10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

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

For the Quarterly Period Ended April 1, 2012

Commission File No. 1-15983

MERITOR, INC.

(Exact name of registrant as specified in its charter)

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

(248) 435-1000
(Registrant’s telephone number, including area code)

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

YesX         No                

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Registration S-T during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).
      Yes [ X ]   No [ ]

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

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

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

Yes         No        X        

96,487,135 shares of Common Stock, $1.00 par value, of Meritor, Inc. were outstanding on April 1, 2012.

INDEX

			Page No.
PART I.	FINANCIAL INFORMATION:
	Item 1.	Financial Statements:
		Consolidated Statement of Operations - - Three and Six Months
		Ended March 31, 2012 and 2011	3
		Condensed Consolidated Balance Sheet - -
		March 31, 2012 and September 30, 2011	4
		Condensed Consolidated Statement of Cash Flows - -
		Six Months Ended March 31, 2012 and 2011	5
		Condensed Consolidated Statement of Equity (Deficit) - -
		Six Months Ended March 31, 2012 and 2011	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis
		of Financial Condition and Results of Operations	33
	Item 3.	Quantitative and Qualitative Disclosures About
		Market Risk	50
	Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION:
	Item 1.	Legal Proceedings	52
	Item 1A.	Risk Factors	52
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
	Item 5.	Other Information	52
	Item 6.	Exhibits	54
Signatures			55

2

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements

MERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share amounts)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
	(Unaudited)
Sales	$	1,160		$	1,176		$	2,319		$	2,133
Cost of sales		(1,026	)		(1,058	)		(2,079	)		(1,910	)
GROSS MARGIN		134			118			240			223
Selling, general and administrative		(72	)		(70	)		(137	)		(140	)
Restructuring costs		(3	)		(5	)		(27	)		(8	)
Other operating expense		(1	)		(2	)		(2	)		(2	)
OPERATING INCOME		58			41			74			73
Other income (loss), net		1			(2	)		5			(2	)
Equity in earnings of affiliates		14			17			29			30
Interest expense, net		(23	)		(24	)		(47	)		(51	)
INCOME BEFORE INCOME TAXES		50			32			61			50
Provision for income taxes		(17	)		(21	)		(37	)		(41	)
INCOME FROM CONTINUING OPERATIONS		33			11			24			9
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax		(9	)		11			(18	)		15
NET INCOME		24			22			6			24
Less: Income attributable to noncontrolling interests		(4	)		(5	)		(8	)		(9	)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	$	20		$	17		$	(2	)	$	15
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.
Net income from continuing operations	$	29		$	6		$	16		$	—
Income (loss) from discontinued operations		(9	)		11			(18	)		15
Net income (loss)	$	20		$	17		$	(2	)	$	15
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations	$	0.30		$	0.06		$	0.17		$	—
Discontinued operations		(0.09	)		0.12			(0.19	)		0.16
Basic earnings (loss) per share	$	0.21		$	0.18		$	(0.02	)	$	0.16
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations	$	0.30		$	0.06		$	0.17		$	—
Discontinued operations		(0.09	)		0.12			(0.19	)		0.15
Diluted earnings (loss) per share	$	0.21		$	0.18		$	(0.02	)	$	0.15
Basic average common shares outstanding		96.3			94.3			95.4			93.8
Diluted average common shares outstanding		97.2			96.9			97.2			96.9

See notes to consolidated financial statements. Amounts for prior period have been recast for discontinued operations.

3

MERITOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)

	March 31,			September 30,
	2012			2011
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	109		$	217
Receivables, trade and other, net		703			712
Inventories		489			460
Other current assets		65			70
TOTAL CURRENT ASSETS		1,366			1,459
NET PROPERTY		404			421
GOODWILL		433			431
OTHER ASSETS		362			352
TOTAL ASSETS	$	2,565		$	2,663
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term debt	$	21		$	84
Accounts payable		809			841
Other current liabilities		343			328
TOTAL CURRENT LIABILITIES		1,173			1,253
LONG-TERM DEBT		954			950
RETIREMENT BENEFITS		1,064			1,096
OTHER LIABILITIES		319			325
EQUITY (DEFICIT):
Common stock (March 31, 2012 and September 30, 2011, 96.4 and 94.6 shares
issued and outstanding, respectively)		96			94
Additional paid-in capital		898			897
Accumulated deficit		(1,159	)		(1,157	)
Accumulated other comprehensive loss		(820	)		(829	)
Total deficit attributable to Meritor, Inc.		(985	)		(995	)
Noncontrolling interests		40			34
TOTAL DEFICIT		(945	)		(961	)
TOTAL LIABILITIES AND DEFICIT	$	2,565		$	2,663

See notes to consolidated financial statements.

4

MERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)

	Six Months Ended March 31,
	2012			2011
	(Unaudited)
OPERATING ACTIVITIES
CASH USED FOR OPERATING ACTIVITIES (See Note 10)	$	(46	)	$	(44	)
INVESTING ACTIVITIES
Capital expenditures		(43	)		(42	)
Proceeds from sale of property		18			—
Other investing activities		(2	)		1
Net investing cash flows used for continuing operations		(27	)		(41	)
Net investing cash flows provided by (used for) discontinued operations		28			(71	)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES		1			(112	)
CASH PROVIDED BY FINANCING ACTIVITIES:
Borrowings on accounts receivable securitization program, net		19			—
Repayment of notes		(84	)		—
Other financing activities		—			6
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES		(65	)		6
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS		2			2
CHANGE IN CASH AND CASH EQUIVALENTS		(108	)		(148	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		217			343
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	109		$	195

See notes to consolidated financial statements. Amounts for prior period have been recast for discontinued operations.

5

MERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF
EQUITY (DEFICIT)
(In millions)
(unaudited)

									Accumulated
			Additional						Other			Total Deficit
	Common		Paid-in			Accumulated			Comprehensive			Attributable to			Noncontrolling
	Stock		Capital			Deficit			Loss			Meritor, Inc.			Interests			Total
Beginning balance
at September 30,
2011	$	94	$	897		$	(1,157	)	$	(829	)	$	(995	)	$	34		$	(961	)
Net income (loss)		—		—			(2	)		—			(2	)		8			6
Foreign currency
translation
adjustments		—		—			—			9			9			—			9
Employee benefit																—
related adjustment		—		—			—			2			2			—			2
Other		—		—			—			(2	)		(2	)		—			(2	)
Comprehensive
income													7			8			15
Issuance of
restricted stock		2		(2	)		—			—			—			—			—
Equity based        Compensation        expense		—		3			—			—			3			—			3
Other		—		—			—			—			—			(2	)		(2	)
Ending Balance at
March 31, 2012	$	96	$	898		$	(1,159	)	$	(820	)	$	(985	)	$	40		$	(945	)
Beginning balance
at September 30,
2010	$	92	$	886		$	(1,220	)	$	(812	)	$	(1,054	)	$	31		$	(1,023	)
Net income		—		—			15			—			15			9			24
Foreign currency
translation
adjustments		—		—			—			38			38			—			38
Impact of sale of
business										(62	)		(62	)					(62	)
Employee benefit
related adjustment		—		—			—			9			9						9
Other		—		—			—			(2	)		(2	)		—			(2	)
Comprehensive
income (loss)													(2	)		9			7
Equity based
compensation
expense		—		3			—			—			3			—			3
Exercise of stock
options		1		5			—			—			6			—			6
Other		—		1			—			—			1			—			1
Ending Balance at
March 31, 2011	$	93	$	895		$	(1,205	)	$	(829	)	$	(1,046	)	$	40		$	(1,006	)

See notes to consolidated financial statements.

6

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

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

Certain businesses are reported in discontinued operations in the consolidated statement of operations, 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 financial statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K, for the fiscal year ended September 30, 2011. The results of operations for the six months ended March 31, 2012, are not necessarily indicative of the results for the full year.

The company’s fiscal year ends on the Sunday nearest September 30. The second quarter of fiscal years 2012 and 2011 ended on April 1, 2012 and April 3, 2011, respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and March 31 are used consistently throughout this report to represent the fiscal year end and second quarter end, respectively.

The company has evaluated subsequent events through the date that the consolidated financial statements were issued. On April 23, 2012, the company amended and extended its bank credit facility (see Note 17).

2. Earnings per Share

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

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

	Three Months Ended		Six Months Ended
	March 31,		March 31,
	2012	2011	2012	2011
Basic average common shares outstanding	96.3	94.3	95.4	93.8
Impact of stock options	—	0.2	—	0.2
Impact of restricted shares and share units	0.9	2.4	1.8	2.9
Diluted average common shares outstanding	97.2	96.9	97.2	96.9

     For the three and six months ended March 31, 2012 and March 31, 2011, options to purchase 0.7 million and 0.4 million shares of common stock, respectively, were not included in the computation of diluted earnings per share because their exercise price exceeded the average market price for the period and thus their inclusion would be anti-dilutive. The company’s convertible senior unsecured notes are excluded from the computation of diluted earnings per share, as the stock price at the end of the quarter is less than the conversion price.

3. New Accounting Standards

   Accounting standards implemented during fiscal year 2012

In September 2011, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2011-08: Testing Goodwill for Impairment. Under the revised guidance, entities testing for goodwill impairment have an option of performing a qualitative assessment before calculating the fair value for the reporting unit, i.e., Step 1 of the goodwill impairment test. If an entity determines, on the basis of qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying amount, the first step of the two-step impairment test would be required. If it is not more-likely-than-not that the fair value of the reporting unit is less than the carrying value, then goodwill is not considered to be impaired. ASU No. 2011-08 does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill at least annually for impairment. This ASU is effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. The company has adopted the revised guidance provided in this ASU effective with its second quarter of fiscal year 2012 and will apply it in the fiscal year 2012 goodwill impairment review during the fourth quarter. The company does not expect any significant effect on its goodwill impairment assessments as a result of the adoption of the new guidance.

7

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). This ASU is intended to result in convergence between U.S. GAAP and IFRS requirements for measurement of and disclosures about fair value. The guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The company has adopted this new guidance effective with its second quarter of fiscal year 2012 and has provided required disclosures in Note 18 to the consolidated financial statements.

   Accounting standard to be implemented

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The company does not believe the adoption of the new guidance will have a significant impact on the company’s consolidated financial statements.

4. Discontinued Operations

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

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Sales	$	—		$	19		$	2		$	336
Operating income (loss), net	$	—		$	(1	)	$	—		$	13
Gain (loss) on sale of businesses, net		—			19			(1	)		19
Restructuring costs		—			(6	)		(1	)		(7	)
Charge for legal contingency (see Note 20)		(6	)		—			(9	)		—
Environmental remediation charges		(2	)		(1	)		(2	)		(1	)
Other, net		(2	)		(4	)		(6	)		(7	)
Income (loss) before income taxes		(10	)		7			(19	)		17
Benefit (provision) for income taxes		1			4			1			(2	)
Income (loss) from discontinued operations
attributable to Meritor, Inc.	$	(9	)	$	11		$	(18	)	$	15

In conjunction with the company’s long-term strategic objective to focus on supplying the commercial vehicle on- and off-highway markets for original equipment manufacturers, aftermarket and industrial customers, the company previously announced its intent to divest the Light Vehicle Systems (LVS) business groups in their entirety. In November 2011, the company sold its damper business located in Leicester, England. With the sale of this business, the company has completed the divestiture of its LVS businesses.

In the second quarter of fiscal year 2011, the company announced the planned closure of its European Trailer (EU Trailer) business which was part of the company’s Aftermarket & Trailer segment. All manufacturing operations and use of productive assets ceased prior to September 30, 2011. The company sold certain long-lived and current assets of the business to a third party during the fourth quarter of fiscal year 2011. The European Trailer business is presented in discontinued operations for all periods presented.

The following summarizes significant items included in income from discontinued operations in the consolidated statement of operations for the three- and six-month periods ended March 31, 2012 and 2011:

     Sales from discontinued operations in the three month period ended March 31, 2011 were $19 million, which primarily related to the company’s EU Trailer business. Sales in the six month period ended March 31, 2011 were $336 million, which included $298 million in Body Systems and $30 million in EU Trailer.

8

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Operating income (loss), net from discontinued operations in the three and six month periods ended March 31, 2011 represents income from normal operating activities of businesses, primarily Body Systems, included in discontinued operations.

Net gain (loss) on sale of businesses: The loss on sale of business in the six month period ended March 31, 2012 relates to the sale of the company’s damper business located in Leicester, England during the first quarter of fiscal year 2012. In the second quarter of fiscal year 2011, the company recognized a pre-tax gain of $32 million ($32 million after tax) on the sale of the Body Systems business and a pre-tax loss of $13 million ($13 million after tax) on the sale of its Gabriel Europe business.

Restructuring costs: In the second quarter of fiscal year 2011, the company recognized $6 million of restructuring charges associated with the closure of its EU Trailer business. The company recognized additional restructuring charges of $1 million associated with EU Trailer closure in the first six months of fiscal year 2012.

Other: These charges primarily relate to charges for changes in estimates and adjustments for certain assets and liabilities retained from previously sold businesses and indemnities provided at the time of sale, and costs associated with the divestiture actions.

5. Goodwill

A summary of the changes in the carrying value of goodwill are presented below (in millions):

	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Total
Balance at September 30, 2011	$	150	$	109	$	172	$	431
Foreign currency translation		2		—		—		2
Balance at March 31, 2012	$	152	$	109	$	172	$	433

6. Restructuring Costs

At March 31, 2012 and September 30, 2011, $15 million and $19 million, respectively, of restructuring reserves primarily related to unpaid employee termination benefits remained in the consolidated balance sheet. The changes in restructuring reserves for the six months ended March 31, 2012 and 2011 are as follows (in millions):

	Employee						Plant
	Termination			Asset			Shutdown
	Benefits			Impairment			& Other			Total
Balance at September 30, 2011	$	19		$	—		$	—		$	19
Activity during the period:
Charges to continuing operations		6			19			2			27
Charges to discontinued operations(1)		—			—			1			1
Asset impairments and other		(1	)		(19	)		—			(20	)
Cash payments – continuing operations		(9	)		—			(1	)		(10	)
Cash payments – discontinued operations		(1	)		—			(1	)		(2	)
Total restructuring reserves at March 31, 2012		14			—			1			15
Less: non-current restructuring reserves		(5	)		—			—			(5	)
Restructuring reserves – current, at March 31, 2012	$	9		$	—		$	1		$	10
Balance at September 30, 2010	$	11		$	—		$	—		$	11
Activity during the period:
Charges to continuing operations		7			1			—			8
Charges to discontinued operations(1)		6			—			—			6
Asset impairments		—			(1	)		—			(1	)
Cash payments - continuing operations		(7	)		—			—			(7	)
Cash payments – discontinued operations		(1	)		—			—			(1	)
Other		1			—			—			1
Total restructuring reserves at March 31, 2011	$	17		$	—		$	—		$	17

(1) Charges to discontinued operations are included in income from discontinued operations in the consolidated statement of income.

9

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Performance Plus: During fiscal year 2007, the company launched a long-term profit improvement and cost reduction initiative called “Performance Plus.” As part of this program, the company identified significant restructuring actions which would eliminate up to 2,800 positions in North America and Europe and consolidate and combine certain global facilities. The company’s continuing operations recognized restructuring costs in its Commercial Truck business segment of $24 million in the first six months of fiscal year 2012 related to Performance Plus. These costs include $19 million of non-cash charges, including an impairment charge of $17 million for assets held for sale at December 31, 2011. In connection with the then planned sale of St. Priest, France manufacturing facility to Renault Trucks SAS, the company classified certain assets and associated liabilities as held for sale (collectively the “Disposal Group”) at December 31, 2011. Upon comparing the carrying value of the Disposal Group to its fair value less cost to sell, an impairment was identified. The sale of Disposal Group was completed on January 2, 2012. In addition, other restructuring charges of approximately $5 million (including $1 million in the second quarter of fiscal year 2012) associated with employee headcount reduction and plant rationalization costs were recognized in connection with the sale of St. Priest facility. Restructuring costs recognized in the first and second quarters of fiscal year 2011 were also associated with the company’s Commercial Truck segment.

Cumulative restructuring costs recorded for this program as of March 31, 2012 are $186 million, including $93 million reported in discontinued operations in the consolidated statement of operations. These costs primarily relate to employee severance and related costs of $117 million, asset impairment charges of $41 million and $28 million primarily associated with pension termination benefits. The company’s Commercial Truck segment has recognized cumulative restructuring costs associated with Performance Plus of $82 million. Cumulative restructuring costs of $11 million were recognized by corporate locations and the company’s Aftermarket & Trailer segment. Substantially all restructuring actions associated with Performance Plus were complete as of March 31, 2012.

Fiscal Year 2012 European Action: During the second quarter of fiscal year 2012, the company approved a European headcount reduction plan in response to the ongoing economic weakness and uncertainty in that region and recognized approximately $1 million of restructuring costs associated with this plan in its Commercial Truck segment. Remaining anticipated costs under this plan are approximately $5 million and are expected to be incurred during the second half of fiscal year 2012.

7. Other Income (Loss), Net

Other income, net for the six months ended March 31, 2012 includes a $3 million non-operating gain related to the sale of the company’s remaining ownership interest in Gabriel India, Ltd during the first quarter of fiscal year 2012. The company’s ownership interest in Gabriel India, Ltd was a legacy cost method investment that the company deemed non-core upon the completion of the sale of its light vehicle businesses.

8. 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 Accounting Standards Codification (ASC) Topic 740-270, “Accounting for Income Taxes in Interim Periods.” The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

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

For the first six months of fiscal 2012 and 2011, the company had approximately $52 million and $85 million, respectively, of net pre-tax losses in tax jurisdictions in which a tax benefit is not recorded. Losses arising from these jurisdictions resulted in increasing the valuation allowance, rather than reducing income tax expense.

10

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Accounts Receivable Factoring

Off-balance sheet arrangements 

     Swedish Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo through one of its European subsidiaries. Under this arrangement, which was renewed in June 2011 for a term of one year, the company can sell up to, at any point in time, €150 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €131 million ($174 million) and €107 million ($146 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively.

French Factoring Facility: The company has an arrangement to sell trade receivables through one of its French subsidiaries. Under this arrangement, the company can sell up to, at any point in time, €125 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €6 million ($8 million) and €47 million ($63 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively. In January 2012, the company sold its manufacturing facility located at St. Priest, France to Renault Trucks SAS. As a result, the French Factoring Facility is expected to ramp down over the course of fiscal year 2012. During the second quarter of fiscal year 2012, the company entered into new arrangements to sell trade receivables from AB Volvo and its European subsidiaries through its United Kingdom and Italian subsidiaries as more fully described below.

U.S. Factoring Facility: In October 2010, the company entered into a two-year arrangement to sell trade receivables from AB Volvo and its subsidiaries. Under this arrangement, the company can sell up to, at any point in time, €60 million ($80 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €49 million ($65 million) and €46 million ($62 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively.

The above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through June 2012 for the French and the Swedish facilities and October 2012 for the U.S. facility. The commitments are subject to standard terms and conditions for these types of arrangements (including, in the case of the French commitment, a sole discretion clause whereby the bank retains the right to not purchase receivables, which to the company’s knowledge has never been invoked).

United Kingdom Factoring Facility: On February 2, 2012, the company entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement, which expires in February 2013, the company can sell up to, at any point in time, €25 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €5 million ($7 million) of this accounts receivable factoring facility as of March 31, 2012. The commitment 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.

Italy Factoring Facility: On March 15, 2012, the company entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement, which expires in March 2017, the company can sell up to, at any point in time, €30 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €17 million ($22 million) of this accounts receivable factoring facility as of March 31, 2012. The commitment 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.

In addition, several of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the consolidated balance sheet. The amount of factored receivables excluded from accounts receivable was $11 million and $8 million at March 31, 2012 and September 30, 2011, respectively.

Total costs associated with these off-balance sheet arrangements were $6 million and $3 million in the six month periods ended March 31, 2012 and 2011, respectively, and are included in selling, general and administrative expenses in the consolidated statement of operations.

On-balance sheet arrangements

The company has a $125 million U.S. receivables financing arrangement which is provided on a committed basis by a syndicate of financial institutions led by Ally Commercial Finance LLC which expires in October 2013. Under this program, the company has the ability to sell substantially all of the trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. Factoring Facility discussed above) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings under a loan agreement with participating lenders. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. At March 31, 2012, the company had $19 million of borrowings outstanding under this program. At September 30, 2011, no amount was outstanding under this program. This program does not have specific financial covenants; however, it does have a cross-default provision to the company’s revolving credit facility agreement.

11

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

10. Operating Cash Flow

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

	Six Months Ended
	March 31,
	2012			2011
OPERATING ACTIVITIES
Net income	$	6		$	24
Less: Income (loss) from discontinued operations, net of tax		(18	)		15
Income from continuing operations		24			9
Adjustments to income from continuing operations to arrive at cash used for operating activities:
Depreciation and amortization		33			33
Restructuring costs		27			8
Equity in earnings of affiliates		(29	)		(30	)
Pension and retiree medical expense		26			35
Other adjustments to income from continuing operations		7			8
Dividends received from affiliates		8			7
Pension and retiree medical contributions		(50	)		(34	)
Restructuring payments		(10	)		(7	)
Changes in off-balance sheet receivable securitization and factoring		8			138
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency
adjustments and discontinued operations		(82	)		(174	)
Operating cash flows used for continuing operations		(38	)		(7	)
Operating cash flows used for discontinued operations		(8	)		(37	)
CASH USED FOR OPERATING ACTIVITIES	$	(46	)	$	(44	)

11. Inventories

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

	March 31,		September 30,
	2012		2011
Finished goods	$	202	$	183
Work in process		48		63
Raw materials, parts and supplies		239		214
Total	$	489	$	460

12. Other Current Assets

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

	March 31,		September 30,
	2012		2011
Current deferred income tax assets, net	$	27	$	28
Asbestos-related recoveries (see Note 20)		9		9
Deposits and collateral		7		11
Prepaid and other		22		18
Assets of discontinued operations		—		4
Other current assets	$	65	$	70

12

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

13. Net Property

Net property is summarized as follows (in millions):

	March 31,			September 30,
	2012			2011
Property at cost:
Land and land improvements	$	39		$	47
Buildings		251			264
Machinery and equipment		913			897
Company-owned tooling		157			153
Construction in progress		55			74
Total		1,415			1,435
Less accumulated depreciation		(1,011	)		(1,014	)
Net property	$	404		$	421

14. Other Assets

Other assets are summarized as follows (in millions):

	March 31, 2012		September 30, 2011
Investments in non-consolidated joint ventures	$	197	$	174
Asbestos-related recoveries (see Note 20)		65		67
Non-current deferred income tax assets, net		12		12
Unamortized debt issuance costs		21		25
Capitalized software costs, net		22		23
Prepaid pension costs		10		9
Other		35		42
Other assets	$	362	$	352

     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 at a cost-plus basis. The company is not the primary beneficiary of the joint venture, as the joint venture partner has shared or absolute control over key manufacturing operations, labor relationships, financing activities and certain other functions of the joint venture. Therefore, the company does not consolidate the joint venture. At March 31, 2012, the company’s investment in the joint venture was $37 million representing the company’s maximum exposure to loss. This amount is included in investments in non-consolidated joint ventures in the table above.

13

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

15. Other Current Liabilities

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

	March 31,		September 30,
	2012		2011
Compensation and benefits	$	132	$	148
Income taxes		26		23
Taxes other than income taxes		38		38
Accrued interest		5		5
Product warranties		17		19
Restructuring (see Note 6)		10		16
Asbestos-related liabilities (see Note 20)		19		18
Deferred credit		18		—
Other		78		61
Other current liabilities	$	343	$	328

     The deferred credit is associated with proceeds received from the sale of excess land at the company’s Commercial Truck facility in Cwmbran, Wales. The company entered into an agreement to sell the excess land in February 2012; however, due to its continued use of this land through April 2012, it has deferred the recognition of a gain on the sale. The company expects to recognize the gain during the third quarter of fiscal year 2012. The land subject to this transaction with a carrying amount of approximately $1 million has been classified as held for sale and is included in other current assets in the accompanying condensed consolidated balance sheet (see Note 12).

     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 known and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability.

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

	Six Months Ended
	March 31,
	2012			2011
Total product warranties – beginning of period	$	48		$	54
Accruals for product warranties		10			12
Payments		(7	)		(11	)
Change in estimates and other		(5	)		(2	)
Total product warranties – end of period		46			53
Less: Non-current product warranties (see Note 16)		(29	)		(25	)
Product warranties – current	$	17		$	28

16. Other Liabilities

     Other liabilities are summarized as follows (in millions):

	March 31,		September 30,
	2012		2011
Asbestos-related liabilities (see Note 20)	$	77	$	78
Non-current deferred income tax liabilities		95		92
Liabilities for uncertain tax positions		34		35
Product warranties (see Note 15)		29		29
Environmental		8		9
Indemnity obligations		36		41
Other		40		41
Other liabilities	$	319	$	325

14

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

17. Long-Term Debt

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

	March 31,			September 30,
	2012			2011
8-3/4 percent notes due 2012(1)	$	—		$	84
8-1/8 percent notes due 2015		250			250
10-5/8 percent notes due 2018		246			246
4.625 percent convertible notes due 2026(2)		300			300
4.0 percent convertible notes due 2027(2)		200			200
Lines of credit and other		12			8
Accounts receivable securitization		19			—
Unamortized gain on interest rate swap termination		11			14
Unamortized discount on convertible notes		(63	)		(68	)
Subtotal		975			1,034
Less: current maturities		(21	)		(84	)
Long-term debt	$	954		$	950

(1)	During the quarter ended March 31, 2012, the company retired its $84 million 8-3/4 percent notes due 2012 at par value.
(2)	The 4.625 percent and 4.0 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016 and 2019, respectively.

   Revolving Credit Facility

     At March 31, 2012, the company had a revolving credit facility of $441 million which was slated to mature in January 2014. The availability under this facility was dependent upon various factors, including principally performance against certain financial covenants. At March 31, 2012 and September 30, 2011, there were no borrowings outstanding under the revolving facility. The revolving credit facility included a $100 million limit on the issuance of letters of credit. No letters of credit were outstanding at March 31, 2012 and September 30, 2011 under the revolving credit facility.

Availability under the revolving credit facility was subject to a collateral test, pursuant to which borrowings on the revolving credit facility could not exceed 1.0x the collateral test value. The collateral test was performed on a quarterly basis and under the most recent collateral test, the full amount of the revolving credit facility was available for borrowing at March 31, 2012. Availability under the revolving credit facility was also 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 was required to maintain a total priority debt-to-EBITDA ratio, as defined in the agreement, of (i) 2.25 to 1 as of the last day of each fiscal quarter commencing with the fiscal quarter ended September 30, 2011 through and including the fiscal quarter ended June 30, 2012; and (ii) 2.00 to 1 as of the last day of each fiscal quarter thereafter through maturity. At March 31, 2012, the company was in compliance with all covenants under its credit agreement with a ratio of approximately 0.26x for the priority debt-to-EBITDA covenant.

Borrowings under the revolving credit facility were collateralized by approximately $653 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 were subject to interest based on quoted LIBOR rates plus a margin, and a commitment fee on undrawn amounts, both of which were based upon the company’s current credit rating for the senior secured facility. At March 31, 2012, the margin over LIBOR rate was 425 basis points and the commitment fee was 50 basis points.

Certain of the company’s subsidiaries, as defined in the credit agreement, irrevocably and unconditionally guaranteed amounts outstanding under the revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the publicly-held notes outstanding under the company’s indentures (see Note 23).

15

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Amended Bank Credit Facility (Subsequent Event)

On April 23, 2012, the company amended and restated the above described revolving credit facility. Pursuant to the revolving credit facility agreement as amended, the company has a $429 million revolving credit facility, $14 million of which matures in January 2014 for a bank not electing to extend its commitments under the revolving credit facility existing at March 31, 2012 and the remaining $415 million of which matures in April 2017. The April 2017 maturity date is also subject to the following: if on June 1, 2015, the outstanding principal amount of the company’s $250 million bonds due 2015 is greater than $100 million, the maturity date becomes June 10, 2015 and if on November 1, 2015, the outstanding principal amount of the company’s $300 million 4.625 percent convertibles notes due 2026 is greater than $100 million and the conversion price of $20.98 is greater than the then current Meritor common stock price, the maturity date becomes November 15, 2015. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit.

Availability under the amended and extended revolving credit facility is 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. The availability under the revolving credit facility is also 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 (i) 2.50 to 1.00 as of the last day of the fiscal quarter commencing with the fiscal quarter ending on or about March 31, 2012 through and including the fiscal quarter ending on or about September 30, 2012, (ii) 2.25 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending on or about December 31, 2012 through and including the fiscal quarter ending on or about September 30, 2013, and (iii) 2.00 to 1.00 as of the last day of each fiscal quarter thereafter. Borrowings under the amended and extended revolving credit facility are subject to the same interest rate and commitment fee terms as applicable to the existing revolving credit facility discussed above.

As part of the amendment and restatement of the above described revolving credit facility, on April 23, 2012, the company entered into a $100 million term loan agreement with a maturity date of April 23, 2017. The term loan will amortize over a period of 5 years from the effective date as follows: $5 million principal to be repaid during year one, $10 million principal to be repaid in each of the years two, three and four; and the remaining principal balance to be paid in year five. Payments will be made on a quarterly basis for the duration of the term loan. As of the effective date of the term loan, the margin over LIBOR rate was 425 basis points. The company has the ability to prepay the term loan at any time without penalty or premium.

Capital Leases

On March 20, 2012, the company entered into an arrangement to finance equipment acquisitions for various U.S. locations. Under this arrangement, the company can request financing from GE Capital Commercial, Inc. (GE Capital) for progress payments for equipment under construction, not to exceed $10 million at any point in time. The financing rate is equal to the 30-day LIBOR plus 575 basis points per annum. Under this arrangement, the company can also enter into lease arrangements with GE Capital for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points. As of March 31, 2012, the company had $4 million outstanding under these arrangements.

Letter of Credit Facilities

     The company entered into a five-year credit agreement dated as of November 18, 2010 with Citicorp USA, Inc., as administrative agent and issuing bank, the other lenders party thereto and the Bank of New York Mellon, as paying agent. Under the terms of this credit agreement, as amended, the company has the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $30 million. This facility contains covenants and events of default generally similar to those existing in our public debt indentures. At March 31, 2012 and September 30, 2011, $29 million and $30 million, respectively, of letters of credit were outstanding under this facility. In addition, the company had another $6 million and $2 million of letters of credit outstanding through other letters of credit facilities at March 31, 2012 and September 30, 2011, respectively.

18. Financial Instruments

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

	March 31,				September 30,
	2012				2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Cash and cash equivalents	$	109	$	109	$	217	$	217
Short-term debt		21		21		84		83
Long-term debt		954		982		950		844
Foreign exchange forward contracts (asset)		2		2		—		—

   Fair Value

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

• Level 1 inputs use quoted prices in active markets for identical instruments.
   
• Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
   
• Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument.

     In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest 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 is as follows (in millions):

	Level 1		Level 2		Level 3
Short-term debt	$	—	$	21	$	—
Long-term debt		—		982		—
Foreign exchange forward contracts (asset)		—		2		—

     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 does not have any cash equivalents at March 31, 2012 or September 30, 2011.

16

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Short- and Long-term debt — Fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

     Foreign exchange forward contracts —The company uses foreign exchange forward purchase and sale contracts with terms of one year or less to hedge its exposure to changes in foreign currency exchange rates. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics.

19. Retirement Benefit Liabilities

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

	March 31,			September 30,
	2012			2011
Retiree medical liability	$	552		$	550
Pension liability		538			565
Other		26			33
Subtotal		1,116			1,148
Less: current portion (included in compensation and benefits, Note 15)		(52	)		(52	)
Retirement benefit liabilities	$	1,064		$	1,096

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

	2012						2011
	Pension			Retiree Medical			Pension			Retiree Medical
Service cost	$	—		$	—		$	1		$	—
Interest cost		23			6			22			6
Assumed return on plan assets		(26	)		—			(28	)		—
Amortization of prior service costs		—			(2	)		—			(1	)
Recognized actuarial loss		5			6			10			7
Total expense	$	2		$	10		$	5		$	12

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

	2012						2011
	Pension			Retiree Medical			Pension			Retiree Medical
Service cost	$	1		$	—		$	4		$	—
Interest cost		46			12			46			13
Assumed return on plan assets		(52	)		—			(58	)		—
Amortization of prior service costs		—			(4	)		—			(4	)
Recognized actuarial loss		10			13			19			15
Total expense	$	5		$	21		$	11		$	24

17

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

20. Contingencies

   Environmental

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

The company has been designated as a potentially responsible party at nine Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Management estimates the total reasonably possible costs the company could incur for the remediation of Superfund sites at March 31, 2012 to be approximately $19 million, of which $3 million is recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators.

In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at March 31, 2012 to be approximately $38 million, of which $15 million is 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 a discount rate of 5-percent and is approximately $8 million at March 31, 2012. The undiscounted estimate of these costs is approximately $10 million.

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

	Superfund Sites		Non-Superfund Sites			Total
Balance at September 30, 2011	$	2	$	15		$	17
Payments and other		—		(3	)		(3	)
Accruals(1)		1		3			4
Balance at March 31, 2012	$	3	$	15		$	18

⁽¹⁾ Includes $2 million recognized in loss from discontinued operations in the consolidated statement of operations.

     Environmental reserves are included in Other Current Liabilities (see Note 15) and Other Liabilities (see Note 16) in the 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.

18

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

   Asset Retirement Obligations

     The company has identified conditional asset retirement obligations for which a reasonable estimate of fair value could not be made because the potential settlement dates cannot be determined at this time. Due to the long term, productive nature of the company’s manufacturing operations, absent plans or expectations of plans to initiate asset retirement activities, the company was not able to reasonably estimate the settlement date for the related obligations. Therefore, the company has not recognized conditional asset retirement obligations for which there are no plans or expectations of plans to retire the asset.

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 21,000 pending asbestos-related claims at March 31, 2012 and September 30, 2011. 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 on behalf of hundreds or thousands of claimants, 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, Maremont does not consider the number of claims filed or the damages alleged to be a meaningful factor in determining its asbestos-related liability.

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

	March 31, 2012		September 30, 2011
Pending and future claims	$	75	$	77
Asbestos-related insurance recoveries		67		67

     A portion of the asbestos-related recoveries and reserves are included in Other Current Assets and Liabilities, with the majority of the amounts recorded in Other Assets and Liabilities (see Notes 12, 14, 15 and 16).

Prior to February 2001, Maremont participated in the Center for Claims Resolution (“CCR”) and shared with other CCR members in the payment of defense and indemnity costs for asbestos-related claims. The CCR handled the resolution and processing of asbestos claims on behalf of its members until February 2001, when it was reorganized and discontinued negotiating shared settlements. Since the CCR was reorganized in 2001, Maremont has handled asbestos-related claims through its own defense counsel and has taken a more aggressive defensive approach that involves examining the merits of each asbestos-related claim. Although the company expects legal defense costs to continue at higher levels than when it participated in the CCR, the company believes its litigation strategy has reduced the average indemnity cost per claim.

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

Bates White provided an estimate of the reasonably possible range of Maremont’s obligation for asbestos personal injury claims over the next ten years of $75 million to $85 million. After consultation with Bates White, Maremont determined that as of March 31, 2012, the most likely and probable liability for pending and future claims over the next ten years is $75 million. 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.

19

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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

• Pending and future claims were estimated for a ten year period ending in fiscal year 2022. The ten-year assumption is considered appropriate as Maremont has reached certain longer-term agreements with key plaintiff law firms and filings of mesothelioma claims have been relatively stable over the last few years resulting in an improvement in the reliability of future projections over a longer time period;
   
• Maremont believes that the litigation environment will 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;
   
• The ultimate cost of resolving pending and future claims filed in Madison County, Illinois, a jurisdiction where a substantial amount of Maremont’s claims are filed, will decline to reflect average outcomes throughout the United States;
   
• Defense and processing costs for pending and future claims filed outside of Madison County, Illinois will be at the level consistent with Maremont’s prior experience; 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. Recent changes in tort law and insufficient settlement history make estimating a liability for these nonmalignant claims difficult and uncertain.

     Recoveries: Maremont has insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The coverage also reimburses Maremont for any indemnity paid on those claims. The coverage is provided by several insurance carriers based on insurance agreements in place. Incorporating historical information with respect to buy-outs and settlements of coverage, and excluding any policies in dispute, the insurance receivable related to asbestos-related liabilities is $67 million as of March 31, 2012. The difference between the estimated liability and insurance receivable is primarily related to proceeds received from settled insurance policies. Certain insurance policies have been settled in cash prior to the ultimate settlement of the related asbestos liabilities. Amounts received from insurance settlements generally reduce recorded insurance receivables. Receivables for policies in dispute are not recorded.

The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Maremont could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Maremont in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; Maremont’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the 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. Currently there are thousands of claimants in lawsuits that name AM, together with many other companies, as defendants. However, the company does not consider the number of claims filed or the damages alleged to be a meaningful factor in determining asbestos-related liabilities. 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. 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 company defends these cases vigorously. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants.

20

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The company engages Bates White to assist with determining whether it would be possible to estimate the cost of resolving pending and future Rockwell legacy asbestos-related claims that have been, and could reasonably be expected to be, filed against the company. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised the company that it would be able to determine an estimate of probable defense and indemnity costs which could be incurred to resolve pending and future Rockwell legacy asbestos-related claims. After consultation with Bates White, the company determined that as of March 31, 2012 and September 30, 2011 the probable liability for pending and future claims over the next four years is $21 million and $19 million, respectively. The accrual estimates are based on historical data and certain assumptions with respect to events that may occur in the future. The uncertainties of asbestos claim litigation and resolution of the litigation with the insurance companies make it difficult to predict accurately the ultimate resolution of asbestos claims beyond four years. That uncertainty is increased by the possibility of adverse rulings or new legislation affecting asbestos claim litigation or the settlement process.

Rockwell maintained insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for most of these claims. The company has initiated claims against certain of these carriers to enforce the insurance policies, which are currently being disputed. The company expects to recover some portion of defense and indemnity costs it has incurred to date, over and above self-insured retentions, and some portion of the costs for defending asbestos claims going forward. Based on consultation with advisors and underlying analysis performed by management, the company has recorded an insurance receivable related to Rockwell legacy asbestos-related liabilities of $7 million and $9 million at March 31, 2012 and September 30, 2011, respectively. If the assumptions with respect to 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.

On March 4, 2010, Gordon Bankhead and his spouse filed suit in Superior Court for Alameda County, California, against more than 40 defendants that Mr. Bankhead claims manufactured or supplied asbestos-containing products he allegedly was exposed to during his career as a janitor; as an ordnance specialist in the National Guard; and as an automotive parts-man. By the time trial began on October 27, 2010, Mr. and Mrs. Bankhead had settled with all defendants except for the company and three other defendants. The claims against these four defendants were limited to Mr. Bankhead’s work as an automotive parts-man. On December 23, 2010, the jury ruled against all four defendants, including the company. The company was assessed $375,000 in compensatory damages for which it has recorded a liability at March 31, 2012. Additionally, the company was assessed $4.5 million in punitive damages. The company filed an appeal on the punitive damages award to the California Court of Appeals. Possible outcomes of the appeal included vacating the damages award in its entirety, reducing the award, affirming the award in its entirety or remanding the case back to the trial court. Accordingly, the possible estimated range of loss at September 30, 2011 was $0 to $4.5 million. Because of the uncertainty associated with the litigation including the appeal process, the company was previously unable to determine an estimate within this range which was considered more probable than others and accordingly did not record any liability for punitive damages at September 30, 2011. On April 19, 2012, the California Court of Appeals issued its opinion, affirming the trial court judgment in full. The company is considering its options, but given the opinion issued by the California Court of Appeals in April 2012, the company increased its liability for this matter from $375,000 to $5.6 million at March 31, 2012.

   Indemnifications

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. During the second quarter of fiscal year 2011, the company recorded a $4 million charge in income from discontinued operations to increase the liability based on changes in demographic data. At March 31, 2012 and September 30, 2011, the remaining estimated liability for this matter was approximately $22 million and $23 million, respectively.

The company has recorded indemnity liabilities of $5 million related to the sale of its Body Systems business, primarily associated with income tax matters and $15 million related to the sale of its 57-percent interest in Meritor Suspension Systems Company related to its share of potential obligations related to taxes, pension funding shortfall, environmental and other contingencies. These amounts are included in other current liabilities and other liabilities in the accompanying consolidated balance sheet.

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. The company’s maximum obligations under these indemnifications cannot be reasonably estimated. The company is not aware of any claims or other information that would give rise to material payments under such indemnifications.

21

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

   Other

     On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that several filter manufacturers and their affiliated corporate entities, including a prior subsidiary of the company, engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive filters. This suit is a purported class action on behalf of direct purchasers of filters from the defendants. Several parallel purported class actions, including on behalf of indirect purchasers of filters, have been filed by other plaintiffs in a variety of jurisdictions in the United States and Canada. The cases have been consolidated into a multi-district litigation proceeding in Federal court for the Northern District of Illinois. On April 16, 2009, the Attorney General of the State of Florida filed a complaint with the U.S. District Court for the Northern District of Illinois based on these same allegations. On May 25, 2010, the Office of the Attorney General for the State of Washington informed the company that it also was investigating the allegations raised in these suits. On August 9, 2010, the County of Suffolk, New York, filed a complaint in the Eastern District of New York based on the same allegations. The case was transferred to the multi-district litigation proceeding in Illinois, but has been dismissed without prejudice pursuant to a tolling agreement that continues until thirty days after the claims by the indirect purchasers in the multi-district litigation are terminated, settled, or dismissed. On April 14, 2011, the judge in that multi-district litigation granted a stay on discovery and depositions until July 25, 2011. The stay was subsequently extended until August 23, 2011 and, on October 12, 2011, was further extended pending the court’s ruling on various motions. On January 19, 2012, counsel for the defendants and counsel for all purported class plaintiffs participated in a settlement conference that was facilitated by the magistrate for the judge in the multi-district litigation. None of the parties were able to reach any agreement at that conference and, on January 20, 2012, the court ruled on the above-referenced motions and vacated the stay on discovery and depositions. In February 2012 the other remaining defendants reached preliminary settlement with all plaintiffs for $13 million, leaving the company as the sole remaining defendant. These preliminary settlements were allocated 65 percent to the direct purchasers and 35 percent to the remaining plaintiffs. In April 2012, the company reached an agreement in principle to settle with certain plaintiffs for $3.1 million.

Based on management’s assessment, the company has recognized a $9 million liability in discontinued operations at March 31, 2012 for this matter. The company believes it has meritorious defenses against the claims raised in all of these actions and intends to vigorously defend itself. However, there is considerable uncertainty around the potential outcomes in a jury trial, and if this matter were to proceed to trial and were ultimately decided by a jury in favor of plaintiffs, it is possible that awarded damages could materially exceed the recorded liability by an amount that the company is unable to reasonably estimate at this time.

In addition, various lawsuits, claims and proceedings, other than those specifically disclosed in the 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 or results of operations.

21. Accumulated Other Comprehensive Loss (AOCL)

The components of AOCL as reported in the Consolidated Balance Sheet are as follows (in millions):

	March 31,			September 30,
	2012			2011
Foreign currency translation	$	119		$	110
Employee benefit related adjustments		(940	)		(942	)
Unrealized gains, net		1			3
Accumulated Other Comprehensive Loss	$	(820	)	$	(829	)

22. 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.

22

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The company has three reportable segments at March 31, 2012, 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 in North America, South America and Europe;

• The Industrial segment supplies drivetrain systems including axles, brakes, drivelines and suspensions for off-highway, military, construction, bus and coach, fire and emergency and other industrial applications. This segment also includes the company’s OE businesses in Asia Pacific, including all on- and off-highway activities; and
   
• The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement and remanufactured parts, including transmissions, to commercial vehicle aftermarket customers. This segment also supplies a wide variety of undercarriage products and systems for trailer applications in North America.

Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring costs and asset impairment charges. The company uses Segment EBITDA as the primary basis for the Chief Operating Decision Maker (CODM) to evaluate the performance of each of its reportable segments.

The accounting policies of the segments are the same as those applied in the Consolidated Financial Statements, except for the use of Segment EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the Segments’ EBITDA.

Segment information is summarized as follows (in millions):

	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Eliminations			Total
Three months ended March 31, 2012:
External Sales	$	632	$	269	$	259	$	—		$	1,160
Intersegment Sales		61		20		4		(85	)		—
Total Sales	$	693		289		263	$	(85	)	$	1,160
Three months ended March 31, 2011:
External Sales	$	635	$	289	$	252	$	—		$	1,176
Intersegment Sales		58		17		5		(80	)		—
Total Sales	$	693	$	306	$	257	$	(80	)	$	1,176
	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Eliminations			Total
Six months ended March 31, 2012:
External Sales	$	1,329	$	500	$	490	$	—		$	2,319
Intersegment Sales		115		37		8		(160	)		—
Total Sales	$	1,444	$	537	$	498	$	(160	)	$	2,319
Six months ended March 31, 2011:
External Sales	$	1,166	$	506	$	461	$	—		$	2,133
Intersegment Sales		102		30		7		(139	)		—
Total Sales	$	1,268	$	536	$	468	$	(139	)	$	2,133

23

MERITOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Segment EBITDA:
Commercial Truck	$	49		$	40		$	96		$	73
Industrial		22			18			33			35
Aftermarket & Trailer		28			29			48			45
Segment EBITDA		99			87			177			153
Unallocated legacy and corporate costs (1)		(4	)		(5	)		(3	)		(6	)
Interest expense, net		(23	)		(24	)		(47	)		(51	)
Provision for income taxes		(17	)		(21	)		(37	)		(41	)
Depreciation and amortization		(16	)		(17	)		(33	)		(33	)
Loss on sale of receivables		(3	)		(2	)		(6	)		(3	)
Restructuring costs		(3	)		(5	)		(27	)		(8	)
Other loss		—			(2	)		—			(2	)
Noncontrolling interests		(4	)		(5	)		(8	)		(9	)
Income from continuing operations
attributable to Meritor, Inc.	$	29		$	6		$	16		$	—

(1) Unallocated legacy and corporate costs represent items that are not directly related to our business segments and include pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability matters.

 

				September 30,
Segment Assets:	March 31, 2012			2011
Commercial Truck	$	1,512		$	1,482
Industrial		480			470
Aftermarket & Trailer		526			504
Total segment assets		2,518			2,456
Corporate(1)		334			483
Discontinued operations		—			4
Less: Accounts receivable sold under off-balance
sheet factoring programs(2)		(287	)		(280	)
Total assets	$	2,565		$	2,663

(1)	Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.
(2)	At March 31, 2012 and September 30, 2011 segment assets include $287 million and $280 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.

23. Supplemental Guarantor Condensed Consolidating Financial Statements

     Certain of the company’s wholly-owned subsidiaries, as defined in the credit agreement (the Guarantors) irrevocably and unconditionally provide joint and several guarantee for the amounts outstanding under the senior secured revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the publicly-held notes outstanding under the company’s indentures (see Note 17).

     In lieu of providing separate financial statements for the Guarantors, the company has included the accompanying condensed consolidating financial statements. 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 distributions and other equity changes. The Guarantor subsidiaries are combined in the condensed consolidating financial statements.

24

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Three Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	448		$	712		$	—		$	1,160
Subsidiaries		—			40			24			(64	)		—
Total sales		—			488			736			(64	)		1,160
Cost of sales		(13	)		(418	)		(659	)		64			(1,026	)
GROSS MARGIN		(13	)		70			77			—			134
Selling, general and administrative		(21	)		(24	)		(27	)		—			(72	)
Restructuring costs		—			—			(3	)		—			(3	)
Other operating expense		—			—			(1	)		—			(1	)
OPERATING INCOME (LOSS)		(34	)		46			46			—			58
Equity in earnings of affiliates		—			10			4			—			14
Other income (loss), net		41			(8	)		(32	)		—			1
Interest income (expense), net		(30	)		5			2			—			(23	)
INCOME (LOSS) BEFORE INCOME TAXES		(23	)		53			20			—			50
Provision for income taxes		(1	)		(2	)		(14	)		—			(17	)
Equity income from continuing operations of subsidiaries		53			(2	)		—			(51	)		—
INCOME FROM CONTINUING OPERATIONS		29			49			6			(51	)		33
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(9	)	$	(2	)	$	—		$	2		$	(9	)
Net income		20			47			6			(49	)		24
Less: Net income attributable to noncontrolling interests		—			—			(4	)		—			(4	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	20		$	47		$	2		$	(49	)	$	20

25

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Three Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	395		$	781		$	—		$	1,176
Subsidiaries		—			40			20			(60	)		—
Total sales		—			435			801			(60	)		1,176
Cost of sales		(15	)		(397	)		(706	)		60			(1,058	)
GROSS MARGIN		(15	)		38			95			—			118
Selling, general and administrative		(25	)		(20	)		(25	)		—			(70	)
Restructuring costs		—			—			(5	)		—			(5	)
Other operating expense		(2	)		—			—			—			(2	)
OPERATING INCOME (LOSS)		(42	)		18			65			—			41
Other income (loss), net		25			(8	)		(19	)		—			(2	)
Equity in earnings of affiliates		—			9			8			—			17
Interest income (expense), net		(31	)		6			1			—			(24	)
INCOME (LOSS) BEFORE INCOME TAXES		(48	)		25			55			—			32
Benefit (provision) for income taxes		1			(1	)		(21	)		—			(21	)
Equity income from continuing operations of subsidiaries		53			25			—			(78	)		—
INCOME FROM CONTINUING OPERATIONS		6			49			34			(78	)		11
INCOME FROM DISCONTINUED OPERATIONS, net of tax		11		$	31		$	39		$	(70	)	$	11
NET INCOME		17			80			73			(148	)		22
Less: Net income attributable to noncontrolling interests		—			—			(5	)		—			(5	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	17		$	80		$	68		$	(148	)	$	17

Amounts have been recast for discontinued operations.

26

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	819		$	1,500		$	—		$	2,319
Subsidiaries		—			72			47			(119	)		—
Total sales		—			891			1,547			(119	)		2,319
Cost of sales		(25	)		(784	)		(1,389	)		119			(2,079	)
GROSS MARGIN		(25	)		107			158			—			240
Selling, general and administrative		(43	)		(43	)		(51	)		—			(137	)
Restructuring costs		—			—			(27	)		—			(27	)
Other operating expense		(1	)		—			(1	)		—			(2	)
OPERATING INCOME (LOSS)		(69	)		64			79			—			74
Other income (loss), net		41			(8	)		(28	)		—			5
Equity in earnings of affiliates		—			19			10			—			29
Interest income (expense), net		(61	)		12			2			—			(47	)
INCOME (LOSS) BEFORE INCOME TAXES		(89	)		87			63			—			61
Benefit (provision) for income taxes		(1	)		(5	)		(31	)		—			(37	)
Equity income from continuing operations of subsidiaries		106			17			—			(123	)		—
INCOME FROM CONTINUING OPERATIONS		16			99			32			(123	)		24
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(18	)	$	(7	)	$	(3	)	$	10		$	(18	)
NET INCOME (LOSS)		(2	)		92			29			(113	)		6
Less: Net income attributable to noncontrolling interests		—			—			(8	)		—			(8	)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	$	(2	)	$	92		$	21		$	(113	)	$	(2	)

Amounts have been recast for discontinued operations.

