DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) | 12 Months Ended | ||
Sep. 30, 2016 | Nov. 30, 2016 | Apr. 01, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | MERITOR INC | ||
Entity Central Index Key | 1,113,256 | ||
Current Fiscal Year End Date | --10-02 | ||
Entity Filer Category | Large Accelerated Filer | ||
Trading Symbol | MTOR | ||
Entity Common Stock, Shares Outstanding | 86,767,764 | ||
Document Period End Date | Oct. 2, 2016 | ||
Document Type | 10-K | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Amendment Flag | false | ||
Entity Well-Known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 731,839,701 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | |||
Sales | $ 3,199 | $ 3,505 | $ 3,766 |
Cost of sales | (2,763) | (3,043) | (3,279) |
GROSS MARGIN | 436 | 462 | 487 |
Selling, general and administrative | (213) | (243) | (258) |
Pension settlement losses | 0 | (59) | 0 |
Restructuring costs | (16) | (16) | (10) |
Goodwill impairment | 0 | (15) | 0 |
Other operating expense, net | (3) | (1) | (2) |
OPERATING INCOME | 204 | 128 | 217 |
Other income (expense), net | (1) | 5 | 0 |
Equity in earnings of ZF Meritor | 0 | 0 | 190 |
Equity in earnings of other affiliates | 36 | 39 | 38 |
Interest expense, net | (84) | (105) | (130) |
INCOME BEFORE INCOME TAXES | 155 | 67 | 315 |
Benefit (provision) for income taxes | 424 | (1) | (31) |
INCOME FROM CONTINUING OPERATIONS | 579 | 66 | 284 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (4) | (1) | (30) |
NET INCOME | 575 | 65 | 254 |
Less: Net income attributable to noncontrolling interests | (2) | (1) | (5) |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 573 | 64 | 249 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | |||
Net income from continuing operations | 577 | 65 | 279 |
Loss from discontinued operations | (4) | (1) | (30) |
Net income | $ 573 | $ 64 | $ 249 |
BASIC EARNINGS (LOSS) PER SHARE | |||
Basic earnings (loss) per share from continuing operations (in dollars per share) | $ 6.40 | $ 0.67 | $ 2.86 |
Basic earnings (loss) per share from discontinued operations (in dollars per share) | (0.04) | (0.01) | (0.31) |
Basic earnings (loss) per share (in dollars per share) | 6.36 | 0.66 | 2.55 |
DILUTED EARNINGS (LOSS) PER SHARE | |||
Diluted earnings (loss) per share from continuing operations (in dollars per share) | 6.27 | 0.65 | 2.81 |
Diluted earnings (loss) per share from discontinued operations (in dollars per share) | (0.04) | (0.01) | (0.30) |
Diluted earnings (loss) per share (in dollars per share) | $ 6.23 | $ 0.64 | $ 2.51 |
Basic average common shares outstanding (in shares) | 90.1 | 96.9 | 97.5 |
Diluted average common shares outstanding (in shares) | 92 | 100.1 | 99.2 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 575 | $ 65 | $ 254 |
Other comprehensive income: | |||
Foreign currency translation adjustments | (12) | (97) | (20) |
Pension and other postretirement benefit related adjustments (net of tax of $33, $5 and $2 at September 30, 2016, 2015 and 2014, respectively) | (35) | 84 | 3 |
Unrealized gain (loss) on investment and foreign exchange contracts | 4 | (6) | 2 |
Total comprehensive income | 532 | 46 | 239 |
Less: Comprehensive (income) loss attributable to noncontrolling interest | (2) | 1 | (5) |
Comprehensive income attributable to Meritor, Inc. | $ 530 | $ 47 | $ 234 |
CONSOLIDATED STATEMENT OF COMP4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Pension and other postretirement benefit, tax | $ 33 | $ 5 | $ 2 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 160 | $ 193 |
Receivables, trade and other, net | 396 | 461 |
Inventories | 316 | 338 |
Other current assets | 33 | 50 |
TOTAL CURRENT ASSETS | 905 | 1,042 |
NET PROPERTY | 439 | 419 |
GOODWILL | 390 | 402 |
OTHER ASSETS | 760 | 332 |
TOTAL ASSETS | 2,494 | 2,195 |
LIABILITIES AND EQUITY (DEFICIT) | ||
Short-term debt | 14 | 15 |
Accounts and notes payable | 475 | 574 |
Other current liabilities | 268 | 279 |
TOTAL CURRENT LIABILITIES | 757 | 868 |
LONG-TERM DEBT | 982 | 1,036 |
RETIREMENT BENEFITS | 703 | 632 |
OTHER LIABILITIES | 238 | 305 |
TOTAL LIABILITIES | 2,680 | 2,841 |
COMMITMENTS AND CONTINGENCIES (NOTE 23) | ||
EQUITY (DEFICIT): | ||
Common stock (September 30, 2016 and 2015, 99.6 and 98.8 shares issued and 86.8 and 94.6 shares outstanding, respectively) | 99 | 99 |
Additional paid-in capital | 876 | 865 |
Accumulated deficit | (241) | (814) |
Treasury stock, at cost (September 30, 2016 and 2015, 12.8 and 4.2 shares, respectively) | (136) | (55) |
Accumulated other comprehensive loss | (809) | (766) |
Total deficit attributable to Meritor, Inc. | (211) | (671) |
Noncontrolling interests | 25 | 25 |
TOTAL DEFICIT | (186) | (646) |
TOTAL LIABILITIES AND DEFICIT | $ 2,494 | $ 2,195 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock issued (in shares) | 99.6 | 98.8 |
Common stock outstanding (in shares) | 86.8 | 94.6 |
Treasury stock, at cost (in shares) | 12.8 | 4.2 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES | |||
CASH PROVIDED BY OPERATING ACTIVITIES (see Note 26) | $ 204 | $ 97 | $ 215 |
INVESTING ACTIVITIES | |||
Capital expenditures | (93) | (79) | (77) |
Proceeds from sale of property | 4 | 4 | 0 |
Cash paid for acquisition of Morganton | 0 | (16) | 0 |
Other investing activities | (1) | 0 | 0 |
Net investing cash flows used for continuing operations | (90) | (91) | (77) |
Net investing cash flows provided by discontinued operations | 4 | 4 | 7 |
CASH USED FOR INVESTING ACTIVITIES | (86) | (87) | (70) |
FINANCING ACTIVITIES | |||
Proceeds from debt issuances | 0 | 225 | 225 |
Repayment of notes and term loan | (55) | (199) | (439) |
Debt issuance costs | 0 | (4) | (10) |
Other financing activities | (16) | (9) | 12 |
Net change in debt | (71) | 13 | (212) |
Repurchase of common stock | (81) | (55) | 0 |
CASH USED FOR FINANCING ACTIVITIES | (152) | (42) | (212) |
EFFECT OF CHANGES IN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | (22) | (4) |
CHANGE IN CASH AND CASH EQUIVALENTS | (33) | (54) | (71) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 193 | 247 | 318 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 160 | $ 193 | $ 247 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - USD ($) | Total | Total Deficit Attributable to Meritor, Inc. | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Loss | Non-controlling Interests |
Beginning balance at Sep. 30, 2013 | $ (822,000,000) | $ (850,000,000) | $ 97,000,000 | $ 914,000,000 | $ (1,127,000,000) | $ 0 | $ (734,000,000) | $ 28,000,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income (loss) | 239,000,000 | 234,000,000 | 249,000,000 | (15,000,000) | 5,000,000 | |||
Repurchase of convertible notes | (4,000,000) | (4,000,000) | (4,000,000) | |||||
Equity based compensation expense | 8,000,000 | 8,000,000 | 8,000,000 | |||||
Non-controlling interest dividends | (6,000,000) | (6,000,000) | ||||||
Ending Balance at Sep. 30, 2014 | (585,000,000) | (612,000,000) | 97,000,000 | 918,000,000 | (878,000,000) | 0 | (749,000,000) | 27,000,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income (loss) | 46,000,000 | 47,000,000 | 64,000,000 | (17,000,000) | (1,000,000) | |||
Vesting of restricted stock | 0 | 2,000,000 | (2,000,000) | |||||
Repurchase of convertible notes | (62,000,000) | (62,000,000) | (62,000,000) | |||||
Equity based compensation expense | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Repurchase of common stock | (55,000,000) | (55,000,000) | (55,000,000) | |||||
Non-controlling interest dividends | (1,000,000) | (1,000,000) | ||||||
Other | 1,000,000 | 1,000,000 | 1,000,000 | |||||
Ending Balance at Sep. 30, 2015 | (646,000,000) | (671,000,000) | 99,000,000 | 865,000,000 | (814,000,000) | (55,000,000) | (766,000,000) | 25,000,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income (loss) | 532,000,000 | 530,000,000 | 573,000,000 | (43,000,000) | 2,000,000 | |||
Equity based compensation expense | 9,000,000 | 9,000,000 | 9,000,000 | |||||
Repurchase of common stock | (81,000,000) | (81,000,000) | 0 | (81,000,000) | ||||
Non-controlling interest dividends | (2,000,000) | (2,000,000) | ||||||
Other | 2,000,000 | 2,000,000 | 2,000,000 | |||||
Ending Balance at Sep. 30, 2016 | $ (186,000,000) | $ (211,000,000) | $ 99,000,000 | $ 876,000,000 | $ (241,000,000) | $ (136,000,000) | $ (809,000,000) | $ 25,000,000 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 12 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Meritor, Inc. (the “company” or “Meritor”), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems, modules and components to original equipment manufacturers (“OEMs”) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The 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, consolidated statement of cash flows and related notes for all periods presented. In fiscal year 2014, the company exited its Mascot business, a remanufacturer and distributor of all makes differentials, transmissions and steering gears. The results of operations and cash flows of the company’s former Mascot business are presented in discontinued operations in the consolidated statement of operations and consolidated statement of cash flows. Additional information regarding discontinued operations is discussed in Note 3. The company’s fiscal year ends on the Sunday nearest September 30. The 2016 , 2015 and 2014 fiscal years ended on October 2, 2016 , September 27, 2015 and September 28, 2014 , 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 is used consistently throughout this report to represent the fiscal year end. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from these estimates. Significant estimates and assumptions were used to review goodwill and other long-lived assets for impairment (see Notes 4 and 11), costs associated with the company’s restructuring actions (see Note 5), product warranty liabilities (see Note 14), long-term incentive compensation plan obligations (see Note 19), retiree medical and pension obligations (see Notes 20 and 21), income taxes (see Note 22), and contingencies including asbestos (see Note 23). Concentration of Credit Risk In the normal course of business, the company provides credit to customers. The company limits its credit risk by performing ongoing credit evaluations of its customers and maintaining reserves for potential credit losses and through accounts receivable factoring programs. The company’s accounts receivables are generally due from medium- and heavy-duty truck OEMs, specialty vehicle manufacturers, aftermarket customers, and trailer producers. The company’s ten largest customers accounted for 73 percent , 75 percent and 76 percent of sales in fiscal years 2016, 2015 and 2014, respectively. Sales to the company's top three customers were 50 percent , 55 percent and 57 percent of total sales in fiscal 2016, 2015 and 2014, respectively. At September 30, 2016 and 2015, 22 percent and 21 percent of the company's trade accounts receivables were from the company's three largest customers, respectively. Consolidation and Joint Ventures The consolidated financial statements include the accounts of the company and those subsidiaries in which the company has control. All intercompany balances and transactions are eliminated in consolidation. The results of operations of controlled subsidiaries are included in the consolidated financial statements and are offset by a related noncontrolling interest recorded for the noncontrolling partners’ ownership. Investments in affiliates that are not controlled or majority-owned are reported using the equity method of accounting (see Note 13). Foreign Currency Local currencies are generally considered the functional currencies for operations outside the U.S. For operations reporting in local currencies, assets and liabilities are translated at year-end exchange rates with cumulative currency translation adjustments included as a component of Accumulated Other Comprehensive Loss in the consolidated balance sheet. Income and expense items are translated at average rates of exchange during the year. Impairment of Long-Lived Assets Long-lived assets, excluding goodwill, to be held and used are reviewed for impairment whenever adverse events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value exceeds the fair value. Long-lived assets held for sale are recorded at the lower of their carrying amount or estimated fair value less cost to sell. Discontinued Operations A business component that either has been disposed of or is classified as held for sale is reported as discontinued operations if the cash flows of the component have been or will be eliminated from the ongoing operations of the company, and the company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statement of operations and consolidated statement of cash flows (see Note 3). Revenue Recognition Revenues are recognized upon shipment of product and transfer of ownership to the customer. Provisions for customer sales allowances and incentives are recorded as a reduction of sales at the time of product shipment. Allowance for Doubtful Accounts An allowance for uncollectible trade receivables is recorded when accounts are deemed uncollectible based on consideration of write-off history, aging analysis, and any specific, known troubled accounts. Earnings per Share Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share 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): Year Ended September 30, 2016 2015 2014 Basic average common shares outstanding 90.1 96.9 97.5 Impact of stock options — 0.1 0.1 Impact of restricted shares, restricted share units and performance share units 1.9 2.0 1.6 Impact of convertible notes — 1.1 — Diluted average common shares outstanding 92.0 100.1 99.2 In November 2015, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $10.51 , which was the company’s share price on the grant date of December 1, 2015. The Board of Directors also approved a grant of 0.5 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $10.51 , which was the company's share price on the grant date of December 1, 2015. The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three -year performance period of October 1, 2015 to September 30, 2018, measured at the end of the performance period. The number of performance share units will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 50% associated with achieving an Adjusted EBITDA margin target and 50% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.7 million performance share units. In November 2014, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $13.74 , which was the company’s share price on the grant date of December 1, 2014. The Board of Directors also approved a grant of 0.4 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $13.74 , which was the company’s share price on the grant date of December 1, 2014. The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three -year performance period of October 1, 2014 to September 30, 2017, measured at the end of the performance period. The number of performance share units will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 75% associated with achieving an Adjusted EBITDA margin target and 25% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million shares. In November 2013, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $7.97 , which was the company’s share price on the grant date of December 1, 2013. The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2016 goals for the three -year performance period of October 1, 2013 to September 30, 2016, measured at the end of the performance period. The number of performance share units will depend on meeting the established M2016 goals at the following weights: 50% associated with achieving an Adjusted EBITDA margin target, 25% associated with achieving a net debt including retirement benefit liabilities target, and 25% associated with achieving an incremental booked revenue target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 1.8 million units which includes incremental performance share units that were issued subsequent to the December 1, 2013 grant date. There were 1.3 million , 0.9 million and 0.1 million shares related to these performance share units included in the diluted earnings per share calculation for the years ended September 30, 2016 , 2015 and 2014 , respectively, as certain payout thresholds were achieved in fiscal years 2016, 2015 and 2014 relative to the Adjusted EBITDA, net debt reduction and incremental booked revenue targets. For the years ended September 30, 2016 , 2015 and 2014 , the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 1.9 million , 2.0 million and 1.6 million , respectively. For the years ended September 30, 2016 , 2015 and 2014 , compensation cost related to restricted shares, restricted share units, performance share units and stock options was $9 million , $10 million and $8 million , respectively. At September 30, 2014 , options to purchase 0.3 million shares of common stock were excluded in the computation of diluted earnings per share because their exercise price exceeded the average market price for the twelve-month period and thus their inclusion would be anti-dilutive. For the fiscal year ended 2015 , 1.1 million shares were included in the computation of diluted earnings per share because the average stock price exceeded the conversion price for the 7.875 percent convertible notes due 2026. For the years ended September 30, 2016 and September 30, 2014, the company's convertible senior unsecured notes were excluded from the computation of diluted earnings per share, as the company's average stock price during these periods was less than the conversion price for the 7.875 percent convertible notes due 2026. Other Other significant accounting policies are included in the related notes, specifically, goodwill (Note 4), inventories (Note 9), property and depreciation (Note 11), capitalized software (Note 12), product warranties (Note 14), financial instruments (Note 17), equity based compensation (Note 19), retirement medical plans (Note 20), retirement pension plans (Note 21), income taxes (Note 22) and environmental and asbestos-related liabilities (Note 23). Accounting standards to be implemented In October 2016, the FASB issued Accounting Standards Update (ASU) 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements and does not expect a material impact upon adoption. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU was issued to remove the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted however the guidance can only be adopted in the first interim period of a fiscal year. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The ASU was issued to reduce differences in practice with respect to how specific transactions are classified in the statement of cash flows. The update provides guidance on the following eight types of transactions: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments in this update are required to be adopted by public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The ASU clarifies the assessment of the likelihood that revenue will be collected from a contract, the guidance for presenting sales taxes and similar taxes, and the timing for measuring customer payments that are not in cash. The ASU also establishes a practical expedient for contract modifications at the transition. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-12 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update). The ASU was issued to remove from the Codification certain SEC staff guidance that the SEC staff stated would be rescinded: Revenue and Expense Recognition for Freight Services in Process; Accounting for Shipping and Handling Fees and Costs; and Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendor’s Products). The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-11 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In April, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. The ASU provides guidance regarding the identification of performance and licensing obligations. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-10 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU intends to simplify how share-based payments are accounted for, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company is assessing the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. The ASU will eliminate the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The ASU clarifies that an exercise contingency itself does not need to be evaluated to determine whether it is in an embedded derivative, just the underlying option. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The update clarifies that a change in a counterparty to a derivative instrument designated as a hedging instrument would not require the entity to dedesignate the hedging relationship and discontinue the application of hedge accounting. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim years within those fiscal periods. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update will require lessees to recognize a right-of-use asset and lease liability for substantially all leases. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 and is currently assessing the potential impact of this new guidance on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires entities that measure inventory using first-in, first-out (FIFO) or average cost to measure inventory at the lower of cost and net realizable value. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), which provides guidance about management's responsibility in evaluating whether there is substantial doubt relating to an entity’s ability to continue as a going concern and to provide related footnote disclosures as applicable. ASU 2014-15 is effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved After the Requisite Service Period. This guidance requires that an award with a performance target that affects vesting, and that could be achieved after the requisite service period, such as when an employee retires, but may still vest if and when the performance target is achieved, be treated as an award with performance conditions that affect vesting and the company apply existing guidance under ASC Topic 718, Compensation - Stock Compensation. The guidance is effective for fiscal periods beginning after December 15, 2015, including interim periods within those fiscal periods and may be applied either prospectively or retrospectively. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service and requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 was originally effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year making it effective for fiscal periods beginning after December 15, 2017, including interim periods within those fiscal periods, while also providing for early adoption but not before the original effective date. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. Accounting standards implemented during fiscal year 2016 In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, as part of its Simplification Initiative, which updates Income Taxes (Topic 740) guidance to eliminate the requirement for an entity to separate deferred tax liabilities and tax assets between current and non-current amounts in a classified balance sheet. Deferred taxes are presented as noncurrent under the new standard. The guidance is effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. Early adoption is permitted. The company implemented this guidance on a prospective basis in the fourth quarter of fiscal year 2016. Prior periods were not retrospectively adjusted. The impact as of September 30, 2016 was a reclassification between current and non-current deferred tax assets of $17 million . In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which updates Business Combination (Topic 805) guidance to eliminate the requirement to restate prior period financial statements for measurement period adjustments. The guidance should be applied prospectively to measurement period adjustments that occur after the effective date. The guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption is permitted. The company adopted this standard in the first quarter of fiscal year 2016. This guidance did not have a material impact on the company's consolidated financial statements. In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This guidance changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results. The guidance also requires new disclosure of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance is to be applied prospectively and is effective for fiscal periods beginning on or after December 15, 2014, including interim periods within those fiscal periods. The company adopted this guidance in the first quarter of fiscal year 2016. The impact of this new guidance on the company's consolidated financial statements is dependent upon future business divestitures. Previous divestitures and amounts currently included in discontinued operations were not impacted. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS Results of the discontinued operations are summarized as follows (in millions): Year Ended September 30, 2016 2015 2014 Sales $ — $ 1 $ 29 Operating losses, net $ — $ — $ (8 ) Net loss on sales of businesses — — (23 ) Environmental remediation charges (see Note 23) — — (4 ) Litigation settlement (3 ) — — Other, net (4 ) (2 ) (2 ) Loss before income taxes (7 ) (2 ) (37 ) Benefit for income taxes 3 1 7 Loss from discontinued operations attributable to Meritor, Inc. $ (4 ) $ (1 ) $ (30 ) Loss from discontinued operations attributable to the company for the twelve months ended September 30, 2016 was primarily attributable to a litigation settlement. Total discontinued operations assets and liabilities as of September 30, 2016 were $1 million and $6 million , respectively. Total discontinued operations assets and liabilities as of September 30, 2015 were $4 million and $10 million , respectively. Prior Period Divestitures Mascot On August 15, 2014, the company completed its strategic review of certain remanufacturing product lines within the aftermarket business in North America, and the Board of Directors concluded the company should exit the Mascot business. Mascot is a remanufacturer and distributor of all makes differentials, transmissions and steering gears primarily for OEMs. In the fourth quarter of fiscal year 2014, the company disposed of its Mascot business which was part of the company's Aftermarket & Trailer segment. The company sold certain long-lived and current assets of the business to a third party and recognized a loss of $23 million during the fourth quarter of fiscal year 2014 in connection with the disposal. These charges included loss on sale, severance and other disposal costs. Total sales from this business were $1 million in fiscal year 2015 and $29 million in fiscal year 2014. The results of operations and cash flows of the company's Mascot business are presented in discontinued operations in the consolidated statements of operations and consolidated statement of cash flows. Body Systems On January 3, 2011, the company completed the sale of its Body Systems business to Inteva Products Holding Coöperatieve U.A., an assignee of 81 Acquisition LLC and an affiliate of Inteva Products, LLC pursuant to the sale agreement signed in August 2010. The purchase price included a five -year, 8 -percent promissory note for $15 million , payable in five annual installments beginning in January 2012 and is included in receivables, trade and other, net in the consolidated balance sheet. The notes receivable balance as of September 30, 2016 and September 30, 2015 was $0 million and $3 million , respectively. MSSC In October, 2009, the company closed on the sale of its 57 percent interest in MSSC, a joint venture that manufactured and supplied automotive coil springs, torsion bars and stabilizer bars in North America, to the joint venture partner, a subsidiary of Mitsubishi Steel Mfg. Co., LTD (MSM). In connection with the sale of its interest in MSSC, the company provided certain indemnifications to the buyer for its share of potential obligations related to pension funding shortfall, environmental and other contingencies, and valuation of certain accounts receivable and inventories. The company’s estimated exposure under these indemnities at September 30, 2016 and September 30, 2015 was $1 million and $2 million , respectively, and is included in other liabilities in the consolidated balance sheet. Adjustments to amounts previously reported in discontinued operations that are related to the disposal of the company’s MSSC business are reflected in discontinued operations for all periods presented. European Trailer In the second quarter of fiscal year 2011, the company announced the planned closure of its European 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. In the fourth quarter of fiscal year 2014, the company recognized a $5 million charge, included in other, net, related to a specific product warranty matter. |
GOODWILL
GOODWILL | 12 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL In accordance with FASB Accounting Standards Codification (ASC) Topic 350-20, “Intangibles – Goodwill and Other”, goodwill is reviewed for impairment annually during the fourth quarter of the fiscal year or more frequently if certain indicators arise. If business conditions or other factors cause the operating results and cash flows of a reporting unit to decline, the company may be required to record impairment charges for goodwill at that time. The company tests goodwill for impairment at a level of reporting referred to as a reporting unit, which is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. When two or more components of an operating segment have similar economic characteristics, the components are aggregated and deemed a single reporting unit. An operating segment is deemed to be a reporting unit if all of its components are similar, if none of its components are a reporting unit, or if the segment comprises only a single component. Annual Impairment Analysis ASC Topic 350 allows entities to perform an initial qualitative evaluation to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform step one of the required two-step impairment test. As allowed by the revised guidance, the company has elected to bypass the qualitative assessment for fiscal year 2016 and proceed directly to the two-step impairment test. Excluding the qualitative evaluation discussed above, the goodwill impairment review is a two-step process. Step one consists of a comparison of the fair value of a reporting unit with its carrying amount. An impairment loss may be recognized if the review indicates that the carrying value of a reporting unit exceeds its fair value. Estimates of fair value are primarily determined by using discounted cash flows and market multiples on earnings. If the carrying amount of a reporting unit exceeds its fair value, step two requires the fair value of the reporting unit to be allocated to the underlying assets and liabilities of that reporting unit, resulting in an implied fair value of goodwill. If the carrying amount of the goodwill of the reporting unit exceeds the implied fair value, an impairment charge is recorded equal to the excess. The impairment review is highly judgmental and involves the use of significant estimates and assumptions. These estimates and assumptions have a significant impact on the amount of any impairment charge recorded. Discounted cash flow methods are dependent upon assumptions of future sales trends, market conditions and cash flows of each reporting unit over several years. Actual cash flows in the future may differ significantly from those previously forecasted. Sales of the company’s primary military program wound down to insignificant levels in 2015. Additionally, the U.S. Army awarded a new contract for the production of the Joint Light Tactical Vehicle to Oshkosh for which the company is expected to supply wheel-ends. Revenue is expected to be significantly less than if the program had been awarded differently and the company was supplying its ProTec independent suspension. The company continues to work toward securing participation in additional military programs; however, based on sales expectations for currently awarded programs, the company's fair value of the Defense business did not exceed its carrying value. Since the fair value of the business did not exceed the implied fair value of its net assets without goodwill enough to support the full amount of goodwill, the company's Defense reporting unit, which is included in the Commercial Truck and Industrial segment, recorded a goodwill impairment of $15 million in the fourth quarter of 2015, which is the total accumulated impairment loss. The fair value of the other reporting units exceeded their carrying values. For fiscal year 2016, the fair value of all of the company’s reporting units exceeded their carrying values. A summary of the changes in the carrying value of goodwill is presented below (in millions): Commercial Truck & Industrial Aftermarket & Trailer Total Balance at September 30, 2014 $ 261 $ 170 $ 431 Impairment (15 ) — (15 ) Foreign currency translation (7 ) (7 ) (14 ) Balance at September 30, 2015 239 163 402 Impairment — — — Foreign currency translation (9 ) (3 ) (12 ) Balance at September 30, 2016 $ 230 $ 160 $ 390 |
RESTRUCTURING COSTS
