M2016 goals. There were 1.9 million and 1.4 million shares related to these performance share units included in the diluted earnings per share calculation for the three and nine months ended June 30, 2016, respectively, as certain payout thresholds were achieved relative to the established M2016 goals. For the three months ended June 30, 2017, the dilutive impact of previously issued restricted shares, restricted share units and performance share units was 1.8 million shares, compared to 2.2 million shares for the same period in the prior fiscal year. For the nine months ended June 30, 2017, the dilutive impact of previously issued restricted shares, restricted share units and performance share units was 1.4 million shares, compared to 1.9 million shares for the same period in the prior fiscal year. For the three and nine months ended June 30, 2017, compensation cost related to restricted shares, restricted share units and performance share units was $5 million and $12 million, respectively. For the three and nine months ended June 30, 2016, compensation cost related to restricted shares, restricted share units and performance share units was $2 million and $8 million, respectively. For each of the three and nine months ended June 30, 2016, options to purchase 0.3 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 nine months ended June 30, 2017, 3.1 million and 2.1 million shares, respectively, were included in the computation of diluted earnings per share, as the company's average stock price during these periods exceeded the conversion price for the 7.875 percent convertible notes due 2026. For the three and nine months ended June 30, 2016, the company’s 7.875 percent convertible notes due 2026 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 for the notes. |
New Accounting Standards |
9 Months Ended |
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Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards to be implemented In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements and provides guidance on when an entity would be required to apply modification accounting. This standard is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied prospectively. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 affects entities who own investments in callable debt securities and aligns the amortization period of premiums on callable debt securities to expectations incorporated in market pricing on the underlying securities. This standard is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effective adjustment directly to retained earnings at the beginning of the adoption period. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance requires entities to only include the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, are to be included in a separate line item(s) outside of any sub-total of operating income. ASU 2017-07 also provides guidance that only the service cost component of net benefit cost is eligible for capitalization. This standard is effective for public business entities for interim and annual periods beginning after December 15, 2017. The revisions in this amendment are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 provides guidance which defines an “in substance nonfinancial asset”; unifies guidance related to partial sales of nonfinancial assets; eliminates rules specifically addressing sales of real estate; removes exceptions to the financial asset derecognition model; and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The effective date and the transition requirements for the amendments in ASU 2017-05 are the same as the effective date and transition requirements in Topic 606, described below. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers in 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The new guidance is not expected to have a material impact on the company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. To be considered a business under the new guidance, it must include an input and a substantive process that together significantly contribute to the ability to create output. The amendment removes the evaluation of whether a market participant could replace missing elements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and will be applied prospectively. The potential impact of this new guidance will be assessed for future acquisitions or dispositions, but it is not expected to have a material impact on the company's consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements but does not expect a material impact upon adoption. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU was issued to remove the prohibition in FASB ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted; however, the guidance can only be adopted in the first interim period of a fiscal year. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The ASU was issued to reduce differences in practice with respect to how specific transactions are classified in the statement of cash flows. The update provides guidance on the following eight types of transactions: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments in this update are required to be adopted by public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The company is currently evaluating the potential impact of this new guidance on its accounting policies and its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The ASU clarifies the assessment of the likelihood that revenue will be collected from a contract, the guidance for presenting sales taxes and similar taxes, and the timing for measuring customer payments that are not in cash. The ASU also establishes a practical expedient for contract modifications at the transition. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-12 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its accounting policies and its consolidated financial statements. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update). The ASU was issued to remove from the Codification certain SEC staff guidance that the SEC staff stated would be rescinded: Revenue and Expense Recognition for Freight Services in Process; Accounting for Shipping and Handling Fees and Costs; and Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendor’s Products). The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-11 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In April, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. The ASU provides guidance regarding the identification of performance and licensing obligations. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-10 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU intends to simplify how share-based payments are accounted for, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company is assessing the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. The ASU will eliminate the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The ASU clarifies that an exercise contingency itself does not need to be evaluated to determine whether it is in an embedded derivative, just the underlying option. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The update clarifies that a change in a counterparty to a derivative instrument designated as a hedging instrument would not require the entity to dedesignate the hedging relationship and discontinue the application of hedge accounting. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim years within those fiscal periods. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update will require lessees to recognize a right-of-use asset and lease liability for substantially all leases. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 and is currently assessing the potential impact of this new guidance on its on its accounting policies and its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires entities that measure inventory using first-in, first-out (FIFO) or average cost to measure inventory at the lower of cost and net realizable value. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), which provides guidance about management's responsibility in evaluating whether there is substantial doubt relating to an entity’s ability to continue as a going concern and to provide related footnote disclosures as applicable. ASU 2014-15 is effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service and requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 was originally effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year making it effective for fiscal periods beginning after December 15, 2017, including interim periods within those fiscal periods, while also providing for early adoption but not before the original effective date. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 and is currently evaluating the potential impact of this new guidance on its on its accounting policies and its consolidated financial statements. Accounting standards implemented during fiscal year 2017 In January 2017, the FASB issued ASU 2017-03 which amended Accounting Changes and Error Corrections (Topic 250) to state that registrants should consider additional qualitative disclosures if the impact of an issued but not yet adopted ASU is unknown or cannot be reasonably estimated and to include a description of the effect of the accounting policies that the registrant expects to apply, if determined. Transition guidance included in certain issued but not yet adopted ASUs was also updated to reflect this amendment. 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. This guidance requires that an award with a performance target that affects vesting and that could be achieved after the requisite service period, such as when an employee retires, but may still vest if and when the performance target is achieved, be treated as an award with performance conditions that affect vesting and the company apply existing guidance under ASC Topic 718, Compensation - Stock Compensation. The guidance is effective for fiscal periods beginning after December 15, 2015, including interim periods within those fiscal periods and may be applied either prospectively or retrospectively. The company adopted this standard prospectively in the first quarter of fiscal year 2017. This guidance did not have a material impact on its consolidated financial statements. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations Results of discontinued operations are summarized as follows (in millions):
Loss from discontinued operations attributable to the company for the three and nine months ended June 30, 2017 and June 30, 2016 was primarily related to changes in estimates related to legal costs incurred in connection with a previously divested business. Total discontinued operations assets as of both June 30, 2017 and September 30, 2016 were $1 million and total discontinued operations liabilities as of June 30, 2017 and September 30, 2016 were $6 million. |
Assets and Liabilities Held for Sale |
9 Months Ended |
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Jun. 30, 2017 | |
Assets And Liabilities Held-For-Sale [Abstract] | |