27

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	698		$	1,435		$	—		$	2,133
Subsidiaries		—			71			37			(108	)		—
Total sales		—			769			1,472			(108	)		2,133
Cost of sales		(29	)		(705	)		(1,284	)		108			(1,910	)
GROSS MARGIN		(29	)		64			188			—			223
Selling, general and administrative		(54	)		(43	)		(43	)		—			(140	)
Restructuring costs		—			—			(8	)		—			(8	)
Other operating expense		(2	)		—			—			—			(2	)
OPERATING INCOME (LOSS)		(85	)		21			137			—			73
Other income (loss), net		24			(8	)		(18	)		—			(2	)
Equity in earnings of affiliates		—			16			14			—			30
Interest income (expense), net		(61	)		15			(5	)		—			(51	)
INCOME (LOSS) BEFORE INCOME TAXES		(122	)		44			128			—			50
Benefit (provision) for income taxes		1			(6	)		(36	)		—			(41	)
Equity income from continuing operations of subsidiaries		121			77			—			(198	)		—
INCOME FROM CONTINUING OPERATIONS		—			115			92			(198	)		9
INCOME FROM DISCONTINUED OPERATIONS, net of tax		15		$	45		$	49		$	(94	)	$	15
NET INCOME		15			160			141			(292	)		24
Less: Net income attributable to noncontrolling interests		—			—			(9	)		—			(9	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	15		$	160		$	132		$	(292	)	$	15

Amounts have been recast for discontinued operations.

28

MERITOR, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
(Unaudited)

	March 31, 2012
							Non-
	Parent			Guarantors			Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	10		$	8		$	91	$	—		$	109
Receivables, net		1			26			676		—			703
Inventories		—			200			289		—			489
Other current assets		5			19			41		—			65
TOTAL CURRENT ASSETS		16			253			1,097		—			1,366
NET PROPERTY		12			141			251		—			404
GOODWILL		—			276			157		—			433
OTHER ASSETS		43			185			134		—			362
INVESTMENTS IN SUBSIDIARIES		1,371			231			—		(1,602	)		—
TOTAL ASSETS	$	1,442		$	1,086		$	1,639	$	(1,602	)	$	2,565
CURRENT LIABILITIES
Short-term debt	$	2		$	—		$	19	$	—		$	21
Accounts payable		57			219			533		—			809
Other current liabilities		108			58			177		—			343
TOTAL CURRENT LIABILITIES		167			277			729		—			1,173
LONG-TERM DEBT		944			2			8		—			954
RETIREMENT BENEFITS		943			—			121		—			1,064
INTERCOMPANY PAYABLE (RECEIVABLE)		302			(797	)		495		—			—
OTHER LIABILITIES		71			170			78		—			319
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.		(985	)		1,434			168		(1,602	)		(985	)
NONCONTROLLING INTERESTS		—			—			40		—			40
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	1,442		$	1,086		$	1,639	$	(1,602	)	$	2,565

29

MERITOR, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
(Unaudited)

	September 30, 2011
							Non-
	Parent			Guarantors			Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	92		$	4		$	121	$	—		$	217
Receivables, net		1			24			687		—			712
Inventories		—			181			279		—			460
Other current assets		6			17			47		—			70
TOTAL CURRENT ASSETS		99			226			1,134		—			1,459
NET PROPERTY		9			138			274		—			421
GOODWILL		—			275			156		—			431
OTHER ASSETS		44			179			129		—			352
INVESTMENTS IN SUBSIDIARIES		1,265			154			—		(1,419	)		—
TOTAL ASSETS	$	1,417		$	972		$	1,693	$	(1,419	)	$	2,663
CURRENT LIABILITIES
Short-term debt	$	84		$	—		$	—	$	—		$	84
Accounts payable		52			225			564		—			841
Other current liabilities		92			67			169		—			328
TOTAL CURRENT LIABILITIES		228			292			733		—			1,253
LONG-TERM DEBT		942			—			8		—			950
RETIREMENT BENEFITS		953			—			143		—			1,096
INTERCOMPANY PAYABLE (RECEIVABLE)		202			(820	)		618		—			—
OTHER LIABILITIES		87			165			73		—			325
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.		(995	)		1,335			84		(1,419	)		(995	)
NONCONTROLLING INTERESTS		—			—			34		—			34
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	1,417		$	972		$	1,693	$	(1,419	)	$	2,663

30

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	(36	)	$	21		$	(31	)	$	—	$	(46	)
INVESTING ACTIVITIES
Capital expenditures		(2	)		(18	)		(23	)		—		(43	)
Proceeds from sale of property		—			—			18			—		18
Other investing activities		—			1			(3	)		—		(2	)
											—
Net cash flows provided by discontinued operations		—			—			28					28
CASH PROVIDED BY (USED FOR) INVESTING        ACTIVITIES		(2	)		(17	)		20			—		1
FINANCING ACTIVITIES
Repayment of notes		(84	)		—			—			—		(84	)
Borrowings on accounts receivable securitization program, net		—			—			19			—		19
Intercompany advances		40			—			(40	)		—		—
CASH USED FOR FINANCING ACTIVITIES		(44	)		—			(21	)		—		(65	)
EFFECT OF FOREIGN CURRENCY EXCHANGE        RATES ON CASH AND CASH EQUIVALENTS		—			—			2			—		2
CHANGE IN CASH AND CASH EQUIVALENTS		(82	)		4			(30	)		—		(108	)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD		92			4			121			—		217
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	10		$	8		$	91		$	—	$	109

31

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	160		$	11		$	(215	)	$	—	$	(44	)
INVESTING ACTIVITIES
Capital expenditures		(2	)		(15	)		(25	)		—		(42	)
Other investing activities		—			2			(1	)		—		1
Net cash flows used by discontinued operations		(15	)		—			(56	)		—		(71	)
CASH USED FOR INVESTING ACTIVITIES		(17	)		(13	)		(82	)		—		(112	)
FINANCING ACTIVITIES
Intercompany advances		(134	)		—			134			—		—
Other financing activities		6			—			—			—		6
CASH PROVIDED BY (USED FOR) FINANCING        ACTIVITIES		(128	)		—			134			—		6
EFFECT OF FOREIGN CURRENCY EXCHANGE        RATES ON CASH AND CASH EQUIVALENTS		—			—			2			—		2
CHANGE IN CASH AND CASH EQUIVALENTS		15			(2	)		(161	)		—		(148	)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD		47			6			290			—		343
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	62		$	4		$	129		$	—	$	195

Amounts have been recast for discontinued operations.

32

MERITOR, INC.

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

OVERVIEW

     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, off-highway, military, bus and coach and other industrial OEMs and certain aftermarkets. Meritor common stock is traded on the New York Stock Exchange under the ticker symbol MTOR.

On January 2, 2012, we completed the sale of our Commercial Truck manufacturing facility located in St. Priest, France to Renault Trucks SAS, an affiliate of AB Volvo. This transaction is not expected to have a significant impact on our sales as production was absorbed by our remaining manufacturing facilities in Europe. During the first quarter of fiscal year 2012, we recognized non-cash charges of $19 million, including an asset impairment charge of $17 million for the disposal group, in connection with the then anticipated sale. In addition, other restructuring charges of approximately $5 million associated with employee headcount reduction and plant rationalization costs were recorded during the first six months of fiscal year 2012.

Our results from continuing operations for the quarter ended March 31, 2012 were significantly improved compared to the same quarter in the prior year. Income from continuing operations in the second quarter of fiscal year 2012 was $29 million, or $0.30 per diluted share, compared to income of $6 million, or $0.06 per diluted share, in the prior year. Net income for the second quarter of fiscal year 2012 was $20 million compared to net income of $17 million in the prior year.

Sales were $1,160 million for the second quarter of fiscal year 2012, down slightly compared to $1,176 million in the prior year. Adjusted EBITDA (see Non-GAAP Financial Measures below) for the second quarter of fiscal year 2012 was $95 million compared to $82 million in the second quarter of fiscal year 2011. Our Adjusted EBITDA margin in the second quarter of fiscal year 2012 was 8.2 percent compared to 7.0 percent in the same period a year ago. The improved Adjusted EBITDA performance is primarily due to the key initiatives executed by the company during fiscal year 2012 including improved pricing and the sale of our St. Priest, France manufacturing facility. In addition, improved military sales mix in our Industrial business segment compared to the prior year favorably impacted Adjusted EBITDA. This improved mix was partially offset by unfavorable geographic sales mix in our Commercial Truck segment due to lower sales in South America in the second quarter of fiscal year 2012 compared to the same period a year ago.

Cash flows used for operating activities were $51 million in the second quarter of fiscal year 2012 compared to cash provided by operating activities of $5 million in the second quarter of the prior fiscal year. The decrease in cash flows from operations was a result of smaller increases in sale of receivables under our accounts receivable factoring programs and higher pension and retiree medical contributions, partially offset by lower utilization of cash flows by discontinued operations.

Trends and Uncertainties

Production Volumes

The following table reflects estimated commercial vehicle production volumes for selected original equipment (OE) markets for the three months ended March 31, 2012 and 2011 based on available sources and management’s estimates.

	Three Months Ended March 31,		Percent
	2012	2011	Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks	76	51	49	%
North America, Medium-Duty Trucks	45	40	13	%
United States, Trailers	57	44	30	%
Western Europe, Heavy- and Medium-Duty Trucks	88	96	(8	)%
South America, Heavy- and Medium-Duty Trucks	39	44	(11	)%

     We expect production volumes in North America to continue to remain at levels experienced since the second half of fiscal year 2011 (which were higher than they were during the first half of fiscal year 2011) and production volumes in Europe to weaken in fiscal year 2012 compared to fiscal year 2011 levels. In the second quarter of fiscal year 2012, production volumes in South America declined significantly as the industry transitioned to tighter emission standard requirements for commercial vehicles. These volumes have since been recovering, and we expect them to increase through our fourth fiscal quarter, although it is unclear whether they will return to previous historic levels during fiscal year 2012.

33

MERITOR, INC.

Industry-Wide Issues

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

• Continued strong demand for commercial truck production in North America and the impact on the ability to support customer demand;
   
• Uncertainty around the market outlook in Europe, China and South America;
   
• 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;
   
• Higher energy and transportation costs;
   
• Consolidation and globalization of OEMs and their suppliers; and
   
• Significant pension and retiree medical health care costs.

Other

Other significant factors that could affect our results and liquidity in fiscal year 2012 include:

• Ability to work with our commercial truck 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;
   
• Higher than planned price reductions to our customers;
   
• Potential price increases from our suppliers;
   
• Additional restructuring actions and the timing and recognition of restructuring charges;
   
• Higher than planned warranty expenses, including the outcome of known or potential recall campaigns;
   
• Our ability to implement planned productivity, cost reduction, and other margin improvement initiatives;
   
• Significant contract awards or losses of existing contracts;
   
• Impact of currency exchange rate volatility in the markets in which we operate;
   
• Restrictive government actions by foreign countries (such as restrictions on transfer of funds and trade protection measures, including export duties and quotas and customs duties and tariffs).

NON-GAAP FINANCIAL MEASURES

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

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

Management believes Adjusted EBITDA and Adjusted income (loss) from continuing operations are meaningful measures of performance as they are commonly utilized by management and investors to analyze ongoing operating performance and entity valuation. Management, the investment community and banking institutions routinely use Adjusted EBITDA, together with other measures, to measure operating performance in our industry. Further, management uses Adjusted EBITDA for planning and forecasting future periods. In addition, we use Segment EBITDA as the primary basis to evaluate the performance of each of our reportable segments. Management believes that Free cash flow is useful in analyzing our ability to service and repay debt.

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

34

MERITOR, INC.

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

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Adjusted income from continuing operations	$	32		$	13		$	43		$	10
Restructuring costs		(3	)		(5	)		(27	)		(8	)
Other loss related to LVS divestitures		—			(2	)		—			(2	)
Income from continuing operations	$	29		$	6		$	16		$	—
Adjusted diluted earnings per share from
continuing operations	$	0.33		$	0.13		$	0.45		$	0.10
Impact of adjustments on diluted earnings per
share		(0.03	)		(0.07	)		(0.28	)		(0.10	)
Diluted earnings per share from continuing
operations	$	0.30		$	0.06		$	0.17		$	—

Free cash flow and Free cash flow from continuing operations before restructuring payments are reconciled to cash flows provided by (used for) operating activities below (in millions).

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Cash provided by (used for) operating activities
– continuing operations	$	(46	)	$	12		$	(38	)	$	(7	)
Capital expenditures – continuing operations		(18	)		(23	)		(43	)		(42	)
Free cash flow – continuing operations		(64	)		(11	)		(81	)		(49	)
Cash used for operating activities – discontinued
operations		(5	)		(7	)		(8	)		(37	)
Capital expenditures – discontinued operations		—			—			—			(6	)
Free cash flow – discontinued operations		(5	)		(7	)		(8	)		(43	)
Free cash flow – total company	$	(69	)	$	(18	)	$	(89	)	$	(92	)
Free cash flow – continuing operations	$	(64	)	$	(11	)	$	(81	)	$	(49	)
Restructuring payments – continuing operations		3			3			10			7
Free cash flow from continuing operations
before restructuring payments	$	(61	)	$	(8	)	$	(71	)	$	(42	)

35

MERITOR, INC.

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

Results of Operations

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

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
SALES:
Commercial Truck	$	693		$	693		$	1,444		$	1,268
Industrial		289			306			537			536
Aftermarket & Trailer		263			257			498			468
Intersegment Sales		(85	)		(80	)		(160	)		(139	)
SALES	$	1,160		$	1,176		$	2,319		$	2,133
SEGMENT EBITDA:
Commercial Truck	$	49		$	40		$	96		$	73
Industrial		22			18			33			35
Aftermarket & Trailer		28			29			48			45
SEGMENT EBITDA		99			87			177			153
Unallocated legacy and corporate costs (1)		(4	)		(5	)		(3	)		(6	)
ADJUSTED EBITDA (2)		95			82			174			147
Interest expense, net		(23	)		(24	)		(47	)		(51	)
Provision for income taxes		(17	)		(21	)		(37	)		(41	)
Depreciation and amortization		(16	)		(17	)		(33	)		(33	)
Restructuring costs		(3	)		(5	)		(27	)		(8	)
Loss on sale of receivables		(3	)		(2	)		(6	)		(3	)
Other loss		—			(2	)		—			(2	)
Noncontrolling interests		(4	)		(5	)		(8	)		(9	)
INCOME FROM CONTINUING OPERATIONS,
attributable to Meritor, Inc.	$	29		$	6		$	16		$	—
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS, net of tax, attributable to
Meritor, Inc.		(9	)		11			(18	)		15
NET INCOME (LOSS) attributable to Meritor, Inc.	$	20		$	17		$	(2	)	$	15
DILUTED EARNINGS (LOSS) PER SHARE
Attributable to Meritor, Inc.
Continuing operations	$	0.30		$	0.06		$	0.17		$	—
Discontinued operations		(0.09	)		0.12			(0.19	)		0.15
Diluted earnings (loss) per share	$	0.21		$	0.18		$	(0.02	)	$	0.15
DILUTED AVERAGE COMMON SHARES
OUTSTANDING		97.2			96.9			97.2			96.9

(1)	Unallocated legacy and corporate costs represent items that are not directly related to our business segments and include pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability matters.
(2)	Adjusted EBITDA margin is defined as Adjusted EBITDA, as calculated above, divided by consolidated sales.

36

MERITOR, INC.

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

Sales

     The following table reflects total company and business segment sales for the three months ended March 31, 2012 and 2011. The reconciliation is intended to reflect the trend in business segment sales and to illustrate the impact that changes in foreign currency exchange rates, volumes and other factors had on sales. Business segment sales include intersegment sales (in millions).

												Dollar Change Due To
	March 31,						Dollar			%					Volume /
	2012			2011			Change			Change		Currency			Other
Sales:
Commercial Truck	$	693		$	693		$	—		—	%	$	(16	)	$	16
Industrial		289			306			(17	)	(6	)%		(2	)		(15	)
Aftermarket & Trailer		263			257			6		2	%		(3	)		9
Intersegment Sales		(85	)		(80	)		(5	)	(6	)%		3			(8	)
TOTAL SALES	$	1,160		$	1,176		$	(16	)	(1	)%	$	(18	)	$	2

Commercial Truck sales were $693 million in the second quarter of fiscal year 2012, flat compared to the second quarter of fiscal year 2011. North American industry-wide production volumes for heavy- and medium-duty trucks increased 33 percent in the second quarter of fiscal year 2012 as compared to the same period a year ago. However, the increase in sales in North America associated with the higher production volumes was largely offset by lower sales in South America and Europe as industry-wide production volumes in these regions were down 11 percent and 8 percent, respectively. In South America the industry transitioned to tighter emission standard requirements for commercial vehicles resulting in lower production volumes in our second fiscal quarter of 2012. We expect production volumes to recover and increase through our fourth fiscal quarter, although it is unclear whether they will return during fiscal year 2012 to recently experienced peak levels. The effects of foreign currency exchange rates decreased sales by $16 million compared to the same period a year ago.

Industrial sales were $289 million in the second quarter of fiscal year 2012, a decrease of $17 million compared to the second quarter of fiscal year 2011. The decrease in sales is primarily due to lower sales from Caiman and other non-FMTV defense orders as well as our Asia-Pacific region, although these declines were partially offset by an increase in FMTV sales.

Aftermarket & Trailer sales were $263 million in the second quarter of fiscal year 2012, slightly up from $257 million in the second quarter of fiscal year 2011. The increase in sales is due to higher sales of our core aftermarket replacement products, primarily in North America.

   Cost of Sales and Gross Profit

Cost of sales primarily represents materials, labor and overhead production costs associated with the company’s products and production facilities. Cost of sales for the three months ended March 31, 2012 was $1,026 million compared to $1,058 million in the prior year, representing a decrease of 3 percent. The decrease in costs of sales is primarily due to the lower fixed costs resulting from the rationalization of our European manufacturing footprint as well as improvements in our operations. Total cost of sales was approximately 88 percent and 90 percent of sales for the three month periods ended March 31, 2012 and 2011, respectively.

The following table summarizes significant factors contributing to the changes in costs of sales during second quarter of fiscal year 2012 compared to the prior quarter (in millions):

	Cost of Sales
Quarter ended March 31, 2011	$	1,058
Volumes and mix		15
Foreign exchange		(17	)
Other, net		(30	)
Quarter ended March 31, 2012	$	1,026

37

MERITOR, INC.

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

Lower material costs	$	(15	)
Lower labor and overhead costs		(13	)
Other costs		(4	)
Total decrease in costs of sales	$	(32	)

     Material costs represent the majority of our cost of sales and include raw materials, composed primarily of steel and purchased components. Material costs for the three months ended March 31, 2012 decreased by approximately $15 million compared to the same period last year. Global steel prices were relatively stable in the second quarter of fiscal year 2012 as compared to the second quarter of fiscal year 2011.

Labor and overhead costs decreased by$13 million compared to the same period in the prior year. The decrease was primarily savings associated with the rationalization of our European manufacturing operations including the sale of the St. Priest, France facility as well as continuous improvement initiatives.

Gross profit for the three months ended March 31, 2012 was $134 million compared to $118 million in the same period last year. Gross margins increased to 12 percent in the second quarter of fiscal year 2012 compared to 10 percent in the second quarter of prior year due to improvements in Commercial Truck pricing and rationalization of the European manufacturing footprint.

   Other Income Statement Items

Selling, general and administrative expenses for the three months ended March 31, 2012 and 2011 are summarized as follows (in millions):

	Three Months Ended					Three Months Ended
	March 31, 2012					March 31, 2011					Increase (Decrease)
SG&A	Amount			% of sales		Amount			% of sales
Loss on sale of receivables	$	(3	)	(0.3	)%	$	(2	)	(0.2	)%	$	1		0.1pts
Short- and long-term variable
compensation		(4	)	(0.3	)%		(7	)	(0.6	)%		(3	)	(0.3)pts
Charge for legal contingency		(5	)	(0.4	)%		—		—			5		0.4
All other SG&A		(60	)	(5.2	)%		(61	)	(5.2	)%		(1	)	—pts
Total SG&A	$	(72	)	(6.2	)%	$	(70	)	(6.0	)%	$	2		0.2pts

The increase is selling, general and administrative expenses is primarily due to a $5 million charge for a legal contingency recognized in our second fiscal quarter of 2012 (see Note 20 of the Notes to Consolidated Financial Statements under Item 1. Financial Statements). All other SG&A represents normal selling, general and administrative expense and was relatively flat in total as well as a percentage of sales compared to the second quarter of fiscal year 2011.

Restructuringcosts of $3 million were recorded during the quarter ended March 31, 2012 compared to $5 million a year ago. During the second quarter of fiscal year 2012, we approved a European headcount reduction plan in response to ongoing economic weakness and uncertainty in the European region and recognized approximately $1 million of restructuring costs. Remaining anticipated costs under this plan are approximately $5 million and are expected to be incurred during the second half of fiscal year 2012. The remaining restructuring costs incurred during the second quarter of fiscal year 2012 were primarily related to residual costs associated with the sale of the St. Priest, France manufacturing facility.

Operating income for the second quarter of fiscal year 2012 was $58 million, compared to $41 million in the prior year. Key items impacting operating income are discussed above.

Equity in earnings of affiliates was $14 million in the second quarter of fiscal year 2012, compared to $17 million in the same period in the prior year. The decrease is due to lower earnings from our affiliates in South America due to the impact of commercial vehicle industry transitioning to tighter emission standard requirements, partially offset by higher earnings from our affiliates in Mexico and India.

Interest expense, net for the second quarter of fiscal year 2012 was $23 million, compared to $24 million in the prior year.

Provision for income taxes was $17 millionin the second quarter of fiscal year 2012 compared to $21 million in the second quarter of fiscal year 2011. In the second quarter of fiscal year 2012, our effective tax rate was 34 percent compared to 66 percent in the prior year. Favorably impacting our effective tax rate in the three months ended March 31, 2012 were lower losses in jurisdictions where no tax expense in recognized. We expect our effective tax rate to continue to be at more normalized levels through the remainder of fiscal year 2012.

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MERITOR, INC.

     Income from continuing operations (before noncontrolling interests) for the second quarter of fiscal year 2012 was $33 million, compared to income of $11 million, in the prior year. The reasons for the improvement are discussed above.

Loss from discontinued operations was $9 million in the second quarter of fiscal year 2012, compared to income of $11 million in the same period in the prior year. Significant items included in results from discontinued operations in the second quarter of fiscal year 2012 and 2011 include the following:

	Three Months Ended
	March 31,
	2012			2011
Operating loss	$	—		$	(1	)
Gain on sale of businesses, net		—			19
Restructuring costs		—			(6	)
Charge for legal contingency		(6	)		—
Environmental remediation charges		(2	)		(1	)
Other, net		(2	)		(4	)
Income (loss) before income taxes		(10	)		7
Benefit for income taxes		1			4
Net income (loss) from discontinued operations attributable
to Meritor, Inc.	$	(9	)	$	11

Gain on sale of businesses, net: On January 3, 2011, we completed the sale of our Body Systems business to an affiliate of Inteva Products, LLC, and recognized a pre-tax gain of $32 million ($32 million after-tax) during the second quarter of fiscal year 2011 associated with this transaction. During the second quarter of fiscal year 2011, we also completed the sale of our chassis operations in Bonneval, France, and recognized a pre-tax loss of $13 million ($13 million after-tax).

Restructuring costs: Restructuring costs recognized in the second quarter of fiscal year 2011 were related to the then planned closure of our European Trailer business. This business was closed during the fourth quarter of fiscal year 2011.

Charge for legal contingency: In the second quarter of fiscal year 2012, we recognized a charge of approximately $6 million in connection with a loss contingency. On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that several filter manufacturers and their affiliated corporate entities, including a prior subsidiary of the company, engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive filters. This suit is a purported class action on behalf of direct purchasers of filters from the defendants. Several parallel purported class actions, including on behalf of indirect purchasers of filters, have been filed by other plaintiffs in a variety of jurisdictions in the United States and Canada. The cases have been consolidated into a multi-district litigation proceeding in Federal court for the Northern District of Illinois. On April 16, 2009, the Attorney General of the State of Florida filed a complaint with the U.S. District Court for the Northern District of Illinois based on these same allegations. On January 19, 2012, counsel for the defendants and counsel for all purported class plaintiffs participated in a settlement conference that was facilitated by the magistrate for the judge in the multi-district litigation. None of the parties were able to reach any agreement at that conference. In February 2012 the other remaining defendants reached preliminary settlement with all plaintiffs for $13 million, leaving the company as the sole remaining defendant. These preliminary settlements were allocated 65 percent to the direct purchasers and 35 percent to the remaining plaintiffs. In April 2012, the company reached an agreement in principle to settle with certain plaintiffs for $3.1 million. Based on management’s assessment, the company has recognized a $9 million liability in discontinued operations at March 31, 2012 for this matter. The company believes it has meritorious defenses against the claims raised in all of these actions and intends to vigorously defend itself. However, there is considerable uncertainty around the potential outcomes in a jury trial, and if this matter were to proceed to trial and were ultimately decided by a jury in favor of plaintiffs, it is possible that awarded damages could materially exceed the recorded liability by an amount that the company is unable to reasonably estimate at this time.

Other: Other primarily relates to charges for changes in estimates and adjustments related to certain assets and liabilities retained from previously sold businesses and indemnities provided at the time of sale.

Net income attributable to Meritor, Inc. was $20 million for the second quarter of fiscal year 2012 compared to income of $17 million in the second quarter of fiscal year 2011. Various factors impacting the net loss are previously discussed.

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MERITOR, INC.

   Segment EBITDA and EBITDA Margins

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

The following table reflects Segment EBITDA and Segment EBITDA margins for the three months ended March 31, 2012 and 2011 (dollars in millions).

	Segment EBITDA							Segment EBITDA Margins
	March 31,							March 31,
	2012		2011		$ Change			2012		2011		Change
Commercial Truck	$	49	$	40	$	9		7.1	%	5.8	%	1.3pts
Industrial		22		18		4		7.6	%	5.9	%	1.7pts
Aftermarket & Trailer		28		29		(1	)	10.6	%	11.3	%	(0.7)pts
Segment EBITDA	$	99	$	87	$	12		8.5	%	7.4	%	1.1pts

Significant items impacting year over year Segment EBITDA include the following:

	Commercial					Aftermarket
	Truck			Industrial		& Trailer			TOTAL
Segment EBITDA– Quarter ended March 31, 2011	$	40		$	18	$	29		$	87
Higher (lower) earnings from unconsolidated affiliates		(2	)		1		(2	)		(3	)
Lower pension and retiree medical costs		—			1		1			2
Volume, mix, pricing and other, net		11			2		—			13
Segment EBITDA – Quarter ended March 31, 2012	$	49		$	22	$	28		$	99

     Commercial Truck SegmentEBITDA was $49 million in the second quarter of fiscal year 2012, up $9 million compared to the same period in the prior year. Segment EBITDA margin increased to 7.1 percent compared to 5.8 percent in the prior year. The increase in Segment EBITDA and Segment EBITDA margin is primarily attributable to improvements in pricing and lower fixed costs resulting from the rationalization of our European manufacturing footprint, primarily the sale of our St. Priest, France manufacturing facility in the second quarter of fiscal year 2012. The favorable impact of these items was partially offset by the adverse impact of geographic sales mix, including lower sales in South America due to the impact of commercial vehicle industry transitioning to tighter emission standards, unfavorable foreign currency translation (primarily associated with the Brazilian Real) and lower earnings from our unconsolidated joint ventures as compared to the same period a year ago.

Industrial SegmentEBITDA was $22 million in the second quarter of fiscal year 2012, up $4 million compared to the prior year. The favorable impact of higher sales for our products associated with the FMTV defense program, which carries comparatively higher margins, was partially offset by lower sales for the Caiman defense program and other military programs. In the prior year, we incurred costs associated with the launch of Caiman defense program which did not recur in the current year. These factors significantly impacted our Segment EBITDA margins, which increased to 7.6 percent in the second quarter of fiscal year 2012 compared to 5.9 percent in the prior year.

Aftermarket & Trailer SegmentEBITDA was $28 million in the second quarter of fiscal year 2012, down $1 million compared to the same period in the prior year. The decrease in Segment EBITDA is primarily due to lower earnings from our unconsolidated trailer joint venture in Brazil.

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MERITOR, INC.

Six Months Ended March 31, 2012 Compared to Six Months Ended March 31, 2011

   Sales

     The following table reflects total company and business segment sales for the six months ended March 31, 2012 and 2011. The reconciliation is intended to reflect the trend in business segment sales and to illustrate the impact that changes in foreign currency exchange rates, volumes and other factors had on sales (in millions).

												Dollar Change Due To
	March 31,						Dollar			%					Volume
	2012			2011			Change			Change		Currency			/ Other
Sales:
Commercial Truck	$	1,444		$	1,268		$	176		14	%	$	(30	)	$	206
Industrial		537			536			1		—	%		(9	)		10
Aftermarket & Trailer		498			468			30		6	%		(5	)		35
Intersegment Sales		(160	)		(139	)		(21	)	(15	)%		4			(25	)
TOTAL SALES	$	2,319		$	2,133		$	186		9	%	$	(40	)	$	226

     Commercial Truck sales were $1,444 million in the first six months of fiscal year 2012, up 14 percent from the same period of fiscal year 2011. North American industry-wide production volumes for heavy- and medium-duty trucks increased 41 percent in the first half of fiscal year 2012 as compared to the same period a year ago. However, the increase in sales in North America associated with the higher production volumes was partially offset by lower sales in South America. In South America the industry transitioned to tighter emission standard requirements for commercial vehicles resulting in lower industry-wide production volumes in our second fiscal quarter of 2012. We expect production volumes to recover and increase through our fourth fiscal quarter, although it is unclear whether they will return during fiscal year 2012 to recently experienced peak levels. The effects of foreign currency exchange rates decreased sales by $30 million compared to the same period a year ago.

Industrial sales were $537 million in the first six months of fiscal year 2012, flat relative to sales of $536 million in the first six months of fiscal year 2011. The impact of higher sales in the Asia-Pacific region during our first fiscal quarter and higher FMTV sales was almost entirely offset by lower sales from Caiman and other non-FMTV defense orders.

Aftermarket & Trailer sales were $498 million in the first six months of fiscal year 2012, up 6 percent from the same period of fiscal year 2011. The increase in sales is primarily due to higher sales of our core aftermarket replacement products and products for trailer applications. These increases were partially offset by lower sales of core aftermarket replacement products in Europe.

   Cost of Sales and Gross Profit

Cost of sales primarily represents materials, labor and overhead production costs associated with the company’s products and production facilities. Cost of sales for the six months ended March 31, 2012 was $2,079 million compared to $1,910 million in the prior year, representing an increase of 9 percent. The increase in costs of sales is primarily due to the increased sales volumes discussed above. Total cost of sales were approximately 90 percent of sales in each of the six months periods ended March 31, 2012 and 2011.

The following table summarizes significant factors contributing to the changes in costs of sales for the six months ended March 31, 2012 compared to the prior period (in millions):

	Cost of Sales
Six months ended March 31, 2011	$	1,910
Volumes and mix		203
Foreign exchange		(33	)
Other, net		(1	)
Six months ended March 31, 2012	$	2,079

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MERITOR, INC.

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

Higher material costs	$	146
Higher labor and overhead costs		22
Other		1
Total increase in costs of sales	$	169

     Material costs represent the majority of our cost of sales and include raw materials, composed primarily of steel and purchased components. Material costs for the six months ended March 31, 2012 increased by approximately $146 million compared to the same period last year, primarily as a result of higher sales volumes and rising steel prices after the first quarter of fiscal year 2011.

Labor and overhead costs increased by$22 million compared to the same period in the prior year. The increase was primarily due to the higher sales volumes. These increases were partially offset by savings associated with the rationalization of our European manufacturing operations, including the sale of the St. Priest, France facility as well as continuous improvement and initiatives.

As a result of the above, gross profit for the six months ended March 31, 2012 was $240 million compared to $223 million in the same period last year. Gross margin was 10 percent for each the six months ended March 31, 2012 and 2011.

   Other Income Statement Items

Selling, general and administrative expenses for the six months ended March 31, 2012 and 2011 are summarized as follows (in millions):

	Six Months Ended					Six Months Ended
	March 31, 2012					March 31, 2011					Increase (Decrease)
SG&A	Amount			% of sales		Amount			% of sales
Loss on sale of receivables	$	(6	)	(0.3	)%	$	(3	)	(0.2	)%	$	3		0.1pts
Short- and long-term variable
compensation		(9	)	(0.4	)%		(13	)	(0.6	)%		(4	)	(0.2)pts
Charge for legal contingency		(5	)	(0.2	)%		—		—			5		0.2pts
All other SG&A		(117	)	(5.0	)%		(124	)	(5.8	)%		(7	)	(0.8)pts
Total SG&A	$	(137	)	(5.9	)%	$	(140	)	(6.6	)%	$	(3	)	(0.7)pts

     Included in selling, general and administrative expenses in the first six months of fiscal year 2012 is a $5 million charge for a legal contingency recognized in our second fiscal quarter of 2012 (see Note 20 of the Notes to Consolidated Financial Statements under Item 1. Financial Statements). All other SG&A represents normal selling, general and administrative expenses. The overall decrease in all other SG&A expense, as well as the decrease as a percentage of sales, compared to the first six months of fiscal year 2011 is a result of our continuing efforts to control costs.

Restructuringcosts of $27 million were recognized during the six months ended March 31, 2012 compared to $8 million in the prior year. Restructuring costs in the first six months of fiscal year 2012 include $24 million recognized in our Commercial Truck segment in connection with the January 2012 sale of our St. Priest, France manufacturing facility to Renault Trucks SAS. These costs included non-cash charges of $19 million recognized in the first quarter of fiscal year 2012, of which $17 million relate to impairments of assets held for sale at December 31, 2011. In addition, we recognized $5 million (including $4 million recognized in the first quarter of fiscal year 2012) of costs associated with employee headcount reductions and facility rationalization actions. During the second quarter of fiscal year 2012, we approved a European headcount reduction plan in response to the ongoing economic weakness and uncertainty in that region and recognized approximately $1 million of restructuring costs associated with this plan. Remaining anticipated costs under this plan are approximately $5 million and are expected to be incurred during the second half of fiscal year 2012. The remaining restructuring costs incurred during the first six months of fiscal year 2012 were associated with the company’s previously announced executive headcount reduction.

Operating income for the first six months of fiscal year 2012 was $74 million compared to $73 million in the prior year. Key items impacting operating income are previously discussed.

Equity in earnings of affiliates was $29 million in the first six months of fiscal year 2012, compared to $30 million in the same period in the prior year. The decrease is due to lower earnings from our affiliates in South America as the industry transitioned to tighter emission standard requirements for commercial vehicles resulting in lower sales, partially offset by higher earnings from our affiliates in the United States, Mexico and India.

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MERITOR, INC.

     Interest expense, net for the first six months of fiscal year 2012 was $47 million, compared to $51 million in the prior fiscal year’s first six months. The decrease in interest expense, net is primarily due to lower fees on our credit facilities.

Provisionfor income taxes in the first six months of fiscal year 2012 was $37 million compared to $41 million in the same period in the prior year. In the first six months of fiscal year 2012, our effective tax rate was 61 percent compared to 82 percent in the prior year. Favorably impacting our effective tax rate in the six months ended March 31, 2012 were lower losses in jurisdictions where no tax expense in recognized. We expect our effective tax rate to decline to more normalized levels during fiscal year 2012. We are recognizing valuation allowances against our deferred tax assets in certain jurisdictions, primarily the United States and Europe until we can generate sufficient income to support such deferred tax assets.

Income from continuing operations (before noncontrolling interests) for the first six months of fiscal year 2012 was $24 million, compared to $9 million in the prior year. The reasons for the improvement are previously discussed.

Loss from discontinued operations was $18 million in the first six months of fiscal year 2012, compared to income of $15 million in the same period in the prior year. Significant items included in results from discontinued operations in the first six months of fiscal years 2012 and 2011 include the following:

	Six Months Ended
	March 31,
	2012			2011
Operating income, net	$	—		$	13
Gain (loss) on sale of business, net		(1	)		19
Restructuring costs		(1	)		(7	)
Charge for legal contingency		(9	)		—
Environmental remediation charges		(2	)		(1	)
Other, net		(6	)		(7	)
Income (loss) before income taxes		(19	)		17
Benefit (provision) for income taxes		1			(2	)
Net income (loss) from discontinued operations attributable
to Meritor, Inc.	$	(18	)	$	15

     Operating income from discontinued operations represents income from normal operating activities of the businesses included in discontinued operations.

Gain on sale of businesses, net: On January 3, 2011, we completed the sale of our Body Systems business to an affiliate of Inteva Products, LLC, and recognized a pre-tax gain of $32 million ($32 million after-tax) during the second quarter of fiscal year 2011 associated with this transaction. During the second quarter of fiscal year 2011, we also completed the sale of our chassis operations in Bonneval, France and recognized a pre-tax loss of $13 million ($13 million after-tax).

Restructuring costs: In the second quarter of fiscal year 2011, we announced our planned closure of our European trailer business and recognized approximately $6 million of restructuring costs associated with employee termination benefits.

Charge for legal contingency: In the first six months of fiscal year 2012, we recognized a charge of approximately $9 million in connection with the Filters anti-trust legal contingency, as discussed above.

Other: Other primarily relates to charges for changes in estimates and adjustments related to certain assets and liabilities retained from previously sold businesses and indemnities provided at the time of sale. Also included in the other charges are LVS divestiture costs related to actions in connection with the separation of the LVS businesses from the company.

Net income attributable to noncontrolling interests for the first six months of fiscal year 2012 was $8 million compared to $9 million for the same period of fiscal year 2011. Noncontrolling interests represent our minority partners’ share of income or loss associated with our less than 100 percent owned consolidated joint ventures.

Net loss attributable to Meritor, Inc. was $2 million for the six month period ended March 31, 2012 compared to net income of $15 million for the six month period ended March 31, 2011. The reasons for the change are previously discussed.

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MERITOR, INC.

   Segment EBITDA and EBITDA Margins

     Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, noncontrolling interests in consolidated joint ventures, loss on sale of receivables, restructuring costs and asset impairment charges.

The following table reflects Segment EBITDA and EBITDA margins for the six months ended March 31, 2012 and 2011 (dollars in millions).

	Segment EBITDA							Segment EBITDA Margins
	March 31,							March 31,
	2012		2011		$ Change			2012		2011		Change
Commercial Truck	$	96	$	73	$	23		6.6	%	5.8	%	0.8pts
Industrial		33		35		(2	)	6.1	%	6.5	%	(0.4)pts
Aftermarket & Trailer		48		45		3		9.6	%	9.6	%	—pts
Segment EBITDA	$	177	$	153	$	24		7.6	%	7.2	%	0.4pts

     Significant items impacting year over year Segment EBITDA include the following:

	Commercial					Aftermarket
	Truck		Industrial			& Trailer			TOTAL
Segment EBITDA– Six months ended March 31, 2011	$	73	$	35		$	45		$	153
Higher (lower) earnings from unconsolidated affiliates		—		1			(2	)		(1	)
Lower pension and retiree medical costs		2		2			1			5
Volume, mix, pricing and other, net		21		(5	)		4			20
Segment EBITDA – Six months ended March 31, 2012	$	96		33			48			177

     Commercial Truck SegmentEBITDA was $96 million in the first six months of fiscal year 2012, up $23 million compared to the same period in the prior year. Segment EBITDA margin increased to 6.6 percent compared to 5.8 percent in the prior year. The increase in Segment EBITDA and Segment EBITDA margin is primarily attributable to improvements in pricing and lower fixed costs resulting from the rationalization of our European manufacturing footprint, primarily the sale of our St. Priest, France manufacturing facility in the second quarter of fiscal year 2012. The increase in Segment EBITDA and Segment EBITDA margin attributable to higher commercial truck production volumes in North America compared to the prior year was partially offset by the adverse impact of geographic sales mix, including lower sales in South America due to the impact of commercial vehicle industry transitioning to tighter emission standards and unfavorable foreign currency translation (primarily associated with the Brazilian Real).

Industrial SegmentEBITDA was $33 million in the first six months of fiscal year 2012, down $2 million compared to the prior year. The increase in sales for our FMTV military program, which carries comparatively higher margins, in the second quarter had an overall positive impact on the Segment EBITDA for the first six months of fiscal year 2012. This positive impact was more than offset by lower sales for Caiman and certain other military programs and adverse sales mix in the Asia-Pacific region during the first quarter of fiscal year 2012.

Aftermarket & Trailer SegmentEBITDA was $48 million in the first six months of fiscal year 2012, up $3 million compared to the same period in the prior year. The increase in Segment EBITDA is due to higher sales in our core aftermarket products and products for trailer applications, partially offset by lower earnings from our unconsolidated trailer joint venture in Brazil and higher material costs in this segment.

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MERITOR, INC.

Financial Condition

     Cash Flows (in millions)

	Six Months Ended March 31,
	2012			2011
OPERATING CASH FLOWS
Income from continuing operations	$	24		$	9
Depreciation and amortization		33			33
Restructuring costs		27			8
Pension and retiree medical expense		26			35
Equity in earnings of affiliates		(29	)		(30	)
Dividends received from equity method investments		8			7
Pension and retiree medical contributions		(50	)		(34	)
Restructuring payments		(10	)		(7	)
Increase in working capital		(74	)		(164	)
Changes in sale of receivables		8			138
Other, net		(1	)		(2	)
Cash flows used for continuing operations		(38	)		(7	)
Cash flows used for discontinued operations		(8	)		(37	)
CASH USED FOR OPERATING ACTIVITIES	$	(46	)	$	(44	)

Cash used by operating activities for the first six months of fiscal year 2012 was $46 million, compared to $44 million in the same period of fiscal year 2011. The decrease in cash provided by operations was a result of a smaller increase in the sale of receivables under our accounts receivable factoring programs. The majority of our off-balance sheet accounts receivable factoring programs are related to sales of receivables in our European commercial truck business. As sales in this business for the first six months of fiscal year 2012 were flat to the prior year, the amount of eligible receivables under these programs have not increased to the degree seen in the prior year, resulting in less cash generated by the sale of receivables. In addition, higher pension and retiree medical contributions adversely affected our operating cash flow in the current year, although, this impact was offset by lower utilization of cash flows by discontinued operations.

	Six Months Ended March 31,
	2012			2011
INVESTING CASH FLOWS
Capital expenditures	$	(43	)	$	(42	)
Proceeds from sale of property		18			—
Other investing activities		(2	)		1
Net investing cash flows provided by (used for) discontinued
operations		28			(71	)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	$	1		$	(112	)

Cash provided by investing activities was $1 million in the first six months of fiscal year 2012 compared to cash used by investing activities of $112 million in the first six months of fiscal year 2011. Proceeds from sale of property are related to the sale of excess land at our Commercial Truck facility at Cwmbran, Wales. Investing cash flows provided by discontinued operations in the first six months of fiscal year 2012 include $27 million of cash received from the purchaser of our Body Systems business. We received $24 million, net of tax withholdings, of cash balances held at Body Systems entities in China and Brazil at the time of sale, which the company was entitled to receive as this cash became available for distribution from those jurisdictions. We also received $3 million for the first installment on the note receivable, which was issued at the time of sale as part of the purchase consideration.

	Six Months Ended March 31,
	2012			2011
FINANCING CASH FLOWS
Repayment of notes	$	(84	)	$	—
Borrowing on accounts receivable securitization		19			—
Proceeds from option exercises		—			6
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	$	(65	)	$	6

Cash used by financing activities was $65 million for the first six months of fiscal year 2012 compared to cash provided by financing activities of $6 million in the first six months of fiscal year 2011. In the second quarter of fiscal year 2012, we retired the remaining $84 million of outstanding 8-3/4 percent notes due 2012 at par value. We borrowed $19 million on our on-balance sheet accounts receivable securitization program in the U.S.

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MERITOR, INC.

Liquidity

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

	March 31,			September 30,
	2012			2011
Fixed-rate debt securities	$	496		$	580
Fixed-rate convertible notes		500			500
Unamortized discount on convertible notes		(63	)		(68	)
Unamortized gain on interest rate swap termination		11			14
Accounts receivable securitization		19			—
Lines of credit and other		12			8
Total debt	$	975		$	1,034

Overview – Our principal operating and capital requirements are for working capital needs, capital expenditure requirements, debt service requirements and funding of pension and retiree medical costs, restructuring and product development programs. We expect fiscal year 2012 capital expenditures for our business segments to be in the range of $100 million to $110 million. In addition, we currently expect restructuring cash costs to be approximately $20 million in fiscal year 2012, although we will continue to evaluate the performance of our global operations and may enact further restructuring if conditions warrant such actions.

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

In February 2012, we filed a shelf registration statement with the Securities and Exchange Commission, which was effective immediately, registering debt and/or equity securities that may be offered in one or more series on terms to be determined at the time of sale.

We believe our current financing arrangements provide us with the financial flexibility required to maintain our operations and fund future growth, including actions required to improve our market share and further diversify our global operations, through the term of our revolving credit facility, which matures in April 2017 (see further discussion below related to amendment and extension of our Revolving Credit Facility maturing in April 2017).

Sources of liquidity as of March 31, 2012, in addition to cash on hand, are as follows:

	Total Facility		Unused as of
	Size		3/31/12		Current Expiration
On-balance sheet arrangements:
Revolving credit facility(1)	$	441	$	441	January 2014(1)
Committed U.S. accounts receivable securitization(2)		125		106	October 2013
Total on-balance sheet arrangements		566		547
Off-balance sheet arrangements:
Committed accounts receivable factoring programs(2)		353		85	Various
Other uncommitted factoring facilities(2)		29		18	Various
Letter of credit facility		30		1	November 2015
Total off-balance sheet arrangements		412		104
Total available sources	$	978	$	651

(1)

The availability under the revolving credit facility is subject to a collateral test as discussed under “Revolving Credit Facility” below. On April 23, 2012, we entered into an agreement to amend and extend the revolving credit facility through April 2017 (with a springing maturity date of 2015 under certain circumstances). See further discussion below under “ Amended and Restated Revolving Credit Facility”.

(2)

Availability subject to adequate eligible accounts receivable as described below. Total facility size and unused amounts at March 31, 2012 exclude availability under our French Factoring Facility, which is ramping down. See further discussion below under Off-balance Sheet Arrangements.

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MERITOR, INC.

     Cash and Liquidity Needs – Our cash and liquidity needs have been impacted by the level, variability and timing of our customers’ worldwide vehicle production and other factors outside of our control. At March 31, 2012, we had $109 million in cash and cash equivalents.

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

Debt Repurchase Program – On April 26, 2012, our Board of Directors approved a repurchase program for up to $150 million of any of our public debt securities (including without limitation convertible debt securities) from time to time through open market purchases or privately negotiated transactions or otherwise (subject to necessary approvals, including further approval by a specified committee of the Board).

Revolving Credit Facility – At March 31, 2012, we had a revolving credit facility of $441 million which was slated to mature in January 2014. The availability under this facility was dependent upon various factors, including principally performance against certain financial covenants. At March 31, 2012 and September 30, 2011, there were no borrowings outstanding under the revolving credit facility. The $441 million revolving credit facility included $100 million of availability for the issuance of letters of credit. At March 31, 2012 and September 30, 2011, no letters of credit were outstanding under the facility. At certain times during any given month, we could draw on our revolving credit facility to fund intra-month working capital needs. In such months, we would then typically utilize the cash we receive from our customers throughout the month to repay borrowing under the facility. Accordingly, during any given month, we may draw down on this facility in amounts exceeding the amounts shown as outstanding at fiscal quarter ends.

Availability under the revolving credit facility was subject to a collateral test, pursuant to which borrowings on the revolving credit facility could not exceed 1.0x the collateral test value. The collateral test was performed on a quarterly basis and under the most recent collateral test, the full amount of the revolving credit facility was available for borrowing at March 31, 2012. Our availability under the revolving credit facility was also 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. We were required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of (i) 2.25 to 1 as of the last day of each fiscal quarter commencing with the fiscal quarter ended September 30, 2011 through and including the fiscal quarter ended June 30, 2012 and (ii) 2.00 to 1 as of the last day of each fiscal quarter thereafter through maturity. At March 31, 2012, we were in compliance with the above noted covenants with a ratio of approximately 0.26x for the priority-debt-to-EBITDA covenant. Certain of the company’s subsidiaries, as defined in the credit agreement, irrevocably and unconditionally guaranteed amounts outstanding under the revolving credit facility.

Borrowings under the revolving credit facility were subject to interest based on quoted LIBOR rates plus a margin, and a commitment fee on undrawn amounts, both of which were based upon the company’s current credit rating for the senior secured facilities. At March 31, 2012, the margin over LIBOR rate was 425 basis points, and the commitment fee was 50 basis points. Although a majority of our revolving credit loans were LIBOR based, overnight revolving credit loans were at the prime rate plus a margin of 325 basis points.

Amended and Restated Revolving Credit Facility – On April 23, 2012, we amended and restated the above described revolving credit facility. Pursuant to the revolving credit facility agreement as amended, we have a $429 million revolving credit facility, $14 million of which matures in January 2014 for a bank not electing to extend its commitments under the revolving credit facility existing at March 31, 2012 and the remaining $415 million of which matures in April 2017. The April 2017 maturity date is also subject to the following: if on June 1, 2015, the outstanding principal amount of our $250 million 2015 bonds is greater than $100 million, the maturity date becomes June 10, 2015 and if on November 1, 2015, the outstanding principal amount of our $300 million 4.625 percent convertibles notes due 2026 is greater than $100 million and the conversion price of $20.98 is greater than the then current Meritor common stock price, the maturity date becomes November 15, 2015. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit.

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MERITOR, INC.

     Availability under the amended and extended revolving credit facility is 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. Our availability under the revolving credit facility is also 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. We are required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of (i) 2.50 to 1.00 as of the last day of the fiscal quarter commencing with the fiscal quarter ending on or about March 31, 2012 through and including the fiscal quarter ending on or about September 30, 2012, (ii) 2.25 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending on or about December 31, 2012 through and including the fiscal quarter ending on or about September 30, 2013, and (iii) 2.00 to 1.00 as of the last day of each fiscal quarter thereafter. Borrowings under the amended and extended revolving credit facility are subject to the same interest rate and commitment fee terms as applicable to the previously existing revolving credit facility discussed above.

