XML 41 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Business Segment Information
 3 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Business Segment Information
Business Segment Information
The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company’s Chief Operating Decision Maker ("CODM") is the Chief Executive Officer.
On March 12, 2018, the company announced a realignment of operations to further drive long-term strategic objectives while also assigning new responsibilities as part of its commitment to leadership development. As part of this realignment, reportable segments changed. As of the second quarter of fiscal year 2018, the company's reportable segments are (1) Commercial Truck & Trailer and (2) Aftermarket & Industrial. Prior year reportable segment financial results have been recast for these changes.
      The company has two reportable segments at December 31, 2018, as follows:
•
The Commercial Truck & Trailer segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks and other applications in North America, South America, Europe and Asia Pacific. It also supplies a variety of undercarriage products and systems for trailer applications in North America. This segment also includes the company's aftermarket businesses in Asia Pacific and South America.
•
The Aftermarket & Industrial segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers, primarily in North America and Europe. In addition, this segment supplies drivetrain systems and certain components, including axles, drivelines, brakes and suspension systems for military, construction, bus and coach, fire and emergency and other applications in North America and Europe.

     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):
 
Commercial Truck
& Trailer
 
Aftermarket
& Industrial
 
Eliminations
 
Total
Three Months Ended December 31, 2018
 
 
 
 
 
 
 
External Sales
$
786

 
$
252

 
$
—

 
$
1,038

Intersegment Sales
38

 
5

 
(43
)
 
—

Total Sales
$
824

 
$
257

 
$
(43
)
 
$
1,038

Three Months Ended December 31, 2017 (1)
 
 
 
 
 
 
 
External Sales
$
678

 
$
225

 
$
—

 
$
903

Intersegment Sales
35

 
4

 
(39
)
 
—

Total Sales
$
713

 
$
229

 
$
(39
)
 
$
903


(1) Amounts for the three months ended December 31, 2017 have been recast to reflect reportable segment changes made in the second quarter of fiscal year 2018.


 
Three Months Ended December 31,
 
2018
 
2017 (1)
Segment adjusted EBITDA:
 
 
 
Commercial Truck & Trailer
$
79

 
$
69

Aftermarket & Industrial
38

 
32

Segment adjusted EBITDA
117


101

Unallocated legacy and corporate expense, net (2)
2

 
(2
)
Interest expense, net
(14
)
 
(24
)
Provision for income taxes
(21
)
 
(83
)
Depreciation and amortization
(22
)
 
(21
)
Noncontrolling interests
(2
)
 
(2
)
Loss on sale of receivables
(1
)
 
(2
)
Restructuring costs
—

 
(2
)
Asbestos related liability remeasurement(3)
31

 
—

 Income (loss) from continuing operations attributable to Meritor, Inc.
$
90


$
(35
)

(1)
Amounts for the three months ended December 31, 2017 have been recast to reflect reportable segment changes made in the second quarter of fiscal year 2018.
(2) 
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.
(3)
The three months ended December 31, 2018 includes $31 million related to the remeasurement of the Maremont asbestos liability to the Maremont prepackaged plan of reorganization.
 
December 31,
2018
 
September 30,
2018
Segment Assets:
 
 
 
Commercial Truck & Trailer
$
1,901

 
$
1,858

Aftermarket & Industrial
501

 
495

Total segment assets
2,402

 
2,353

Corporate (1)
625

 
633

Less: Accounts receivable sold under off-balance sheet factoring programs (2) 
(294
)
 
(260
)
Total assets
$
2,733

 
$
2,726


(1) 
Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.
(2) 
At December 31, 2018 and September 30, 2018, segment assets include $294 million and $260 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 10). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.