RESTRUCTURING COSTS | 12 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING COSTS | RESTRUCTURING COSTS At September 30, 2016 and 2015 , $16 million and $10 million , respectively, of restructuring reserves primarily related to unpaid employee termination benefits remained in the consolidated balance sheet. Asset impairment charges relate to manufacturing facilities that have been sold and machinery and equipment that became idle and obsolete as a result of these actions. The following table summarizes changes in restructuring reserves (in millions): Employee Termination Benefits Asset Impairment Plant Shutdown & Other Total Balance at September 30, 2013 $ 12 $ — $ — $ 12 Activity during the period: Charges to continuing operations 10 — — 10 Cash payments – continuing operations (10 ) — — (10 ) Other (1 ) — — (1 ) Balance at September 30, 2014 11 — — 11 Activity during the period: Charges to continuing operations 15 1 — 16 Asset write-offs — (1 ) — (1 ) Cash payments – continuing operations (16 ) — — (16 ) Balance at September 30, 2015 10 — — 10 Activity during the period: Charges to continuing operations 15 — 1 16 Cash payments – continuing operations (11 ) — — (11 ) Other 1 — — 1 Total restructuring reserves, end of year 15 — 1 16 Less: non-current restructuring reserves (2 ) — — (2 ) Restructuring reserves – current, at September 30, 2016 $ 13 $ — $ 1 $ 14 Restructuring costs attributable to the company’s business segments during fiscal years 2016 , 2015 and 2014 are as follows (in millions): Commercial Truck & Industrial Aftermarket & Trailer Corporate Total Fiscal year 2016: Market related actions $ 5 $ 1 $ 2 $ 8 Aftermarket actions — 5 — 5 Other 1 2 — 3 Total restructuring costs $ 6 $ 8 $ 2 $ 16 Fiscal year 2015: South America labor reduction II $ 6 $ — $ — $ 6 M2016 footprint actions 5 — — 5 Closure of engineering facility — — 2 2 European labor reductions 2 — — 2 Other 1 — — 1 Total restructuring costs $ 14 $ — $ 2 $ 16 Fiscal year 2014: South America labor reduction I $ 7 $ — $ — $ 7 Other 1 1 1 3 Total restructuring costs $ 8 $ 1 $ 1 $ 10 Fourth Quarter 2016 Market Related Actions: In response to the decline in revenue in North America and South America, during the fourth quarter of fiscal year 2016, the company approved various headcount reduction plans targeting different areas of the business. The company expects to incur an aggregate of $10 million in restructuring costs associated with these plans, primarily related to a total reduction of approximately 100 salaried and hourly positions. During the fourth quarter of fiscal year 2016, the company incurred a total of $5 million in restructuring costs in the Commercial Truck & Industrial segment, $1 million in Aftermarket & Trailer segments and $2 million in their corporate locations. Restructuring actions with these plans are expected to be substantially complete by the first half of fiscal year 2017. Aftermarket Actions: During the third quarter of fiscal year 2016, the company approved various restructuring plans in the North American and European aftermarket businesses. The company expects to incur an aggregate of approximately $8 million in restructuring costs associated with these plans in the Aftermarket & Trailer segment primarily for severance. The company recorded $5 million of restructuring costs during the third quarter of fiscal year 2016. Restructuring actions associated with these plans are expected to be completed by the end of fiscal year 2017. Other Fiscal 2016 Actions : During the first half of fiscal year 2016, the company recorded restructuring costs of $3 million primarily associated with a labor reduction program in China in the Commercial Truck & Industrial segment and a labor reduction program in the Aftermarket and Trailer segment. Restructuring actions with these plans were substantially complete as of September 30, 2016. M2016 Footprint Actions : As part of the company's M2016 Strategy, during fiscal year 2013 the company announced a North American footprint realignment action and a European shared services reorganization. Restructuring actions associated with these programs were substantially complete as of September 30, 2015. In total, the company eliminated approximately 140 hourly and salaried positions and incurred approximately $7 million of associated restructuring costs, primarily in the Commercial Truck & Industrial segment in connection with the consolidation of certain gearing and machining operations in North America and the closure of a North America manufacturing facility. South America Labor Reduction: During fiscal years 2014 and 2015, the company completed a South America headcount reduction plan intended to reduce labor costs in response to softening economic conditions in the region. In response to decreasing production volumes in South America, the company eliminated approximately 420 hourly and 40 salaried positions and incurred $13 million of restructuring costs, primarily severance benefits, in the Commercial Truck & Industrial segment. This plan was substantially complete as of September 30, 2015. Closure of a Corporate Engineering Facility: During the second quarter of fiscal year 2015, the company notified approximately 30 salaried and contract employees that their positions were being eliminated due to the planned closure of a corporate engineering facility. The company recorded severance expenses of $2 million associated with this plan. Restructuring actions associated with this program were substantially complete as of September 30, 2015. European Labor Reductions: During the second quarter of fiscal year 2015, the company initiated a European headcount reduction plan intended to reduce labor costs in response to continued soft markets in the region. The company eliminated approximately 20 hourly and 20 salaried positions and recorded $2 million of expected severance expenses in the Commercial Truck & Industrial segment in fiscal year 2015. Restructuring actions associated with this program were substantially complete as of June 30, 2015. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS On July 9, 2015, the company purchased from Sypris Solutions, Inc. (“Sypris”), a supplier of axle shafts and trailer beams for Meritor and Sistemas Automotrices De Mexico S.A. de C.V., a joint venture that is 50% -owned by Meritor, the majority of the assets of Sypris’s Morganton, North Carolina manufacturing facility for $16 million cash consideration. The fair value of the net assets acquired was $16 million , which consisted mainly of property, plant and equipment. Of the equipment acquired, $2 million was classified as held for sale at the acquisition date and was recorded in net property as of September 30, 2015. The revenue and earnings of the combined entity as though the business combination had occurred as of the beginning of the comparable prior annual reporting period was insignificant to the consolidated financial statements as the majority of sales were eliminated upon consolidation. |
ACCOUNTS RECEIVABLE FACTORING A
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION | 12 Months Ended |
Sep. 30, 2016 | |
Accounts Receivable Securitization and Factoring Disclosure [Abstract] | |
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION | ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION Off-balance sheet arrangements Swedish Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo through one of its European subsidiaries. On October 14, 2016, Meritor extended this Swedish factoring facility with Nordea Bank until December 9, 2016. All other terms of the agreement remain unchanged. Under this arrangement, the company can sell up to, at any point in time, €155 million ( $174 million ) of eligible trade receivables. The company is working to extend this arrangement before its current maturity date. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €121 million ( $135 million ) and €108 million ( $121 million ) of this accounts receivable factoring facility as of September 30, 2016 and 2015 , respectively. The above facility is backed by a 364 -day liquidity commitment from Nordea Bank which extends through December 2016. The commitment is subject to standard terms and conditions for this type of arrangement. U.S. Factoring Facility: On February 19, 2016, the company entered into a new Receivables Purchase Agreement with Nordea Bank, replacing a similar agreement that was set to expire February 28, 2016. Under this arrangement, which terminates on February 19, 2019, the company can sell up to, at any point in time, €80 million ( $90 million ) of eligible trade receivables from AB Volvo and its U.S. subsidiaries through one of the company's U.S. subsidiaries. The amount of eligible receivables sold may exceed Nordea Bank’s commitment at Nordea Bank’s discretion. The receivables under this program are sold at face value and are excluded from the condensed consolidated balance sheet. The company had utilized €39 million ( $44 million ) and €74 million ( $83 million ) of this accounts receivable factoring facility as of September 30, 2016 and 2015 , respectively. As of September 30, 2015, the company had utilized more than the committed eligible trade receivable amount of €65 million ( $73 million ) then in effect based on approval from the bank. United Kingdom Factoring Facility: The company has 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 2018, the company can sell up to, at any point in time, €25 million ( $28 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 ( $6 million ) and €8 million ( $8 million ) of this accounts receivable factoring facility as of September 30, 2016 and 2015 , respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program. Italy Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement, which expires in June 2017, the company can sell up to, at any point in time, €30 million ( $34 million ) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €22 million ( $24 million ) and €22 million ( $24 million ) of this accounts receivable factoring facility as of September 30, 2016 and 2015 , respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program. In addition to the above facilities, a number of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the condensed consolidated balance sheet. The amount of factored receivables excluded from accounts receivable under these arrangements was $10 million and $18 million at September 30, 2016 and 2015 , respectively. Total costs associated with all of the off-balance sheet arrangements described above were $5 million , $6 million and $8 million in fiscal years 2016 , 2015 and 2014 , respectively, and are included in selling, general and administrative expenses in the condensed consolidated statement of operations. On-balance sheet arrangements The company has a $100 million U.S. accounts receivables securitization facility. On December 4, 2015, the company entered into an amendment which extends the facility expiration date to December 4, 2018. The maximum permitted priority-debt-to-EBITDA ratio as of the last day of each fiscal quarter under the U.S. securitization facility at 2.25 to 1.00 . This program is provided by PNC Bank, National Association, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents from time to time (participating lenders), which are party to the agreement. Under this program, the company has the ability to sell an undivided percentage ownership interest in substantially all of its trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. accounts receivable factoring facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation ("ARC"), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for the company's U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. At September 30, 2016 and 2015 , no amounts, including letters of credit, were outstanding under this program. This securitization program contains a cross-default to the revolving credit facility. At certain times during any given month, the company may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, the company would then typically utilize the cash received from customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, the company may borrow under this program in amounts exceeding the amounts shown as outstanding at fiscal year ends. |
GAIN ON SALE OF PROPERTY AND OT
GAIN ON SALE OF PROPERTY AND OTHER OPERATING EXPENSE, NET | 12 Months Ended |
Sep. 30, 2016 | |
Other Income and Expenses [Abstract] | |
GAIN ON SALE OF PROPERTY AND OTHER OPERATING EXPENSE, NET | GAIN ON SALE OF PROPERTY AND OTHER OPERATING EXPENSE, NET The company recognized a gain on sale of property of $3 million during fiscal year 2015. This gain is associated with the sale of excess land at the company's facility at Cwmbran, Wales. Other operating expense, net for fiscal years 2016 and 2014 primarily relates to environmental remediation costs incurred by the company (see Note 23). |
INVENTORIES
INVENTORIES | 12 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions): September 30, 2016 2015 Finished goods $ 125 $ 133 Work in process 26 28 Raw materials, parts and supplies 165 177 Total $ 316 $ 338 |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Sep. 30, 2016 | |
Other Current Assets Disclosure [Abstract] | |
OTHER CURRENT ASSETS | OTHER CURRENT ASSETS Other current assets are summarized as follows (in millions): September 30, 2016 2015 Current deferred income tax assets (see Note 22) $ — $ 20 Asbestos-related recoveries (see Note 23) 10 13 Prepaid and other 23 17 Other current assets $ 33 $ 50 |
NET PROPERTY
NET PROPERTY | 12 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
NET PROPERTY | NET PROPERTY Property is stated at cost. Depreciation of property is based on estimated useful lives, generally using the straight-line method. Estimated useful lives for buildings and improvements range from 10 to 50 years and estimated useful lives for machinery and equipment range from 3 to 20 years. Significant improvements are capitalized, and disposed or replaced property is written off. Maintenance and repairs are charged to expense in the period they are incurred. Company-owned tooling is classified as property and depreciated over the shorter of its expected life or the life of the production contract, generally not to exceed three years . In accordance with the FASB guidance on property, plant and equipment, the company reviews the carrying value of long-lived assets, excluding goodwill, to be held and used, for impairment whenever events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value. In the fourth quarter of fiscal year 2015, the U.S. Army awarded a new contract for the production of the Joint Light Tactical Vehicle (JLTV) to Oshkosh, for which the company is expected to supply wheel-ends. However, the company made certain capital investments and commitments to supply its ProTec Independent Suspension had the JLTV program been awarded differently. As a result, the company recorded an impairment of $2 million of long-lived assets in the fourth quarter of fiscal year 2015. Net property is summarized as follows (in millions): September 30, 2016 2015 Property at cost: Land and land improvements $ 30 $ 31 Buildings 231 214 Machinery and equipment 839 864 Company-owned tooling 113 116 Construction in progress 56 62 Total 1,269 1,287 Less: accumulated depreciation (830 ) (868 ) Net property $ 439 $ 419 |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Sep. 30, 2016 | |
Other Assets, Noncurrent [Abstract] | |
OTHER ASSETS | OTHER ASSETS Other assets are summarized as follows (in millions): September 30, 2016 2015 Investments in non-consolidated joint ventures (see Note 13) $ 100 $ 96 Asbestos-related recoveries (see Note 23) 49 42 Unamortized revolver debt issuance costs (see Note 16) 7 10 Capitalized software costs, net (1) 29 28 Non-current deferred income tax assets (see Note 22) 413 28 Assets for uncertain tax positions (see Note 22) 35 3 Prepaid pension costs (see Note 21) 123 110 Other 4 15 Other assets $ 760 $ 332 (1) 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. |
INVESTMENTS IN NON-CONSOLIDATED
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES | 12 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES | INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES The company’s non-consolidated joint ventures and related direct ownership interest are as follows: September 30, 2016 2015 2014 Meritor WABCO Vehicle Control Systems (Commercial Truck & Industrial) 50 % 50 % 50 % Master Sistemas Automotivos Ltda. (Commercial Truck & Industrial) 49 % 49 % 49 % Sistemas Automotrices de Mexico S.A. de C.V. (Commercial Truck & Industrial) 50 % 50 % 50 % Ege Fren Sanayii ve Ticaret A.S. (Commercial Truck & Industrial) 49 % 49 % 49 % Automotive Axles Limited (Commercial Truck & Industrial) 36 % 36 % 36 % ZF Meritor LLC (Commercial Truck & Industrial) — % — % 50 % In June 2014, ZF Meritor LLC, a joint venture between ZF Friedrichshafen AG and the company's subsidiary, Meritor Transmission LLC, entered into a settlement agreement with Eaton Corporation relating to an antitrust lawsuit filed by ZF Meritor in 2006. Pursuant to the terms of the settlement agreement, Eaton agreed to pay $500 million to ZF Meritor. In July 2014, ZF Meritor received proceeds of $400 million , net of attorney's contingency fees. In July 2014, the company received proceeds of $210 million representing its share based on the company's ownership interest in ZF Meritor and including a recovery of current and prior years' attorney expenses paid by Meritor. ZF Meritor and Meritor Transmission agreed to dismiss all pending antitrust litigation with Eaton. ZF Meritor did not have any operating activities and was dissolved in fiscal year 2015. The company's pre-tax share of the settlement was $210 million ( $209 million after-tax), of which $190 million was recognized as equity in earnings of ZF Meritor, and $20 million for the recovery of legal expenses from ZF Meritor was recognized as a reduction of selling, general and administrative expenses ("SG&A") in the consolidated statement of operations. The company recognized the recovery in SG&A as the historical incurrence of these costs was included in SG&A in the consolidated statement of operations in prior periods. The company’s investments in non-consolidated joint ventures are as follows (in millions): September 30, 2016 2015 Commercial Truck & Industrial $ 100 $ 96 Aftermarket & Trailer — — Total investments in non-consolidated joint ventures $ 100 $ 96 The company’s equity in earnings of non-consolidated joint ventures is as follows (in millions): Year Ended September 30, 2016 2015 2014 Commercial Truck & Industrial $ 36 $ 39 $ 38 Aftermarket & Trailer — — — Total equity in earnings of affiliates $ 36 $ 39 $ 38 The summarized financial information presented below represents the combined accounts of the company’s non-consolidated joint ventures related to its continuing operations (in millions): September 30, 2016 2015 Current assets $ 337 $ 393 Non-current assets 151 140 Total assets $ 488 $ 533 Current liabilities $ 192 $ 239 Non-current liabilities 103 111 Total liabilities $ 295 $ 350 Year Ended September 30, 2016 2015 2014 Sales $ 1,101 $ 1,288 $ 1,268 Gross profit 165 187 167 Net income 73 83 458 Dividends received from the company’s non-consolidated joint ventures were $37 million in fiscal year 2016 , $32 million in fiscal year 2015 and $36 million in fiscal year 2014 . The company had sales to its non-consolidated joint ventures of approximately $9 million , $5 million and $3 million in fiscal years 2016 , 2015 and 2014 , respectively. These sales exclude sales of $124 million , $135 million and $141 million in fiscal years 2016 , 2015 and 2014 , respectively, to a joint venture in the company’s Commercial Truck & Industrial segment, which are eliminated as the company purchases these components back after value add provided by the joint venture. The company had purchases from its non-consolidated joint ventures of approximately $753 million , $855 million and $760 million in fiscal years 2016 , 2015 and 2014 , respectively. Additionally, the company leases space and provides certain administrative and technical services to various non-consolidated joint ventures. The company collected $12 million , $9 million and $5 million for such leases and services during fiscal years 2016 , 2015 and 2014 , respectively. Amounts due from the company’s non-consolidated joint ventures were $22 million and $35 million at September 30, 2016 and 2015 , respectively, and are included in Receivables, trade and other, net in the consolidated balance sheet. Amounts due to the company’s non-consolidated joint ventures were $84 million and $107 million at September 30, 2016 and 2015 , respectively, and are included in Accounts payable in the consolidated balance sheet. The fair value of the company’s investment in its Automotive Axles Limited joint venture was approximately $59 million and $57 million at September 30, 2016 and 2015 , respectively, based on quoted market prices as this joint venture is listed and publicly traded on the Bombay Stock Exchange in India. The company holds a variable interest in a joint venture accounted for under the equity method of accounting. The joint venture manufactures components for commercial vehicle applications primarily on behalf of the company. The variable interest relates to a supply arrangement between the company and the joint venture whereby the company supplies certain components to the joint venture on a cost-plus basis. The company is not the primary beneficiary of the joint venture, as the joint venture partner has shared or absolute control over key manufacturing operations, labor relationships, financing activities and certain other functions of the joint venture. Therefore, the company does not consolidate the joint venture. At September 30, 2016 and 2015, the company’s investment in the joint venture was $45 million and $42 million , respectively, representing the company’s maximum exposure to loss. This amount is included in investments in non-consolidated joint ventures (see Note 12). |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Sep. 30, 2016 | |
Other Current Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES Other current liabilities are summarized as follows (in millions): September 30, 2016 2015 Compensation and benefits $ 115 $ 122 Income taxes 8 9 Taxes other than income taxes 21 23 Accrued interest 14 14 Product warranties 18 22 Restructuring (see Note 5) 14 7 Asbestos-related liabilities (see Note 23) 18 17 Indemnity obligations (see Note 23) 2 2 Other 58 63 Other current liabilities $ 268 $ 279 The company records estimated product warranty costs at the time of shipment of products to customers. Warranty reserves are primarily based on factors that include past claims experience, sales history, product manufacturing and engineering changes and industry developments. Liabilities for product recall campaigns are recorded at the time the company’s obligation is probable and can be reasonably estimated. Policy repair actions to maintain customer relationship are recorded as other liabilities at the time an obligation is probable and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability. A summary of the changes in product warranties is as follows (in millions): September 30, 2016 2015 2014 Total product warranties – beginning of year $ 48 $ 51 $ 57 Accruals for product warranties 10 15 22 Payments (14 ) (18 ) (22 ) Change in estimates and other — — (6 ) Total product warranties – end of year 44 48 51 Less: non-current product warranties (see Note 15) (26 ) (26 ) (24 ) Product warranties – current $ 18 $ 22 $ 27 |
OTHER LIABILITIES
OTHER LIABILITIES | 12 Months Ended |
Sep. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
OTHER LIABILITIES | OTHER LIABILITIES Other liabilities are summarized as follows (in millions): September 30, 2016 2015 Asbestos-related liabilities (see Note 23) $ 136 $ 109 Restructuring (see Note 5) 2 3 Non-current deferred income tax liabilities (see Note 22) 12 99 Liabilities for uncertain tax positions (see Note 22) 16 15 Product warranties (see Note 14) 26 26 Environmental (see Note 23) 6 8 Indemnity obligations (see Note 23) 11 13 Other 29 32 Other liabilities $ 238 $ 305 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions): September 30, 2016 2015 4.625 percent convertible notes due 2026 (1) $ — $ 55 4.0 percent convertible notes due 2027 (2)(4) 142 142 7.875 percent convertible notes due 2026 (2)(5) 129 127 6.75 percent notes due 2021 (3)(6) 271 270 6.25 percent notes due 2024 (3)(7) 442 442 Capital lease obligation 16 17 Export financing arrangements and other 10 18 Unamortized discount on convertible notes (8) (14 ) (20 ) Subtotal 996 1,051 Less: current maturities (14 ) (15 ) Long-term debt $ 982 $ 1,036 (1) The 4.625 percent convertible notes contained a put and call feature, which allowed for earlier redemption beginning in 2016. As of June 30, 2016 all of these notes were redeemed. (2) The 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2019 and 2020, respectively. (3) The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption. (4) The 4.0 percent convertible notes due 2027 are presented net of $1 million unamortized issuance costs as of September 30, 2016 and September 30, 2015 . (5) The 7.875 percent convertible notes due 2026 are presented net of $2 million and $3 million unamortized issuance costs as of September 30, 2016 and September 30, 2015, respectively, an d $9 million and $10 million original issuance discount as of September 30, 2016 and September 30, 2015 . (6) The 6.75 percent notes due 2021 are presented net of $4 million and $5 million unamortized issuance costs as of September 30, 2016 and September 30, 2015 . (7) The 6.25 percent notes due 2024 are presented net of $8 million unamortized issuance costs as of September 30, 2016 and September 30, 2015 . (8) The carrying amount of the equity component related to convertible debt. Revolving Credit Facility On June 2, 2016, the company entered into a third amendment of its senior secured revolving credit facility. The amendment increased the 2019 revolving loan commitment to $466 million , permits the company to execute certain internal restructuring plans, including the release of certain guarantors when required by such plans, and reset covenant basket amounts. Pricing and maturity dates remained unchanged. Subsequent to the amendment, certain lenders converted their $32 million 2017 revolving loan commitments to 2019 revolving loan commitments and are now subject to the terms of 2019 lenders. Pursuant to the revolving credit agreement, the company now has a $506 million revolving credit facility, $8 million of which matures in April 2017 for banks not electing to extend their commitments under the revolving credit facility, and $498 million of which matures in February 2019. The availability under the revolving credit facility is subject to certain financial covenants based on (i) the ratio of the company’s priority debt (consisting principally of amounts outstanding under the revolving credit facility, U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA and (ii) the amount of annual capital expenditures. The company is required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement. The availability under the revolving credit facility is also subject to a collateral test, pursuant to which borrowings on the revolving credit facility cannot exceed 1.0 x the collateral test value. The collateral test is performed on a quarterly basis. At September 30, 2016 , the revolving credit facility was collateralized by approximately $693 million of the company's assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and the company's investment in all or a portion of certain of its wholly-owned subsidiaries. Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin and a commitment fee on undrawn amounts, both of which are based upon the company's current corporate credit rating. At September 30, 2016 , the margin over LIBOR rate was 325 basis points , and the commitment fee was 50 basis points . Overnight revolving credit loans are at the prime rate plus a margin of 225 basis points . Certain of the company's subsidiaries, as defined in the revolving credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly held notes outstanding under the company's indentures (see Note 27). No borrowings were outstanding under the revolving credit facility at September 30, 2016 and September 30, 2015 . The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At September 30, 2016 and September 30, 2015, there were no letters of credit outstanding under the revolving credit facility. Debt Securities In December 2014, the company filed a shelf registration statement with the Securities and Exchange Commission, registering an unlimited amount of debt and/or equity securities that the company may offer in one or more offerings on terms to be determined at the time of sale. The December 2014 shelf registration statement superseded and replaced the shelf registration statement filed in February 2012, as amended. Issuance of Debt Securities - 2024 Notes On February 13, 2014, the company completed a public offering of debt securities consisting of the issuance of $225 million principal amount of 10 -year, 6.25 percent notes due 2024 (the "Initial 2024 Notes"). The offering and sale were made pursuant to the company's February 2012 shelf registration statement. The Initial 2024 Notes were issued under the company's indenture dated as of April 1, 1998, as supplemented. The Initial 2024 Notes were issued at 100 percent of their principal amount. The proceeds from the sale of the Initial 2024 Notes were $225 million and, together with cash on hand, were primarily used to repurchase $250 million principal amount of the company’s previously outstanding 10.625 percent notes due 2018. On June 11, 2015, the company completed a public offering of an additional $225 million aggregate principal amount of 6.25 percent notes due 2024 (the "Additional 2024 Notes"), in an underwritten public offering pursuant to the company's December 2014 shelf registration statement. The proceeds from the sale of the Additional 2024 Notes were used to replenish available cash used to pay $179 million , including premium and fees, to repurchase $110 million principal amount at maturity of the company's 7.875 percent convertible notes due 2026 (the " 7.875 convertible notes"). The company used the remaining net proceeds to purchase an annuity to satisfy its obligations under the Canadian and German pension plans for its employees and for general corporate purposes. The Additional 2024 Notes constitute a further issuance of, and are fungible with, the $225 million aggregate principal amount of Initial 2024 Notes that the company issued on February 13, 2014 and form a single series with the Initial 2024 Notes (collectively, the “2024 Notes”). The Additional 2024 Notes have terms identical to the Initial 2024 Notes, other than issue date and offering price, and have the same CUSIP number as the Initial 2024 Notes. Upon completion of the offering, the aggregate principal amount of outstanding notes of this series was $450 million . The 2024 Notes bear interest at a fixed rate of 6.25 percent per annum. The company pays interest on the 2024 Notes semi-annually, in arrears, on February 15 and August 15 of each year. The 2024 Notes constitute senior unsecured obligations of the company and rank equally in right of payment with existing and future senior unsecured indebtedness and effectively junior to existing and future secured indebtedness. The 2024 Notes are guaranteed on a senior unsecured basis by each of the company's subsidiaries from time to time guaranteeing its senior secured credit facility. The guarantees rank equally with existing and future senior unsecured indebtedness of the guarantors and will be effectively subordinated to all of the existing and future secured indebtedness of the guarantors, to the extent of the value of the assets securing such indebtedness. Prior to February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at a redemption price equal to 100 percent of the principal amount of the 2024 Notes to be redeemed, plus an applicable make-whole premium (as defined in the indenture under which the 2024 Notes were issued) and any accrued and unpaid interest. On or after February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2024 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on February 15 of the years indicated below: Year Redemption Price 2019 103.125% 2020 102.083% 2021 101.042% 2022 and thereafter 100.000% Prior to February 15, 2017, the company may redeem, at its option, from time to time, up to approximately $79 million aggregate principal amount of the 2024 Notes with the net cash proceeds of one or more public sales of the company's common stock at a redemption price equal to 106.25 percent of the principal amount, plus accrued and unpaid interest, if any, provided that at least approximately $146 million aggregate principal amount of the 2024 Notes remain outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock. If a Change of Control (as defined in the indenture under which the 2024 Notes were issued) occurs, unless the company has exercised its right to redeem the 2024 Notes, each holder of 2024 Notes may require the company to repurchase some or all of such holder's 2024 Notes at a purchase price equal to 101 percent of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest, if any. Issuance of Debt Securities - 2021 Notes On May 31, 2013, the company completed an offering of debt securities consisting of the issuance of $275 million principal amount of 8 -year, 6.75 percent notes due 2021 (the "2021 Notes"). The offering and sale were made pursuant to the company's shelf registration statement that was effective at the time of the offering. The 2021 Notes were issued under the company's indenture dated as of April 1, 1998, as supplemented. The 2021 Notes were issued at 100 percent of their principal amount. The proceeds from the sale of the 2021 Notes were $275 million and were primarily used to complete a cash tender offer for $167 million of the 8.125 percent notes due 2015. The 2021 Notes bear interest at a fixed rate of 6.75 percent per annum. The company pays interest on the 2021 Notes semi-annually, in arrears, on June 15 and December 15 of each year. The 2021 Notes constitute senior unsecured obligations of the company and rank equally in right of payment with existing and future senior unsecured indebtedness and effectively junior to existing and future secured indebtedness to the extent of the security therefor. The 2021 Notes are guaranteed on a senior unsecured basis by each of the company's subsidiaries from time to time guaranteeing its senior secured credit facility. The guarantees rank equally with existing and future senior unsecured indebtedness of the guarantors and will be effectively subordinated to all of the existing and future secured indebtedness of the guarantors, to the extent of the value of the assets securing such indebtedness. Prior to June 15, 2016, the company may redeem, at its option, from time to time, the 2021 Notes, in whole or in part, at a redemption price equal to the 100 percent of the principal amount of the 2021 Notes to be redeemed plus an applicable make-whole premium (as defined in the indenture under which the 2021 Notes were issued) and any accrued and unpaid interest. On or after June 15, 2016, the company may redeem, at its option, from time to time, the 2021 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2021 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on June 15 of the years indicated below: Year Redemption Price 2016 105.063% 2017 103.375% 2018 101.688% 2019 and thereafter 100.000% Prior to June 15, 2016, the company also may redeem, at its option, from time to time, up to 35 percent of the aggregate principal amount of the 2021 Notes with the net cash proceeds of one or more public sales of the company's common stock at a redemption price equal to 106.75 percent of the principal amount, plus accrued and unpaid interest, if any, so long as at least 65 percent the aggregate principal amount of 2021 Notes originally issued remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock. If a Change of Control (as defined in the indenture under which the 2021 Notes were issued) occurs, unless the company has exercised its right to redeem the 2021 Notes, each holder of 2021 Notes may require the company to repurchase some or all of such holder's 2021 Notes at a purchase price equal to 101 percent of the principal amount of the 2021 Notes to be repurchased, plus accrued and unpaid interest, if any. Repurchase of Debt Securities In fiscal year 2014, the company repurchased $38 million principal amount of its 4.0 percent convertible notes due 2027. The notes were repurchased at a premium equal to 7 percent of their principal amount. The repurchase of $38 million principal amount of 4.0 percent convertible notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $5 million , the majority of which is premium. The net loss on debt extinguishment is included in Interest expense, net in the consolidated statement of operations. On September 20, 2014, the company completed the redemption of its outstanding 8.125 percent notes due 2015. The notes were redeemed at a premium equal to 7 percent of their principal amount. The repurchase of $84 million principal amount of 8.125 percent notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $5 million consisting of $6 million of premium net of $1 million acceleration of the remaining unamortized gain on a related interest rate swap termination. The net loss on debt extinguishment is included in Interest expense, net in the consolidated statement of operations. On March 15, 2014, the company completed the redemption of its 10.625 percent notes due 2018. The notes were redeemed at a premium equal to approximately 5 percent of their principal amount. The repurchase of $250 million principal amount of 10.625 percent notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $19 million , which consisted of $6 million of unamortized discount and deferred issuance costs and $13 million of premium. The net loss on debt extinguishment is included in Interest expense, net in the consolidated statement of operations. In fiscal year 2015, the company repurchased $110 million principal amount at maturity of the company's 7.875 percent convertible notes, of which $85 million were repurchased at a premium equal to approximately 64 percent of their principal amount in the third quarter of 2015, and $25 million were purchased at a premium equal to approximately 58 percent of their principal amount in the fourth quarter of 2015. The 7.875 percent convertible notes contain a conversion to equity feature which can be settled in cash upon conversion. Accordingly, the liability and equity components are required to be separately accounted for upon recognition. Subsequently, upon derecognition of the convertible notes, the total cash consideration paid by the company is required to be allocated between the extinguishment of the liability component and the reacquisition of the equity component. Of the fiscal year 2015 total cash consideration of $179 million paid, $121 million and $58 million were allocated between the liability and equity components, respectively. The repurchase of $110 million principal amount at maturity of the company's 7.875 percent convertible notes was accounted for as an extinguishment of debt, and accordingly, the company recognized a net loss on debt extinguishment of $24 million , which consisted of $14 million of unamortized discount and deferred issuance costs and $10 million of premium. The net loss on debt extinguishment was included in Interest expense, net in the consolidated statement of operations. The repurchase was made under the company's 2026 convertible notes repurchase authorization. In fiscal year 2015, the company repurchased $19 million principal amount of the company's 4.0 percent convertible notes. In the second quarter of fiscal year 2015, $15 million of the notes were repurchased at a premium equal to approximately 6 percent of their principal amount. In the third quarter of fiscal year 2015, $4 million of the notes were repurchased at a premium equal to approximately 5 percent of their principal amount. The repurchase of $19 million of 4.0 percent convertible notes was accounted for as an extinguishment of debt, and accordingly the company recognized an insignificant net loss on debt extinguishment, the majority of which was premium. The net loss on debt extinguishment was included in Interest expense, net in the consolidated statement of operations. On March 1, 2016, substantially all $55 million outstanding principal amount of the company's 4.625 percent convertible notes were repurchased at 100 percent of the face value of the notes. On April 15, 2016, the remaining 4.625 percent convertible notes were redeemed at 100 percent of the face value. As of September 30, 2016 none of the 4.625 percent convertible notes were outstanding. The repurchases were made under the company's equity and equity linked repurchase authorizations (see Note 18). The repurchase program under these authorizations was complete as of September 30, 2016. 