Term Loan – As part of the amendment and restatement of our revolving credit facility, on April 23, 2012, we also entered into a $100 million term loan agreement with a maturity date of April 23, 2017. The term loan will amortize over a period of 5 years from the effective date as follows: $5 million principal to be repaid during year one, $10 million principal to be repaid in each of the years two, three and four; and the remaining principal balance to be paid in year five. Payments will be made on a quarterly basis for the duration of the term loan. As of the effective date of the term loan, the margin over LIBOR rate was 425 basis points. The company has the ability to prepay the term loan at any time without penalty or premium.

U.S. Securitization Program – We have a $125 million U.S. receivables financing arrangement which is provided on a committed basis by a syndicate of financial institutions led by Ally Commercial Finance LLC, which expires in October 2013. Under this program, we have the ability to sell substantially all of our trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. Factoring Facility discussed below) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings under a loan agreement with participating lenders. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. At March 31, 2012, $19 million was outstanding under this program. No amount was outstanding under this program and September 30, 2011. At certain times during any given month, we may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, we would then typically utilize the cash we receive from our customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, we may borrow under this program in amounts exceeding the amounts shown as outstanding at fiscal quarter ends. This program does not have specific financial covenants; however, it does have a cross-default provision to our revolving credit facility agreement.

Capital Leases – On March 20, 2012, we entered into an arrangement to finance equipment acquisitions at our various U.S. locations. Under this arrangement, we can request financing from GE Capital Commercial, Inc. (GE Capital) for progress payments for equipment under construction, not to exceed $10 million at any point in time. The financing rate is equal to the 30-day LIBOR plus 575 basis points per annum. Under this arrangement, we can also enter into lease arrangements with GE Capital for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points. As of March 31, 2012, we had $4 million outstanding under these arrangements.

Letter of Credit Facilities – We have a five-year credit agreement dated as of November 18, 2010 with Citicorp USA, Inc., as administrative agent and issuing bank, the other lenders party thereto and the Bank of New York Mellon, as paying agent. Under the terms of this credit agreement, as amended, we have the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $30 million. This facility contains covenants and events of default generally similar to those existing in our public debt indentures. At March 31, 2012 and September 30, 2011, we had $29 million and $30 million, respectively, of letters of credit outstanding under this facility. In addition, we had another $6 million and $2 million of letters of credit outstanding through other letters of credit facilities at March 31, 2012 and September 30, 2011, respectively.

Other – One of our consolidated joint ventures in China participates in a bills of exchange program to settle its obligations with its trade suppliers. These programs are common in China and generally require the participation of local banks. Under these programs, our joint venture issues notes payable through the participating banks to its trade suppliers. If the issued notes payable remain unpaid on their respective due dates, this could constitute an event of default under the company’s revolving credit facility if the defaulted amount were to exceed $35 million.

Credit Ratings – At March 31, 2012, Standard & Poor’s corporate credit rating, senior secured credit rating, and senior unsecured credit rating for our company is B, BB- and B-, respectively. Moody’s Investors Service corporate credit rating, senior secured credit rating, and senior unsecured credit rating for our company is B2, Ba2 and B3, respectively. Any lowering of our credit ratings could increase our cost of future borrowings and could reduce our access to capital markets and result in lower trading prices for our securities.

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MERITOR, INC.

Off-Balance Sheet Arrangements

Accounts Receivable Factoring Arrangements – We participate in accounts receivable factoring programs with total amounts utilized at March 31, 2012, of approximately $287 million, of which $276 was attributable to factoring facilities involving the sale of AB Volvo accounts receivables. These programs are described in more detail below.

     Swedish Factoring Facility: We have an arrangement to sell trade receivables from AB Volvo through one of our European subsidiaries. Under this arrangement, which was renewed in June 2011 for a term of one year, we can sell up to, at any point in time, €150 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. We had utilized €131 million ($174 million) and €107 million ($146 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively.

French Factoring Facility: We have an arrangement to sell trade receivables through one of our French subsidiaries. Under this arrangement, we can sell up to, at any point in time, €125 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. We had utilized €6 million ($8 million) and €47 million ($63 million) of this accounts receivable securitization facility as of March 31, 2012 and September 30, 2011, respectively. In January 2012, we sold our manufacturing facility located at St. Priest, France to Renault Trucks SAS. As a result, the French Factoring Facility is expected to ramp down over the course of fiscal year 2012. During the second quarter of fiscal year 2012, we entered into new arrangements to sell trade receivables from AB Volvo and its European subsidiaries through our United Kingdom and Italian subsidiaries as more fully described below. We expect these new arrangements to partially offset the ramp down of the French facility in future quarters.

U.S. Factoring Facility: We have an arrangement to sell trade receivables from AB Volvo and its subsidiaries through our U.S. subsidiaries. Under this arrangement, which expires in October 2012, we can sell up to, at any point in time, €60 million ($80 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. We had utilized €49 million ($65 million) and €46 million ($62 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively.

The above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through June 2012 for the French and the Swedish facilities and October 2012 for the U.S. facility. The commitments are subject to standard terms and conditions for these types of arrangements (including, in the case of the French commitment, a sole discretion clause whereby the bank retains the right to not purchase receivables, which to our knowledge has never been invoked).

United Kingdom Factoring Facility: On February 2, 2012, we entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of our United Kingdom subsidiaries. Under this arrangement, which expires in February 2013, we can sell up to, at any point in time, €25 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. We had utilized €5 million ($7 million) of this accounts receivable factoring facility as of March 31, 2012. The commitment 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.

Italy Factoring Facility: On March 15, 2012, we entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of our Italian subsidiaries. Under this arrangement, which expires in March 2017, we can sell up to, at any point in time, €30 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. We had utilized €17 million ($22 million) of this accounts receivable factoring facility as of March 31, 2012. The commitment 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.

In addition, several of our European subsidiaries factor eligible accounts receivables with financial institutions. The amount of factored receivables was approximately $11 million and $8 million at March 31, 2012 and September 30, 2011, respectively.

Contingencies

     Contingencies related to environmental, asbestos and other matters are discussed in Note 20 of the Notes to Condensed Consolidated Financial Statements.

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MERITOR, INC.

New Accounting Pronouncements

Accounting standards implemented during fiscal year 2012

     In September 2011, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2011-08: Testing Goodwill for Impairment. Under the revised guidance, entities testing for goodwill impairment have an option of performing a qualitative assessment before calculating the fair value for the reporting unit, i.e., Step 1 of the goodwill impairment test. If an entity determines, on the basis of qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying amount, the first step of the two-step impairment test would be required. If it is not more-likely-than-not that the fair value of the reporting unit is less than the carrying value, then goodwill is not considered to be impaired. ASU No. 2011-08 does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill at least annually for impairment. This ASU is effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. We have adopted the revised guidance provided in this ASU effective with the second quarter of fiscal year 2012 and will apply it in the fiscal year 2012 goodwill impairment review during the fourth quarter. We do not expect any significant effect on our goodwill impairment assessments as a result of the adoption of the new guidance.

     In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). This ASU is intended to result in convergence between U.S. GAAP and IFRS requirements for measurement of and disclosures about fair value. The guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. We have adopted this new guidance effective with the second quarter of fiscal year 2012 and have provided required disclosures in Note 18 to the consolidated financial statements.

Accounting standard to be implemented

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We do not believe the adoption of the new guidance will have a significant impact on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

As a result of our substantial international operations, we are exposed to foreign currency risks that arise from our normal business operations, including in connection with our transactions that are denominated in foreign currencies. In addition, we translate sales and financial results denominated in foreign currencies into U.S. dollars for purposes of our consolidated financial statements. As a result, appreciation of the U.S. dollar against these foreign currencies generally will have a negative impact on our reported revenues and operating income while depreciation of the U.S. dollar against these foreign currencies will generally have a positive effect on reported revenues and operating income. For the second quarter of fiscal year 2012, our reported financial results have been adversely affected by the appreciation of the U.S. dollar against foreign currencies whereas for fiscal year 2011, our reported financial results benefited from depreciation of the U.S. dollar against foreign currencies.

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

We generally have not hedged against our foreign currency exposure related to translations to U.S. dollars of our financial results denominated in foreign currencies. However, in the first quarter of fiscal year 2012 and fourth quarters of fiscal years 2011 and 2010, due to the volatility of the Brazilian real as compared to the U.S. dollar, we entered into foreign currency option contracts to reduce volatility in the translation of Brazilian real earnings to U.S. dollars. Gains and losses on these option contracts are recorded in other income (expense), net, in the consolidated statement of operations, generally reducing the exposure to translation volatility during a full-year period. The impact of these option contracts was not significant to our results of operations or financial position at March 31, 2012.

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MERITOR, INC.

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

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

Market Risk

	Assuming a			Assuming a			Favorable /
	10% Increase			10% Decrease			(Unfavorable)
	in Rates			in Rates			Impact on
Foreign Currency Sensitivity:
Forward contracts in USD(1)	$	0.5		$	(0.5	)	Fair Value
Forward contracts in Euro(1)		(1.7	)		1.7		Fair Value
Foreign currency denominated debt		0.8			(0.8	)	Fair Value
	Assuming a 50			Assuming a 50			Favorable /
	BPS Increase in			BPS Decrease in			(Unfavorable)
	Rates			Rates			Impact on
Interest Rate Sensitivity:
Debt - fixed rate	$	(31.7	)	$	33.4		Fair Value
Debt – variable rate(2)		(0.1	)		0.1		Cash flow

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

At March 31, 2012 a 10% decrease in quoted currency exchange rates would result in a potential loss of approximately $1 million in foreign currency denominated debt.

At March 31, 2012 the fair value of debt outstanding was approximately $982 million. A 50 basis points decrease in quoted interest rates would result in favorable impact of $33 million on fixed rate debt.

(2) Includes domestic and foreign debt.

Item 4. Controls and Procedures

     As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), management, with the participation of the chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2012. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of March 31, 2012, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the company’s internal control over financial reporting that occurred during the quarter ended March 31, 2012 that materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

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

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MERITOR, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Except as set forth in this Quarterly Report under Note 20 “Contingencies”, there have been no material developments in legal proceedings involving the company or its subsidiaries since those reported in the company’s Annual Report on Form 10-K, for the fiscal year ended September 30, 2011 and those reported in the Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2011.

Item 1A. Risk Factors

There have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2011 and the Annual Report on Form 10-K, for the fiscal year ended September 30, 2011.

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

Issuer repurchases

The independent trustee of our 401(k) plans purchases shares in the open market to fund investments by employees in our common stock, one of the investment options available under such plans, and any matching contributions in company stock we provide under certain of such plans. In addition, our stock incentive plans permit payment of an option exercise price by means of cashless exercise through a broker and permit the satisfaction of the minimum statutory tax obligations upon exercise of options and the vesting of restricted stock units through stock withholding. However, the company does not believe such purchases or transactions are issuer repurchases for the purposes of this Item 2 of Part II of this Report on Form 10-Q. In addition, our stock incentive plans also permit the satisfaction of tax obligations upon the vesting of restricted stock through stock withholding. There were 6,176 shares withheld in the second quarter of 2012.

Item 5. Other Information

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS – Frequency of Say-on-Pay

On January 27, 2012, the company filed a Current Report on Form 8-K announcing the final voting results on the matters submitted to a vote at its Annual Meeting of Stockholders held on January 26, 2012. As previously reported, in the advisory vote on the frequency of an advisory vote on the compensation of our named executive officers, 69,417,849 shares voted for such a vote to be held every year, 103,086 shares voted for two years, 5,722,054 shares voted for three years, 1,230,039 shares abstained and there were 8,922,376 broker non-votes.

On April 26, 2012, the Board of Directors determined, consistent with these voting results, that the company will hold an advisory vote on the compensation of the company’s named executive officers annually until the next vote on the frequency of such advisory votes.

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Cautionary Statement

     This Quarterly Report on Form 10-Q contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to our ability to successfully manage rapidly changing volumes in the commercial truck markets and work with our customers to adjust their demands in view of rapid changes in production levels; availability and sharply rising costs of raw materials, including steel, and our ability to manage or recover such costs; reduced production for certain military programs as compared to levels in prior years and the return of volumes of selected long-term military contracts to more normalized levels; global economic and market cycles and conditions, including a slower than anticipated recovery from the recent global economic crisis; risks inherent in operating abroad (including foreign currency exchange rates, implications of foreign regulations relating to pensions and potential disruption of production and supply due to terrorist attacks or acts of aggression); rising costs of pension and other postretirement benefits; the ability to achieve the expected benefits of restructuring actions; the demand for commercial and specialty vehicles for which we supply products; whether the liquidity of the company will be affected by declining vehicle productions in the future; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers and possible negative outcomes from contract negotiations with our major customers; labor relations of the company, its suppliers and customers, including potential disruptions in supply of parts to our facilities; or demand for our products due to work stoppages; the financial condition of the company's suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; potential adjustment of the value of deferred tax assets; competitive product and pricing pressures; the amount of the company's debt; the ability of the company to continue to comply with covenants in its financing agreements; the ability of the company to access capital markets; credit ratings of the company's debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; the outcome of actual and potential product liability, warranty and recall claims; and possible changes in accounting rules; as well as other substantial costs, risks and uncertainties, including but not limited to those detailed herein and from time to time in other filings of the company with the SEC. See also the following portions of our Annual Report on Form 10-K, as amended, for the year ending October 2, 2011: Item 1. Business, “Customers; Sales and Marketing” “Competition” “Raw Materials and Suppliers” “Employees” “Environmental Matters” “International Operations” and “Seasonality; Cyclicality”; Item 1A. Risk Factors; Item 3. Legal Proceedings; and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and see also “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures about Market Risk” “Legal Proceedings” and “Risk Factors” herein. These forward-looking statements are made only as of the respective dates on which they were made, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

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Item 6. Exhibits

3-a	Restated Articles of Incorporation of Meritor, filed as Exhibit 4.01 to Meritor’s Registration Statement on Form S-4, as amended (Registration Statement No. 333-36448) ("Form S-4"), is incorporated by reference.
3-a-1	Articles of Amendment of Restated Articles of Incorporation of Meritor filed as exhibit 3-a-1 to Meritor’s Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2011, is incorporated by reference
3-b	By-laws of Meritor, filed as Exhibit 3 to Meritor's Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2003 (File No. 1-15983), is incorporated by reference.
10-a	Receivable Purchase Agreement dated March 15, 2012 between Meritor Heavy Vehicle Systems Cameri S.P.A. as Seller and Viking Asset Purchaser No. 7IC, an incorporated cell of Viking Global Finance ICC, as Purchaser and Citicorp Trustee Company Limited, as Programme Trustee*
10-b	Receivable Purchase Agreement dated February 2, 2012 between Meritor Heavy Vehicle Braking Systems (UK) Limited as Seller and Viking Asset Purchaser No. 7IC, an incorporated cell of Viking Global Finance ICC, as Purchaser and Citicorp Trustee Company Limited, as Programme Trustee*
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 Securities Exchange Act of 1934, as amended (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*

* Filed herewith.

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MERITOR, INC.

SIGNATURES

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

	MERITOR, INC.
Date: May 4, 2012	By:	/s/	V. G. Baker, II
			V. G. Baker, II
			Senior Vice President and General Counsel
			(For the registrant)
Date: May 4, 2012	By:	/s/	J.A. Craig
			J.A. Craig
			Senior Vice President and Chief Financial Officer

55

EX-10.A

RECEIVABLES PURCHASE AGREEMENT

dated 15 March 2012

between

MERITOR HEAVY VEHICLE SYSTEMS CAMERI S.P.A.
as Seller

and

VIKING ASSET PURCHASER No 7 IC
an incorporated cell of Viking Global Finance ICC
as Purchaser

and

CITICORP TRUSTEE COMPANY LIMITED
as Programme Trustee

Table of Contents
1.	DEFINITIONS AND CONSTRUCTION	1
2.	PURCHASE AND SALE	10
3.	CONDITIONS PRECEDENT TO INITIAL PURCHASE	11
4.	ADDITIONAL PURCHASERS	11
5.	PAYMENTS TO THE PURCHASER, ETC.	12
6.	REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS	12
7.	REMEDIES FOR UNTRUE REPRESENTATION, ETC.	14
8.	FURTHER ASSURANCE	15
9.	NOTICES	16
10.	ASSIGNMENT AND SUPPLEMENTS	17
11.	AMENDMENTS AND MODIFICATIONS	17
12.	RIGHTS CUMULATIVE, WAIVERS	17
13.	APPORTIONMENT	17
14.	PARTIAL INVALIDITY	17
15.	CONFIDENTIALITY	18
16.	NO OBLIGATIONS OR LIABILITIES	19
17.	CHANGE OF PROGRAMME TRUSTEE	19
18.	NO LIABILITY AND NO PETITION	19
19.	LIMITED RECOURSE	20
20.	GOVERNING LAW AND JURISDICTION	20
21.	TERMINATION	20
SCHEDULE 1 Eligibility Criteria
SCHEDULE 2 Conclusion of purchase – offer and acceptance, purchase price and perfection
SCHEDULE 3 Representations, warranties and undertakings
SCHEDULE 4 Form of Accession Letter
SCHEDULE 5 Form of solvency certificate

	This receivables purchase agreement (the “Agreement”) is made on 15 March 2012 between:
(1)	Meritor Heavy Vehicle Systems Cameri S.P.A., a company incorporated under the laws of Italy (reg. no. 03788210015) having its registered office at Strada Provinciale Cameri Bellinzago KM 5 28062 Cameri, Italy (the “Seller”);
(2)	VIKING ASSET PURCHASER NO 7 IC (registration no. 92607), an incorporated cell of VIKING GLOBAL FINANCE ICC, an incorporated cell company incorporated under the laws of Jersey having its registered office at Ogier House, The Esplanade, St Helier , Jersey JE4 9WG, Channel Islands (the “Initial Purchaser”); and
(3)	CITICORP TRUSTEE COMPANY LIMITED, acting through its office at 14th Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB (the “Programme Trustee” which expression shall include such person and all other persons for the time being acting as the security trustee or trustees pursuant to the Master Security Trust Deed).
1.	DEFINITIONS AND CONSTRUCTION
1.1	Definitions
	In this Agreement the following terms have the following meanings:
	“Accession Letter” means a document substantially in the form set out in Schedule 4 hereto.
	“Acceptance” means an acceptance issued by the Purchaser to the Seller through the PrimeRevenue System or in any other form acceptable to the Accounts Administrator in response to an Offer.
	“Accounts” means bank accounts number [REDACTED] (giro 5845-2426) with Nordea Bank AB (publ), and all such other accounts as may from time to time be in addition thereto or substituted therefore in accordance with the relevant Transaction Documents (including but not limited to all and any Operating Account as such term is defined in the Masters Definitions Schedule).
	“Accounts Administrator” means Structured Finance Servicer A/S acting through its office at Copenhagen and any person appointed as accounts administrator in respect of inter alia the Transaction under the Master Accounts Administration Agreement.
	“Accounts Pledge Agreement” means the pledge agreement(s) over the Accounts dated 12 June 2006 entered into or to be entered into by or on behalf of a Purchaser and the Programme Trustee.
	“Additional Purchaser” means (i) on the date of this Agreement, Nordea Bank AB (publ) and (ii) further to such date, any other company within the Nordea Bank AB (publ) group that agrees to be bound by the terms and conditions of this Agreement by executing an Accession Letter, in accordance with the terms of Clause 4 hereafter.
	“Aggregate Euro Outstanding Amount” means, at any time, the aggregate of the Euro Outstanding Amount of all of the Purchased Receivables in relation to the relevant Purchaser relating to the Transaction at that time.
	“Aggregate Outstanding Amount” means, at any time, the aggregate of the Outstanding Amount of all the Purchased Receivables at that time.
	“Available Facility” means, in respect of each Purchaser and in relation to the Transaction, on any day, the lesser of; (a) the Total Commitments in relation to such Purchaser; and (b) the Borrowing Base in relation to such Purchaser, less the Face Amount of outstanding Notes, Overdraft Advances and Loans in relation to the relevant Purchaser. For the purpose of calculating the Available Facility on any day, any Notes, Loans or Overdraft Advances due to be repaid on such day shall be deemed to have been repaid.

2(40)

“Banks” means the financial institutions listed as banks in Part 1 of Schedule 1 of the relevant Liquidity Facility Agreement.

"Borrowing Base" means, in respect of each Purchaser which is, or which becomes a party to this Agreement in respect of the Transaction, on any day, the aggregate of: (a) Aggregate Euro Outstanding Amount; (b) any Collections received or payable in relation to the Transaction, in each case either by the Seller or the Accounts Administrator which have not been remitted or paid to the Purchaser on any relevant Purchased Receivable and that have not been utilised either to purchase Receivables under this Agreement or to repay the Notes; (c) an amount equal to any insufficiency in available funds necessary for a Purchaser to pay the Face Amount of the Notes in relation to that Purchaser and all amounts ranking pari passu with or senior to such Notes including those arising as the result of any difference between the spot and forward rates under any currency hedging agreement entered into by the Purchaser in accordance with the Master Accounts Administration Agreement; and (d) accrued legal and other fees, costs and expenses incurred by the relevant Purchaser in connection with the Transaction Documents.

“Business Day” means a day on which banks are open in Copenhagen, Stockholm, Jersey and London, for the transaction of business of the nature required by the Transaction Documents.

“Calculation Date” means the Purchase Date provided that if such day is not a Business Day it shall be the next Business Day following such day.

“CMSAs” means the Renault CMSA and any other Customer Managed Service Agreement entered into between a Permitted Obligor and PrimeRevenue, and “CMSA” means any of them.

“Collections” means the aggregate of all amounts paid by the relevant obligors in respect of any and all Purchased Receivables relating to a Purchaser plus any amounts payable to such Purchaser by the Seller but not yet paid to such Purchaser following settlement of the final amount of any claim under any of the warranties, covenants and indemnities contained in this Agreement.

“Commitment” means: (a) in relation to a Bank which is a Bank on the date of the relevant Liquidity Facility Agreement, the amount set opposite its name in Schedule 1 of the relevant Liquidity Facility Agreement and the amount of any other Bank’s Commitment acquired by it under the relevant Liquidity Facility Agreement; and (b) in relation to a Bank which becomes a Bank after the date of the relevant Liquidity Facility Agreement, the amount of any other Bank’s Commitment acquired by it under the relevant Liquidity Facility Agreement, to the extent not cancelled, reduced or transferred under the relevant Liquidity Facility Agreement.

“CP Programme” means the EUR 2,000,000,000 multi-currency asset-backed commercial paper programme for the issue of commercial paper notes established by the Issuer.

“Defaulted Receivable” means a Purchased Receivable in respect of which there is a Permitted Obligor Default.

“Delinquent Receivable” means, at any time, a Receivable in respect of which all or any part of the Outstanding Amount is not paid on its due date.

“Eligibility Criteria” means the eligibility criteria in respect of the Purchased Receivables set out in Schedule 1 of this Agreement.

“EURIBOR” means: (a) the rate per annum which appears on Page EURIBOR01 on the Reuters Screen; or (b) if no such rate appears, the arithmetic mean (rounded upward to four decimal places) of the relevant offered rates which appear on the relevant page (if any) on the Telerate Screen; or (c) if no such rate appears on the Telerate Screen and one only or no offered rate appears on the relevant page of the Reuters Screen or there is no relevant page on the Reuters Screen, the arithmetic mean (rounded upward to four decimal places) of the rates quoted by the Reference Banks to leading banks in the European interbank market, at or about 11.00 a.m. Copenhagen time on the applicable Calculation Date for the offering of euro deposits for the relevant period.

 

3(40)

“euro” or “EUR” or means the single currency of any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

“Euro Outstanding Amount” means, in relation to any Purchased Receivable, the Outstanding Amount of such Purchased Receivable converted into euro at the Foreign Exchange Rate in respect of such Purchased Receivable.

“Face Amount” means the face amount in respect of the Notes or the Receivables, as the case may be.

“FI Agreement” means the financial institution agreement dated 12 June 2006 and entered into between the Initial Purchaser and PrimeRevenue.

“Financial Indebtedness” means (i) moneys borrowed, (ii) finance or capital leases, (iii) receivables sold or discounted (other than on a non-recourse basis), (iv) other transactions having the commercial effect of a borrowing, (v) the marked to market value of derivative transactions entered into in connection with protection against or benefit from fluctuation in any rate or price, (vi) counter-indemnity obligations in respect of guarantees or other instruments issued by a bank or financial institution, and (vii) liabilities under guarantees or indemnities for any of the obligations referred to in items (i) to (vi).

“Foreign Exchange Rate” means for any Purchased Receivable, the rate at which any relevant currency is to be exchanged into euro pursuant to any foreign exchange agreement entered into in respect of such Purchased Receivable on or about the Purchase Date in respect of such Purchased Receivable.

“Funding Costs” means the aggregate interest accrued on (i) the Notes (paid or to be paid) and (ii) any debt incurred by the Purchaser for the purpose of financing the acquisition of the Purchased Receivables (paid or to be paid). For the avoidance of doubt “to be paid” in relation to (i) and (ii) shall mean for the period up and till the date when the relevant debt may be repaid without any penalty, break cost or fee.

“Incorporated Cell” means each incorporated cell of Viking Global Finance ICC.

“Initial L/C Bank” means Nordea Bank Danmark A/S under the Standby Letter of Credit Agreement.

“Initial Purchaser” means Viking Asset Purchaser No 7 IC.

“Issuer” means Viking Asset Securitisation Limited, a company incorporated in Jersey with limited liability, having its registered office at Ogier House, The Esplanade, St Helier, Jersey JE4 9WG, Channel Islands.

“Issuer Security Trust Deed” means the issuer security trust deed dated 1 March 2000 between the Issuer and the Programme Trustee as amended and restated by a deed dated 18 July 2003 between the Issuer and the Programme Trustee.

“L/C Bank” means Nordea Bank AB (publ) under the Standby Letter of Credit Agreement.

4(40)

“Liquidity Coverage Condition” is met if, in respect of each Purchaser, on any day, the aggregate outstanding amount of the Notes in respect of such Purchaser (in each case, where such Notes are not denominated in euro, converted into euro at the rate of exchange between euro and the relevant currency under the relevant hedging agreement entered into in connection with such Notes) (excluding for this purpose any Notes to be redeemed on such date of determination) plus the Euro Equivalent (as such term is defined in the Master Definitions Schedule) amount of any outstanding drawings under the Liquidity Facility and the Overdraft Facility in each case attributable to the Purchaser in relation to the Transaction, plus any interest accrued or to accrue in respect of such drawings is not greater than the lesser of (i) the part of the Total Commitments in respect of such Purchaser and (ii) the Borrowing Base in respect of such Purchaser, in each case less an amount equal to twenty five (25) per cent of the Senior Fees Provision (as such term is defined in the Master Definitions Schedule), if any in respect of such Purchaser in relation to the Transaction.

“Liquidity Facility” means the liquidity facility under the relevant Liquidity Facility Agreement.

“Liquidity Facility Agreement” means each liquidity facility agreement entered into in relation to inter alia the Transaction between relevant Purchaser, Nordea Bank Danmark A/S as Agent and the Banks, including the liquidity facility agreement dated 12 June, 2006 between the Initial Purchaser, Nordea Bank Danmark A/S as Agent and the Banks.

“Loan” means the aggregate of the principal amount of each borrowing by each Purchaser under the relevant Liquidity Facility Agreement or the principal amount outstanding of that borrowing attributable to the Transaction.

“Margin” shall be as set out in the fee letter entered into between Initial Purchaser and the Seller on or about the date hereof.

“Master Account Administrator” means Nordea Bank Danmark A/S as Master Account Administrator under the Master Accounts Administration Agreement.

“Master Accounts Administration Agreement” means the accounts administration agreement dated 12 June, 2006 between inter alia Nordea Bank Danmark A/S, Nordea Bank AB (publ), the Accounts Administrator and the Programme Trustee inter alia in relation to the Transaction.

“Master Definitions Schedule” means the masters definitions schedule dated 12 June 2006 and signed for the purpose of identification by, inter alia, the Initial Purchaser, Nordea Bank AB (publ), the Issuer and Nordea Bank Danmark A/S.

“Master Overdraft Facility Agreement” means the overdraft facility agreement dated 12 June, 2006 between inter alia the Initial Purchaser and the Overdraft Bank (as defined therein) in relation inter alia to the Transaction.

“Master Security Trust Deed” means the security trust deed dated 12 June, 2006 between the Initial Purchaser and the Programme Trustee inter alia in relation to the Transaction, as supplemented by a supplemental security trust deed.

“Moody’s” means Moody’s Investors Service Limited and includes any successor to its rating business.

“Non-Defaulted Receivables” means Purchased Receivables in relation to the relevant Purchaser for which there has not been any default in payment from the relevant Permitted Obligors.

5(40)

“Notes” means commercial paper notes issued by Viking Asset Securitisation Limited in relation to this Transaction on behalf of the Purchasers and includes the commercial paper notes represented by a Note in global form.

“Offer” means an irrevocable offer from the Seller to the Purchaser for the sale of Receivables and given by the Seller to the Purchaser through the PrimeRevenue System or in any other form acceptable to the Accounts Administrator and “to Offer” and “Offered” shall have the corresponding meaning.

“Outstanding Amount” means at any time in respect of any Receivable or Purchased Receivable, the total amount due and owing by the relevant Permitted Obligor at that time in respect of the relevant Receivable or Purchased Receivable. For the avoidance of doubt, the Outstanding Amount for any Purchased Receivable shall not be reduced by virtue of any set off or counterclaim which reduces the amount recoverable in respect of the that Purchased Receivable.

“Overdraft Advance” means, save as otherwise provided herein, an advance (as from time to time reduced by repayment) made or to be made by the Overdraft Bank (as defined in the Master Overdraft Facility Agreement) under Clause 4 of the Master Overdraft Facility Agreement and attributable to the Transaction.

“Overdraft Facility” means the overdraft facility relating inter alia to the Transaction and made to the relevant Purchaser under the Master Overdraft Facility Agreement.

“Permitted Currency” means EUR.

“Permitted Obligors” means Renault Trucks SAS and any other company within the Volvo group that has entered into a Customer Managed Service Agreement (in all material respects corresponding to the CMSAs) with PrimeRevenue and that has been approved in writing by the Accounts Administrator.

“Permitted Obligor Default” means, at any time, when a Permitted Obligor is unable to pay its debts as they fall due or against whom any administration, insolvency, bankruptcy or liquidation or similar procedures have been instituted.

“PrimeRevenue” means PrimeRevenue, Inc. a company incorporated under the laws of the state of Delaware having its registered office at 1349 West Peachtree St., Suite 900, Atlanta, GA, USA.

“PrimeRevenue System” means the system for the sale and transfer of receivables as more particularly described in the CMSAs, the Supplier Agreement and the FI Agreement.

“Presidential Decree” means the Italian presidential decree no. 131 dated 26 April 1986 and any subsequent amendment thereto.

“Programme Trustee” means CitiCorp Trustee Company Limited or such other person so designated in accordance with the Issuer Security Trust Deed.

“Purchase Date” means each date upon which a sale and purchase of Receivables is concluded pursuant to Clause 2.2 of this Agreement.

“Purchase Price” means the aggregate Receivables Purchase Price paid or to be paid by the relevant Purchaser to the Seller in respect of Purchased Receivables on a particular Settlement Date.

“Purchased Receivables” means all Receivables which are the subject of any sale and purchase (or any purported sale and purchase) pursuant to Clause 2.2 of this Agreement and any other Receivables in respect of which the Receivables Purchase Price has been paid or will be paid by the relevant Purchaser to the Seller.

6(40)

“Purchaser” means the Initial Purchaser and all Additional Purchasers.

“Purchaser Supplemental Agreement” means the supplemental deed dated on or about 12 June 2006 entered into by, inter alia, the Purchaser, the Issuer, Nordea Bank Danmark A/S, Nordea Bank AB (publ), Nordea Bank Norge ASA, Nordea Bank Finland plc and the Programme Trustee.

“Rating Agencies” means Moody’s and S&P and “Rating Agency” means any one of them.

“Receivable” means any receivable (inclusive of VAT applied thereon) owed to the Seller in the ordinary course of business by any Permitted Obligor including all rights of the Seller pertaining to such Receivable (defined as “Payment Obligation” in the respective CMSA) in accordance with the respective CMSA, including but not limited to all the Seller’s rights under Section 18(f) of the respective CMSA.

“Receivables Purchase Price” shall be calculated as follows: CA - (CA x IR / (360/DM)); where

CA = the Certified Amount (as defined in the Supplier Agreement) of the Receivable

DM= actual number of days to and including the relevant maturity date

IR = means the applicable interest rate being EURIBOR three (3) months plus the Margin.

“Records” means: (a) all files, correspondence, notes of dealing and other documents, books, books of account, registers, records and other information; and (b) all computer tapes, discs, computer programmes, data processing software and related property rights, owned by or under the control and disposition of the Seller, in each case only to the extent relating to the Purchased Receivables.

“Reference Banks” means a minimum of four of the banks (including, in each case, Nordea Bank AB (publ)) which quote rates for the offering of deposits in euro to leading banks in the European interbank market for the relevant period immediately prior to the time set out in the definition of EURIBOR on the applicable Calculation Date.

“Renault CMSA” means the Customer Managed Service Agreement entered or to be entered into between Renault Trucks SAS and PrimeRevenue, pursuant to which the Seller is defined as a Supplier.

“S&P” or “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor company of such rating business.

“Security Interest” means any mortgage, charge, floating charge, assignment or assignation by way of security, lien, pledge, hypothecation, right of set-off (or analogous right), retention of title, flawed asset or blocked-deposit arrangement or any other encumbrance or security interest or security arrangement whatsoever created or arising under any relevant law or any agreement or arrangement having the effect of or performing the economic function of conferring security howsoever created or arising.

“Seller” means Meritor Heavy Vehicle Systems Cameri S.P.A., in its capacity as seller under this Agreement and not in any other capacity.

“Seller Potential Suspension Event” means any event which, with the giving of notice and/or lapse of time and/or making of any determination and/or any certification, would constitute a Seller Suspension Event.

7(40)

“Seller Suspension Event” means any of the following events:
(a)	Failure to pay: The Seller fails to pay any amount due under this Agreement or the Supplier Agreement on the due date or on demand in writing, if so payable, unless payment is made within three (3) Business Days of such due date or demand.
(b)	Failure to perform other obligations: The Seller fails to observe or perform any of its other material obligations under this Agreement or the Supplier Agreement or under any undertaking or arrangement entered into in connection therewith and, in the case of a failure capable of being remedied, within ten (10) days after receipt by the Seller of a request in writing from the relevant Purchaser (acting through the Accounts Administrator), that the same be remedied, it has not been remedied to the Purchaser’s (acting through the Accounts Administrator) reasonable satisfaction.
(c)	Representations, warranties or statements proving to be incorrect: Any representation, warranty or statement which is made (or deemed or acknowledged to have been made) by the Seller under this Agreement or the Supplier Agreement or which is contained in any certificate, statement or notice provided by the Seller under or in connection with this Agreement or the Supplier Agreement proves to be incorrect to an extent which, in the reasonable opinion of the Accounts Administrator, is likely to affect the ability of the Seller to perform its obligations under any of the Transaction Documents to which it is a party in a manner which is material and adverse in the context of the Transaction or which is likely materially and adversely to affect the collectability of the Purchased Receivables or any of them.
(d)	Provisions becoming unenforceable: Any provision of any of the Transaction Documents to which the Seller is a party is or becomes, for any reason, invalid or unenforceable and for so long as such provision remains invalid and unenforceable to an extent which, in the reasonable opinion of the Accounts Administrator, is likely materially and adversely to affect the ability of the Seller (acting in any capacity under any of the Transaction Documents to which it is a party) to perform its obligations under any of the Transaction Documents to which it is a party in a manner which is material and adverse in the context of the Transaction or which is likely to materially and adversely affect the collectability of the Purchased Receivables or any of them.
(e)	Suspension or expropriation of business operations: The Seller changes, suspends or threatens to suspend a substantial part of the present business operations which it now conducts directly or indirectly, or any governmental authority expropriates all or a substantial part of its assets and the result of any of the foregoing is, in the reasonable opinion of the Accounts Administrator, likely to affect the ability of the Seller to observe or perform its obligations under any of the Transaction Documents to which it is a party in a manner which is material and adverse in the context of the Transaction or which is likely to materially and adversely affect the collectability of the Purchased Receivables or any of them.
(f)	Enforcement by creditors: Any form of execution or arrest is levied or enforced upon or sued out against all and any of the Seller’s assets and is not discharged within twenty (20) days of being levied, or any Security Interest which may for the time being affect any material part of its assets becomes enforceable and steps are lawfully taken by the creditor to enforce the same. No Seller Suspension Event will occur under this paragraph (f) if the aggregate amount of the claim enforced is less than EUR 1,000,000 or the equivalent in any other currency.
(g)	Arrangement with Creditors: The Seller proposes or makes any arrangement or composition with, or any assignment or trust for the benefit of, its creditors generally involving (not necessarily exclusively) indebtedness which the Seller would not otherwise be able to repay or service in accordance with the terms thereof.
(h)	Winding-up:A petition is presented (unless contested in good faith and discharged or stayed within twenty (20) days) or a meeting is convened for the purpose of considering a resolution or other steps are taken for the winding up of the Seller (other than for the purposes of and followed by a solvent reconstruction previously approved in writing by the Accounts Administrator and the Programme Trustee (such approval not to be unreasonably withheld or delayed), unless during or following such reconstruction the Seller becomes or is declared to be insolvent).

8(40)

“Settlement Date” means, in respect of a Purchased Receivable, the first (1st) Business Day after the relevant Calculation Date.
“Standby Letter of Credit Agreement” means the standby letter of credit agreement dated 28 May, 2001 between Viking Asset Purchaser No. 2 Limited and Nordea Bank Danmark A/S (formerly Unibank A/S) as amended and restated by an agreement dated 18 July 2003 between Viking Asset Purchaser No. 2 Limited, Viking Asset Purchaser No. 3 Limited, the Initial L/C Bank and other affiliates of the Initial L/C Bank.
“Supplier Agreement” means the supplier agreement entered or to be entered into between the Seller and PrimeRevenue, pursuant to which each of the Permitted Obligors is defined as a Customer.
“Swedish Pledge Agreement” means the pledge agreement regarding the Purchased Receivables dated on or about the date hereof between the relevant Purchaser and the Programme Trustee.
“Tax” or “tax” includes all forms of tax, duty or charge on gross or net income, profits or gains, distributions, receipts, sales, use, occupation, franchise, value added, personal property, documents and instruments, and any levy, impost, duty, charge or withholding of any nature whatsoever chargeable by any authority, whether in Sweden, Jersey or elsewhere, together with all penalties, charges and interest relating to any of the foregoing.
“Termination Date” means the earliest date on which a Termination Event occurs.
“Termination Event” means the occurrence of any of the following:
(a)	five (5) years having elapsed from the date of this Agreement;
(b)	a failure by the Seller to perform any of its material obligations within thirty (30) Business Days after notification in writing of such failure to perform;
(c)	in relation to the Seller, any corporate action being taken or becoming pending, any other steps being taken or any legal proceedings being commenced or threatened or becoming pending for (i) the bankruptcy, liquidation, dissolution, administration or reorganisation of the Seller (other than for the purposes of and followed by a solvent reconstruction previously approved in writing by each Purchaser and the Programme Trustee (such approval not to be unreasonably withheld or delayed) unless during or following such reconstruction the Seller becomes or is declared to be insolvent) and which is not being contested in good faith or which is not dismissed or withdrawn within thirty (30) days, (ii) the Seller to enter into any composition or arrangement with its creditors generally, or (iii) the appointment of a receiver, administrative receiver, trustee or similar officer in respect of the Seller or substantially all of the property, undertaking or assets of the Seller;
(d)	a refusal of the Seller to pay any increased costs incurred by any Bank and/or L/C Bank in connection with the Transaction, such increased costs being outside the control of the Purchaser and the Bank and/or L/C Bank, as the case may be;
(e)	any CMSA and/or the Supplier Agreement being amended to the detriment of any Purchaser or if any CMSA, the FI Agreement and/or the Supplier Agreement is terminated for whatever reason or if any third party right in any CMSA or the Supplier Agreement in relation to which a Purchaser is a beneficiary becomes invalid or unenforceable;
(f)	the occurrence of any termination event under the CP Programme;
(g)	a Seller Suspension Event is outstanding for sixty (60) days or longer, subject to written notice being given by the Accounts Administrator on behalf of the relevant Purchaser; and

9(40)

	(h)	cross default; (i) any Financial Indebtedness of the Seller is not paid when due nor within any originally applicable grace period, or is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described); (ii) any commitment for any Financial Indebtedness of the Seller is cancelled or suspended by a creditor as a result of an event of default (however described); (iii) Any creditor of the Seller becomes entitled to declare any Financial Indebtedness of the Seller due and payable prior to its specified maturity as a result of an event of default (however described); (iv) no Termination Event will occur under this paragraph (h) if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iii) above is less than EUR 10,000,000 or the equivalent in any other currency.
	“Total Commitments” means (i) where the Initial Purchaser is the sole purchaser under this Agreement, the part of the aggregate of the Commitments as reserved by the Accounts Administrator to be used in relation to the Transaction, being EUR thirty million (30,000,000) at the date of this Agreement and (ii) where Additional Purchasers have acceded to this Agreement, in respect of each Purchaser, such part of the aggregate of the Commitments as reserved by the Accounts Administrator to be used in relation to the Transaction as is allocated to such Purchaser by the Accounts Administrator. The Total Commitments will be reduced (A) at the request of the Seller or (B) if the Accounts Administrator in connection with an annual review (such annual review to be made at each anniversary of this Agreement) determines that the twelve (12) months rolling average of the Aggregate Outstanding Amount (“Outstanding Average”) is less than seventy (70) per cent of the Total Commitments, at which time the Total Commitments will be reduced by an amount equal to fifty (50) per cent of the difference between the Outstanding Average and the Total Commitments (to be reduced). No reduction shall however take effect unless, immediately following such reduction, the Liquidity Coverage Condition is met. The Total Commitments may (to the extent possible) be increased as agreed between the Seller and the Accounts Administrator from time to time. The Accounts Administrator may allocate the Total Commitments (including any increase or decrease thereof) as between the Purchasers at its own discretion and each Purchaser’s available part of the Total Commitments is determined accordingly, provided that, no such allocation shall be made unless, immediately following such allocation, the Liquidity Coverage Condition is met.
	“Transaction” means the transaction relating to this Agreement envisaged by the Transaction Documents whereby the Seller may sell certain Receivables to a Purchaser and a Purchaser may purchase such Receivables, funded by the issue of Notes under the CP Programme and all related arrangements provided for in the Transaction Documents.
	“Transaction Documents” means the documents relating to the Transaction, including this Agreement, the FI Agreement, the CMSAs and the Supplier Agreement, each Liquidity Facility Agreement, the Master Overdraft Facility Agreement and the Master Security Trust Deed, and any agreement or document executed pursuant to or in connection with any of these documents.
1.2	Construction
1.2.1	References in this Agreement to any person shall include references to his successors, transferees and assignees and any person deriving title under or through him.
1.2.2	References in this Agreement to any statutory provision shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under any such re-enactment.

10(40)

1.2.3	References in this Agreement to any agreement or other document shall be deemed also to refer to such agreement or document as amended, varied, supplemented, replaced or novated from time to time.
2.	PURCHASE AND SALE
2.1	Purchase of Receivables
	Subject to the terms and conditions of this Agreement, each Purchaser agrees that it may (at its sole discretion) elect to purchase Receivables from the Seller on a regular basis from the date hereof until the Termination Date.
2.2	Conclusion of purchase - offer and acceptance
	Sale and purchase of Receivables will in each case be concluded as more particularly set out in Part 1 of Schedule 2.
2.3	Purchase Price
	The Purchase Price shall be paid and calculated as more particularly set out in Part 2 of Schedule 2.
2.4	VAT
	Any VAT refund collected from the VAT authorities by the Seller following credit losses on a Purchased Receivable shall be for the benefit of the relevant Purchaser and be paid by the Seller to the relevant Purchaser. The Seller undertakes to take any action permissible, and required by the relevant Purchaser, to assist in collecting any such VAT refund for the benefit of the relevant Purchaser, including but not limited to acquiring the Purchased Receivable at a price equal to any VAT refund available for collection and any amounts recoverable from the Permitted Obligor (if any) and to pay such purchase price upon and to the extent of receipt of the VAT refund and any amounts recovered from the Permitted Obligor.
2.5	Perfection
	Each sale and purchase pursuant to Clause 2.2 above shall be perfected through the actions more particularly described in Part 3 of Schedule 2.
2.6	Seller’s receipt of payment in respect of Purchased Receivables
	In the event that, notwithstanding the notification referred to in Clause 2.5, the Seller receives from the Permitted Obligors any payment in respect of Purchased Receivables, the Seller shall pay to the relevant Purchaser promptly following such a receipt, all such Collections received by it in respect of the Purchased Receivables to the account as notified by the Accounts Administrator pursuant to Clause 5.2.

11(40)

3.	CONDITIONS PRECEDENT
3.1	The obligations of any Purchaser (and with respect to paragraph (c) below, of the Seller) under or pursuant to this Agreement are subject to the satisfaction (as determined in the reasonable opinion of the Accounts Administrator) of the following conditions precedent:
	(a)	each of the Transaction Documents (including the CMSA(s) relating to the relevant Permitted Obligor(s)) has been validly executed by all parties thereto;
	(b)	all actions that pursuant to Part 3 of Schedule 2 shall be taken prior to or upon any purchase of the relevant Receivables have been completed;
	(c)	Nordea Bank AB (publ) has acceded to this Agreement as Additional Purchaser and the Seller has received a copy of an Accession Letter relating to the accession of Nordea Bank AB (publ) to this Agreement as Additional Purchaser;
	(d)	Initial Purchaser and the Programme Trustee have received a solvency certificate from the Seller substantially in the form of Schedule 5; and
	(e)	Initial Purchaser and the Programme Trustee have received in form and substance satisfactory to each of them legal opinion(s) issued by reputable law firm(s) approved by each of them, as to the laws of the jurisdiction(s) each of them deem relevant.
4.	ADDITIONAL PURCHASERS
4.1	The Initial Purchaser shall request that Nordea Bank AB (publ) becomes an Additional Purchaser on the date hereof. For the purpose of such accession, the Initial Purchaser shall deliver to the Seller a duly completed and executed Accession Letter. It is agreed amongst the parties to this Agreement that such accession of Nordea Bank AB (publ) as an Additional Purchaser is a condition precedent to the entry into this Agreement by the Seller, as set out under Clause 3.1(c) above and the Seller is relying on the representation and warranty to be made by Nordea Bank AB (publ) under the terms of the Accession Letter regarding its banking license status and capacity.
4.2	In addition, the Initial Purchaser may request that any company within the Nordea Bank AB (publ) group becomes an Additional Purchaser and such company within the Nordea Bank AB (publ) group shall become an Additional Purchaser without the prior consent of the Seller, provided that:
	(a)	the Initial Purchaser or the Accounts Administrator delivers to the Seller a duly completed and executed Accession Letter, and
	(b)	such Additional Purchaser is authorized to purchase Receivables from the Seller under any applicable law; and
	(c)	such Additional Purchaser is a credit institution licensed within the European Union for the purpose of banking transactions, is duly authorised to operate in France on the basis of its European Passport and is authorised under French law to purchase receivables under the provisions of article L.313-23 and seq. of the French monetary and financial code.
4.3	It is agreed amongst the parties to this Agreement that no sale and transfer of Receivables by the Seller under this Agreement can be made with any party as Purchaser other than a credit institution licensed within the European Union for the purpose of banking transactions, who is, duly authorised to operate in France on the basis of its European Passport and who is authorised under French law to purchase receivables under the provisions of article L.313-23 and seq. of the French monetary and financial code. To this end, the parties to this Agreement hereby acknowledge and consent to the fact that in practice no sale and transfer of Receivables will be completed between the Seller and the Initial Purchaser under this Agreement and that any reference in this Agreement to a “Purchaser” with respect to the sale and transfer of the Receivables shall be a reference to Nordea Bank AB (publ) or any other Additional Purchaser in accordance with Clause 4.2 above.

