EX-99.A 2 exhibit99a.htm UNAUDITED PRO FORMA STATEMENTS OF MERITOR, INC. Exhibit


Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the nine months ended June 30, 2017
(In millions except for per share amounts)

 
 
As Reported
(a)
 
Pro Forma Adjustments
 
Pro Forma
Sales
 
$
2,425

 
$
—

 
$
2,425

Cost of Sales
 
(2,073
)
 
—

 
(2,073
)
GROSS MARGIN
 
352

 
—

 
352

Selling, general and administrative
 
(192
)
 
(3
)
(b)
(195
)
Restructuring costs
 
(4
)
 
—

 
(4
)
Other operating expense, net
 
(5
)
 
—

 
(5
)
OPERATING INCOME
 
151

 
(3
)
 
148

Other income, net
 
1

 
—

 
1

Equity in earnings of affiliates
 
32

 
(19
)
(c)
13

Interest expense, net
 
(63
)
 
—

 
(63
)
INCOME BEFORE INCOME TAXES
 
121

 
(22
)
 
99

Provision for income taxes
 
(30
)
 
7

(d)
(23
)
Net income attributable to noncontrolling interests
 
(5
)
 
—

 
(5
)
INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO MERITOR, INC.
 
86

 
(15
)
 
71

 
 
 
 
 
 
 
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
 
 
 
 
Basic
 
$
0.98

 
 
 
$
0.81

Diluted
 
$
0.94

 
 
 
$
0.78

 
 
 
 
 
 

Basic average common shares outstanding
 
87.9

 
 
 
87.9

Diluted average common shares outstanding
 
91.4

 
 
 
91.4

 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Represents historical condensed consolidated statement of operations as reported by the Company for the nine months ended June 30, 2017.
 
(b) Represents purchased employee and other services provided to the Meritor WABCO JV by the Company during the nine months ended June 30, 2017, which will not continue after varying agreed upon transition periods of up to two years.
 
 
 
 
 
 
 
(c) Represents the elimination of the equity in earnings of the Company's investment in the Meritor WABCO JV from the continuing operations of the Company for the nine months ended June 30, 2017.
 
 
 
 
 
 
 
(d) Represents the estimated income tax effect of the pro-forma adjustments for the nine months ended June 30, 2017. The tax effect of the pro-forma adjustments was calculated using the statutory rates in effect for the periods presented.






Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended September 30, 2016
(In millions except for per share amounts)

 
 
As Reported
(a)
 
Pro Forma Adjustments
 
Pro Forma
Sales
 
$
3,199

 
$
—

 
$
3,199

Cost of Sales
 
(2,763
)
 
—

 
(2,763
)
GROSS MARGIN
 
436

 
—

 
436

Selling, general and administrative
 
(213
)
 
(4
)
(b)
(217
)
Restructuring costs
 
(16
)
 
—

 
(16
)
Other operating expense, net
 
(3
)
 
—

 
(3
)
OPERATING INCOME
 
204

 
(4
)
 
200

Other expense, net
 
(1
)
 
—

 
(1
)
Equity in earnings of affiliates
 
36

 
(26
)
(c)
10

Interest expense, net
 
(84
)
 
—

 
(84
)
INCOME BEFORE INCOME TAXES
 
155

 
(30
)
 
125

Benefit for income taxes
 
424

 
10

(d)
434

Net income attributable to noncontrolling interests
 
(2
)
 
—

 
(2
)
INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO MERITOR, INC.
 
577

 
(20
)
 
557

 
 
 
 
 
 
 
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
 
 
 
 
Basic
 
$
6.40

 
 
 
$
6.18

Diluted
 
$
6.27

 
 
 
$
6.05

 
 
 
 
 
 
 
Basic average common shares outstanding
 
90.1

 
 
 
90.1

Diluted average common shares outstanding
 
92.0

 
 
 
92.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Represents historical condensed consolidated statement of operations as reported by the Company for the year ended September 30, 2016.
 
(b) Represents purchased employee and other services provided to the Meritor WABCO JV by the Company during the year ended September 30, 2016, which will not continue after varying agreed upon transition periods of up to two years.
 