2013 Convertible Senior Unsecured Notes In December 2012, the company issued $250 million principal amount of 7.875 percent convertible notes due 2026 (the "2013 convertible notes"). The 2013 convertible notes were sold by the company to qualified institutional buyers in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. The 2013 convertible notes have an initial principal amount of $900 per note and will accrete to $1,000 per note on December 1, 2020 at an effective interest rate of 10.9 percent . Net proceeds received by the company, after issuance costs and discounts, were approximately $220 million . The company pays 7.875 percent cash interest on the principal amount of the 2013 convertible notes semi-annually in arrears on June 1 and December 1 of each year to holders of record at the close of business on the preceding May 15 and November 15, respectively, and at maturity to the holders that present the 2013 convertible notes for payment. Interest accrues on the principal amount thereof from and including the date the 2013 convertible notes were issued or from, and including, the last date in respect of which interest has been paid or provided for, as the case may be, to, but excluding, the next interest payment date. The 2013 convertible notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of the company's subsidiaries. The 2013 convertible notes are senior unsecured obligations and rank equally in right of payment with all of the company's existing and future senior unsecured indebtedness and are junior to any of the company's existing and future secured indebtedness. The 2013 convertible notes will be convertible into cash up to the principal amount at maturity of the 2013 convertible note surrendered for conversion and, if applicable, shares of the company's common stock (subject to a conversion share cap as described below), based on an initial conversion rate, subject to adjustment, equivalent to 83.3333 shares per $1,000 principal amount at maturity of 2013 convertible notes (which represents an initial conversion price of $12.00 per share), only under the following circumstances: • prior to June 1, 2025, during any calendar quarter after the calendar quarter ending December 31, 2012, if the closing sale price of the company's common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120 percent of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; • prior to June 1, 2025, during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount at maturity of 2013 convertible notes was equal to or less than 97 percent of the conversion value of the 2013 convertible notes on each trading day during such five consecutive trading day period; • prior to June 1, 2025, if the company has called the 2013 convertible notes for redemption; • prior to June 1, 2025, upon the occurrence of specified corporate transactions; or • at any time on or after June 1, 2025. On or after December 1, 2020, the company may redeem the 2013 convertible notes at its option, in whole or in part, at a redemption price in cash equal to 100 percent of the principal amount at maturity of the 2013 convertible notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Further, holders may require the company to purchase all or a portion of their 2013 convertible notes at a purchase price in cash equal to 100 percent of the principal amount at maturity of the 2013 convertible notes to be purchased, plus accrued and unpaid interest, on December 1, 2020 or upon certain fundamental changes. The maximum number of shares of common stock into which the 2013 convertible notes are convertible is approximately 11 million shares. The company used the net proceeds of approximately $220 million from the offering of the 2013 convertible notes (after discounts and issuance costs) and additional cash to acquire a portion of its outstanding 4.625 percent convertible senior notes due 2026 (the " 4.625 percent convertible notes") in transactions that settled concurrently with the closing of the 2013 convertible note offering. Approximately $245 million of $300 million principal amount of the 4.625 percent convertible notes were repurchased for an aggregate purchase price of approximately $236 million (including accrued interest). Accounting guidance requires that cash-settled convertible debt, such as the 2013 convertible notes, be separated into debt and equity components at issuance and a value be assigned to each. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, is recorded as a debt discount. The company measures the debt component at fair value by utilizing a discounted cash flow model. This model utilizes observable inputs such as contractual repayment terms, benchmark forward yield curves, yield curves and quoted market prices of its own nonconvertible debt. The yield curves are acquired from an independent source that is widely used in the financial industry and reviewed internally by personnel with appropriate expertise in valuation methodologies. 2027 Convertible Notes In February 2007, the company issued $200 million principal amount of 4.00 percent convertible notes due 2027 (the "2027 convertible notes"). The 2027 convertible notes bear cash interest at a rate of 4.00 percent per annum from the date of issuance through February 15, 2019, payable semi-annually in arrears on February 15 and August 15 of each year. After February 15, 2019, the principal amount of the notes will be subject to accretion at a rate that provides holders with an aggregate annual yield to maturity of 4.00 percent . The 2027 convertible notes are convertible into shares of the company’s common stock at an initial conversion rate, subject to adjustment, equivalent to 37.4111 shares of common stock per $1,000 initial principal amount of notes, which represents an initial conversion price of approximately $26.73 per share. If converted, the accreted principal amount will be settled in cash and the remainder of the company’s conversion obligation, if any, in excess of such accreted principal amount will be settled in cash, shares of common stock, or a combination thereof, at the company’s election. Holders may convert their 2027 convertible notes at any time on or after February 15, 2025. The maximum number of shares of common stock into which the 2027 convertible notes are convertible is approximately 5 million shares. Prior to February 15, 2025, holders may convert their notes only under the following circumstances: • during any calendar quarter, if the closing price of the company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120 percent of the applicable conversion price; • during the five business day period after any five consecutive trading day period in which the average trading price per $1,000 initial principal amount of notes is equal to or less than 97 percent of the average conversion value of the notes during such five consecutive trading day period; • upon the occurrence of specified corporate transactions; or • if the notes are called by the company for redemption. On or after February 15, 2019, the company may redeem the 2027 convertible notes, in whole or in part, for cash at a redemption price equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. On each of February 15, 2019 and 2022, or upon certain fundamental changes, holders may require the company to purchase all or a portion of their 2027 convertible notes at a purchase price in cash equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. The 2027 convertible notes are fully and unconditionally guaranteed by certain subsidiaries of the company that currently guarantee the company’s obligations under its senior secured credit facility and other publicly held notes (see Revolving Credit Facility above). Accounting guidance requires that cash-settled convertible debt, such as the 2027 convertible notes, be separated into debt and equity components at issuance and a value be assigned to each. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, is recorded as a debt discount. The company measures the debt component at fair value by utilizing a discounted cash flow model. This model utilizes observable inputs such as contractual repayment terms, benchmark forward yield curves, yield curves and quoted market prices of its own nonconvertible debt. The yield curves are acquired from an independent source that is widely used in the financial industry and reviewed internally by personnel with appropriate expertise in valuation methodologies. The following table summarizes the principal amounts and related unamortized discount on all convertible notes (in millions): September 30, September 30, Principal amount of convertible notes $ 283 $ 338 Unamortized discount on convertible notes (23 ) (30 ) Net carrying value $ 260 $ 308 The following table summarizes other information related to the convertible notes: Convertible Notes 2027 2013 Total amortization period for debt discount (in years): 12 8 Remaining amortization period for debt discount (in years): 3 4 Effective interest rates on convertible notes: 7.7 % 10.9 % The following table summarizes interest costs recognized on convertible notes (in millions): Year Ended September 30, 2016 2015 2014 Contractual interest coupon $ 18 $ 26 $ 30 Amortization of debt discount 8 8 9 Repurchase of convertible notes — 24 5 Total $ 26 $ 58 $ 44 Debt Maturities As of September 30, 2016, the company is contractually obligated to make payments as follows (in millions): Total 2017 2018 2019 2020 2021 Thereafter (2) Total debt (1) $ 1,034 $ 14 $ 4 $ 2 $ 1 $ 277 $ 736 (1) Total debt excludes unamortized discount on convertible notes of $14 million , unamortized issuance costs of $15 million , and original issuance discount of $9 million . (2) Includes the company's 4.0 percent and 7.875 percent convertible notes, which contain a put and call feature that allows for earlier redemption beginning in 2019 and 2020, respectively. Capital Leases On March 20, 2012, the company entered into an arrangement to finance equipment acquisitions for various U.S. locations. Under this arrangement, the company can request financing from Wells Fargo Equipment Finance ("Wells Fargo"), which acquired the equipment financing business from GE Capital Commercial, Inc., for progress payments for equipment under construction, not to exceed $10 million at any time. The financing rate is equal to the 30-day LIBOR plus 475 basis points per annum. Under this arrangement, the company can also enter into lease arrangements with Wells Fargo for completed equipment. The lease term is 60 months and the lease interest rate is equal to the 5-year Swap Rate published by the Federal Reserve Board plus 564 basis points . The company had $7 million and $ 10 million outstanding under this capital lease arrangement as of September 30, 2016 and 2015, respectively. In addition, the company had another $9 million and $7 million outstanding through other capital lease arrangements at September 30, 2016 and 2015, respectively. As of September 30, 2016, the future minimum lease payments for noncancelable capital leases with initial terms in excess of one year were as follows: Total 2017 2018 2019 2020 2021 Thereafter Capital lease obligation $ 20 $ 6 $ 4 $ 3 $ 2 $ 2 $ 3 Less amounts representing interest (4 ) (1 ) (1 ) (1 ) (1 ) — — Principal on capital lease $ 16 $ 5 $ 3 $ 2 $ 1 $ 2 $ 3 Letter of Credit Facilities On February 21, 2014, the company entered into an arrangement to amend and restate the letter of credit facility with Citicorp USA, Inc., as administrative agent and issuing bank, and the other lenders party thereto. Under the terms of this amended credit agreement, 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 through December 19, 2015. From December 20, 2015 through March 19, 2019, the aggregate availability is $25 million . This facility contains covenants and events of default generally similar to those existing in the company’s public debt indentures. At September 30, 2016 and 2015, $23 million and $24 million of letters of credit were outstanding under this facility. In addition, the company had another $5 million and $6 million of letters of credit outstanding through other letter of credit facilities at September 30, 2016 and 2015, respectively. Export Financing Arrangements The company entered into a number of export financing arrangements through its Brazilian subsidiary during fiscal year 2014. The export financing arrangements are issued under an incentive program of the Brazilian government to fund working capital for Brazilian companies in exportation programs. The arrangements bear interest at 5.5 percent and have maturity dates in 2016 and 2017. There were $9 million and $18 million outstanding under these arrangements at September 30, 2016 and 2015 , respectively. Other O |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS The company’s financial instruments include cash and cash equivalents, short-term debt, long-term debt, and foreign exchange forward and options contracts. The company uses derivatives for hedging and non-trading purposes in order to manage its foreign exchange rate exposures. Foreign Exchange Contracts As a result of the company’s substantial international operations, it is exposed to foreign currency risks that arise from normal business operations, including in connection with transactions that are denominated in foreign currencies. In addition, the company translates sales and financial results denominated in foreign currencies into U.S. dollars for purposes of its consolidated financial statements. As a result, appreciation of the U.S. dollar against these foreign currencies generally will have a negative impact on 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 fiscal years 2016, 2015 and 2014, the company's reported financial results were adversely affected by appreciation of the U.S. dollar against foreign currencies relative to the prior years. The company has a foreign currency cash flow hedging program to reduce the company’s exposure to changes in exchange rates on foreign currency purchases and sales. The company uses foreign currency forward contracts to manage the company’s exposures arising from foreign currency exchange risk. Gains and losses on the underlying foreign currency exposures are partially offset with gains and losses on the foreign currency forward contracts. Under this foreign currency cash flow hedging program, the company has designated the foreign exchange contracts (the “contracts”) as cash flow hedges of underlying forecasted foreign currency 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 consolidated balance sheet and is recognized in operating income when the underlying forecasted transaction impacts earnings. The terms of the foreign exchange contracts generally require the company to place cash on deposit as collateral if the fair value of these contracts represents a liability for the company. The fair values of the foreign exchange derivative instruments and any related collateral cash deposits are presented on a net basis as the derivative contracts are subject to master netting arrangements. At September 30, 2016, 2015 and 2014, the notional amount of the company's foreign exchange contracts outstanding under its foreign currency cash flow hedging program were $190 million , $137 million , and $47 million respectively. The company classifies the cash flows associated with the contracts in cash flows from operating activities in the consolidated statement of cash flows. This is consistent with the classification of the cash flows associated with the underlying hedged item. From time to time the company hedges against foreign currency exposure related to translations to U.S. dollars of financial results denominated in foreign currencies. Changes in fair value associated with these contracts are recorded in other income, net, in the consolidated statement of operations. The company also uses option contracts to mitigate foreign currency exposure on expected future Indian Rupee-denominated purchases. Changes in fair value associated with these contracts are recorded in cost of sales in the consolidated statement of operations. The following table summarizes the impact of the company’s derivatives instruments on comprehensive income for fiscal years ended September 30 (in millions): Location of Gain (Loss) 2016 2015 2014 Derivatives designated as hedging instruments: Amount of gain (loss) recognized in AOCL (effective portion) AOCL $ (3 ) $ 3 $ 3 Amount of gain (loss) reclassified from AOCL into income (effective portion) Cost of Sales (4 ) 6 1 Derivatives not designated as hedging instruments: Amount of gain recognized in income Cost of Sales (1 ) 2 — Derivatives not designated as hedging instruments: Amount of gain recognized in income Other Income (expense) (1 ) 2 — Fair Value Fair values of financial instruments are summarized as follows (in millions): September 30, September 30, Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents $ 160 $ 160 $ 193 $ 193 Short-term debt 14 14 15 15 Long-term debt 982 1,051 1,036 1,123 Foreign exchange forward contracts (other assets) 1 1 1 1 Foreign exchange forward contracts (other liabilities) 2 2 3 3 Short-term foreign currency option contracts (other assets) — — 1 1 Long-term foreign currency option contracts (other assets) 2 2 1 1 The following table reflects the offsetting of derivative assets and liabilities (in millions): September 30, 2016 September 30, 2015 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Asset Foreign exchange forward contract 1 — 1 1 — 1 Derivative Liabilities Foreign exchange forward contract 2 — 2 3 — 3 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 priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Fair value of financial instruments by the valuation hierarchy at September 30, 2016 is as follows (in millions): Level 1 Level 2 Level 3 Cash equivalents $ 160 $ — $ — Short-term debt — — 14 Long-term debt — 1,040 11 Foreign exchange forward contracts (asset) — 1 — Foreign exchange forward contracts (liability) — 2 — Short-term foreign currency option contracts (asset) — — — Long-term foreign currency option contracts (asset) — — 2 Fair value of financial instruments by the valuation hierarchy at September 30, 2015 is as follows (in millions): Level 1 Level 2 Level 3 Cash equivalents $ 193 $ — $ — Short-term debt — — 15 Long-term debt — 1,102 21 Foreign exchange forward contracts (asset) — 1 — Foreign exchange forward contracts (liability) — 3 — Short-term foreign currency option contracts (asset) — — 1 Long-term foreign currency option contracts (asset) — — 1 The tables below provide a reconciliation of changes in fair value of the Level 3 financial assets and liabilities measured at fair value in the consolidated balance sheet for the twelve months ended September 30, 2016 and September 30, 2015, respectively. No transfers of assets between any of the Levels occurred during these periods. Twelve months ended September 30, 2016 (in millions) Short-term foreign currency option contracts (asset) Long-term foreign currency option contracts (asset) Total Fair Value as of September 30, 2015 $ 1 $ 1 $ 2 Total unrealized gains (losses): Included in other income, net (2 ) — (2 ) Included in cost of sales — (1 ) (1 ) Total realized gains (losses): Included in other income, net — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases 1 — 1 Settlements — 2 2 Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — — — Fair Value as of September 30, 2016 $ — $ 2 $ 2 (1) Transfers as of the last day of the reporting period Twelve months ended September 30, 2015 (in millions) Short-term foreign currency option contracts (asset) Long-term foreign currency option contracts (asset) Total Fair Value as of September 30, 2014 $ 2 $ 1 $ 3 Total unrealized gains (losses): Included in other income, net (1 ) — (1 ) Included in cost of sales (1 ) — (1 ) Total realized gains (losses): Included in other income, net 2 — 2 Included in cost of sales 3 — 3 Purchases, issuances, sales and settlements: Purchases 6 — 6 Settlements (10 ) (1 ) (11 ) Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — 1 1 Fair Value as of September 30, 2015 $ 1 $ 1 $ 2 (1) Transfers as of the last day of the reporting period Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments. The company did not have any cash equivalents at September 30, 2016 or September 30, 2015 . Short- and Long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities. Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with terms of 16 months 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. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss in the statement of shareholders’ equity and is recognized in operating income when the underlying forecasted transaction impacts earnings. Foreign currency option contracts — The company uses option contracts to mitigate foreign currency exposure on expected future Indian Rupee-denominated purchases. In the second quarter of fiscal year 2015, the company entered into a new series of foreign currency option contracts with effective dates from the start of third quarter of fiscal year 2015 through the end of fiscal year 2017. In the fourth quarter of fiscal year 2016, the company entered into a new series of foreign currency option contracts with effective dates from the start of the first quarter of fiscal year 2017 through the end of fiscal year 2018. At September 30, 2016, the notional amount of the company's Indian Rupee foreign exchange contracts outstanding was $174 million . The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the consolidated statement of operations. From time to time the company will hedge against its foreign currency exposure related to translations to U.S. dollars of financial results denominated in foreign currencies. In fiscal year 2015, the company entered into a series of foreign currency option contracts with a total notional amount of $48 million to reduce volatility in the translation of Brazilian real earnings to U.S. dollars. These foreign currency option contracts did not qualify for a hedge accounting election but were expected to mitigate foreign currency translation exposure of Brazilian real earnings to U.S. dollars. As of the end of fiscal year 2016, there are no Brazilian real foreign currency option contracts outstanding. The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. Changes in fair value associated with these contracts are recorded in other income, net, in the consolidated statement of operations. Also in fiscal year 2015, the company entered into a series of foreign currency contracts with total notional amounts of $30 million and $27 million to mitigate the risk of volatility in the translation of Swedish krona and euro earnings to U.S. dollars, respectively. During the first quarter of fiscal year 2016, the company entered into additional foreign currency contracts with total notional amounts of $19 million and $21 million to mitigate the risk of volatility in the translation of Swedish krona and euro earnings, to U.S. dollars. These foreign currency option contracts did not qualify for a hedge accounting election. As of the end of fiscal year 2016, there were no Swedish krona and euro foreign currency option contracts outstanding. The fair value of the foreign currency option contracts is based on a third-party proprietary model, which incorporates inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates, and time utilizing market instruments with similar quality and maturity characteristics. Changes in fair value associated with these contracts are recorded in the consolidated statement of operations in other income, net. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Common Stock The company is authorized to issue 500 million shares of common stock, with a par value of $1 per share, and 30 million shares of Preferred Stock, without par value, of which 2 million shares are designated as Series A Junior Participating Preferred Stock (Junior Preferred Stock). No shares of Preferred Stock or Junior Preferred Stock have been issued. In the first quarter of fiscal year 2015, the company filed a shelf registration statement with the Securities and Exchange Commission, registering an unlimited amount of debt and/or equity securities that may be offered in one or more offerings on terms to be determined at the time of sale. The company has reserved approximately 10 million shares of common stock in connection with its 2010 Long-Term Incentive Plan, as amended ("LTIP") for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, performance shares, restricted share units and stock awards to key employees and directors. At September 30, 2016 , there were 2.9 million shares available for future grants the LTIP. Repurchase Authorizations On July 21, 2016, the Board of Directors authorized the repurchase of up to $100 million of the company’s common stock and up to $150 million aggregate principal amount of any of the company’s debt securities (including convertible debt securities), in each case from time to time through open market purchases, privately negotiated transactions or otherwise, until September 30, 2019, subject to compliance with legal and regulatory requirements and our debt covenants. This repurchase authorization superseded and replaced the January 2015 repurchase authorization described below. No repurchases were made under these authorizations during fiscal 2016. In June 2014, the company's Board of Directors authorized the repurchase of up to $210 million of the company's equity and equity-linked securities (including convertible debt securities), subject to the achievement of its M2016 net debt reduction target and compliance with legal and regulatory requirements and its debt covenants. During fiscal year 2016, the company repurchased 8.7 million shares of common stock for $81 million (including commission costs) and all $55 million outstanding principal amount 4.625% convertible notes at 100 percent of the face value of the notes. In the aggregate, the company repurchased 12.8 million shares of common stock for $136 million (including commission costs), $19 million principal amount of its 4.0 percent convertible notes, and all of the $55 million outstanding principal amount 4.625% convertible notes at 100 percent of the face value of the notes. (see Note 18). The repurchase program under the $210 million authorization was complete as of September 30, 2016. In January 2015, the Offering Committee of the company's Board of Directors authorized the repurchase of up to $150 million aggregate principal amount of any of the company's debt securities (including convertible debt securities). No repurchases were made under this authorization prior to its replacement with the authorization described above on July 21, 2016. In May 2015, the Offering Committee of the company's Board of Directors authorized the repurchase of up to $175 million aggregate principal amount at maturity of the company’s 7.875 percent convertible notes, subject to compliance with legal and regulatory requirements and its debt covenants. This repurchase authorization expired on September 30, 2015. During fiscal year 2015, the company repurchased $110 million principal amount at maturity of the company's 7.875 percent convertible notes for $179 million (see Note 16) pursuant to this repurchase authorization. Accumulated Other Comprehensive Loss (AOCL) The components of AOCL as reported in the Consolidated Balance Sheet and Statement of Equity (Deficit), and the changes in AOCL by components, net of tax, are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss, net of tax Total Balance at September 30, 2015 $ (54 ) $ (705 ) $ (7 ) $ (766 ) Other comprehensive income (loss) before reclassification (12 ) (70 ) 4 (78 ) Amounts reclassified from accumulated other comprehensive loss - net of tax — 35 — 35 Net current-period other comprehensive income (loss) $ (12 ) $ (35 ) $ 4 $ (43 ) Balance at September 30, 2016 $ (66 ) $ (740 ) $ (3 ) $ (809 ) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Amortization of prior service costs $ (1 ) (a) Amortization of actuarial losses 36 (a) 35 Total before tax — Tax (benefit) expense $ 35 Net of tax Total reclassifications for the period $ 35 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 20 and 21 for additional details), which is recorded in cost of sales and selling, general and administrative expenses Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss, net of tax Total Balance at September 30, 2014 $ 41 $ (789 ) $ (1 ) $ (749 ) Other comprehensive income (loss) before reclassification (96 ) (18 ) (6 ) (120 ) Amounts reclassified from accumulated other comprehensive loss - net of tax 1 102 — 103 Net current-period other comprehensive income (loss) $ (95 ) $ 84 $ (6 ) $ (17 ) Balance at September 30, 2015 $ (54 ) $ (705 ) $ (7 ) $ (766 ) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Amortization of prior service costs $ (1 ) (a) Amortization of actuarial losses 47 (a) Recognized prior service costs due to settlement 56 (a) 102 Total before tax — Tax (benefit) expense $ 102 Net of tax Employee Benefit Related Adjustment Other reclassification adjustment $ 1 (b) 1 Total before tax — Tax (benefit) expense $ 1 Net of tax Total reclassifications for the period $ 103 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 20 and 21 for additional details). (b) These accumulated other comprehensive income components are included in the computation of loss from discontinued operations (see Note 3). Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss, net of tax Total Balance at September 30, 2013 $ 61 $ (792 ) $ (3 ) $ (734 ) Other comprehensive income (loss) before reclassification (20 ) (21 ) 2 (39 ) Amounts reclassified from accumulated other comprehensive loss - net of tax — 24 — 24 Net current-period other comprehensive income (loss) $ (20 ) $ 3 $ 2 $ (15 ) Balance at September 30, 2014 $ 41 $ (789 ) $ (1 ) $ (749 ) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Amortization of prior service costs $ (7 ) (a) Amortization of actuarial losses 46 (a) Recognized prior service costs due to curtailment (15 ) (a) 24 Total before tax — Tax (benefit) expense $ 24 Net of tax Total reclassifications for the period $ 24 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 20 and 21 for additional details). |
EQUITY BASED COMPENSATION