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4.4	The obligations and liabilities of each Purchaser hereunder shall be several. For the avoidance of doubt, failure by one Purchaser to perform its obligations under this Agreement shall not affect the obligations of any other Purchaser and no Purchaser is responsible for the obligations and representations of any other Purchaser.
5.	PAYMENTS TO THE PURCHASER, ETC.
5.1	All amounts to be paid to any Purchaser under this Agreement shall be paid when due to the relevant account and at the times specified below.
5.2	Any amounts payable to any Purchaser under this Agreement shall be remitted to the accounts notified in writing to the Seller by the Accounts Administrator no later than the time indicated in such notice.
5.3	All payments made by the Seller under this Agreement shall be made without set-off, counterclaim or withholding. If the Seller is compelled by law or otherwise to make any deduction, the Seller shall pay any additional amount as will result in the net amount received by the Purchaser being equal to the full amount which would have been received had there been no deduction or withholding.
6.	REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1	Warranties relating to the Seller
	As at each Purchase Date, the Seller shall make the representations and warranties to each relevant Purchaser and the Programme Trustee in the terms set out in Part 1 of Schedule 3 in relation to the Seller and with reference to the facts and circumstances subsisting on such Purchase Date.
6.2	Warranties relating to Purchased Receivables
	As at each Purchase Date, the Seller shall make the representations and warranties severally to each relevant Purchaser and the Programme Trustee in the terms set out in Part 2 of Schedule 3 with respect to the Receivables to be sold by it and purchased by the relevant Purchaser on such Purchase Date with reference to the facts and circumstances subsisting on such Purchase Date.
6.3	Obligation to notify in case of incorrect representations, etc.
	The Seller shall forthwith notify the relevant Purchaser if any of the representations and warranties referred to in this Clause 6 were incorrect when made promptly upon becoming aware thereof.
6.4	Covenants and undertakings
	The Seller covenants and undertakes with and to each Purchaser and the Programme Trustee as follows:
	(a)	Indemnity against claims: no Purchaser nor the Programme Trustee shall have any obligation or liability with respect to any Purchased Receivables nor will any Purchaser or the Programme Trustee be required to perform any of the obligations of the Seller (or any of its agents) under any such contracts save, in each case, as specifically provided in this Agreement. The Seller will on demand indemnify and keep indemnified each Purchaser, the Accounts Administrator and the Programme Trustee against any cost, claim, loss, expense, liability or damages (including legal costs and out-of-pocket expenses) (save to the extent that such cost, claim, loss, expense, liability or damage shall not have arisen as a consequence of any breach of this Agreement by, or as a result of the wilful misconduct or negligence of the relevant Purchaser and/or as a result of any wilful default or negligence of the Programme Trustee) reasonably and properly incurred or suffered by that Purchaser and/or the Programme Trustee as a consequence of any claim or counterclaim or action of whatsoever nature made or taken by a Permitted Obligor or any third party arising out of or in connection with any Purchased Receivables or any services which are the subject of such Purchased Receivables;

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(b)	Indemnity against breach: the Seller will on demand indemnify and keep indemnified each Purchaser, the Accounts Administrator and the Programme Trustee against any cost, claim, loss, expense, liability or damages (including legal costs and out-of-pocket expenses) reasonably and properly incurred or suffered by such Purchaser or the Programme Trustee as a consequence of any breach by the Seller of this Agreement or any other Transaction Document (to which the Seller is a party) (save to the extent that such cost, claim, loss, expense, liability or damages shall not have arisen as a consequence of any breach of this Agreement by, or as a result of the wilful misconduct or negligence of the relevant Purchaser or as a result of any wilful default or negligence of the Programme Trustee);
(c)	Indemnity on termination: the Seller shall on demand indemnify each Purchaser against all Funding Costs incurred by that Purchaser as a result of such termination, which, for the avoidance of doubt, include Funding Costs which are incurred on or after the Termination Date;
(d)	No set-off: the Seller shall not take any action which would cause any set-off, counterclaim, credit, discount, allowance, right of retention or compensation, right to make any deduction, equity or any other justification for the non-payment of any of the amounts payable under any Purchased Receivable (whether by the relevant Permitted Obligor or otherwise) without the prior written consent of the relevant Purchaser (acting through the Accounts Administrator);
(e)	Authorisations, approvals, licences, consents etc.: the Seller shall obtain, comply with the terms of, and maintain in full force and effect, all authorisations, approvals, licences and consents required in or by the laws and regulations of Italy and any other applicable law to enable it to perform its obligations under this Agreement;
(f)	No other dealing: the Seller will not dispose, sell, transfer or assign, create any interest in (including Security Interest), or deal with any of the Purchased Receivables in any manner whatsoever or purport to do so except as permitted by this Agreement;
(g)	No other action: the Seller will not knowingly take any action which may prejudice the validity or recoverability of any Purchased Receivable or which may otherwise adversely affect the benefit which the Purchaser may derive from such Purchased Receivable pursuant to this Agreement;
(h)	Tax payments: the Seller will pay or procure the payment (as required by law) of all federal, state, local, and foreign sales, use, excise, utility, gross receipts, VAT or other taxes, including but not limited to any withholding tax, imposed by any authority in relation to the Purchased Receivables, the FI Agreements or this Agreement and shall make all relevant returns in respect of VAT in relation to the Purchased Receivables;

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	(i)	Notice of default: the Seller shall promptly upon becoming aware of the same inform the Accounts Administrator and the Programme Trustee of any occurrence which might adversely affect its ability to perform its obligations under this Agreement and from time to time, if so requested by the Accounts Administrator, confirm to the Accounts Administrator and the Programme Trustee in writing that, save as otherwise stated in such confirmation, no such occurrence has occurred and is continuing;
	(j)	Delivery of reports: the Seller shall deliver to the Accounts Administrator and the Programme Trustee, sufficient copies of each of the following documents, in each case at the time of issue thereof:
		(i)	every report, circular, notice or like document issued by the Seller to its creditors generally; and
		(ii)	(if the Accounts Administrator so requires) a certificate from its CFO stating that the Seller as at the date of its latest consolidated audited accounts was in compliance with the covenants and undertakings in this Agreement (or if it was not in compliance indicating the extent of the breach).
	(k)	Provision of further information: subject to applicable legislation, the Seller shall provide the Accounts Administrator and the Programme Trustee with such financial and other information concerning the Seller and its affairs as the Accounts Administrator or the Programme Trustee may from time to time reasonably require and which is available to the Seller.
	(l)	Notice of misrepresentation: the Seller shall promptly upon becoming aware of the same notify the Accounts Administrator and the Programme Trustee of any misrepresentation by the Seller under or in connection with any Transaction Document to which it is a party.
6.5	Representations and Warranties relating to the Purchasers
6.5.1	As at each Purchase Date and each Calculation Date, each Purchaser shall make the representations and warranties to the Seller in the terms set out in Part 3 of Schedule 3 with reference to the facts and circumstances subsisting on each such Purchase Date and Calculation Date.
6.5.2	The Seller shall have the option to terminate this Agreement in respect of the relevant Purchaser upon any material breach of the representations and warranties referred to in this Clause 6.5 by the relevant Purchaser, provided such material breach have a material adverse effect on the Seller.
7.	REMEDIES FOR UNTRUE REPRESENTATION, ETC.
7.1	If at any time after the Settlement Date in respect of any Purchased Receivable it shall become apparent that any of the representations and warranties set out in Part 2 of Schedule 3 relating to or otherwise affecting such Purchased Receivable was untrue or incorrect when made by reference to the facts and circumstances subsisting at the date on which such representations and warranties were given, the Seller shall, within five (5) Business Days of receipt of written notice thereof from the relevant Purchaser (or the Accounts Administrator) or the Programme Trustee, remedy or procure the remedy of the matter giving rise thereto if such matter is capable of remedy and, if such matter is not capable of remedy or is not remedied within the said period of five (5) Business Days, then following the expiry of such five (5) Business Day period the Seller shall pay to the relevant Purchaser an amount equal to the difference (if any) between (i) the amount due for payment in respect of such Purchased Receivable on such due date and (ii) the amount of Collections received in respect of such Purchased Receivable on or before such due date, to the extent such difference was caused by, or has any connection with, the breach of the relevant representation and warranty. If the Seller shall otherwise become aware of such untrue or incorrect representation and warranty other than by written notification from the relevant Purchaser (or the Accounts Administrator) or the Programme Trustee, it shall immediately notify the Accounts Administrator and the Programme Trustee of such untrue or incorrect representation and warranty. In the event the Transaction is terminated prior to the date on which an amount under this Clause 7 would have been payable by the Seller, the Seller shall pay such amount following receipt of the said written notice from the relevant Purchaser (or the Accounts Administrator) or the Programme Trustee on or before the date the Transaction is terminated or promptly thereafter.

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7.2	Notwithstanding Clause 7.1, if at any time after the Purchase Date but prior to collection of payments in full in relation to any Purchased Receivables it shall become apparent that the representation and warranty set out in paragraph (d) of Part 2 of Schedule 3 relating to or otherwise affecting such Purchased Receivable was untrue or incorrect when made by reference to the facts and circumstances subsisting at the date on which such representations and warranties were given, then the Seller shall repurchase such Purchased Receivable for a price equal to the sum of (i) the Purchase Price for such Purchased Receivable (taking into account any Collections received in respect of such Purchased Receivable prior to the repurchase), and (ii) the Funding Costs attributable to such Purchased Receivable, and see to it that notice of such repurchase is given to the relevant Permitted Obligor. Any Collections received by the relevant Purchaser in respect of such repurchased Purchased Receivables after the Seller has paid the price for such repurchase shall be paid to the Seller promptly upon receipt.
7.3	With respect to any event where, under this Clause 7 or any other provision of this Agreement, the Seller is required to repurchase any of the Receivables or if any of such Receivables are to be transferred back to the Seller, such assignment and transfer shall be performed pursuant to and in compliance with the provisions of article 1689 and seq of the French civil code.
8.	SPECIFIC INDEMNITIES
8.1	The Seller shall indemnify and hold the Purchaser harmless from any obligation, liability or assessment to pay any tax (other than income tax but without prejudice to the provisions of Sections 5.3 and 6.4 (h)), including registration tax (imposta di registro) under the Presidential Decree arising out of the execution, delivery, performance and/or the perfection of the arrangements contemplated under this Agreement, including, without limitation, in the so called “case of use” (caso d’uso) as such term is defined in Article 6 of the Presidential Decree.
8.2	The Seller shall further indemnify and hold the Purchaser harmless from any cost or loss incurred or suffered by the Purchaser in relation to a failure by the Seller to perform its obligations under Part 3 of Schedule 2.
9.	FURTHER ASSURANCE
9.1	The Seller hereby undertakes not to take any steps or cause any steps to be taken in respect of the Purchased Receivables or the services supplied thereunder.

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9.2	For the avoidance of doubt, this undertaking shall apply (without limitation) to the following:
	(a)	any termination, waiver, amendment or variation in relation to any Purchased Receivables;
	(b)	any assignment or sale of any Purchased Receivables; and
	(c)	any disposal of its right, title, interest, benefit or power in any Purchased Receivables.
9.3	In addition to any records or information available through the PrimeRevenue System, the Seller undertakes at the request of the relevant Purchaser or the Programme Trustee through the Accounts Administrator to produce and deliver Records concerning the Purchased Receivables as the Purchaser, the Programme Trustee or the Accounts Administrator may reasonably request for enforcement or accounting purposes.
9.4	In the event that such Records as referred to in Clause 9.3 are not produced reasonably promptly, the Seller shall permit any persons nominated by the Purchasers, the Accounts Administrator or the Programme Trustee at any time during normal business hours upon five (5) Business Days written notice to enter any premises owned or occupied by it or its agents where the Records and other information concerning Purchased Receivables are kept to have access (subject to appropriate supervision provided by the Seller and provided that the Seller shall not unreasonably delay the provision of such supervision) to, examine and make copies of all Records relating to the Purchased Receivables and the performance by the Seller of its obligations hereunder. Such access shall include the right to have access to and use (subject to appropriate supervision provided by the Seller and provided that the Seller shall not unreasonably delay the provision of such supervision) all computer passwords necessary to gain access to the relevant computer records.
9.5	The parties hereto acknowledge that each Purchaser has pledged all its title to and interest in the Purchased Receivables to the Programme Trustee, on behalf of the Purchaser Beneficiaries (as defined in the Master Definitions Schedule) as security for the due and punctual performance by the relevant Purchaser of the Purchaser Secured Obligations (as defined in the Master Definitions Schedule). All the parties hereby undertake to use, upon notice from the Programme Trustee, all reasonable efforts and take all actions as the Programme Trustee may reasonably require in order for such pledge to be perfected.
10.	NOTICES
	Any notices to be given pursuant to this Agreement to any of the parties hereto shall be sufficiently served or given if delivered by hand or sent by prepaid first-class post or by facsimile transmission and shall be deemed to be given (in case of notice delivered by hand or post) when delivered or (in the case of any notice by facsimile transmission) upon receipt in legible form and shall be delivered or sent:

The Purchasers:	Ogier House
	The Esplanade
	St Helier
	Jersey JE4 9WG
	Channel Islands
with a copy to the
Accounts Administrator:	Structured Finance Servicer A/S
	Christiansbro, 3 Strandgade,
	DK-1401 Copenhagen K,
	Denmark
	Attention: Structured Finance

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	Servicer A/S
	Facsimile No: +45 3333 2697
The Seller:	Meritor Heavy Vehicle Systems Cameri S.P.A
	Strada Provinciale Cameri Bellinzago KM 5,
	28062 Cameri,
	Italy
	Attention: Gianluca Alberti
	Facsimile No: +39 0321 423 424

	or to such other address or facsimile number or for the attention of such other person as may from time to time be notified by any party to each of the other parties by written notice in accordance with the provisions of this Clause 10.
11.	ASSIGNMENT AND SUPPLEMENTS
	This Agreement may be assigned by each Purchaser to the Programme Trustee.
12.	AMENDMENTS AND MODIFICATIONS
	No amendment, modification, variation or waiver of this Agreement shall be effective unless it is in writing and signed by (or by some person duly authorised by) each of the parties hereto. No amendment of this Agreement shall be made unless the relevant Purchaser has received written confirmation from the Rating Agencies that the ratings then assigned to the Notes are not adversely affected thereby.
13.	RIGHTS CUMULATIVE, WAIVERS
	The respective rights of each party under or pursuant to this Agreement are cumulative, and are in addition to their respective rights under the general law. The respective rights of each party under or pursuant to this Agreement shall not be capable of being waived or varied otherwise than by an express waiver or variation in writing; and, in particular, any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right.
14.	APPORTIONMENT
	The parties agree that if a Permitted Obligor, owing a payment obligation which is due in respect of one or more Purchased Receivables, submits an incomplete or inaccurate information regarding the Receivable to the PrimeRevenue System or otherwise makes a general payment to a Purchaser (or the Seller) and makes no apportionment between them as to which Purchased Receivables such payment relates, then such payment shall be treated as though the Permitted Obligor had appropriated the same as payment of Purchased Receivables in relation to the relevant Purchaser in order of maturity (starting with the Purchased Receivables in relation to the relevant Purchaser having the earliest maturity date).
15.	PARTIAL INVALIDITY
	If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability in such jurisdiction shall not render invalid, illegal or unenforceable such provisions in any other jurisdiction or affect the remaining provisions of this Agreement. Such invalid, illegal or unenforceable provision shall be replaced by the parties with a provision which comes as close as reasonably possible to the commercial intentions of the invalid, illegal or unenforceable provision.

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16.	CONFIDENTIALITY
	None of the parties shall disclose to any person, firm or company whatsoever, or make use of (other than in accordance with the Transaction Documents) any information relating to the business, finances or other matters of a confidential nature of any other party to this Agreement of which it may in the course of its duties under this Agreement or otherwise have become possessed (including, without limitation and without prejudice to the generality of the foregoing any information concerning the identity or creditworthiness of any Permitted Obligor (all and any of the foregoing being “Confidential Information”)) and all the parties shall use all reasonable endeavours to prevent any such disclosure or use provided however that the provisions of this Clause 16 shall not apply:
	(a)	Permitted parties: to the disclosure of any information to any person who is a party to any of the Transaction Documents (to the extent such Transaction Documents relates to the Transaction as contemplated by this Agreement);
	(b)	Known information: to the disclosure of any information already known to the recipient otherwise than as a result of entering into any of the Transaction Documents (to the extent such Transaction Documents relates to the Transaction as contemplated by this Agreement);
	(c)	Public knowledge: to the disclosure of any information which is or becomes public knowledge otherwise than as a result of the conduct of the recipient;
	(d)	Legal requirement: to the extent that the recipient is required to disclose the same pursuant to any law or order of any court of competent jurisdiction or pursuant to any direction or requirement (whether or not having the force of law) of any central bank or any governmental or other regulatory or taxation authority in any part of the world (including, without limitation, any official bank examiners or regulators);
	(e)	Rights and duties: to the extent that the recipient needs to disclose the same for the exercise, protection or enforcement of any of its rights under any of the Transaction Documents or, for the purpose of discharging, in such manner as it reasonably thinks fit, its duties or obligations under or in connection with the Transaction Documents in each case to such persons as require to be informed of such information for such purposes (including for these purposes, without limitation, disclosure to any rating agency);
	(f)	Professional advisers: to the disclosure of any information to professional advisers or auditors of the relevant party in relation to, and for the purpose of, advising such party or complying with their duties as auditors;
	(g)	Financial institutions: to the disclosure in general terms of any information to financial institutions servicing the relevant party in relation to finances, insurance, pension schemes and other financial services;
	(h)	Written consent: to the disclosure of any information with the written consent of all of the parties hereto;
	(i)	Rating Agencies: to the disclosure of any information which either of the Rating Agencies may require to be disclosed to it;

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	(j)	The Issuer, Viking Global Finance ICC and Viking Asset Securitisation Holdings Limited: to the disclosure of information to the Issuer, Viking Global Finance ICC and Viking Asset Securitisation Holding Limited (or to anyone acting on behalf of such a person) or to any person providing finance to the Issuer, Viking Global Finance ICC and Viking Asset Securitisation Holding Limited (or to anyone acting on behalf of such a person);
	(k)	Group companies: to the disclosure of information to companies belonging to the same group of companies as the Seller; and
	(l)	Permitted Obligors: to the disclosure of information to Permitted Obligors necessary for the performance of the Seller’s obligations hereunder, or reasonably incidental thereto.
17.	NO OBLIGATIONS OR LIABILITIES
17.1	Each Purchaser acknowledges and agrees that (i) the Programme Trustee is a party to this Agreement for the purpose only of taking the benefit of this Agreement and for the better enforcement of its rights under the Master Security Trust Deed (as supplemented by the relevant Purchaser Supplemental Agreement) and (ii) the Programme Trustee shall assume no obligations or liabilities to the Seller or the relevant Purchaser or to any other person by virtue of the provisions of this Agreement except as otherwise determined by the Transaction Documents to which the Programme Trustee is a party.
17.2	The Seller acknowledges and agrees that (i) the Programme Trustee is a party to this Agreement for the purpose only of taking the benefit of this Agreement in the manner and as set out in Clause 17.1 and (ii) the Programme Trustee shall assume no obligations or liabilities to the Seller or to any other person by virtue of this Agreement.
18.	CHANGE OF PROGRAMME TRUSTEE
	If there is any change in the identity of the Programme Trustee or appointment of an additional trustee in accordance with the provisions of the Master Security Trust Deed (as supplemented by the relevant Purchaser Supplemental Agreement), the Seller and the Accounts Administrator shall execute such documents and take such action as the new trustee, the retiring Programme Trustee or, as the case may be, the existing Programme Trustee may properly require for the purpose of vesting in the new trustee the rights of the outgoing Programme Trustee under this Agreement.
19.	NO LIABILITY AND NO PETITION
19.1	No recourse under any obligation, covenant, or agreement of any party contained in this Agreement shall be had against any shareholder, officer or director of the relevant party as such, by the enforcement of any assessment or by any proceeding, by virtue of any statute or otherwise, it being expressly agreed and understood that this Agreement is a corporate obligation of the relevant party and no personal liability shall attach to or be incurred by the shareholders, officers, agents or directors of the relevant party as such, or any of them, under or by reason of any of the obligations, covenants or agreements of such relevant party contained in this Agreement, or implied therefrom, and that any and all personal liability for breaches by such party of any of such obligations, covenants or agreements, either at law or by statute or constitution, of every shareholder, officer, agent or director is hereby expressly waived by the other parties as a condition of and consideration for the execution of this Agreement.
19.2	Without prejudice to the rights of the Programme Trustee to enforce the security created pursuant to the Issuer Security Trust Deed, the Master Security Trust Deed (as supplemented by the relevant Purchaser Supplemental Agreement), the relevant Swedish Pledge Agreement and the relevant Accounts Pledge Agreement, each of the Programme Trustee and the Seller hereby agrees that it shall not, until the expiry of one (1) year and one (1) day after the payment of all sums outstanding and owing under the latest maturing note issued under the CP Programme take any corporate action or other steps or legal proceedings for the winding-up, dissolution or re-organisation or for the appointment of a receiver, administrator, administrative receiver, trustee, liquidator, sequestrator or similar officer of the Issuer or any Purchaser or of any or all of the Issuer’s or any Purchaser’s revenues and assets.

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20.	LIMITED RECOURSE
	In the event that the security created by the Master Security Trust Deed (as supplemented by the relevant Purchaser Supplemental Agreement), the relevant Swedish Pledge Agreement and the relevant Accounts Pledge Agreement is enforced and the proceeds of such enforcement are insufficient, after payment of all other claims ranking in priority to the claims hereunder or thereunder, to repay in full all principal or pay in full all interest and other amounts whatsoever hereunder or thereunder, then until such amounts have been paid in full the Seller shall have no further claim against the relevant Purchaser (or the Programme Trustee) in respect of any such unpaid amounts and any resultant claim shall have expired.
21.	GOVERNING LAW AND JURISDICTION
21.1	This Agreement is governed by and shall be construed in accordance with Swedish law. The simplified assignment form in Appendix 2 to Schedule 2 shall be governed by French law.
21.2	The courts of Sweden shall have non-exclusive jurisdiction over matters arising out of or in connection with this Agreement. The City Court of Stockholm shall be court of first instance.
22.	TERMINATION
	This Agreement shall remain in full force and effect until the Termination Date, provided, however, that the rights and remedies of a party with respect to any breach of any warranty made by another party in or pursuant to this Agreement, the provisions of Clause 16, Clause 19 and Clause 20 and the indemnification and payment provisions of this Agreement shall be continuing and shall survive any termination of this Agreement.

____________________

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This Agreement has been entered into on the date stated at the beginning of this Agreement.

For and on behalf of
MERITOR HEAVY VEHICLE SYSTEMS CAMERI S.P.A

By: /s/ Charles Molnar and

By: /s/ Gianluca Alberti

For and on behalf of
VIKING ASSET PURCHASER No 7 IC

By: /s/ Ellen Chislett

For and on behalf of
CITICORP TRUSTEE COMPANY LIMITED
By: /s/ David Mares

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SCHEDULE 1

ELIGIBILITY CRITERIA

Each Receivable must satisfy the following Eligibility Criteria on the relevant Purchase Date:

1.	The terms of the Receivable provide for payment in full by the Permitted Obligor not later than 120 days after the date of creation of such Receivable or as otherwise approved by the Accounts Administrator and the Rating Agencies.
2.	The Receivable is neither a Defaulted Receivable nor a Delinquent Receivable.
3.	The Receivable is denominated and payable in a Permitted Currency and is fully identified as such in the PrimeRevenue System and in the records of the Seller.
4.	An invoice relating to the Receivable has been issued and has been approved by the relevant Permitted Obligor.
5.	The Receivable is segregated and identifiable and can be validly transferred without the consent of the Permitted Obligor by the Seller to the Purchaser.
6.	The Receivable is not subject to set-off, counterclaim (other than Credit Memo Amounts as such term is defined in the respective CMSA) or withholding taxes other than as generally provided for under French law (as applicable) and is a legally enforceable obligation of the Permitted Obligor.
7.	The Receivable is owed by a Permitted Obligor who as at the Purchase Date to the knowledge of the Seller is not bankrupt or in liquidation, has not filed for a suspension of payments or petitioned for the opening of procedures for a compulsory composition of debts or is subject to similar or analogous proceedings or as otherwise approved by the Accounts Administrator and the Rating Agencies.
8.	The governing law of the Receivables is French law.
9.	The Receivable is a non-interest bearing (other than default or penalty interest) trade receivable arising in the ordinary course of the Seller’s business, the Outstanding Amount of which remains as debt.
10.	The delivery of the goods and/or services giving rise to the Receivable has been made and invoiced, has not been cancelled or rejected by the Permitted Obligor and the invoice provides for full payment by the Permitted Obligor.
11.	The Receivable has been created in accordance with all applicable laws and all consents, approvals and authorisations required of or to be maintained by the Seller have been obtained and are in full force and effect and are not subject to any restriction that would be material to the origination, enforceability or assignability of such Receivable.
12.	The Receivable has not been, in whole or in part, pledged, mortgaged, charged, assigned, discounted, subrogated or attached or transferred in any way and is otherwise free and clear of any liens or encumbrances, other than those arising by operation of law, exercisable against the Seller by any party.
13.	The Receivable constitutes the legal, valid, binding and enforceable obligation of the Permitted Obligor to pay on the due date the Outstanding Amount of the Receivable as at the Purchase Date and is not subject to any defence, dispute, lien, right of rescission, set-off or counterclaim (other than Credit Memo Amounts as such term is defined in the respective CMSA) or enforcement order.

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14.	The Receivable has been owned exclusively by the Seller since its origination and until the relevant Purchase Date.
15.	Collections in respect of the Receivable can be identified as being attributable to the Receivable as soon as practically possible following their receipt and in any event not later than three (3) Business Days following their receipt.

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SCHEDULE 2

CONCLUSION OF PURCHASE – OFFER AND ACCEPTANCE, PURCHASE PRICE AND PERFECTION

Part 1

Conclusion of Purchase – offer and acceptance

1.	The Seller may from time to time make an Offer to the Purchasers and any Purchaser may from time to time (but shall, for the avoidance of doubt, have no obligation to) accept such Offer by an Acceptance. On the date of Acceptance the Purchaser shall complete the simplified assignment form (acte de cession de créances professionnelles) subject to articles L.313-23 à L.313-34 of the French monetary and financial code (Code monétaire et financier), signed by the Seller by dating the simplified assignment form with the date for Acceptance.
2.	Any Acceptance by a Purchaser shall always be subject to all of the following conditions being satisfied or waived:
	(a)	any Acceptance must be made before the Termination Date and no Acceptance which is communicated or generated on or after the Termination Date shall be valid;
	(b)	no Seller Potential Suspension Event or Seller Suspension Event having occurred and being continuing;
	(c)	(i) any new Notes (if such Notes are denominated in a currency other than the Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement) to be issued in relation to that Purchaser shall not exceed the then Available Facility in relation to that Purchaser, (ii) immediately after such purchase the Face Amount of all outstanding Notes in relation to that Purchaser (if such Notes are denominated in a currency other than the Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement) shall not exceed the relevant Purchaser’s part of the Total Commitments, and (iii) the relevant Purchaser shall have available to it either the Liquidity Facility or the Overdraft Facility in an amount equal to its part of the Total Commitments, in each case as determined by the Accounts Administrator;
	(d)	immediately following such purchase, the outstanding amount of Non-Defaulted Receivables shall be equal to or greater than the amount of proceeds from outstanding Notes in relation to that Purchaser (if such Notes are denominated in a currency other than the Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement);
	(e)	immediately following such purchase, such Purchaser’s part of the Total Commitments shall be equal to or greater than the sum of (i) the Face Amount of outstanding Notes in relation to that Purchaser (if such Notes are denominated in a currency other than a Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement), (ii) the outstanding drawings under the relevant Liquidity Facility in relation to the Transaction, (iii) the outstanding drawings under the relevant Overdraft Facility in relation to the Transaction and (iv) interest accrued or to accrue in respect of outstanding drawings under the relevant Liquidity Facility and the relevant Overdraft Facility;
	(f)	the relevant Receivable shall meet all of the Eligibility Criteria;

25(40)

(g)	the Purchaser having received from the Seller a letter of confirmation substantially in the form set out in Appendix 4 hereto duly signed, but not dated, on separate copies by the Seller and the Permitted Obligor; and
(h)	the Purchaser having received from the Seller a duly completed simplified assignment form (acte de cession de créances professionnelles) subject to articles L.313-23 à L.313-34 of the French monetary and financial code (Code monétaire et financier), in the form appended as Appendix 2 to this Schedule 2, duly signed, but not dated, by the Seller.

26(40)

Part 2

Purchase Price

1.	The Purchase Price, which shall be paid (debited from the relevant Purchaser’s account) by or behalf of the relevant Purchaser to the Seller on the relevant Settlement Date. Payment shall be made (subject to deductions, including for the settlement of fees, as agreed by the Seller in any Transaction Document) to bank account number as set out below or as otherwise agreed from time to time between the Accounts Administrator, on behalf of the Purchasers, and the Seller and notified to PrimeRevenue.
	Bank:	Banco Popolare
	IBAN:	[REDACTED]
	Swift:	NVRBIT21054
2.	The Receivables Purchase Price shall be calculated by the PrimeRevenue System on behalf of the Accounts Administrator on the Calculation Date and PrimeRevenue shall inform the Seller and the relevant Purchaser of the Receivables Purchase Price through the PrimeRevenue System on such Calculation Date.

27(40)

Part 3

Perfection

1. Prior to the transfer and acquisition of any Receivables the Initial Purchaser and the Seller shall send a notice letter to (each of) the Permitted Obligor(s) that is/are the debtor(s) of the relevant Receivables, with the following content:

To: [PERMITTED OBLIGOR]
RE: NOTICE OF SALE AND TRANSFER OF RECEIVABLES AND RIGHTS UNDER A CUSTOMER MANAGED SERVICES AGREEMENT
A.	Pursuant to a Receivables Purchase Agreement (the “RPA”) Meritor Heavy Vehicle Systems Cameri S.P.A. as seller (the “Seller”) and Viking Asset Purchaser No 7 IC, an incorporated cell of Viking Global Finance ICC, an incorporated cell company incorporated under the laws of Jersey (the “Initial Purchaser”), dated [ ] [2012], the Seller has agreed to sell and the Initial Purchaser has agreed to purchase receivables (the “Receivables”) owed by [name of Permitted Obligor] (“Obligor”) to the Seller (in its capacity as supplier to Obligor). Pursuant to the RPA the Initial Purchaser may request that additional incorporated cells of Viking Global Finance ICC and any company within the Nordea Bank AB (publ) group accedes to the RPA by the execution of an accession letter. Nordea Bank AB (publ) has acceded to the RPA. The Initial Purchaser and all such incorporated cells and members of the Nordea Bank AB (publ) group that have executed an accession letter are herein jointly referred to as the “Purchasers” and each a “Purchaser”
B.	Offer and acceptance will be made through a system (the “System”) provided by PrimeRevenue, Inc (“PrimeRevenue”). Obligor has on 2 May 2006 entered into a Customer Managed Services Agreement (the “CMSA”) with PrimeRevenue regarding the use of the System. Through the CMSA (Section 18(f)) Obligor has made certain undertakings, covenants, representations and warranties to the Seller (the “Seller CMSA Rights”) as regards inter alia the Receivables and the use of the System.
C.	In connection with a sale of Receivable(s) under the RPA through the System, the System will generate a notice of transfer (the “Transfer Notice”) that will be sent to Obligor. A specimen of such Transfer Notice is attached hereto as Appendix 1.
D.	In accordance with and without limiting, expanding or otherwise amending the terms and conditions of the CMSA, this is to notify Obligor that each Transfer Notice shall have the following meanings;
		(i)	the Receivable(s) defined therein (as clarified in Appendix 1) (the “Purchased Receivables”) has/have been sold and transferred to the Purchaser identified in the Transfer Notice (see Appendix 1);
		(ii)	consequently, all payments attributable to the Purchased Receivables shall be made to such Purchaser in its capacity as owner of such receivables (as set forth in the CMSA and in particular Section 2(b)(v) thereof);
		(iii)	all payments to the Purchasers referred to in this notice shall (until otherwise instructed) be made to the bank account numbers set out below with Nordea Bank AB (publ);

28(40)

	In respect of payments in EUR by Permitted Obligors domiciled in Sweden:
	Bank: Nordea Bank AB (publ) Address: Hamngatan 10, 105 71 Stockholm, Sweden Swift: NDEASESS Account No.: [REDACTED]
	In respect of payments in EUR by Permitted Obligors domiciled in any other jurisdiction than Sweden:
	Bank: Nordea Bank AB (publ) Address: Hamngatan 10, 105 71 Stockholm, Sweden Swift: NDEASESS Account No.: [REDACTED] IBAN: [REDACTED]
(iv)	all Seller CMSA Rights attributable to the Purchased Receivables are pursuant to the RPA included in and an integral part of the Purchased Receivables and thus also sold and transferred to the relevant Purchaser (the “Transferred Seller CMSA Rights”).

Place/date:____________________
MERITOR HEAVY VEHICLE	VIKING ASSET PURCHASER No 7 IC
SYSTEMS CAMERI S.P.A
NORDEA BANK AB (publ)

We hereby confirm;
(i)	receipt of the above notice;
(ii)	that we will act in accordance therewith;
(iii)	our agreement as regards the meaning of the Transfer Notice; and
(iv)	our obligations vis-à-vis the relevant Purchaser as regards the Transferred Seller CMSA Rights.
	_______________________
Place/date:____________________ [PERMITTED OBLIGOR]

29(40)

and the Seller shall procure that each such Permitted Obligor acknowledge and counter sign the notice letter as anticipated therein, on a separate copy.
2.	The Seller shall procure that simultaneously (or as soon thereafter as is technically possible) with the issuance of the Acceptance, a Transfer Notice (as defined in the above notice) is issued by the PrimeRevenue System to the relevant Permitted Obligor.
3.	For the perfection of the transfer of Receivables owed by any Permitted Obligor domiciled in France, the Seller shall procure that (i) a simplified form of assignment (acte de cession de créances professionnelles) in the form of Appendix 2 to this Schedule 2 is delivered by the Seller to the Purchaser after being properly filled out and completed, but not dated, and duly signed by the Seller. Upon the Purchaser’s request a notification properly filled out and completed and duly signed by all relevant parties shall be sent to the Permitted Obligor, such notification being in the form of Appendix 3 to this Schedule 2.
4.	To enable the Purchaser to fulfil date certain at law (data certa) in Italy, the Seller shall further procure that a letter of confirmation in the form set out in Appendix 4 hereto is properly filled out but not dated, duly signed by the Seller and the Permitted Obligor, is delivered to the Purchaser. For the avoidance of doubt, Acceptance is not subject to date certain at law (data certa) in Italy has been completed.
5.	The Seller shall procure that at such time(s) as the Accounts Administrator determines all other actions the Accounts Administrator in its reasonable opinion deems necessary or desirable in order for the transfer and acquisition of the Receivables to be perfected in all respects, is/are taken.

30(40)

APPENDIX 2 TO SCHEDULE 2

Form of simplified Assignment Form

[Acte de cession de créances professionnelles soumisaux dispositions des articles L.313-23 à L.313-34 du Code monétaire et financier.

Entreprise cédante : Meritor Heavy Vehicle Systems Cameri S.P.A, immatriculée sous le numéro [insert registration number and body of registration], dont le siège social est sis [please insert details of address], Italie.

Etablissement de crédit cessionnaire¹ : [insert the name of the EU licensed bank] [please insert details of address, registration, etc...].

Date : [     ] (apposée par [insert the name of the EU licensed bank]

Débiteurs et créances cédées : Conformément à l’article L.313-23 alinéa 3 du Code monétaire et financier, la transmission des créances cédées est effectuée par un procédé informatique permettant de les identifier.

L'ENTREPRISE CEDANTE EXCLUT TOUTE GARANTIE DE PAIEMENT POUR LES CREANCES CEDEES ET MENTIONNEES CI-DESSOUS, EN APPLICATION DU SECOND ALINEA DE L'ARTICLE L.313-24 DU CODE MONETAIRE ET FINANCIER. EN ACCEPTANT LA CESSION DES CREANCES MATERIALISEE PAR LE PRESENT BORDEREAU, L'ETABLISSEMENT DE CREDIT CESSIONNAIRE ACCEPTE IRREVOCABLEMENT LADITE EXCLUSION DE GARANTIE DE L'ENTREPRISE CEDANTE POUR LE PAIEMENT DES CREANCES CEDES, SANS RECOURS CONTRE L'ENTREPRISE CEDANTE.

		Montant total
Moyen par lequel les créances sont cédées	Nombre de créances cédées	des créances
		cédées
Transmission des créances cédées par un procédé télématique géré par la société PrimeRevenue Inc., permettant de les identifier (l’indication pour chacune des créances cédées du débiteur cédé, de son lieu de paiement, de son montant et/ou de son échéance figure sur les "Payment Obligation Notification Reports" générés par ce système entre le [date] et le [date]	[   ]	[   ]

Le présent Bordereau est soumis à l'ensemble des stipulations du contrat cadre de cession de créances professionnelles en date du [    ] [2012] intitulé "Receivables Purchase Agreement" entre, notamment, MERITOR HEAVY VEHICLE SYSTEMS CAMERI S.P.A., [insert the name of the EU licensed bank] et CITICORP TRUSTEE COMPANY LIMITED.

[Le présent Bordereau est stipulé à ordre, transmissible par endos au profit d’un autre établissement de crédit.]

____________________

¹ Required to be a EU licensed credit institution

31(40)

Signature et cachet du représentant de	Signature et cachet du représentant de [        ]
MERITOR HEAVY VEHICLE SYSTEMS
CAMERI S.P.A.

____________________

32(40)

[English translation for information purposes]

Form of simplified Assignment Form

Assignment of receivables in accordance with the provisions L. 313-23 to L.313-34 of the Code Monétaire etFinancier

Assignor Meritor Heavy Vehicle Systems Cameri S.P.A. (reg. no. [  ]) having its registered office [ ], Italy.

Assignee bank: [         ] [please insert details of address, registration, etc...].

Date: [    [to be affixed by[                                     ]

Assigned Debtors and assigned receivables: Pursuant to article L. 313-23 alinea 3 of the Monetary and Financial Code, the assignment of the assigned receivables is effected by a computerised process permitting their identification.

The Seller expressly and irrevocably waives any joint and several liability with the Obligor with respect to the Purchased Receivables listed herein, as permitted under the second paragraph of Article L.313-24 of the CMF. The Purchaser expressly accepts such waiver by accepting this Assignment, without recourse against the Seller.

Means of assignment of the receivables	Number of assigned receivables	Total amount of assigned receivables
Assignment of the receivables using a computerised process operated by PrimeRevenue Inc. enabling their identification (the indication for each assigned receivable of the assigned debtor, its invoice number, the invoice date, its amount and its due date appears on the "Payment Obligation Notification Reports" generated by the above system between [date] and [date]).	[    ]	[    ]

This Bordereau is governed by all the provisions of the Receivables Purchase Agreement dated [ ] [2012] between, inter alia MERITOR HEAVY VEHICLE SYSTEMS CAMERI S.P.A., [                        ] and CITICORP TRUSTEE COMPANY LIMITED.

[This Bordereau is to the order of the Assignee Bank and may be assigned by endorsement in favour of another bank.]

Signature of the representative of MERITOR	Signature of the representative of [        ]
HEAVY VEHICLE SYSTEMS CAMERI S.P.A.

33(40)

APPENDIX 3 TO SCHEDULE 2

Form of Notification addressed to the Assigned Debtor
(French and English language)

[ON [              ] LETTER HEAD]

(Décret n° 81-862 of 9 September 1981, as
amended by Décret n° 85-1288 of 3rd December 1985, codified as articles R.313-15 to R.313-18 of the
Monetary and Financial Code)

Dans les conditions prévues par les articles L.313-23 à L.313-35 du Code monétaire et financier (anciennement loi n°81-1 du 2 janvier 1981 facilitant le crédit aux entreprises), la société Meritor Heavy Vehicle Systems Cameri S.P.A. (reg. no. [   ]) having its registered office at [ ], [ ] nous a cédé, par bordereau de cession de créances professionnelles en date du [insert date of relevant assignment form] les créances dont vous êtes débiteur envers elle dont les caractéristiques figurent ci-dessous:

[              ]

Conformément aux dispositions de l'article L.313-28 du Code monétaire et financier, nous vous demandons de cesser, à compter de la présente notification, tout paiement au titre des créances susvisées à Meritor Heavy Vehicle Systems Cameri S.P.A..

En conséquence, le règlement de vos dettes au titre desdites créances devra être effectué à [              ] par virement au compte dont les références sont les suivantes:

[INSERT REFERENCES OF ACCOUNT]]

[            ]

Par:

Translation for information purpose

Pursuant to the provisions of Articles L.313-23 to L.313-35 of the Code monétaire et financier (formerly law n° 81-1 of 2nd January 1981 facilitating credit to businesses Meritor Heavy Vehicle Systems Cameri S.P.A . (reg. no. [  ]) having its registered office at [ ], Italy has assigned to us pursuant to an Assignment Form dated [insert date of relevant assignment form] the receivables in respect of which you are the debtor and which are identified below:

[            ]

Pursuant to the provisions of Article L.313-28 of the Code monétaire et financier, it is hereby requested that you cease, as of the date hereof, to make any payment in respect of such receivables to Meritor Heavy Vehicle Systems Cameri S.P.A..

Consequently, any payment in respect of such receivables should henceforth be made to the benefit of [            ] by way of bank draft or transfer to the following account:

[INSERT REFERENCES OF ACCOUNT]

34(40)

APPENDIX 4 TO SCHEDULE 2

RE: SALE AND TRANSFER OF RECEIVABLES AND RIGHTS UNDER A CUSTOMER MANAGED SERVICES AGREEMENT

A.	Pursuant to a Receivables Purchase Agreement (the “RPA”) Meritor Heavy Vehicle Systems Cameri S.P.A. as seller (the “Seller”) and Viking Asset Purchaser No 7 IC, an incorporated cell of Viking Global Finance ICC, an incorporated cell company incorporated under the laws of Jersey (the “Initial Purchaser”), dated [ ] [2012], the Seller has agreed to sell and the Initial Purchaser has agreed to purchase receivables (the “Receivables”) owed by [name of Permitted Obligor] (“Obligor”) to the Seller (in its capacity as supplier to Obligor). Pursuant to the RPA the Initial Purchaser may request that additional incorporated cells of Viking Global Finance ICC and any company within the Nordea Bank AB (publ) group accedes to the RPA by the execution of an accession letter. Nordea Bank AB (publ) has acceded to the RPA. The Initial Purchaser and all such incorporated cells and members of the Nordea Bank AB (publ) group that have executed an accession letter are herein jointly referred to as the “Purchasers” and each a “Purchaser”.
B.	Offer and acceptance will be made through a system (the “System”) provided by PrimeRevenue, Inc (“PrimeRevenue”). Obligor has on 2 May 2006 entered into a Customer Managed Services Agreement (the “CMSA”) with PrimeRevenue regarding the use of the System. Through the CMSA (Section 18(f)) Obligor has made certain undertakings, covenants, representations and warranties to the Seller (the “Seller CMSA Rights”) as regards inter alia the Receivables and the use of the System.
C.	In accordance with and without limiting, expanding or otherwise amending the terms and conditions of the CMSA, this is to confirm that;
(i)		the Receivable(s) defined in Exhibit [1] hereto (the “Purchased Receivables”) has/have been sold and transferred to the Purchaser identified in the Exhibit [1];
(ii)		consequently, all payments attributable to the Purchased Receivables shall be made to such Purchaser in its capacity as owner of such receivables (as set forth in the CMSA and in particular Section 2(b)(v) thereof);
(iii)		all payments to the Purchasers referred to in this notice shall (until otherwise instructed) be made to the bank account numbers set out below with Nordea Bank AB (publ);

In respect of payments in EUR by Permitted Obligors domiciled in Sweden:

Bank: Nordea Bank AB (publ)
Address: Hamngatan 10, 105 71 Stockholm, Sweden
Swift: NDEASESS
Account No.: [REDACTED]

In respect of payments in EUR by Permitted Obligors domiciled in any other jurisdiction than Sweden:

Bank: Nordea Bank AB (publ)
Address: Hamngatan 10, 105 71 Stockholm, Sweden
Swift: NDEASESS
Account No.: [REDACTED]
IBAN: [REDACTED]

35(40)

all Seller CMSA Rights attributable to the Purchased Receivables are pursuant to the RPA included in and an integral part of the Purchased Receivables and thus also sold and transferred to the relevant Purchaser (the “Transferred Seller CMSA Rights”).

Place/date:____________________
MERITOR HEAVY VEHICLE	NORDEA BANK AB (Publ)
SYSTEMS CAMERI S.P.A
RENAULT TRUCK SAS

36(40)

SCHEDULE 3

REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

Part 1

Representations and Warranties relating to the Seller

The following representations and warranties are given by the Seller:

(a)	Status: The Seller is duly incorporated, with limited liability, under the laws of Italy.
(b)	Powers and authorisations: The Seller has the requisite power and authority under its articles of association and otherwise, and all necessary corporate authority has been obtained and action taken, for it to sign and deliver, and perform the transactions contemplated in this Agreement.
(c)	Legal validity: The obligations of the Seller under this Agreement constitute, or when executed by it will constitute, the legal, valid and binding obligations of the Seller and are enforceable against it, subject to the qualifications set forth in the Legal Opinions.
(d)	Non-violation: The execution, signing and delivery of this Agreement and the performance of any of the transactions contemplated herein do not and will not contravene or breach or constitute a default under or conflict or be inconsistent with or cause to be exceeded any limitation on it or the powers of its officers imposed by or contained in:
	(i)	any law, statute or regulation to which it or any of its assets or revenues is subject or any order, judgment, injunction, decree, resolution, or award of any court or any administrative authority or organisation which applies to it or any of its assets or revenues; or
	(ii)	any agreement or any other document or obligation to which it is a party or by which any of its assets or revenues is bound or affected if this may have a material adverse effect on the rights of any Purchaser, the Accounts Administrator or the Programme Trustee; or
	(iii)	any document which contains or establishes or regulates its constitution.
(e)	Consents: The Seller has duly obtained, made or taken each authorisation, approval, consent, registration, recording, filing, deliveries or notarisation which it is required to obtain (or make) in connection with the entry into, or performance of the transactions contemplated in, the Transaction Documents to which it is a party.
(f)	Litigation: No litigation, arbitration or administrative proceeding or claim of or before any court, tribunal or governmental body which, if adversely determined, would materially and adversely affect the ability of the Seller to observe or perform its obligations under the Transaction Documents to which it is a party, is presently in progress or pending.
(g)	Accounts: The latest audited financial statements of the Seller then available have been prepared on a basis consistently applied in accordance with accounting principles generally accepted in Italy and give a true and fair view of the results of its operations for that year and the state of its affairs at that date.
(h)	Solvency: The Seller is able to pay its debts as they fall due and it will not be unable to pay its debts as they fall due in consequence of any obligation or transaction contemplated in this Agreement.

(i)	Material adverse change to the Seller: There has been no change in the financial condition or operations of the Seller since [31 December 2010] so as to have a material and adverse effect on the ability of the Seller to perform its obligations under the Transaction Documents to which it is a party.
(j)	No misleading information: Any factual information in writing provided by the Seller in connection with the entry into any of the transactions envisaged by the Transaction Documents was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it was stated.
(k)	Insolvency and other procedures: No corporate action has been taken or is pending, no other steps have been taken and no legal proceedings have been commenced (in each case by the Seller or, so far as the Seller is aware, by any other person) for (i) the bankruptcy, liquidation, administration or reorganisation of the Seller, or (ii) the Seller to enter into any composition or arrangement with its creditors generally, or (iii) the appointment of a receiver, supervisor, trustee or similar officer in respect of the Seller or substantially all of its property, undertaking or assets.
(l)	Pari passu ranking: Each of the payment obligations of the Seller under this Agreement will rank at least pari passu with its unsecured payment obligations to all its other unsecured creditors save those whose claims are preferred solely by any bankruptcy, insolvency or similar laws of general application.
(m)	No default: No event has occurred which constitutes, or which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute, a contravention of, or default under, any such law, statute, decree, rule, regulation, order, judgment, injunction, resolution, determination or award or any agreement, document or instrument by which the Seller or any of its assets is bound, being a contravention or default which would have a material adverse effect on the business, assets or condition (financial or other) of the Seller or materially and adversely affect its ability to observe or perform its obligations under this Agreement.

37(40)

Part 2

Representations and Warranties relating to the Purchased Receivables

The following representations and warranties are given by the Seller:

(a)	Particulars correct: The particulars of the Purchased Receivables set out in the Offers and in the PrimeRevenue System (to the extent submitted by the Seller) are true and accurate in all material respects, as of the date thereof.
(b)	No default: The Seller is not aware of any default, breach or violation in respect of any Purchased Receivable (other than any default relating to lateness in payment) or of any event, which with the giving of notice and/or the expiration of any applicable grace period, would constitute such a default, breach or violation, such default, breach or violation being of a nature that (i) is material and (ii) affects the value of the Purchased Receivable or its collectability.
(c)	Obligation performed: The Seller has performed all its obligations under or in connection with the Purchased Receivable unless any such obligation is not material and does not affect the value of the Purchased Receivable or its collectability.
(d)	Compliance with Eligibility Criteria: Each Purchased Receivable complies, as at the relevant Purchase Date, in all respects with the Eligibility Criteria.
(e)	Maintenance of records: In addition to any records relating to the Purchased Receivables maintained in the PrimeRevenue System, the Seller has maintained records relating to each Purchased Receivable which are accurate and complete in all material respects, are sufficient to enable such Purchased Receivables to be identified and enforced against the relevant Permitted Obligor and such records are held by or to the order of the Seller.
(f)	Accounting: In addition to any records relating to the Purchased Receivables maintained in the PrimeRevenue System, the Seller shall maintain an accounting system which separates the Purchased Receivables and accounting for collections related thereto from other receivables or assets of the Seller so that the Accounts Administrator at any time can verify the Outstanding Amount of the Purchased Receivables and the Seller’s compliance with this Agreement.
(g)	No waiver: The Seller has not waived any of its rights in relation to the Purchased Receivables.
(h)	Perfection: The Seller has performed all its actions as set out in Clause 2.5 of this Agreement as of the Purchase Date.

38(40)

Part 3

Representations and Warranties relating to the Purchaser

The following representations and warranties are given by each Purchaser:

(a)	Status: The Purchaser is an incorporated cell of a company or company (as applicable) duly incorporated and validly existing under the laws of its jurisdiction of incorporation.
(b)	Powers and authorisations: The Purchaser has the requisite power and authority and all necessary corporate and constitutional authority has been obtained and action taken, for it to sign and deliver, and perform the transactions contemplated in, this Agreement.
(c)	Legal validity: The obligations of the Purchaser under this Agreement constitute, or when executed by it will constitute, the legal, valid and binding obligations of the Purchaser and, subject to any laws or other procedures affecting generally the enforcement of creditors’ rights and principles of equity are enforceable against it.
(d)	Non-violation: The execution, signing and delivery of this Agreement and the performance of any of the transactions contemplated in this Agreement do not and will not contravene or breach or constitute a default under or conflict or be inconsistent with or cause to be exceeded any limitation on it or the powers of its officers imposed by or contained in:
	(i)	any law, statute, decree, rule or regulation to which it or any of its assets or revenues is subject or of any order, judgment, injunction, decree, resolution, determination, or award of any court or any judicial, administrative, or governmental authority or organisation which applies to it or any of its assets or revenues; or
	(ii)	any agreement, indenture, mortgage, deed of trust, bond, or any other document, instrument or obligation to which it is a party or by which any of its assets or revenues is bound or affected; or
	(iii)	any document which contains or establishes or regulates its constitution.
(e)	Consents: The Purchaser has duly obtained, made or taken each authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation which it is required to obtain (or make) in connection with the entry into, or performance of the transactions contemplated in, this Agreement. The Purchaser is not aware of any circumstances which indicate that any such authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation which has been obtained (or made) is likely to be terminated, revoked or not renewed. No authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation and no payment of any duty or tax and no other action whatsoever which has not been duly and unconditionally obtained, made or taken is necessary or desirable to ensure the validity, legality, enforceability or priority of the liabilities and obligations of the Purchaser under this Agreement.
(f)	No default: No event has occurred which constitutes, or which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute, a contravention of, or default under, any such law, statute, decree, rule, regulation, order, judgment, injunction, resolution, determination or award or any agreement, document or instrument by which the Purchaser or any of its assets is bound, being a contravention or default which would have a material adverse effect on the business, assets or condition (financial or other) of the Purchaser or materially and adversely affect its ability to observe or perform its obligations under this Agreement.
(g)	Litigation: No litigation, arbitration or administrative proceeding or claim of or before any court, tribunal or governmental body which, if adversely determined, would materially and adversely affect the ability of the Purchaser to observe or perform its obligations under this Agreement, is presently in progress or pending or, to the knowledge of the Purchaser, threatened against the Purchaser or any of its assets.