 
 
 
 
 
 
(c) Represents the elimination of the equity in earnings of the Company's investment in the Meritor WABCO JV from the continuing operations of the Company for the year ended September 30, 2016.
 
 
 
 
 
 
 
(d) Represents the estimated income tax effect of the pro-forma adjustments for the year ended September 30, 2016. The tax effect of the pro-forma adjustments was calculated using the statutory rates in effect for the periods presented.








Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 2017
(In millions)

 
 
As Reported
(a)
 
Pro Forma
Adjustments
 
Pro Forma
CURRENT ASSETS:
 
 
 
 
 
 
Cash and cash equivalents (h)
 
$
231

 
$
250

(b)
$
481

Receivables, trade and other, net (h)
 
500

 
(4
)
(c)
496

Inventories (h)
 
360

 
—

 
360

Other current assets
 
37

 
—

 
37

TOTAL CURRENT ASSETS
 
1,128

 
246

 
1,374

Net property (h)
 
430

 
—

 
430

Goodwill (h)
 
391

 
—

 
391

Other assets
 
763

 
(97
)
(d)
666

TOTAL ASSETS
 
$
2,712

 
$
149

 
$
2,861

 
 
 
 
 
 
 
LIABILITIES, MEZZANINE EQUITY AND EQUITY (DEFICIT)
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
Short-term debt
 
$
132

 
$
—

 
$
132

Accounts and notes payable (h)
 
602

 
(4
)
(e)
598

Other current liabilities
 
277

 
1

(f)
278

TOTAL CURRENT LIABILITIES
 
1,011

 
(3
)
 
1,008

Long-term debt
 
858

 
—

 
858

Retirement benefits
 
667

 
—

 
667

Other liabilities
 
220

 
4

(f)
224

TOTAL LIABILITIES
 
2,756

 
1

 
2,757

MEZZANINE EQUITY
 
 
 
 
 
 
Convertible debt with cash settlement
 
12

 
—

 
12

EQUITY (DEFICIT):
 
 
 
 
 
 
Common stock (101.4 shares issued and 88.6 shares outstanding)
 
101

 
—

 
101

Additional paid-in capital
 
875

 
—

 
875

Accumulated deficit
 
(156
)
 
148

(g)
(8
)
Treasury stock, at cost (12.8 shares)
 
(136
)
 
—

 
(136
)
Accumulated other comprehensive loss
 
(768
)
 
—

 
(768
)
Total deficit attributable to Meritor, Inc.
 
(84
)
 
148

 
64

Noncontrolling interests (h)
 
28

 
—

 
28

TOTAL EQUITY (DEFICIT)
 
(56
)
 
148

 
92

TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY (DEFICIT)
 
$
2,712

 
$
149

 
$
2,861

 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Represents historical condensed consolidated balance sheet as reported by the Company as of June 30, 2017.
 
 
 
 
 
 
 
(b) Represents cash proceeds from the sale of the Company's investment in the Meritor WABCO JV.
 
 
 
 
 
 
 




(c) Represents amounts due to the Company from the Meritor WABCO JV for employee and other services provided by or paid for by the Company, which will not continue after varying agreed upon transition periods of up to two years.
 
 
 
 
 
 
 
(d) Includes $84 million of net operating losses and certain income tax credits used related to the transaction and $13 million related to the elimination of the Company's investment as of June 30, 2017 in the Meritor WABCO JV.
 
 
 
 
 
 
 
(e) Represents amounts owed by the Company to third parties for goods and services provided to the Meritor WABCO JV and paid for by the Company, which will not be paid by the Company after varying agreed upon transition periods of up to two years.
 
 
 
 
 
 
 
(f) Represents estimated tax liabilities related to the transaction. 
 
 
 
 
 
 
 
(g) Represents the estimated $243 million gain on sale of the Company's investment in the Meritor WABCO JV net of the estimated $89 million of associated tax expense, calculated with the statutory rate in effect during the period and $6 million related to the Meritor WABCO JV pre-closing distribution and dividends, net of other items. The estimated gain has not been reflected in the pro forma condensed statement of operations as it is considered to be nonrecurring in nature.     
 
 
 
 
 
 
 
(h) 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.