EQUITY BASED COMPENSATION | 12 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY BASED COMPENSATION | EQUITY BASED COMPENSATION Stock Options Under the company’s incentive plans, stock options are typically granted at prices equal to the fair value on the grant date and have a maximum term of 10 years . Stock options generally vest over a three -year period from the grant date. No stock options were granted or exercised during fiscal years 2016, 2015 and 2014. The following is a rollforward of stock options for fiscal year 2016 (shares in thousands, exercise price and remaining contractual term represent weighted averages and aggregate intrinsic values in millions): Shares Exercise Price Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding — beginning of year 650 $ 10.32 Cancelled or expired (417 ) 11.50 Outstanding — end of year 233 $ 8.22 1.9 — Exercisable — end of year 233 $ 8.22 1.9 — Stock-based compensation is measured at the grant date based on the fair value of the award and is generally recognized as expense ratably on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited. Compensation expense is recognized for the non-vested portion of previously issued stock options. No compensation expense associated with the expensing of stock options was recognized in fiscal years 2016 and 2015. During fiscal year 2014, the company recognized $1.2 million in compensation expense associated with the expensing of stock options. No options were exercised in fiscal years 2016, 2015 and 2014. Restricted Stock and Restricted Share Units The company has granted shares of restricted stock and restricted share units to certain employees and non-employee members of the Board of Directors in accordance with the existing plans. The company measures the grant price fair value of these stock-based awards at the market price of the company’s common stock as of the date of the grant. Employee awards typically vest at the end of three years and are subject to continued employment by the employee. Compensation cost associated with stock-based awards is recognized ratably over the vesting period. Cash dividends on the restricted stock, if any, are reinvested in additional shares of common stock during the vesting period. The following is a rollforward of the company’s non-vested restricted stock and restricted share units as of September 30, 2016 , and the activity during fiscal year 2016 is summarized as follows (shares in thousands): Non-vested Shares Number of Shares Weighted-Average Grant-Date Fair Value Non-vested - beginning of year 1,447 $ 8.23 Granted 713 9.72 Vested (744 ) 4.44 Forfeited (184 ) 12.14 Non-vested - end of year 1,232 11.00 In fiscal years 2016 , 2015 and 2014 , the company granted 0.7 million , 0.5 million , and 0.2 million shares of restricted stock and restricted share units, respectively. The grant date weighted average fair value of these restricted share units was $9.72 , $13.91 , and $9.23 for shares of restricted stock and restricted share units granted in fiscal years 2016 , 2015 and 2014 , respectively. The number of non-vested restricted shares and restricted share units as of September 30, 2016 was 1.2 million . The per share weighted average fair value of these non-vested shares was $11.00 . As of September 30, 2016 , there was $8 million of total unrecognized compensation costs related to non-vested restricted shares and restricted share units. These costs are expected to be recognized over a weighted average period of 1.49 years. Total compensation expense recognized for restricted stock and restricted share units was $5 million in fiscal year 2016 , $4 million in fiscal year 2015 and fiscal year 2014 . Performance Share Units The company has granted performance share units to all executives eligible to participate in the LTIP. The company measures the grant price fair value of these units-based awards at the market price of the company’s common stock as of the date of the grant. Compensation cost associated with these stock-based awards is recognized ratably over the vesting period. In November 2015, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the LTIP. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $10.51 , which was the company’s share price on the grant date of December 1, 2015. The Board of Directors also approved a grant of 0.5 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $10.51 , which was the company's share price on the grant date of December 1, 2015. The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three -year performance period of October 1, 2015 to September 30, 2018, measured at the end of the performance period. The number of performance share units will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 50% associated with achieving an Adjusted EBITDA margin target and 50% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.7 million performance share units. In November 2014, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the LTIP. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $13.74 , which was the company’s share price on the grant date of December 1, 2014. The Board of Directors also approved a grant of 0.4 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $13.74 , which was the company’s share price on the grant date of December 1, 2014. The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three -year performance period of October 1, 2014 to September 30, 2017, measured at the end of the performance period. The number of performance share units will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 75% associated with achieving an Adjusted EBITDA margin target and 25% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million shares. In November 2013, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $7.97 , which was the company’s share price on the grant date of December 1, 2013. The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2016 goals for the three -year performance period of October 1, 2013 to September 30, 2016, measured at the end of the performance period. The number of performance share units will depend on meeting the established M2016 goals at the following weights: 50% associated with achieving an Adjusted EBITDA margin target, 25% associated with achieving a net debt including retirement benefit liabilities target, and 25% associated with achieving an incremental booked revenue target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 1.8 million units which includes incremental performance share units that were issued subsequent to the December 1, 2013 grant date. The following is a rollforward of the company’s non-vested performance share units as of September 30, 2016 , and the activity during fiscal year 2016 is summarized as follows (shares in thousands): Non-vested Shares Number of Shares Weighted-Average Grant-Date Fair Value Non-vested - beginning of year 2,310 $ 10.01 Granted 810 10.31 Vested — — Forfeited (460 ) 11.31 Non-vested - end of year 2,660 9.88 There were 0.8 million performance share units granted during fiscal 2016 and 2.7 million of non-vested performance shares as of September 30, 2016 . The per share weighted average fair value of the performance share units was $9.88 as of September 30, 2016 . For the years ended September 30, 2016 , 2015 and 2014 , compensation cost recognized related to the performance share units was $6 million , $8 million and $4 million , respectively. As of September 30, 2016 , there were $15.9 million of total unrecognized compensation costs related to non-vested performance share unit equity compensation arrangements. These costs are expected to be recognized over a weighted average period of 3.74 years . |
RETIREMENT MEDICAL PLANS
RETIREMENT MEDICAL PLANS | 12 Months Ended |
Sep. 30, 2016 | |
Postretirement Medical Plans with Prescription Drug Benefits [Abstract] | |
RETIREMENT MEDICAL PLANS | RETIREMENT MEDICAL PLANS The company has retirement medical plans that cover certain of its U.S. and non-U.S. employees, including certain employees of divested businesses, and provide for medical payments to eligible employees and dependents upon retirement. These plans are unfunded. The company approved amendments to certain retiree medical plans in fiscal years 2002 and 2004. Certain of these plan amendments were challenged in lawsuits that were filed in the United States District Court for the Eastern District of Michigan ("District Court") alleging the changes breached the terms of various collective bargaining agreements entered into with the United Auto Workers (the "UAW lawsuit") at facilities that have either been closed or sold and alleging a companion claim under the Employee Retirement Income Security Act of 1974 ("ERISA"). On December 22, 2005, the District Court issued a preliminary injunction enjoining the company from implementing the changes to retiree health benefits and ordered the company to reinstate and resume paying the full cost of health benefits for the UAW retirees at the levels existing prior to the changes made in 2002 and 2004. On September 13, 2006, the District Court granted a motion by the UAW for summary judgment and granted the UAW’s request to make the terms of the preliminary injunction permanent (the "injunction"). The company accounted for the injunction as a rescission of the 2002 and 2004 plan amendments and began recording the impact of the injunction in March 2006. In addition, the injunction ordered the defendants to reimburse the plaintiffs for out-of-pocket expenses incurred since the date of the earlier benefit modifications. The company has recorded a $2 million reserve at September 30, 2016 and 2015 , as the best estimate of its liability for these retroactive benefits. The company appealed the District Court’s order to the U.S. Court of Appeals for the Sixth Circuit. The Sixth Circuit ruled to affirm the District Court’s ruling and the company moved for an en banc rehearing. The motion for an en banc rehearing was held in abeyance while the parties attempted to settle the case. In July, 2016 the company moved for re-hearing based on a Supreme Court decision on the subject matter and subsequent Sixth Circuit ruling in a separate case on the same subject matter. The company believes it has meritorious defenses and continues to pursue a reversal of the Sixth Circuit’s previous decision. The ultimate outcome of the UAW lawsuit may result in future plan amendments. The impact of any future plan amendments cannot be reasonably estimated at this time. The mortality assumptions for participants in the company’s U.S. plans incorporates future mortality improvements from tables published by the Society of Actuaries ("SOA"). In October 2014, the SOA issued new mortality and mortality improvement tables that raised the life expectancies. The company reviewed the new SOA mortality and mortality improvement tables and utilized an actuary to conduct a study based on the company’s plan participants. The company determined that the best representation of the plans' mortality is to utilize the new SOA mortality and mortality improvement tables as the reference table for credibility-weighted mortality rates, blended with company-specific mortality based on the study conducted by the actuary. The company incorporated the updated tables into the 2015 year-end measurement of the plans’ benefit obligations. As a result of this change in actuarial assumption, the company’s U.S. OPEB obligations decreased by $18 million in the fourth quarter of fiscal year 2015. The company considers improvement scales released annually by the SOA. These did not have an impact in fiscal year 2016. On September 26, 2014, Meritor amended its retiree medical and retiree life insurance plan in the United States to cease retiree medical coverage for salaried and non-union hourly employees under the age of 65 and eliminate retiree life insurance coverage with face amounts ranging from $3,750 to $15,000 . The amendment triggered a curtailment in the fourth quarter of fiscal year 2014 which immediately reduced the retiree medical liability by $16 million (i.e., a curtailment gain) and reduced retiree medical expense by $15 million . The reduction in expense was primarily attributable to the required immediate recognition of negative prior service costs which were previously being amortized into net periodic expense over the active participants remaining average service life. The $16 million reduction to the retiree medical liability established a new negative prior service cost base, which, subsequent to the curtailment, is being amortized over an average expected lifetime of inactive participants of approximately 10 years. The company’s retiree medical obligations were measured as of September 30, 2016 , 2015 , and 2014 . The following are the assumptions used in the measurement of the APBO and retiree medical expense: 2016 2015 2014 Discount rate 3.45 % 4.20 % 4.20 % Health care cost trend rate 7.10 % 7.00 % 7.40 % Ultimate health care trend rate 4.75 % 5.00 % 5.00 % Year ultimate rate is reached 2024 2022 2022 The assumptions noted above are used to calculate the APBO for each fiscal year end and retiree medical expense for the subsequent fiscal year. The discount rate is used to calculate the present value of the APBO. This rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical benefits. The company has used the corporate AA/Aa bond rate for this assumption. The health care cost trend rate represents the company’s expected annual rates of change in the cost of health care benefits. The company’s projection for fiscal year 2017 health care cost trend rate is 7.10 percent . The APBO as of the September 30, 2016 and 2015 measurement dates are summarized as follows (in millions): 2016 2015 Retirees $ 444 $ 433 Employees eligible to retire 1 3 Total $ 445 $ 436 The following reconciles the change in APBO and the amounts included in the consolidated balance sheet for years ended September 30, 2016 and 2015 , respectively (in millions): 2016 2015 APBO — beginning of year $ 436 $ 477 Service cost — — Interest cost 18 19 Participant contributions — 2 Actuarial loss (gain) 27 (19 ) Foreign currency rate changes — (3 ) Benefit payments (2) (36 ) (40 ) APBO — end of year 445 436 Other (1) 2 2 Retiree medical liability $ 447 $ 438 (1) The company recorded a $2 million reserve for retiree medical liabilities at September 30, 2016 and 2015 as its best estimate for retroactive benefits related to the previously mentioned injunction (2) Net of subsidies and rebates available under Employer Group Waiver Plan (EGWP). Actuarial losses/(gains) relate to changes in the discount rate and other actuarial assumptions. In accordance with FASB ASC Topic 715, “Compensation – Retirement Benefits”, a portion of the actuarial losses is not subject to amortization. The actuarial losses that are subject to amortization are generally amortized over the average lifetime of inactive participants of approximately 10 years . The Medicare Prescription Drug Improvement and Modernization Act of 2003 provides for a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit at least actuarially equivalent to the benefit established by the law. The company provides retiree medical benefits under certain plans that exceed the value of the benefits that are provided by the Medicare Part D plan. Therefore, management concluded that these plans are at least actuarially equivalent to the Medicare Part D plan and the company is eligible for the federal subsidy. In September 2011, in connection with the Health Care and Education Reconciliation Act of 2010, the company converted its current prescription drug program for certain retirees to a group-based, company-sponsored Medicare Part D program, or Employer Group Waiver Plan (EGWP). In September 2012, the company converted certain additional groups of retirees to EGWP and as a result, reduced its APBO by an additional amount of approximately $25 million . In 2013, the company began using use the Part D subsidies delivered through EGWP to reduce its net retiree medical costs. As a result of this change in assumption, the company reduced its APBO by approximately $35 million . These reductions to APBO are being amortized over an average expected lifetime of inactive participants of approximately 10 years. The retiree medical liability is included in the consolidated balance sheet as follows (in millions): September 30, 2016 2015 Current — included in compensation and benefits $ 33 $ 33 Long-term — included in retirement benefits 414 405 Retiree medical liability $ 447 $ 438 The following table summarizes the amounts included in Accumulated Other Comprehensive Loss net of tax related to retiree medical liabilities as of September 30, 2016 and 2015 and changes recognized in Other Comprehensive Income (Loss) net of tax for the years ended September 30, 2016 and 2015 . Net Actuarial Loss Prior Service Cost (Benefit) Total Balance at September 30, 2015 $ 101 $ (12 ) $ 89 Net actuarial loss for the year 27 — 27 Amortization for the year (13 ) 1 (12 ) Deferred tax impact (8 ) — (8 ) Balance at September 30, 2016 $ 107 $ (11 ) $ 96 Balance at September 30, 2014 $ 142 $ (13 ) $ 129 Net actuarial gain for the year (19 ) — (19 ) Amortization for the year (22 ) 1 (21 ) Balance at September 30, 2015 $ 101 $ (12 ) $ 89 The net actuarial loss and prior service benefit that are estimated to be amortized from accumulated other comprehensive loss into net periodic retiree medical expense in fiscal year 2017 are $15 million and $(3) million , respectively. The components of retiree medical expense for years ended September 30 are as follows (in millions): 2016 2015 2014 Service cost $ — $ — $ — Interest cost 18 19 23 Amortization of: Prior service benefit (1 ) (1 ) (7 ) Actuarial losses 13 22 23 Recognized prior service costs due to curtailment — — (15 ) Retiree medical expense $ 30 $ 40 $ 24 A one-percentage point change in the assumed health care cost trend rate for all years to, and including, the ultimate rate would have the following effects (in millions): 2016 2015 Effect on total service and interest cost 1% Increase $ 1 $ 2 1% Decrease (1 ) (1 ) Effect on APBO 1% Increase 40 39 1% Decrease (35 ) (34 ) The company expects future benefit payments as follows (in millions): Gross Benefit Payments Gross Receipts (1) Fiscal 2017 $ 40 $ 7 Fiscal 2018 40 7 Fiscal 2019 40 7 Fiscal 2020 40 7 Fiscal 2021 40 7 Fiscal 2022 – 2026 184 34 (1) Consists of subsidies and rebates available under EGWP. |
RETIREMENT PENSION PLANS
RETIREMENT PENSION PLANS | 12 Months Ended |
Sep. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT PENSION PLANS | RETIREMENT PENSION PLANS The company sponsors defined benefit pension plans that cover certain of its U.S. and non-U.S. employees. Pension benefits for salaried employees are based on years of credited service and compensation. Pension benefits for hourly employees are based on years of service and specified benefit amounts. The company’s funding policy provides that annual contributions to the pension trusts will be at least equal to the minimum amounts required by ERISA in the U.S. and the actuarial recommendations or statutory requirements in other countries. The mortality assumptions for participants in the company’s U.S. plans incorporates future mortality improvements from tables published by the SOA. In October 2014, the SOA issued new mortality and mortality improvement tables that raised the life expectancies. The company reviewed the new SOA mortality and mortality improvement tables and utilized an actuary to conduct a study based on the company’s plan participants. The company determined that the best representation of the plans' mortality is to utilize the new SOA mortality and mortality improvement tables as the reference table for credibility-weighted mortality rates, blended with company specific mortality based on the study conducted by the actuary. The company incorporated the updated tables into the 2015 year-end measurement of the plans’ benefit obligations. As a result of this change in actuarial assumption, the company’s U.S. pension obligations increased by $24 million in the fourth quarter of fiscal year 2015. The company considers improvement scales released annually by the SOA. These did not have an impact in fiscal year 2016. On August 1, 2010, Meritor amended its defined benefit pension plan in the United Kingdom to cease the accrual of future benefits for all of its active plan participants. Subsequent to the freeze date, the company began making contributions to its defined contribution savings plan on behalf of the affected employees. The amount of the savings plan contribution is based on a percentage of the employees’ pay. These changes did not affect then-current retirees. The company began recording the impact of the plan freeze in the fourth quarter of fiscal year 2010. Subsequent to the plan freeze, accumulated actuarial losses are being amortized into net periodic pension expense over the average life expectancy of inactive plan participants of approximately 27 years rather than over their remaining average service life. In April 2007, the company announced a freeze of its defined benefit pension plan for salaried and non-represented employees in the United States, effective January 1, 2008. The change affected approximately 3,800 employees including certain employees who continued to accrue benefits for an additional transition period, ending June 30, 2011. After these freeze dates, the company started making additional contributions to its defined contribution savings plan on behalf of the affected employees. The amount of the savings plan contribution is based on a percentage of the employees’ pay, with the contribution percentage increasing as a function of employees’ age. These changes do not affect plan participants who had retired prior to the freeze dates or represented employees. Accumulated actuarial losses are being amortized into net periodic pension expense over the average life expectancy of inactive plan participants of approximately 21 years. During fiscal year 2015, the company settled the remaining liabilities associated with its Canadian pension plans through lump-sum payments made from plan assets to plan participants and by purchasing annuity contracts from an insurance company. The company recognized a primarily non-cash pre-tax settlement loss of $16 million associated with the annuity purchases and lump-sum payments. The company settled a net pension obligation of $16 million using $20 million of pension plan assets, such that the assets and liabilities were derecognized from the balance sheet during the quarter ended September 30, 2015. Additionally, in fiscal year 2015, the company settled the remaining liabilities associated with its German pension plans by purchasing annuity contracts from an insurance company. The company recognized a primarily non-cash pre-tax settlement loss of $43 million associated with the annuity purchases. The company settled a net pension obligation of $91 million , which was derecognized from the balance sheet during the quarter ended September 30, 2015. In June 2013, the company amended its U.S. Retirement Plan to allow all terminated vested participants with an accrued benefit of $5,000 or less to receive a full lump-sum distribution of their benefit. The lump-sum amounts were rolled into individual retirement accounts for those participants that had an accrued benefit of $1,000 to $5,000 who did not make an affirmative election to receive their benefits. For those participants with an accrued benefit of less than $1,000 , the benefits were automatically distributed to the participant. Effective October 2014, the company amended the U.S. Retirement Plan to include an additional distribution option in the form of a Lump Sum Benefit from the Plan. The majority of Plan members are eligible for this distribution option following termination or when making their retirement payment election. The Lump Sum Benefit equals the present value of a member's vested accrued benefit paid in one lump sum payment. The company’s pension obligations are generally measured as of September 30, 2016 , 2015 and 2014 , while the pension obligations associated with the fourth quarter fiscal year 2015 settled Canadian and German pension plans were measured as of August 31, 2015. The U.S. plans include qualified and non-qualified pension plans. The company’s only significant non-U.S. plan is located in the United Kingdom. The following are the significant assumptions used in the measurement of the projected benefit obligation (PBO) and net periodic pension expense: U.S. Plans 2016 2015 2014 Discount Rate 3.50% — 3.55% 4.25% — 4.35% 4.20% — 4.30% Assumed return on plan assets (beginning of the year) 7.75% 8.00% 8.00% Non-U.S. Plans (2) 2016 2015 2014 Discount Rate (1) 2.50% 1.00% — 3.80% 1.90% — 4.10% Assumed return on plan assets (beginning of the year) (1) 6.00% 2.25% — 7.25% 2.25% — 7.25% Rate of compensation increase (3) N/A 2.00% 2.00% — 3.00% (1) The discount rate for the company’s U.K. pension plan was 2.50 percent , 3.80 percent and 4.10 percent for 2016 , 2015 and 2014 , respectively. The assumed return on plan assets for this plan was 6.00 percent for 2016 and 7.25 percent for 2015 and 2014 . (2) In fiscal year 2015, our German and Canadian pension plans were settled. In 2016, assumptions presented are for the U.K pension plan, which is the only significant non-U.S. plan remaining. (3) Rate of compensation expense for 2016 is not applicable as the U.K. pension plan is frozen. The discount rate is used to calculate the present value of the PBO at the balance sheet date and net periodic pension expense for the subsequent fiscal year. The rate used reflects a rate of return on high-quality fixed income investments that match the duration of expected benefit payments. Generally, the company uses a portfolio of long-term corporate AA/Aa bonds that match the duration of the expected benefit payments, except for the company's U.K. pension plan which uses an annualized yield curve, to establish the discount rate for this assumption. The assumed return on plan assets is used to determine net periodic pension expense. The rate of return assumptions are based on projected long-term market returns for the various asset classes in which the plans are invested, weighted by the target asset allocations. An incremental amount for active plan asset management and diversification, where appropriate, is included in the rate of return assumption. The return assumption is reviewed annually. The rate of compensation increase represents the long-term assumption for expected increases to salaries for pay-related plans. The accompanying disclosures include pension obligations associated with businesses classified as discontinued operations. The following table reconciles the change in the PBO, the change in plan assets and amounts included in the consolidated balance sheet for the years ended September 30, 2016 and 2015 , respectively (in millions): 2016 2015 U.S. Non- U.S. Total U.S. Non- U.S. Total PBO — beginning of year $ 1,042 $ 614 $ 1,656 $ 1,059 $ 735 $ 1,794 Service cost — 1 1 1 1 2 Interest cost 45 20 65 44 26 70 Actuarial loss 105 115 220 10 48 58 Settlements — — — — (111 ) (111 ) Benefit payments (80 ) (35 ) (115 ) (72 ) (29 ) (101 ) Foreign currency rate changes — (99 ) (99 ) — (56 ) (56 ) PBO — end of year $ 1,112 $ 616 $ 1,728 $ 1,042 $ 614 $ 1,656 Change in plan assets Fair value of assets — beginning of year $ 830 $ 717 $ 1,547 $ 832 $ 743 $ 1,575 Actual return on plan assets 79 169 248 65 67 132 Employer contributions 5 1 6 5 7 12 Settlements — — — — (20 ) (20 ) Benefit payments (80 ) (35 ) (115 ) (72 ) (29 ) (101 ) Foreign currency rate changes — (118 ) (118 ) — (51 ) (51 ) Fair value of assets — end of year $ 834 $ 734 $ 1,568 $ 830 $ 717 $ 1,547 Funded status $ (278 ) $ 118 $ (160 ) $ (212 ) $ 103 $ (109 ) Amounts included in the consolidated balance sheet at September 30 are comprised of the following (in millions): 2016 2015 U.S. Non-U.S. Total U.S. Non-U.S. Total Non-current assets $ — $ 123 $ 123 $ — $ 110 $ 110 Current liabilities (6 ) — (6 ) (5 ) — (5 ) Retirement benefits-non-current (272 ) (5 ) (277 ) (207 ) (7 ) (214 ) Net amount recognized $ (278 ) $ 118 $ (160 ) $ (212 ) $ 103 $ (109 ) The following tables summarize the amounts included in Accumulated Other Comprehensive Loss net of tax related to pension liabilities as of September 30, 2016 and 2015 and changes recognized in Other Comprehensive Income (Loss) net of tax for the year ended September 30, 2016 . Net Actuarial Loss U.S. Non-U.S. Total Balance at September 30, 2015 $ 410 $ 206 $ 616 Net actuarial loss for the year 87 (11 ) 76 Amortization for the year (18 ) (5 ) (23 ) Deferred tax impact (25 ) — (25 ) Balance at September 30, 2016 $ 454 $ 190 $ 644 Balance at September 30, 2014 $ 419 $ 241 $ 660 Net actuarial loss for the year 8 24 32 Amortization for the year (17 ) (8 ) (25 ) Deferred tax impact — 5 5 Settlements — (56 ) (56 ) Balance at September 30, 2015 $ 410 $ 206 $ 616 The company estimates that $30 million of net actuarial losses will be amortized from accumulated other comprehensive loss into net periodic pension expense during fiscal year 2017 . The non-current portion of the pension liability is included in Retirement Benefits in the consolidated balance sheet as follows (in millions): September 30, 2016 2015 Pension liability $ 277 $ 214 Retiree medical liability — long term (see Note 20) 414 405 Other 12 13 Total retirement benefits $ 703 $ 632 In accordance with FASB guidance, the PBO, accumulated benefit obligation (ABO) and fair value of plan assets are required to be disclosed for all plans where the ABO is in excess of plan assets. The difference between the PBO and ABO is that the PBO includes projected compensation increases. Additional information is as follows (in millions): 2016 2015 ABO Exceeds Assets Assets Exceed ABO Total ABO Exceeds Assets Assets Exceed ABO Total PBO $ 1,116 $ 612 $ 1,728 $ 1,057 $ 599 $ 1,656 ABO 1,116 612 1,728 1,057 598 1,655 Plan Assets 834 734 1,568 838 709 1,547 The components of net periodic pension expense are as follows (in millions): 2016 2015 2014 Service cost $ 1 $ 2 $ 2 Interest cost 65 70 80 Assumed rate of return on plan assets (99 ) (111 ) (104 ) Amortization of — Actuarial losses 23 26 23 Settlement loss — 59 — Net periodic pension expense $ (10 ) $ 46 $ 1 Disclosures on investment policies and strategies, categories of plan assets, fair value measurements of plan assets, and significant concentrations of risk are included below. Investment Policy and Strategy The company’s primary investment objective for its pension plan assets is to generate a total investment return sufficient to meet present and future benefit payments while minimizing the company’s cash contributions over the life of the plans. In order to accomplish this objective, the company maintains target allocations to identify and manage exposures. The target asset allocation ranges for the U.S. plan are 30 – 50 percent equity investments, 30 – 50 percent fixed income investments and 10 – 30 percent alternative investments. Alternative investments include private equities, real estate, hedge funds, diversified growth funds, and partnership interests. The target asset allocation ranges for the non-U.S. plans are 15 – 35 percent equity investments, 30 – 60 percent fixed income investments, 0 – 10 percent real estate and 10 – 30 percent alternative investments. Investment strategies and policies for the company’s pension plan assets reflect a balance of risk-reducing and return-seeking considerations. The objective of minimizing the volatility of assets relative to liabilities is addressed primarily through asset diversification. Assets are broadly diversified across several asset classes to achieve risk-adjusted returns that accomplish this objective. The majority of pension plan assets are externally managed through active managers. Managers are only permitted to invest within established asset classes and follow the strategies for which they have been appointed. The company uses investment guidelines and reviews asset returns and investment decisions made by the managers to ensure that they are in accordance with the company’s strategies. Concentration of Risk The company seeks to mitigate risks relative to performance of the plan assets. Assets are invested in various classes with different risk and return characteristics in order to ensure that they are sufficient to pay benefits. The company’s investment strategies incorporate a return-seeking approach through equity and alternative investments, while seeking to minimize the volatility of the plans’ assets relative to its liabilities through investments in fixed income securities. The significant areas of risk related to these strategies include equity, interest rate, and operating risk. A portion of plan assets is allocated to equity and alternative investments that are expected, over time, to earn higher returns. Within this return-seeking portfolio, asset diversification is utilized to reduce uncompensated risk. Plan assets are also allocated to fixed income investments, which seek to minimize interest rate risk volatility relative to pension liabilities. The fixed income portfolio partially matches the long-dated nature of the pension liabilities reducing interest rate risk. Interest rate decreases generally increase the value of fixed income assets, partially offsetting the related increase in the liabilities, while interest rate increases generally result in a decline in the value of fixed income assets while reducing the present value of the liabilities. Operating risks consist of the risks of inadequate diversification and weak controls. The company has established policies and procedures in order to mitigate this risk by monitoring investment manager performance, reviewing periodic compliance information, and ensuring that the plans’ managers invest in accordance with the company’s investment strategies. Fair Value of Investments 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 assets (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 assets that the Plan has the ability to access. • Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets 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 asset. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Following are descriptions, valuation methodologies and other information related to plan assets. Cash and cash equivalents : The fair value of cash and cash equivalents is valued at cost. Equity Securities : The overall equity category includes common and preferred stocks issued by U.S. and international companies as well as equity funds that invest in these instruments. All investments generally allow near-term (within 90 days of the measurement date) liquidity and are held in issues that are actively traded to facilitate transactions at minimum cost. The aggregate equity portfolio is diversified to avoid exposure to any investment strategy, single economic sector, industry group, or individual security. The fair value of equity securities is determined by either direct or indirect quoted market prices. When the value of assets held in separate accounts is not published, the value is based on the underlying holdings, which are primarily direct quoted market prices on regulated financial exchanges. Most of the equity investments allow daily redemptions, with some providing monthly liquidity or requiring a 30-day notice. Fixed Income Securities : The overall fixed income category includes U.S. dollar-denominated and international marketable bonds and convertible debt securities as well as fixed income funds that invest in these instruments. All assets generally allow near-term liquidity and are held in issues which are actively traded to facilitate transactions at minimum cost. The aggregate fixed income portfolio is diversified to avoid exposure to any investment strategy, maturity, issuer or credit quality. The fair value of fixed income securities is determined by either direct or indirect quoted market prices. When the value of assets held in separate accounts is not published, the value is based on the underlying holdings, which are primarily direct quoted market prices on regulated financial exchanges. U.S. fixed income securities typically offer daily liquidity, with only one investment allowing quarterly redemptions. International and emerging fixed income investment vehicles generally provide daily liquidity. Commingled Funds : The fair value of commingled funds is accounted for by a custodian. The custodian obtains valuations from underlying fund managers based on market quotes for the most liquid assets and alternative methods for assets that do not have sufficient trading activity to derive prices. The company and custodian review the methods used by the underlying managers to value the assets. Real Estate : Real estate provides an indirect investment into a diversified and multi-sector portfolio of property assets. The fair value of real estate investments is valued by the fund managers. The fund managers value the real estate investments via independent third-party appraisals on a periodic basis. Assumptions used to revalue the properties are updated every quarter. For the component of the real estate portfolio under development, the investments are carried at cost, which approximates fair value, until they are completed and valued by a third-party appraiser. Due to the long-term nature of real estate investments, liquidity is provided on a quarterly basis. Futures Contracts : The plan enters into futures contracts in the normal course of its investing activities to manage market risk and to achieve overall investment portfolio objectives. The credit risk associated with these contracts is minimal as they are traded on organized exchanges and settled daily. The fair value of futures contracts is determined by direct quoted market prices. Cash margin for these futures contracts is included in Cash and Cash Equivalents in the leveling table. Alternatives/Partnerships/Private Equity : This category includes investments in private equity and hedge funds. Such investments may be made directly or through pooled funds, including fund of funds structures. The fair market value of the company’s interest in partnerships and private equity is valued by the fund managers. The valuation is based on the net present value of observable inputs (dividends, cash flows, earnings, etc.), which are discounted at applicable discount rates. The company and custodian review the methods used by the underlying managers to value the assets. Most of these investments offer quarterly redemption opportunities. Some partnerships and private equity investments, due to the nature of their investment strategy and underlying holdings, offer less frequent liquidity. When available, liquidity events are closely evaluated. The valuation methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The fair value of plan assets at September 30, 2016 by asset category is as follows (in millions): U.S. Plans 2016 Asset Category Level 1 Level 2 Level 3 Total Equity investments U.S. – Large cap $ 71 $ — $ — $ 71 U.S. – Small cap 22 — — 22 Private equity — — 11 11 International equity 41 — — 41 Equity investments measured at net asset value (1) — — — 152 Total equity investments $ 134 $ — $ 11 $ 297 Fixed income investments U.S. fixed income $ 10 $ 265 $ — $ 275 Emerging fixed income — 20 — 20 Partnerships fixed income — — 1 1 Fixed income investments measured at net asset value (1) — — — 45 Total fixed income $ 10 $ 285 $ 1 $ 341 Alternatives – Partnerships — — 77 77 Alternatives – Partnerships measured at net asset value (1) — — — 84 Cash and cash equivalents — 35 — 35 Total assets at fair value $ 144 $ 320 $ 89 $ 834 Non-U.S. Plans 2016 Asset Category Level 1 Level 2 Level 3 Total Equity investments International equity $ 61 $ — $ — $ 61 Equity investments measured at net asset value (1) — — — 82 Total equity investments $ 61 $ — $ — $ 143 Fixed income investments Other fixed income investments $ — $ 222 $ — $ 222 Fixed income investments measured at net asset value (1) — — — 198 Total fixed income $ — $ 222 $ — $ 420 Commingled funds — 6 — 6 Alternative investments measured at net asset value (1) — — — 114 Real estate measured at net asset value (1) — — — 37 Cash and cash equivalents — 14 — 14 Total assets at fair value $ 61 $ 242 $ — $ 734 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The fair value of plan assets at September 30, 2015 by asset category is as follows (in millions): U.S. Plans 2015 Asset Category Level 1 Level 2 Level 3 Total Equity investments U.S. – Large cap $ 88 $ — $ — $ 88 U.S. – Small cap 21 — — 21 Private equity — — 15 15 International equity 53 — — 53 Equity investments measured at net asset value (1) — — — 160 Total equity investments $ 162 $ — $ 15 $ 337 Fixed income investments U.S. fixed income $ 8 $ 263 $ — $ 271 Emerging fixed income — 20 — 20 Partnerships fixed income — — 1 1 Fixed income investments measured at net asset value (1) — — — 45 Total fixed income $ 8 $ 283 $ 1 $ 337 Alternatives – Partnerships — — 84 84 Alternatives – Partnerships measured at net asset value (1) — — — 65 Cash and cash equivalents — 7 — 7 Total assets at fair value $ 170 $ 290 $ 100 $ 830 Non-U.S. Plans 2015 Asset Category Level 1 Level 2 Level 3 Total Equity investments International equity $ 55 $ — $ — $ 55 Equity investments measured at net asset value (1) — — — 106 Total equity investments $ 55 $ — $ — $ 161 Fixed income investments Other fixed income investments $ — $ 186 $ — $ 186 Fixed income investments measured at net asset value (1) — — — 158 Total fixed income $ — $ 186 $ — $ 344 Commingled funds — 8 — 8 Alternative investments measured at net asset value (1) — — — 133 Real estate measured at net asset value (1) — — — 43 Cash and cash equivalents — 28 — 28 Total assets at fair value $ 55 $ 222 $ — $ 717 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. Unfunded Commitment As of September 30, 2016 , the U.S. plan had $20 million of unfunded investment commitments related to plan assets. The majority of this amount is attributed to partnership investments that the plan will invest in gradually over the course of several years. Non-U.S. plans currently do not have any unfunded commitments. The following table summarizes the changes in Level 3 pension plan assets measured at fair value on a recurring basis for the year ended September 30, 2016 (in millions): U.S. Plans 2016 Fair Value at October 1, 2015 Return on Plan Assets: Attributable to Assets Held at September 30, 2016 Purchases Settlements Net Transfers Into (Out of) Level 3 Fair Value at September 30, 2016 Asset Category Private equity $ 15 $ (4 ) $ — $ — $ — $ 11 Partnerships – Fixed income 1 — — — — 1 Alternatives – Partnerships 84 (5 ) — (2 ) — 77 Total Level 3 fair value $ 100 $ (9 ) $ — $ (2 ) $ — $ 89 The following table summarizes the changes in Level 3 pension plan assets measured at fair value on a recurring basis for the year ended September 30, 2015 (in millions): U.S. Plans 2015 Fair Value at October 1, 2014 Return on Plan Assets: Attributable to Assets Held at September 30, 2015 Purchases Settlements Net Transfers Into (Out of) Level 3 Fair Value at September 30, 2015 Asset Category Private equity $ 15 $ — $ — $ — $ — $ 15 Partnerships – Fixed income 1 — — — — 1 Alternatives – Partnerships 58 19 8 (1 ) — 84 Total Level 3 fair value $ 74 $ 19 $ 8 $ (1 ) $ — $ 100 Information about the expected cash flows for the U.S. and non-U.S. pension plans is as follows (in millions): U.S. Non U.S. Total Expected employer contributions: Fiscal 2017 $ 5 $ 1 $ 6 Expected benefit payments: Fiscal 2017 78 20 98 Fiscal 2018 76 20 96 Fiscal 2019 74 21 95 Fiscal 2020 73 22 95 Fiscal 2021 71 22 93 Fiscal 2022-2026 336 121 457 The company also sponsors certain defined contribution savings plans for eligible employees. Expense related to these plans, including company matching contributions, was $16 million , $15 million and $14 million for fiscal years 2016 , 2015 and 2014 , respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The income tax provisions were calculated based upon the following components of income before income taxes (in millions): 2016 2015 2014 U.S. income $ 71 $ 24 $ 204 Foreign income 84 43 111 Total $ 155 $ 67 $ 315 The components of the benefit (provision) for income taxes are summarized as follows (in millions): 2016 2015 2014 Current tax benefit (expense): U.S. $ (1 ) $ (4 ) $ (1 ) Foreign 11 (20 ) (32 ) State and local (1 ) (1 ) — Total current tax benefit (expense) 9 (25 ) (33 ) Deferred tax benefit (expense): U.S. 394 3 (1 ) Foreign (22 ) 21 3 State and local 43 — — Total deferred tax benefit 415 24 2 Income tax benefit (expense) $ 424 $ (1 ) $ (31 ) The deferred tax expense or benefit represents tax effects of current year deductions or items of income that will be recognized in future periods for tax purposes. In fiscal year 2016, the U.S. and state and local deferred tax benefit was primarily attributable to the valuation allowance reversal in the U.S. In fiscal year 2015, the foreign deferred tax benefit was primarily attributable to valuation allowance reversals in Germany, Italy, Mexico and Sweden in addition to the tax benefit received from the Canadian and German pension settlement charges. Net current and non-current deferred income tax assets (liabilities) included in the consolidated balance sheet consist of the tax effects of temporary differences related to the following (in millions): September 30, 2016 2015 (1) Accrued compensation and benefits $ 21 $ 27 Accrued product warranties 13 19 Inventory costs 8 20 Receivables 15 16 Accrued retiree healthcare benefits 169 175 Retirement pension plans 119 95 Property 7 9 Loss and credit carryforwards 455 487 Other 67 77 Sub-total 874 925 Less: Valuation allowances (379 ) (834 ) Deferred income taxes - asset $ 495 $ 91 Taxes on undistributed income $ (7 ) $ (51 ) Intangible assets (82 ) (85 ) Debt basis difference (5 ) (8 ) Deferred income taxes - liability $ (94 ) $ (144 ) Net deferred income tax assets (liabilities) $ 401 $ (53 ) (1) Immaterial Restatement- Subsequent to the issuance of Meritor’s consolidated financial statements as of and for the year ended September 30, 2015, it was determined that (i) Loss and credit carryforwards; (ii) Valuation allowances; and (iii) Taxes on undistributed income as of and for the year ended September 30, 2015 were overstated by approximately $121 million , overstated by approximately $127 million , and understated by approximately $6 million , respectively. As a result, September 30, 2015 Loss and credit carryforwards, Valuation allowances and Taxes on undistributed income have been corrected in the above reconciliation to appropriately reflect these balances. The errors had no impact on the consolidated balance sheet as of September 30, 2015 or the related consolidated statement of operations, comprehensive income, equity (deficit), or cash flows for the year ended September 30, 2015. Net current and non-current deferred income tax assets (liabilities) are included in the consolidated balance sheet as follows (in millions): September 30, 2016 2015 Other current assets (see Note 10) $ — $ 20 Other current liabilities — (2 ) Net current deferred income taxes — asset — 18 Other assets (see Note 12) 413 28 Other liabilities (see Note 15) (12 ) (99 ) Net non-current deferred income taxes — asset (liability) $ 401 $ (71 ) In prior years, the company established valuation allowances against its U.S. net deferred tax assets and the net deferred tax assets of its 100% -owned subsidiaries in France, Germany, Italy, Sweden, the U.K. and certain other countries. In evaluating its ability to recover these net deferred tax assets, the company utilizes a consistent approach which considers its historical operating results, including an assessment of the degree to which any gains or losses are driven by items that are unusual in nature and tax planning strategies. In addition, the company reviews changes in near-term market conditions and other factors that impact future operating results. During the fourth quarter of fiscal year 2016, as a result of sustained profitability in the U.S. evidenced by a strong earnings history, future forecasted earnings, and additional positive evidence, the company determined it was more likely than not it would be able to realize deferred tax assets in the U.S. Accordingly, the company reversed a portion of the valuation allowance in the U.S., resulting in a non-cash income tax benefit of $438 million . In fiscal year 2015, the company reversed valuation allowances in Germany, Italy, Mexico, and Sweden, resulting in a non-cash income tax benefit of $16 million . During the fourth quarter of fiscal year 2016, due to a three-year cumulative loss and future economic uncertainty, the company concluded that a valuation allowance was required in Brazil. This resulted in a non-cash charge to income tax expense of $9 million . As of September 30, 2016, the company continues to maintain the valuation allowances in France, the U.K. and certain other jurisdictions, as the company believes the negative evidence that it will be able to recover these net deferred tax assets continues to outweigh the positive evidence. If, in the future, the company generates taxable income on a sustained basis, its conclusion regarding the need for valuation allowances in these jurisdictions could change. The expiration periods for deferred tax assets related to net operating losses and tax credit carryforwards as of September 30, 2016 are included below (in millions). Also included are the associated valuation allowances on these deferred tax assets (in millions). Fiscal Year Expiration Periods 2017-2021 2022-2031 2032-2036 Indefinite Total Net Operating Losses and Tax Credit Carryforwards $ 25 $ 160 $ 10 $ 260 $ 455 Valuation Allowances on these Deferred Tax Assets $ 24 $ 56 $ 8 $ 253 $ 341 Realization of deferred tax assets representing net operating loss carryforwards for which a valuation allowance has not been provided is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of such deferred tax assets will be realized. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if the company is unable to generate sufficient future taxable income during the carryforward period. For fiscal years 2016 and 2015 , no provision has been made for U.S., state or additional foreign income taxes related to approximately $687 million and $686 million of undistributed earnings of foreign subsidiaries that have been or are intended to be permanently reinvested. Quantification of the deferred tax liability, if any, associated with permanently reinvested earnings is not practicable. The company’s provision for income taxes was different from the provision for income taxes calculated at the U.S. statutory rate for the reasons set forth below (in millions): 2016 2015 (1) 2014 (1) Expense for income taxes at statutory tax rate of 35% $ (54 ) $ (23 ) $ (110 ) State and local income taxes (7 ) (1 ) — Foreign income taxed at rates other than 35% 5 7 13 Joint venture equity income 3 3 5 Tax effect of nonfunctional currency transaction (30 ) — (4 ) Correlated tax relief 51 — — U.S. tax impact on distributions from subsidiaries and joint ventures 14 (11 ) (26 ) Nondeductible expenses (12 ) (9 ) (10 ) Tax credits 61 — — Valuation allowances 418 49 113 Tax rate change (14 ) — — Other (11 ) (16 ) (12 ) Income tax benefit (expense) $ 424 $ (1 ) $ (31 ) (1) Immaterial Restatement- Subsequent to the issuance of Meritor’s consolidated financial statements as of and for the year ended September 30, 2015, it was determined that (i) U.S. tax impact on distributions from subsidiaries and joint ventures; (ii) Valuation allowances; and (iii) Other as of and for the year ended September 30, 2015 were overstated by approximately $7 million , understated by approximately $2 million , and understated by approximately $9 million , respectively. As a result, September 30, 2015 U.S. tax impact on distributions from subsidiaries and joint ventures, Valuation allowances and Other have been corrected in the above reconciliation to appropriately reflect these balances. Also, it was determined that (i) Tax effect of nonfunctional currency transaction; (ii) U.S. tax impact on distributions from subsidiaries and joint ventures; (iii) Valuation allowances; and (iv) Other as of and for the year ended September 30, 2014 were understated by approximately $4 million , understated by approximately $8 million , understated by approximately $24 million , and understated by approximately $12 million , respectively. As a result, September 30, 2014 Tax effect of nonfunctional currency transaction, U.S. tax impact on distributions from subsidiaries and joint ventures, Valuation allowances and Other have been corrected in the above reconciliation to appropriately reflect these balances. The errors had no impact on the consolidated balance sheets as of September 30, 2015 and September 30, 2014 or the related consolidated statement of operations, comprehensive income, equity (deficit), or cash flows for the years ended September 30, 2015 and September 30, 2014. In fiscal year 2016, the company determined it is now more favorable to take a foreign tax credit instead of foreign tax deduction, and as a result, a $61 million income tax benefit was recorded. Additionally, the company established a $51 million correlated relief asset against a related uncertain tax position. In fiscal year 2014, the company recorded $210 million of earnings related to the antitrust lawsuit settlement with Eaton Corporation. The earnings did not impact U.S. federal income tax expense, since they were offset by a corresponding valuation allowance in the U.S. The total amount of gross unrecognized tax benefits the company recorded in accordance with FASB ASC Topic 740 as of September 30, 2016 was $243 million , of which $215 million represents the amount that, if recognized, would favorably affect the effective income tax rate in future periods. A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows (in millions): 2016 2015 (1) 2014 (1) Balance at beginning of the period $ 207 $ 209 $ 190 Additions to tax positions recorded during the current year 39 15 28 Reductions to tax position recorded in prior years — (2 ) (2 ) Reductions to tax positions due to lapse of statutory limits (3 ) (11 ) (7 ) Translation, other — (4 ) — Balance at end of the period $ 243 $ 207 $ 209 (1) Immaterial Restatemen t- Subsequent to the issuance of Meritor’s consolidated financial statements as of and for the year ended September 30, 2015, it was determined that unrecognized tax benefits as of and for the years ended September 30, 2015 and September 30, 2014 were understated by approximately $131 million and $121 million , respectively. As a result, September 30, 2015 and September 30, 2014 total unrecognized tax benefits have been corrected in the above reconciliation to appropriately reflect these balances. The errors had no impact on the consolidated balance sheet as of September 30, 2015 or the related consolidated statement of operations, comprehensive income, equity (deficit), or cash flows for the years ended September 30, 2015 and September 30, 2014. The company’s continuing practice is to recognize interest and penalties on uncertain tax positions in the provision for income taxes in the consolidated statement of operations. At September 30, 2016 and September 30, 2015 , the company recorded a $4 million asset and a $3 million liability, respectively of interest on uncertain tax positions in the consolidated balance sheet. In addition, penalties of $2 million were recorded at each of September 30, 2016 and September 30, 2015 . The income tax benefit related to interest was $8 million for the year ended September 30, 2016 . The income tax benefit amount related to interest and penalties was immaterial for the years ended September 30, 2015 and 2014. The income tax benefit related to penalties was immaterial for years ended September 30, 2016 , 2015 and 2014. The company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. The company’s Canadian federal income tax returns for fiscal years 2010 through 2014 are currently under audit. The company’s Brazil subsidiary is currently under audit for calendar years 2011, 2014 and 2015. The company's German subsidiary is currently under audit for fiscal years 2008 through 2013. The company's Singapore subsidiary is currently under audit for fiscal year 2013. The company's Indian subsidiary is currently under audit for fiscal years 2013 through 2015. In addition, the company is under audit in the U.S. for federal, fiscal years 2010 and 2011, along with various state tax jurisdictions for various years. It is reasonably possible that audit settlements, the conclusion of current examinations or the expiration of the statute of limitations in several jurisdictions could change the company’s unrecognized tax benefits during the next twelve months. It is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefit in the next twelve months. In addition to the audits listed above, the company has open tax years primarily from 2001-2015 with various significant taxing jurisdictions, including the U.S., Brazil, Canada, China, France, Mexico and the U.K. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given audit cycle. The company has recorded a tax benefit only for those positions that meet the more-likely-than-not standard. |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Environmental Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties. The company has been designated as a potentially responsible party at nine Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Management estimates the total reasonably possible costs the company could incur for the remediation of Superfund sites at September 30, 2016 to be approximately $9 million , of which $2 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. Environmental remediation costs recorded with respect to the Superfund sites was $1 million in fiscal year 2014 . Costs were not substantial in fiscal years 2015 and 2016 . 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 September 30, 2016 to be approximately $28 million , of which $11 million is probable and recorded as a liability. During fiscal years 2016 , 2015 and 2014 , the company recorded environmental remediation costs of $3 million , $3 million and $5 million , respectively, with respect to these matters, resulting from revised estimates to remediate these sites. Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 1 to 2.75 percent and is approximately $7 million at September 30, 2016 . The undiscounted estimate of these costs is approximately $8 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, 2015 $ 2 $ 14 $ 16 Payments and other — (6 ) (6 ) Accruals — 3 3 Balance at September 30, 2016 $ 2 $ 11 $ 13 There were $3 million , $ 2 million , and $2 million of environmental remediation costs recognized in other operating expense in the consolidated statement of operations in fiscal years 2016, 2015 and 2014, respectively. In addition, $4 million of environmental remediation costs was recorded in loss from discontinued operations in the consolidated statement of operations for fiscal year 2014. Environmental reserves are included in Other Current Liabilities (see Note 14) and Other Liabilities (see Note 15) 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. 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 5,800 and 5,600 pending asbestos-related claims at September 30, 2016 and 2015 , respectively. Although Maremont has been named in these cases, in the cases where actual injury has been alleged, very few claimants have established that a Maremont product caused their injuries. Plaintiffs’ lawyers often sue dozens or even hundreds of defendants in individual lawsuits, seeking damages against all named defendants irrespective of the disease or injury and irrespective of any causal connection with a particular product. For these reasons, the total number of claims filed is not necessarily the most meaningful factor in determining Maremont's asbestos related liability. Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions): September 30, 2016 2015 Pending and future claims $ 70 $ 71 Billed but unpaid claims 2 3 Asbestos-related liabilities $ 72 $ 74 Asbestos-related insurance recoveries $ 32 $ 41 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 10, 12, 14 and 15). Pending and Future Claims : Maremont engaged Bates White LLC ("Bates White"), a consulting firm with extensive experience estimating costs associated with asbestos litigation, to assist with determining the estimated cost of resolving pending and future asbestos-related claims that have been, and could reasonably be expected to be, filed against Maremont. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised Maremont that it would be possible to determine an estimate of a reasonable forecast of the cost of the probable settlement and defense costs of resolving pending and future asbestos-related claims, based on historical data and certain assumptions with respect to events that may occur in the future. As of September 30, 2016, Bates White provided a reasonable and probable estimate that consisted of a range of equally likely possibilities of Maremont’s obligation for asbestos personal injury claims over the next ten years of $70 million to $83 million . After consultation with Bates White, Maremont recognized a liability for pending and future claims over the next ten years of $70 million and $71 million as of September 30, 2016 and 2015, respectively. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Maremont. Maremont recognized $2 million of expense and $2 million of income in fiscal years 2016 and 2015, respectively, associated with its annual valuation of asbestos-related liabilities and receivables. Maremont has recognized incremental insurance receivables associated with recoveries expected for asbestos-related liabilities as the estimate of asbestos-related liabilities for pending and future claims changes. Assumptions: The following assumptions were made by Maremont after consultation with Bates White and are included in their study: • Pending and future claims were estimated for a ten-year period ending in fiscal year 2026; • Maremont believes that the litigation environment could change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims will decline for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain; • On a per claim basis, defense and processing costs for pending and future claims will be at the level consistent with Maremont’s prior experience; • Potential payments made to claimants from other sources, including other defendants and 524(g) trusts, favorably impact Maremont's estimated liability in the future; and • The ultimate indemnity cost of resolving nonmalignant claims with plaintiffs’ law firms in jurisdictions without an established history with Maremont cannot be reasonably estimated. Recoveries : Maremont has historically had insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The insurance receivable related to asbestos-related liabilities was $32 million and $41 million as of September 30, 2016 and 2015, respectively. The receivable is for coverage provided by one insurance carrier based on a coverage-in-place agreement. Maremont currently expects to exhaust the remaining limits provided by this coverage sometime in the next ten years. The difference between the estimated liability and insurance receivable is primarily related to exhaustion of settled insurance coverage within the forecasted period and proceeds from settled insurance policies. Maremont maintained insurance coverage with other insurance carriers that management believed also provided coverage for indemnity and defense costs. During fiscal year 2013, Maremont re-initiated lawsuits against these carriers, seeking a declaration of its rights to coverage for asbestos claims and to facilitate an orderly and timely collection of insurance proceeds. During the first quarter of fiscal year 2016, the dispute related to these insurance policies was settled. As part of this settlement, on December 12, 2015, Maremont received $17 million in cash, of which $5 million was recognized as reduction in asbestos expense and $12 million was recorded as a liability to the insurance carrier as it is required to be returned to the carrier if additional asbestos liability is not incurred. During the fourth quarter of fiscal year 2016, Maremont recognized an additional $9 million of the cash settlement proceeds as a reduction in asbestos expense. As of September 30, 2016, $3 million remained recorded as a liability to the insurance carrier. The settlement also provides additional recovery for Maremont if certain future defense and indemnity spending thresholds are met. The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Maremont could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Maremont in terms of plaintiffs’ law 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 estimation period, the nature of pending and future claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Maremont’s asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations. Rockwell International ("Rockwell") — ArvinMeritor, Inc. ("AM"), a subsidiary of Meritor, along with many other companies, has also been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred at the time of the spin-off of the automotive business from Rockwell in 1997. Rockwell had approximately 3,200 and 3,000 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at September 30, 2016 and 2015, respectively. A significant portion of the claims do not identify any of Rockwell’s products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell’s products, and past experience has shown that the vast majority of the claimants will likely never identify any of Rockwell’s products. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants. For those claimants who do show that they worked with Rockwell’s products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved and the lack of any impairing medical condition on the part of many claimants. The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions): September 30, 2016 2015 Pending and future claims $ 60 $ 55 Billed but unpaid claims 1 3 Asbestos-related liabilities $ 61 $ 58 Asbestos-related insurance recoveries $ 27 $ 14 Pending and Future Claims : The company engaged Bates White to assist with determining whether it would be possible to estimate the cost of resolving pending and future Rockwell legacy asbestos-related claims that have been, and could reasonably be expected to be, filed against the company. As of September 30, 2016, Bates White provided a reasonable and probable estimate that consisted of a range of equally likely possibilities of Rockwell’s obligation for asbestos personal injury claims over the next ten years of $60 million to $75 million . After consultation with Bates White, management recognized a liability for pending and future claims over the next ten years of $60 million as of September 30, 2016 compared to $55 million as of September 30, 2015. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Rockwell. The increase in the estimated liability is primarily due to higher settlement values, compared to the prior year. AM recognized a $2 million and $4 million charge in the fourth quarter of fiscal years 2016 and 2015, respectively, associated with its annual valuation of asbestos-related liabilities and receivables. Assumptions: The following assumptions were made by the company 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 2026; • The company believes that the litigation environment could change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims declines for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain; • On a per claim basis, defense and processing costs for pending and future claims will be at the level consistent with the company's prior experience; • Potential payments made to claimants from other sources, including other defendants and 524(g) trusts, favorably impact the company's estimated liability in the future; and • The ultimate indemnity cost of resolving nonmalignant claims with plaintiff’s law firms in jurisdictions without an established history with Rockwell cannot be reasonably estimated. Recoveries: Rockwell has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for a significant portion of these claims. In 2004, the company initiated litigation against certain of these carriers to enforce the insurance policies. During the fourth quarter of fiscal year 2016, the company executed settlement agreements with two of these carriers, thereby resolving the litigation against those particular carriers. Pursuant to the terms of one of those settlement agreements, the company received $32 million in cash from an insurer, of which $10 million was recognized as a reduction in asbestos expense, and $22 million was recorded as a liability to the insurance carrier as it is required to be returned to the carrier if additional asbestos liability is not ultimately incurred. Pursuant to the terms of a second settlement agreement, the company recorded a $12 million receivable to reflect expected reimbursement of future defense and indemnity payments under a coverage-in-place arrangement with that insurer. In addition to the coverage provided from the settlements executed during the fourth quarter of fiscal year 2016, the company continues to maintain a receivable of $6 million related to a previously executed coverage-in-place arrangement with other insurers. The insurance receivables for Rockwell’s asbestos-related liabilities totaled $27 million and $14 million as of September 30, 2016 and 2015, respectively. Included in these amounts are insurance receivables of $9 million at both September 30, 2016 and 2015, which are associated with policies in dispute. Although the company continues to pursue litigation and believes it has insurance coverage, the collection of the $9 million has become doubtful; therefore, in the fourth quarter of fiscal year 2016, the company recorded a $9 million reserve. Also, during the third quarter of fiscal year 2016, the company reached a settlement relating to certain proofs of claim filed under certain insurance policies with an insolvent insurer for $6 million (the "allowed claim"). On June 17, 2016, the company entered into an assignment of claim (“Assignment”) with a third party to assign the allowed claim the company had against the insolvent insurer. The Assignment was approved by the liquidator, which resulted in the receipt by the company of $3 million and was recognized as a reduction of selling, general and administrative expenses in the consolidated statement of operations in the third quarter of fiscal year 2016. The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Rockwell could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Rockwell in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; Rockwell’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the estimation period, the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Rockwell asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations. Indemnifications The company has provided indemnifications in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos and employment-related matters, and the periods of indemnification vary in duration. In December 2005, the company guaranteed a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees. The retirees were former employees of a wholly-owned subsidiary of the company prior to it being acquired by the company. The wholly-owned subsidiary, which was part of the company’s light vehicle aftermarket business, was sold by the company in fiscal year 2006. Prior to May 2009, except as set forth hereinafter, the third party met its obligations to reimburse the other party. In May 2009, the third party filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code requiring the company to recognize its obligations under the guarantee. The company recorded a $28 million liability in fiscal year 2009 for this matter. At September 30, 2016 and September 30, 2015 , the remaining estimated liability for this matter was approximately $11 million and $13 million , respectively. On January 3, 2011, the company completed the sale of its Body Systems business. The sale agreement contains certain customary representations, warranties and covenants of the seller and the purchaser. The agreement also includes provisions governing post-closing indemnities between the seller and the purchaser for losses arising from specified events. At September 30, 2014, the company had an accrual of $6 million for such indemnities, of which $2 million was for a contingency-related income tax matter, which was included in other liabilities in the accompanying consolidated balance sheet. In the second quarter of fiscal year 2015, the company settled all remaining matters related to the Body Systems business and recorded a net gain, after tax in discontinued operations of $6 million . In connection with the sale of its interest in MSSC in October 2009, the company provided certain indemnifications to the buyer for its share of potential obligations related to pension funding shortfall, environmental and other contingencies, and valuation of certain accounts receivable and inventories. The company's estimated exposure under these indemnities at September 30, 2016 and September 30, 2015 was approximately $1 million and $2 million , respectively, and is included in other liabilities in the consolidated balance sheet. The company is not aware of any other claims or other information that would give rise to material payments under such indemnifications. Other The company identified certain sales transactions for which value-added tax may have been required to be remitted to certain tax jurisdictions for tax years 2009 through 2016. At both September 30, 2016 and September 30, 2015 , the company’s estimate of the probable liability to settle the audit was $10 million . On June 24, 2014, the company filed a complaint in the Circuit Court for Oakland County, Michigan against a supplier alleging that certain bearings supplied by the supplier for TL Trailer Axles were faulty, and as a result, the company suffered product liability damages and expenses with respect to vehicle recalls. On May 13, 2016, the company entered into a settlement agreement with the supplier pursuant to which the company received approximately $6 million and was recognized as a reduction of selling, general and administrative expenses in the consolidated statement of operations in the third quarter of fiscal year 2016. The settlement does not relieve the company of its current liability for past or future claims related to TL Axles. The company has the right to seek future indemnification from the supplier with respect to any currently unasserted claims. In March 2016, the company was served with a complaint filed against the company and other defendants in the United States District Court for the Eastern District of Michigan. The complaint is a proposed class action and alleges that the company violated federal and state antitrust and other laws in connection with a former business of the company that manufactured and sold exhaust systems for automobiles. The alleged class is comprised of persons and entities that purchased or leased a passenger vehicle during a specified time period. In April 2016, the company was served with a virtually identical suit also naming the company as a defendant on behalf of a purported class of automobile dealers. In September 2016, the company filed a motion to dismiss. The company intends to defend itself vigorously against these claims. The company believes at this time that liabilities associated with this case, while possible, are not probable, and therefore has not recorded any accrual for them as of September 30, 2016. Further, any possible range of loss cannot be reasonably estimated at this time. In April 2016, the company was served with several complaints filed against the company and other defendants in the United States District Court for the Northern District of Mississippi. The complaints were amended in July 2016. These complaints allege damages, including diminution of property value, concealment/fraud and emotional distress resulting from alleged environmental pollution in and around a neighborhood in Grenada, Mississippi. Rockwell owned and operated a facility near the neighborhood from 1965 to 1985. The company filed answers to the complaints in July 2016 and intends to defend itself vigorously against these claims. The company believes at this time that liabilities associated with this case, while possible, are not probable, and therefore has not recorded any accrual for them as of September 30, 2016. Further, any possible range of loss cannot be reasonably estimated 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, results of operations or cash flows. |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 12 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company has three operating segments, America's Commercial Truck and Industrial, International Commercial Truck and Industrial, and Aftermarket and Trailer. America's Commercial Truck and Industrial and International Commercial Truck and Industrial are aggregated into one reportable segment, Commercial Truck and Industrial. The company’s Chief Operating Decision Maker (CODM) is the Chief Executive Officer. The two reportable segments at September 30, 2016, are as follows: • The Commercial Truck & Industrial segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks, military, construction, bus and coach, fire and emergency and other applications in North America, South America, Europe and Asia Pacific. This segment also includes the company's aftermarket businesses in Asia Pacific and South America; and • The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers. 