(h)

Insolvency procedures: No corporate action has been taken or is pending, no other steps have been taken and no legal proceedings have been commenced (in each case by the Purchaser or, so far as the Purchaser is aware, by any other person) or (so far as the Purchaser is aware) are threatened or are pending for (i) the winding-up, liquidation, dissolution, administration or reorganisation of the Purchaser (other than for the purposes of and followed by a solvent reconstruction previously notified to the Seller); or (ii) the Purchaser to enter into any composition or arrangement with its creditors generally; or (iii) the appointment of a receiver, administrative receiver, trustee or similar officer in respect of the Purchaser or substantially all of its property, undertaking or assets.

(i)

EU license as credit institution: any Additional Purchaser is duly licensed as a credit institution (établissement de credit) in Sweden (or in any other country within the European Union), is authorised to operate in France on the basis of its European Passport and has the capacity to purchase receivables pursuant to the provisions of article L.313-23 of the French monetary and financial code.

39(40)

SCHEDULE 4

FORM OF ACCESSION LETTER

To:	Meritor Heavy Vehicle Systems Cameri S.P.A.
From:	[INITIAL PURCHASER/ACCOUNTS ADMINISTRATOR]

Dear Sirs

Reference is made to the Receivables Purchase Agreement entered into between Meritor Heavy Vehicle Systems Cameri S.P.A., Viking Asset Purchaser No 7 IC and Citicorp Trustee Company Limited dated [   ] [2012] (the “Agreement”).

This is an Accession Letter. Terms defined in the Agreement have the same meaning herein unless given a different meaning in this Accession Letter.

[[name of incorporated cell] of [       ] / [name of Nordea group company] agrees to become an Additional Purchaser and to in all respects be bound by all the terms and conditions of the Agreement as an Additional Purchaser pursuant to Clause 4 of the Agreement.

The Additional Purchaser hereby expressly represents and warrants to the Initial Purchaser, the Accounts Administrator and the Seller that it is, and shall remain without interruption until the term of the Agreement, a credit institution duly licensed for the purpose of banking transactions in the European Union, duly authorised to operate in France on the basis of its European Passport and that it has and shall maintain the capacity to purchase the Receivables under the terms of the Agreement, in accordance with the requirements set out under article L.313-23 and seq. of the French monetary and financial code.

This Accession Letter is governed by Swedish law.

Place date:

[INITIAL PURCHASER/ACCOUNTS ADMINISTRATOR]

[ADDITIONAL PURCHASER]

40(40)

SCHEDULE 5

FORM OF SOLVENCY CERTIFICATE

To:	Citicorp Trustee Company Limited	Date:
	[PURCHASER]
From:	Meritor Heavy Vehicle Systems Cameri S.P.A.

Dear Sirs

Reference is made to the Receivables Purchase Agreement entered into between Meritor Heavy Vehicle Systems Cameri S.P.A., Viking Asset Purchaser No 7 IC and Citicorp Trustee Company Limited dated [ ] [2012].

Meritor Heavy Vehicle Systems Cameri S.P.A. hereby certifies that it is able to pay its debts as they fall due and it will not be unable to pay its debts as they fall due in consequence of any obligation or transaction contemplated in the Receivables Purchase Agreement.

Very truly yours

On behalf of
MERITOR HEAVY VEHICLE SYSTEMS CAMERI S.P.A.
By:
Name:
Title:

EX-10.B

RECEIVABLES PURCHASE AGREEMENT

dated 2 February 2012

between

MERITOR HEAVY VEHICLE BRAKING SYSTEMS (UK)
LIMITED
as Seller

and

VIKING ASSET PURCHASER No 7 IC
an incorporated cell of Viking Global Finance ICC
as Purchaser

and

CITICORP TRUSTEE COMPANY LIMITED
as Programme Trustee

Table of Contents

1.	DEFINITIONS AND CONSTRUCTION	1
2.	PURCHASE AND SALE	9
3.	CONDITIONS PRECEDENT TO INITIAL PURCHASE	10
4.	PAYMENTS TO THE PURCHASER, ETC.	11
5.	REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS	11
6.	REMEDIES FOR UNTRUE REPRESENTATION, ETC.	14
7.	FURTHER ASSURANCE	15
8.	NOTICES	15
9.	ASSIGNMENT AND SUPPLEMENTS	16
10.	AMENDMENTS AND MODIFICATIONS	16
11.	RIGHTS CUMULATIVE, WAIVERS	16
12.	APPORTIONMENT	17
13.	PARTIAL INVALIDITY	17
14.	CONFIDENTIALITY	17
15.	NO OBLIGATIONS OR LIABILITIES	18
16.	CHANGE OF PROGRAMME TRUSTEE	18
17.	NO LIABILITY AND NO PETITION	19
18.	LIMITED RECOURSE	19
19.	GOVERNING LAW AND JURISDICTION	19
20.	TERMINATION	20
SCHEDULE 1 Eligibility Criteria
SCHEDULE 2 Conclusion of purchase – offer and acceptance, purchase price and perfection
SCHEDULE 3 Representations, warranties and undertakings
SCHEDULE 4 Form of solvency certificate

This receivables purchase agreement (the “Agreement”) is made on 2 February 2012 between:
(1)	MERITOR HEAVY VEHICLE BRAKING SYSTEMS (UK) LIMITED a company incorporated under the laws of England (Commercial register of England and Wales, reg. no. 3640941) having its registered office at Grange Road, Cwmbran, NP44 3XU, United Kingdom (the “Seller”);
(2)	VIKING ASSET PURCHASER NO 7 IC (registration no. 92607), an incorporated cell of VIKING GLOBAL FINANCE ICC, an incorporated cell company incorporated under the laws of Jersey having its registered office at Ogier House, The Esplanade, St Helier, Jersey JE4 9WG, Channel Islands (the “Purchaser”); and
(3)	CITICORP TRUSTEE COMPANY LIMITED, acting through its office at 14th Floor, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB (the “Programme Trustee” which expression shall include such person and all other persons for the time being acting as the security trustee or trustees pursuant to the Master Security Trust Deed).
1.	DEFINITIONS AND CONSTRUCTION
1.1	Definitions
	In this Agreement the following terms have the following meanings:
	“Acceptance” means an acceptance issued by the Purchaser to the Seller through the PrimeRevenue System or in any other form acceptable to the Accounts Administrator in response to an Offer.
	“Accounts” means bank accounts number [REDACTED] (giro 5845-2426) with Nordea Bank AB (publ), and all such other accounts as may from time to time be in addition thereto or substituted therefore in accordance with the relevant Transaction Documents (including but not limited to all and any Operating Account).
	“Accounts Administrator” means Structured Finance Servicer A/S acting through its office at Copenhagen and any person appointed as accounts administrator in respect of inter alia the Transaction under the Master Accounts Administration Agreement.
	“Accounts Pledge Agreement” means the pledge agreement(s) over the Accounts entered into or to be entered into by or on behalf of the Purchaser and the Programme Trustee.
	“Aggregate Euro Outstanding Amount” means, at any time, the aggregate of the Euro Outstanding Amount of all of the Purchased Receivables in relation to the Purchaser relating to the Transaction at that time.
	“Aggregate Outstanding Amount” means, at any time, the aggregate of the Outstanding Amount of allthe Purchased Receivables at that time.
	“Available Facility” means, in respect of the Purchaser and in relation to the Transaction, on any day, the lesser of; (a) the Total Commitments in relation to the Purchaser; and (b) the Borrowing Base in relation to the Purchaser, less the Face Amount of outstanding Notes, Overdraft Advances and Loans in relation to the Purchaser. For the purpose of calculating the Available Facility on any day, any Notes, Loans or Overdraft Advances due to be repaid on such day shall be deemed to have been repaid.
	“Banks” means the financial institutions listed as banks in Part 1 of Schedule 1 of the relevant Liquidity Facility Agreement.
	"Borrowing Base" means, in respect of the Purchaser, on any day, the aggregate of: (a) Aggregate Euro Outstanding Amount; (b) any Collections received or payable in relation to the Transaction, in each case either by the Seller or the Accounts Administrator which have not been remitted or paid to the Purchaser on any relevant Purchased Receivable and that have not been utilised either to purchase Receivables under this Agreement or to repay the Notes; (c) an amount equal to any insufficiency in available funds necessary for the Purchaser to pay the Face Amount of the Notes in relation to the Purchaser and all amounts ranking pari passu with or senior to such Notes including those arising as the result of any difference between the spot and forward rates under any currency hedging agreement entered into by the Purchaser in accordance with the Master Accounts Administration Agreement; and (d) accrued legal and other fees, costs and expenses incurred by the Purchaser in connection with the Transaction Documents.

2(33)

“Business Day” means a day on which banks are open in Copenhagen, Stockholm, Jersey and London, for the transaction of business of the nature required by the Transaction Documents.

“Calculation Date” means the Purchase Date provided that if such day is not a Business Day it shall be the next Business Day following such day.

“CMSAs” means Volvo Group Belgium CMSA, Renault Trucks CMSA, and any other Customer Managed Service Agreement entered into between a Permitted Obligor and PrimeRevenue, and “CMSA” means any of them.

“Collections” means the aggregate of all amounts paid by the relevant obligors in respect of any and all Purchased Receivables relating to the Purchaser plus any amounts payable to the Purchaser by the Seller but not yet paid to the Purchaser following settlement of the final amount of any claim under any of the warranties, covenants and indemnities contained in this Agreement.

“Commitment” means: (a) in relation to a Bank which is a Bank on the date of the relevant Liquidity Facility Agreement, the amount set opposite its name in Schedule 1 of the relevant Liquidity Facility Agreement and the amount of any other Bank’s Commitment acquired by it under the relevant Liquidity Facility Agreement; and (b) in relation to a Bank which becomes a Bank after the date of the relevant Liquidity Facility Agreement, the amount of any other Bank’s Commitment acquired by it under the relevant Liquidity Facility Agreement, to the extent not cancelled, reduced or transferred under the relevant Liquidity Facility Agreement.

“CP Programme” means the EUR 2,000,000,000 multi-currency asset-backed commercial paper programme for the issue of commercial paper notes established by the Issuer.

“Defaulted Receivable” means a Purchased Receivable in respect of which there is a Permitted Obligor Default.

“Delinquent Receivable” means, at any time, a Receivable in respect of which all or any part of the Outstanding Amount is not paid on its due date.

“Eligibility Criteria” means the eligibility criteria in respect of the Purchased Receivables set outin Schedule 1 of this Agreement.

“EURIBOR” means: (a) the rate per annum which appears on Page EURIBOR01 on the Reuters Screen; or (b) if no such rate appears, the arithmetic mean (rounded upward to four decimal places) of the rates quoted by the Reference Banks to leading banks in the European interbank market, at or about 11.00 a.m. Copenhagen time on the applicable Calculation Date for the offering of euro deposits for the relevant period. If the EURIBOR01 page is replaced or service ceases to be available, the Accounts Administrator may specify another page or service displaying the appropriate rate after consultation with the Purchaser and the Seller.

“euro” or “EUR” ormeans the single currency of any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

3(33)

“Euro Outstanding Amount” means, in relation to any Purchased Receivable, the Outstanding Amount of such Purchased Receivable converted into euro at the Foreign Exchange Rate in respect of such Purchased Receivable.

“Face Amount” means the face amount in respect of the Notes or the Receivables, as the case may be.

“FI Agreement” means the financial institution agreement dated 12 June 2006 and entered into between the Purchaser and PrimeRevenue.

“Financial Indebtedness” means (i) moneys borrowed, (ii) finance or capital leases, (iii) receivables sold or discounted (other than on a non-recourse basis), (iv) other transactions having the commercial effect of a borrowing, (v) the marked to market value of derivative transactions entered into in connection with protection against or benefit from fluctuation in any rate or price, (vi) counter-indemnity obligations in respect of guarantees or other instruments issued by a bank or financial institution, and (vii) liabilities under guarantees or indemnities for any of the obligations referred to in items (i) to (vi).

“Foreign Exchange Rate” means for any Purchased Receivable, the rate at which any relevant currency is to be exchanged into euro pursuant to any foreign exchange agreement entered into in respect of such Purchased Receivable on or about the Purchase Date in respect of such Purchased Receivable.

“Funding Costs” means the aggregate interest accrued on (i) the Notes (paid or to be paid) and (ii) any debt incurred by the Purchaser for the purpose of financing the acquisition of the Purchased Receivables (paid or to be paid). For the avoidance of doubt “to be paid” in relation to (i) and (ii) shall mean for the period up and till the date when the relevant debt may be repaid without any penalty, break cost or fee.

“Incorporated Cell” means each incorporated cell of Viking Global Finance ICC.

“Initial L/C Bank” means Nordea Bank Danmark A/S under the Standby Letter of Credit Agreement.

“Issuer” means Viking Asset Securitisation Limited, a company incorporated in Jersey with limited liability, having its registered office at Ogier House, the Esplanade, St Helier, Jersey JE4 9WG, Channel Islands.

“Issuer Security Trust Deed” means the issuer security trust deed dated 1 March 2000 between the Issuer and the Programme Trustee as amended and restated by a deed dated 18 July 2003 between the Issuer and the Programme Trustee.

“L/C Bank” means Nordea Bank AB (publ) under the Standby Letter of Credit Agreement.

“Liquidity Facility” means the liquidity facility under the relevant Liquidity Facility Agreement.

“Liquidity Facility Agreement” means each liquidity facility agreement entered into in relation to inter alia the Transaction between the Purchaser, Nordea Bank Danmark A/S as Agent and the Banks, including the liquidity facility agreement dated 12 June, 2006 between the Purchaser, Nordea Bank Danmark A/S as Agent and the Banks.

“Loan” means the aggregate of the principal amount of each borrowing by the Purchaser under the relevant Liquidity Facility Agreement or the principal amount outstanding of that borrowing attributable to the Transaction.

4(33)

 

“Margin” shall be as set out in the fee letter entered into between thePurchaser and the Seller on or about the date hereof.

“Master Account Administrator” means Nordea Bank Danmark A/S as Master Account Administrator under the Master Accounts Administration Agreement.

“Master Accounts Administration Agreement” means the accounts administration agreement dated 12 June, 2006 between inter alia Nordea Bank Danmark A/S, Nordea Bank AB (publ), the Accounts Administrator and the Programme Trustee inter alia in relation to the Transaction.

“Master Overdraft Facility Agreement” means the overdraft facility agreement dated 12 June, 2006 between inter alia the Purchaser and the Overdraft Bank in relation inter alia to the Transaction.

“Master Security Trust Deed” means the security trust deed dated 12 June, 2006 between the Purchaser and the Programme Trustee inter alia in relation to the Transaction, as supplemented by a supplemental security trust deed.

“Moody’s” means Moody’s Investors Service Limited and includes any successor to its rating business.

“Non-Defaulted Receivables” means Purchased Receivables in relation to the Purchaser for which there has not been any default in payment from the relevant Permitted Obligors.

“Notes” means commercial paper notes issued by Viking Asset Securitisation Limited in relation to this Transaction on behalf of the Purchaser and includes the commercial paper notes represented by a Note in global form.

“Offer” means an irrevocable offer from the Seller to the Purchaser for the sale of Receivables and given by the Seller to the Purchaser through the PrimeRevenue System or in any other form acceptable to the Accounts Administrator and “to Offer” and “Offered” shall have the corresponding meaning.

“Operating Account” means bank accounts number 42781300116 with Nordea Bank AB (publ), and all such other accounts as may from time to time be in addition thereto or substituted therefore in accordance with the relevant Transaction Documents

“Outstanding Amount” means at any time in respect of any Receivable or Purchased Receivable, the total amount due and owing by the relevant Permitted Obligor at that time in respect of the relevant Receivable or Purchased Receivable. For the avoidance of doubt, the Outstanding Amount for any Purchased Receivable shall not be reduced by virtue of any set off or counterclaim which reduces the amount recoverable in respect of that Purchased Receivable.

“Overdraft Advance” means, save as otherwise provided herein, an advance (as from time to time reduced by repayment) made or to be made by the Overdraft Bank under Clause 4 of the Master Overdraft Facility Agreement and attributable to the Transaction.

“Overdraft Bank” means Nordea Bank AB (publ) or such other financial institution as may be appointed in relation to the Purchaser under the Master Overdraft Facility Agreement.

“Overdraft Facility” means the overdraft facility relating inter alia to the Transaction and made to the Purchaser under the Master Overdraft Facility Agreement.

“Permitted Currency” means EUR.

5(33)

“Permitted Obligors” means Renault Trucks SAS, Volvo Group Belgium NV and any other company within the Volvo group that has entered into a Customer Managed Service Agreement (in all material respects corresponding to the CMSAs) with PrimeRevenue and that has been approved in writing by the Accounts Administrator and the Purchaser.

“Permitted Obligor Default” means, at any time, when a Permitted Obligor is unable to pay its debts as they fall due or against whom any administration, insolvency, bankruptcy or liquidation or similar procedures have been instituted.

“PrimeRevenue” means PrimeRevenue, Inc. a company incorporated under the laws of the state of Delaware having its registered office at 1349 West Peachtree St., Suite 900, Atlanta, GA, USA.

“PrimeRevenue System” means the system for the sale and transfer of receivables as more particularly described in the CMSAs, the Supplier Agreement and the FI Agreement.

“Programme Trustee” means CitiCorp Trustee Company Limited or such other person so designated in accordance with the Issuer Security Trust Deed.

“Purchase Date” means each date upon which a sale and purchase of Receivables is concluded pursuant to Clause 2.2 of this Agreement.

“Purchase Price” means the aggregate Receivables Purchase Price paid or to be paid by the Purchaser to the Seller in respect of Purchased Receivables on a particular Settlement Date.

“Purchased Receivables” means all Receivables which are the subject of any sale and purchase (or any purported sale and purchase) pursuant to Clause 2.2 of this Agreement and any other Receivables in respect of which the Receivables Purchase Price has been paid or will be paid by the Purchaser to the Seller.

“Purchaser” means Viking Asset Purchaser No. 7 IC.

“Purchaser Supplemental Agreement” means the supplemental deed dated on or about 12 June 2006 entered into by, inter alia, the Purchaser, the Issuer, Nordea Bank Danmark A/S, Nordea Bank AB (publ), Nordea Bank Norge ASA, Nordea Bank Finland plc and the Programme Trustee.

“Rating Agencies” means Moody’s and S&P and “Rating Agency” means any one of them.

“Receivable” means any receivable (inclusive of VAT applied thereon) owed to the Seller in the ordinary course of business by any Permitted Obligor including all rights of the Seller pertaining to such Receivable (defined as “Payment Obligation” in the respective CMSA) in accordance with the respective CMSA, including but not limited to all the Seller’s rights under Section 18(f) of the respective CMSA.

“Receivables Purchase Price” shall be calculated as follows: CA - (CA x IR / (360/DM)); where
DM= actual number of days to and including the relevant maturity date
CA = the Certified Amount (as defined in the Supplier Agreement) of the Receivable
IR = means in respect of EUR the applicable interest rate being EURIBOR three (3) months plus the Margin.

“Records” means: (a) all files, correspondence, notes of dealing and other documents, books, books of account, registers, records and other information; and (b) all computer tapes, discs, computer programmes, data processing software and related property rights, owned by or under the control and disposition of the Seller, in each case only to the extent relating to the Purchased Receivables.

6(33)

“Reference Banks” means a minimum of four of the banks (including, in each case, Nordea Bank AB (publ)) which quote rates for the offering of deposits in EUR to leading banks in the European interbank market for the relevant period immediately prior to the time set out in the definition of EURIBOR on the applicable Calculation Date.
“Renault TrucksCMSA” means the Customer Managed Service Agreement entered or to be entered into between Renault Trucks SAS and PrimeRevenue, pursuant to which the Seller is defined as a Supplier.
“S&P” or “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor company of such rating business.
“Security Interest” means any mortgage, charge, floating charge, assignment or assignation by way of security, lien, pledge, hypothecation, right of set-off (or analogous right), retention of title, flawed asset or blocked-deposit arrangement or any other encumbrance or security interest or security arrangement whatsoever created or arising under any relevant law or any agreement or arrangement having the effect of or performing the economic function of conferring security howsoever created or arising.
“Seller” means Meritor Heavy Vehicle Braking Systems (UK) Limited in its capacity as seller under this Agreement and not in any other capacity.
“Seller Potential Suspension Event” means any event which, with the giving of notice and/or lapse of time and/or making of any determination and/or any certification, would constitute a Seller Suspension Event.
“Seller Suspension Event” means any of the following events:
(a)	Failure to pay: The Seller fails to pay any amount due under this Agreement or the Supplier Agreement on the due date or on demand in writing, if so payable, unless payment is made within three (3) Business Days of such due date or demand.
(b)	Failure to perform other obligations: The Seller fails to observe or perform any of its other material obligations under this Agreement or the Supplier Agreement or under any undertaking or arrangement entered into in connection therewith and, in the case of a failure capable of being remedied, within ten (10) days after receipt by the Seller of a request in writing from the Purchaser (acting through the Accounts Administrator), that the same be remedied, it has not been remedied to the Purchaser’s (acting through the Accounts Administrator) reasonable satisfaction.
(c)	Representations, warranties or statements proving to be incorrect: Any representation, warranty or statement which is made (or deemed or acknowledged to have been made) by the Seller under this Agreement or the Supplier Agreement or which is contained in any certificate, statement or notice provided by the Seller under or in connection with this Agreement or the Supplier Agreement proves to be incorrect to an extent which, in the reasonable opinion of the Accounts Administrator, is likely to affect the ability of the Seller to perform its obligations under any of the Transaction Documents to which it is a party in a manner which is material and adverse in the context of the Transaction or which is likely materially and adversely to affect the collectability of the Purchased Receivables or any of them.
(d)	Provisions becoming unenforceable: Any provision of any of the Transaction Documents to which the Seller is a party is or becomes, for any reason, invalid or unenforceable and for so long as such provision remains invalid and unenforceable to an extent which, in the reasonable opinion of the Accounts Administrator, is likely materially and adversely to affect the ability of the Seller (acting in any capacity under any of the Transaction Documents to which it is a party) to perform its obligations under any of the Transaction Documents to which it is a party in a manner which is material and adverse in the context of the Transaction or which is likely to materially and adversely affect the collectability of the Purchased Receivables or any of them.

7(33)

(e)	Suspension or expropriation of business operations: The Seller changes, suspends or threatens to suspend a substantial part of the present business operations which it now conducts directly or indirectly, or any governmental authority expropriates all or a substantial part of its assets and the result of any of the foregoing is, in the reasonable opinion of the Accounts Administrator, likely to affect the ability of the Seller to observe or perform its obligations under any of the Transaction Documents to which it is a party in a manner which is material and adverse in the context of the Transaction or which is likely to materially and adversely affect the collectability of the Purchased Receivables or any of them.
(f)	Enforcement by creditors: Any form of execution or arrest is levied or enforced upon or sued out against all and any of the Seller’s assets and is not discharged within twenty (20) days of being levied, or any Security Interest which may for the time being affect any material part of its assets becomes enforceable and steps are lawfully taken by the creditor to enforce the same. No Seller Suspension Event will occur under this paragraph (f) if the aggregate amount of the claim enforced is less than EUR 1,000,000 or the equivalent in any other currency.
(g)	Arrangement with Creditors: The Seller proposes or makes any arrangement or composition with, or any assignment or trust for the benefit of, its creditors generally involving (not necessarily exclusively) indebtedness which the Seller would not otherwise be able to repay or service in accordance with the terms thereof.
(h)	Winding-up:A petition is presented (unless contested in good faith and discharged or stayed within twenty (20) days) or a meeting is convened for the purpose of considering a resolution or other steps are taken for the winding up of the Seller (other than for the purposes of and followed by a solvent reconstruction previously approved in writing by the Accounts Administrator and the Programme Trustee (such approval not to be unreasonably withheld or delayed), unless during or following such reconstruction the Seller becomes or is declared to be insolvent).
“Settlement Date” means, in respect of a Purchased Receivable, the first (1st) Business Day after the relevant Calculation Date.
“Standby Letter of Credit Agreement” means the standby letter of credit agreement dated 28 May, 2001 between Viking Asset Purchaser No. 2 Limited and Nordea Bank Danmark A/S (formerly Unibank A/S) as amended and restated by an agreement dated 18 July 2003 between Viking Asset Purchaser No. 2 Limited, Viking Asset Purchaser No. 3 Limited, the Initial L/C Bank and other affiliates of the Initial L/C Bank.
“Supplier Agreement” means the supplier agreement entered or to be entered into between the Seller and PrimeRevenue, pursuant to which each of the Permitted Obligors is defined as a Customer.
“SwedishLegal Opinion” means the legal opinion dated on or about the date hereof issued by Advokatfirman Vinge KB, legal advisers to inter alia Nordea Bank Danmark A/S, Nordea Bank AB (publ), the Programme Trustee, the Issuer and the Purchaser as to Swedish law.
“Swedish Pledge Agreement” means the pledge agreement regarding the Purchased Receivables dated on or about the date hereof between the Purchaser and the Programme Trustee.
“Tax” or “tax” includes all forms of tax, duty or charge on gross or net income, profits or gains, distributions, receipts, sales, use, occupation, franchise, value added, personal property and instruments, and any levy, impost, duty, charge or withholding of any nature whatsoever chargeable by any authority, whether in Sweden, Jersey or elsewhere, together with all penalties, charges and interest relating to any of the foregoing.

8(33)

“Termination Date” means the earliest date on which a Termination Event occurs.
“Termination Event” means the occurrence of any of the following:
(a)		one (1) year having elapsed from the date of this Agreement;
(b)		a failure by the Seller to perform any of its material obligations within ten (10) Business Days after notification in writing of such failure to perform;
(c)		in relation to the Seller, any corporate action being taken or becoming pending, any other steps being taken or any legal proceedings being commenced or threatened or becoming pending for (i) the bankruptcy, liquidation, dissolution, administration or reorganisation of the Seller (other than for the purposes of and followed by a solvent reconstruction previously approved in writing by the Purchaser and the Programme Trustee (such approval not to be unreasonably withheld or delayed) unless during or following such reconstruction the Seller becomes or is declared to be insolvent) and which is not being contested in good faith or which is not dismissed or withdrawn within thirty (30) days, (ii) the Seller to enter into any composition or arrangement with its creditors generally, or (iii) the appointment of a receiver, administrative receiver, trustee or similar officer in respect of the Seller or substantially all of the property, undertaking or assets of the Seller;
(d)		a refusal of the Seller to pay any increased costs incurred by any Bank and/or L/C Bank in connection with the Transaction, such increased costs being outside the control of the Purchaser and the Bank and/or L/C Bank, as the case may be;
(e)		any CMSA and/or the Supplier Agreement being amended to the detriment of the Purchaser or if any CMSA, the FI Agreement and/or the Supplier Agreement is terminated for what ever reason or if any third party right in any CMSA or the Supplier Agreement in relation to which the Purchaser is a beneficiary becomes invalid or unenforceable;
(f)		the occurrence of any termination event under the CP Programme;
(g)		a Seller Suspension Event is outstanding for sixty (60) days or longer, subject to written notice being given by the Accounts Administrator on behalf of the Purchaser; and
(h)		cross default; (i) any Financial Indebtedness of the Seller is not paid when due nor within any originally applicable grace period, or is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described); (ii) any commitment for any Financial Indebtedness of the Seller is cancelled or suspended by a creditor as a result of an event of default (however described); (iii) Any creditor of the Seller becomes entitled to declare any Financial Indebtedness of the Seller due and payable prior to its specified maturity as a result of an event of default (however described); (iv) no Termination Event will occur under this paragraph (h) if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (i) to (iii) above is less than EUR 1,000,000 or the equivalent in any other currency.
	“Total Commitments” means the part of the aggregate of the Commitments as reserved by the Accounts Administrator to be used in relation to the Transaction, being EUR twenty five million (25,000,000) at the date of this Agreement. The Total Commitments may (to the extent possible) be increased as agreed between the Seller, the Purchaser and the Accounts Administrator from time to time.
	“Transaction” means the transaction relating to this Agreement envisaged by the Transaction Documents whereby the Seller may sell certain Receivables to the Purchaser and the Purchaser may purchase such Receivables, funded by the issue of Notes under the CP Programme and all related arrangements provided for in the Transaction Documents.
	“Transaction Documents” means the documents relating to the Transaction, including this Agreement, the FI Agreement, the CMSAs and the Supplier Agreement, each Liquidity Facility Agreement, the Master Overdraft Facility Agreement and the Master Security Trust Deed, and any agreement or document executed pursuant to or in connection with any of these documents.
	“Volvo Group BelgiumCMSA” means the Customer Managed Service Agreement entered or to be entered into between Volvo Group Belgium NV and PrimeRevenue, pursuant to which the Seller is defined as a Supplier.

9(33)

1.2	Construction
1.2.1	References in this Agreement to any person shall include references to his successors, transferees and assignees and any person deriving title under or through him.
1.2.2	References in this Agreement to any statutory provision shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under any such re-enactment.
1.2.3	References in this Agreement to any agreement or other document shall be deemed also to refer to such agreement or document as amended, varied, supplemented, replaced or novated from time to time.
2.	PURCHASE AND SALE
2.1	Purchase of Receivables Subject to the terms and conditions of this Agreement, each Purchaser agrees that it may (at its sole discretion) elect to purchase Receivables from the Seller on a regular basis from the date hereof until the Termination Date.
2.2	Conclusion of purchase - offer and acceptance Sale and purchase of Receivables will in each case be concluded as more particularly set out in Part 1 of Schedule 2.
2.3	Purchase Price The Purchase Price shall be paid and calculated as more particularly set out in Part 2 of Schedule 2.
2.4	VAT Any VAT refund collected from the VAT authorities by the Seller following credit losses on a Purchased Receivable shall be for the benefit of the Purchaser and be paid by the Seller to the Purchaser. The Seller undertakes to take any action permissible, and required by the Purchaser, to assist in collecting any such VAT refund for the benefit of the Purchaser, including but not limited to acquiring the Purchased Receivable at a price equal to any VAT refund available for collection and any amounts recoverable from the Permitted Obligor (if any) and to pay such purchase price upon and to the extent of receipt of the VAT refund and any amounts recovered from the Permitted Obligor.
2.5	Perfection Each sale and purchase pursuant to Clause 2.2 above shall be perfected through the actions more particularly described in Part 3 of Schedule 2.
2.6	Seller’s receipt of payment in respect of Purchased Receivables In the event that, notwithstanding the notification referred to in Clause 2.5, the Seller receives from the Permitted Obligors any payment in respect of Purchased Receivables, the Seller shall pay to the Purchaser promptly following such a receipt, all such Collections received by it in respect of the Purchased Receivables to the account as notified by the Accounts Administrator pursuant to Clause 4.2.

 

10(33)

3.	CONDITIONS PRECEDENT TO INITIAL PURCHASE
3.1	The obligations of the Purchaser under or pursuant to this Agreement are subject to the satisfaction (as determined in the reasonable opinion of the Accounts Administrator) of the following conditions precedent:
	(a)	each of the Transaction Documents has been validly executed by all parties thereto;
	(b)	all actions that pursuant to Part 3 of Schedule 2 have been completed;
	(c)	Purchaser and the Programme Trustee have received a solvency certificate from the Seller substantially in the form of Schedule 4; and
	(d)	Purchaser and the Programme Trustee have received in form and substance satisfactory to each of them legal opinion(s) issued by reputable law firm(s) approved by each of them, as to the laws of the jurisdiction(s) each of them deem relevant.

11(33)

4.	PAYMENTS TO THE PURCHASER, ETC.
4.1	All amounts to be paid to the Purchaser under this Agreement shall be paid when due to the relevant account and at the times specified below.
4.2	Any amounts payable to the Purchaser under this Agreement shall be remitted to the accounts notified in writing to the Seller by the Accounts Administrator no later than the time indicated in such notice.
4.3	All payments made by the Seller under this Agreement shall be made without set-off, counterclaim or withholding. If the Seller is compelled by law or otherwise to make any deduction, the Seller shall pay any additional amount as will result in the net amount received by the Purchaser being equal to the full amount which would have been received had there been no deduction or withholding.
5.	REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
5.1	Warranties relating to the Seller
	As at each Purchase Date, the Seller shall make the representations and warranties to the Purchaser and the Programme Trustee in the terms set out in Part 1 of Schedule 3 in relation to the Seller and with reference to the facts and circumstances subsisting on such Purchase Date.
5.2	Warranties relating to Purchased Receivables
	As at each Purchase Date, the Seller shall make the representations and warranties severally to the Purchaser and the Programme Trustee in the terms set out in Part 2 of Schedule 3 with respect to the Receivables to be sold by it and purchased by the Purchaser on such Purchase Date with reference to the facts and circumstances subsisting on such Purchase Date.
5.3	Obligation to notify in case of incorrect representations, etc.
	The Seller shall forthwith notify the Purchaser if any of the representations and warranties referred to in this Clause 5 were incorrect when made promptly upon becoming aware thereof.
5.4	Covenants and undertakings
	The Seller covenants and undertakes with and to the Purchaser and the Programme Trustee as follows:
	(a)	Indemnity against claims: Neither the Purchaser nor the Programme Trustee shall have any obligation or liability with respect to any Purchased Receivables nor will the Purchaser or the Programme Trustee be required to perform any of the obligations of the Seller (or any of its agents) under any such contracts save, in each case, as specifically provided in this Agreement. The Seller will on demand indemnify and keep indemnified the Purchaser, the Accounts Administrator and the Programme Trustee against any cost, claim, loss, expense, liability or damages (including legal costs and out-of-pocket expenses) (save to the extent that such cost, claim, loss, expense, liability or damage shall not have arisen as a consequence of any breach of this Agreement by, or as a result of the wilful misconduct or negligence of the Purchaser and/or as a result of any wilful default or negligence of the Programme Trustee) reasonably and properly incurred or suffered by the Purchaser and/or the Programme Trustee as a consequence of any claim or counterclaim or action of whatsoever nature made or taken by a Permitted Obligor or any third party arising out of or in connection with any Purchased Receivables or any services which are the subject of such Purchased Receivables;
	(b)	Indemnity against breach: the Seller will on demand indemnify and keep indemnified the Purchaser, the Accounts Administrator and the Programme Trustee against any cost, claim, loss, expense, liability or damages (including legal costs and out-of-pocket expenses) reasonably and properly incurred or suffered by the Purchaser or the Programme Trustee as a consequence of any breach by the Seller of this Agreement or any other Transaction Document (to which the Seller is a party) (save to the extent that such cost, claim, loss, expense, liability or damages shall not have arisen as a consequence of any breach of this Agreement by, or as a result of the wilful misconduct or negligence of the Purchaser or as a result of any wilful default or negligence of the Programme Trustee);

12(33)

(c)	Indemnity on termination: the Seller shall on demand indemnify the Purchaser against all Funding Costs incurred by the Purchaser as a result of such termination, which, for the avoidance of doubt, include Funding Costs which are incurred on or after the Termination Date;
(d)	No set-off: the Seller shall not take any action which would cause any set-off, counterclaim, credit, discount, allowance, right of retention or compensation, right to make any deduction, equity or any other justification for the non-payment of any of the amounts payable under any Purchased Receivable (whether by the relevant Permitted Obligor or otherwise) without the prior written consent of the Purchaser (acting through the Accounts Administrator);
(e)	Authorisations, approvals, licences, consents etc.: the Seller shall obtain, comply with the terms of, and maintain in full force and effect, all authorisations, approvals, licences and consents required in or by the laws and regulations of England and any other applicable law to enable it to perform its obligations under this Agreement;
(f)	No other dealing: the Seller will not dispose, sell, transfer or assign, create any interest in (including Security Interest), or deal with any of the Purchased Receivables in any manner whatsoever or purport to do so except as permitted by this Agreement;
(g)	No other action: the Seller will not knowingly take any action which may prejudice the validity or recoverability of any Purchased Receivable or which may otherwise adversely affect the benefit which the Purchaser may derive from such Purchased Receivable pursuant to this Agreement;
(h)	Tax payments: the Seller will pay or procure the payment (as required by law) of all federal, state, local, and foreign sales, use, excise, utility, gross receipts, VAT or other taxes imposed by any authority in relation to the Purchased Receivables, the FI Agreements or this Agreement and shall make all relevant returns in respect of VAT in relation to the Purchased Receivables;
(i)	Notice of default: the Seller shall promptly upon becoming aware of the same inform the Accounts Administrator and the Programme Trustee of any occurrence which might adversely affect its ability to perform its obligations under this Agreement and from time to time, if so requested by the Accounts Administrator, confirm to the Accounts Administrator and the Programme Trustee in writing that, save as otherwise stated in such confirmation, no such occurrence has occurred and is continuing;
(j)	Delivery of reports: the Seller shall deliver to the Accounts Administrator and the Programme Trustee, sufficient copies of each of the following documents, in each case at the time of issue thereof:
	(i)	every report, circular, notice or like document issued by the Seller to its creditors generally; and

13(33)

	(ii)	(if the Accounts Administrator so requires) a certificate from its CFO stating that the Seller as at the date of its latest consolidated audited accounts was in compliance with the covenants and undertakings in this Agreement (or if it was not in compliance indicating the extent of the breach).
(k)	Provision of further information: subject to applicable legislation, the Seller shall provide the Accounts Administrator and the Programme Trustee with such financial and other information concerning the Seller and its affairs as the Accounts Administrator or the Programme Trustee may from time to time reasonably require and which is available to the Seller.
(l)	Notice of misrepresentation: the Seller shall promptly upon becoming aware of the same notify the Accounts Administrator and the Programme Trustee of any misrepresentation by the Seller under or in connection with any Transaction Document to which it is a party.

14(33)

5.5	Representations and Warranties relating to the Purchaser
5.5.1	As at each Purchase Date and each Calculation Date, the Purchaser shall make the representations and warranties to the Seller in the terms set out in Part 3 of Schedule 3 with reference to the facts and circumstances subsisting on each such Purchase Date and Calculation Date.
5.5.2	The Seller shall have the option to terminate this Agreement in respect of the Purchaser upon any material breach of the representations and warranties referred to in this Clause 5.5 by the Purchaser, provided such material breach have a material adverse effect on the Seller.
6.	REMEDIES FOR UNTRUE REPRESENTATION, ETC.
6.1	If at any time after the Settlement Date in respect of any Purchased Receivable it shall become apparent that any of the representations and warranties set out in Part 2 of Schedule 3 relating to or otherwise affecting such Purchased Receivable was untrue or incorrect when made by reference to the facts and circumstances subsisting at the date on which such representations and warranties were given, the Seller shall, within five (5) Business Days of receipt of written notice thereof from the Purchaser (or the Accounts Administrator) or the Programme Trustee, remedy or procure the remedy of the matter giving rise thereto if such matter is capable of remedy and, if such matter is not capable of remedy or is not remedied within the said period of five (5) Business Days, then following the expiry of such five (5) Business Day period the Seller shall pay to the Purchaser an amount equal to the difference (if any) between (i) the amount due for payment in respect of such Purchased Receivable on such due date and (ii) the amount of Collections received in respect of such Purchased Receivable on or before such due date, to the extent such difference was caused by, or has any connection with, the breach of the relevant representation and warranty. If the Seller shall otherwise become aware of such untrue or incorrect representation and warranty other than by written notification from the Purchaser (or the Accounts Administrator) or the Programme Trustee, it shall immediately notify the Accounts Administrator and the Programme Trustee of such untrue or incorrect representation and warranty. In the event the Transaction is terminated prior to the date on which an amount under this Clause 6 would have been payable by the Seller, the Seller shall pay such amount following receipt of the said written notice from the Purchaser (or the Accounts Administrator) or the Programme Trustee on or before the date the Transaction is terminated or promptly thereafter.
6.2	Notwithstanding Clause 6.1, if at any time after the Purchase Date but prior to collection of payments in full in relation to any Purchased Receivables it shall become apparent that the representation and warranty set out in paragraph (d) of Part 2 of Schedule 3 relating to or otherwise affecting such Purchased Receivable was untrue or incorrect when made by reference to the facts and circumstances subsisting at the date on which such representations and warranties were given, then the Seller shall repurchase such Purchased Receivable for a price equal to the sum of (i) the Purchase Price for such Purchased Receivable (taking into account any Collections received in respect of such Purchased Receivable prior to the repurchase), and (ii) the Funding Costs attributable to such Purchased Receivable, and see to it that notice of such repurchase is given to the relevant Permitted Obligor. Any Collections received by the Purchaser in respect of such repurchased Purchased Receivables after the Seller has paid the price for such repurchase shall be paid to the Seller promptly upon receipt.

15(33)

7.	FURTHER ASSURANCE
7.1	The Seller hereby undertakes not to take any steps or cause any steps to be taken in respect of the Purchased Receivables or the services supplied thereunder.
7.2	For the avoidance of doubt, this undertaking shall apply (without limitation) to the following:
	(a)	any termination, waiver, amendment or variation in relation to any Purchased Receivables;
	(b)	any assignment or sale of any Purchased Receivables; and
	(c)	any disposal of its right, title, interest, benefit or power in any Purchased Receivables.
7.3	In addition to any records or information available through the PrimeRevenue System, the Seller undertakes at the request of the Purchaser or the Programme Trustee through the Accounts Administrator to produce and deliver Records concerning the Purchased Receivables as the Purchaser, the Programme Trustee or the Accounts Administrator may reasonably request for enforcement or accounting purposes.
7.4	In the event that such Records as referred to in Clause 7.3 are not produced reasonably promptly, the Seller shall permit any persons nominated by the Purchaser, the Accounts Administrator or the Programme Trustee at any time during normal business hours upon five (5) Business Days written notice to enter any premises owned or occupied by it or its agents where the Records and other information concerning Purchased Receivables are kept to have access (subject to appropriate supervision provided by the Seller and provided that the Seller shall not unreasonably delay the provision of such supervision) to, examine and make copies of all Records relating to the Purchased Receivables and the performance by the Seller of its obligations hereunder. Such access shall include the right to have access to and use (subject to appropriate supervision provided by the Seller and provided that the Seller shall not unreasonably delay the provision of such supervision) all computer passwords necessary to gain access to the relevant computer records.
7.5	The parties hereto acknowledge that the Purchaser has pledged or will pledge all its title to and interest in the Purchased Receivables to the Programme Trustee, on behalf of certain creditors. All the parties hereby undertake to use, upon notice from the Programme Trustee, all reasonable efforts and take all actions as the Programme Trustee may reasonably require in order for such pledge to be perfected.
8.	NOTICES
	Any notices to be given pursuant to this Agreement to any of the parties hereto shall be sufficiently served or given if delivered by hand or sent by prepaid first-class post or by facsimile transmission and shall be deemed to be given (in case of notice delivered by hand or post) when delivered or (in the case of any notice by facsimile transmission) upon receipt in legible form and shall be delivered or sent:

The Purchaser:	Ogier House
	The Esplanade, St Helier
	Jersey JE4 9WG
	Channel Islands
with a copy to the

16(33)

Accounts Administrator:	Structured Finance Servicer A/S
	Christiansbro, 3 Strandgade,
	DK-1401 Copenhagen K,
	Denmark
	Attention: Structured Finance
	Servicer A/S
	Facsimile No: +45 3333 2697
The Seller:	Meritor Heavy Vehicle Braking Systems (UK)
	Limited
	Grange Road
	Cwmbran
	NP44 3XU
	United Kingdom
	Attention: Andrew Watkins
	Facsimile No: +1633 834304

	or to such other address or facsimile number or for the attention of such other person as may from time to time be notified by any party to each of the other parties by written notice in accordance with the provisions of this Clause 8.
9.	ASSIGNMENT AND SUPPLEMENTS
	This Agreement may be assigned by the Purchaser to the Programme Trustee.
10.	AMENDMENTS AND MODIFICATIONS
	No amendment, modification, variation or waiver of this Agreement shall be effective unless it is in writing and signed by (or by some person duly authorised by) each of the parties hereto. No amendment of this Agreement shall be made unless the Purchaser has received written confirmation from the Rating Agencies that the ratings then assigned to the Notes are not adversely affected thereby.
11.	RIGHTS CUMULATIVE, WAIVERS
	The respective rights of each party under or pursuant to this Agreement are cumulative, and are in addition to their respective rights under the general law. The respective rights of each party under or pursuant to this Agreement shall not be capable of being waived or varied otherwise than by an express waiver or variation in writing; and, in particular, any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right.

17(33)

12.	APPORTIONMENT
	The parties agree that if a Permitted Obligor, owing a payment obligation which is due in respect of one or more Purchased Receivables, submits an incomplete or inaccurate information regarding the Receivable to the PrimeRevenue System or otherwise makes a general payment to the Purchaser (or the Seller) and makes no apportionment between them as to which Purchased Receivables such payment relates, then such payment shall be treated as though the Permitted Obligor had appropriated the same as payment of Purchased Receivables in relation to the Purchaser in order of maturity (starting with the Purchased Receivables in relation to the Purchaser having the earliest maturity date).
13.	PARTIAL INVALIDITY
	If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability in such jurisdiction shall not render invalid, illegal or unenforceable such provisions in any other jurisdiction or affect the remaining provisions of this Agreement. Such invalid, illegal or unenforceable provision shall be replaced by the parties with a provision which comes as close as reasonably possible to the commercial intentions of the invalid, illegal or unenforceable provision.
14.	CONFIDENTIALITY
	None of the parties shall disclose to any person, firm or company whatsoever, or make use of (other than in accordance with the Transaction Documents) any information relating to the business, finances or other matters of a confidential nature of any other party to this Agreement of which it may in the course of its duties under this Agreement or otherwise have become possessed (including, without limitation and without prejudice to the generality of the foregoing any information concerning the identity or creditworthiness of any Permitted Obligor (all and any of the foregoing being “Confidential Information”)) and all the parties shall use all reasonable endeavours to prevent any such disclosure or use provided however that the provisions of this Clause 14 shall not apply:
	(a)	Permitted parties: to the disclosure of any information to any person who is a party to any of the Transaction Documents (to the extent such Transaction Documents relates to the Transaction as contemplated by this Agreement);
	(b)	Known information: to the disclosure of any information already known to the recipient otherwise than as a result of entering into any of the Transaction Documents (to the extent such Transaction Documents relates to the Transaction as contemplated by this Agreement);
	(c)	Public knowledge: to the disclosure of any information which is or becomes public knowledge otherwise than as a result of the conduct of the recipient;
	(d)	Legal requirement: to the extent that the recipient is required to disclose the same pursuant to any law or order of any court of competent jurisdiction or pursuant to any direction or requirement (whether or not having the force of law) of any central bank or any governmental or other regulatory or taxation authority in any part of the world (including, without limitation, any official bank examiners or regulators);
	(e)	Rights and duties: to the extent that the recipient needs to disclose the same for the exercise, protection or enforcement of any of its rights under any of the Transaction Documents or, for the purpose of discharging, in such manner as it reasonably thinks fit, its duties or obligations under or in connection with the Transaction Documents in each case to such persons as require to be informed of such information for such purposes (including for these purposes, without limitation, disclosure to any rating agency);

18(33)

	(f)	Professional advisers: to the disclosure of any information to professional advisers or auditors of the relevant party in relation to, and for the purpose of, advising such party or complying with their duties as auditors;
	(g)	Financial institutions: to the disclosure in general terms of any information to financial institutions servicing the relevant party in relation to finances, insurance, pension schemes and other financial services;
	(h)	Written consent: to the disclosure of any information with the written consent of all of the parties hereto;
	(i)	Rating Agencies: to the disclosure of any information which either of the Rating Agencies may require to be disclosed to it;
	(j)	The Issuer, Viking Global Finance ICC and Viking Asset Securitisation Holdings Limited: to the disclosure of information to the Issuer, Viking Global Finance ICC and Viking Asset Securitisation Holding Limited (or to anyone acting on behalf of such a person) or to any person providing finance to the Issuer, Viking Global Finance ICC and Viking Asset Securitisation Holding Limited (or to anyone acting on behalf of such a person);
	(k)	Group companies: to the disclosure of information to companies belonging to the same group of companies as the Seller; and
	(l)	Permitted Obligors: to the disclosure of information to Permitted Obligors necessary for the performance of the Seller’s obligations hereunder, or reasonably incidental thereto.
15.	NO OBLIGATIONS OR LIABILITIES
15.1	The Purchaser acknowledges and agrees that (i) the Programme Trustee is a party to this Agreement for the purpose only of taking the benefit of this Agreement and for the better enforcement of its rights under the Master Security Trust Deed (as supplemented by the Purchaser Supplemental Agreement) and (ii) the Programme Trustee shall assume no obligations or liabilities to the Seller or the Purchaser or to any other person by virtue of the provisions of this Agreement except as otherwise determined by the Transaction Documents to which the Programme Trustee is a party.
15.2	The Seller acknowledges and agrees that (i) the Programme Trustee is a party to this Agreement for the purpose only of taking the benefit of this Agreement in the manner and as set out in Clause 15.1 and (ii) the Programme Trustee shall assume no obligations or liabilities to the Seller or to any other person by virtue of this Agreement.
16.	CHANGE OF PROGRAMME TRUSTEE
	If there is any change in the identity of the Programme Trustee or appointment of an additional trustee in accordance with the provisions of the Master Security Trust Deed (as supplemented by the Purchaser Supplemental Agreement), the Seller and the Accounts Administrator shall execute such documents and take such action as the new trustee, the retiring Programme Trustee or, as the case may be, the existing Programme Trustee may properly require for the purpose of vesting in the new trustee the rights of the outgoing Programme Trustee under this Agreement.

19(33)

17.	NO LIABILITY AND NO PETITION
17.1	No recourse under any obligation, covenant, or agreement of any party contained in this Agreement shall be had against any shareholder, officer or director of the relevant party as such, by the enforcement of any assessment or by any proceeding, by virtue of any statute or otherwise, it being expressly agreed and understood that this Agreement is a corporate obligation of the relevant party and no personal liability shall attach to or be incurred by the shareholders, officers, agents or directors of the relevant party as such, or any of them, under or by reason of any of the obligations, covenants or agreements of such relevant party contained in this Agreement, or implied therefrom, and that any and all personal liability for breaches by such party of any of such obligations, covenants or agreements, either at law or by statute or constitution, of every shareholder, officer, agent or director is hereby expressly waived by the other parties as a condition of and consideration for the execution of this Agreement.
17.2	Without prejudice to the rights of the Programme Trustee to enforce the security created pursuant to the Issuer Security Trust Deed, the Master Security Trust Deed (as supplemented by the Purchaser Supplemental Agreement), the relevant Swedish Pledge Agreement and the relevant Accounts Pledge Agreement, each of the Programme Trustee and the Seller hereby agrees that it shall not, until the expiry of one (1) year and one (1) day after the payment of all sums outstanding and owing under the latest maturing note issued under the CP Programme take any corporate action or other steps or legal proceedings for the winding-up, dissolution or re-organisation or for the appointment of a receiver, administrator, administrative receiver, trustee, liquidator, sequestrator or similar officer of the Issuer or the Purchaser or of any or all of the Issuer’s or the Purchaser’s revenues and assets.
18.	LIMITED RECOURSE
	In the event that the security created by the Master Security Trust Deed (as supplemented by the Purchaser Supplemental Agreement), the relevant Swedish Pledge Agreement and the relevant Accounts Pledge Agreement is enforced and the proceeds of such enforcement are insufficient, after payment of all other claims ranking in priority to the claims hereunder or thereunder, to repay in full all principal or pay in full all interest and other amounts whatsoever hereunder or thereunder, then until such amounts have been paid in full the Seller shall have no further claim against the Purchaser (or the Programme Trustee) in respect of any such unpaid amounts and any resultant claim shall have expired.
19.	GOVERNING LAW AND JURISDICTION
19.1	This Agreement and any non-contractual obligations arising out of or in connection with it are governed by the substantive laws of Sweden.
19.2	Any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by arbitration administered by the Arbitration Institute of the Stockholm Chamber of Commerce (the SCC Institute).
	The Rules for Expedited Arbitrations of the Arbitration Institute of the Stockholm Chamber of Commerce shall apply, unless the SCC Institute, taking into account the complexity of the case, the amount in dispute and other circumstances, determines, in its discretion, that the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce shall apply. In the latter case, the SCC Institute shall also decide whether the arbitral tribunal shall be composed of one or three arbitrators.
	The place of arbitration shall be Stockholm, Sweden.
	The language to be used in the arbitral proceedings shall be English.