Assets and Liabilities Held for Sale | Assets and Liabilities Held for Sale During the first quarter of fiscal year 2017, management approved a plan to sell a business within the Commercial Truck & Industrial reporting segment. The company expects to sell the business within one year from management's approval of the plan. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of June 30, 2017. Assets and liabilities held for sale are measured at the lower of the carrying value or fair value less costs to sell. Upon meeting the held for sale criteria, the company determined the carrying value of the business exceeded the fair value less costs to sell. As a result, an impairment charge of $3 million was recorded within other operating expense, net in the company’s condensed consolidated statement of operations during the first quarter of fiscal year 2017. Assets and liabilities held for sale, when measured in subsequent periods, are permitted to be written-up for increases in the fair value, less cost to sell, not in excess of the cumulative loss previously recognized. During the third quarter of fiscal year 2017, the fair value less costs to sell of the business increased relative to the carrying value. As a result, a $1 million adjustment, which reduced the previously recognized loss, was recorded in the company's condensed consolidated statement of operations within other operating expense, net. During the third quarter of fiscal year 2017, an additional $2 million of assets met the criteria for presentation as assets held for sale within the Aftermarket & Trailer segment related to the Aftermarket restructuring actions (see Note 7). |
Goodwill |
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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. 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):
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Restructuring Costs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Costs | Restructuring Costs Restructuring reserves, primarily related to unpaid employee termination benefits, were $8 million at June 30, 2017 and $16 million at September 30, 2016. The changes in restructuring reserves for the nine months ended June 30, 2017 and 2016 are as follows (in millions):
Ongoing Aftermarket Actions: During the third quarter of fiscal year 2016, the company approved various restructuring plans in the North American and European Aftermarket businesses. The company recorded $5 million of restructuring costs during the third quarter of fiscal year 2016. The company recorded $4 million of restructuring costs during the second quarter of fiscal year 2017. Restructuring actions associated with these plans are expected to be completed by the end of fiscal year 2017. Other Fiscal 2016 Actions: During the first half of fiscal year 2016, the company recorded restructuring costs of $3 million primarily associated with a labor reduction program in China in the Commercial Truck & Industrial segment and a labor reduction program in the Aftermarket & Trailer segment. Restructuring actions with these plans were substantially complete as of September 30, 2016. |
Income Taxes |
9 Months Ended |
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Jun. 30, 2017 | |
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 among 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. In prior years, the company established valuation allowances against its U.S. net deferred tax assets and the net deferred tax assets of its 100-percent-owned subsidiaries in France, the United Kingdom, Brazil and certain other countries. In evaluating its ability to recover these net deferred tax assets, the company utilizes a consistent approach which considers its historical operating results, including an assessment of the degree to which any gains or losses are driven by items that are unusual in nature, and tax planning strategies. In addition, the company reviews changes in near-term market conditions and other factors that impact future operating results. Continued improvement in the company’s operating results could lead to reversal of some or all of these valuation allowances in the future. During the fourth quarter of fiscal year 2016, as a result of sustained profitability in the U.S. evidenced by a strong earnings history, future forecasted earnings and additional positive evidence, the company determined it was more likely than not that it would be able to realize deferred tax assets in the U.S. Accordingly, the company reversed a portion of the valuation allowance in the U.S. Also in the fourth quarter of fiscal year 2016, due to a three-year cumulative loss and future economic uncertainty, the company established a tax valuation allowance in Brazil because the company determined it was not more likely than not that it would realize its deferred tax assets in Brazil. The company continues to maintain valuation allowances in France, the United Kingdom, Brazil and certain other jurisdictions, as the company believes the negative evidence that it will be able to recover these net deferred tax assets continues to outweigh the positive evidence. For the three months ended June 30, 2017, the company had approximately $3 million of net pre-tax income compared to $19 million of net pre-tax income in the same period in fiscal year 2016 in tax jurisdictions in which tax expense (benefit) is not recorded. For the nine months ended June 30, 2017, the company had an insignificant net pre-tax loss compared to $47 million of net pre-tax income in the same period in fiscal year 2016 in tax jurisdictions in which tax expense (benefit) is not recorded. |
Accounts Receivable Factoring and Securitization |
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Jun. 30, 2017 | |
Accounts Receivable Factoring and Securitization [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 with Nordea Bank, which expires in March 2020, the company can sell up to, at any point in time, €155 million ($177 million) of eligible trade receivables. The amount of eligible receivables sold may 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 €162 million ($186 million) and €121 million ($135 million) of this accounts receivable factoring facility as of June 30, 2017 and September 30, 2016, respectively. The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through April 23, 2018. The commitment is subject to standard terms and conditions for this type of arrangement. U.S. Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo and its U.S. subsidiaries through one of its U.S. subsidiaries. Under this arrangement with Nordea Bank, which expires in February 2019, the company can sell up to, at any point in time, €80 million ($91 million) of eligible trade receivables. The amount of eligible receivables sold may 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 €38 million ($43 million) and €39 million ($44 million) of this accounts receivable factoring facility as of June 30, 2017 and September 30, 2016, respectively. United Kingdom Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement with Nordea Bank, which expires in February 2018, the company can sell up to, at any point in time, €25 million ($29 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 €4 million ($5 million) and €6 million ($6 million) of this accounts receivable factoring facility as of June 30, 2017 and September 30, 2016, 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 due from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. On June 13, 2017, Meritor extended this Italy factoring facility with Nordea Bank until June 18, 2022, with all other terms of the agreement remaining unchanged. Under this arrangement, the company can sell up to, at any point in time, €30 million ($34 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 €29 million ($33 million) and €22 million ($24 million) of this accounts receivable factoring facility as of June 30, 2017 and September 30, 2016, 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 to the above facilities, a number 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 under these arrangements was $21 million and $10 million at June 30, 2017 and September 30, 2016, respectively. Total costs associated with all of the off-balance sheet arrangements described above were $2 million in the three months ended June 30, 2017 and 2016, and $4 million and $6 million in the nine months ended June 30, 2017 and 2016, respectively, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations. On-balance sheet arrangements The company has a $100 million U.S. accounts receivables securitization facility, which expires December 2019. The maximum permitted priority debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility is 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 June 30, 2017 and September 30, 2016, no amounts, including letters of credit, were outstanding under this program. This securitization 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 amounts exceeding the amounts shown as outstanding at fiscal quarter ends. |
Operating Cash Flows |
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Operating Cash Flow Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Cash Flows | Operating Cash Flows The reconciliation of net income to cash flows provided by operating activities is as follows (in millions):
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Inventories |
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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):
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Other Current Assets |
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Other Current Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets | Other Current Assets Other current assets are summarized as follows (in millions):
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Net Property |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Property | Net Property Net property is summarized as follows (in millions):
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Other Assets |
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Other Assets, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets Other assets are summarized as follows (in millions):
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 June 30, 2017 and September 30, 2016, the company’s investment in the joint venture was $48 million and $45 million, respectively. |
Other Current Liabilities |
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Other Current Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Other Current Liabilities Other current liabilities are summarized as follows (in millions):
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):
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other Liabilities Other liabilities are summarized as follows (in millions):
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Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions):