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 expense and asset impairment charges. The company uses Segment EBITDA as the primary basis for the CODM to evaluate the performance of each of its reportable segments. The accounting policies of the segments are the same as those applied in the consolidated financial statements, except for the use of Segment EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand-alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the segment. Segment information is summarized as follows (in millions): Commercial Truck & Industrial Aftermarket & Trailer Elims Total Fiscal year 2016 Sales: External Sales $ 2,369 $ 830 $ — $ 3,199 Intersegment Sales 76 30 (106 ) — Total Sales $ 2,445 $ 860 $ (106 ) $ 3,199 Fiscal year 2015 Sales: External Sales $ 2,649 $ 856 $ — $ 3,505 Intersegment Sales 90 28 (118 ) — Total Sales $ 2,739 $ 884 $ (118 ) $ 3,505 Fiscal year 2014 Sales: External Sales $ 2,876 $ 890 $ — $ 3,766 Intersegment Sales 104 30 (134 ) — Total Sales $ 2,980 $ 920 $ (134 ) $ 3,766 Segment EBITDA: 2016 2015 2014 Commercial Truck & Industrial $ 208 $ 216 $ 218 Aftermarket & Trailer 115 123 106 Segment EBITDA 323 339 324 Unallocated legacy and corporate income (expense), net (1) 4 (5 ) (10 ) Interest expense, net (84 ) (105 ) (130 ) Benefit (provision) for income taxes 424 (1 ) (31 ) Depreciation and amortization (67 ) (65 ) (67 ) Loss on sale of receivables (5 ) (5 ) (8 ) Restructuring costs (16 ) (16 ) (10 ) Antitrust settlement with Eaton, net of tax (2) — — 208 Reduction of specific warranty contingency, net of supplier recovery — — 8 Pension settlement losses — (59 ) — Goodwill and asset impairment charges — (17 ) — Noncontrolling interests (2 ) (1 ) (5 ) Income from continuing operations attributable to Meritor, Inc. $ 577 $ 65 $ 279 (1) Unallocated legacy and corporate income (expense), net represents items that are not directly related to the company's business segments. These items primarily include asbestos-related charges and settlements, pension and retiree medical costs associated with sold businesses, and other legacy costs for environmental and product liability. (2) Adjustment associated with the company's share of the antitrust settlement with Eaton less legal expenses incurred in fiscal year 2014. Depreciation and Amortization: 2016 2015 2014 Commercial Truck & Industrial $ 59 $ 59 $ 61 Aftermarket & Trailer 8 6 6 Total depreciation and amortization $ 67 $ 65 $ 67 Capital Expenditures: 2016 2015 2014 Commercial Truck & Industrial $ 83 $ 71 $ 71 Aftermarket & Trailer 10 8 6 Total capital expenditures $ 93 $ 79 $ 77 Segment Assets: 2016 2015 Commercial Truck & Industrial $ 1,433 $ 1,569 Aftermarket & Trailer 436 448 Total segment assets 1,869 2,017 Corporate (1) 845 434 Less: Accounts receivable sold under off-balance sheet factoring programs (220 ) (256 ) Total assets $ 2,494 $ 2,195 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. Sales by geographic area are based on the location of the selling unit. Information on the company’s geographic areas is summarized as follows (in millions): Sales by Geographic Area: 2016 2015 2014 U.S. $ 1,617 $ 1,733 $ 1,466 Canada 67 70 68 Mexico 390 491 652 Total North America 2,074 2,294 2,186 Sweden 250 325 369 Italy 201 204 234 United Kingdom 136 76 82 Other Europe 86 90 111 Total Europe 673 695 796 Brazil 130 198 408 China 84 90 146 India 152 140 114 Other Asia-Pacific 86 88 116 Total sales $ 3,199 $ 3,505 $ 3,766 Assets by Geographic Area: 2016 2015 U.S. $ 1,359 $ 995 Canada 33 30 Mexico 202 236 Total North America 1,594 1,261 Sweden 104 108 United Kingdom 212 211 Italy 65 77 Other Europe 164 176 Total Europe 545 572 Brazil 146 136 China 97 118 Other Asia-Pacific 112 108 Total $ 2,494 $ 2,195 Sales to AB Volvo represented approximately 23 percent , 24 percent and 27 percent of the company’s sales in each of fiscal years 2016 , 2015 and 2014 , respectively. Sales to Daimler AG represented approximately 18 percent , 20 percent and 18 percent of the company’s sales in fiscal years 2016 , 2015 and 2014 , respectively. Sales to Navistar International Corporation represented approximately 9 percent , 11 percent and 12 percent of the company's sales in each of fiscal years 2016 , 2015 and 2014 , respectively. No other customer comprised 10 percent or more of the company’s total sales in any of the three fiscal years ended September 30, 2016 . |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Sep. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following is a condensed summary of the company’s unaudited quarterly results of continuing operations for fiscal years 2016 and 2015 . Per share amounts are based on the weighted average shares outstanding for that quarter. Earnings per share for the year may not equal the sum of the four fiscal quarters’ earnings per share due to changes in basic and diluted shares outstanding. 2016 Fiscal Quarters (Unaudited) First Second Third Fourth 2016 (In millions, except share related data) Sales $ 809 $ 821 $ 841 $ 728 $ 3,199 Cost of sales (705 ) (700 ) (714 ) (644 ) (2,763 ) Gross margin 104 121 127 84 436 Benefit (provision) for income taxes (7 ) (7 ) (8 ) 446 424 Net income 27 32 42 474 575 Net income from continuing operations attributable to Meritor, Inc. 28 33 42 474 577 Net income attributable to Meritor, Inc. 26 32 41 474 573 Basic earnings per share from continuing operations $ 0.30 $ 0.36 $ 0.47 $ 5.47 $ 6.40 Diluted earnings per share from continuing operations $ 0.30 $ 0.36 $ 0.46 $ 5.34 $ 6.27 The company recognized restructuring costs in its continuing operations during fiscal year 2016 as follows: $1 million in the first quarter, $2 million in the second quarter, $6 million in the third quarter and $7 million in the fourth quarter (see Note 5). During the fourth quarter of fiscal year 2016, the company recognized a $438 million tax benefit from the partial reversal of the U.S. valuation allowance and a $25 million income tax benefit related to other correlated tax relief, which were partially offset by a $9 million non-cash charge to income tax expense in Brazil related to the establishment of a valuation allowance (see Note 22). Also in the fourth quarter of fiscal year 2016, the company recognized $31 million as reduction in asbestos expense due to settlement agreements (see Note 23). 2015 Fiscal Quarters (Unaudited) First Second Third Fourth 2015 (In millions, except share related data) Sales $ 879 $ 864 $ 909 $ 853 $ 3,505 Cost of sales (764 ) (749 ) (785 ) (745 ) (3,043 ) Gross margin 115 115 124 108 462 Benefit (provision) for income taxes (7 ) (6 ) (6 ) 18 (1 ) Net income (loss) 30 43 14 (22 ) 65 Net income (loss) from continuing operations attributable to Meritor, Inc. 32 39 15 (21 ) 65 Net income (loss) attributable to Meritor, Inc. 29 43 13 (21 ) 64 Basic earnings (loss) per share from continuing operations $ 0.33 $ 0.40 $ 0.15 $ (0.22 ) $ 0.67 Diluted earnings (loss) per share from continuing operations $ 0.32 $ 0.38 $ 0.15 $ (0.22 ) $ 0.65 The company recognized restructuring costs in its continuing operations during fiscal year 2015 as follows: $3 million in the first quarter, $3 million in the second quarter, $9 million in the third quarter and $1 million in the fourth quarter (see Note 5). During the fourth quarter of fiscal year 2015, the company settled the remaining liabilities associated with its German and Canadian pension plans and recognized a pre-tax settlement loss of $59 million associated with the annuity purchases and lump-sum payments (see Note 21). During the fourth quarter of fiscal year 2015 the company recorded an impairment of $15 million of goodwill (see Note 4). In addition, the company recorded an impairment of $2 million of long-lived assets in the fourth quarter of fiscal year 2015 (see Note 11). During the fourth quarter of fiscal year 2015, as a result of sustained profitability in Germany, Italy, Mexico and Sweden evidenced by a strong earnings history and additional positive evidence, the company determined it was more likely than not future earnings would be sufficient to realize deferred tax assets in these jurisdictions. Accordingly, the company reversed valuation allowances in Germany, Italy, Mexico, and Sweden, resulting in non-cash income tax benefits of $16 million . |
OPERATING CASH FLOWS AND OTHER
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION | 12 Months Ended |
Sep. 30, 2016 | |
Operating Cash Flow Disclosure [Abstract] | |
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION | OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION Year Ended September 30, 2016 2015 2014 (in millions) OPERATING ACTIVITIES Net income $ 575 $ 65 $ 254 Less: Loss from discontinued operations, net of tax (4 ) (1 ) (30 ) Income from continuing operations 579 66 284 Adjustments to income from continuing operations to arrive at cash provided by (used for) operating activities: Depreciation and amortization 67 65 67 Deferred income tax benefit (415 ) (24 ) (2 ) Restructuring costs 16 16 10 Loss on debt extinguishment — 25 31 Goodwill and asset impairment — 17 — Equity in earnings of ZF Meritor — — (190 ) Equity in earnings of other affiliates (36 ) (39 ) (38 ) Stock compensation expense 9 10 8 Provision for doubtful accounts 2 2 — Pension and retiree medical expense 20 82 25 Gain on sale of property (2 ) (3 ) — Dividends received from ZF Meritor — — 190 Dividends received from other equity method investments 37 32 36 Pension and retiree medical contributions (42 ) (141 ) (177 ) Restructuring payments (11 ) (16 ) (10 ) Changes in off-balance sheet receivable securitization and factoring programs (31 ) 39 (46 ) Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations: Receivables 89 54 34 Inventories 28 4 (9 ) Accounts payable (89 ) (70 ) (5 ) Other current assets and liabilities (18 ) (52 ) 19 Other assets and liabilities 6 40 — Operating cash flows provided by continuing operations 209 107 227 Operating cash flows used for discontinued operations (5 ) (10 ) (12 ) CASH PROVIDED BY OPERATING ACTIVITIES $ 204 $ 97 $ 215 September 30, 2016 2015 2014 (In millions) Balance sheet data: Allowance for doubtful accounts $ 6 $ 9 $ 6 Statement of operations data: Maintenance and repairs expense 45 52 59 Research, development and engineering expense 68 69 71 Depreciation expense 61 60 62 Rental expense 15 11 16 Interest income 3 9 2 Interest expense (87 ) (114 ) (132 ) Statement of cash flows data: Interest payments 71 64 84 Income tax payments, net of refunds 24 14 26 Non-cash investing activities - capital asset additions from capital leases — 9 5 |
SUPPLEMENTAL PARENT AND GUARANT
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | 12 Months Ended |
Sep. 30, 2016 | |
Supplemental Guarantor Condensed Consolidating Financial Statements [Abstract] | |
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS Article 3-10 of Regulation S-X (S-X Rule 3-10) requires that separate financial information for issuers and guarantors of registered securities be filed in certain circumstances. Certain of the company's 100% owned subsidiaries, as defined in the credit agreement (the Guarantors) irrevocably and unconditionally guarantee amounts outstanding under the senior secured revolving credit facility on a joint and several basis. Similar subsidiary guarantees were provided for the benefit of the holders of the publicly-held notes outstanding under the company's indentures (see Note 16). Schedule I of Article 5-04 of Regulation S-X (S-X Rule 5-04) requires that condensed financial information of the registrant (Parent) be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. As of September 30, 2016 , net assets that exceed 25 percent of the consolidated net assets of Meritor, Inc. of certain subsidiaries in China and India and certain unconsolidated subsidiaries are restricted by law from transfer by cash dividends, loans or advances to Meritor, Inc. As of September 30, 2016 the amount of the net assets restricted from transfer by law was $36 million . In lieu of providing separate audited financial statements for the Parent and Guarantors, the company has included the accompanying condensed consolidating financial statements as permitted by S-X Rules 3-10 and 5-04. These condensed consolidating financial statements are presented on the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the parent's share of the subsidiary's cumulative results of operations, capital contributions and distribution and other equity changes. The Guarantor subsidiaries are combined in the condensed consolidated financial statements. MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions) Fiscal Year Ended September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 1,616 $ 1,583 $ — $ 3,199 Subsidiaries — 112 61 (173 ) — Total sales — 1,728 1,644 (173 ) 3,199 Cost of sales (57 ) (1,439 ) (1,440 ) 173 (2,763 ) GROSS MARGIN (57 ) 289 204 — 436 Selling, general and administrative (64 ) (75 ) (74 ) — (213 ) Restructuring costs (7 ) (4 ) (5 ) — (16 ) Other operating expense, net (3 ) — — — (3 ) OPERATING INCOME (LOSS) (131 ) 210 125 — 204 Other income (expense), net 34 (35 ) — — (1 ) Equity in earnings of affiliates — 32 4 — 36 Interest income (expense), net (117 ) 27 6 — (84 ) INCOME (LOSS) BEFORE INCOME TAXES (214 ) 234 135 — 155 Benefit (provision) for income taxes 526 (88 ) (14 ) — 424 Equity income from continuing operations of subsidiaries 265 106 — (371 ) — INCOME FROM CONTINUING OPERATIONS 577 252 121 (371 ) 579 LOSS FROM DISCONTINUED OPERATIONS, net of tax (4 ) (4 ) (2 ) 6 (4 ) NET INCOME 573 248 119 (365 ) 575 Less: Net income attributable to noncontrolling interests — — (2 ) — (2 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 573 $ 248 $ 117 $ (365 ) $ 573 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions) Fiscal Year Ended September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 573 $ 248 $ 119 $ (365 ) $ 575 Other comprehensive income (loss) (43 ) 55 (44 ) (11 ) (43 ) Total comprehensive income 530 303 75 (376 ) 532 Less: Comprehensive income attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive income attributable to Meritor, Inc. $ 530 $ 303 $ 73 $ (376 ) $ 530 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions) Fiscal Year Ended September 30, 2015 Parent Guarantors Non-Guarantors Elims Consolidated Sales External $ — $ 1,734 $ 1,771 $ — $ 3,505 Subsidiaries — 129 71 (200 ) — Total sales — 1,863 1,842 (200 ) 3,505 Cost of sales (52 ) (1,579 ) (1,612 ) 200 (3,043 ) GROSS MARGIN (52 ) 284 230 — 462 Selling, general and administrative (53 ) (118 ) (72 ) — (243 ) Pension settlement losses — — (59 ) — (59 ) Restructuring costs (2 ) (5 ) (9 ) — (16 ) Goodwill impairment — (15 ) — — (15 ) Other operating income (expense), net (2 ) (2 ) 3 — (1 ) OPERATING INCOME (LOSS) (109 ) 144 93 — 128 Other income (expense), net 36 18 (49 ) — 5 Equity in earnings of affiliates — 36 3 — 39 Interest income (expense), net (138 ) 26 7 — (105 ) INCOME (LOSS) BEFORE INCOME TAXES (211 ) 224 54 — 67 Provision for income taxes (2 ) 2 (1 ) — (1 ) Equity income from continuing operations of subsidiaries 278 38 — (316 ) — INCOME FROM CONTINUING OPERATIONS 65 264 53 (316 ) 66 LOSS FROM DISCONTINUED OPERATIONS, net of tax (1 ) (2 ) (3 ) 5 (1 ) NET INCOME 64 262 50 (311 ) 65 Less: Net income attributable to noncontrolling interests — — (1 ) — (1 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 64 $ 262 $ 49 $ (311 ) $ 64 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions) Fiscal Year Ended September 30, 2015 Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 64 $ 262 $ 50 $ (311 ) $ 65 Other comprehensive loss (19 ) (61 ) (16 ) 77 (19 ) Total comprehensive income 45 201 34 (234 ) 46 Less: Comprehensive income attributable to noncontrolling interests 2 — (1 ) — 1 Comprehensive income attributable to Meritor, Inc. $ 47 $ 201 $ 33 $ (234 ) $ 47 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions) Fiscal Year Ended September 30, 2014 Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 1,467 $ 2,299 $ — $ 3,766 Subsidiaries — 142 62 (204 ) — Total sales — 1,609 2,361 (204 ) 3,766 Cost of sales (56 ) (1,343 ) (2,084 ) 204 (3,279 ) GROSS MARGIN (56 ) 266 277 — 487 Selling, general and administrative (65 ) (102 ) (91 ) — (258 ) Restructuring costs — (1 ) (9 ) — (10 ) Other operating expense, net (1 ) (1 ) — — (2 ) OPERATING INCOME (LOSS) (122 ) 162 177 — 217 Other income (expense), net 35 23 (58 ) — — Equity in earnings of ZF Meritor — 190 — — 190 Equity in earnings of affiliates — 30 8 — 38 Interest income (expense), net (159 ) 35 (6 ) — (130 ) INCOME (LOSS) BEFORE INCOME TAXES (246 ) 440 121 — 315 Provision for income taxes — (1 ) (30 ) — (31 ) Equity income from continuing operations of subsidiaries 525 71 — (596 ) — INCOME FROM CONTINUING OPERATIONS 279 510 91 (596 ) 284 LOSS FROM DISCONTINUED OPERATIONS, net of tax (30 ) (31 ) (12 ) 43 (30 ) NET INCOME 249 479 79 (553 ) 254 Less: Net income attributable to noncontrolling interests — — (5 ) — (5 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 249 $ 479 $ 74 $ (553 ) $ 249 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions) Fiscal Year Ended September 30, 2014 Parent Guarantors Non- Guarantors Elims Consolidated Net income (loss) $ 249 $ 479 $ 79 $ (553 ) $ 254 Other comprehensive income (loss) (15 ) (54 ) 25 29 (15 ) Total comprehensive income 234 425 104 (524 ) 239 Less: Comprehensive income attributable to noncontrolling interests — — (5 ) — (5 ) Comprehensive income attributable to Meritor, Inc. $ 234 $ 425 $ 99 $ (524 ) $ 234 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET (In millions) September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS Cash and cash equivalents $ 90 $ 4 $ 66 $ — $ 160 Receivables, trade and other, net 1 39 356 — 396 Inventories — 143 173 — 316 Other current assets 5 12 16 — 33 TOTAL CURRENT ASSETS 96 198 611 — 905 NET PROPERTY 22 198 219 — 439 GOODWILL — 219 171 — 390 OTHER ASSETS 447 132 181 — 760 INVESTMENTS IN SUBSIDIARIES 2,575 679 — (3,254 ) — TOTAL ASSETS $ 3,140 $ 1,426 $ 1,182 $ (3,254 ) $ 2,494 CURRENT LIABILITIES Short-term debt $ 1 $ 4 $ 9 $ — $ 14 Accounts and notes payable 42 172 261 — 475 Other current liabilities 90 74 104 — 268 TOTAL CURRENT LIABILITIES 133 250 374 — 757 LONG-TERM DEBT 971 3 8 — 982 RETIREMENT BENEFITS 680 — 23 — 703 INTERCOMPANY PAYABLE (RECEIVABLE) 1,534 (1,768 ) 234 — — OTHER LIABILITIES 34 162 42 — 238 EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. (212 ) 2,779 476 (3,254 ) (211 ) NONCONTROLLING INTERESTS — — 25 — 25 TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 3,140 $ 1,426 $ 1,182 $ (3,254 ) $ 2,494 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET (In millions) September 30, 2015 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS Cash and cash equivalents $ 73 $ 6 $ 114 $ — $ 193 Receivables, trade and other, net 1 40 420 — 461 Inventories — 159 179 — 338 Other current assets 4 20 26 — 50 TOTAL CURRENT ASSETS 78 225 739 — 1,042 NET PROPERTY 15 183 221 — 419 GOODWILL — 219 183 — 402 OTHER ASSETS 61 129 142 — 332 INVESTMENTS IN SUBSIDIARIES 2,354 313 — (2,667 ) — TOTAL ASSETS $ 2,508 $ 1,069 $ 1,285 $ (2,667 ) $ 2,195 CURRENT LIABILITIES Short-term debt $ 1 $ 4 $ 10 $ — $ 15 Accounts and notes payable 55 213 306 — 574 Other current liabilities 93 83 103 — 279 TOTAL CURRENT LIABILITIES 149 300 419 — 868 LONG-TERM DEBT 1,017 6 13 — 1,036 RETIREMENT BENEFITS 603 — 29 — 632 INTERCOMPANY PAYABLE (RECEIVABLE) 1,365 (1,886 ) 521 — — OTHER LIABILITIES 45 217 43 — 305 EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. (671 ) 2,432 235 (2,667 ) (671 ) NONCONTROLLING INTERESTS — — 25 — 25 TOTAL LIABILITIES AND EQUITY(DEFICIT) $ 2,508 $ 1,069 $ 1,285 $ (2,667 ) $ 2,195 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions) Fiscal Year Ended September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 196 $ 40 $ (32 ) $ — $ 204 INVESTING ACTIVITIES Capital expenditures (19 ) (43 ) (31 ) — (93 ) Proceeds from sale of property — 4 — — 4 Other investing activities — — (1 ) — (1 ) Net investing cash flows provided by discontinued operations — 1 3 — 4 CASH USED FOR INVESTING ACTIVITIES (19 ) (38 ) (29 ) — (86 ) FINANCING ACTIVITIES Repayment of notes and term loan (55 ) — — — (55 ) Other financing cash flows (1 ) (4 ) (11 ) — (16 ) Repurchase of common stock (81 ) — — — (81 ) Intercompany advances (23 ) — 23 — — CASH USED FOR FINANCING ACTIVITIES (160 ) (4 ) 12 — (152 ) EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — 1 — 1 CHANGE IN CASH AND CASH EQUIVALENTS 17 (2 ) (48 ) — (33 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 73 6 114 — 193 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 90 $ 4 $ 66 $ — $ 160 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions) Fiscal Year Ended September 30, 2015 Parent Guarantors Non- Guarantors Elims Consolidated CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 57 $ 62 $ (22 ) $ — $ 97 INVESTING ACTIVITIES Capital expenditures (4 ) (41 ) (34 ) — (79 ) Proceeds from sale of property — — 4 — 4 Cash paid for acquisition of Morganton — (16 ) — — (16 ) Net investing cash flows provided by discontinued operations — 1 3 — 4 CASH USED FOR INVESTING ACTIVITIES (4 ) (56 ) (27 ) — (87 ) FINANCING ACTIVITIES Proceeds from debt issuance 225 — — — 225 Repayment of notes and term loan (199 ) — — — (199 ) Other financing cash flows — (5 ) (4 ) — (9 ) Repurchase of common stock (55 ) — — — (55 ) Debt issuance costs (4 ) — — — (4 ) CASH USED FOR FINANCING ACTIVITIES (33 ) (5 ) (4 ) — (42 ) EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — (22 ) — (22 ) CHANGE IN CASH AND CASH EQUIVALENTS 2 1 (57 ) — (54 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 71 5 171 — 247 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 73 $ 6 $ 114 $ — $ 193 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions) Fiscal Year Ended September 30, 2014 Parent Guarantors Non- Guarantors Elims Consolidated CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 245 $ 34 $ (64 ) $ — $ 215 INVESTING ACTIVITIES Capital expenditures (4 ) (37 ) (36 ) — (77 ) Net investing cash flows provided by discontinued operations — 4 3 — 7 CASH USED FOR INVESTING ACTIVITIES (4 ) (33 ) (33 ) — (70 ) FINANCING ACTIVITIES Proceeds from debt issuance 225 — — — 225 Repayment of notes and term loan (439 ) — — — (439 ) Debt issuance costs (10 ) — — — (10 ) Other financing cash flows — (2 ) 14 — 12 Intercompany advances (90 ) — 90 — — CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (314 ) (2 ) 104 — (212 ) EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — (4 ) — (4 ) CHANGE IN CASH AND CASH EQUIVALENTS (73 ) (1 ) 3 — (71 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 144 6 168 — 318 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 71 $ 5 $ 171 $ — $ 247 Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the SEC. As of September 30, 2016 and 2015 , parent company only obligations included $708 million and $631 million , respectively, of pension and retiree medical benefits (see Notes 20 and 21). All debt is debt of the parent company other than $24 million and $33 million at September 30, 2016 , and 2015 respectively (see Note 16) and is primarily related to capital lease obligations and lines of credit. Cash dividends paid to the parent by subsidiaries and investments accounted for by the equity method were $25 million , $37 million , $5 million for 2016 , 2015 , and 2014 , respectively. |
SIGNIFICANT ACCOUNTING POLICI36
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from these estimates. Significant estimates and assumptions were used to review goodwill and other long-lived assets for impairment (see Notes 4 and 11), costs associated with the company’s restructuring actions (see Note 5), product warranty liabilities (see Note 14), long-term incentive compensation plan obligations (see Note 19), retiree medical and pension obligations (see Notes 20 and 21), income taxes (see Note 22), and contingencies including asbestos (see Note 23). |
Concentration of Credit Risk | Concentration of Credit Risk In the normal course of business, the company provides credit to customers. The company limits its credit risk by performing ongoing credit evaluations of its customers and maintaining reserves for potential credit losses and through accounts receivable factoring programs. The company’s accounts receivables are generally due from medium- and heavy-duty truck OEMs, specialty vehicle manufacturers, aftermarket customers, and trailer producers. |
Consolidation and Joint Ventures | Consolidation and Joint Ventures The consolidated financial statements include the accounts of the company and those subsidiaries in which the company has control. All intercompany balances and transactions are eliminated in consolidation. The results of operations of controlled subsidiaries are included in the consolidated financial statements and are offset by a related noncontrolling interest recorded for the noncontrolling partners’ ownership. Investments in affiliates that are not controlled or majority-owned are reported using the equity method of accounting (see Note 13). |
Foreign Currency | Foreign Currency Local currencies are generally considered the functional currencies for operations outside the U.S. For operations reporting in local currencies, assets and liabilities are translated at year-end exchange rates with cumulative currency translation adjustments included as a component of Accumulated Other Comprehensive Loss in the consolidated balance sheet. Income and expense items are translated at average rates of exchange during the year. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, excluding goodwill, to be held and used are reviewed for impairment whenever adverse events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value exceeds the fair value. Long-lived assets held for sale are recorded at the lower of their carrying amount or estimated fair value less cost to sell. |
Discontinued Operations | Discontinued Operations A business component that either has been disposed of or is classified as held for sale is reported as discontinued operations if the cash flows of the component have been or will be eliminated from the ongoing operations of the company, and the company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statement of operations and consolidated statement of cash flows (see Note 3). |
Revenue Recognition | Revenue Recognition Revenues are recognized upon shipment of product and transfer of ownership to the customer. Provisions for customer sales allowances and incentives are recorded as a reduction of sales at the time of product shipment. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts An allowance for uncollectible trade receivables is recorded when accounts are deemed uncollectible based on consideration of write-off history, aging analysis, and any specific, known troubled accounts. |
Earnings per Share | Earnings per Share Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share awards, and convertible securities, if applicable. |
Other | Other Other significant accounting policies are included in the related notes, specifically, goodwill (Note 4), inventories (Note 9), property and depreciation (Note 11), capitalized software (Note 12), product warranties (Note 14), financial instruments (Note 17), equity based compensation (Note 19), retirement medical plans (Note 20), retirement pension plans (Note 21), income taxes (Note 22) and environmental and asbestos-related liabilities (Note 23). |
Accounting Standards to be Implemented and Implemented in Fiscal Year 2014 | Accounting standards to be implemented In October 2016, the FASB issued Accounting Standards Update (ASU) 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements and does not expect a material impact upon adoption. In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU was issued to remove the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted however the guidance can only be adopted in the first interim period of a fiscal year. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The ASU was issued to reduce differences in practice with respect to how specific transactions are classified in the statement of cash flows. The update provides guidance on the following eight types of transactions: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments in this update are required to be adopted by public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The ASU clarifies the assessment of the likelihood that revenue will be collected from a contract, the guidance for presenting sales taxes and similar taxes, and the timing for measuring customer payments that are not in cash. The ASU also establishes a practical expedient for contract modifications at the transition. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-12 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update). The ASU was issued to remove from the Codification certain SEC staff guidance that the SEC staff stated would be rescinded: Revenue and Expense Recognition for Freight Services in Process; Accounting for Shipping and Handling Fees and Costs; and Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendor’s Products). The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-11 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In April, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. The ASU provides guidance regarding the identification of performance and licensing obligations. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-10 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU intends to simplify how share-based payments are accounted for, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company is assessing the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. The ASU will eliminate the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The ASU clarifies that an exercise contingency itself does not need to be evaluated to determine whether it is in an embedded derivative, just the underlying option. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The update clarifies that a change in a counterparty to a derivative instrument designated as a hedging instrument would not require the entity to dedesignate the hedging relationship and discontinue the application of hedge accounting. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim years within those fiscal periods. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update will require lessees to recognize a right-of-use asset and lease liability for substantially all leases. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 and is currently assessing the potential impact of this new guidance on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires entities that measure inventory using first-in, first-out (FIFO) or average cost to measure inventory at the lower of cost and net realizable value. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), which provides guidance about management's responsibility in evaluating whether there is substantial doubt relating to an entity’s ability to continue as a going concern and to provide related footnote disclosures as applicable. ASU 2014-15 is effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved After the Requisite Service Period. This guidance requires that an award with a performance target that affects vesting, and that could be achieved after the requisite service period, such as when an employee retires, but may still vest if and when the performance target is achieved, be treated as an award with performance conditions that affect vesting and the company apply existing guidance under ASC Topic 718, Compensation - Stock Compensation. The guidance is effective for fiscal periods beginning after December 15, 2015, including interim periods within those fiscal periods and may be applied either prospectively or retrospectively. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service and requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 was originally effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year making it effective for fiscal periods beginning after December 15, 2017, including interim periods within those fiscal periods, while also providing for early adoption but not before the original effective date. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. Accounting standards implemented during fiscal year 2016 In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, as part of its Simplification Initiative, which updates Income Taxes (Topic 740) guidance to eliminate the requirement for an entity to separate deferred tax liabilities and tax assets between current and non-current amounts in a classified balance sheet. Deferred taxes are presented as noncurrent under the new standard. The guidance is effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. Early adoption is permitted. The company implemented this guidance on a prospective basis in the fourth quarter of fiscal year 2016. Prior periods were not retrospectively adjusted. The impact as of September 30, 2016 was a reclassification between current and non-current deferred tax assets of $17 million . In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which updates Business Combination (Topic 805) guidance to eliminate the requirement to restate prior period financial statements for measurement period adjustments. The guidance should be applied prospectively to measurement period adjustments that occur after the effective date. The guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption is permitted. The company adopted this standard in the first quarter of fiscal year 2016. This guidance did not have a material impact on the company's consolidated financial statements. In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This guidance changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results. The guidance also requires new disclosure of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance is to be applied prospectively and is effective for fiscal periods beginning on or after December 15, 2014, including interim periods within those fiscal periods. The company adopted this guidance in the first quarter of fiscal year 2016. The impact of this new guidance on the company's consolidated financial statements is dependent upon future business divestitures. Previous divestitures and amounts currently included in discontinued operations were not impacted. |
Inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) |
Net Property | Property is stated at cost. Depreciation of property is based on estimated useful lives, generally using the straight-line method. Estimated useful lives for buildings and improvements range from 10 to 50 years and estimated useful lives for machinery and equipment range from 3 to 20 years. Significant improvements are capitalized, and disposed or replaced property is written off. Maintenance and repairs are charged to expense in the period they are incurred. Company-owned tooling is classified as property and depreciated over the shorter of its expected life or the life of the production contract, generally not to exceed three years . In accordance with the FASB guidance on property, plant and equipment, the company reviews the carrying value of long-lived assets, excluding goodwill, to be held and used, for impairment whenever events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value. |
Product Warranty | The company records estimated product warranty costs at the time of shipment of products to customers. Warranty reserves are primarily based on factors that include past claims experience, sales history, product manufacturing and engineering changes and industry developments. Liabilities for product recall campaigns are recorded at the time the company’s obligation is probable and can be reasonably estimated. Policy repair actions to maintain customer relationship are recorded as other liabilities at the time an obligation is probable and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability. |
Environmental Costs | 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. |
SIGNIFICANT ACCOUNTING POLICI37
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Reconciliation of Basic Average Common Shares Outstanding to Diluted Average Common Shares Outstanding | A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions): Year Ended September 30, 2016 2015 2014 Basic average common shares outstanding 90.1 96.9 97.5 Impact of stock options — 0.1 0.1 Impact of restricted shares, restricted share units and performance share units 1.9 2.0 1.6 Impact of convertible notes — 1.1 — Diluted average common shares outstanding 92.0 100.1 99.2 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of discontinued operations | Results of the discontinued operations are summarized as follows (in millions): Year Ended September 30, 2016 2015 2014 Sales $ — $ 1 $ 29 Operating losses, net $ — $ — $ (8 ) Net loss on sales of businesses — — (23 ) Environmental remediation charges (see Note 23) — — (4 ) Litigation settlement (3 ) — — Other, net (4 ) (2 ) (2 ) Loss before income taxes (7 ) (2 ) (37 ) Benefit for income taxes 3 1 7 Loss from discontinued operations attributable to Meritor, Inc. $ (4 ) $ (1 ) $ (30 ) |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of the Changes in the Carrying Value of Goodwill | A summary of the changes in the carrying value of goodwill is presented below (in millions): Commercial Truck & Industrial Aftermarket & Trailer Total Balance at September 30, 2014 $ 261 $ 170 $ 431 Impairment (15 ) — (15 ) Foreign currency translation (7 ) (7 ) (14 ) Balance at September 30, 2015 239 163 402 Impairment — — — Foreign currency translation (9 ) (3 ) (12 ) Balance at September 30, 2016 $ 230 $ 160 $ 390 |
RESTRUCTURING COSTS (Tables)
RESTRUCTURING COSTS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Changes in Restructuring Reserves | The following table summarizes changes in restructuring reserves (in millions): Employee Termination Benefits Asset Impairment Plant Shutdown & Other Total Balance at September 30, 2013 $ 12 $ — $ — $ 12 Activity during the period: Charges to continuing operations 10 — — 10 Cash payments – continuing operations (10 ) — — (10 ) Other (1 ) — — (1 ) Balance at September 30, 2014 11 — — 11 Activity during the period: Charges to continuing operations 15 1 — 16 Asset write-offs — (1 ) — (1 ) Cash payments – continuing operations (16 ) — — (16 ) Balance at September 30, 2015 10 — — 10 Activity during the period: Charges to continuing operations 15 — 1 16 Cash payments – continuing operations (11 ) — — (11 ) Other 1 — — 1 Total restructuring reserves, end of year 15 — 1 16 Less: non-current restructuring reserves (2 ) — — (2 ) Restructuring reserves – current, at September 30, 2016 $ 13 $ — $ 1 $ 14 |
Schedule of Restructuring Expense Recognized By Segment | Restructuring costs attributable to the company’s business segments during fiscal years 2016 , 2015 and 2014 are as follows (in millions): Commercial Truck & Industrial Aftermarket & Trailer Corporate Total Fiscal year 2016: Market related actions $ 5 $ 1 $ 2 $ 8 Aftermarket actions — 5 — 5 Other 1 2 — 3 Total restructuring costs $ 6 $ 8 $ 2 $ 16 Fiscal year 2015: South America labor reduction II $ 6 $ — $ — $ 6 M2016 footprint actions 5 — — 5 Closure of engineering facility — — 2 2 European labor reductions 2 — — 2 Other 1 — — 1 Total restructuring costs $ 14 $ — $ 2 $ 16 Fiscal year 2014: South America labor reduction I $ 7 $ — $ — $ 7 Other 1 1 1 3 Total restructuring costs $ 8 $ 1 $ 1 $ 10 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | 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): September 30, 2016 2015 Finished goods $ 125 $ 133 Work in process 26 28 Raw materials, parts and supplies 165 177 Total $ 316 $ 338 |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Other Current Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets are summarized as follows (in millions): September 30, 2016 2015 Current deferred income tax assets (see Note 22) $ — $ 20 Asbestos-related recoveries (see Note 23) 10 13 Prepaid and other 23 17 Other current assets $ 33 $ 50 |
NET PROPERTY (Tables)
NET PROPERTY (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Net Property | Net property is summarized as follows (in millions): September 30, 2016 2015 Property at cost: Land and land improvements $ 30 $ 31 Buildings 231 214 Machinery and equipment 839 864 Company-owned tooling 113 116 Construction in progress 56 62 Total 1,269 1,287 Less: accumulated depreciation (830 ) (868 ) Net property $ 439 $ 419 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of Other Assets | Other assets are summarized as follows (in millions): September 30, 2016 2015 Investments in non-consolidated joint ventures (see Note 13) $ 100 $ 96 Asbestos-related recoveries (see Note 23) 49 42 Unamortized revolver debt issuance costs (see Note 16) 7 10 Capitalized software costs, net (1) 29 28 Non-current deferred income tax assets (see Note 22) 413 28 Assets for uncertain tax positions (see Note 22) 35 3 Prepaid pension costs (see Note 21) 123 110 Other 4 15 Other assets $ 760 $ 332 (1) 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. |
INVESTMENTS IN NON-CONSOLIDAT45
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Non-Consolidated Joint Ventures and Direct Ownership Interests | The company’s non-consolidated joint ventures and related direct ownership interest are as follows: September 30, 2016 2015 2014 Meritor WABCO Vehicle Control Systems (Commercial Truck & Industrial) 50 % 50 % 50 % Master Sistemas Automotivos Ltda. (Commercial Truck & Industrial) 49 % 49 % 49 % Sistemas Automotrices de Mexico S.A. de C.V. (Commercial Truck & Industrial) 50 % 50 % 50 % Ege Fren Sanayii ve Ticaret A.S. (Commercial Truck & Industrial) 49 % 49 % 49 % Automotive Axles Limited (Commercial Truck & Industrial) 36 % 36 % 36 % ZF Meritor LLC (Commercial Truck & Industrial) — % — % 50 % |
Schedule Of Investments In Non-Consolidated Joint Ventures | The company’s investments in non-consolidated joint ventures are as follows (in millions): September 30, 2016 2015 Commercial Truck & Industrial $ 100 $ 96 Aftermarket & Trailer — — Total investments in non-consolidated joint ventures $ 100 $ 96 |
Schedule of Equity in Earnings of Non-Consolidated Joint Ventures | The company’s equity in earnings of non-consolidated joint ventures is as follows (in millions): Year Ended September 30, 2016 2015 2014 Commercial Truck & Industrial $ 36 $ 39 $ 38 Aftermarket & Trailer — — — Total equity in earnings of affiliates $ 36 $ 39 $ 38 |
Summarized Balance Sheet Information Of Non-Consolidated Joint Ventures | The summarized financial information presented below represents the combined accounts of the company’s non-consolidated joint ventures related to its continuing operations (in millions): September 30, 2016 2015 Current assets $ 337 $ 393 Non-current assets 151 140 Total assets $ 488 $ 533 Current liabilities $ 192 $ 239 Non-current liabilities 103 111 Total liabilities $ 295 $ 350 |
Summarized Income Statement Information Of Non-Consolidated Joint Ventures | Year Ended September 30, 2016 2015 2014 Sales $ 1,101 $ 1,288 $ 1,268 Gross profit 165 187 167 Net income 73 83 458 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Other Current Liabilities Disclosure [Abstract] | |
Schedule Of Other Current Liabilities | Other current liabilities are summarized as follows (in millions): September 30, 2016 2015 Compensation and benefits $ 115 $ 122 Income taxes 8 9 Taxes other than income taxes 21 23 Accrued interest 14 14 Product warranties 18 22 Restructuring (see Note 5) 14 7 Asbestos-related liabilities (see Note 23) 18 17 Indemnity obligations (see Note 23) 2 2 Other 58 63 Other current liabilities $ 268 $ 279 |
Schedule of Product Warranties | A summary of the changes in product warranties is as follows (in millions): September 30, 2016 2015 2014 Total product warranties – beginning of year $ 48 $ 51 $ 57 Accruals for product warranties 10 15 22 Payments (14 ) (18 ) (22 ) Change in estimates and other — — (6 ) Total product warranties – end of year 44 48 51 Less: non-current product warranties (see Note 15) (26 ) (26 ) (24 ) Product warranties – current $ 18 $ 22 $ 27 |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Schedule Of Other Liabilities | Other liabilities are summarized as follows (in millions): September 30, 2016 2015 Asbestos-related liabilities (see Note 23) $ 136 $ 109 Restructuring (see Note 5) 2 3 Non-current deferred income tax liabilities (see Note 22) 12 99 Liabilities for uncertain tax positions (see Note 22) 16 15 Product warranties (see Note 14) 26 26 Environmental (see Note 23) 6 8 Indemnity obligations (see Note 23) 11 13 Other 29 32 Other liabilities $ 238 $ 305 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions): September 30, 2016 2015 4.625 percent convertible notes due 2026 (1) $ — $ 55 4.0 percent convertible notes due 2027 (2)(4) 142 142 7.875 percent convertible notes due 2026 (2)(5) 129 127 6.75 percent notes due 2021 (3)(6) 271 270 6.25 percent notes due 2024 (3)(7) 442 442 Capital lease obligation 16 17 Export financing arrangements and other 10 18 Unamortized discount on convertible notes (8) (14 ) (20 ) Subtotal 996 1,051 Less: current maturities (14 ) (15 ) Long-term debt $ 982 $ 1,036 (1) The 4.625 percent convertible notes contained a put and call feature, which allowed for earlier redemption beginning in 2016. As of June 30, 2016 all of these notes were redeemed. (2) The 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2019 and 2020, respectively. (3) The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption. (4) The 4.0 percent convertible notes due 2027 are presented net of $1 million unamortized issuance costs as of September 30, 2016 and September 30, 2015 . (5) The 7.875 percent convertible notes due 2026 are presented net of $2 million and $3 million unamortized issuance costs as of September 30, 2016 and September 30, 2015, respectively, an d $9 million and $10 million original issuance discount as of September 30, 2016 and September 30, 2015 . (6) The 6.75 percent notes due 2021 are presented net of $4 million and $5 million unamortized issuance costs as of September 30, 2016 and September 30, 2015 . (7) The 6.25 percent notes due 2024 are presented net of $8 million unamortized issuance costs as of September 30, 2016 and September 30, 2015 . (8) The carrying amount of the equity component related to convertible debt. |
Debt instrument redemption summary | On or after June 15, 2016, the company may redeem, at its option, from time to time, the 2021 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2021 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on June 15 of the years indicated below: Year Redemption Price 2016 105.063% 2017 103.375% 2018 101.688% 2019 and thereafter 100.000% On or after February 15, 2019, the company may redeem, at its option, from time to time, the 2024 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2024 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on February 15 of the years indicated below: Year Redemption Price 2019 103.125% 2020 102.083% 2021 101.042% 2022 and thereafter 100.000% |
Schedule of principle and unamortized discount on convertible notes | The following table summarizes the principal amounts and related unamortized discount on all convertible notes (in millions): September 30, September 30, Principal amount of convertible notes $ 283 $ 338 Unamortized discount on convertible notes (23 ) (30 ) Net carrying value $ 260 $ 308 |
Summary of convertible notes | The following table summarizes other information related to the convertible notes: Convertible Notes 2027 2013 Total amortization period for debt discount (in years): 12 8 Remaining amortization period for debt discount (in years): 3 4 Effective interest rates on convertible notes: 7.7 % 10.9 % |
Schedule of interest costs on convertible notes | The following table summarizes interest costs recognized on convertible notes (in millions): Year Ended September 30, 2016 2015 2014 Contractual interest coupon $ 18 $ 26 $ 30 Amortization of debt discount 8 8 9 Repurchase of convertible notes — 24 5 Total $ 26 $ 58 $ 44 |
Schedule of long-term debt maturities | As of September 30, 2016, the company is contractually obligated to make payments as follows (in millions): Total 2017 2018 2019 2020 2021 Thereafter (2) Total debt (1) $ 1,034 $ 14 $ 4 $ 2 $ 1 $ 277 $ 736 (1) Total debt excludes unamortized discount on convertible notes of $14 million , unamortized issuance costs of $15 million , and original issuance discount of $9 million . (2) Includes the company's 4.0 percent and 7.875 percent convertible notes, which contain a put and call feature that allows for earlier redemption beginning in 2019 and 2020, respectively. |
Future minimum lease payments for capital leases | As of September 30, 2016, the future minimum lease payments for noncancelable capital leases with initial terms in excess of one year were as follows: Total 2017 2018 2019 2020 2021 Thereafter Capital lease obligation $ 20 $ 6 $ 4 $ 3 $ 2 $ 2 $ 3 Less amounts representing interest (4 ) (1 ) (1 ) (1 ) (1 ) — — Principal on capital lease $ 16 $ 5 $ 3 $ 2 $ 1 $ 2 $ 3 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of the impact of derivatives on comprehensive income | The following table summarizes the impact of the company’s derivatives instruments on comprehensive income for fiscal years ended September 30 (in millions): Location of Gain (Loss) 2016 2015 2014 Derivatives designated as hedging instruments: Amount of gain (loss) recognized in AOCL (effective portion) AOCL $ (3 ) $ 3 $ 3 Amount of gain (loss) reclassified from AOCL into income (effective portion) Cost of Sales (4 ) 6 1 Derivatives not designated as hedging instruments: Amount of gain recognized in income Cost of Sales (1 ) 2 — Derivatives not designated as hedging instruments: Amount of gain recognized in income Other Income (expense) (1 ) 2 — |
Summary of fair value of financial instruments | Fair values of financial instruments are summarized as follows (in millions): September 30, September 30, Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents $ 160 $ 160 $ 193 $ 193 Short-term debt 14 14 15 15 Long-term debt 982 1,051 1,036 1,123 Foreign exchange forward contracts (other assets) 1 1 1 1 Foreign exchange forward contracts (other liabilities) 2 2 3 3 Short-term foreign currency option contracts (other assets) — — 1 1 Long-term foreign currency option contracts (other assets) 2 2 1 1 |
Schedule of offsetting of derivative assets and liabilities | The following table reflects the offsetting of derivative assets and liabilities (in millions): September 30, 2016 September 30, 2015 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Asset Foreign exchange forward contract 1 — 1 1 — 1 Derivative Liabilities Foreign exchange forward contract 2 — 2 3 — 3 |
Fair value of financial instruments by the valuation hierarchy | Fair value of financial instruments by the valuation hierarchy at September 30, 2016 is as follows (in millions): Level 1 Level 2 Level 3 Cash equivalents $ 160 $ — $ — Short-term debt — — 14 Long-term debt — 1,040 11 Foreign exchange forward contracts (asset) — 1 — Foreign exchange forward contracts (liability) — 2 — Short-term foreign currency option contracts (asset) — — — Long-term foreign currency option contracts (asset) — — 2 Fair value of financial instruments by the valuation hierarchy at September 30, 2015 is as follows (in millions): Level 1 Level 2 Level 3 Cash equivalents $ 193 $ — $ — Short-term debt — — 15 Long-term debt — 1,102 21 Foreign exchange forward contracts (asset) — 1 — Foreign exchange forward contracts (liability) — 3 — Short-term foreign currency option contracts (asset) — — 1 Long-term foreign currency option contracts (asset) — — 1 |
Reconciliation of changes in fair value of Level 3 financial assets and liabilities | The tables below provide a reconciliation of changes in fair value of the Level 3 financial assets and liabilities measured at fair value in the consolidated balance sheet for the twelve months ended September 30, 2016 and September 30, 2015, respectively. No transfers of assets between any of the Levels occurred during these periods. Twelve months ended September 30, 2016 (in millions) Short-term foreign currency option contracts (asset) Long-term foreign currency option contracts (asset) Total Fair Value as of September 30, 2015 $ 1 $ 1 $ 2 Total unrealized gains (losses): Included in other income, net (2 ) — (2 ) Included in cost of sales — (1 ) (1 ) Total realized gains (losses): Included in other income, net — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases 1 — 1 Settlements — 2 2 Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — — — Fair Value as of September 30, 2016 $ — $ 2 $ 2 (1) Transfers as of the last day of the reporting period Twelve months ended September 30, 2015 (in millions) Short-term foreign currency option contracts (asset) Long-term foreign currency option contracts (asset) Total Fair Value as of September 30, 2014 $ 2 $ 1 $ 3 Total unrealized gains (losses): Included in other income, net (1 ) — (1 ) Included in cost of sales (1 ) — (1 ) Total realized gains (losses): Included in other income, net 2 — 2 Included in cost of sales 3 — 3 Purchases, issuances, sales and settlements: Purchases 6 — 6 Settlements (10 ) (1 ) (11 ) Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — 1 1 Fair Value as of September 30, 2015 $ 1 $ 1 $ 2 (1) Transfers as of the last day of the reporting period |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Components of accumulated other comprehensive loss | Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss, net of tax Total Balance at September 30, 2014 $ 41 $ (789 ) $ (1 ) $ (749 ) Other comprehensive income (loss) before reclassification (96 ) (18 ) (6 ) (120 ) Amounts reclassified from accumulated other comprehensive loss - net of tax 1 102 — 103 Net current-period other comprehensive income (loss) $ (95 ) $ 84 $ (6 ) $ (17 ) Balance at September 30, 2015 $ (54 ) $ (705 ) $ (7 ) $ (766 ) The components of AOCL as reported in the Consolidated Balance Sheet and Statement of Equity (Deficit), and the changes in AOCL by components, net of tax, are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss, net of tax Total Balance at September 30, 2015 $ (54 ) $ (705 ) $ (7 ) $ (766 ) Other comprehensive income (loss) before reclassification (12 ) (70 ) 4 (78 ) Amounts reclassified from accumulated other comprehensive loss - net of tax — 35 — 35 Net current-period other comprehensive income (loss) $ (12 ) $ (35 ) $ 4 $ (43 ) Balance at September 30, 2016 $ (66 ) $ (740 ) $ (3 ) $ (809 ) Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss, net of tax Total Balance at September 30, 2013 $ 61 $ (792 ) $ (3 ) $ (734 ) Other comprehensive income (loss) before reclassification (20 ) (21 ) 2 (39 ) Amounts reclassified from accumulated other comprehensive loss - net of tax — 24 — 24 Net current-period other comprehensive income (loss) $ (20 ) $ 3 $ 2 $ (15 ) Balance at September 30, 2014 $ 41 $ (789 ) $ (1 ) $ (749 ) |
Changes in accumulated other comprehensive income | Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Amortization of prior service costs $ (7 ) (a) Amortization of actuarial losses 46 (a) Recognized prior service costs due to curtailment (15 ) (a) 24 Total before tax — Tax (benefit) expense $ 24 Net of tax Total reclassifications for the period $ 24 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 20 and 21 for additional details). Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Amortization of prior service costs $ (1 ) (a) Amortization of actuarial losses 36 (a) 35 Total before tax — Tax (benefit) expense $ 35 Net of tax Total reclassifications for the period $ 35 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 20 and 21 for additional details), which is recorded in cost of sales and selling, general and administrative expenses Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Amortization of prior service costs $ (1 ) (a) Amortization of actuarial losses 47 (a) Recognized prior service costs due to settlement 56 (a) 102 Total before tax — Tax (benefit) expense $ 102 Net of tax Employee Benefit Related Adjustment Other reclassification adjustment $ 1 (b) 1 Total before tax — Tax (benefit) expense $ 1 Net of tax Total reclassifications for the period $ 103 Net of tax (a) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 20 and 21 for additional details). (b) These accumulated other comprehensive income components are included in the computation of loss from discontinued operations (see Note 3). |
EQUITY BASED COMPENSATION (Tabl
EQUITY BASED COMPENSATION (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Rollforward of stock options | The following is a rollforward of stock options for fiscal year 2016 (shares in thousands, exercise price and remaining contractual term represent weighted averages and aggregate intrinsic values in millions): Shares Exercise Price Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding — beginning of year 650 $ 10.32 Cancelled or expired (417 ) 11.50 Outstanding — end of year 233 $ 8.22 1.9 — Exercisable — end of year 233 $ 8.22 1.9 — |
Rollforward of non-vested restricted stock, restricted share, and performance share units and activity | The following is a rollforward of the company’s non-vested performance share units as of September 30, 2016 , and the activity during fiscal year 2016 is summarized as follows (shares in thousands): Non-vested Shares Number of Shares Weighted-Average Grant-Date Fair Value Non-vested - beginning of year 2,310 $ 10.01 Granted 810 10.31 Vested — — Forfeited (460 ) 11.31 Non-vested - end of year 2,660 9.88 The following is a rollforward of the company’s non-vested restricted stock and restricted share units as of September 30, 2016 , and the activity during fiscal year 2016 is summarized as follows (shares in thousands): Non-vested Shares Number of Shares Weighted-Average Grant-Date Fair Value Non-vested - beginning of year 1,447 $ 8.23 Granted 713 9.72 Vested (744 ) 4.44 Forfeited (184 ) 12.14 Non-vested - end of year 1,232 11.00 |
RETIREMENT MEDICAL PLANS (Table
RETIREMENT MEDICAL PLANS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Postretirement Medical Plans with Prescription Drug Benefits [Abstract] | |
Schedule Of Retiree Medical Liability Expense Assumptions | The following are the assumptions used in the measurement of the APBO and retiree medical expense: 2016 2015 2014 Discount rate 3.45 % 4.20 % 4.20 % Health care cost trend rate 7.10 % 7.00 % 7.40 % Ultimate health care trend rate 4.75 % 5.00 % 5.00 % Year ultimate rate is reached 2024 2022 2022 |
Retiree Medical Liability Components As of Balance Sheet Date | The APBO as of the September 30, 2016 and 2015 measurement dates are summarized as follows (in millions): 2016 2015 Retirees $ 444 $ 433 Employees eligible to retire 1 3 Total $ 445 $ 436 |
Rollforward Of Retiree Medical Liability | The following reconciles the change in APBO and the amounts included in the consolidated balance sheet for years ended September 30, 2016 and 2015 , respectively (in millions): 2016 2015 APBO — beginning of year $ 436 $ 477 Service cost — — Interest cost 18 19 Participant contributions — 2 Actuarial loss (gain) 27 (19 ) Foreign currency rate changes — (3 ) Benefit payments (2) (36 ) (40 ) APBO — end of year 445 436 Other (1) 2 2 Retiree medical liability $ 447 $ 438 (1) The company recorded a $2 million reserve for retiree medical liabilities at September 30, 2016 and 2015 as its best estimate for retroactive benefits related to the previously mentioned injunction (2) Net of subsidies and rebates available under Employer Group Waiver Plan (EGWP). |
Schedule Of Retiree Medical Liability Current and Long Term Components | The retiree medical liability is included in the consolidated balance sheet as follows (in millions): September 30, 2016 2015 Current — included in compensation and benefits $ 33 $ 33 Long-term — included in retirement benefits 414 405 Retiree medical liability $ 447 $ 438 |
Amount Of Retiree Medical Obligations Recorded In Accumulated Other Comprehensive Loss Net Of Tax | The following table summarizes the amounts included in Accumulated Other Comprehensive Loss net of tax related to retiree medical liabilities as of September 30, 2016 and 2015 and changes recognized in Other Comprehensive Income (Loss) net of tax for the years ended September 30, 2016 and 2015 . Net Actuarial Loss Prior Service Cost (Benefit) Total Balance at September 30, 2015 $ 101 $ (12 ) $ 89 Net actuarial loss for the year 27 — 27 Amortization for the year (13 ) 1 (12 ) Deferred tax impact (8 ) — (8 ) Balance at September 30, 2016 $ 107 $ (11 ) $ 96 Balance at September 30, 2014 $ 142 $ (13 ) $ 129 Net actuarial gain for the year (19 ) — (19 ) Amortization for the year (22 ) 1 (21 ) Balance at September 30, 2015 $ 101 $ (12 ) $ 89 |
Components Of Retiree Medical Expense | The components of retiree medical expense for years ended September 30 are as follows (in millions): 2016 2015 2014 Service cost $ — $ — $ — Interest cost 18 19 23 Amortization of: Prior service benefit (1 ) (1 ) (7 ) Actuarial losses 13 22 23 Recognized prior service costs due to curtailment — — (15 ) Retiree medical expense $ 30 $ 40 $ 24 |
Retiree Medical Plan Effect Of One Percentage Point Change In Assumed Health Care Cost Trend Rates | A one-percentage point change in the assumed health care cost trend rate for all years to, and including, the ultimate rate would have the following effects (in millions): 2016 2015 Effect on total service and interest cost 1% Increase $ 1 $ 2 1% Decrease (1 ) (1 ) Effect on APBO 1% Increase 40 39 1% Decrease (35 ) (34 ) |
Retiree Medical Plan Estimated Future Benefit Payments | The company expects future benefit payments as follows (in millions): Gross Benefit Payments Gross Receipts (1) Fiscal 2017 $ 40 $ 7 Fiscal 2018 40 7 Fiscal 2019 40 7 Fiscal 2020 40 7 Fiscal 2021 40 7 Fiscal 2022 – 2026 184 34 (1) Consists of subsidies and rebates available under EGWP. |
RETIREMENT PENSION PLANS (Table
RETIREMENT PENSION PLANS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of US Pension Benefit Obligation Expense and Net Expense Assumptions | The following are the significant assumptions used in the measurement of the projected benefit obligation (PBO) and net periodic pension expense: U.S. Plans 2016 2015 2014 Discount Rate 3.50% — 3.55% 4.25% — 4.35% 4.20% — 4.30% Assumed return on plan assets (beginning of the year) 7.75% 8.00% 8.00% |
Schedule of Non-US Pension Benefit Obligation Expense and Net Expense Assumptions | Non-U.S. Plans (2) 2016 2015 2014 Discount Rate (1) 2.50% 1.00% — 3.80% 1.90% — 4.10% Assumed return on plan assets (beginning of the year) (1) 6.00% 2.25% — 7.25% 2.25% — 7.25% Rate of compensation increase (3) N/A 2.00% 2.00% — 3.00% (1) The discount rate for the company’s U.K. pension plan was 2.50 percent , 3.80 percent and 4.10 percent for 2016 , 2015 and 2014 , respectively. The assumed return on plan assets for this plan was 6.00 percent for 2016 and 7.25 percent for 2015 and 2014 . (2) In fiscal year 2015, our German and Canadian pension plans were settled. In 2016, assumptions presented are for the U.K pension plan, which is the only significant non-U.S. plan remaining. (3) Rate of compensation expense for 2016 is not applicable as the U.K. pension plan is frozen. |
Rollforward of Pension Liability and Pension Plan Assets | The following table reconciles the change in the PBO, the change in plan assets and amounts included in the consolidated balance sheet for the years ended September 30, 2016 and 2015 , respectively (in millions): 2016 2015 U.S. Non- U.S. Total U.S. Non- U.S. Total PBO — beginning of year $ 1,042 $ 614 $ 1,656 $ 1,059 $ 735 $ 1,794 Service cost — 1 1 1 1 2 Interest cost 45 20 65 44 26 70 Actuarial loss 105 115 220 10 48 58 Settlements — — — — (111 ) (111 ) Benefit payments (80 ) (35 ) (115 ) (72 ) (29 ) (101 ) Foreign currency rate changes — (99 ) (99 ) — (56 ) (56 ) PBO — end of year $ 1,112 $ 616 $ 1,728 $ 1,042 $ 614 $ 1,656 Change in plan assets Fair value of assets — beginning of year $ 830 $ 717 $ 1,547 $ 832 $ 743 $ 1,575 Actual return on plan assets 79 169 248 65 67 132 Employer contributions 5 1 6 5 7 12 Settlements — — — — (20 ) (20 ) Benefit payments (80 ) (35 ) (115 ) (72 ) (29 ) (101 ) Foreign currency rate changes — (118 ) (118 ) — (51 ) (51 ) Fair value of assets — end of year $ 834 $ 734 $ 1,568 $ 830 $ 717 $ 1,547 Funded status $ (278 ) $ 118 $ (160 ) $ (212 ) $ 103 $ (109 ) |
Schedule of Balance Sheet Classification of Net Pension Liability | Amounts included in the consolidated balance sheet at September 30 are comprised of the following (in millions): 2016 2015 U.S. Non-U.S. Total U.S. Non-U.S. Total Non-current assets $ — $ 123 $ 123 $ — $ 110 $ 110 Current liabilities (6 ) — (6 ) (5 ) — (5 ) Retirement benefits-non-current (272 ) (5 ) (277 ) (207 ) (7 ) (214 ) Net amount recognized $ (278 ) $ 118 $ (160 ) $ (212 ) $ 103 $ (109 ) |
Schedule of Pension Costs Recognized in Other Comprehensive Loss | The following tables summarize the amounts included in Accumulated Other Comprehensive Loss net of tax related to pension liabilities as of September 30, 2016 and 2015 and changes recognized in Other Comprehensive Income (Loss) net of tax for the year ended September 30, 2016 . Net Actuarial Loss U.S. Non-U.S. Total Balance at September 30, 2015 $ 410 $ 206 $ 616 Net actuarial loss for the year 87 (11 ) 76 Amortization for the year (18 ) (5 ) (23 ) Deferred tax impact (25 ) — (25 ) Balance at September 30, 2016 $ 454 $ 190 $ 644 Balance at September 30, 2014 $ 419 $ 241 $ 660 Net actuarial loss for the year 8 24 32 Amortization for the year (17 ) (8 ) (25 ) Deferred tax impact — 5 5 Settlements — (56 ) (56 ) Balance at September 30, 2015 $ 410 $ 206 $ 616 |
Pension and Other Postretirement Benefits | The non-current portion of the pension liability is included in Retirement Benefits in the consolidated balance sheet as follows (in millions): September 30, 2016 2015 Pension liability $ 277 $ 214 Retiree medical liability — long term (see Note 20) 414 405 Other 12 13 Total retirement benefits $ 703 $ 632 |
Schedule of Projected Benefit Obligation Accumulated Benefit Obligation and Plan Assets | Additional information is as follows (in millions): 2016 2015 ABO Exceeds Assets Assets Exceed ABO Total ABO Exceeds Assets Assets Exceed ABO Total PBO $ 1,116 $ 612 $ 1,728 $ 1,057 $ 599 $ 1,656 ABO 1,116 612 1,728 1,057 598 1,655 Plan Assets 834 734 1,568 838 709 1,547 |
Schedule of Net Periodic Pension Benefit Costs | The components of net periodic pension expense are as follows (in millions): 2016 2015 2014 Service cost $ 1 $ 2 $ 2 Interest cost 65 70 80 Assumed rate of return on plan assets (99 ) (111 ) (104 ) Amortization of — Actuarial losses 23 26 23 Settlement loss — 59 — Net periodic pension expense $ (10 ) $ 46 $ 1 |