20(33)

	The Parties undertake and agree that all arbitral proceedings conducted with reference to this arbitration clause will be kept strictly confidential. This confidentiality undertaking shall cover all information disclosed in the course of such arbitral proceedings, as well as any decision or award that is made or declared during the proceedings. Information covered by this confidentiality undertaking may not, in any form, be disclosed to a third party without the written consent of the other Party. The aforesaid shall however be subject to the exemptions set out in Clause 14 (a) through (l).
	In case this Agreement or any part of it is assigned or transferred to a third party, such third party shall automatically be bound by the provisions of this arbitration clause.
20.	TERMINATION
	This Agreement shall remain in full force and effect until the Termination Date, provided, however, that the rights and remedies of a party with respect to any breach of any warranty made by another party in or pursuant to this Agreement, the provisions of Clause 14, Clause 17 and Clause 18 and the indemnification and payment provisions of this Agreement shall be continuing and shall survive any termination of this Agreement.

____________________

This Agreement has been entered into on the date stated at the beginning of this Agreement.

For and on behalf of
MERITOR HEAVY VEHICLE BRAKING SYSTEMS (UK) LIMITED
By: /s/ Mike Lei

For and on behalf of
VIKING ASSET PURCHASER No 7 IC

By: /s/ Cheryl Heslop

For and on behalf of
CITICORP TRUSTEE COMPANY LIMITED

By: /s/ David Mares

21(33)

SCHEDULE 1

ELIGIBILITY CRITERIA

Each Receivable must satisfy the following Eligibility Criteria on the relevant Purchase Date:

1.	The terms of the Receivable provide for payment in full by the Permitted Obligor not later than 120 days after the date of creation of such Receivable or as otherwise approved by the Accounts Administrator and the Rating Agencies.
2.	The Receivable is neither a Defaulted Receivable nor a Delinquent Receivable.
3.	The Receivable is denominated and payable in a Permitted Currency and is fully identified as such in the PrimeRevenue System and in the records of the Seller.
4.	An invoice relating to the Receivable has been issued and has been approved by the relevant Permitted Obligor.
5.	The Receivable is segregated and identifiable and can be validly transferred without the consent of the Permitted Obligor by the Seller to the Purchaser.
6.	The Receivable is not subject to set-off, counterclaim (other than Credit Memo Amounts as such term is defined in the respective CMSA) or withholding taxes other than as generally provided for under Swedish law (as applicable) and is a legally enforceable obligation of the Permitted Obligor.
7.	The Receivable is owed by a Permitted Obligor who as at the Purchase Date to the knowledge of the Seller is not bankrupt or in liquidation, has not filed for a suspension of payments or petitioned for the opening of procedures for a compulsory composition of debts or is subject to similar or analogous proceedings or as otherwise approved by the Accounts Administrator and the Rating Agencies.
8.	The governing law of the Receivable is Swedish law.
9.	The Receivable is a non-interest bearing (other than default or penalty interest) trade receivable arising in the ordinary course of the Seller’s business, the Outstanding Amount of which remains as debt.

22(33)

10.	The delivery of the goods and/or services giving rise to the Receivable has been made and invoiced, has not been cancelled or rejected by the Permitted Obligor and the invoice provides for full payment by the Permitted Obligor.
11.	The Receivable has been created in accordance with all applicable laws and all consents, approvals and authorisations required of or to be maintained by the Seller have been obtained and are in full force and effect and are not subject to any restriction that would be material to the origination, enforceability or assignability of such Receivable.
12.	The Receivable has not been, in whole or in part, pledged, mortgaged, charged, assigned, discounted, subrogated or attached or transferred in any way and is otherwise free and clear of any liens or encumbrances exercisable against the Seller by any party.
13.	The Receivable constitutes the legal, valid, binding and enforceable obligation of the Permitted Obligor to pay on the due date the Outstanding Amount of the Receivable as at the Purchase Date and is not subject to any defence, dispute, lien, right of rescission, set-off or counterclaim (other than Credit Memo Amounts as such term is defined in the respective CMSA) or enforcement order.
14.	The Receivable has been owned exclusively by the Seller since its origination and until the relevant Purchase Date.
15.	Collections in respect of the Receivable can be identified as being attributable to the Receivable as soon as practically possible following their receipt and in any event not later than three (3) Business Days following their receipt.

23(33)

SCHEDULE 2

CONCLUSION OF PURCHASE – OFFER AND ACCEPTANCE, PURCHASE PRICE AND PERFECTION

Part 1

Conclusion of Purchase – offer and acceptance

1.	The Seller may from time to time make an Offer to the Purchaser and the Purchaser may from time to time (but shall, for the avoidance of doubt, have no obligation to) accept such Offer by an Acceptance.
2.	Any Acceptance by a Purchaser shall always be subject to all of the following conditions being satisfied or waived:
	(a)	no Termination Event having occurred and being continuing;
	(b)	any Acceptance must be made before the Termination Date and no Acceptance which is communicated or generated on or after the Termination Date shall be valid;
	(c)	no Seller Potential Suspension Event or Seller Suspension Event having occurred and being continuing;
	(d)	(i) any new Notes (if such Notes are denominated in a currency other than the Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement) to be issued in relation to the Purchaser shall not exceed the then Available Facility in relation to the Purchaser, (ii) immediately after such purchase the Face Amount of all outstanding Notes in relation to the Purchaser (if such Notes are denominated in a currency other than the Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement) shall not exceed the Total Commitments, and (iii) the Purchaser shall have available to it either the Liquidity Facility or the Overdraft Facility in an amount equal to the Total Commitments, in each case as determined by the Accounts Administrator;
	(e)	immediately following such purchase, the outstanding amount of Non-Defaulted Receivables shall be equal to or greater than the amount of proceeds from outstanding Notes in relation to the Purchaser (if such Notes are denominated in a currency other than the Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement);
	(f)	immediately following such purchase, the Total Commitments shall be equal to or greater than the sum of (i) the Face Amount of outstanding Notes in relation to the Purchaser (if such Notes are denominated in a currency other than a Permitted Currency, the Face Amount of such Notes converted at the relevant exchange rate under the hedge arrangement), (ii) the outstanding drawings under the relevant Liquidity Facility in relation to the Transaction, (iii) the outstanding drawings under the relevant Overdraft Facility in relation to the Transaction and (iv) interest accrued or to accrue in respect of outstanding drawings under the relevant Liquidity Facility and the relevant Overdraft Facility; and
	(g)	the relevant Receivable shall meet all of the Eligibility Criteria.

24(33)

Part 2

Purchase Price

1.	The Purchase Price, which shall be paid (debited from the Purchaser’s account) by or on behalf of the Purchaser to the Seller on the relevant Settlement Date. Payment shall be made (subject to deductions, including for the settlement of fees, as agreed by the Seller in any Transaction Document) to bank account number as set out below or as otherwise agreed from time to time between the Accounts Administrator, on behalf of the Purchaser, and the Seller and notified to PrimeRevenue.
	Bank: Bank of America NA Account No: [REDACTED] IBAN: [REDACTED] Swift address: BOFAGB22
2.	The Receivables Purchase Price shall be calculated by the PrimeRevenue System on behalf of the Accounts Administrator on the Calculation Date and PrimeRevenue shall inform the Seller and the Purchaser of the Receivables Purchase Price through the PrimeRevenue System on such Calculation Date.

25(33)

Part 3

Perfection

1. Prior to the transfer and acquisition of any Receivables the Purchaser and the Seller shall send a notice letter to (each of) the Permitted Obligor(s) that is/are the debtor(s) of the relevant Receivables, with the following content:

To: [PERMITTED OBLIGOR]
RE: NOTICE OF SALE AND TRANSFER OF RECEIVABLES AND RIGHTS UNDER A CUSTOMER MANAGED SERVICES AGREEMENT
A.	Pursuant to a Receivables Purchase Agreement (the “RPA”) between Meritor Heavy Braking Systems (UK) Limited as seller (the “Seller”) and Viking Asset Purchaser No 7 IC, an incorporated cell of Viking Global Finance ICC, an incorporated cell company incorporated under the laws of Jersey (the “Purchaser”), dated [•] 2012, the Seller has agreed to sell and the Purchaser has agreed to purchase receivables (the “Receivables”) owed by [name of Permitted Obligor] (“Obligor”) to the Seller (in its capacity as supplier to Obligor).
B.	Offer and acceptance will be made through a system (the “System”) provided by PrimeRevenue, Inc (“PrimeRevenue”). Obligor has on [•] entered into a Customer Managed Services Agreement (the “CMSA”) with PrimeRevenue regarding the use of the System. Through the CMSA (Section 18(f)) Obligor has made certain undertakings, covenants, representations and warranties to the Seller (the “Seller CMSA Rights”) as regards inter alia the Receivables and the use of the System.
C.	In connection with a sale of Receivable(s) under the RPA through the System, the System will generate a notice of transfer (the “Transfer Notice”) that will be sent to Obligor. A specimen of such Transfer Notice is attached hereto as Appendix 1.
D.	In accordance with and without limiting, expanding or otherwise amending the terms and conditions of the CMSA, this is to notify Obligor that each Transfer Notice shall have the following meanings;
		(i)	the Receivable(s) defined therein (as clarified in Appendix 1) (the “Purchased Receivables”) has/have been sold and transferred to the Purchaser identified in the Transfer Notice (see Appendix 1);
		(ii)	consequently, all payments attributable to the Purchased Receivables shall be made to the Purchaser in its capacity as owner of such receivables (as set forth in the CMSA and in particular Section 2(b)(v) thereof);
		(iii)	all payments to the Purchaser referred to in this notice shall (until otherwise instructed) be made to the bank account numbers set out below with Nordea Bank AB (publ) or Nordea Bank Finland Plc, London Branch;

26(33)

In respect of payments in EUR by Permitted Obligors domiciled in Sweden: Bank: Nordea Bank AB (publ) Address: Hamngatan 10, 105 71 Stockholm, Sweden Swift: NDEASESS Account No.: [REDACTED] In respect of payments in EUR by Permitted Obligors domiciled in any other jurisdiction than Sweden: Bank: Nordea Bank AB (publ) Address: Hamngatan 10, 105 71 Stockholm, Sweden Swift: NDEASESS Account No.: [REDACTED] IBAN: [REDACTED]

(iv)

all Seller CMSA Rights attributable to the Purchased Receivables are pursuant to the RPA included in and an integral part of the Purchased Receivables and thus also sold and transferred to the Purchaser (the “Transferred Seller CMSA Rights”).

Place/date:____________________

MERITOR HEAVY VEHICLEVIKING ASSET PURCHASER No 7 IC

BRAKING SYSTEMS (UK)

LIMITED

We hereby confirm;
(i)	receipt of the above notice;
(ii)	that we will act in accordance therewith;
(iii)	our agreement as regards the meaning of the Transfer Notice; and
(iv)	our obligations vis-à-vis the Purchaser as regards the Transferred Seller CMSA Rights.
	_______________________
Place/date:____________________ [PERMITTED OBLIGOR]

27(33)

and the Seller shall procure that each such Permitted Obligor acknowledge and counter sign the notice letter as anticipated therein.
	2.	The Seller shall procure that simultaneously (or as soon thereafter as is technically possible) with the issuance of the Acceptance, a Transfer Notice (as defined in the above notice) is issued by the PrimeRevenue System to the relevant Permitted Obligor.
	3.	The Seller shall procure that at such time(s) as the Accounts Administrator determines all other actions the Accounts Administrator in its reasonable opinion deems necessary or desirable in order for the transfer and acquisition of the Receivables to be perfected in all respects, is/are taken.

28(33)

SCHEDULE 3

REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

Part 1

Representations and Warranties relating to the Seller

The following representations and warranties are given by the Seller:

(a)	Status: The Seller is duly incorporated, with limited liability, under the laws of England.
(b)	Powers and authorisations: The Seller has the requisite power and authority under its articles of association and otherwise, and all necessary corporate authority has been obtained and action taken, for it to sign and deliver, and perform the transactions contemplated in this Agreement.
(c)	Legal validity: The obligations of the Seller under this Agreement constitute, or when executed by it will (subject to any reservations of law expressed in the Swedish Legal Opinion) constitute, the legal, valid and binding obligations of the Seller and are enforceable against it.
(d)	Non-violation: The execution, signing and delivery of this Agreement and the performance of any of the transactions contemplated herein do not and will not contravene or breach or constitute a default under or conflict or be inconsistent with or cause to be exceeded any limitation on it or the powers of its officers imposed by or contained in:
	(i)	any law, statute or regulation to which it or any of its assets or revenues is subject or any order, judgment, injunction, decree, resolution, or award of any court or any administrative authority or organisation which applies to it or any of its assets or revenues; or
	(ii)	any agreement or any other document or obligation to which it is a party or by which any of its assets or revenues is bound or affected if this may have a material adverse effect on the rights of the Purchaser, the Accounts Administrator or the Programme Trustee; or
	(iii)	any document which contains or establishes or regulates its constitution.
(e)	Consents: The Seller has duly obtained, made or taken each authorisation, approval, consent, registration, recording, filing, deliveries or notarisation which it is required to obtain (or make) in connection with the entry into, or performance of the transactions contemplated in, the Transaction Documents to which it is a party.
(f)	Litigation: No litigation, arbitration or administrative proceeding or claim of or before any court, tribunal or governmental body which, if adversely determined, would materially and adversely affect the ability of the Seller to observe or perform its obligations under the Transaction Documents to which it is a party, is presently in progress or pending.
(g)	Accounts: The latest audited financial statements of the Seller then available have been prepared on a basis consistently applied in accordance with accounting principles generally accepted in England and give a true and fair view of the results of its operations for that year and the state of its affairs at that date.
(h)	Solvency: The Seller is able to pay its debts as they fall due and it will not be unable to pay its debts as they fall due in consequence of any obligation or transaction contemplated in this Agreement.

29(33)

(i)	Material adverse change to the Seller: There has been no change in the financial condition or operations of the Seller since the last audited financial statement so as to have a material and adverse effect on the ability of the Seller to perform its obligations under the Transaction Documents to which it is a party.
(j)	No misleading information: Any factual information in writing provided by the Seller in connection with the entry into any of the transactions envisaged by the Transaction Documents was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it was stated.
(k)	Insolvency and other procedures: No corporate action has been taken or is pending, no other steps have been taken and no legal proceedings have been commenced (in each case by the Seller or, so far as the Seller is aware, by any other person) for (i) the bankruptcy, liquidation, administration or reorganisation of the Seller, or (ii) the Seller to enter into any composition or arrangement with its creditors generally, or (iii) the appointment of a receiver, supervisor, trustee or similar officer in respect of the Seller or substantially all of its property, undertaking or assets.
(l)	Pari passu ranking: Each of the payment obligations of the Seller under this Agreement will rank at least pari passu with its unsecured payment obligations to all its other unsecured creditors save those whose claims are preferred solely by any bankruptcy, insolvency or similar laws of general application.
(m)	No default: No event has occurred which constitutes, or which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute, a contravention of, or default under, any such law, statute, decree, rule, regulation, order, judgment, injunction, resolution, determination or award or any agreement, document or instrument by which the Seller or any of its assets is bound, being a contravention or default which would have a material adverse effect on the business, assets or condition (financial or other) of the Purchaser or materially and adversely affect its ability to observe or perform its obligations under this Agreement.
(n)	COMI: For the purposes of EC Regulation No. 1346/2000 on insolvency proceedings (the (“Regulation”) the Seller has and it will have its centre of main interests (as that term is used in Article 3(1) of the Regulation) in England and Wales and it has no “establishment” (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.

30(33)

Part 2

Representations and Warranties relating to the Purchased Receivables

The following representations and warranties are given by the Seller:

(a)	Particulars correct: The particulars of the Purchased Receivables set out in the Offers and in the PrimeRevenue System (to the extent submitted by the Seller) are true and accurate in all material respects, as of the date thereof.
(b)	No default: The Seller is not aware of any default, breach or violation in respect of any Purchased Receivable (other than any default relating to lateness in payment) or of any event, which with the giving of notice and/or the expiration of any applicable grace period, would constitute such a default, breach or violation, such default, breach or violation being of a nature that (i) is material and (ii) affects the value of the Purchased Receivable or its collectability.
(c)	Obligation performed: The Seller has performed all its obligations under or in connection with the Purchased Receivable unless any such obligation is not material and does not affect the value of the Purchased Receivable or its collectability.
(d)	Compliance with Eligibility Criteria: Each Purchased Receivable complies, as at the relevant Purchase Date, in all respects with the Eligibility Criteria.
(e)	Maintenance of records: In addition to any records relating to the Purchased Receivables maintained in the PrimeRevenue System, the Seller has maintained records relating to each Purchased Receivable which are accurate and complete in all material respects, are sufficient to enable such Purchased Receivables to be identified and enforced against the relevant Permitted Obligor and such records are held by or to the order of the Seller.
(f)	Accounting: In addition to any records relating to the Purchased Receivables maintained in the PrimeRevenue System, the Seller shall maintain an accounting system which separates the Purchased Receivables and accounting for collections related thereto from other receivables or assets of the Seller so that the Accounts Administrator at any time can verify the Outstanding Amount of the Purchased Receivables and the Seller’s compliance with this Agreement.
(g)	No waiver: The Seller has not waived any of its rights in relation to the Purchased Receivables.
(h)	Perfection: The Seller has performed all its actions as set out in Clause 2.5 of this Agreement as of the Purchase Date.

31(33)

Part 3

Representations and Warranties relating to the Purchaser

The following representations and warranties are given by the Purchaser:

(a)	Status: The Purchaser is an incorporated cell of a company or company (as applicable) duly incorporated and validly existing under the laws of its jurisdiction of incorporation.
(b)	Powers and authorisations: The Purchaser has the requisite power and authority and all necessary corporate and constitutional authority has been obtained and action taken, for it to sign and deliver, and perform the transactions contemplated in, this Agreement.
(c)	Legal validity: The obligations of the Purchaser under this Agreement constitute, or when executed by it will constitute, the legal, valid and binding obligations of the Purchaser and, subject to any laws or other procedures affecting generally the enforcement of creditors’ rights and principles of equity are enforceable against it.
(d)	Non-violation: The execution, signing and delivery of this Agreement and the performance of any of the transactions contemplated in this Agreement do not and will not contravene or breach or constitute a default under or conflict or be inconsistent with or cause to be exceeded any limitation on it or the powers of its officers imposed by or contained in:
	(i)	any law, statute, decree, rule or regulation to which it or any of its assets or revenues is subject or of any order, judgment, injunction, decree, resolution, determination, or award of any court or any judicial, administrative, or governmental authority or organisation which applies to it or any of its assets or revenues; or
	(ii)	any agreement, indenture, mortgage, deed of trust, bond, or any other document, instrument or obligation to which it is a party or by which any of its assets or revenues is bound or affected; or
	(iii)	any document which contains or establishes or regulates its constitution.
(e)	Consents: The Purchaser has duly obtained, made or taken each authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation which it is required to obtain (or make) in connection with the entry into, or performance of the transactions contemplated in, this Agreement. The Purchaser is not aware of any circumstances which indicate that any such authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation which has been obtained (or made) is likely to be terminated, revoked or not renewed. No authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation and no payment of any duty or tax and no other action whatsoever which has not been duly and unconditionally obtained, made or taken is necessary or desirable to ensure the validity, legality, enforceability or priority of the liabilities and obligations of the Purchaser under this Agreement.

32(33)

(f)	No default: No event has occurred which constitutes, or which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute, a contravention of, or default under, any such law, statute, decree, rule, regulation, order, judgment, injunction, resolution, determination or award or any agreement, document or instrument by which the Purchaser or any of its assets is bound, being a contravention or default which would have a material adverse effect on the business, assets or condition (financial or other) of the Purchaser or materially and adversely affect its ability to observe or perform its obligations under this Agreement.
(g)	Litigation: No litigation, arbitration or administrative proceeding or claim of or before any court, tribunal or governmental body which, if adversely determined, would materially and adversely affect the ability of the Purchaser to observe or perform its obligations under this Agreement, is presently in progress or pending or, to the knowledge of the Purchaser, threatened against the Purchaser or any of its assets.
(h)	Insolvency procedures: No corporate action has been taken or is pending, no other steps have been taken and no legal proceedings have been commenced (in each case by the Purchaser or, so far as the Purchaser is aware, by any other person) or (so far as the Purchaser is aware) are threatened or are pending for (i) the winding-up, liquidation, dissolution, administration or reorganisation of the Purchaser (other than for the purposes of and followed by a solvent reconstruction previously notified to the Seller); or (ii) the Purchaser to enter into any composition or arrangement with its creditors generally; or (iii) the appointment of a receiver, administrative receiver, trustee or similar officer in respect of the Purchaser or substantially all of its property, undertaking or assets.

33(33)

SCHEDULE 4

FORM OF SOLVENCY CERTIFICATE

To:	Citicorp Trustee Company Limited	Date:
From:	Meritor Heavy Vehicle Braking Systems (UK) Limited

Dear Sirs

Reference is made to the Receivables Purchase Agreement entered into between Meritor Heavy Vehicle Braking Systems (UK) Limited, Viking Asset Purchaser No 7 IC and Citicorp Trustee Company Limited dated [•] 2012.

Meritor Heavy Vehicle Braking Systems (UK) Limited hereby certifies as of the date hereof that it is able to pay its debts as they fall due and it will not be unable to pay its debts as they fall due in consequence of any obligation or transaction contemplated in the Receivables Purchase Agreement.

Very truly yours

On behalf of
Meritor Heavy Vehicle Braking Systems (UK) LimitedBy:
Name:
Title:

EX-12

Exhibit 12

Meritor, Inc.
Computation of Ratio of Earnings to Fixed Charges
Six Months Ended March 31, 2012
(Amounts in millions, except the ratio)

Earnings Available for Fixed Charges (A):

Pre-tax income from continuing operations	$	61
Less:
Equity in earnings of affiliates, net of dividends		(21	)
		40
Add: fixed charges included in earnings:
Interest expense		48
Interest element of rentals		3
Total		51
Total earnings available for fixed charges:	$	91
Fixed Charges (B):
Fixed charges included in earnings	$	51
Capitalized interest		—
Total fixed charges	$	51
Ratio of Earnings to Fixed Charges		1.78

(A)	“Earnings” are defined as pre-tax income from continuing operations, adjusted for undistributed earnings of less than majority owned subsidiaries and fixed charges excluding capitalized interest.
(B)	“Fixed charges” are defined as interest on borrowings (whether expensed or capitalized), the portion of rental expense applicable to interest, and amortization of debt issuance costs.

EX-23

CONSENT OF EXPERT

     We consent to the references to our firm and to our reports with respect to estimation of the liability for pending and reasonably estimable unasserted future asbestos-related claims, which are included in Note 20 of the Notes to Consolidated Financial Statements in the Quarterly Report on Form 10-Q of Meritor, Inc. (“Meritor”) for the fiscal quarter ended April 1, 2012 and to the incorporation by reference of such reference into the following Registration Statements of Meritor:

Form	Registration No.	Purpose
S-3	333-179405	Registration of common stock, preferred stock,
		warrants and guarantees of debt securities
S-8	333-171713	Amended 2010 Long-Term Incentive Plan
S-8	333-164333	2010 Long-Term Incentive Plan
S-3	333-163233	Registration of common stock, preferred stock,
		warrants and guarantees of debt securities
S-8	333-141186	2007 Long-Term Incentive Plan
S-3	333-143615	Registration of convertible notes,
		guarantees and common stock
S-3	333-134409	Registration of convertible notes,
		guarantees and common stock
S-8	333-107913	Meritor, Inc. Savings Plan
S-8	333-123103	Meritor, Inc. Hourly Employees
		Savings Plan
S-3	333-58760	Registration of debt securities
S-8	333-49610	1997 Long-Term Incentives Plan
S-3	333-43118	Meritor, Inc. 1988 Stock Benefit
		Plan
S-3	333-43116	Meritor, Inc. 1998 Stock Benefit
		Plan
S-3	333-43112	Meritor, Inc. Employee Stock
		Benefit Plan
S-8	333-42012	Employee Stock Benefit Plan, 1988 Stock
		Benefit Plan and 1998 Employee Stock Benefit
		Plan

BATES WHITE LLC
By:	/s/ Charles E. Bates
	Charles E. Bates, Ph.D.
	President and CEO

Date: May 2, 2012

EX-31.A

Exhibit 31-a

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
RULE 13a-14(a) UNDER THE EXCHANGE ACT

          I, Charles G. McClure, Jr., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Meritor, Inc. for the quarterly period ended April 1, 2012;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2012

/s/ Charles G. McClure, Jr.

Charles G. McClure, Jr., Chairman of the Board,

Chief Executive Officer and President

EX-31.B

Exhibit 31-b

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
RULE 13a-14(a) UNDER THE EXCHANGE ACT

          I, Jeffrey A. Craig, certify that::

1.	I have reviewed this Quarterly Report on Form 10-Q of Meritor, Inc. for the quarterly period ended April 1, 2012;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2012

/s/ Jeffrey A. Craig

Jeffrey A. Craig

Senior Vice President and Chief Financial Officer

EX-32.A

Exhibit 32-a

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE
13a-14(b) UNDER THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

     As required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, I, Charles G. McClure, Jr., hereby certify that:

1.	The Quarterly Report of Meritor, Inc. on Form 10-Q for the quarterly period ended April 1, 2012 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/ Charles G. McClure, Jr.

Charles G. McClure, Jr.

Chairman of the Board, Chief

Executive Officer and President

Date: May 4, 2012

EX-32.B

Exhibit 32-b

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
RULE 13a-14(b) UNDER THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

     As required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, I, Jeffrey A. Craig, hereby certify that:

1.	The Quarterly Report of Meritor, Inc. on Form 10-Q for the quarterly period ended April 1, 2012 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

Senior Vice President and Chief

Financial Officer

Date: May 4, 2012

XML

Other Current Liabilities (Tables)

6 Months Ended

Mar. 31, 2012

Other Current Liabilities Disclosure [Abstract]

Schedule Of Other Current Liabilities [Table Text Block]

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

	March 31,		September 30,
	2012		2011
Compensation and benefits	$	132	$	148
Income taxes		26		23
Taxes other than income taxes		38		38
Accrued interest		5		5
Product warranties		17		19
Restructuring (see Note 6)		10		16
Asbestos-related liabilities (see Note 20)		19		18
Deferred credit		18		—
Other		78		61
Other current liabilities	$	343	$	328

Schedule of Product Warranty Liability [Table Text Block]

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

	Six Months Ended
	March 31,
	2012			2011
Total product warranties – beginning of period	$	48		$	54
Accruals for product warranties		10			12
Payments		(7	)		(11	)
Change in estimates and other		(5	)		(2	)
Total product warranties – end of period		46			53
Less: Non-current product warranties (see Note 16)		(29	)		(25	)
Product warranties – current	$	17		$	28

XML

Restructuring Costs (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011	Sep. 30, 2011
Balance		$ 19		$ 19	$ 11
Activity during the period:
Charges to continuing operations	3		5	27	8
Charges to discontinued operations	0			1	7
Charges to discontinued operations for Retained Entities					6
Asset impairments and other		(19)		(20)	(1)
Cash payments - continuing operations				(10)	(7)
Cash payments - discontinued operations				(2)	(1)
Other					1
Total restructuring reserves	15		17	15	17
Less: non-current restructuring reserves	(5)			(5)
Restructuring reserves - current	10			10		16
Employee Severance [Member]
Balance		19		19	11
Activity during the period:
Charges to continuing operations				6	7
Charges to discontinued operations				0
Charges to discontinued operations for Retained Entities					6
Asset impairments and other				(1)	0
Cash payments - continuing operations				(9)	(7)
Cash payments - discontinued operations				(1)	(1)
Other					1
Total restructuring reserves	14		17	14	17
Less: non-current restructuring reserves	(5)			(5)
Restructuring reserves - current	9			9
Impairment In Value Of Asset [Member]
Balance		0		0	0
Activity during the period:
Charges to continuing operations				19	1
Charges to discontinued operations				0
Charges to discontinued operations for Retained Entities					0
Asset impairments and other				(19)	(1)
Cash payments - continuing operations				0	0
Cash payments - discontinued operations				0	0
Other					0
Total restructuring reserves	0		0	0	0
Less: non-current restructuring reserves	0			0
Restructuring reserves - current	0			0
Plant Shutdown and Other [Member]
Balance		0		0	0
Activity during the period:
Charges to continuing operations				2	0
Charges to discontinued operations				1
Charges to discontinued operations for Retained Entities					0
Asset impairments and other				0	0
Cash payments - continuing operations				(1)	0
Cash payments - discontinued operations				(1)	0
Other					0
Total restructuring reserves	1		0	1	0
Less: non-current restructuring reserves	0			0
Restructuring reserves - current	$ 1			$ 1

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Earnings per Share (Details) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Basic average common shares outstanding	96.3	94.3	95.4	93.8
Impact of stock options	0	0.2	0	0.2
Impact of restricted shares and share units	0.9	2.4	1.8	2.9
Diluted average common shares outstanding	97.2	96.9	97.2	96.9

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Long-Term Debt (Details Textuals) (USD $) In Millions, unless otherwise specified		6 Months Ended					6 Months Ended		3 Months Ended	6 Months Ended								3 Months Ended	6 Months Ended
	Mar. 31, 2012	Mar. 31, 2012 Financing Arrangements For Capital Leases [Member]	Mar. 31, 2012 Capital Lease Arrangements [Member]	Mar. 31, 2012 Subsequent Event Revolving Credit Facility [Member]	Jan. 31, 2014 Subsequent Event Revolving Credit Facility [Member]	Dec. 31, 2012 Subsequent Event Revolving Credit Facility [Member]	Mar. 31, 2012 4.625 percent convertible notes due 2026 [Member]	Mar. 31, 2012 4.0 percent convertible notes due 2027 [Member]	Mar. 31, 2012 Revolving Credit Facility [Member]	Mar. 31, 2012 Revolving Credit Facility [Member]	Jan. 31, 2014 Revolving Credit Facility [Member]	Dec. 31, 2011 Revolving Credit Facility [Member]	Sep. 30, 2011 Revolving Credit Facility [Member]	Mar. 31, 2012 Standby Letters Of Credit [Member]	Sep. 30, 2011 Standby Letters Of Credit [Member]	Mar. 31, 2012 Revolving Credit Facility Matures In January 2014 [Member]	Mar. 31, 2012 Revolving Credit Facility Matures In April 2017 [Member]	Mar. 31, 2012 Term Loan [Member]	Mar. 31, 2012 Retirement Of Notes [Member]
Repayments Of Long-Term Debt																			$ 84
Debt Instrument, Convertible, Earliest Date							2016	2019
Line Of Credit Facility, Maximum Borrowing Capacity				429					441	441						14	415	100
Line Of Credit Facility, Expiration Date										January 2014								April 23, 2017
Maximum Limit On The Issuance Of Letters Of Credit									100	100
Letters Of Credit Outstanding, Amount									0	0			0	29	30
Maximum Collateral Test Value									1.0x	1.0x
Required Ratio Of Total Priority Debt To Ebitda Through The Period Ended				2.50 to 1.00	2.00 to 1.00	2.25 to 1.00			2.25 to 1	2.25 to 1	2.00 to 1	2.25 to 1
Actual Ratio Of Total Priority Debt To Ebitda At Period End										0.26x
Value Of Company Assets Collateralized									653	653
Debt Instrument, Description Of Variable Rate Basis		30-day LIBOR plus 575 basis points	564 basis points	425 basis points						LIBOR								425 basis points
Debt Instrument, Basis Spread On Variable Rate									4.25%	4.25%
Line Of Credit Facility, Commitment Fee Description				50 basis points					50	50 basis points
Additional Other Letter Of Credit Outstanding														6	2
Debt Instrument, Interest Rate, Stated Percentage	8.75%						4.625%	4.00%
Description Of Maturity Date Of Debt				The April 2017 maturity date is also subject to the following: if on June 1, 2015, the outstanding principal amount of the company's $250 million bonds due 2015 is greater than $100 million, the maturity date becomes June 10, 2015 and if on November 1, 2015, the outstanding principal amount of the company's $300 million 4.625 percent convertibles notes due 2026 is greater than $100 million and the conversion price of $20.98 is greater than the then current Meritor common stock price, the maturity date becomes November 15, 2015.
Line of Credit Facility, Frequency of Payment and Payment Terms																		5 years
Line Of Credit Facility Periodic Payment Principal During Year One																		5
Line Of Credit Facility Periodic Payment Principal During Remaining Year																		10
Maximum Amount Of Progress Payments For Equipment Under Construction		10
Capital Leases Term			60 months
Capital Lease Obligations, Noncurrent			$ 4
Maximum Collateral Test Values				1.0x

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Restructuring Costs (Details Textuals) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended				6 Months Ended	12 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011	Sep. 30, 2011	Sep. 30, 2010	Mar. 31, 2012 Commercial Truck Segment [Member]	Sep. 30, 2007 Performance Plus Program [Member]	Mar. 31, 2012 Employee Severance [Member]	Dec. 31, 2011 St Priest [Member]	Mar. 31, 2012 St Priest [Member]	Dec. 31, 2011 European Action [Member]	Mar. 31, 2012 European Action [Member]
Restructuring Reserve	$ 15		$ 17	$ 15	$ 17	$ 19	$ 11
Restructuring and Related Cost, Expected Number Of Positions Eliminated									2,800
Restructuring Reserve, Period Expense								24
Cumulative Restructuring Costs Performance Plus Program Discontinued Operations	93			93
Cumulative Employee Severance and Related Cost Under Peformance Plus Program										117
Cumulative Restructuring Costs Performance Plus Program	186			186
Cumulative Restructuring Costs Under Performance Plus Program Related To Commercial Truck Segment	82			82
Cumulative Restructuring Costs Under Performance Plus Program Related To Corporate Locations and Aftermarket and Trailer Segment	11			11
Cumulative Restructuring Cost Asset Impairment Charges Under Performance Plus Program	41			41
Cumulative Restructuring Cost Pension Termination Benefits Under Performance Plus Program	28			28
Total Expected European Action Restructuring Costs														5
Restructuring Costs and Asset Impairment Charges		19		20	1						17
Restructuring Charges	$ 3		$ 5	$ 27	$ 8						$ 1	$ 5	$ 1

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Accumulated Other Comprehensive Loss (AOCL) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Foreign currency translation	$ 119	$ 110
Employee benefit related adjustments	(940)	(942)
Unrealized gains, net	1	3
Accumulated Other Comprehensive Loss	$ (820)	$ (829)

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Business Segment Information (Tables)

6 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

Segment information is summarized as follows (in millions):

	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Eliminations			Total
Three months ended March 31, 2012:
External Sales	$	632	$	269	$	259	$	—		$	1,160
Intersegment Sales		61		20		4		(85	)		—
Total Sales	$	693		289		263	$	(85	)	$	1,160
Three months ended March 31, 2011:
External Sales	$	635	$	289	$	252	$	—		$	1,176
Intersegment Sales		58		17		5		(80	)		—
Total Sales	$	693	$	306	$	257	$	(80	)	$	1,176
	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Eliminations			Total
Six months ended March 31, 2012:
External Sales	$	1,329	$	500	$	490	$	—		$	2,319
Intersegment Sales		115		37		8		(160	)		—
Total Sales	$	1,444	$	537	$	498	$	(160	)	$	2,319
Six months ended March 31, 2011:
External Sales	$	1,166	$	506	$	461	$	—		$	2,133
Intersegment Sales		102		30		7		(139	)		—
Total Sales	$	1,268	$	536	$	468	$	(139	)	$	2,133

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Segment EBITDA:
Commercial Truck	$	49		$	40		$	96		$	73
Industrial		22			18			33			35
Aftermarket & Trailer		28			29			48			45
Segment EBITDA		99			87			177			153
Unallocated legacy and corporate costs (1)		(4	)		(5	)		(3	)		(6	)
Interest expense, net		(23	)		(24	)		(47	)		(51	)
Provision for income taxes		(17	)		(21	)		(37	)		(41	)
Depreciation and amortization		(16	)		(17	)		(33	)		(33	)
Loss on sale of receivables		(3	)		(2	)		(6	)		(3	)
Restructuring costs		(3	)		(5	)		(27	)		(8	)
Other loss		—			(2	)		—			(2	)
Noncontrolling interests		(4	)		(5	)		(8	)		(9	)
Income from continuing operations
attributable to Meritor, Inc.	$	29		$	6		$	16		$	—

(1) Unallocated legacy and corporate costs represent items that are not directly related to our business segments and include pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability matters.

Schedule Of Segment Reporting Information Assets, By Segment [Table Text Block]

				September 30,
Segment Assets:	March 31, 2012			2011
Commercial Truck	$	1,512		$	1,482
Industrial		480			470
Aftermarket & Trailer		526			504
Total segment assets		2,518			2,456
Corporate(1)		334			483
Discontinued operations		—			4
Less: Accounts receivable sold under off-balance
sheet factoring programs(2)		(287	)		(280	)
Total assets	$	2,565		$	2,663

(1)	Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.
(2)	At March 31, 2012 and September 30, 2011 segment assets include $287 million and $280 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.

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Restructuring Costs (Tables)

6 Months Ended

Mar. 31, 2012

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs [Table Text Block]

The changes in restructuring reserves for the six months ended March 31, 2012 and 2011 are as follows (in millions):

	Employee						Plant
	Termination			Asset			Shutdown
	Benefits			Impairment			& Other			Total
Balance at September 30, 2011	$	19		$	—		$	—		$	19
Activity during the period:
Charges to continuing operations		6			19			2			27
Charges to discontinued operations(1)		—			—			1			1
Asset impairments and other		(1	)		(19	)		—			(20	)
Cash payments – continuing operations		(9	)		—			(1	)		(10	)
Cash payments – discontinued operations		(1	)		—			(1	)		(2	)
Total restructuring reserves at March 31, 2012		14			—			1			15
Less: non-current restructuring reserves		(5	)		—			—			(5	)
Restructuring reserves – current, at March 31, 2012	$	9		$	—		$	1		$	10
Balance at September 30, 2010	$	11		$	—		$	—		$	11
Activity during the period:
Charges to continuing operations		7			1			—			8
Charges to discontinued operations(1)		6			—			—			6
Asset impairments		—			(1	)		—			(1	)
Cash payments - continuing operations		(7	)		—			—			(7	)
Cash payments – discontinued operations		(1	)		—			—			(1	)
Other		1			—			—			1
Total restructuring reserves at March 31, 2011	$	17		$	—		$	—		$	17

(1) Charges to discontinued operations are included in income from discontinued operations in the consolidated statement of income.

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Business Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
External Sales	$ 1,160	$ 1,176	$ 2,319	$ 2,133
Intersegment Sales	0	0	0	0
Total Sales	1,160	1,176	2,319	2,133
Commercial Truck [Member]
External Sales	632	635	1,329	1,166
Intersegment Sales	61	58	115	102
Total Sales	693	693	1,444	1,268
Industrial [Member]
External Sales	269	289	500	506
Intersegment Sales	20	17	37	30
Total Sales	289	306	537	536
Aftermarket and Trailer [Member]
External Sales	259	252	490	461
Intersegment Sales	4	5	8	7
Total Sales	263	257	498	468
Intersegment Elimination [Member]
External Sales	0	0	0	0
Intersegment Sales	(85)	(80)	(160)	(139)
Total Sales	$ (85)	$ (80)	$ (160)	$ (139)

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Retirement Benefit Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Retiree medical liability	$ 552	$ 550
Pension liability	538	565
Other	26	33
Subtotal	1,116	1,148
Less: current portion (included in compensation and benefits, Note 15)	(52)	(52)
Retirement benefit liabilities	$ 1,064	$ 1,096

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Income Taxes (Details Texuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Net Pre Tax Losses Tax Benefitis Not Recorded	$ 52	$ 85

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Contingencies (Details 1) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Pending and future claims	$ 75	$ 77
Asbestos-related insurance recoveries	$ 67	$ 67

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Business Segment Information (Details 2) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Total assets	$ 2,565	$ 2,663
Less: Accounts receivable sold under off-balance sheet factoring programs	(287)	(280)
Commercial Truck Segment [Member]
Total assets	1,512	1,482
Industrial Segment [Member]
Total assets	480	470
Aftermarket and Trailer Segment [Member]
Total assets	526	504
Segment Assets [Member]
Total assets	2,518	2,456
Corporate [Member]
Total assets	334	483
Segment, Discontinued Operations [Member]
Total assets	$ 0	$ 4

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Contingencies (Details Textuals) (USD $)	3 Months Ended		6 Months Ended			6 Months Ended				6 Months Ended						3 Months Ended	6 Months Ended		12 Months Ended		6 Months Ended	12 Months Ended			6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011	Sep. 30, 2011	Mar. 31, 2012 Discontinued Operations [Member]	Mar. 31, 2011 Discontinued Operations [Member]	Mar. 31, 2012 Super Fund [Member]	Sep. 30, 2011 Super Fund [Member]	Mar. 31, 2012 Non-Super Fund [Member]	Sep. 30, 2011 Non-Super Fund [Member]	Mar. 31, 2012 Maremont Asbestos [Member]	Sep. 30, 2011 Maremont Asbestos [Member]	Mar. 31, 2012 Rockwell Asbestos [Member]	Sep. 30, 2011 Rockwell Asbestos [Member]	Mar. 31, 2012 Other Asbestos Legal Matters [Member]	Mar. 31, 2012 Other Asbestos Legal Matters [Member]	Sep. 30, 2011 Other Asbestos Legal Matters [Member]	Sep. 30, 2009 MSSC [Member]	Mar. 31, 2012 MSSC [Member]	Mar. 31, 2012 Indemnity Obligations [Member]	Sep. 30, 2011 Indemnity Obligations [Member]	Sep. 30, 2009 Indemnity Obligations [Member]	Mar. 31, 2012 Body Systems [Member]	Mar. 31, 2012 S and E Quick Lube Matte [Member]	Mar. 31, 2012 Direct Purchaser [Member]	Mar. 31, 2012 Remaining Plaintiffs [Member]
Environmental Costs Reasonably Possible								$ 19,000,000		$ 38,000,000
Balance at September 30, 2011	18,000,000		18,000,000		17,000,000			3,000,000	2,000,000	15,000,000	15,000,000
Site Contingency, Accrual, Discount Rate	5.00%		5.00%
Undiscounted Amount Environmental Accrual For Onging Operations Maintenance and Monitoring	10,000,000		10,000,000
Discounted Amount Environmental Accrual For Onging Operations Maintenance and Monitoring	8,000,000		8,000,000
Loss Contingency, Pending Claims, Number												21,000	21,000
Obligation For Asbestos Personal Injury Low Estimate												75,000,000
Obligation For Asbestos Personal Injury High Estimate												85,000,000
Obligation For Asbestos Personal Injury Best Estimate														21,000,000	19,000,000
Asbestos Insurance Recoveries												67,000,000		7,000,000	9,000,000
Liability for Asbestos and Environmental Claims, Gross, Incurred Loss	56,000,000															56,000,000	375,000
Asbestos Related Punitive Damages Award Being Challenged In Appeals Court																45,000,000	45,000,000
Loss Contingency, Range of Possible Loss, Minimum																		0
Loss Contingency, Range of Possible Loss, Maximum																		45,000,000
Guarantee Obligations Recorded							4,000,000														22,000,000	23,000,000	28,000,000
Percentage Of Interest In Joint Venture																			57.00%
Accrual For Loss Contingency																									9,000,000
Exposure Under Indemnity																				15,000,000				5,000,000
Other Remaining Defendants			13,000,000
Loss Contingency Settlement Agreement Consideration1	31,000,000		31,000,000
Percentage Of Preliminary Settlement On Purchase Commitments																										65.00%	35.00%
Environmental Remediation Expense	$ 2,000,000	$ 1,000,000	$ 4,000,000	$ 1,000,000		$ 2,000,000		$ 1,000,000		$ 3,000,000

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Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011	Mar. 31, 2011	Sep. 30, 2010
Carrying Value
Cash and cash equivalents	$ 109	$ 217	$ 195	$ 343
Short-term debt	21	84
Long-term debt	954	950
Foreign exchange forward contracts (asset)	2	0
Fair Value
Cash and cash equivalents	109	217
Short-term debt	21	83
Long-term debt	982	844
Foreign exchange forward contracts (asset)	$ 2	$ 0

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Retirement Benefit Liabilities

6 Months Ended

Mar. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

19. Retirement Benefit Liabilities

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

	March 31,			September 30,
	2012			2011
Retiree medical liability	$	552		$	550
Pension liability		538			565
Other		26			33
Subtotal		1,116			1,148
Less: current portion (included in compensation and benefits, Note 15)		(52	)		(52	)
Retirement benefit liabilities	$	1,064		$	1,096

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

	2012						2011
	Pension			Retiree Medical			Pension			Retiree Medical
Service cost	$	—		$	—		$	1		$	—
Interest cost		23			6			22			6
Assumed return on plan assets		(26	)		—			(28	)		—
Amortization of prior service costs		—			(2	)		—			(1	)
Recognized actuarial loss		5			6			10			7
Total expense	$	2		$	10		$	5		$	12

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

	2012						2011
	Pension			Retiree Medical			Pension			Retiree Medical
Service cost	$	1		$	—		$	4		$	—
Interest cost		46			12			46			13
Assumed return on plan assets		(52	)		—			(58	)		—
Amortization of prior service costs		—			(4	)		—			(4	)
Recognized actuarial loss		10			13			19			15
Total expense	$	5		$	21		$	11		$	24

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New Accounting Standards (Details Textuals)

12 Months Ended

9 Months Ended

Sep. 30, 2011

Testing Goodwill For Impairment [Member]

Jun. 30, 2011

Presentation Of Comprehensive Income [Member]

Jun. 30, 2011

Common Fair Value Measurement and Disclosure Requirements [Member]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

New Accounting Pronouncement Or Change In Accounting Principle, Description

In September 2011, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2011-08: Testing Goodwill for Impairment. Under the revised guidance, entities testing for goodwill impairment have an option of performing a qualitative assessment before calculating the fair value for the reporting unit, i.e., Step 1 of the goodwill impairment test. If an entity determines, on the basis of qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying amount, the first step of the two-step impairment test would be required. If it is not more-likely-than-not that the fair value of the reporting unit is less than the carrying value, then goodwill is not considered to be impaired. ASU No. 2011-08 does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill at least annually for impairment. This ASU is effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. The company has adopted the revised guidance provided in this ASU effective with its second quarter of fiscal year 2012 and will apply it in the fiscal year 2012 goodwill impairment review during the fourth quarter. The company does not expect any significant effect on its goodwill impairment assessments as a result of the adoption of the new guidance.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The company does not believe the adoption of the new guidance will have a significant impact on the company's consolidated financial statements.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). This ASU is intended to result in convergence between U.S. GAAP and IFRS requirements for measurement of and disclosures about fair value. The guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The company has adopted this new guidance effective with its second quarter of fiscal year 2012 and has provided required disclosures in Note 18 to the consolidated financial statements.