(1) The 4.0 percent convertible notes due 2027 and 7.875 percent convertible notes due 2026 contain a put and call feature, which allows for earlier redemption beginning in 2019 and 2020, respectively. (2) The 6.75 percent notes and 6.25 percent notes contain a call option, which allows for early redemption. (3) The 4.0 percent convertible notes due 2027 are presented net of $1 million unamortized issuance costs as of June 30, 2017 and September 30, 2016. (4) The 7.875 percent convertible notes due 2026 are presented net of $2 million unamortized issuance costs as of June 30, 2017 and September 30, 2016, and $7 million and $9 million original issuance discount as of June 30, 2017 and September 30, 2016, respectively. (5) The 6.75 percent notes due 2021 are presented net of $4 million unamortized issuance costs as of June 30, 2017 and September 30, 2016. (6) The 6.25 percent notes due 2024 are presented net of $7 million and $8 million unamortized issuance costs as of June 30, 2017 and September 30, 2016, respectively. (7) The carrying amount of the equity component related to convertible debt. Convertible Notes Due 2026 The 7.875 percent convertible notes due 2026 (the “2026 Notes”) were classified as current as of June 30, 2017 and noncurrent as of September 30, 2016 as the holders of the company's 2026 Notes are entitled to convert all or a portion of their 2026 Notes at any time beginning July 1, 2017 and prior to the close of business on September 29, 2017 at a rate of 83.3333 shares of common stock per $1,000 principal amount at maturity of the 2026 Notes (representing a conversion price of approximately $12.00 per share). The 2026 Notes are convertible as the closing price of shares of the company's common stock for at least 20 trading days during the 30 consecutive trading-day period ending on June 30, 2017 was greater than 120% of the $12.00 conversion price associated with the 2026 Notes. The 2026 Notes surrendered for conversion, if any, would be settled in cash up to the principal amount at maturity of the 2026 Notes and cash, stock or a combination of cash and stock, at the company’s election, for the remainder of the conversion value of the 2026 Notes in excess of the principal amount at maturity and cash in lieu of any fractional shares, subject to and in accordance with the provisions of the indenture that governs the 2026 Notes. As a result of the 2026 Notes becoming currently convertible for cash up to the principal amount of $140 million at the holder's option, $12 million of permanent equity was reclassified as mezzanine equity. Revolving Credit Facility On March 31, 2017, the company amended and restated its revolving credit facility. Pursuant to the revolving credit agreement as amended, the company has a $525 million revolving credit facility that matures in March 2022. Additionally, $4 million was capitalized as deferred issuance costs and will be amortized over the term of the agreement. The availability under this facility is dependent upon various factors, including 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 June 30, 2017, the revolving credit facility was collateralized by approximately $774 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 June 30, 2017, the margin over LIBOR rate was 300 basis points and the commitment fee was 45 basis points. Overnight revolving credit loans are at the prime rate plus a margin of 200 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 23). No borrowings were outstanding under the revolving credit facility at June 30, 2017 and September 30, 2016. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At June 30, 2017 and September 30, 2016, 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. Repurchase of Debt Securities On March 1, 2016, substantially all of the $55 million principal amount of 4.625 percent convertible notes were repurchased at 100 percent of their face value. On April 15, 2016, the remaining 4.625 percent convertible notes were redeemed at 100 percent of their face value. As of September 30, 2016, none of the 4.625 percent convertible notes were outstanding. The repurchases were made under the company's equity and equity linked repurchase authorizations (see Note 21). The repurchase program under these authorizations was complete as of September 30, 2016. 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 Wells Fargo Equipment Finance (“Wells Fargo”) 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 Wells Fargo 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 $3 million and $7 million outstanding under this capital lease arrangement as of June 30, 2017 and September 30, 2016, respectively. In addition, the company had another $10 million and $9 million outstanding through other capital lease arrangements at June 30, 2017 and September 30, 2016, 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, which expires in March 2019, the company has the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $25 million. This facility contains covenants and events of default generally similar to those existing in the company’s public debt indentures. There were $18 million and $23 million of letters of credit outstanding under this facility at June 30, 2017 and September 30, 2016, respectively. The company had another $5 million of letters of credit outstanding through other letter of credit facilities at June 30, 2017 and September 30, 2016. 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 were issued under an incentive program of the Brazilian government to fund working capital for Brazilian companies in exportation programs. The arrangements bore interest at 5.5 percent and had maturity dates in 2017. These financing arrangements were paid off at maturity, as of March 31, 2017. There was $9 million outstanding under these arrangements at September 30, 2016. 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 June 30, 2017 and September 30, 2016, the company had $16 million and $10 million, respectively, outstanding under this program at more than one bank. |
Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments Fair values of financial instruments are summarized as follows (in millions):
The following table reflects the offsetting of derivative assets and liabilities (in millions):
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:
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 June 30, 2017 is as follows (in millions):
Fair value of financial instruments by the valuation hierarchy at September 30, 2016 is as follows (in millions):
The tables below provide 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 for the three and nine months ended June 30, 2017 and 2016, respectively. No transfers of assets between any of the Levels occurred during these periods.
(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 as of June 30, 2017 or September 30, 2016. 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. As of June 30, 2017 and September 30, 2016, the notional amount of the company's foreign exchange forward contracts outstanding was $125 million and $190 million, respectively. 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 in the statement of shareholders’ 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. In the fourth quarter of fiscal year 2016, the company entered into a new series of foreign currency option contracts with effective dates from the start of the first quarter of fiscal year 2017 through the end of fiscal year 2018. In the third quarter of fiscal year 2017, the company monetized certain foreign currency options maturing in fiscal year 2018 and entered into a new series of foreign currency option contracts with effective dates from the start of the first quarter of fiscal year 2018 through the end of fiscal year 2019. As of June 30, 2017 and September 30, 2016, the notional amount of the company's Indian rupee foreign exchange contracts outstanding was $141 million and $174 million, respectively. 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. Also, in fiscal year 2015, the company entered into a series of foreign currency contracts with total notional amounts of $30 million and $27 million to mitigate the risk of volatility in the translation of Swedish krona and euro earnings to U.S. dollars, respectively. During the first quarter of fiscal year 2016, the company entered into additional foreign currency contracts with total notional amounts of $19 million and $21 million to mitigate the risk of volatility in the translation of Swedish krona and euro earnings to U.S. dollars, respectively. During the third quarter of fiscal year 2017, the company entered into additional foreign currency contracts with a total notional amount of $35 million to mitigate the risk of volatility in the translation of euro earnings to U.S. dollars. These foreign currency option contracts did not qualify for a hedge accounting election. As of June 30, 2017 and September 30, 2016, there were no Swedish krona foreign currency option contracts outstanding. As of June 30, 2017, the notional amount of the company's euro foreign currency option contracts outstanding was $20 million. Changes in fair value associated with these contracts were recorded in other income, net, in the consolidated statement of operations. |
Retirement Benefit Liabilities |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Liabilities | Retirement Benefit Liabilities Retirement benefit liabilities consisted of the following (in millions):
The components of net periodic pension and retiree medical expense included in continuing operations for the three months ended June 30 are as follows (in millions):
The components of net periodic pension and retiree medical expense included in continuing operations for the nine months ended June 30 are as follows (in millions):
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Contingencies |
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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 June 30, 2017 to be approximately $8 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 June 30, 2017 to be approximately $27 million, of which $9 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 1.0 to 3.0 percent and is approximately $7 million at June 30, 2017. The undiscounted estimate of these costs is approximately $8 million. The following are the components of the Superfund and non-Superfund environmental reserves (in millions):
Environmental reserves are included in Other Current Liabilities (see Note 15) and Other Liabilities (see Note 16) 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. In April 2016, the company was served with several complaints filed against the company and other defendants in the United States District Court for the Northern District of Mississippi. The complaints were amended in July 2016. These complaints allege damages, including diminution of property value, concealment/fraud and emotional distress resulting from alleged environmental pollution in and around a neighborhood in Grenada, Mississippi. Rockwell owned and operated a facility near the neighborhood from 1965 to 1985. The company filed answers to the complaints in July 2016. In May 2017, the company was served with a complaint filed against the company and other defendants by the Mississippi Attorney General in the Chancery Court of Grenada County, Mississippi. The complaint alleges that operations at the above-referenced Grenada facility caused contamination of off-site groundwater and surface waters. Subsequently, the company removed this action to the United States District Court for the Northern District of Mississippi.The company intends to defend itself vigorously against these claims. The company believes at this time that liabilities associated with this case, while possible, are not probable and estimable, and therefore has not recorded any accrual for them as of June 30, 2017. Further, a reasonably possible range of loss cannot be estimated at this time. Asbestos Maremont Corporation (“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 4,200 and 5,800 pending asbestos-related claims at June 30, 2017 and September 30, 2016, 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):
