XML 181 R34.htm IDEA: XBRL DOCUMENT

BUSINESS SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2019

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.

In the second quarter of fiscal year 2019, the company realigned its operations resulting in a change to its operating and reportable segments. As of the second quarter of fiscal year 2019, the reportable segments are (1) Commercial Truck and (2) Aftermarket, Industrial and Trailer. Prior year reportable segment financial results have been recast for these changes.

The company has two reportable segments at September 30, 2019, as follows:


•	The Commercial Truck 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. This segment also includes the company's aftermarket businesses in Asia Pacific and South America.


•	The Aftermarket, Industrial and 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. 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. It also supplies a variety of undercarriage products and systems for trailer applications in North America.

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 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		Aftermarket, Industrial and Trailer		Elims			Total
Fiscal year 2019 Sales:
External Sales	$	3,110	$	1,278	$	—		$	4,388
Intersegment Sales	142		35		(177		)	—
Total Sales	$	3,252	$	1,313	$	(177	)	$	4,388
Fiscal year 2018 Sales ⁽¹⁾:
External Sales	$	3,037	$	1,141	$	—		$	4,178
Intersegment Sales	135		35		(170		)	—
Total Sales	$	3,172	$	1,176	$	(170	)	$	4,178
Fiscal year 2017 Sales ⁽¹⁾:
External Sales	$	2,347	$	1,000	$	—		$	3,347
Intersegment Sales	122		32		(154		)	—
Total Sales	$	2,469	$	1,032	$	(154	)	$	3,347


⁽¹⁾	Fiscal years 2018 and 2017 have been recast to reflect reportable segment changes.



Segment adjusted EBITDA:	2019			2018 ⁽²⁾			2017 ⁽²⁾
Commercial Truck	$	327		$	337		$	224
Aftermarket, Industrial and Trailer	190			150			126
Segment adjusted EBITDA	517			487			350
Unallocated legacy and corporate income (expense), net ⁽¹⁾	3			(13		)	(3		)
Interest expense, net	(57		)	(67		)	(119		)
Gain on sale of equity investment	—			—			243
Provision for income taxes	(82		)	(149		)	(52		)
Depreciation and amortization	(87		)	(84		)	(75		)
Loss on sale of receivables	(6		)	(5		)	(5		)
Restructuring costs	(8		)	(6		)	(6		)
AxleTech transactions costs ⁽³⁾	(6		)	—			—
Asbestos related items⁽⁴⁾	31			(25		)	—
Pension settlement loss ⁽⁵⁾	—			(6		)	—
Asset impairment charges	(10		)	(3		)	(4		)
Noncontrolling interests	(5		)	(9		)	(4		)
Income from continuing operations attributable to Meritor, Inc.	$	290		$	120		$	325


⁽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.


⁽²⁾	Fiscal years 2018 and 2017 have been recast to reflect reportable segment changes.


⁽³⁾	Represents transaction fees.


⁽⁴⁾	The year ended September 30, 2019 includes $31 million related to the remeasurement of the Maremont net asbestos liability based on the Plan. The year ended September 30, 2018 includes $25 million related to the change in estimate resulting from change in estimated forecast horizon and an asbestos insurance settlement.


⁽⁵⁾	The year ended September 30, 2018 includes $6 million related to the U.K. pension settlement loss.



Depreciation and Amortization:	2019			2018 ⁽¹⁾			2017 ⁽¹⁾
Commercial Truck	$	68		$	68		$	64
Aftermarket, Industrial and Trailer	19			16			11
Total depreciation and amortization	$	87		$	84		$	75
Capital Expenditures:	2019			2018 ⁽¹⁾			2017 ⁽¹⁾
Commercial Truck	$	82		$	83		$	79
Aftermarket, Industrial and Trailer	21			21			16
Total capital expenditures	$	103		$	104		$	95

	September 30,
Segment Assets:	2019			2018 ⁽²⁾
Commercial Truck	$	1,659		$	1,764
Aftermarket, Industrial and Trailer	815			589
Total segment assets	2,474			2,353
Corporate ⁽³⁾	567			633
Less: Accounts receivable sold under off-balance sheet factoring programs ⁽⁴⁾	(226		)	(260		)
Total assets	$	2,815		$	2,726


⁽¹⁾	Fiscal years 2018 and 2017 have been recast to reflect reportable segment changes.


⁽²⁾	Amounts as of September 30, 2018 have been recast to reflect reportable segment changes, including the reallocation of goodwill.


⁽³⁾	Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.


⁽⁴⁾	At September 30, 2019 and September 30, 2018, segments assets include $226 million and $260 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.

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



Sales by Geographic Area:
	2019		2018		2017
U.S.	$	2,622	$	2,289	$	1,761
Canada	69		72		69
Mexico	249		221		234
Total North America	2,940		2,582		2,064
Sweden	276		311		273
Italy	234		243		210
United Kingdom	165		179		149
Other Europe	91		103		83
Total Europe	766		836		715
Brazil	248		224		168
China	153		196		127
India	197		231		184
Other Asia-Pacific	84		109		89
Total sales	$	4,388	$	4,178	$	3,347



Assets by Geographic Area:
	2019		2018
U.S.	$	1,504	$	1,350
Canada	39		36
Mexico	197		224
Total North America	1,740		1,610
Sweden	130		138
Italy	81		86
United Kingdom	241		263
Other Europe	173		171
Total Europe	625		658
Brazil	187		161
China	124		123
India	84		100
Other Asia-Pacific	55		74
Total	$	2,815	$	2,726

Sales to AB Volvo represented approximately 22 percent, 23 percent and 22 percent of the company’s sales in fiscal years 2019, 2018 and 2017, respectively. Sales to Daimler AG represented approximately 19 percent, 17 percent and 17 percent of the company’s sales in fiscal years 2019, 2018 and 2017, respectively. Sales to PACCAR represented approximately 13 percent, 12 percent and 10 percent of the company's sales in fiscal years 2019, 2018 and 2017, respectively. Sales to Navistar represented approximately 10 percent, 9 percent and 9 percent of the company’s sales in fiscal years 2019, 2018 and 2017, respectively. No other customer comprised 10 percent or more of the company’s total sales in any of the three fiscal years ended September 30, 2019.