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Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

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

	March 31,				September 30,
	2012				2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Cash and cash equivalents	$	109	$	109	$	217	$	217
Short-term debt		21		21		84		83
Long-term debt		954		982		950		844
Foreign exchange forward contracts (asset)		2		2		—		—

Fair Value, Measurement Inputs, Disclosure [Table Text Block]

Fair value of financial instruments by the valuation hierarchy is as follows (in millions):

	Level 1		Level 2		Level 3
Short-term debt	$	—	$	21	$	—
Long-term debt		—		982		—
Foreign exchange forward contracts (asset)		—		2		—

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Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Balance at September 30, 2011			$ 17
Payments and other			(3)
Accruals(1)	2	1	4	1
Balance at March 31, 2012	18		18
Super Fund [Member]
Balance at September 30, 2011			2
Payments and other			0
Accruals(1)			1
Balance at March 31, 2012	3		3
Non-Super Fund [Member]
Balance at September 30, 2011			15
Payments and other			(3)
Accruals(1)			3
Balance at March 31, 2012	$ 15		$ 15

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Net Property (Tables)

6 Months Ended

Mar. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Net property is summarized as follows (in millions):

	March 31,			September 30,
	2012			2011
Property at cost:
Land and land improvements	$	39		$	47
Buildings		251			264
Machinery and equipment		913			897
Company-owned tooling		157			153
Construction in progress		55			74
Total		1,415			1,435
Less accumulated depreciation		(1,011	)		(1,014	)
Net property	$	404		$	421

XML

Discontinued Operations (Details Textuals) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Discontinued Operations Restructuring Charges	$ 0		$ 1	$ 7
Sales Revenue, Goods, Net	1,160	1,176	2,319	2,133
Sales Revenue Goods Net Discontinued Operations				336
Body Systems [Member]
Gain Loss On Sale Of Business Before Tax		32
Gain Loss On Sale Of Business After Tax		32
Sales Revenue, Goods, Net				298
Gabriel Europe [Member]
Gain Loss On Sale Of Business Before Tax		13
Gain Loss On Sale Of Business After Tax		13
EU Trailer [Member]
Discontinued Operations Restructuring Charges		6	1
Sales Revenue, Goods, Net		$ 19		$ 30

XML

Other Current Liabilities (Details Textuals) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012
Land Available-for-sale	$ 1

XML

Other Current Assets (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Current deferred income tax assets, net	$ 27	$ 28
Asbestos-related recoveries (see Note 20)	9	9
Deposits and collateral	7	11
Prepaid and other	22	18
Assets of discontinued operations	0	4
Other current assets	$ 65	$ 70

XML

Supplemental Guarantor Condensed Consolidating Financial Statements (Tables)

6 Months Ended

Mar. 31, 2012

Supplemental Guarantor Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Statement Of Income [Table Text Block]

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Three Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	448		$	712		$	—		$	1,160
Subsidiaries		—			40			24			(64	)		—
Total sales		—			488			736			(64	)		1,160
Cost of sales		(13	)		(418	)		(659	)		64			(1,026	)
GROSS MARGIN		(13	)		70			77			—			134
Selling, general and administrative		(21	)		(24	)		(27	)		—			(72	)
Restructuring costs		—			—			(3	)		—			(3	)
Other operating expense		—			—			(1	)		—			(1	)
OPERATING INCOME (LOSS)		(34	)		46			46			—			58
Equity in earnings of affiliates		—			10			4			—			14
Other income (loss), net		41			(8	)		(32	)		—			1
Interest income (expense), net		(30	)		5			2			—			(23	)
INCOME (LOSS) BEFORE INCOME TAXES		(23	)		53			20			—			50
Provision for income taxes		(1	)		(2	)		(14	)		—			(17	)
Equity income from continuing operations of subsidiaries		53			(2	)		—			(51	)		—
INCOME FROM CONTINUING OPERATIONS		29			49			6			(51	)		33
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(9	)	$	(2	)	$	—		$	2		$	(9	)
Net income		20			47			6			(49	)		24
Less: Net income attributable to noncontrolling interests		—			—			(4	)		—			(4	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	20		$	47		$	2		$	(49	)	$	20

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Three Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	395		$	781		$	—		$	1,176
Subsidiaries		—			40			20			(60	)		—
Total sales		—			435			801			(60	)		1,176
Cost of sales		(15	)		(397	)		(706	)		60			(1,058	)
GROSS MARGIN		(15	)		38			95			—			118
Selling, general and administrative		(25	)		(20	)		(25	)		—			(70	)
Restructuring costs		—			—			(5	)		—			(5	)
Other operating expense		(2	)		—			—			—			(2	)
OPERATING INCOME (LOSS)		(42	)		18			65			—			41
Other income (loss), net		25			(8	)		(19	)		—			(2	)
Equity in earnings of affiliates		—			9			8			—			17
Interest income (expense), net		(31	)		6			1			—			(24	)
INCOME (LOSS) BEFORE INCOME TAXES		(48	)		25			55			—			32
Benefit (provision) for income taxes		1			(1	)		(21	)		—			(21	)
Equity income from continuing operations of subsidiaries		53			25			—			(78	)		—
INCOME FROM CONTINUING OPERATIONS		6			49			34			(78	)		11
INCOME FROM DISCONTINUED OPERATIONS, net of tax		11		$	31		$	39		$	(70	)	$	11
NET INCOME		17			80			73			(148	)		22
Less: Net income attributable to noncontrolling interests		—			—			(5	)		—			(5	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	17		$	80		$	68		$	(148	)	$	17

Amounts have been recast for discontinued operations.

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	819		$	1,500		$	—		$	2,319
Subsidiaries		—			72			47			(119	)		—
Total sales		—			891			1,547			(119	)		2,319
Cost of sales		(25	)		(784	)		(1,389	)		119			(2,079	)
GROSS MARGIN		(25	)		107			158			—			240
Selling, general and administrative		(43	)		(43	)		(51	)		—			(137	)
Restructuring costs		—			—			(27	)		—			(27	)
Other operating expense		(1	)		—			(1	)		—			(2	)
OPERATING INCOME (LOSS)		(69	)		64			79			—			74
Other income (loss), net		41			(8	)		(28	)		—			5
Equity in earnings of affiliates		—			19			10			—			29
Interest income (expense), net		(61	)		12			2			—			(47	)
INCOME (LOSS) BEFORE INCOME TAXES		(89	)		87			63			—			61
Benefit (provision) for income taxes		(1	)		(5	)		(31	)		—			(37	)
Equity income from continuing operations of subsidiaries		106			17			—			(123	)		—
INCOME FROM CONTINUING OPERATIONS		16			99			32			(123	)		24
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(18	)	$	(7	)	$	(3	)	$	10		$	(18	)
NET INCOME (LOSS)		(2	)		92			29			(113	)		6
Less: Net income attributable to noncontrolling interests		—			—			(8	)		—			(8	)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	$	(2	)	$	92		$	21		$	(113	)	$	(2	)

Amounts have been recast for discontinued operations.

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	698		$	1,435		$	—		$	2,133
Subsidiaries		—			71			37			(108	)		—
Total sales		—			769			1,472			(108	)		2,133
Cost of sales		(29	)		(705	)		(1,284	)		108			(1,910	)
GROSS MARGIN		(29	)		64			188			—			223
Selling, general and administrative		(54	)		(43	)		(43	)		—			(140	)
Restructuring costs		—			—			(8	)		—			(8	)
Other operating expense		(2	)		—			—			—			(2	)
OPERATING INCOME (LOSS)		(85	)		21			137			—			73
Other income (loss), net		24			(8	)		(18	)		—			(2	)
Equity in earnings of affiliates		—			16			14			—			30
Interest income (expense), net		(61	)		15			(5	)		—			(51	)
INCOME (LOSS) BEFORE INCOME TAXES		(122	)		44			128			—			50
Benefit (provision) for income taxes		1			(6	)		(36	)		—			(41	)
Equity income from continuing operations of subsidiaries		121			77			—			(198	)		—
INCOME FROM CONTINUING OPERATIONS		—			115			92			(198	)		9
INCOME FROM DISCONTINUED OPERATIONS, net of tax		15		$	45		$	49		$	(94	)	$	15
NET INCOME		15			160			141			(292	)		24
Less: Net income attributable to noncontrolling interests		—			—			(9	)		—			(9	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	15		$	160		$	132		$	(292	)	$	15

Amounts have been recast for discontinued operations.

Grantor Consolidating Balance Sheet [Table Text Block]

MERITOR, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
(Unaudited)

	March 31, 2012
							Non-
	Parent			Guarantors			Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	10		$	8		$	91	$	—		$	109
Receivables, net		1			26			676		—			703
Inventories		—			200			289		—			489
Other current assets		5			19			41		—			65
TOTAL CURRENT ASSETS		16			253			1,097		—			1,366
NET PROPERTY		12			141			251		—			404
GOODWILL		—			276			157		—			433
OTHER ASSETS		43			185			134		—			362
INVESTMENTS IN SUBSIDIARIES		1,371			231			—		(1,602	)		—
TOTAL ASSETS	$	1,442		$	1,086		$	1,639	$	(1,602	)	$	2,565
CURRENT LIABILITIES
Short-term debt	$	2		$	—		$	19	$	—		$	21
Accounts payable		57			219			533		—			809
Other current liabilities		108			58			177		—			343
TOTAL CURRENT LIABILITIES		167			277			729		—			1,173
LONG-TERM DEBT		944			2			8		—			954
RETIREMENT BENEFITS		943			—			121		—			1,064
INTERCOMPANY PAYABLE (RECEIVABLE)		302			(797	)		495		—			—
OTHER LIABILITIES		71			170			78		—			319
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.		(985	)		1,434			168		(1,602	)		(985	)
NONCONTROLLING INTERESTS		—			—			40		—			40
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	1,442		$	1,086		$	1,639	$	(1,602	)	$	2,565

MERITOR, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
(Unaudited)

	September 30, 2011
							Non-
	Parent			Guarantors			Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	92		$	4		$	121	$	—		$	217
Receivables, net		1			24			687		—			712
Inventories		—			181			279		—			460
Other current assets		6			17			47		—			70
TOTAL CURRENT ASSETS		99			226			1,134		—			1,459
NET PROPERTY		9			138			274		—			421
GOODWILL		—			275			156		—			431
OTHER ASSETS		44			179			129		—			352
INVESTMENTS IN SUBSIDIARIES		1,265			154			—		(1,419	)		—
TOTAL ASSETS	$	1,417		$	972		$	1,693	$	(1,419	)	$	2,663
CURRENT LIABILITIES
Short-term debt	$	84		$	—		$	—	$	—		$	84
Accounts payable		52			225			564		—			841
Other current liabilities		92			67			169		—			328
TOTAL CURRENT LIABILITIES		228			292			733		—			1,253
LONG-TERM DEBT		942			—			8		—			950
RETIREMENT BENEFITS		953			—			143		—			1,096
INTERCOMPANY PAYABLE (RECEIVABLE)		202			(820	)		618		—			—
OTHER LIABILITIES		87			165			73		—			325
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.		(995	)		1,335			84		(1,419	)		(995	)
NONCONTROLLING INTERESTS		—			—			34		—			34
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	1,417		$	972		$	1,693	$	(1,419	)	$	2,663

Grantor Consolidating Statement Of Cash Flows [Table Text Block]

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	(36	)	$	21		$	(31	)	$	—	$	(46	)
INVESTING ACTIVITIES
Capital expenditures		(2	)		(18	)		(23	)		—		(43	)
Proceeds from sale of property		—			—			18			—		18
Other investing activities		—			1			(3	)		—		(2	)
											—
Net cash flows provided by discontinued operations		—			—			28					28
CASH PROVIDED BY (USED FOR) INVESTING        ACTIVITIES		(2	)		(17	)		20			—		1
FINANCING ACTIVITIES
Repayment of notes		(84	)		—			—			—		(84	)
Borrowings on accounts receivable securitization program, net		—			—			19			—		19
Intercompany advances		40			—			(40	)		—		—
CASH USED FOR FINANCING ACTIVITIES		(44	)		—			(21	)		—		(65	)
EFFECT OF FOREIGN CURRENCY EXCHANGE        RATES ON CASH AND CASH EQUIVALENTS		—			—			2			—		2
CHANGE IN CASH AND CASH EQUIVALENTS		(82	)		4			(30	)		—		(108	)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD		92			4			121			—		217
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	10		$	8		$	91		$	—	$	109

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	160		$	11		$	(215	)	$	—	$	(44	)
INVESTING ACTIVITIES
Capital expenditures		(2	)		(15	)		(25	)		—		(42	)
Other investing activities		—			2			(1	)		—		1
Net cash flows used by discontinued operations		(15	)		—			(56	)		—		(71	)
CASH USED FOR INVESTING ACTIVITIES		(17	)		(13	)		(82	)		—		(112	)
FINANCING ACTIVITIES
Intercompany advances		(134	)		—			134			—		—
Other financing activities		6			—			—			—		6
CASH PROVIDED BY (USED FOR) FINANCING        ACTIVITIES		(128	)		—			134			—		6
EFFECT OF FOREIGN CURRENCY EXCHANGE        RATES ON CASH AND CASH EQUIVALENTS		—			—			2			—		2
CHANGE IN CASH AND CASH EQUIVALENTS		15			(2	)		(161	)		—		(148	)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD		47			6			290			—		343
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	62		$	4		$	129		$	—	$	195

Amounts have been recast for discontinued operations.

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New Accounting Standards

6 Months Ended

Mar. 31, 2012

New Accounting Pronouncements and Changes In Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

3. New Accounting Standards

   Accounting standards implemented during fiscal year 2012

In September 2011, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2011-08: Testing Goodwill for Impairment. Under the revised guidance, entities testing for goodwill impairment have an option of performing a qualitative assessment before calculating the fair value for the reporting unit, i.e., Step 1 of the goodwill impairment test. If an entity determines, on the basis of qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying amount, the first step of the two-step impairment test would be required. If it is not more-likely-than-not that the fair value of the reporting unit is less than the carrying value, then goodwill is not considered to be impaired. ASU No. 2011-08 does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill at least annually for impairment. This ASU is effective for interim and annual periods beginning after December 15, 2011 with early adoption permitted. The company has adopted the revised guidance provided in this ASU effective with its second quarter of fiscal year 2012 and will apply it in the fiscal year 2012 goodwill impairment review during the fourth quarter. The company does not expect any significant effect on its goodwill impairment assessments as a result of the adoption of the new guidance.

     In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). This ASU is intended to result in convergence between U.S. GAAP and IFRS requirements for measurement of and disclosures about fair value. The guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The company has adopted this new guidance effective with its second quarter of fiscal year 2012 and has provided required disclosures in Note 18 to the consolidated financial statements.

   Accounting standard to be implemented

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The company does not believe the adoption of the new guidance will have a significant impact on the company’s consolidated financial statements.

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Net Property (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Property at cost:
Land and land improvements	$ 39	$ 47
Buildings	251	264
Machinery and equipment	913	897
Company-owned tooling	157	153
Construction in progress	55	74
Total	1,415	1,435
Less accumulated depreciation	(1,011)	(1,014)
Net property	$ 404	$ 421

XML

Retirement Benefit Liabilities (Tables)

6 Months Ended

Mar. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits [Table Text Block]

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

	March 31,			September 30,
	2012			2011
Retiree medical liability	$	552		$	550
Pension liability		538			565
Other		26			33
Subtotal		1,116			1,148
Less: current portion (included in compensation and benefits, Note 15)		(52	)		(52	)
Retirement benefit liabilities	$	1,064		$	1,096

Schedule of Net Benefit Costs [Table Text Block]

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

	2012						2011
	Pension			Retiree Medical			Pension			Retiree Medical
Service cost	$	—		$	—		$	1		$	—
Interest cost		23			6			22			6
Assumed return on plan assets		(26	)		—			(28	)		—
Amortization of prior service costs		—			(2	)		—			(1	)
Recognized actuarial loss		5			6			10			7
Total expense	$	2		$	10		$	5		$	12

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

	2012						2011
	Pension			Retiree Medical			Pension			Retiree Medical
Service cost	$	1		$	—		$	4		$	—
Interest cost		46			12			46			13
Assumed return on plan assets		(52	)		—			(58	)		—
Amortization of prior service costs		—			(4	)		—			(4	)
Recognized actuarial loss		10			13			19			15
Total expense	$	5		$	21		$	11		$	24

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Supplemental Guarantor Condensed Consolidating Financial Statements

6 Months Ended

Mar. 31, 2012

Supplemental Guarantor Condensed Consolidating Financial Statements [Abstract]

Supplemental Guarantor Condensed Consolidating Financial Statements [Text Block]

23. Supplemental Guarantor Condensed Consolidating Financial Statements

     Certain of the company’s wholly-owned subsidiaries, as defined in the credit agreement (the Guarantors) irrevocably and unconditionally provide joint and several guarantee for the amounts outstanding under the senior secured revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the publicly-held notes outstanding under the company’s indentures (see Note 17).

     In lieu of providing separate financial statements for the Guarantors, the company has included the accompanying condensed consolidating financial statements. 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 distributions and other equity changes. The Guarantor subsidiaries are combined in the condensed consolidating financial statements.

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Three Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	448		$	712		$	—		$	1,160
Subsidiaries		—			40			24			(64	)		—
Total sales		—			488			736			(64	)		1,160
Cost of sales		(13	)		(418	)		(659	)		64			(1,026	)
GROSS MARGIN		(13	)		70			77			—			134
Selling, general and administrative		(21	)		(24	)		(27	)		—			(72	)
Restructuring costs		—			—			(3	)		—			(3	)
Other operating expense		—			—			(1	)		—			(1	)
OPERATING INCOME (LOSS)		(34	)		46			46			—			58
Equity in earnings of affiliates		—			10			4			—			14
Other income (loss), net		41			(8	)		(32	)		—			1
Interest income (expense), net		(30	)		5			2			—			(23	)
INCOME (LOSS) BEFORE INCOME TAXES		(23	)		53			20			—			50
Provision for income taxes		(1	)		(2	)		(14	)		—			(17	)
Equity income from continuing operations of subsidiaries		53			(2	)		—			(51	)		—
INCOME FROM CONTINUING OPERATIONS		29			49			6			(51	)		33
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(9	)	$	(2	)	$	—		$	2		$	(9	)
Net income		20			47			6			(49	)		24
Less: Net income attributable to noncontrolling interests		—			—			(4	)		—			(4	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	20		$	47		$	2		$	(49	)	$	20

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Three Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	395		$	781		$	—		$	1,176
Subsidiaries		—			40			20			(60	)		—
Total sales		—			435			801			(60	)		1,176
Cost of sales		(15	)		(397	)		(706	)		60			(1,058	)
GROSS MARGIN		(15	)		38			95			—			118
Selling, general and administrative		(25	)		(20	)		(25	)		—			(70	)
Restructuring costs		—			—			(5	)		—			(5	)
Other operating expense		(2	)		—			—			—			(2	)
OPERATING INCOME (LOSS)		(42	)		18			65			—			41
Other income (loss), net		25			(8	)		(19	)		—			(2	)
Equity in earnings of affiliates		—			9			8			—			17
Interest income (expense), net		(31	)		6			1			—			(24	)
INCOME (LOSS) BEFORE INCOME TAXES		(48	)		25			55			—			32
Benefit (provision) for income taxes		1			(1	)		(21	)		—			(21	)
Equity income from continuing operations of subsidiaries		53			25			—			(78	)		—
INCOME FROM CONTINUING OPERATIONS		6			49			34			(78	)		11
INCOME FROM DISCONTINUED OPERATIONS, net of tax		11		$	31		$	39		$	(70	)	$	11
NET INCOME		17			80			73			(148	)		22
Less: Net income attributable to noncontrolling interests		—			—			(5	)		—			(5	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	17		$	80		$	68		$	(148	)	$	17

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	819		$	1,500		$	—		$	2,319
Subsidiaries		—			72			47			(119	)		—
Total sales		—			891			1,547			(119	)		2,319
Cost of sales		(25	)		(784	)		(1,389	)		119			(2,079	)
GROSS MARGIN		(25	)		107			158			—			240
Selling, general and administrative		(43	)		(43	)		(51	)		—			(137	)
Restructuring costs		—			—			(27	)		—			(27	)
Other operating expense		(1	)		—			(1	)		—			(2	)
OPERATING INCOME (LOSS)		(69	)		64			79			—			74
Other income (loss), net		41			(8	)		(28	)		—			5
Equity in earnings of affiliates		—			19			10			—			29
Interest income (expense), net		(61	)		12			2			—			(47	)
INCOME (LOSS) BEFORE INCOME TAXES		(89	)		87			63			—			61
Benefit (provision) for income taxes		(1	)		(5	)		(31	)		—			(37	)
Equity income from continuing operations of subsidiaries		106			17			—			(123	)		—
INCOME FROM CONTINUING OPERATIONS		16			99			32			(123	)		24
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(18	)	$	(7	)	$	(3	)	$	10		$	(18	)
NET INCOME (LOSS)		(2	)		92			29			(113	)		6
Less: Net income attributable to noncontrolling interests		—			—			(8	)		—			(8	)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	$	(2	)	$	92		$	21		$	(113	)	$	(2	)

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims			Consolidated
Sales
External	$	—		$	698		$	1,435		$	—		$	2,133
Subsidiaries		—			71			37			(108	)		—
Total sales		—			769			1,472			(108	)		2,133
Cost of sales		(29	)		(705	)		(1,284	)		108			(1,910	)
GROSS MARGIN		(29	)		64			188			—			223
Selling, general and administrative		(54	)		(43	)		(43	)		—			(140	)
Restructuring costs		—			—			(8	)		—			(8	)
Other operating expense		(2	)		—			—			—			(2	)
OPERATING INCOME (LOSS)		(85	)		21			137			—			73
Other income (loss), net		24			(8	)		(18	)		—			(2	)
Equity in earnings of affiliates		—			16			14			—			30
Interest income (expense), net		(61	)		15			(5	)		—			(51	)
INCOME (LOSS) BEFORE INCOME TAXES		(122	)		44			128			—			50
Benefit (provision) for income taxes		1			(6	)		(36	)		—			(41	)
Equity income from continuing operations of subsidiaries		121			77			—			(198	)		—
INCOME FROM CONTINUING OPERATIONS		—			115			92			(198	)		9
INCOME FROM DISCONTINUED OPERATIONS, net of tax		15		$	45		$	49		$	(94	)	$	15
NET INCOME		15			160			141			(292	)		24
Less: Net income attributable to noncontrolling interests		—			—			(9	)		—			(9	)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	15		$	160		$	132		$	(292	)	$	15

MERITOR, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
(Unaudited)

	March 31, 2012
							Non-
	Parent			Guarantors			Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	10		$	8		$	91	$	—		$	109
Receivables, net		1			26			676		—			703
Inventories		—			200			289		—			489
Other current assets		5			19			41		—			65
TOTAL CURRENT ASSETS		16			253			1,097		—			1,366
NET PROPERTY		12			141			251		—			404
GOODWILL		—			276			157		—			433
OTHER ASSETS		43			185			134		—			362
INVESTMENTS IN SUBSIDIARIES		1,371			231			—		(1,602	)		—
TOTAL ASSETS	$	1,442		$	1,086		$	1,639	$	(1,602	)	$	2,565
CURRENT LIABILITIES
Short-term debt	$	2		$	—		$	19	$	—		$	21
Accounts payable		57			219			533		—			809
Other current liabilities		108			58			177		—			343
TOTAL CURRENT LIABILITIES		167			277			729		—			1,173
LONG-TERM DEBT		944			2			8		—			954
RETIREMENT BENEFITS		943			—			121		—			1,064
INTERCOMPANY PAYABLE (RECEIVABLE)		302			(797	)		495		—			—
OTHER LIABILITIES		71			170			78		—			319
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.		(985	)		1,434			168		(1,602	)		(985	)
NONCONTROLLING INTERESTS		—			—			40		—			40
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	1,442		$	1,086		$	1,639	$	(1,602	)	$	2,565

MERITOR, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
(Unaudited)

	September 30, 2011
							Non-
	Parent			Guarantors			Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	92		$	4		$	121	$	—		$	217
Receivables, net		1			24			687		—			712
Inventories		—			181			279		—			460
Other current assets		6			17			47		—			70
TOTAL CURRENT ASSETS		99			226			1,134		—			1,459
NET PROPERTY		9			138			274		—			421
GOODWILL		—			275			156		—			431
OTHER ASSETS		44			179			129		—			352
INVESTMENTS IN SUBSIDIARIES		1,265			154			—		(1,419	)		—
TOTAL ASSETS	$	1,417		$	972		$	1,693	$	(1,419	)	$	2,663
CURRENT LIABILITIES
Short-term debt	$	84		$	—		$	—	$	—		$	84
Accounts payable		52			225			564		—			841
Other current liabilities		92			67			169		—			328
TOTAL CURRENT LIABILITIES		228			292			733		—			1,253
LONG-TERM DEBT		942			—			8		—			950
RETIREMENT BENEFITS		953			—			143		—			1,096
INTERCOMPANY PAYABLE (RECEIVABLE)		202			(820	)		618		—			—
OTHER LIABILITIES		87			165			73		—			325
EQUITY (DEFICIT) ATTRIBUTABLE TO        MERITOR, INC.		(995	)		1,335			84		(1,419	)		(995	)
NONCONTROLLING INTERESTS		—			—			34		—			34
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	1,417		$	972		$	1,693	$	(1,419	)	$	2,663

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2012
							Non-
	Parent			Guarantors			Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	(36	)	$	21		$	(31	)	$	—	$	(46	)
INVESTING ACTIVITIES
Capital expenditures		(2	)		(18	)		(23	)		—		(43	)
Proceeds from sale of property		—			—			18			—		18
Other investing activities		—			1			(3	)		—		(2	)
											—
Net cash flows provided by discontinued operations		—			—			28					28
CASH PROVIDED BY (USED FOR) INVESTING        ACTIVITIES		(2	)		(17	)		20			—		1
FINANCING ACTIVITIES
Repayment of notes		(84	)		—			—			—		(84	)
Borrowings on accounts receivable securitization program, net		—			—			19			—		19
Intercompany advances		40			—			(40	)		—		—
CASH USED FOR FINANCING ACTIVITIES		(44	)		—			(21	)		—		(65	)
EFFECT OF FOREIGN CURRENCY EXCHANGE        RATES ON CASH AND CASH EQUIVALENTS		—			—			2			—		2
CHANGE IN CASH AND CASH EQUIVALENTS		(82	)		4			(30	)		—		(108	)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD		92			4			121			—		217
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	10		$	8		$	91		$	—	$	109

MERITOR, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)

	Six Months Ended March 31, 2011
							Non-
	Parent			Guarantors			Guarantors			Elims		Consolidated
CASH FLOWS PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	160		$	11		$	(215	)	$	—	$	(44	)
INVESTING ACTIVITIES
Capital expenditures		(2	)		(15	)		(25	)		—		(42	)
Other investing activities		—			2			(1	)		—		1
Net cash flows used by discontinued operations		(15	)		—			(56	)		—		(71	)
CASH USED FOR INVESTING ACTIVITIES		(17	)		(13	)		(82	)		—		(112	)
FINANCING ACTIVITIES
Intercompany advances		(134	)		—			134			—		—
Other financing activities		6			—			—			—		6
CASH PROVIDED BY (USED FOR) FINANCING        ACTIVITIES		(128	)		—			134			—		6
EFFECT OF FOREIGN CURRENCY EXCHANGE        RATES ON CASH AND CASH EQUIVALENTS		—			—			2			—		2
CHANGE IN CASH AND CASH EQUIVALENTS		15			(2	)		(161	)		—		(148	)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD		47			6			290			—		343
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	62		$	4		$	129		$	—	$	195

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Business Segment Information

6 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

22. 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 three reportable segments at March 31, 2012, 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 in North America, South America and Europe;

• The Industrial segment supplies drivetrain systems including axles, brakes, drivelines and suspensions for off-highway, military, construction, bus and coach, fire and emergency and other industrial applications. This segment also includes the company’s OE businesses in Asia Pacific, including all on- and off-highway activities; and
   
• The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement and remanufactured parts, including transmissions, to commercial vehicle aftermarket customers. This segment also supplies a wide variety of undercarriage products and systems for trailer applications in North America.

Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring costs and asset impairment charges. The company uses Segment EBITDA as the primary basis for the Chief Operating Decision Maker (CODM) to evaluate the performance of each of its reportable segments.

The accounting policies of the segments are the same as those applied in the Consolidated Financial Statements, except for the use of Segment EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the Segments’ EBITDA.

Segment information is summarized as follows (in millions):

	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Eliminations			Total
Three months ended March 31, 2012:
External Sales	$	632	$	269	$	259	$	—		$	1,160
Intersegment Sales		61		20		4		(85	)		—
Total Sales	$	693		289		263	$	(85	)	$	1,160
Three months ended March 31, 2011:
External Sales	$	635	$	289	$	252	$	—		$	1,176
Intersegment Sales		58		17		5		(80	)		—
Total Sales	$	693	$	306	$	257	$	(80	)	$	1,176
	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Eliminations			Total
Six months ended March 31, 2012:
External Sales	$	1,329	$	500	$	490	$	—		$	2,319
Intersegment Sales		115		37		8		(160	)		—
Total Sales	$	1,444	$	537	$	498	$	(160	)	$	2,319
Six months ended March 31, 2011:
External Sales	$	1,166	$	506	$	461	$	—		$	2,133
Intersegment Sales		102		30		7		(139	)		—
Total Sales	$	1,268	$	536	$	468	$	(139	)	$	2,133

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Segment EBITDA:
Commercial Truck	$	49		$	40		$	96		$	73
Industrial		22			18			33			35
Aftermarket & Trailer		28			29			48			45
Segment EBITDA		99			87			177			153
Unallocated legacy and corporate costs (1)		(4	)		(5	)		(3	)		(6	)
Interest expense, net		(23	)		(24	)		(47	)		(51	)
Provision for income taxes		(17	)		(21	)		(37	)		(41	)
Depreciation and amortization		(16	)		(17	)		(33	)		(33	)
Loss on sale of receivables		(3	)		(2	)		(6	)		(3	)
Restructuring costs		(3	)		(5	)		(27	)		(8	)
Other loss		—			(2	)		—			(2	)
Noncontrolling interests		(4	)		(5	)		(8	)		(9	)
Income from continuing operations
attributable to Meritor, Inc.	$	29		$	6		$	16		$	—

(1) Unallocated legacy and corporate costs represent items that are not directly related to our business segments and include pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability matters.

				September 30,
Segment Assets:	March 31, 2012			2011
Commercial Truck	$	1,512		$	1,482
Industrial		480			470
Aftermarket & Trailer		526			504
Total segment assets		2,518			2,456
Corporate(1)		334			483
Discontinued operations		—			4
Less: Accounts receivable sold under off-balance
sheet factoring programs(2)		(287	)		(280	)
Total assets	$	2,565		$	2,663

(1)	Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.
(2)	At March 31, 2012 and September 30, 2011 segment assets include $287 million and $280 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.

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Other Income (Loss), Net (Details Texuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012
Gain (Loss) On Investments	$ 3

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Contingencies (Tables)

6 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Schedule of Environmental Loss Contingencies by Site [Table Text Block]

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

	Superfund Sites		Non-Superfund Sites			Total
Balance at September 30, 2011	$	2	$	15		$	17
Payments and other		—		(3	)		(3	)
Accruals(1)		1		3			4
Balance at March 31, 2012	$	3	$	15		$	18

⁽¹⁾ Includes $2 million recognized in loss from discontinued operations in the consolidated statement of operations.

Asbestos Related Reserves and Recoveries [Table Text Block]

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

	March 31, 2012		September 30, 2011
Pending and future claims	$	75	$	77
Asbestos-related insurance recoveries		67		67

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Earnings per Share (Tables)

6 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

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

	Three Months Ended		Six Months Ended
	March 31,		March 31,
	2012	2011	2012	2011
Basic average common shares outstanding	96.3	94.3	95.4	93.8
Impact of stock options	—	0.2	—	0.2
Impact of restricted shares and share units	0.9	2.4	1.8	2.9
Diluted average common shares outstanding	97.2	96.9	97.2	96.9

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Discontinued Operations (Tables)

6 Months Ended

Mar. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

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

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Sales	$	—		$	19		$	2		$	336
Operating income (loss), net	$	—		$	(1	)	$	—		$	13
Gain (loss) on sale of businesses, net		—			19			(1	)		19
Restructuring costs		—			(6	)		(1	)		(7	)
Charge for legal contingency (see Note 20)		(6	)		—			(9	)		—
Environmental remediation charges		(2	)		(1	)		(2	)		(1	)
Other, net		(2	)		(4	)		(6	)		(7	)
Income (loss) before income taxes		(10	)		7			(19	)		17
Benefit (provision) for income taxes		1			4			1			(2	)
Income (loss) from discontinued operations
attributable to Meritor, Inc.	$	(9	)	$	11		$	(18	)	$	15

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Earnings per Share

6 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

2. Earnings per Share

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

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

	Three Months Ended		Six Months Ended
	March 31,		March 31,
	2012	2011	2012	2011
Basic average common shares outstanding	96.3	94.3	95.4	93.8
Impact of stock options	—	0.2	—	0.2
Impact of restricted shares and share units	0.9	2.4	1.8	2.9
Diluted average common shares outstanding	97.2	96.9	97.2	96.9

     For the three and six months ended March 31, 2012 and March 31, 2011, options to purchase 0.7 million and 0.4 million shares of common stock, respectively, were not included in the computation of diluted earnings per share because their exercise price exceeded the average market price for the period and thus their inclusion would be anti-dilutive. The company’s convertible senior unsecured notes are excluded from the computation of diluted earnings per share, as the stock price at the end of the quarter is less than the conversion price.

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Goodwill (Tables)

6 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

A summary of the changes in the carrying value of goodwill are presented below (in millions):

	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Total
Balance at September 30, 2011	$	150	$	109	$	172	$	431
Foreign currency translation		2		—		—		2
Balance at March 31, 2012	$	152	$	109	$	172	$	433

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details 1) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011	Mar. 31, 2011	Sep. 30, 2010
CURRENT ASSETS
Cash and cash equivalents	$ 109	$ 217	$ 195	$ 343
Receivables, net	703	712
Inventories	489	460
Other current assets	65	70
TOTAL CURRENT ASSETS	1,366	1,459
NET PROPERTY	404	421
GOODWILL	433	431
OTHER ASSETS	362	352
TOTAL ASSETS	2,565	2,663
CURRENT LIABILITIES
Short-term debt	21	84
Accounts payable	809	841
Other current liabilities	343	328
TOTAL CURRENT LIABILITIES	1,173	1,253
LONG-TERM DEBT	954	950
RETIREMENT BENEFITS	1,064	1,096
OTHER LIABILITIES	319	325
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(985)	(995)
NONCONTROLLING INTERESTS	40	34
TOTAL LIABILITIES AND EQUITY (DEFICIT)	2,565	2,663
Parent Company [Member]
CURRENT ASSETS
Cash and cash equivalents	10	92	62	47
Receivables, net	1	1
Inventories	0	0
Other current assets	5	6
TOTAL CURRENT ASSETS	16	99
NET PROPERTY	12	9
GOODWILL	0	0
OTHER ASSETS	43	44
INVESTMENTS IN SUBSIDIARIES	1,371	1,265
TOTAL ASSETS	1,442	1,417
CURRENT LIABILITIES
Short-term debt	2	84
Accounts payable	57	52
Other current liabilities	108	92
TOTAL CURRENT LIABILITIES	167	228
LONG-TERM DEBT	944	942
RETIREMENT BENEFITS	943	953
INTERCOMPANY PAYABLE (RECEIVABLE)	302	202
OTHER LIABILITIES	71	87
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(985)	(995)
NONCONTROLLING INTERESTS	0	0
TOTAL LIABILITIES AND EQUITY (DEFICIT)	1,442	1,417
Guarantor Subsidiaries [Member]
CURRENT ASSETS
Cash and cash equivalents	8	4	4	6
Receivables, net	26	24
Inventories	200	181
Other current assets	19	17
TOTAL CURRENT ASSETS	253	226
NET PROPERTY	141	138
GOODWILL	276	275
OTHER ASSETS	185	179
INVESTMENTS IN SUBSIDIARIES	231	154
TOTAL ASSETS	1,086	972
CURRENT LIABILITIES
Short-term debt	0	0
Accounts payable	219	225
Other current liabilities	58	67
TOTAL CURRENT LIABILITIES	277	292
LONG-TERM DEBT	2	0
RETIREMENT BENEFITS	0	0
INTERCOMPANY PAYABLE (RECEIVABLE)	(797)	(820)
OTHER LIABILITIES	170	165
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	1,434	1,335
NONCONTROLLING INTERESTS	0	0
TOTAL LIABILITIES AND EQUITY (DEFICIT)	1,086	972
Non-Guarantor Subsidiaries [Member]
CURRENT ASSETS
Cash and cash equivalents	91	121	129	290
Receivables, net	676	687
Inventories	289	279
Other current assets	41	47
TOTAL CURRENT ASSETS	1,097	1,134
NET PROPERTY	251	274
GOODWILL	157	156
OTHER ASSETS	134	129
INVESTMENTS IN SUBSIDIARIES	0	0
TOTAL ASSETS	1,639	1,693
CURRENT LIABILITIES
Short-term debt	19	0
Accounts payable	533	564
Other current liabilities	177	169
TOTAL CURRENT LIABILITIES	729	733
LONG-TERM DEBT	8	8
RETIREMENT BENEFITS	121	143
INTERCOMPANY PAYABLE (RECEIVABLE)	495	618
OTHER LIABILITIES	78	73
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	168	84
NONCONTROLLING INTERESTS	40	34
TOTAL LIABILITIES AND EQUITY (DEFICIT)	1,639	1,693
Elims [Member]
CURRENT ASSETS
Cash and cash equivalents	0	0	0	0
Receivables, net	0	0
Inventories	0	0
Other current assets	0	0
TOTAL CURRENT ASSETS	0	0
NET PROPERTY	0	0
GOODWILL	0	0
OTHER ASSETS	0	0
INVESTMENTS IN SUBSIDIARIES	(1,602)	(1,419)
TOTAL ASSETS	(1,602)	(1,419)
CURRENT LIABILITIES
Short-term debt	0	0
Accounts payable	0	0
Other current liabilities	0	0
TOTAL CURRENT LIABILITIES	0	0
LONG-TERM DEBT	0	0
RETIREMENT BENEFITS	0	0
INTERCOMPANY PAYABLE (RECEIVABLE)	0	0
OTHER LIABILITIES	0	0
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(1,602)	(1,419)
NONCONTROLLING INTERESTS	0	0
TOTAL LIABILITIES AND EQUITY (DEFICIT)	(1,602)	(1,419)
Consolidated [Member]
CURRENT ASSETS
Cash and cash equivalents	109	217	195	343
Receivables, net	703	712
Inventories	489	460
Other current assets	65	70
TOTAL CURRENT ASSETS	1,366	1,459
NET PROPERTY	404	421
GOODWILL	433	431
OTHER ASSETS	362	352
INVESTMENTS IN SUBSIDIARIES	0	0
TOTAL ASSETS	2,565	2,663
CURRENT LIABILITIES
Short-term debt	21	84
Accounts payable	809	841
Other current liabilities	343	328
TOTAL CURRENT LIABILITIES	1,173	1,253
LONG-TERM DEBT	954	950
RETIREMENT BENEFITS	1,064	1,096
INTERCOMPANY PAYABLE (RECEIVABLE)	0	0
OTHER LIABILITIES	319	325
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC.	(985)	(995)
NONCONTROLLING INTERESTS	40	34
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$ 2,565	$ 2,663

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Other Liabilities (Tables)

6 Months Ended

Mar. 31, 2012

Other Liabilities Disclosure [Abstract]

Schedule Of Other Liabilities Noncurrent [Table Text Block]

Other liabilities are summarized as follows (in millions):

	March 31,		September 30,
	2012		2011
Asbestos-related liabilities (see Note 20)	$	77	$	78
Non-current deferred income tax liabilities		95		92
Liabilities for uncertain tax positions		34		35
Product warranties (see Note 15)		29		29
Environmental		8		9
Indemnity obligations		36		41
Other		40		41
Other liabilities	$	319	$	325

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Goodwill (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012
Balance at September 30, 2011	$ 431
Foreign currency translation	2
Balance at March 31, 2012	433
Commercial Truck [Member]
Balance at September 30, 2011	150
Foreign currency translation	2
Balance at March 31, 2012	152
Industrial [Member]
Balance at September 30, 2011	109
Foreign currency translation	0
Balance at March 31, 2012	109
Aftermarket and Trailer [Member]
Balance at September 30, 2011	172
Foreign currency translation	0
Balance at March 31, 2012	$ 172

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Financial Instruments (Details 1) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Short-term debt	$ 21	$ 83
Long-term debt	982	844
Foreign exchange forward contracts (asset)	2	0
Fair Value, Inputs, Level 1 [Member]
Short-term debt	0
Long-term debt	0
Foreign exchange forward contracts (asset)	0
Fair Value, Inputs, Level 2 [Member]
Short-term debt	21
Long-term debt	982
Foreign exchange forward contracts (asset)	2
Fair Value, Inputs, Level 3 [Member]
Short-term debt	0
Long-term debt	0
Foreign exchange forward contracts (asset)	$ 0

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CONSOLIDATED STATEMENT OF OPERATIONS (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Sales	$ 1,160	$ 1,176	$ 2,319	$ 2,133
Cost of sales	(1,026)	(1,058)	(2,079)	(1,910)
GROSS MARGIN	134	118	240	223
Selling, general and administrative	(72)	(70)	(137)	(140)
Restructuring costs	(3)	(5)	(27)	(8)
Other operating expense	(1)	(2)	(2)	(2)
OPERATING INCOME	58	41	74	73
Other income (loss), net	1	(2)	5	(2)
Equity in earnings of affiliates	14	17	29	30
Interest expense, net	(23)	(24)	(47)	(51)
INCOME BEFORE INCOME TAXES	50	32	61	50
Provision for income taxes	(17)	(21)	(37)	(41)
INCOME FROM CONTINUING OPERATIONS	33	11	24	9
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	(9)	11	(18)	15
NET INCOME	24	22	6	24
Less: Income attributable to noncontrolling interests	(4)	(5)	(8)	(9)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	20	17	(2)	15
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.
Net income from continuing operations	29	6	16	0
Income (loss) from discontinued operations	(9)	11	(18)	15
Net income (loss)	$ 20	$ 17	$ (2)	$ 15
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ 0.30	$ 0.06	$ 0.17	$ 0
Discontinued operations (in dollars per share)	$ (0.09)	$ 0.12	$ (0.19)	$ 0.16
Basic earnings (loss) per share (in dollars per share)	$ 0.21	$ 0.18	$ (0.02)	$ 0.16
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ 0.30	$ 0.06	$ 0.17	$ 0
Discontinued operations (in dollars per share)	$ (0.09)	$ 0.12	$ (0.19)	$ 0.15
Diluted earnings (loss) per share (in dollars per share)	$ 0.21	$ 0.18	$ (0.02)	$ 0.15
Basic average common shares outstanding (in shares)	96.3	94.3	95.4	93.8
Diluted average common shares outstanding (in shares)	97.2	96.9	97.2	96.9

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Accumulated Other Comprehensive Loss (AOCL) (Tables)

6 Months Ended

Mar. 31, 2012

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The components of AOCL as reported in the Consolidated Balance Sheet are as follows (in millions):

	March 31,			September 30,
	2012			2011
Foreign currency translation	$	119		$	110
Employee benefit related adjustments		(940	)		(942	)
Unrealized gains, net		1			3
Accumulated Other Comprehensive Loss	$	(820	)	$	(829	)

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CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (USD $) In Millions	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Beginning balance at Sep. 30, 2010	$ 92	$ 886	$ (1,220)	$ (812)	$ (1,054)	$ 31	$ (1,023)
Net income (loss)	0	0	15	0	15	9	24
Foreign currency translation adjustments	0	0	0	38	38	0	38
Impact of sale of business				(62)	(62)		(62)
Employee benefit related adjustment	0	0	0	9	9		9
Other	0	0	0	(2)	(2)	0	(2)
Comprehensive income (loss)					(2)	9	7
Equity based Compensation expense	0	3	0	0	3	0	3
Exercise of stock options	1	5	0	0	6	0	6
Other	0	1	0	0	1	0	1
Ending Balance at Mar. 31, 2011	93	895	(1,205)	(829)	(1,046)	40	(1,006)
Beginning balance at Sep. 30, 2011	94	897	(1,157)	(829)	(995)	34	(961)
Net income (loss)	0	0	(2)	0	(2)	8	6
Foreign currency translation adjustments	0	0	0	9	9	0	9
Employee benefit related adjustment	0	0	0	2	2	0	2
Other	0	0	0	(2)	(2)	0	(2)
Comprehensive income (loss)					7	8	15
Issuance of restricted stock	2	(2)	0	0	0	0	0
Equity based Compensation expense	0	3	0	0	3	0	3
Other	0	0	0	0	0	(2)	(2)
Ending Balance at Mar. 31, 2012	$ 96	$ 898	$ (1,142)	$ (820)	$ (968)	$ 40	$ (945)

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Operating Cash Flow (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
OPERATING ACTIVITIES
Net income	$ 24	$ 22	$ 6	$ 24
Less: Income (loss) from discontinued operations, net of tax	(9)	11	(18)	15
Income from continuing operations	33	11	24	9
Adjustments to income from continuing operations to arrive at cash used for operating activities:
Depreciation and amortization	16	17	33	33
Restructuring costs	(3)	(5)	(27)	(8)
Equity in earnings of affiliates	14	17	29	30
Pension and retiree medical expense			26	35
Other adjustments to income from continuing operations			7	8
Dividends received from affiliates			8	7
Pension and retiree medical contributions			(50)	(34)
Restructuring payments			(10)	(7)
Changes in off-balance sheet receivable securitization and factoring			8	138
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations			(82)	(174)
Operating cash flows used for continuing operations			(38)	(7)
Operating cash flows used for discontinued operations			(8)	(37)
CASH USED FOR OPERATING ACTIVITIES			$ (46)	$ (44)

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Inventories (Tables)

6 Months Ended

Mar. 31, 2012

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

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

	March 31,		September 30,
	2012		2011
Finished goods	$	202	$	183
Work in process		48		63
Raw materials, parts and supplies		239		214
Total	$	489	$	460

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Other Current Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011	Mar. 31, 2011
Compensation and benefits	$ 132	$ 148
Income taxes	26	23
Taxes other than income taxes	38	38
Accrued interest	5	5
Product warranties	17	19	28
Restructuring (see Note 6)	10	16
Asbestos-related liabilities (see Note 20)	19	18
Deferred credit	18	0
Other	78	61
Other current liabilities	$ 343	$ 328

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Other Liabilities

6 Months Ended

Mar. 31, 2012

Other Liabilities Disclosure [Abstract]

Other Liabilities [Text Block]

16. Other Liabilities

     Other liabilities are summarized as follows (in millions):

	March 31,		September 30,
	2012		2011
Asbestos-related liabilities (see Note 20)	$	77	$	78
Non-current deferred income tax liabilities		95		92
Liabilities for uncertain tax positions		34		35
Product warranties (see Note 15)		29		29
Environmental		8		9
Indemnity obligations		36		41
Other		40		41
Other liabilities	$	319	$	325

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Other Current Assets (Tables)

6 Months Ended

Mar. 31, 2012

Other Current Assets Disclosure [Abstract]

Schedule Of Other Assets Current [Table Text Block]

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

	March 31,		September 30,
	2012		2011
Current deferred income tax assets, net	$	27	$	28
Asbestos-related recoveries (see Note 20)		9		9
Deposits and collateral		7		11
Prepaid and other		22		18
Assets of discontinued operations		—		4
Other current assets	$	65	$	70

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Financial Instruments

6 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

18. Financial Instruments

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

	March 31,				September 30,
	2012				2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Cash and cash equivalents	$	109	$	109	$	217	$	217
Short-term debt		21		21		84		83
Long-term debt		954		982		950		844
Foreign exchange forward contracts (asset)		2		2		—		—

   Fair Value

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

• Level 1 inputs use quoted prices in active markets for identical instruments.
   
• Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
   
• Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument.

     In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest 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 is as follows (in millions):

	Level 1		Level 2		Level 3
Short-term debt	$	—	$	21	$	—
Long-term debt		—		982		—
Foreign exchange forward contracts (asset)		—		2		—

     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 does not have any cash equivalents at March 31, 2012 or September 30, 2011.

Short- and Long-term debt — Fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

     Foreign exchange forward contracts —The company uses foreign exchange forward purchase and sale contracts with terms of one year or less to hedge its exposure to changes in foreign currency exchange rates. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics.

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Other Liabilities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011	Mar. 31, 2011
Asbestos-related liabilities (see Note 20)	$ 77	$ 78
Non-current deferred income tax liabilities	95	92
Liabilities for uncertain tax positions	34	35
Product warranties (see Note 15)	29	29	25
Environmental	8	9
Indemnity obligations	36	41
Other	40	41
Other liabilities	$ 319	$ 325

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Basis of Presentation

6 Months Ended

Mar. 31, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Basis of Presentation

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

Certain businesses are reported in discontinued operations in the consolidated statement of operations, 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 financial statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K, for the fiscal year ended September 30, 2011. The results of operations for the six months ended March 31, 2012, are not necessarily indicative of the results for the full year.

The company’s fiscal year ends on the Sunday nearest September 30. The second quarter of fiscal years 2012 and 2011 ended on April 1, 2012 and April 3, 2011, respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and March 31 are used consistently throughout this report to represent the fiscal year end and second quarter end, respectively.

The company has evaluated subsequent events through the date that the consolidated financial statements were issued. On April 23, 2012, the company amended and extended its bank credit facility (see Note 17).

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CONDENSED CONSOLIDATED BALANCE SHEET (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
ASSETS
Cash and cash equivalents	$ 109	$ 217
Receivables, trade and other, net	703	712
Inventories	489	460
Other current assets	65	70
TOTAL CURRENT ASSETS	1,366	1,459
NET PROPERTY	404	421
GOODWILL	433	431
OTHER ASSETS	362	352
TOTAL ASSETS	2,565	2,663
LIABILITIES AND EQUITY (DEFICIT)
Short-term debt	21	84
Accounts payable	809	841
Other current liabilities	343	328
TOTAL CURRENT LIABILITIES	1,173	1,253
LONG-TERM DEBT	954	950
RETIREMENT BENEFITS	1,064	1,096
OTHER LIABILITIES	319	325
EQUITY (DEFICIT):
Common stock (March 31, 2012 and September 30, 2011, 96.4 and 94.6 shares issued and outstanding, respectively)	96	94
Additional paid-in capital	898	897
Accumulated deficit	(1,159)	(1,157)
Accumulated other comprehensive loss	(820)	(829)
Total deficit attributable to Meritor, Inc.	(985)	(995)
Noncontrolling interests	40	34
TOTAL DEFICIT	(945)	(961)
TOTAL LIABILITIES AND DEFICIT	$ 2,565	$ 2,663

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Inventories

6 Months Ended

Mar. 31, 2012

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

11. Inventories

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

	March 31,		September 30,
	2012		2011
Finished goods	$	202	$	183
Work in process		48		63
Raw materials, parts and supplies		239		214
Total	$	489	$	460

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DOCUMENT AND ENTITY INFORMATION	6 Months Ended
	Mar. 31, 2012	Apr. 01, 2012
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		96,487,135
Document Period End Date	Mar. 31, 2012
Document Type	10-Q
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012
Amendment Flag	false

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Other Current Assets

6 Months Ended

Mar. 31, 2012

Other Current Assets Disclosure [Abstract]

Other Current Assets [Text Block]

12. Other Current Assets

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

	March 31,		September 30,
	2012		2011
Current deferred income tax assets, net	$	27	$	28
Asbestos-related recoveries (see Note 20)		9		9
Deposits and collateral		7		11
Prepaid and other		22		18
Assets of discontinued operations		—		4
Other current assets	$	65	$	70

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Business Segment Information (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Segment EBITDA	$ 99	$ 87	$ 177	$ 153
Unallocated legacy and corporate costs (1)	(4)	(5)	(3)	(6)
Interest expense, net	(23)	(24)	(47)	(51)
Provision for income taxes	(17)	(21)	(37)	(41)
Depreciation and amortization	(16)	(17)	(33)	(33)
Loss on sale of receivables	(3)	(2)	(6)	(3)
Restructuring costs	(3)	(5)	(27)	(8)
Other loss	0	(2)	0	(2)
Noncontrolling interests	(4)	(5)	(8)	(9)
Income from continuing operations attributable to Meritor, Inc.	29	6	16	0
Commercial Truck [Member]
Segment EBITDA	49	40	96	73
Industrial [Member]
Segment EBITDA	22	18	33	35
Aftermarket and Trailer [Member]
Segment EBITDA	$ 28	$ 29	$ 48	$ 45

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CONDENSED CONSOLIDATED BALANCE SHEET [PARENTHETICAL] In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Balance Sheet Paranthetical [Abstract]
Common stock, shares issued	96.4	94.6
Common stock, shares outstanding	96.4	94.6

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Restructuring Costs

6 Months Ended

Mar. 31, 2012

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

6. Restructuring Costs

At March 31, 2012 and September 30, 2011, $15 million and $19 million, respectively, of restructuring reserves primarily related to unpaid employee termination benefits remained in the consolidated balance sheet. The changes in restructuring reserves for the six months ended March 31, 2012 and 2011 are as follows (in millions):

	Employee						Plant
	Termination			Asset			Shutdown
	Benefits			Impairment			& Other			Total
Balance at September 30, 2011	$	19		$	—		$	—		$	19
Activity during the period:
Charges to continuing operations		6			19			2			27
Charges to discontinued operations(1)		—			—			1			1
Asset impairments and other		(1	)		(19	)		—			(20	)
Cash payments – continuing operations		(9	)		—			(1	)		(10	)
Cash payments – discontinued operations		(1	)		—			(1	)		(2	)
Total restructuring reserves at March 31, 2012		14			—			1			15
Less: non-current restructuring reserves		(5	)		—			—			(5	)
Restructuring reserves – current, at March 31, 2012	$	9		$	—		$	1		$	10
Balance at September 30, 2010	$	11		$	—		$	—		$	11
Activity during the period:
Charges to continuing operations		7			1			—			8
Charges to discontinued operations(1)		6			—			—			6
Asset impairments		—			(1	)		—			(1	)
Cash payments - continuing operations		(7	)		—			—			(7	)
Cash payments – discontinued operations		(1	)		—			—			(1	)
Other		1			—			—			1
Total restructuring reserves at March 31, 2011	$	17		$	—		$	—		$	17

(1) Charges to discontinued operations are included in income from discontinued operations in the consolidated statement of income.