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 Note 12, Note 14, Note 15 and Note 16). Pending and Future Claims: Maremont engaged 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. 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. As of September 30, 2016, 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 $70 million to $83 million. After consultation with Bates White, management recognized a liability of $70 million as of each of June 30, 2017 and September 30, 2016 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. 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 claims changes. Assumptions: The following assumptions were made by Maremont after consultation with Bates White and are included in their study:
Recoveries: Maremont has historically had insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The insurance receivable related to asbestos-related liabilities was $27 million and $32 million as of June 30, 2017 and September 30, 2016, 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. The difference between the estimated liability and insurance receivable is primarily related to exhaustion of settled insurance coverage within the forecasted period. Maremont maintained insurance coverage with other insurance carriers that management believes also covers indemnity and defense costs. During fiscal year 2013, Maremont re-initiated lawsuits against these carriers, seeking a declaration of its rights to coverage for asbestos claims and to facilitate an orderly and timely collection of insurance proceeds. During the first quarter of fiscal year 2016, the dispute related to these insurance policies was settled. As a part of this settlement, on December 12, 2015, Maremont received $17 million in cash, of which $5 million was recognized as a reduction in asbestos expense and $12 million was recorded as a liability to the insurance carrier as it is required to be returned to the carrier if additional asbestos liability is not incurred. During the fourth quarter of fiscal year 2016, Maremont recognized an additional $9 million of the cash settlement proceeds as a reduction in asbestos expense. During the first quarter of fiscal year 2017, the company recognized the remaining $3 million of the cash settlement proceeds as a reduction in asbestos expense. The settlement also provides additional recovery for Maremont if certain future defense and indemnity spending thresholds are met. 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 firms, jurisdictions and diseases; 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 1,600 and 3,200 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at June 30, 2017 and September 30, 2016, 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):
Pending and Future Claims: The company engaged 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. As of September 30, 2016, 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 $60 million to $75 million. After consultation with Bates White, management recognized a liability for the pending and future claims over the next ten years of $60 million as of each of June 30, 2017 and September 30, 2016. 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:
Recoveries: Rockwell has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for a significant portion of these claims. In 2004, the company initiated litigation against certain of these carriers to enforce the insurance policies. During the third quarter of fiscal year 2016, the company reached a settlement, relating to certain proofs of claim filed by the company under certain insurance policies, with an insolvent insurer for $5.5 million (the "allowed claim"). On June 17, 2016, the company entered into an assignment of claim (the "Assignment”) with Macquarie Bank to assign the allowed claim the company had against the insolvent insurer. The Assignment was approved by the liquidator, which resulted in the company receiving $3 million in the third quarter of fiscal year 2016. During the fourth quarter of fiscal year 2016, the company executed settlement agreements with two of these carriers, thereby resolving the litigation against those particular carriers. Pursuant to the terms of one of those settlement agreements, in the fourth quarter of fiscal year 2016 the company received $32 million in cash from an insurer, of which $10 million was recognized as a reduction in asbestos expense, and $22 million was recorded as a liability to the insurance carrier as it is required to be returned to the carrier if additional asbestos liability is not ultimately incurred. During the first nine months of fiscal year 2017, Rockwell recognized an additional $12 million of the cash settlement proceeds as a reduction in asbestos expense. Pursuant to the terms of a second settlement agreement, in the fourth quarter of fiscal year 2016 the company recorded a $12 million receivable to reflect expected reimbursement of future defense and indemnity payments under a coverage-in-place arrangement with that insurer. In addition to the coverage provided from the settlement agreements executed during the fourth quarter of fiscal year 2016, the company continues to maintain a receivable of $6 million related to a previously executed coverage-in-place arrangement with other insurers. The insurance receivable for Rockwell's asbestos-related liabilities totaled $27 million as of each of June 30, 2017 and September 30, 2016. Included in these amounts are insurance receivables of $9 million as of each of June 30, 2017 and September 30, 2016, which are associated with policies in dispute and have been fully reserved. 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 Rockwell could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Rockwell in terms of plaintiffs’ law firms, jurisdictions and diseases; legislative or regulatory developments; Rockwell’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 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 each of June 30, 2017 and September 30, 2016, the remaining estimated liability for this matter was approximately $11 million. In connection with the sale of its interest in MSSC in October 2009, the company provided certain indemnities 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. At June 30, 2017 and September 30, 2016, the company's remaining exposure was approximately $1 million, which is included in 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 The company identified certain sales transactions for which value-added tax was potentially required to be remitted to certain tax jurisdictions for tax years 2009 through 2016. At June 30, 2017 and September 30, 2016, the company’s estimate of the probable liability was $11 million and $10 million, respectively. On June 24, 2014, the company filed a complaint in the Circuit Court for Oakland County Michigan against a supplier alleging that certain bearings supplied by the supplier for TL Trailer Axles were faulty, and as a result, the company suffered product liability damages and expenses with respect to vehicle recalls. On May 13, 2016, the company entered into a settlement agreement with the supplier pursuant to which the company received approximately $6 million in the third quarter of fiscal year 2016. The settlement does not relieve the company of its current liability for past or future claims related to TL Axles. The company has the right to seek future indemnification from the supplier with respect to any currently unasserted claims. On July 5, 2017, the company's subsidiary Meritor Heavy Vehicle Systems, LLC fully and finally resolved all claims with respect to its various legal proceedings with Sistemas Automotrices de Mexico, S.A. de C.V. (“Sisamex”), its Mexican joint venture with Quimmco, S.A. de C.V. ("Quimmco"), that were originally filed in 2014 in the District Court for the Northern District of Illinois regarding Sisamex’s rights to manufacture certain products and the components thereof for sale in Mexico. The parties entered into a confidential settlement agreement and release pursuant to which the parties agreed to dismiss, with prejudice, all of the legal proceedings between them and Meritor agreed to pay Quimmco a settlement of $10 million, consistent with the reserve recorded as of June 30, 2017. 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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Shareholders' Equity | Shareholders' Equity Common Stock and Debt Repurchase Authorizations On July 21, 2016, the Board of Directors authorized the repurchase of up to $100 million of the company’s common stock and up to $150 million aggregate principal amount of any of the company’s debt securities (including convertible debt securities), in each case from time to time through open market purchases, privately negotiated transactions or otherwise, until September 30, 2019, subject to compliance with legal and regulatory requirements and the company's debt covenants. As of June 30, 2017, an insignificant amount of repurchases had been made under these authorizations. Accumulated Other Comprehensive Loss (“AOCL”) The components of AOCL and the changes in AOCL by components, net of tax, for three months ended June 30, 2017 and 2016 are as follows (in millions):
The components of AOCL and the changes in AOCL by components, net of tax, for nine months ended June 30, 2017 and 2016 are as follows (in millions):
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Business Segment Information |
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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 June 30, 2017, as follows:
Segment adjusted 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, asset impairment charges and other special items as determined by management. Segment adjusted EBITDA excludes unallocated legacy and corporate income (expense), net. The company uses Segment adjusted 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 condensed consolidated financial statements, except for the use of Segment adjusted 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 segment. Segment information is summarized as follows (in millions):
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Supplemental Guarantor Condensed Consolidating Financial Statements |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor Condensed Consolidating Financial Statements | Supplemental Guarantor Condensed Consolidating Financial Statements Rule 3-10 of Regulation S-X requires that separate financial information for issuers and guarantors of registered securities be filed in certain circumstances. Certain of the company's 100-percent-owned subsidiaries, as defined in the credit agreement (the “Guarantors”), irrevocably and unconditionally guarantee amounts outstanding under the senior secured revolving credit facility on a joint and several basis. Similar subsidiary guarantees were provided for the benefit of the holders of the notes outstanding under the company's indentures (see Note 17). 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 Regulation S-X Rules 3-10. 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 consolidating financial statements.