     Performance Plus: During fiscal year 2007, the company launched a long-term profit improvement and cost reduction initiative called “Performance Plus.” As part of this program, the company identified significant restructuring actions which would eliminate up to 2,800 positions in North America and Europe and consolidate and combine certain global facilities. The company’s continuing operations recognized restructuring costs in its Commercial Truck business segment of $24 million in the first six months of fiscal year 2012 related to Performance Plus. These costs include $19 million of non-cash charges, including an impairment charge of $17 million for assets held for sale at December 31, 2011. In connection with the then planned sale of St. Priest, France manufacturing facility to Renault Trucks SAS, the company classified certain assets and associated liabilities as held for sale (collectively the “Disposal Group”) at December 31, 2011. Upon comparing the carrying value of the Disposal Group to its fair value less cost to sell, an impairment was identified. The sale of Disposal Group was completed on January 2, 2012. In addition, other restructuring charges of approximately $5 million (including $1 million in the second quarter of fiscal year 2012) associated with employee headcount reduction and plant rationalization costs were recognized in connection with the sale of St. Priest facility. Restructuring costs recognized in the first and second quarters of fiscal year 2011 were also associated with the company’s Commercial Truck segment.

Cumulative restructuring costs recorded for this program as of March 31, 2012 are $186 million, including $93 million reported in discontinued operations in the consolidated statement of operations. These costs primarily relate to employee severance and related costs of $117 million, asset impairment charges of $41 million and $28 million primarily associated with pension termination benefits. The company’s Commercial Truck segment has recognized cumulative restructuring costs associated with Performance Plus of $82 million. Cumulative restructuring costs of $11 million were recognized by corporate locations and the company’s Aftermarket & Trailer segment. Substantially all restructuring actions associated with Performance Plus were complete as of March 31, 2012.

Fiscal Year 2012 European Action: During the second quarter of fiscal year 2012, the company approved a European head count reduction plan in response to the ongoing economic weakness and uncertainty in that region and recognized approximately $1 million of restructuring costs associated with this plan in its Commercial Truck segment. Remaining anticipated costs under this plan are approximately $5 million and are expected to be incurred during the second half of fiscal year 2012.

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Goodwill

6 Months Ended

Mar. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill Disclosure [Text Block]

5. Goodwill

A summary of the changes in the carrying value of goodwill are presented below (in millions):

	Commercial				Aftermarket
	Truck		Industrial		& Trailer		Total
Balance at September 30, 2011	$	150	$	109	$	172	$	431
Foreign currency translation		2		—		—		2
Balance at March 31, 2012	$	152	$	109	$	172	$	433

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Long-Term Debt

6 Months Ended

Mar. 31, 2012

Debt Disclosure [Abstract]

Long-term Debt [Text Block]

17. Long-Term Debt

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

	March 31,			September 30,
	2012			2011
8-3/4 percent notes due 2012(1)	$	—		$	84
8-1/8 percent notes due 2015		250			250
10-5/8 percent notes due 2018		246			246
4.625 percent convertible notes due 2026(2)		300			300
4.0 percent convertible notes due 2027(2)		200			200
Lines of credit and other		12			8
Accounts receivable securitization		19			—
Unamortized gain on interest rate swap termination		11			14
Unamortized discount on convertible notes		(63	)		(68	)
Subtotal		975			1,034
Less: current maturities		(21	)		(84	)
Long-term debt	$	954		$	950

(1)	During the quarter ended March 31, 2012, the company retired its $84 million 8-3/4 percent notes due 2012 at par value.
(2)	The 4.625 percent and 4.0 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016 and 2019, respectively.

   Revolving Credit Facility

     At March 31, 2012, the company had a revolving credit facility of $441 million which was slated to mature in January 2014. The availability under this facility was dependent upon various factors, including principally performance against certain financial covenants. At March 31, 2012 and September 30, 2011, there were no borrowings outstanding under the revolving facility. The revolving credit facility included a $100 million limit on the issuance of letters of credit. No letters of credit were outstanding at March 31, 2012 and September 30, 2011 under the revolving credit facility.

Availability under the revolving credit facility was subject to a collateral test, pursuant to which borrowings on the revolving credit facility could not exceed 1.0x the collateral test value. The collateral test was performed on a quarterly basis and under the most recent collateral test, the full amount of the revolving credit facility was available for borrowing at March 31, 2012. Availability under the revolving credit facility was also 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 was required to maintain a total priority debt-to-EBITDA ratio, as defined in the agreement, of (i) 2.25 to 1 as of the last day of each fiscal quarter commencing with the fiscal quarter ended September 30, 2011 through and including the fiscal quarter ended June 30, 2012; and (ii) 2.00 to 1 as of the last day of each fiscal quarter thereafter through maturity. At March 31, 2012, the company was in compliance with all covenants under its credit agreement with a ratio of approximately 0.26x for the priority debt-to-EBITDA covenant.

Borrowings under the revolving credit facility were collateralized by approximately $653 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 were subject to interest based on quoted LIBOR rates plus a margin, and a commitment fee on undrawn amounts, both of which were based upon the company’s current credit rating for the senior secured facility. At March 31, 2012, the margin over LIBOR rate was 425 basis points and the commitment fee was 50 basis points.

Certain of the company’s subsidiaries, as defined in the credit agreement, irrevocably and unconditionally guaranteed amounts outstanding under the revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the publicly-held notes outstanding under the company’s indentures (see Note 23). 

     Amended Bank Credit Facility (Subsequent Event)

On April 23, 2012, the company amended and restated the above described revolving credit facility. Pursuant to the revolving credit facility agreement as amended, the company has a $429 million revolving credit facility, $14 million of which matures in January 2014 for a bank not electing to extend its commitments under the revolving credit facility existing at March 31, 2012 and the remaining $415 million of which matures in April 2017. The April 2017 maturity date is also subject to the following: if on June 1, 2015, the outstanding principal amount of the company’s $250 million bonds due 2015 is greater than $100 million, the maturity date becomes June 10, 2015 and if on November 1, 2015, the outstanding principal amount of the company’s $300 million 4.625 percent convertibles notes due 2026 is greater than $100 million and the conversion price of $20.98 is greater than the then current Meritor common stock price, the maturity date becomes November 15, 2015. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit.

Availability under the amended and extended revolving credit facility is 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. The availability under the revolving credit facility is also 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 (i) 2.50 to 1.00 as of the last day of the fiscal quarter commencing with the fiscal quarter ending on or about March 31, 2012 through and including the fiscal quarter ending on or about September 30, 2012, (ii) 2.25 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending on or about December 31, 2012 through and including the fiscal quarter ending on or about September 30, 2013, and (iii) 2.00 to 1.00 as of the last day of each fiscal quarter thereafter. Borrowings under the amended and extended revolving credit facility are subject to the same interest rate and commitment fee terms as applicable to the existing revolving credit facility discussed above.

As part of the amendment and restatement of the above described revolving credit facility, on April 23, 2012, the company entered into a $100 million term loan agreement with a maturity date of April 23, 2017. The term loan will amortize over a period of 5 years from the effective date as follows: $5 million principal to be repaid during year one, $10 million principal to be repaid in each of the years two, three and four; and the remaining principal balance to be paid in year five. Payments will be made on a quarterly basis for the duration of the term loan. As of the effective date of the term loan, the margin over LIBOR rate was 425 basis points. The company has the ability to prepay the term loan at any time without penalty or premium.

Capital Leases

On March 20, 2012, the company entered into an arrangement to finance equipment acquisitions for various U.S. locations. Under this arrangement, the company can request financing from GE Capital Commercial, Inc. (GE Capital) for progress payments for equipment under construction, not to exceed $10 million at any point in time. The financing rate is equal to the 30-day LIBOR plus 575 basis points per annum. Under this arrangement, the company can also enter into lease arrangements with GE Capital for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points. As of March 31, 2012, the company had $4 million outstanding under these arrangements.

Letter of Credit Facilities

     The company entered into a five-year credit agreement dated as of November 18, 2010 with Citicorp USA, Inc., as administrative agent and issuing bank, the other lenders party thereto and the Bank of New York Mellon, as paying agent. Under the terms of this credit agreement, as amended, the company has the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $30 million. This facility contains covenants and events of default generally similar to those existing in our public debt indentures. At March 31, 2012 and September 30, 2011, $29 million and $30 million, respectively, of letters of credit were outstanding under this facility. In addition, the company had another $6 million and $2 million of letters of credit outstanding through other letters of credit facilities at March 31, 2012 and September 30, 2011, respectively.

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Net Property

6 Months Ended

Mar. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

13. Net Property

Net property is summarized as follows (in millions):

	March 31,			September 30,
	2012			2011
Property at cost:
Land and land improvements	$	39		$	47
Buildings		251			264
Machinery and equipment		913			897
Company-owned tooling		157			153
Construction in progress		55			74
Total		1,415			1,435
Less accumulated depreciation		(1,011	)		(1,014	)
Net property	$	404		$	421

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details 2) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	$ (46)	$ (44)
INVESTING ACTIVITIES
Capital expenditures	43	42
Proceeds from sale of property	18	0
Other investing activities	2	(1)
Net cash flows used by discontinued operations	28	(71)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	1	(112)
FINANCING ACTIVITIES
Repayment of notes	84	0
Borrowings on accounts receivable securitization program, net	19	0
Other financing activities	0	6
CASH USED FOR FINANCING ACTIVITIES	(65)	6
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	2	2
CHANGE IN CASH AND CASH EQUIVALENTS	(108)	(148)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	217	343
CASH AND CASH EQUIVALENTS AT END OF PERIOD	109	195
Parent Company [Member]
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	(36)	160
INVESTING ACTIVITIES
Capital expenditures	(2)	(2)
Proceeds from sale of property	0
Other investing activities	0	0
Net cash flows used by discontinued operations	0	(15)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	(2)	(17)
FINANCING ACTIVITIES
Repayment of notes	(84)
Borrowings on accounts receivable securitization program, net	0
Intercompany advances	40	(134)
Other financing activities		6
CASH USED FOR FINANCING ACTIVITIES	(44)	(128)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	0	0
CHANGE IN CASH AND CASH EQUIVALENTS	(82)	15
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	92	47
CASH AND CASH EQUIVALENTS AT END OF PERIOD	10	62
Guarantor Subsidiaries [Member]
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	21	11
INVESTING ACTIVITIES
Capital expenditures	(18)	(15)
Proceeds from sale of property	0
Other investing activities	1	2
Net cash flows used by discontinued operations	0	0
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	(17)	(13)
FINANCING ACTIVITIES
Repayment of notes	0
Borrowings on accounts receivable securitization program, net	0
Intercompany advances	0	0
Other financing activities		0
CASH USED FOR FINANCING ACTIVITIES	0	0
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	0	0
CHANGE IN CASH AND CASH EQUIVALENTS	4	(2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	4	6
CASH AND CASH EQUIVALENTS AT END OF PERIOD	8	4
Non-Guarantor Subsidiaries [Member]
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	(31)	(215)
INVESTING ACTIVITIES
Capital expenditures	(23)	(25)
Proceeds from sale of property	18
Other investing activities	(3)	(1)
Net cash flows used by discontinued operations	28	(56)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	20	(82)
FINANCING ACTIVITIES
Repayment of notes	0
Borrowings on accounts receivable securitization program, net	19
Intercompany advances	(40)	134
Other financing activities		0
CASH USED FOR FINANCING ACTIVITIES	(21)	134
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	2	2
CHANGE IN CASH AND CASH EQUIVALENTS	(30)	(161)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	121	290
CASH AND CASH EQUIVALENTS AT END OF PERIOD	91	129
Elims [Member]
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	0	0
INVESTING ACTIVITIES
Capital expenditures	0	0
Proceeds from sale of property	0
Other investing activities	0	0
Net cash flows used by discontinued operations	0	0
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	0	0
FINANCING ACTIVITIES
Repayment of notes	0
Borrowings on accounts receivable securitization program, net	0
Intercompany advances	0	0
Other financing activities		0
CASH USED FOR FINANCING ACTIVITIES	0	0
EFFECT OF 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
Consolidated [Member]
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES	(46)	(44)
INVESTING ACTIVITIES
Capital expenditures	(43)	(42)
Proceeds from sale of property	18
Other investing activities	(2)	1
Net cash flows used by discontinued operations	28	(71)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	1	(112)
FINANCING ACTIVITIES
Repayment of notes	(84)
Borrowings on accounts receivable securitization program, net	19
Intercompany advances	0	0
Other financing activities		6
CASH USED FOR FINANCING ACTIVITIES	(65)	6
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	2	2
CHANGE IN CASH AND CASH EQUIVALENTS	(108)	(148)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	217	343
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 109	$ 195

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Accounts Receivable Factoring

6 Months Ended

Mar. 31, 2012

Accounts Receivable Securitization and Factoring Disclosure [Abstract]

Accounts Receivable Securitization and Factoring [Text Block]

9. Accounts Receivable Factoring

Off-balance sheet arrangements 

     Swedish Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo through one of its European subsidiaries. Under this arrangement, which was renewed in June 2011 for a term of one year, the company can sell up to, at any point in time, €150 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €131 million ($174 million) and €107 million ($146 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively.

French Factoring Facility: The company has an arrangement to sell trade receivables through one of its French subsidiaries. Under this arrangement, the company can sell up to, at any point in time, €125 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €6 million ($8 million) and €47 million ($63 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively. In January 2012, the company sold its manufacturing facility located at St. Priest, France to Renault Trucks SAS. As a result, the French Factoring Facility is expected to ramp down over the course of fiscal year 2012. During the second quarter of fiscal year 2012, the company entered into new arrangements to sell trade receivables from AB Volvo and its European subsidiaries through its United Kingdom and Italian subsidiaries as more fully described below.

U.S. Factoring Facility: In October 2010, the company entered into a two-year arrangement to sell trade receivables from AB Volvo and its subsidiaries. Under this arrangement, the company can sell up to, at any point in time, €60 million ($80 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €49 million ($65 million) and €46 million ($62 million) of this accounts receivable factoring facility as of March 31, 2012 and September 30, 2011, respectively.

The above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through June 2012 for the French and the Swedish facilities and October 2012 for the U.S. facility. The commitments are subject to standard terms and conditions for these types of arrangements (including, in the case of the French commitment, a sole discretion clause whereby the bank retains the right to not purchase receivables, which to the company’s knowledge has never been invoked).

United Kingdom Factoring Facility: On February 2, 2012, the company entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement, which expires in February 2013, the company can sell up to, at any point in time, €25 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €5 million ($7 million) of this accounts receivable factoring facility as of March 31, 2012. The commitment 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.

Italy Factoring Facility: On March 15, 2012, the company entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement, which expires in March 2017, the company can sell up to, at any point in time, €30 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €17 million ($22 million) of this accounts receivable factoring facility as of March 31, 2012. The commitment 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.

In addition, several of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the consolidated balance sheet. The amount of factored receivables excluded from accounts receivable was $11 million and $8 million at March 31, 2012 and September 30, 2011, respectively.

Total costs associated with these off-balance sheet arrangements were $6 million and $3 million in the six month periods ended March 31, 2012 and 2011, respectively, and are included in selling, general and administrative expenses in the consolidated statement of operations.

On-balance sheet arrangements

The company has a $125 million U.S. receivables financing arrangement which is provided on a committed basis by a syndicate of financial institutions led by Ally Commercial Finance LLC which expires in October 2013. Under this program, the company has the ability to sell substantially all of the trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. Factoring Facility discussed above) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings under a loan agreement with participating lenders. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. At March 31, 2012, the company had $19 million of borrowings outstanding under this program. At September 30, 2011, no amount was outstanding under this program. This program does not have specific financial covenants; however, it does have a cross-default provision to the company’s revolving credit facility agreement.

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Inventories (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Finished goods	$ 202	$ 183
Work in process	48	63
Raw materials, parts and supplies	239	214
Total	$ 489	$ 460

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Other Income (Loss), Net

6 Months Ended

Mar. 31, 2012

Other Income and Expenses [Abstract]

Other Income and Other Expense Disclosure [Text Block]

7. Other Income (Loss), Net

Other income, net for the six months ended March 31, 2012 includes a $3 million non-operating gain related to the sale of the company’s remaining ownership interest in Gabriel India, Ltd during the first quarter of fiscal year 2012. The company’s ownership interest in Gabriel India, Ltd was a legacy cost method investment that the company deemed non-core upon the completion of the sale of its light vehicle businesses.

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Income Taxes

6 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

8. 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 Accounting Standards Codification (ASC) Topic 740-270, “Accounting for Income Taxes in Interim Periods.” The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

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

For the first six months of fiscal 2012 and 2011, the company had approximately $52 million and $85 million, respectively, of net pre-tax losses in tax jurisdictions in which a tax benefit is not recorded. Losses arising from these jurisdictions resulted in increasing the valuation allowance, rather than reducing income tax expense.

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Operating Cash Flow

6 Months Ended

Mar. 31, 2012

Operating Cash Flow Disclosure [Abstract]

Operating Cash Flow [Text Block]

10. Operating Cash Flow

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

	Six Months Ended
	March 31,
	2012			2011
OPERATING ACTIVITIES
Net income	$	6		$	24
Less: Income (loss) from discontinued operations, net of tax		(18	)		15
Income from continuing operations		24			9
Adjustments to income from continuing operations to arrive at cash used for operating activities:
Depreciation and amortization		33			33
Restructuring costs		27			8
Equity in earnings of affiliates		(29	)		(30	)
Pension and retiree medical expense		26			35
Other adjustments to income from continuing operations		7			8
Dividends received from affiliates		8			7
Pension and retiree medical contributions		(50	)		(34	)
Restructuring payments		(10	)		(7	)
Changes in off-balance sheet receivable securitization and factoring		8			138
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency
adjustments and discontinued operations		(82	)		(174	)
Operating cash flows used for continuing operations		(38	)		(7	)
Operating cash flows used for discontinued operations		(8	)		(37	)
CASH USED FOR OPERATING ACTIVITIES	$	(46	)	$	(44	)

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Other Assets (Details Textuals) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Investments In and Advance To Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 197	$ 174
Equity Method Joint Venture [Member]
Investments In and Advance To Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 37

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Other Current Liabilities (Details 1) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Sep. 30, 2011
Total product warranties - beginning of period	$ 46	$ 54
Accruals for product warranties	10	12
Payments	(7)	(11)
Change in estimates and other	(5)	(2)
Total product warranties - end of period	44	53
Less: Non-current product warranties (see Note 16)	(29)	(25)	(29)
Product warranties - current	$ 17	$ 28	$ 19

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Other Assets (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Investments in non-consolidated joint ventures	$ 197	$ 174
Asbestos-related recoveries (see Note 20)	65	67
Non-current deferred income tax assets, net	12	12
Unamortized debt issuance costs	21	25
Capitalized software costs, net	22	23
Prepaid pension costs	10	9
Other	35	42
Other assets	$ 362	$ 352

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Operating Cash Flow (Tables)

6 Months Ended

Mar. 31, 2012

Operating Cash Flow Disclosure [Abstract]

Schedule Of Operating Cash Flow [Table Text Block]

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

	Six Months Ended
	March 31,
	2012			2011
OPERATING ACTIVITIES
Net income	$	6		$	24
Less: Income (loss) from discontinued operations, net of tax		(18	)		15
Income from continuing operations		24			9
Adjustments to income from continuing operations to arrive at cash used for operating activities:
Depreciation and amortization		33			33
Restructuring costs		27			8
Equity in earnings of affiliates		(29	)		(30	)
Pension and retiree medical expense		26			35
Other adjustments to income from continuing operations		7			8
Dividends received from affiliates		8			7
Pension and retiree medical contributions		(50	)		(34	)
Restructuring payments		(10	)		(7	)
Changes in off-balance sheet receivable securitization and factoring		8			138
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency
adjustments and discontinued operations		(82	)		(174	)
Operating cash flows used for continuing operations		(38	)		(7	)
Operating cash flows used for discontinued operations		(8	)		(37	)
CASH USED FOR OPERATING ACTIVITIES	$	(46	)	$	(44	)

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Discontinued Operations (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Sales	$ 0	$ 19	$ 2	$ 336
Operating income (loss), net	0	(1)	0	13
Gain (loss) on sale of businesses, net	0	19	(1)	19
Restructuring costs	0		(1)	(7)
Charge for legal contingency (see Note 20)	(6)	0	(9)	0
Environmental remediation charges	(2)	(1)	(2)	(1)
Other, net	(2)	(4)	(6)	(7)
Income (loss) before income taxes	(10)	7	(19)	17
Benefit (provision) for income taxes	1	4	1	(2)
Income (loss) from discontinued operations attributable to Meritor, Inc.	$ (9)	$ 11	$ (18)	$ 15

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Other Current Liabilities

6 Months Ended

Mar. 31, 2012

Other Current Liabilities Disclosure [Abstract]

Other Current Liabilities [Text Block]

15. Other Current Liabilities

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

	March 31,		September 30,
	2012		2011
Compensation and benefits	$	132	$	148
Income taxes		26		23
Taxes other than income taxes		38		38
Accrued interest		5		5
Product warranties		17		19
Restructuring (see Note 6)		10		16
Asbestos-related liabilities (see Note 20)		19		18
Deferred credit		18		—
Other		78		61
Other current liabilities	$	343	$	328

     The deferred credit is associated with proceeds received from the sale of excess land at the company’s Commercial Truck facility in Cwmbran, Wales. The company entered into an agreement to sell the excess land in February 2012; however, due to its continued use of this land through April 2012, it has deferred the recognition of a gain on the sale. The company expects to recognize the gain during the third quarter of fiscal year 2012. The land subject to this transaction with a carrying amount of approximately $1 million has been classified as held for sale and is included in other current assets in the accompanying condensed consolidated balance sheet (see Note 12).

     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 known and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability.

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

	Six Months Ended
	March 31,
	2012			2011
Total product warranties – beginning of period	$	48		$	54
Accruals for product warranties		10			12
Payments		(7	)		(11	)
Change in estimates and other		(5	)		(2	)
Total product warranties – end of period		46			53
Less: Non-current product warranties (see Note 16)		(29	)		(25	)
Product warranties – current	$	17		$	28

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Contingencies

6 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

20. Contingencies

   Environmental

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

The company has been designated as a potentially responsible party at nine Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Management estimates the total reasonably possible costs the company could incur for the remediation of Superfund sites at March 31, 2012 to be approximately $19 million, of which $3 million is recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators.

In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at March 31, 2012 to be approximately $38 million, of which $15 million is 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 a discount rate of 5-percent and is approximately $8 million at March 31, 2012. The undiscounted estimate of these costs is approximately $10 million.

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

	Superfund Sites		Non-Superfund Sites			Total
Balance at September 30, 2011	$	2	$	15		$	17
Payments and other		—		(3	)		(3	)
Accruals(1)		1		3			4
Balance at March 31, 2012	$	3	$	15		$	18

⁽¹⁾ Includes $2 million recognized in loss from discontinued operations in the consolidated statement of operations.

     Environmental reserves are included in Other Current Liabilities (see Note 15) and Other Liabilities (see Note 16) in the 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.

   Asset Retirement Obligations

     The company has identified conditional asset retirement obligations for which a reasonable estimate of fair value could not be made because the potential settlement dates cannot be determined at this time. Due to the long term, productive nature of the company’s manufacturing operations, absent plans or expectations of plans to initiate asset retirement activities, the company was not able to reasonably estimate the settlement date for the related obligations. Therefore, the company has not recognized conditional asset retirement obligations for which there are no plans or expectations of plans to retire the asset.

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 21,000 pending asbestos-related claims at March 31, 2012 and September 30, 2011. 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 on behalf of hundreds or thousands of claimants, 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, Maremont does not consider the number of claims filed or the damages alleged to be a meaningful factor in determining its asbestos-related liability.

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

	March 31, 2012		September 30, 2011
Pending and future claims	$	75	$	77
Asbestos-related insurance recoveries		67		67

     A portion of the asbestos-related recoveries and reserves are included in Other Current Assets and Liabilities, with the majority of the amounts recorded in Other Assets and Liabilities (see Notes 12, 14, 15 and 16).

Prior to February 2001, Maremont participated in the Center for Claims Resolution (“CCR”) and shared with other CCR members in the payment of defense and indemnity costs for asbestos-related claims. The CCR handled the resolution and processing of asbestos claims on behalf of its members until February 2001, when it was reorganized and discontinued negotiating shared settlements. Since the CCR was reorganized in 2001, Maremont has handled asbestos-related claims through its own defense counsel and has taken a more aggressive defensive approach that involves examining the merits of each asbestos-related claim. Although the company expects legal defense costs to continue at higher levels than when it participated in the CCR, the company believes its litigation strategy has reduced the average indemnity cost per claim.

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

Bates White provided an estimate of the reasonably possible range of Maremont’s obligation for asbestos personal injury claims over the next ten years of $75 million to $85 million. After consultation with Bates White, Maremont determined that as of March 31, 2012, the most likely and probable liability for pending and future claims over the next ten years is $75 million. 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.

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

• Pending and future claims were estimated for a ten year period ending in fiscal year 2022. The ten-year assumption is considered appropriate as Maremont has reached certain longer-term agreements with key plaintiff law firms and filings of mesothelioma claims have been relatively stable over the last few years resulting in an improvement in the reliability of future projections over a longer time period;
   
• Maremont believes that the litigation environment will 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;
   
• The ultimate cost of resolving pending and future claims filed in Madison County, Illinois, a jurisdiction where a substantial amount of Maremont’s claims are filed, will decline to reflect average outcomes throughout the United States;
   
• Defense and processing costs for pending and future claims filed outside of Madison County, Illinois will be at the level consistent with Maremont’s prior experience; 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. Recent changes in tort law and insufficient settlement history make estimating a liability for these nonmalignant claims difficult and uncertain.

     Recoveries: Maremont has insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The coverage also reimburses Maremont for any indemnity paid on those claims. The coverage is provided by several insurance carriers based on insurance agreements in place. Incorporating historical information with respect to buy-outs and settlements of coverage, and excluding any policies in dispute, the insurance receivable related to asbestos-related liabilities is $67 million as of March 31, 2012. The difference between the estimated liability and insurance receivable is primarily related to proceeds received from settled insurance policies. Certain insurance policies have been settled in cash prior to the ultimate settlement of the related asbestos liabilities. Amounts received from insurance settlements generally reduce recorded insurance receivables. Receivables for policies in dispute are not recorded.

The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Maremont could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Maremont in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; Maremont’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the 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. Currently there are thousands of claimants in lawsuits that name AM, together with many other companies, as defendants. However, the company does not consider the number of claims filed or the damages alleged to be a meaningful factor in determining asbestos-related liabilities. 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. 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 company defends these cases vigorously. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants.

     The company engages Bates White to assist with determining whether it would be possible to estimate the cost of resolving pending and future Rockwell legacy asbestos-related claims that have been, and could reasonably be expected to be, filed against the company. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised the company that it would be able to determine an estimate of probable defense and indemnity costs which could be incurred to resolve pending and future Rockwell legacy asbestos-related claims. After consultation with Bates White, the company determined that as of March 31, 2012 and September 30, 2011 the probable liability for pending and future claims over the next four years is $21 million and $19 million, respectively. The accrual estimates are based on historical data and certain assumptions with respect to events that may occur in the future. The uncertainties of asbestos claim litigation and resolution of the litigation with the insurance companies make it difficult to predict accurately the ultimate resolution of asbestos claims beyond four years. That uncertainty is increased by the possibility of adverse rulings or new legislation affecting asbestos claim litigation or the settlement process.

Rockwell maintained insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for most of these claims. The company has initiated claims against certain of these carriers to enforce the insurance policies, which are currently being disputed. The company expects to recover some portion of defense and indemnity costs it has incurred to date, over and above self-insured retentions, and some portion of the costs for defending asbestos claims going forward. Based on consultation with advisors and underlying analysis performed by management, the company has recorded an insurance receivable related to Rockwell legacy asbestos-related liabilities of $7 million and $9 million at March 31, 2012 and September 30, 2011, respectively. If the assumptions with respect to 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.

On March 4, 2010, Gordon Bankhead and his spouse filed suit in Superior Court for Alameda County, California, against more than 40 defendants that Mr. Bankhead claims manufactured or supplied asbestos-containing products he allegedly was exposed to during his career as a janitor; as an ordnance specialist in the National Guard; and as an automotive parts-man. By the time trial began on October 27, 2010, Mr. and Mrs. Bankhead had settled with all defendants except for the company and three other defendants. The claims against these four defendants were limited to Mr. Bankhead’s work as an automotive parts-man. On December 23, 2010, the jury ruled against all four defendants, including the company. The company was assessed $375,000 in compensatory damages for which it has recorded a liability at March 31, 2012. Additionally, the company was assessed $4.5 million in punitive damages. The company filed an appeal on the punitive damages award to the California Court of Appeals. Possible outcomes of the appeal included vacating the damages award in its entirety, reducing the award, affirming the award in its entirety or remanding the case back to the trial court. Accordingly, the possible estimated range of loss at September 30, 2011 was $0 to $4.5 million. Because of the uncertainty associated with the litigation including the appeal process, the company was previously unable to determine an estimate within this range which was considered more probable than others and accordingly did not record any liability for punitive damages at September 30, 2011. On April 19, 2012, the California Court of Appeals issued its opinion, affirming the trial court judgment in full. The company is considering its options, but given the opinion issued by the California Court of Appeals in April 2012, the company increased its liability for this matter from $375,000 to $5.6 million at March 31, 2012.

   Indemnifications

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. During the second quarter of fiscal year 2011, the company recorded a $4 million charge in income from discontinued operations to increase the liability based on changes in demographic data. At March 31, 2012 and September 30, 2011, the remaining estimated liability for this matter was approximately $22 million and $23 million, respectively.

The company has recorded indemnity liabilities of $5 million related to the sale of its Body Systems business, primarily associated with income tax matters and $15 million related to the sale of its 57-percent interest in Meritor Suspension Systems Company related to its share of potential obligations related to taxes, pension funding shortfall, environmental and other contingencies. These amounts are included in other current liabilities and other liabilities in the accompanying consolidated balance sheet.

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. The company’s maximum obligations under these indemnifications cannot be reasonably estimated. The company is not aware of any claims or other information that would give rise to material payments under such indemnifications.

   Other

     On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that several filter manufacturers and their affiliated corporate entities, including a prior subsidiary of the company, engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive filters. This suit is a purported class action on behalf of direct purchasers of filters from the defendants. Several parallel purported class actions, including on behalf of indirect purchasers of filters, have been filed by other plaintiffs in a variety of jurisdictions in the United States and Canada. The cases have been consolidated into a multi-district litigation proceeding in Federal court for the Northern District of Illinois. On April 16, 2009, the Attorney General of the State of Florida filed a complaint with the U.S. District Court for the Northern District of Illinois based on these same allegations. On May 25, 2010, the Office of the Attorney General for the State of Washington informed the company that it also was investigating the allegations raised in these suits. On August 9, 2010, the County of Suffolk, New York, filed a complaint in the Eastern District of New York based on the same allegations. The case was transferred to the multi-district litigation proceeding in Illinois, but has been dismissed without prejudice pursuant to a tolling agreement that continues until thirty days after the claims by the indirect purchasers in the multi-district litigation are terminated, settled, or dismissed. On April 14, 2011, the judge in that multi-district litigation granted a stay on discovery and depositions until July 25, 2011. The stay was subsequently extended until August 23, 2011 and, on October 12, 2011, was further extended pending the court’s ruling on various motions. On January 19, 2012, counsel for the defendants and counsel for all purported class plaintiffs participated in a settlement conference that was facilitated by the magistrate for the judge in the multi-district litigation. None of the parties were able to reach any agreement at that conference and, on January 20, 2012, the court ruled on the above-referenced motions and vacated the stay on discovery and depositions. In February 2012 the other remaining defendants reached preliminary settlement with all plaintiffs for $13 million, leaving the company as the sole remaining defendant. These preliminary settlements were allocated 65 percent to the direct purchasers and 35 percent to the remaining plaintiffs. In April 2012, the company reached an agreement in principle to settle with certain plaintiffs for $3.1 million.

Based on management’s assessment, the company has recognized a $9 million liability in discontinued operations at March 31, 2012 for this matter. The company believes it has meritorious defenses against the claims raised in all of these actions and intends to vigorously defend itself. However, there is considerable uncertainty around the potential outcomes in a jury trial, and if this matter were to proceed to trial and were ultimately decided by a jury in favor of plaintiffs, it is possible that awarded damages could materially exceed the recorded liability by an amount that the company is unable to reasonably estimate at this time.

In addition, various lawsuits, claims and proceedings, other than those specifically disclosed in the 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 or results of operations.

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Earnings per Share (Details Textuals) (Stock Option [Member]) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded From Computation Of Earnings Per Share, Amount	0.7	0.4	0.7	0.4

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Long-Term Debt (Tables)

6 Months Ended

Mar. 31, 2012

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

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

	March 31,			September 30,
	2012			2011
8-3/4 percent notes due 2012(1)	$	—		$	84
8-1/8 percent notes due 2015		250			250
10-5/8 percent notes due 2018		246			246
4.625 percent convertible notes due 2026(2)		300			300
4.0 percent convertible notes due 2027(2)		200			200
Lines of credit and other		12			8
Accounts receivable securitization		19			—
Unamortized gain on interest rate swap termination		11			14
Unamortized discount on convertible notes		(63	)		(68	)
Subtotal		975			1,034
Less: current maturities		(21	)		(84	)
Long-term debt	$	954		$	950

(1)	During the quarter ended March 31, 2012, the company retired its $84 million 8-3/4 percent notes due 2012 at par value.
(2)	The 4.625 percent and 4.0 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016 and 2019, respectively.

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
OPERATING ACTIVITIES
CASH USED FOR OPERATING ACTIVITIES (See Note 10)	$ (46)	$ (44)
INVESTING ACTIVITIES
Capital expenditures	(43)	(42)
Proceeds from sale of property	18	0
Other investing activities	(2)	1
Net investing cash flows used for continuing operations	(27)	(41)
Net investing cash flows provided by (used for) discontinued operations	28	(71)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	1	(112)
CASH PROVIDED BY FINANCING ACTIVITIES:
Borrowings on accounts receivable securitization program, net	19	0
Repayment of notes	(84)	0
Other financing activities	0	6
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(65)	6
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	2	2
CHANGE IN CASH AND CASH EQUIVALENTS	(108)	(148)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	217	343
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 109	$ 195

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Discontinued Operations

6 Months Ended

Mar. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4. Discontinued Operations

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

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2012			2011			2012			2011
Sales	$	—		$	19		$	2		$	336
Operating income (loss), net	$	—		$	(1	)	$	—		$	13
Gain (loss) on sale of businesses, net		—			19			(1	)		19
Restructuring costs		—			(6	)		(1	)		(7	)
Charge for legal contingency (see Note 20)		(6	)		—			(9	)		—
Environmental remediation charges		(2	)		(1	)		(2	)		(1	)
Other, net		(2	)		(4	)		(6	)		(7	)
Income (loss) before income taxes		(10	)		7			(19	)		17
Benefit (provision) for income taxes		1			4			1			(2	)
Income (loss) from discontinued operations
attributable to Meritor, Inc.	$	(9	)	$	11		$	(18	)	$	15

In conjunction with the company’s long-term strategic objective to focus on supplying the commercial vehicle on- and off-highway markets for original equipment manufacturers, aftermarket and industrial customers, the company previously announced its intent to divest the Light Vehicle Systems (LVS) business groups in their entirety. In November 2011, the company sold its damper business located in Leicester, England. With the sale of this business, the company has completed the divestiture of its LVS businesses.

In the second quarter of fiscal year 2011, the company announced the planned closure of its European Trailer (EU Trailer) business which was part of the company’s Aftermarket & Trailer segment. All manufacturing operations and use of productive assets ceased prior to September 30, 2011. The company sold certain long-lived and current assets of the business to a third party during the fourth quarter of fiscal year 2011. The European Trailer business is presented in discontinued operations for all periods presented.

The following summarizes significant items included in income from discontinued operations in the consolidated statement of operations for the three- and six-month periods ended March 31, 2012 and 2011:

     Sales from discontinued operations in the three month period ended March 31, 2011 were $19 million, which primarily related to the company’s EU Trailer business. Sales in the six month period ended March 31, 2011 were $336 million, which included $298 million in Body Systems and $30 million in EU Trailer.

     Operating income (loss), net from discontinued operations in the three and six month periods ended March 31, 2011 represents income from normal operating activities of businesses, primarily Body Systems, included in discontinued operations.

Net gain (loss) on sale of businesses: The loss on sale of business in the six month period ended March 31, 2012 relates to the sale of the company’s damper business located in Leicester, England during the first quarter of fiscal year 2012. In the second quarter of fiscal year 2011, the company recognized a pre-tax gain of $32 million ($32 million after tax) on the sale of the Body Systems business and a pre-tax loss of $13 million ($13 million after tax) on the sale of its Gabriel Europe business.

Restructuring costs: In the second quarter of fiscal year 2011, the company recognized $6 million of restructuring charges associated with the closure of its EU Trailer business. The company recognized additional restructuring charges of $1 million associated with EU Trailer closure in the first six months of fiscal year 2012.

Other: These charges primarily relate to charges for changes in estimates and adjustments for certain assets and liabilities retained from previously sold businesses and indemnities provided at the time of sale, and costs associated with the divestiture actions.

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Accounts Receivable Factoring (Details Textuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012 U.S Factoring Facility [Member]	Sep. 30, 2011 U.S Factoring Facility [Member]	Mar. 31, 2012 Swedish Factoring Facility [Member]	Sep. 30, 2011 Swedish Factoring Facility [Member]	Mar. 31, 2012 French Factoring Facility [Member]	Sep. 30, 2011 French Factoring Facility [Member]	Mar. 31, 2012 Other Factoring Facility [Member]	Sep. 30, 2011 Other Factoring Facility [Member]	Mar. 31, 2012 U.S. Securitization Financing Facility [Member]	Sep. 30, 2011 U.S. Securitization Financing Facility [Member]	Mar. 31, 2012 United Kingdom Factoring Facility [Member]	Mar. 31, 2012 Italy Factoring Facility [Member]
Factoring and Securitization Program Maturity Date			October 2012		June 2012		June 2012				October 2013		February 2013	March 2017
Maximum Limit For Sale Of Eligible Trade Receivables Reported In Us Dollars			$ 80
Maximum Limit For Sale Of Eligible Trade Receivables Reported In Euro			60		150			125					25	30
Utilization Of Accounts Receivable Factoring Facility Under Arrangement In Euros			49	46	131	107	6	47					5	17
Utilization Of Accounts Receivable Factoring Facility Under Arrangement In Us Dollars			65	62	174	146	8	63	11	8			7	22
Costs Associated With Off Balance Sheet Factoring Arrangements	6	3
Maximum Limit For Securitization Financing Arrangement In Us Dollar											125
Outstanding Balance Under Accounts Receivable Securitization Program											$ 19	$ 0

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Supplemental Guarantor Condensed Consolidating Financial Statements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Sales
Total sales	$ 1,160	$ 1,176	$ 2,319	$ 2,133
Cost of sales	1,026	1,058	2,079	1,910
GROSS MARGIN	134	118	240	223
Selling, general and administrative	72	70	137	140
Restructuring costs	(3)	(5)	(27)	(8)
Other operating expense	(1)	(2)	(2)	(2)
OPERATING INCOME (LOSS)	58	41	74	73
Other income (loss), net	1	(2)	5	(2)
Equity in earnings of affiliates	14	17	29	30
Interest income (expense), net	23	24	47	51
INCOME (LOSS) BEFORE INCOME TAXES	50	32	61	50
Benefit (provision) for income taxes	17	21	37	41
INCOME FROM CONTINUING OPERATIONS	33	11	24	9
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	(9)	11	(18)	15
Net income	24	22	6	24
Less: Net income attributable to noncontrolling interests	4	5	8	9
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	20	17	(2)	15
Parent Company [Member]
Sales
Total sales	0	0	0	0
Cost of sales	(13)	(15)	(25)	(29)
GROSS MARGIN	(13)	(15)	(25)	(29)
Selling, general and administrative	(21)	(25)	(43)	(54)
Restructuring costs	0	0	0	0
Other operating expense	0	(2)	(1)	(2)
OPERATING INCOME (LOSS)	(34)	(42)	(69)	(85)
Other income (loss), net	41	25	41	24
Equity in earnings of affiliates	0	0	0	0
Interest income (expense), net	(30)	(31)	(61)	(61)
INCOME (LOSS) BEFORE INCOME TAXES	(23)	(48)	(89)	(122)
Benefit (provision) for income taxes	(1)	1	(1)	1
Equity income from continuing operations of subsidiaries	53	53	106	121
INCOME FROM CONTINUING OPERATIONS	29	6	16	0
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	(9)	11	(18)	15
Net income	20	17	(2)	15
Less: Net income attributable to noncontrolling interests	0	0	0	0
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	20	17	(2)	15
Parent Company [Member] | External Sales [Member]
Sales
Total sales	0	0	0	0
Parent Company [Member] | Subsidiaries Sales [Member]
Sales
Total sales	0	0	0	0
Guarantor Subsidiaries [Member]
Sales
Total sales	488	435	891	769
Cost of sales	(418)	(397)	(784)	(705)
GROSS MARGIN	70	38	107	64
Selling, general and administrative	(24)	(20)	(43)	(43)
Restructuring costs	0	0	0	0
Other operating expense	0	0	0	0
OPERATING INCOME (LOSS)	46	18	64	21
Other income (loss), net	(8)	(8)	(8)	(8)
Equity in earnings of affiliates	10	9	19	16
Interest income (expense), net	5	6	12	15
INCOME (LOSS) BEFORE INCOME TAXES	53	25	87	44
Benefit (provision) for income taxes	(2)	(1)	(5)	(6)
Equity income from continuing operations of subsidiaries	(2)	25	17	77
INCOME FROM CONTINUING OPERATIONS	49	49	99	115
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	(2)	31	(7)	45
Net income	47	80	92	160
Less: Net income attributable to noncontrolling interests	0	0	0	0
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	47	80	92	160
Guarantor Subsidiaries [Member] | External Sales [Member]
Sales
Total sales	448	395	819	698
Guarantor Subsidiaries [Member] | Subsidiaries Sales [Member]
Sales
Total sales	40	40	72	71
Non-Guarantor Subsidiaries [Member]
Sales
Total sales	736	801	1,547	1,472
Cost of sales	(659)	(706)	(1,389)	(1,284)
GROSS MARGIN	77	95	158	188
Selling, general and administrative	(27)	(25)	(51)	(43)
Restructuring costs	(3)	(5)	(27)	(8)
Other operating expense	(1)	0	(1)	0
OPERATING INCOME (LOSS)	46	65	79	137
Other income (loss), net	(32)	(19)	(28)	(18)
Equity in earnings of affiliates	4	8	10	14
Interest income (expense), net	2	1	2	(5)
INCOME (LOSS) BEFORE INCOME TAXES	20	55	63	128
Benefit (provision) for income taxes	(14)	(21)	(31)	(36)
Equity income from continuing operations of subsidiaries	0	0	0	0
INCOME FROM CONTINUING OPERATIONS	6	34	32	92
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	0	39	(3)	49
Net income	6	73	29	141
Less: Net income attributable to noncontrolling interests	(4)	(5)	(8)	(9)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	2	68	21	132
Non-Guarantor Subsidiaries [Member] | External Sales [Member]
Sales
Total sales	712	781	1,500	1,435
Non-Guarantor Subsidiaries [Member] | Subsidiaries Sales [Member]
Sales
Total sales	24	20	47	37
Elims [Member]
Sales
Total sales	(64)	(60)	(119)	(108)
Cost of sales	64	60	119	108
GROSS MARGIN	0	0	0	0
Selling, general and administrative	0	0	0	0
Restructuring costs	0	0	0	0
Other operating expense	0	0	0	0
OPERATING INCOME (LOSS)	0	0	0	0
Other income (loss), net	0	0	0	0
Equity in earnings of affiliates	0	0	0	0
Interest income (expense), net	0	0	0	0
INCOME (LOSS) BEFORE INCOME TAXES	0	0	0	0
Benefit (provision) for income taxes	0	0	0	0
Equity income from continuing operations of subsidiaries	(51)	(78)	(123)	(198)
INCOME FROM CONTINUING OPERATIONS	(51)	(78)	(123)	(198)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	2	(70)	10	(94)
Net income	(49)	(148)	(113)	(292)
Less: Net income attributable to noncontrolling interests	0	0	0	0
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	(49)	(148)	(113)	(292)
Elims [Member] | External Sales [Member]
Sales
Total sales	0	0	0	0
Elims [Member] | Subsidiaries Sales [Member]
Sales
Total sales	(64)	(60)	(119)	(108)
Consolidated [Member]
Sales
Total sales	1,160	1,176	2,319	2,133
Cost of sales	(1,026)	(1,058)	(2,079)	(1,910)
GROSS MARGIN	134	118	240	223
Selling, general and administrative	(72)	(70)	(137)	(140)
Restructuring costs	(3)	(5)	(27)	(8)
Other operating expense	(1)	(2)	(2)	(2)
OPERATING INCOME (LOSS)	58	41	74	73
Other income (loss), net	1	(2)	5	(2)
Equity in earnings of affiliates	14	17	29	30
Interest income (expense), net	(23)	(24)	(47)	(51)
INCOME (LOSS) BEFORE INCOME TAXES	50	32	61	50
Benefit (provision) for income taxes	(17)	(21)	(37)	(41)
Equity income from continuing operations of subsidiaries	0	0	0	0
INCOME FROM CONTINUING OPERATIONS	33	11	24	9
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax	(9)	11	(18)	15
Net income	24	22	6	24
Less: Net income attributable to noncontrolling interests	(4)	(5)	(8)	(9)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	20	17	(2)	15
Consolidated [Member] | External Sales [Member]
Sales
Total sales	1,160	1,176	2,319	2,133
Consolidated [Member] | Subsidiaries Sales [Member]
Sales
Total sales	$ 0	$ 0	$ 0	$ 0

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Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2012	Sep. 30, 2011
Debt	$ 975	$ 1,034
Less: current maturities	(21)	(84)
Long-term debt	954	950
8-3/4 percent notes due 2012 [Member]
Debt	0	84
8-1/8 percent notes due 2015 [Member]
Debt	250	250
10-5/8 percent notes due 2018 [Member]
Debt	246	246
4.625 percent convertible notes due 2026 [Member]
Debt	300	300
4.0 percent convertible notes due 2027 [Member]
Debt	200	200
Lines of credit and other [Member]
Debt	12	8
Accounts Receivable Securitization [Member]
Debt	19	0
Unamortized gain on interest rate swap termination [Member]
Debt	11	14
Unamortized discount on convertible notes [Member]
Debt	$ (63)	$ (68)

XML

Accumulated Other Comprehensive Loss (AOCL)

6 Months Ended

Mar. 31, 2012

Stockholders Equity Note [Abstract]

Comprehensive Income (Loss) Note [Text Block]

21. Accumulated Other Comprehensive Loss (AOCL)

The components of AOCL as reported in the Consolidated Balance Sheet are as follows (in millions):

	March 31,			September 30,
	2012			2011
Foreign currency translation	$	119		$	110
Employee benefit related adjustments		(940	)		(942	)
Unrealized gains, net		1			3
Accumulated Other Comprehensive Loss	$	(820	)	$	(829	)

XML

Retirement Benefit Liabilities (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Pension [Member]
Service cost	$ 0	$ 1	$ 1	$ 4
Interest cost	23	22	46	46
Assumed return on plan assets	(26)	(28)	(52)	(58)
Amortization of prior service costs	0	0	0	0
Recognized actuarial loss	5	10	10	19
Total expense	2	5	5	11
Retiree Medical [Member]
Service cost	0	0	0	0
Interest cost	6	6	12	13
Assumed return on plan assets	0	0	0	0
Amortization of prior service costs	(2)	(1)	(4)	(4)
Recognized actuarial loss	6	7	13	15
Total expense	$ 10	$ 12	$ 21	$ 24

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Other Assets (Tables)

6 Months Ended

Mar. 31, 2012

Other Assets, Noncurrent [Abstract]

Schedule of Other Assets, Noncurrent [Table Text Block]

Other assets are summarized as follows (in millions):

	March 31, 2012		September 30, 2011
Investments in non-consolidated joint ventures	$	197	$	174
Asbestos-related recoveries (see Note 20)		65		67
Non-current deferred income tax assets, net		12		12
Unamortized debt issuance costs		21		25
Capitalized software costs, net		22		23
Prepaid pension costs		10		9
Other		35		42
Other assets	$	362	$	352

XML

Other Assets

6 Months Ended

Mar. 31, 2012

Other Assets, Noncurrent [Abstract]

Other Assets Disclosure [Text Block]

14. Other Assets

Other assets are summarized as follows (in millions):

	March 31, 2012		September 30, 2011
Investments in non-consolidated joint ventures	$	197	$	174
Asbestos-related recoveries (see Note 20)		65		67
Non-current deferred income tax assets, net		12		12
Unamortized debt issuance costs		21		25
Capitalized software costs, net		22		23
Prepaid pension costs		10		9
Other		35		42
Other assets	$	362	$	352

     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 at a cost-plus basis. The company is not the primary beneficiary of the joint venture, as the joint venture partner has shared or absolute control over key manufacturing operations, labor relationships, financing activities and certain other functions of the joint venture. Therefore, the company does not consolidate the joint venture. At March 31, 2012, the company’s investment in the joint venture was $37 million representing the company’s maximum exposure to loss. This amount is included in investments in non-consolidated joint ventures in the table above.