(1) As of June 30, 2017, Assets and Liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $11 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $10 million Accounts and notes payable; and (vii) $2 million Noncontrolling interests. These assets and liabilities held for sale are included in the Non-Guarantors column.
(1) As of September 30, 2016, Assets and Liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $8 million Receivables, trade and other, net; (iii) $1 million Inventories; (iv) $5 million Net property; (v) $5 million Accounts and notes payable; and (vi) $3 million Noncontrolling interests. These assets and liabilities held for sale are included in the Non-Guarantors column.
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 June 30, 2017 and September 30, 2016, Parent-only obligations included $672 million and $708 million of pension and retiree medical benefits, respectively (see Note 19). All debt is debt of the Parent other than $12 million and $24 million at June 30, 2017 and September 30, 2016, respectively (see Note 17), and is primarily related to capital lease obligations and lines of credit. There were $1 million and $18 million of cash dividends paid to the Parent by subsidiaries and investments accounted for by the equity method for the nine months ended June 30, 2017 and June 30, 2016, respectively. |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Standards | Accounting standards to be implemented In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements and provides guidance on when an entity would be required to apply modification accounting. This standard is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied prospectively. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 affects entities who own investments in callable debt securities and aligns the amortization period of premiums on callable debt securities to expectations incorporated in market pricing on the underlying securities. This standard is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effective adjustment directly to retained earnings at the beginning of the adoption period. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance requires entities to only include the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, are to be included in a separate line item(s) outside of any sub-total of operating income. ASU 2017-07 also provides guidance that only the service cost component of net benefit cost is eligible for capitalization. This standard is effective for public business entities for interim and annual periods beginning after December 15, 2017. The revisions in this amendment are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 provides guidance which defines an “in substance nonfinancial asset”; unifies guidance related to partial sales of nonfinancial assets; eliminates rules specifically addressing sales of real estate; removes exceptions to the financial asset derecognition model; and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The effective date and the transition requirements for the amendments in ASU 2017-05 are the same as the effective date and transition requirements in Topic 606, described below. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers in 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The new guidance is not expected to have a material impact on the company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. To be considered a business under the new guidance, it must include an input and a substantive process that together significantly contribute to the ability to create output. The amendment removes the evaluation of whether a market participant could replace missing elements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and will be applied prospectively. The potential impact of this new guidance will be assessed for future acquisitions or dispositions, but it is not expected to have a material impact on the company's consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements but does not expect a material impact upon adoption. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU was issued to remove the prohibition in FASB ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted; however, the guidance can only be adopted in the first interim period of a fiscal year. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The ASU was issued to reduce differences in practice with respect to how specific transactions are classified in the statement of cash flows. The update provides guidance on the following eight types of transactions: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments in this update are required to be adopted by public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The company is currently evaluating the potential impact of this new guidance on its accounting policies and its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The ASU clarifies the assessment of the likelihood that revenue will be collected from a contract, the guidance for presenting sales taxes and similar taxes, and the timing for measuring customer payments that are not in cash. The ASU also establishes a practical expedient for contract modifications at the transition. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-12 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its accounting policies and its consolidated financial statements. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update). The ASU was issued to remove from the Codification certain SEC staff guidance that the SEC staff stated would be rescinded: Revenue and Expense Recognition for Freight Services in Process; Accounting for Shipping and Handling Fees and Costs; and Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendor’s Products). The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-11 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In April, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. The ASU provides guidance regarding the identification of performance and licensing obligations. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-10 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU intends to simplify how share-based payments are accounted for, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company is assessing the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. The ASU will eliminate the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The ASU clarifies that an exercise contingency itself does not need to be evaluated to determine whether it is in an embedded derivative, just the underlying option. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The update clarifies that a change in a counterparty to a derivative instrument designated as a hedging instrument would not require the entity to dedesignate the hedging relationship and discontinue the application of hedge accounting. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim years within those fiscal periods. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update will require lessees to recognize a right-of-use asset and lease liability for substantially all leases. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 and is currently assessing the potential impact of this new guidance on its on its accounting policies and its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires entities that measure inventory using first-in, first-out (FIFO) or average cost to measure inventory at the lower of cost and net realizable value. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), which provides guidance about management's responsibility in evaluating whether there is substantial doubt relating to an entity’s ability to continue as a going concern and to provide related footnote disclosures as applicable. ASU 2014-15 is effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service and requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 was originally effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year making it effective for fiscal periods beginning after December 15, 2017, including interim periods within those fiscal periods, while also providing for early adoption but not before the original effective date. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 and is currently evaluating the potential impact of this new guidance on its on its accounting policies and its consolidated financial statements. Accounting standards implemented during fiscal year 2017 In January 2017, the FASB issued ASU 2017-03 which amended Accounting Changes and Error Corrections (Topic 250) to state that registrants should consider additional qualitative disclosures if the impact of an issued but not yet adopted ASU is unknown or cannot be reasonably estimated and to include a description of the effect of the accounting policies that the registrant expects to apply, if determined. Transition guidance included in certain issued but not yet adopted ASUs was also updated to reflect this amendment. 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. This guidance requires that an award with a performance target that affects vesting and that could be achieved after the requisite service period, such as when an employee retires, but may still vest if and when the performance target is achieved, be treated as an award with performance conditions that affect vesting and the company apply existing guidance under ASC Topic 718, Compensation - Stock Compensation. The guidance is effective for fiscal periods beginning after December 15, 2015, including interim periods within those fiscal periods and may be applied either prospectively or retrospectively. The company adopted this standard prospectively in the first quarter of fiscal year 2017. This guidance did not have a material impact on its consolidated financial statements. |
Inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) |
Environmental | 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. |
Earnings per Share (Tables) |
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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):
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Discontinued Operations (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Discontinued Operations | Results of discontinued operations are summarized as follows (in millions):
|
Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the changes in carrying value of goodwill | A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions):
|
Restructuring Costs (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in restructuring reserves | The changes in restructuring reserves for the nine months ended June 30, 2017 and 2016 are as follows (in millions):
|
Operating Cash Flows (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Cash Flow Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Cash Flows | The reconciliation of net income to cash flows provided by operating activities is as follows (in millions):
|
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of 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):
|
Other Current Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Summary of other current assets | Other current assets are summarized as follows (in millions):
|
Net Property (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net property | Net property is summarized as follows (in millions):
|
Other Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets, Noncurrent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of other assets | Other assets are summarized as follows (in millions):
|
Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of other current liabilities | Other current liabilities are summarized as follows (in millions):
|
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Summary of the changes in product warranties | A summary of the changes in product warranties is as follows (in millions):
|
Other Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of other liabilities | Other liabilities are summarized as follows (in millions):
|
Long-Term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of long-term debt | Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions):
(1) The 4.0 percent convertible notes due 2027 and 7.875 percent convertible notes due 2026 contain a put and call feature, which allows for earlier redemption beginning in 2019 and 2020, respectively. (2) The 6.75 percent notes and 6.25 percent notes contain a call option, which allows for early redemption. (3) The 4.0 percent convertible notes due 2027 are presented net of $1 million unamortized issuance costs as of June 30, 2017 and September 30, 2016. (4) The 7.875 percent convertible notes due 2026 are presented net of $2 million unamortized issuance costs as of June 30, 2017 and September 30, 2016, and $7 million and $9 million original issuance discount as of June 30, 2017 and September 30, 2016, respectively. (5) The 6.75 percent notes due 2021 are presented net of $4 million unamortized issuance costs as of June 30, 2017 and September 30, 2016. (6) The 6.25 percent notes due 2024 are presented net of $7 million and $8 million unamortized issuance costs as of June 30, 2017 and September 30, 2016, respectively. (7) The carrying amount of the equity component related to convertible debt. |
Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of financial instruments | Fair values of financial instruments are summarized as follows (in millions):
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Offsetting of derivative assets and liabilities | The following table reflects the offsetting of derivative assets and liabilities (in millions):
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Fair value of financial instruments by valuation hierarchy | Fair value of financial instruments by the valuation hierarchy at June 30, 2017 is as follows (in millions):
Fair value of financial instruments by the valuation hierarchy at September 30, 2016 is as follows (in millions):
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Reconciliation of changes in fair value | The tables below provide 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 for the three and nine months ended June 30, 2017 and 2016, respectively. No transfers of assets between any of the Levels occurred during these periods.
(1) Transfers as of the last day of the reporting period. |
Retirement Benefit Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of retirement benefit liabilities | Retirement benefit liabilities consisted of the following (in millions):
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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 June 30 are as follows (in millions):
The components of net periodic pension and retiree medical expense included in continuing operations for the nine months ended June 30 are as follows (in millions):
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Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of environmental reserves | The following are the components of the Superfund and non-Superfund environmental reserves (in millions):
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Asbestos related reserves and recoveries | Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):
The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):
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Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive loss | The components of AOCL and the changes in AOCL by components, net of tax, for nine months ended June 30, 2017 and 2016 are as follows (in millions):
The components of AOCL and the changes in AOCL by components, net of tax, for three months ended June 30, 2017 and 2016 are as follows (in millions):
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Reclassification out of accumulated other comprehensive income |
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Business Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of segment information | Segment information is summarized as follows (in millions):
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Segment income attributable to parent |
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Schedule of segment assets |
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Supplemental Guarantor Condensed Consolidating Financial Statements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed consolidating statement of operations |
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Schedule of condensed consolidating statement of comprehensive income (loss) |
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Schedule of condensed consolidating balance sheet |
(1) As of June 30, 2017, Assets and Liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $11 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $10 million Accounts and notes payable; and (vii) $2 million Noncontrolling interests. These assets and liabilities held for sale are included in the Non-Guarantors column.
(1) As of September 30, 2016, Assets and Liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $8 million Receivables, trade and other, net; (iii) $1 million Inventories; (iv) $5 million Net property; (v) $5 million Accounts and notes payable; and (vi) $3 million Noncontrolling interests. These assets and liabilities held for sale are included in the Non-Guarantors column. |
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Schedule of condensed consolidating statement of cash flows |
|
Earnings per Share - Reconciliation of common shares (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Basic average common shares outstanding (in shares) | 88.4 | 89.8 | 87.9 | 91.2 |
Impact of restricted shares, restricted share units and performance share units (in shares) | 1.8 | 2.2 | 1.4 | 1.9 |
Impact of convertible notes (in shares) | 3.1 | 0.0 | 2.1 | 0.0 |
Diluted average common shares outstanding (in shares) | 93.3 | 92.0 | 91.4 | 93.1 |
Discontinued Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Sep. 30, 2016 |
|
Discontinued Operations and Disposal Groups [Abstract] | |||||
Sales | $ 0 | $ 0 | $ 0 | $ 0 | |
Loss before income taxes | (1) | (1) | (1) | (5) | |
Benefit from income taxes | 0 | 0 | 0 | 1 | |
Loss from discontinued operations attributable to Meritor, Inc. | (1) | $ (1) | (1) | $ (4) | |
Discontinued operations, assets | 1 | 1 | $ 1 | ||
Discontinued operations, liabilities | $ 6 | $ 6 | $ 6 |
Assets and Liabilities Held for Sale (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Assets And Liabilities Held-For-Sale [Abstract] | ||
Impairment charge for assets held for sale | $ 3 | |
Increase of fair value write-up | $ 1 | |
Aftermarket & Trailer | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Addition in assets meeting held for sale criteria | $ 2 |
Goodwill (Details) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
segment
|
Sep. 30, 2016
USD ($)
|
||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Goodwill [Line Items] | |||||
Goodwill gross | $ 405 | ||||
Accumulated impairment losses, Beginning balance | (15) | ||||
Goodwill [Roll Forward] | |||||
Goodwill net, Beginning balance | [1] | $ 390 | |||
Foreign currency translation | 1 | ||||
Goodwill net, Ending balance | [1] | 391 | |||
Commercial Truck & Industrial | |||||
Goodwill [Line Items] | |||||
Goodwill gross | 245 | ||||
Accumulated impairment losses, Beginning balance | (15) | ||||
Goodwill [Roll Forward] | |||||
Goodwill net, Beginning balance | 230 | ||||
Foreign currency translation | 0 | ||||
Goodwill net, Ending balance | 230 | ||||
Aftermarket & Trailer | |||||
Goodwill [Line Items] | |||||
Goodwill gross | 160 | ||||
Accumulated impairment losses, Beginning balance | $ 0 | ||||
Goodwill [Roll Forward] | |||||
Goodwill net, Beginning balance | 160 | ||||
Foreign currency translation | 1 | ||||
Goodwill net, Ending balance | $ 161 | ||||
|
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Net pre-tax income (loss) tax benefit not recorded | $ 3 | $ 19 | $ 47 |
Inventories (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
||
---|---|---|---|---|
Inventory Disclosure [Abstract] | ||||
Finished goods | $ 142 | $ 125 | ||
Work in process | 33 | 26 | ||
Raw materials, parts and supplies | 185 | 165 | ||
Total inventories | [1] | $ 360 | $ 316 | |
|
Other Current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Other Current Assets Disclosure [Abstract] | ||
Asbestos-related recoveries (see Note 20) | $ 10 | $ 10 |
Prepaid and other | 27 | 23 |
Other current assets | $ 37 | $ 33 |
Net Property (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
||
---|---|---|---|---|
Property, Plant and Equipment [Line Items] | ||||
Property at cost | $ 1,290 | $ 1,269 | ||
Less: accumulated depreciation | (860) | (830) | ||
Net property | [1] | 430 | 439 | |
Land and land improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Property at cost | 29 | 30 | ||
Buildings | ||||
Property, Plant and Equipment [Line Items] | ||||
Property at cost | 234 | 231 | ||
Machinery and equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property at cost | 867 | 839 | ||
Company-owned tooling | ||||
Property, Plant and Equipment [Line Items] | ||||
Property at cost | 122 | 113 | ||
Construction in progress | ||||
Property, Plant and Equipment [Line Items] | ||||
Property at cost | $ 38 | $ 56 | ||
|
Other Assets - Summary of other assets (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Other Assets, Noncurrent [Abstract] | ||
Investments in non-consolidated joint ventures | $ 108 | $ 100 |
Asbestos-related recoveries (see Note 20) | 44 | 49 |
Unamortized revolver debt issuance costs | 8 | 7 |
Capitalized software costs, net | 28 | 29 |
Non-current deferred income tax assets, net | 395 | 413 |
Assets for uncertain tax positions | 37 | 35 |
Prepaid pension costs | 138 | 123 |
Other | 5 | 4 |
Other assets | $ 763 | $ 760 |
Other Assets - Additional information (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Equity Method Joint Venture | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments in joint venture | $ 48 | $ 45 |
Other Current Liabilities - Summary of other current liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|---|
Other Current Liabilities Disclosure [Abstract] | |||
Compensation and benefits | $ 121 | $ 115 | |
Income taxes | 4 | 8 | |
Taxes other than income taxes | 24 | 21 | |
Accrued interest | 15 | 14 | |
Product warranties | 18 | 18 | $ 18 |
Environmental reserves (see Note 20) | 5 | 7 | |
Restructuring (see Note 7) | 7 | 14 | $ 9 |
Asbestos-related liabilities (see Note 20) | 18 | 18 | |
Indemnity obligations (see Note 20) | 2 | 2 | |
Other | 63 | 51 | |
Other current liabilities | $ 277 | $ 268 |
Other Current Liabilities - Summary of changes in product warranties (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Sep. 30, 2016 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Total product warranties – beginning of period | $ 44 | $ 48 | |
Accruals for product warranties | 8 | 11 | |
Payments | (10) | (13) | |
Change in estimates and other | 1 | (1) | |
Total product warranties – end of period | 43 | 45 | |
Less: Non-current product warranties | (25) | (27) | $ (26) |
Product warranties – current | $ 18 | $ 18 | $ 18 |
Other Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|---|
Other Liabilities Disclosure [Abstract] | |||
Asbestos-related liabilities (see Note 20) | $ 122 | $ 136 | |
Restructuring (see Note 7) | 1 | 2 | $ 2 |
Non-current deferred income tax liabilities | 13 | 12 | |
Liabilities for uncertain tax positions | 15 | 16 | |
Product warranties (see Note 15) | 25 | 26 | $ 27 |
Environmental (see Note 20) | 6 | 6 | |
Indemnity obligations (see Note 20) | 11 | 11 | |
Other | 27 | 29 | |
Other liabilities | $ 220 | $ 238 |
Long-Term Debt - Notes Due (Details) - Convertible Notes - 7.875% Convertible Notes Due 2026 |
9 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
trading_day
$ / shares
| |
Debt Instrument [Line Items] | |
Interest rate | 7.875% |
Trading days | trading_day | 20 |
Consecutive trading days | trading_day | 30 |
Conversion price threshold percentage | 120.00% |
Principle amount of debt | $ | $ 140,000,000 |
Permanent equity reclassified as mezzanine equity | $ | $ 12,000,000 |
April 2017 - June 2017 Period | |
Debt Instrument [Line Items] | |
Conversion ratio of common stock per principal | 83.3333 |
Conversion price (in usd per share) | $ / shares | $ 12.00 |
Long-Term Debt - Revolving Credit Facility (Details) - Revolving Credit Facility |
9 Months Ended | ||
---|---|---|---|
Jun. 30, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Line of Credit Facility [Line Items] | |||
Borrowings outstanding | $ 0 | $ 0 | |
Letters of credit outstanding | $ 0 | $ 0 | |
Triggering Event One | |||
Line of Credit Facility [Line Items] | |||
Debt-to-EBITDA ratio | 2.25 | ||
LIBOR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 3.00% | ||
Unused capacity, commitment fee percentage | 0.45% | ||
Amended Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 525,000,000 | ||
Deferred issuance cost | $ 4,000,000 | ||
Collateral test, maximum ratio | 1.0 | ||
Value of company assets collateralized | $ 774,000,000 | ||
Maximum limit on issuance, letters of credit | $ 100,000,000 | ||
Overnight Revolving Credit Loans | Prime Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.00% |
Long-Term Debt - Repurchases of Debt Securities (Details) - Convertible Notes Payable - 4.625% convertible notes due 2026 - USD ($) $ in Millions |
Apr. 15, 2016 |
Mar. 01, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Principal amount of convertible notes repurchased | $ 55 | |
Interest rate | 4.625% | |
Repurchase price percentage | 100.00% | 100.00% |
Long-Term Debt - Capital Leases (Details) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Mar. 20, 2012 |
Jun. 30, 2017 |
Sep. 30, 2016 |
|
Debt Instrument [Line Items] | |||
Outstanding capital lease obligations | $ 13,000,000 | $ 16,000,000 | |
Financing Arrangements For Capital Leases | |||
Debt Instrument [Line Items] | |||
Maximum amount of progress payments for equipment under construction | $ 10,000,000 | ||
Financing Arrangements For Capital Leases | Five-Year Swap Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 5.64% | ||
Capital Lease Arrangements | |||
Debt Instrument [Line Items] | |||
Capital lease, term | 60 months | ||
Outstanding capital lease obligations | $ 3,000,000 | 7,000,000 | |
Capital Lease Arrangements | 30-Day LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 4.75% | ||
Other Capital Lease Arrangements | |||
Debt Instrument [Line Items] | |||
Outstanding capital lease obligations | $ 10,000,000 | $ 9,000,000 |
Long-Term Debt - Letter of Credit Facilities (Details) - USD ($) |
Jun. 30, 2017 |
Sep. 30, 2016 |
Feb. 21, 2014 |
---|---|---|---|
Other Letters of Credit Arrangements | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding | $ 5,000,000 | $ 5,000,000 | |
Standby Letters of Credit | |||
Line of Credit Facility [Line Items] | |||
Maximum limit on issuance, letters of credit | $ 25,000,000 | ||
Letters of credit outstanding | $ 18,000,000 | $ 23,000,000 |
Long-Term Debt - Export Financing Arrangements (Details) - Brazil - Note payable - Export Financing Arrangement - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Interest rate | 5.50% | |
Long-term debt outstanding | $ 9 |
Long-Term Debt - Other (Details) - China - Notes Payable to Banks - Other Export Financing Arrangements - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt default, amount | $ 35 | |
Long-term debt outstanding | $ 16 | $ 10 |
Financial Instruments - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Derivative Asset | ||
Gross Amounts Recognized | $ 1 | $ 1 |
Gross Amounts Offset | (1) | 0 |
Net Amounts Reported | 0 | 1 |
Derivative Liabilities | ||
Gross Amounts Recognized | 1 | 2 |
Gross Amounts Offset | (1) | 0 |
Net Amounts Reported | $ 0 | $ 2 |
Retirement Benefit Liabilities - Summary of retirement benefits (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Retirement Benefits [Abstract] | ||
Retiree medical liability | $ 432 | $ 447 |
Pension liability | 261 | 283 |
Other | 13 | 13 |
Subtotal | 706 | 743 |
Less: current portion (included in compensation and benefits, Note 15) | (39) | (40) |
Retirement benefits | $ 667 | $ 703 |
Retirement Benefit Liabilities - Components of net periodic pension and retiree medical expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Pension | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | $ 13 | $ 16 | $ 39 | $ 49 |
Assumed return on plan assets | (24) | (24) | (71) | (74) |
Amortization of prior service costs | 0 | 0 | 0 | 0 |
Recognized actuarial loss | 8 | 6 | 23 | 18 |
Total expense (income) | (3) | (2) | (9) | (7) |
Retiree Medical | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | 4 | 4 | 11 | 13 |
Assumed return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service costs | (1) | 0 | (2) | 0 |
Recognized actuarial loss | 4 | 3 | 11 | 9 |
Total expense (income) | $ 7 | $ 7 | $ 20 | $ 22 |
Contingencies - Summary of environmental reserves (Details) $ in Millions |
9 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Beginning balance | $ 13 |
Payments and other | (4) |
Accruals | 2 |
Ending balance | 11 |
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 | 11 |
Payments and other | (4) |
Accruals | 2 |
Ending balance | $ 9 |
Contingencies - Asbestos related reserves and recoveries (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Loss Contingencies [Line Items] | ||
Asbestos-related liabilities | $ 11 | $ 13 |
Maremont Asbestos | ||
Loss Contingencies [Line Items] | ||
Pending and future claims | 70 | 70 |
Billed but unpaid claims | 3 | 2 |
Asbestos-related liabilities | 73 | 72 |
Asbestos-related insurance recoveries | 27 | 32 |
Rockwell Asbestos | ||
Loss Contingencies [Line Items] | ||
Pending and future claims | 60 | 60 |
Billed but unpaid claims | 4 | 1 |
Asbestos-related liabilities | 64 | 61 |
Asbestos-related insurance recoveries | $ 27 | $ 27 |
Shareholders' Equity - Common Stock and Debt Repurchase Authorizations (Details) |
Jul. 21, 2016
USD ($)
|
---|---|
Debt Securities | |
Class of Stock [Line Items] | |
Debt repurchase program, amount authorized | $ 150,000,000 |
Common Stock | |
Class of Stock [Line Items] | |
Authorized repurchase of securities, with debt reduction target | $ 100,000,000 |
Business Segment Information - Schedule of Segment Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 2,712 | $ 2,494 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,084 | 1,869 |
Operating Segments | Commercial Truck & Industrial | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,618 | 1,433 |
Operating Segments | Aftermarket & Trailer | ||
Segment Reporting Information [Line Items] | ||
Total assets | 466 | 436 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 916 | 845 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Less: Accounts receivable sold under off-balance sheet factoring programs | $ (288) | $ (220) |
Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Sep. 30, 2016 |
|
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||
Parent's total ownership, percentage | 100.00% | ||
Parent | |||
Condensed Financial Statements, Captions [Line Items] | |||
Pension and retiree benefits, parent obligation | $ 672 | $ 708 | |
Proceeds from investment in subsidiary | 1 | $ 18 | |
Subsidiaries | |||
Condensed Financial Statements, Captions [Line Items] | |||
Debt and capital lease obligations, subsidiary portion | $ 12 | $ 24 |
Supplemental Guarantor Condensed Consolidating Financial Statements - Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
||||
Condensed Cash Flow Statements, Captions [Line Items] | |||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | $ 136 | $ 144 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (52) | (66) | |||
Other investing activities | 0 | 3 | |||
Net investing cash flows provided by discontinued operations | 2 | 4 | |||
CASH USED FOR INVESTING ACTIVITIES | (50) | (59) | |||
FINANCING ACTIVITIES | |||||
Repayment of notes | (55) | ||||
Repurchase of common stock | 0 | (81) | |||
Debt issuance costs | (4) | 0 | |||
Intercompany advances | 0 | 0 | |||
Other financing activities | (12) | (15) | |||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | (16) | (151) | |||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | 2 | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 71 | (64) | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 160 | [1] | 193 | ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 231 | [1] | 129 | ||
Elims | |||||
Condensed Cash Flow Statements, Captions [Line Items] | |||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 0 | 0 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Other investing activities | 0 | ||||
Net investing cash flows provided by discontinued operations | 0 | 0 | |||
CASH USED FOR INVESTING ACTIVITIES | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Repayment of notes | 0 | ||||
Repurchase of common stock | 0 | ||||
Debt issuance costs | 0 | ||||
Intercompany advances | 0 | 0 | |||
Other financing activities | 0 | 0 | |||
CASH PROVIDED BY (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 | |||
Parent | Reportable Legal Entities | |||||
Condensed Cash Flow Statements, Captions [Line Items] | |||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | (24) | 124 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (8) | (16) | |||
Other investing activities | 0 | ||||
Net investing cash flows provided by discontinued operations | 0 | 0 | |||
CASH USED FOR INVESTING ACTIVITIES | (8) | (16) | |||
FINANCING ACTIVITIES | |||||
Repayment of notes | (55) | ||||
Repurchase of common stock | (81) | ||||
Debt issuance costs | (4) | ||||
Intercompany advances | 96 | (10) | |||
Other financing activities | 0 | 0 | |||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 92 | (146) | |||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 60 | (38) | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 90 | 73 | |||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 150 | 35 | |||
Guarantors | Reportable Legal Entities | |||||
Condensed Cash Flow Statements, Captions [Line Items] | |||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 28 | 25 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (27) | (29) | |||
Other investing activities | 4 | ||||
Net investing cash flows provided by discontinued operations | 2 | 1 | |||
CASH USED FOR INVESTING ACTIVITIES | (25) | (24) | |||
FINANCING ACTIVITIES | |||||
Repayment of notes | 0 | ||||
Repurchase of common stock | 0 | ||||
Debt issuance costs | 0 | ||||
Intercompany advances | 0 | 0 | |||
Other financing activities | (3) | (4) | |||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | (3) | (4) | |||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 0 | (3) | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 4 | 6 | |||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 4 | 3 | |||
Non- Guarantors | Reportable Legal Entities | |||||
Condensed Cash Flow Statements, Captions [Line Items] | |||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 132 | (5) | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (17) | (21) | |||
Other investing activities | (1) | ||||
Net investing cash flows provided by discontinued operations | 0 | 3 | |||
CASH USED FOR INVESTING ACTIVITIES | (17) | (19) | |||
FINANCING ACTIVITIES | |||||
Repayment of notes | 0 | ||||
Repurchase of common stock | 0 | ||||
Debt issuance costs | 0 | ||||
Intercompany advances | (96) | 10 | |||
Other financing activities | (9) | (11) | |||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | (105) | (1) | |||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | 2 | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 11 | (23) | |||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 66 | 114 | |||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 77 | $ 91 | |||
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