Pension Plan Investments Measured at Fair Value by Level Within Fair Value Hierarchy | The fair value of plan assets at September 30, 2016 by asset category is as follows (in millions): U.S. Plans 2016 Asset Category Level 1 Level 2 Level 3 Total Equity investments U.S. – Large cap $ 71 $ — $ — $ 71 U.S. – Small cap 22 — — 22 Private equity — — 11 11 International equity 41 — — 41 Equity investments measured at net asset value (1) — — — 152 Total equity investments $ 134 $ — $ 11 $ 297 Fixed income investments U.S. fixed income $ 10 $ 265 $ — $ 275 Emerging fixed income — 20 — 20 Partnerships fixed income — — 1 1 Fixed income investments measured at net asset value (1) — — — 45 Total fixed income $ 10 $ 285 $ 1 $ 341 Alternatives – Partnerships — — 77 77 Alternatives – Partnerships measured at net asset value (1) — — — 84 Cash and cash equivalents — 35 — 35 Total assets at fair value $ 144 $ 320 $ 89 $ 834 Non-U.S. Plans 2016 Asset Category Level 1 Level 2 Level 3 Total Equity investments International equity $ 61 $ — $ — $ 61 Equity investments measured at net asset value (1) — — — 82 Total equity investments $ 61 $ — $ — $ 143 Fixed income investments Other fixed income investments $ — $ 222 $ — $ 222 Fixed income investments measured at net asset value (1) — — — 198 Total fixed income $ — $ 222 $ — $ 420 Commingled funds — 6 — 6 Alternative investments measured at net asset value (1) — — — 114 Real estate measured at net asset value (1) — — — 37 Cash and cash equivalents — 14 — 14 Total assets at fair value $ 61 $ 242 $ — $ 734 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The fair value of plan assets at September 30, 2015 by asset category is as follows (in millions): U.S. Plans 2015 Asset Category Level 1 Level 2 Level 3 Total Equity investments U.S. – Large cap $ 88 $ — $ — $ 88 U.S. – Small cap 21 — — 21 Private equity — — 15 15 International equity 53 — — 53 Equity investments measured at net asset value (1) — — — 160 Total equity investments $ 162 $ — $ 15 $ 337 Fixed income investments U.S. fixed income $ 8 $ 263 $ — $ 271 Emerging fixed income — 20 — 20 Partnerships fixed income — — 1 1 Fixed income investments measured at net asset value (1) — — — 45 Total fixed income $ 8 $ 283 $ 1 $ 337 Alternatives – Partnerships — — 84 84 Alternatives – Partnerships measured at net asset value (1) — — — 65 Cash and cash equivalents — 7 — 7 Total assets at fair value $ 170 $ 290 $ 100 $ 830 Non-U.S. Plans 2015 Asset Category Level 1 Level 2 Level 3 Total Equity investments International equity $ 55 $ — $ — $ 55 Equity investments measured at net asset value (1) — — — 106 Total equity investments $ 55 $ — $ — $ 161 Fixed income investments Other fixed income investments $ — $ 186 $ — $ 186 Fixed income investments measured at net asset value (1) — — — 158 Total fixed income $ — $ 186 $ — $ 344 Commingled funds — 8 — 8 Alternative investments measured at net asset value (1) — — — 133 Real estate measured at net asset value (1) — — — 43 Cash and cash equivalents — 28 — 28 Total assets at fair value $ 55 $ 222 $ — $ 717 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. |
Changes in Level 3, Pension Plan Investments | The following table summarizes the changes in Level 3 pension plan assets measured at fair value on a recurring basis for the year ended September 30, 2016 (in millions): U.S. Plans 2016 Fair Value at October 1, 2015 Return on Plan Assets: Attributable to Assets Held at September 30, 2016 Purchases Settlements Net Transfers Into (Out of) Level 3 Fair Value at September 30, 2016 Asset Category Private equity $ 15 $ (4 ) $ — $ — $ — $ 11 Partnerships – Fixed income 1 — — — — 1 Alternatives – Partnerships 84 (5 ) — (2 ) — 77 Total Level 3 fair value $ 100 $ (9 ) $ — $ (2 ) $ — $ 89 The following table summarizes the changes in Level 3 pension plan assets measured at fair value on a recurring basis for the year ended September 30, 2015 (in millions): U.S. Plans 2015 Fair Value at October 1, 2014 Return on Plan Assets: Attributable to Assets Held at September 30, 2015 Purchases Settlements Net Transfers Into (Out of) Level 3 Fair Value at September 30, 2015 Asset Category Private equity $ 15 $ — $ — $ — $ — $ 15 Partnerships – Fixed income 1 — — — — 1 Alternatives – Partnerships 58 19 8 (1 ) — 84 Total Level 3 fair value $ 74 $ 19 $ 8 $ (1 ) $ — $ 100 |
Pension Plan Estimated Future Contributions and Benefit Payments | Information about the expected cash flows for the U.S. and non-U.S. pension plans is as follows (in millions): U.S. Non U.S. Total Expected employer contributions: Fiscal 2017 $ 5 $ 1 $ 6 Expected benefit payments: Fiscal 2017 78 20 98 Fiscal 2018 76 20 96 Fiscal 2019 74 21 95 Fiscal 2020 73 22 95 Fiscal 2021 71 22 93 Fiscal 2022-2026 336 121 457 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Components of Income Before Income Tax | The income tax provisions were calculated based upon the following components of income before income taxes (in millions): 2016 2015 2014 U.S. income $ 71 $ 24 $ 204 Foreign income 84 43 111 Total $ 155 $ 67 $ 315 |
Summary of Components of the Benefit (Provision) for Income Taxes | The components of the benefit (provision) for income taxes are summarized as follows (in millions): 2016 2015 2014 Current tax benefit (expense): U.S. $ (1 ) $ (4 ) $ (1 ) Foreign 11 (20 ) (32 ) State and local (1 ) (1 ) — Total current tax benefit (expense) 9 (25 ) (33 ) Deferred tax benefit (expense): U.S. 394 3 (1 ) Foreign (22 ) 21 3 State and local 43 — — Total deferred tax benefit 415 24 2 Income tax benefit (expense) $ 424 $ (1 ) $ (31 ) |
Summary of the Tax Effects of Temporary Differences | Net current and non-current deferred income tax assets (liabilities) included in the consolidated balance sheet consist of the tax effects of temporary differences related to the following (in millions): September 30, 2016 2015 (1) Accrued compensation and benefits $ 21 $ 27 Accrued product warranties 13 19 Inventory costs 8 20 Receivables 15 16 Accrued retiree healthcare benefits 169 175 Retirement pension plans 119 95 Property 7 9 Loss and credit carryforwards 455 487 Other 67 77 Sub-total 874 925 Less: Valuation allowances (379 ) (834 ) Deferred income taxes - asset $ 495 $ 91 Taxes on undistributed income $ (7 ) $ (51 ) Intangible assets (82 ) (85 ) Debt basis difference (5 ) (8 ) Deferred income taxes - liability $ (94 ) $ (144 ) Net deferred income tax assets (liabilities) $ 401 $ (53 ) (1) Immaterial Restatement- Subsequent to the issuance of Meritor’s consolidated financial statements as of and for the year ended September 30, 2015, it was determined that (i) Loss and credit carryforwards; (ii) Valuation allowances; and (iii) Taxes on undistributed income as of and for the year ended September 30, 2015 were overstated by approximately $121 million , overstated by approximately $127 million , and understated by approximately $6 million , respectively. As a result, September 30, 2015 Loss and credit carryforwards, Valuation allowances and Taxes on undistributed income have been corrected in the above reconciliation to appropriately reflect these balances. The errors had no impact on the consolidated balance sheet as of September 30, 2015 or the related consolidated statement of operations, comprehensive income, equity (deficit), or cash flows for the year ended September 30, 2015. |
Schedule of Net Current and Non-Current Deferred Income Tax Assets (Liabilities) | Net current and non-current deferred income tax assets (liabilities) are included in the consolidated balance sheet as follows (in millions): September 30, 2016 2015 Other current assets (see Note 10) $ — $ 20 Other current liabilities — (2 ) Net current deferred income taxes — asset — 18 Other assets (see Note 12) 413 28 Other liabilities (see Note 15) (12 ) (99 ) Net non-current deferred income taxes — asset (liability) $ 401 $ (71 ) |
Summary of Tax Credit Carryforwards and Deferred Tax Assets | The expiration periods for deferred tax assets related to net operating losses and tax credit carryforwards as of September 30, 2016 are included below (in millions). Also included are the associated valuation allowances on these deferred tax assets (in millions). Fiscal Year Expiration Periods 2017-2021 2022-2031 2032-2036 Indefinite Total Net Operating Losses and Tax Credit Carryforwards $ 25 $ 160 $ 10 $ 260 $ 455 Valuation Allowances on these Deferred Tax Assets $ 24 $ 56 $ 8 $ 253 $ 341 |
Reconciliation of Income Tax (Benefit) Provision at the U.S Statutory Rate | The company’s provision for income taxes was different from the provision for income taxes calculated at the U.S. statutory rate for the reasons set forth below (in millions): 2016 2015 (1) 2014 (1) Expense for income taxes at statutory tax rate of 35% $ (54 ) $ (23 ) $ (110 ) State and local income taxes (7 ) (1 ) — Foreign income taxed at rates other than 35% 5 7 13 Joint venture equity income 3 3 5 Tax effect of nonfunctional currency transaction (30 ) — (4 ) Correlated tax relief 51 — — U.S. tax impact on distributions from subsidiaries and joint ventures 14 (11 ) (26 ) Nondeductible expenses (12 ) (9 ) (10 ) Tax credits 61 — — Valuation allowances 418 49 113 Tax rate change (14 ) — — Other (11 ) (16 ) (12 ) Income tax benefit (expense) $ 424 $ (1 ) $ (31 ) (1) Immaterial Restatement- Subsequent to the issuance of Meritor’s consolidated financial statements as of and for the year ended September 30, 2015, it was determined that (i) U.S. tax impact on distributions from subsidiaries and joint ventures; (ii) Valuation allowances; and (iii) Other as of and for the year ended September 30, 2015 were overstated by approximately $7 million , understated by approximately $2 million , and understated by approximately $9 million , respectively. As a result, September 30, 2015 U.S. tax impact on distributions from subsidiaries and joint ventures, Valuation allowances and Other have been corrected in the above reconciliation to appropriately reflect these balances. Also, it was determined that (i) Tax effect of nonfunctional currency transaction; (ii) U.S. tax impact on distributions from subsidiaries and joint ventures; (iii) Valuation allowances; and (iv) Other as of and for the year ended September 30, 2014 were understated by approximately $4 million , understated by approximately $8 million , understated by approximately $24 million , and understated by approximately $12 million , respectively. As a result, September 30, 2014 Tax effect of nonfunctional currency transaction, U.S. tax impact on distributions from subsidiaries and joint ventures, Valuation allowances and Other have been corrected in the above reconciliation to appropriately reflect these balances. The errors had no impact on the consolidated balance sheets as of September 30, 2015 and September 30, 2014 or the related consolidated statement of operations, comprehensive income, equity (deficit), or cash flows for the years ended September 30, 2015 and September 30, 2014. |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows (in millions): 2016 2015 (1) 2014 (1) Balance at beginning of the period $ 207 $ 209 $ 190 Additions to tax positions recorded during the current year 39 15 28 Reductions to tax position recorded in prior years — (2 ) (2 ) Reductions to tax positions due to lapse of statutory limits (3 ) (11 ) (7 ) Translation, other — (4 ) — Balance at end of the period $ 243 $ 207 $ 209 (1) Immaterial Restatemen t- Subsequent to the issuance of Meritor’s consolidated financial statements as of and for the year ended September 30, 2015, it was determined that unrecognized tax benefits as of and for the years ended September 30, 2015 and September 30, 2014 were understated by approximately $131 million and $121 million , respectively. As a result, September 30, 2015 and September 30, 2014 total unrecognized tax benefits have been corrected in the above reconciliation to appropriately reflect these balances. The errors had no impact on the consolidated balance sheet as of September 30, 2015 or the related consolidated statement of operations, comprehensive income, equity (deficit), or cash flows for the years ended September 30, 2015 and September 30, 2014. |
CONTINGENCIES (Tables)
CONTINGENCIES (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Loss Contingencies [Line Items] | |
Schedule of Environmental Loss Contingencies by Site | Following are the components of the Superfund and non-Superfund environmental reserves (in millions): Superfund Sites Non-Superfund Sites Total Balance at September 30, 2015 $ 2 $ 14 $ 16 Payments and other — (6 ) (6 ) Accruals — 3 3 Balance at September 30, 2016 $ 2 $ 11 $ 13 |
Maremont Asbestos | |
Loss Contingencies [Line Items] | |
Asbestos Related Reserves and Recoveries | Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions): September 30, 2016 2015 Pending and future claims $ 70 $ 71 Billed but unpaid claims 2 3 Asbestos-related liabilities $ 72 $ 74 Asbestos-related insurance recoveries $ 32 $ 41 |
Rockwell Asbestos | |
Loss Contingencies [Line Items] | |
Asbestos Related Reserves and Recoveries | The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions): September 30, 2016 2015 Pending and future claims $ 60 $ 55 Billed but unpaid claims 1 3 Asbestos-related liabilities $ 61 $ 58 Asbestos-related insurance recoveries $ 27 $ 14 |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Summary of Segment Information | Segment information is summarized as follows (in millions): Commercial Truck & Industrial Aftermarket & Trailer Elims Total Fiscal year 2016 Sales: External Sales $ 2,369 $ 830 $ — $ 3,199 Intersegment Sales 76 30 (106 ) — Total Sales $ 2,445 $ 860 $ (106 ) $ 3,199 Fiscal year 2015 Sales: External Sales $ 2,649 $ 856 $ — $ 3,505 Intersegment Sales 90 28 (118 ) — Total Sales $ 2,739 $ 884 $ (118 ) $ 3,505 Fiscal year 2014 Sales: External Sales $ 2,876 $ 890 $ — $ 3,766 Intersegment Sales 104 30 (134 ) — Total Sales $ 2,980 $ 920 $ (134 ) $ 3,766 |
Segment Income Attributable to Parent | Segment EBITDA: 2016 2015 2014 Commercial Truck & Industrial $ 208 $ 216 $ 218 Aftermarket & Trailer 115 123 106 Segment EBITDA 323 339 324 Unallocated legacy and corporate income (expense), net (1) 4 (5 ) (10 ) Interest expense, net (84 ) (105 ) (130 ) Benefit (provision) for income taxes 424 (1 ) (31 ) Depreciation and amortization (67 ) (65 ) (67 ) Loss on sale of receivables (5 ) (5 ) (8 ) Restructuring costs (16 ) (16 ) (10 ) Antitrust settlement with Eaton, net of tax (2) — — 208 Reduction of specific warranty contingency, net of supplier recovery — — 8 Pension settlement losses — (59 ) — Goodwill and asset impairment charges — (17 ) — Noncontrolling interests (2 ) (1 ) (5 ) Income from continuing operations attributable to Meritor, Inc. $ 577 $ 65 $ 279 (1) Unallocated legacy and corporate income (expense), net represents items that are not directly related to the company's business segments. These items primarily include asbestos-related charges and settlements, pension and retiree medical costs associated with sold businesses, and other legacy costs for environmental and product liability. (2) Adjustment associated with the company's share of the antitrust settlement with Eaton less legal expenses incurred in fiscal year 2014. |
Schedule of Segment Assets | Depreciation and Amortization: 2016 2015 2014 Commercial Truck & Industrial $ 59 $ 59 $ 61 Aftermarket & Trailer 8 6 6 Total depreciation and amortization $ 67 $ 65 $ 67 Capital Expenditures: 2016 2015 2014 Commercial Truck & Industrial $ 83 $ 71 $ 71 Aftermarket & Trailer 10 8 6 Total capital expenditures $ 93 $ 79 $ 77 Segment Assets: 2016 2015 Commercial Truck & Industrial $ 1,433 $ 1,569 Aftermarket & Trailer 436 448 Total segment assets 1,869 2,017 Corporate (1) 845 434 Less: Accounts receivable sold under off-balance sheet factoring programs (220 ) (256 ) Total assets $ 2,494 $ 2,195 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. |
Schedule of Revenues and Assets by Geographical Areas | Sales by geographic area are based on the location of the selling unit. Information on the company’s geographic areas is summarized as follows (in millions): Sales by Geographic Area: 2016 2015 2014 U.S. $ 1,617 $ 1,733 $ 1,466 Canada 67 70 68 Mexico 390 491 652 Total North America 2,074 2,294 2,186 Sweden 250 325 369 Italy 201 204 234 United Kingdom 136 76 82 Other Europe 86 90 111 Total Europe 673 695 796 Brazil 130 198 408 China 84 90 146 India 152 140 114 Other Asia-Pacific 86 88 116 Total sales $ 3,199 $ 3,505 $ 3,766 Assets by Geographic Area: 2016 2015 U.S. $ 1,359 $ 995 Canada 33 30 Mexico 202 236 Total North America 1,594 1,261 Sweden 104 108 United Kingdom 212 211 Italy 65 77 Other Europe 164 176 Total Europe 545 572 Brazil 146 136 China 97 118 Other Asia-Pacific 112 108 Total $ 2,494 $ 2,195 |
QUARTERLY FINANCIAL INFORMATI57
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Unaudited Quarterly Results | The following is a condensed summary of the company’s unaudited quarterly results of continuing operations for fiscal years 2016 and 2015 . Per share amounts are based on the weighted average shares outstanding for that quarter. Earnings per share for the year may not equal the sum of the four fiscal quarters’ earnings per share due to changes in basic and diluted shares outstanding. 2016 Fiscal Quarters (Unaudited) First Second Third Fourth 2016 (In millions, except share related data) Sales $ 809 $ 821 $ 841 $ 728 $ 3,199 Cost of sales (705 ) (700 ) (714 ) (644 ) (2,763 ) Gross margin 104 121 127 84 436 Benefit (provision) for income taxes (7 ) (7 ) (8 ) 446 424 Net income 27 32 42 474 575 Net income from continuing operations attributable to Meritor, Inc. 28 33 42 474 577 Net income attributable to Meritor, Inc. 26 32 41 474 573 Basic earnings per share from continuing operations $ 0.30 $ 0.36 $ 0.47 $ 5.47 $ 6.40 Diluted earnings per share from continuing operations $ 0.30 $ 0.36 $ 0.46 $ 5.34 $ 6.27 2015 Fiscal Quarters (Unaudited) First Second Third Fourth 2015 (In millions, except share related data) Sales $ 879 $ 864 $ 909 $ 853 $ 3,505 Cost of sales (764 ) (749 ) (785 ) (745 ) (3,043 ) Gross margin 115 115 124 108 462 Benefit (provision) for income taxes (7 ) (6 ) (6 ) 18 (1 ) Net income (loss) 30 43 14 (22 ) 65 Net income (loss) from continuing operations attributable to Meritor, Inc. 32 39 15 (21 ) 65 Net income (loss) attributable to Meritor, Inc. 29 43 13 (21 ) 64 Basic earnings (loss) per share from continuing operations $ 0.33 $ 0.40 $ 0.15 $ (0.22 ) $ 0.67 Diluted earnings (loss) per share from continuing operations $ 0.32 $ 0.38 $ 0.15 $ (0.22 ) $ 0.65 |
OPERATING CASH FLOWS AND OTHE58
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Operating Cash Flow Disclosure [Abstract] | |
Schedule of Operating Cash Flows | Year Ended September 30, 2016 2015 2014 (in millions) OPERATING ACTIVITIES Net income $ 575 $ 65 $ 254 Less: Loss from discontinued operations, net of tax (4 ) (1 ) (30 ) Income from continuing operations 579 66 284 Adjustments to income from continuing operations to arrive at cash provided by (used for) operating activities: Depreciation and amortization 67 65 67 Deferred income tax benefit (415 ) (24 ) (2 ) Restructuring costs 16 16 10 Loss on debt extinguishment — 25 31 Goodwill and asset impairment — 17 — Equity in earnings of ZF Meritor — — (190 ) Equity in earnings of other affiliates (36 ) (39 ) (38 ) Stock compensation expense 9 10 8 Provision for doubtful accounts 2 2 — Pension and retiree medical expense 20 82 25 Gain on sale of property (2 ) (3 ) — Dividends received from ZF Meritor — — 190 Dividends received from other equity method investments 37 32 36 Pension and retiree medical contributions (42 ) (141 ) (177 ) Restructuring payments (11 ) (16 ) (10 ) Changes in off-balance sheet receivable securitization and factoring programs (31 ) 39 (46 ) Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations: Receivables 89 54 34 Inventories 28 4 (9 ) Accounts payable (89 ) (70 ) (5 ) Other current assets and liabilities (18 ) (52 ) 19 Other assets and liabilities 6 40 — Operating cash flows provided by continuing operations 209 107 227 Operating cash flows used for discontinued operations (5 ) (10 ) (12 ) CASH PROVIDED BY OPERATING ACTIVITIES $ 204 $ 97 $ 215 |
Schedule of Supplemental Disclosures | September 30, 2016 2015 2014 (In millions) Balance sheet data: Allowance for doubtful accounts $ 6 $ 9 $ 6 Statement of operations data: Maintenance and repairs expense 45 52 59 Research, development and engineering expense 68 69 71 Depreciation expense 61 60 62 Rental expense 15 11 16 Interest income 3 9 2 Interest expense (87 ) (114 ) (132 ) Statement of cash flows data: Interest payments 71 64 84 Income tax payments, net of refunds 24 14 26 Non-cash investing activities - capital asset additions from capital leases — 9 5 |
SUPPLEMENTAL PARENT AND GUARA59
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Sep. 30, 2016 | |
Supplemental Guarantor Condensed Consolidating Financial Statements [Abstract] | |
Schedule of Condensed Consolidating Statement of Operations | MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions) Fiscal Year Ended September 30, 2015 Parent Guarantors Non-Guarantors Elims Consolidated Sales External $ — $ 1,734 $ 1,771 $ — $ 3,505 Subsidiaries — 129 71 (200 ) — Total sales — 1,863 1,842 (200 ) 3,505 Cost of sales (52 ) (1,579 ) (1,612 ) 200 (3,043 ) GROSS MARGIN (52 ) 284 230 — 462 Selling, general and administrative (53 ) (118 ) (72 ) — (243 ) Pension settlement losses — — (59 ) — (59 ) Restructuring costs (2 ) (5 ) (9 ) — (16 ) Goodwill impairment — (15 ) — — (15 ) Other operating income (expense), net (2 ) (2 ) 3 — (1 ) OPERATING INCOME (LOSS) (109 ) 144 93 — 128 Other income (expense), net 36 18 (49 ) — 5 Equity in earnings of affiliates — 36 3 — 39 Interest income (expense), net (138 ) 26 7 — (105 ) INCOME (LOSS) BEFORE INCOME TAXES (211 ) 224 54 — 67 Provision for income taxes (2 ) 2 (1 ) — (1 ) Equity income from continuing operations of subsidiaries 278 38 — (316 ) — INCOME FROM CONTINUING OPERATIONS 65 264 53 (316 ) 66 LOSS FROM DISCONTINUED OPERATIONS, net of tax (1 ) (2 ) (3 ) 5 (1 ) NET INCOME 64 262 50 (311 ) 65 Less: Net income attributable to noncontrolling interests — — (1 ) — (1 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 64 $ 262 $ 49 $ (311 ) $ 64 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions) Fiscal Year Ended September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 1,616 $ 1,583 $ — $ 3,199 Subsidiaries — 112 61 (173 ) — Total sales — 1,728 1,644 (173 ) 3,199 Cost of sales (57 ) (1,439 ) (1,440 ) 173 (2,763 ) GROSS MARGIN (57 ) 289 204 — 436 Selling, general and administrative (64 ) (75 ) (74 ) — (213 ) Restructuring costs (7 ) (4 ) (5 ) — (16 ) Other operating expense, net (3 ) — — — (3 ) OPERATING INCOME (LOSS) (131 ) 210 125 — 204 Other income (expense), net 34 (35 ) — — (1 ) Equity in earnings of affiliates — 32 4 — 36 Interest income (expense), net (117 ) 27 6 — (84 ) INCOME (LOSS) BEFORE INCOME TAXES (214 ) 234 135 — 155 Benefit (provision) for income taxes 526 (88 ) (14 ) — 424 Equity income from continuing operations of subsidiaries 265 106 — (371 ) — INCOME FROM CONTINUING OPERATIONS 577 252 121 (371 ) 579 LOSS FROM DISCONTINUED OPERATIONS, net of tax (4 ) (4 ) (2 ) 6 (4 ) NET INCOME 573 248 119 (365 ) 575 Less: Net income attributable to noncontrolling interests — — (2 ) — (2 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 573 $ 248 $ 117 $ (365 ) $ 573 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions) Fiscal Year Ended September 30, 2014 Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 1,467 $ 2,299 $ — $ 3,766 Subsidiaries — 142 62 (204 ) — Total sales — 1,609 2,361 (204 ) 3,766 Cost of sales (56 ) (1,343 ) (2,084 ) 204 (3,279 ) GROSS MARGIN (56 ) 266 277 — 487 Selling, general and administrative (65 ) (102 ) (91 ) — (258 ) Restructuring costs — (1 ) (9 ) — (10 ) Other operating expense, net (1 ) (1 ) — — (2 ) OPERATING INCOME (LOSS) (122 ) 162 177 — 217 Other income (expense), net 35 23 (58 ) — — Equity in earnings of ZF Meritor — 190 — — 190 Equity in earnings of affiliates — 30 8 — 38 Interest income (expense), net (159 ) 35 (6 ) — (130 ) INCOME (LOSS) BEFORE INCOME TAXES (246 ) 440 121 — 315 Provision for income taxes — (1 ) (30 ) — (31 ) Equity income from continuing operations of subsidiaries 525 71 — (596 ) — INCOME FROM CONTINUING OPERATIONS 279 510 91 (596 ) 284 LOSS FROM DISCONTINUED OPERATIONS, net of tax (30 ) (31 ) (12 ) 43 (30 ) NET INCOME 249 479 79 (553 ) 254 Less: Net income attributable to noncontrolling interests — — (5 ) — (5 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 249 $ 479 $ 74 $ (553 ) $ 249 |
Schedule of Condensed Consolidating Statement of Comprehensive Income (Loss) | MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions) Fiscal Year Ended September 30, 2015 Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 64 $ 262 $ 50 $ (311 ) $ 65 Other comprehensive loss (19 ) (61 ) (16 ) 77 (19 ) Total comprehensive income 45 201 34 (234 ) 46 Less: Comprehensive income attributable to noncontrolling interests 2 — (1 ) — 1 Comprehensive income attributable to Meritor, Inc. $ 47 $ 201 $ 33 $ (234 ) $ 47 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions) Fiscal Year Ended September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 573 $ 248 $ 119 $ (365 ) $ 575 Other comprehensive income (loss) (43 ) 55 (44 ) (11 ) (43 ) Total comprehensive income 530 303 75 (376 ) 532 Less: Comprehensive income attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive income attributable to Meritor, Inc. $ 530 $ 303 $ 73 $ (376 ) $ 530 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions) Fiscal Year Ended September 30, 2014 Parent Guarantors Non- Guarantors Elims Consolidated Net income (loss) $ 249 $ 479 $ 79 $ (553 ) $ 254 Other comprehensive income (loss) (15 ) (54 ) 25 29 (15 ) Total comprehensive income 234 425 104 (524 ) 239 Less: Comprehensive income attributable to noncontrolling interests — — (5 ) — (5 ) Comprehensive income attributable to Meritor, Inc. $ 234 $ 425 $ 99 $ (524 ) $ 234 |
Schedule of Condensed Consolidating Balance Sheet | MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET (In millions) September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS Cash and cash equivalents $ 90 $ 4 $ 66 $ — $ 160 Receivables, trade and other, net 1 39 356 — 396 Inventories — 143 173 — 316 Other current assets 5 12 16 — 33 TOTAL CURRENT ASSETS 96 198 611 — 905 NET PROPERTY 22 198 219 — 439 GOODWILL — 219 171 — 390 OTHER ASSETS 447 132 181 — 760 INVESTMENTS IN SUBSIDIARIES 2,575 679 — (3,254 ) — TOTAL ASSETS $ 3,140 $ 1,426 $ 1,182 $ (3,254 ) $ 2,494 CURRENT LIABILITIES Short-term debt $ 1 $ 4 $ 9 $ — $ 14 Accounts and notes payable 42 172 261 — 475 Other current liabilities 90 74 104 — 268 TOTAL CURRENT LIABILITIES 133 250 374 — 757 LONG-TERM DEBT 971 3 8 — 982 RETIREMENT BENEFITS 680 — 23 — 703 INTERCOMPANY PAYABLE (RECEIVABLE) 1,534 (1,768 ) 234 — — OTHER LIABILITIES 34 162 42 — 238 EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. (212 ) 2,779 476 (3,254 ) (211 ) NONCONTROLLING INTERESTS — — 25 — 25 TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 3,140 $ 1,426 $ 1,182 $ (3,254 ) $ 2,494 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET (In millions) September 30, 2015 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS Cash and cash equivalents $ 73 $ 6 $ 114 $ — $ 193 Receivables, trade and other, net 1 40 420 — 461 Inventories — 159 179 — 338 Other current assets 4 20 26 — 50 TOTAL CURRENT ASSETS 78 225 739 — 1,042 NET PROPERTY 15 183 221 — 419 GOODWILL — 219 183 — 402 OTHER ASSETS 61 129 142 — 332 INVESTMENTS IN SUBSIDIARIES 2,354 313 — (2,667 ) — TOTAL ASSETS $ 2,508 $ 1,069 $ 1,285 $ (2,667 ) $ 2,195 CURRENT LIABILITIES Short-term debt $ 1 $ 4 $ 10 $ — $ 15 Accounts and notes payable 55 213 306 — 574 Other current liabilities 93 83 103 — 279 TOTAL CURRENT LIABILITIES 149 300 419 — 868 LONG-TERM DEBT 1,017 6 13 — 1,036 RETIREMENT BENEFITS 603 — 29 — 632 INTERCOMPANY PAYABLE (RECEIVABLE) 1,365 (1,886 ) 521 — — OTHER LIABILITIES 45 217 43 — 305 EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. (671 ) 2,432 235 (2,667 ) (671 ) NONCONTROLLING INTERESTS — — 25 — 25 TOTAL LIABILITIES AND EQUITY(DEFICIT) $ 2,508 $ 1,069 $ 1,285 $ (2,667 ) $ 2,195 |
Schedule of Condensed Consolidating Statement of Cash Flows | MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions) Fiscal Year Ended September 30, 2016 Parent Guarantors Non- Guarantors Elims Consolidated CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 196 $ 40 $ (32 ) $ — $ 204 INVESTING ACTIVITIES Capital expenditures (19 ) (43 ) (31 ) — (93 ) Proceeds from sale of property — 4 — — 4 Other investing activities — — (1 ) — (1 ) Net investing cash flows provided by discontinued operations — 1 3 — 4 CASH USED FOR INVESTING ACTIVITIES (19 ) (38 ) (29 ) — (86 ) FINANCING ACTIVITIES Repayment of notes and term loan (55 ) — — — (55 ) Other financing cash flows (1 ) (4 ) (11 ) — (16 ) Repurchase of common stock (81 ) — — — (81 ) Intercompany advances (23 ) — 23 — — CASH USED FOR FINANCING ACTIVITIES (160 ) (4 ) 12 — (152 ) EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — 1 — 1 CHANGE IN CASH AND CASH EQUIVALENTS 17 (2 ) (48 ) — (33 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 73 6 114 — 193 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 90 $ 4 $ 66 $ — $ 160 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions) Fiscal Year Ended September 30, 2015 Parent Guarantors Non- Guarantors Elims Consolidated CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 57 $ 62 $ (22 ) $ — $ 97 INVESTING ACTIVITIES Capital expenditures (4 ) (41 ) (34 ) — (79 ) Proceeds from sale of property — — 4 — 4 Cash paid for acquisition of Morganton — (16 ) — — (16 ) Net investing cash flows provided by discontinued operations — 1 3 — 4 CASH USED FOR INVESTING ACTIVITIES (4 ) (56 ) (27 ) — (87 ) FINANCING ACTIVITIES Proceeds from debt issuance 225 — — — 225 Repayment of notes and term loan (199 ) — — — (199 ) Other financing cash flows — (5 ) (4 ) — (9 ) Repurchase of common stock (55 ) — — — (55 ) Debt issuance costs (4 ) — — — (4 ) CASH USED FOR FINANCING ACTIVITIES (33 ) (5 ) (4 ) — (42 ) EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — (22 ) — (22 ) CHANGE IN CASH AND CASH EQUIVALENTS 2 1 (57 ) — (54 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 71 5 171 — 247 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 73 $ 6 $ 114 $ — $ 193 MERITOR, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions) Fiscal Year Ended September 30, 2014 Parent Guarantors Non- Guarantors Elims Consolidated CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ 245 $ 34 $ (64 ) $ — $ 215 INVESTING ACTIVITIES Capital expenditures (4 ) (37 ) (36 ) — (77 ) Net investing cash flows provided by discontinued operations — 4 3 — 7 CASH USED FOR INVESTING ACTIVITIES (4 ) (33 ) (33 ) — (70 ) FINANCING ACTIVITIES Proceeds from debt issuance 225 — — — 225 Repayment of notes and term loan (439 ) — — — (439 ) Debt issuance costs (10 ) — — — (10 ) Other financing cash flows — (2 ) 14 — 12 Intercompany advances (90 ) — 90 — — CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (314 ) (2 ) 104 — (212 ) EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — (4 ) — (4 ) CHANGE IN CASH AND CASH EQUIVALENTS (73 ) (1 ) 3 — (71 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 144 6 168 — 318 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 71 $ 5 $ 171 $ — $ 247 |
SIGNIFICANT ACCOUNTING POLICI60
SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Average Common Shares (Details) - shares shares in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Basic average common shares outstanding (in shares) | 90.1 | 96.9 | 97.5 |
Impact of convertible notes (in shares) | 0 | 1.1 | 0 |
Diluted average common shares outstanding (in shares) | 92 | 100.1 | 99.2 |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Impact of instruments attributable to dilutive effect of share-based payment arrangements (in shares) | 0 | 0.1 | 0.1 |
Restricted Shares, Restricted Share Units and Performance Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Impact of instruments attributable to dilutive effect of share-based payment arrangements (in shares) | 1.9 | 2 | 1.6 |
SIGNIFICANT ACCOUNTING POLICI61
SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) $ / shares in Units, $ in Millions | Dec. 01, 2015$ / sharesshares | Dec. 01, 2014$ / sharesshares | Dec. 02, 2013$ / shares | Sep. 30, 2016USD ($)customershares | Sep. 30, 2015USD ($)customershares | Sep. 30, 2014USD ($)shares | Nov. 30, 2015shares | Nov. 30, 2014shares | Dec. 01, 2013shares | Nov. 30, 2013shares |
Significant Accounting Policies [Line Items] | ||||||||||
Concentration risk from significant customers, percentage | 10.00% | |||||||||
Impact of convertible notes (in shares) | 0 | 1,100,000 | 0 | |||||||
Compensation costs recognized | $ | $ 9 | $ 10 | $ 8 | |||||||
Deferred tax asset reclassified | $ | $ 0 | $ (18) | ||||||||
7.875% convertible notes due 2026 | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Stated interest rate | 7.875% | 7.875% | ||||||||
Convertible Notes | 7.875% convertible notes due 2026 | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Stated interest rate | 7.875% | |||||||||
Stock Options | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 300,000 | |||||||||
Restricted Stock Units (RSUs) | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Shares granted in period (in shares) | 700,000 | 500,000 | 200,000 | |||||||
Vesting term | 3 years | |||||||||
Restricted Stock Units (RSUs) | Executive Officer | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Exercise price (usd per share) | $ / shares | $ 10.51 | $ 13.74 | ||||||||
Shares granted in period (in shares) | 500,000 | 400,000 | ||||||||
Vesting term | 3 years | 3 years | ||||||||
Performance Shares | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Compensation costs recognized | $ | $ 6 | $ 8 | $ 4 | |||||||
Performance Shares | Executive Officer | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Number of shares issuable per performance share unit (in shares) | 1 | 1 | 1 | |||||||
Exercise price (usd per share) | $ / shares | $ 10.51 | $ 13.74 | $ 7.97 | |||||||
Performance period | 3 years | 3 years | 3 years | |||||||
Shares authorized for grant (in shares) | 700,000 | 600,000 | ||||||||
Impact of convertible notes (in shares) | 1,300,000 | 900,000 | 100,000 | |||||||
Performance Shares | Executive Officer | Minimum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Performance-based vesting percentage | 0.00% | 0.00% | 0.00% | |||||||
Performance Shares | Executive Officer | Maximum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Performance-based vesting percentage | 200.00% | 200.00% | 200.00% | |||||||
Performance Shares | Executive Officer | Performance Objective One | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | 75.00% | ||||||||
Performance Shares | Executive Officer | Performance Objective Two | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | 25.00% | 25.00% | |||||||
Performance Shares | Executive Officer | Performance Objective Three | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Award vesting rights percentage | 25.00% | |||||||||
Restricted Shares, Restricted Share Units and Performance Share Units | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Impact of instruments attributable to dilutive effect of share-based payment arrangements (in shares) | 1,900,000 | 2,000,000 | 1,600,000 | |||||||
M2016 Strategy | Performance Shares | Executive Officer | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Shares authorized for grant (in shares) | 1,800,000 | |||||||||
M2016 Strategy | Performance Shares | Executive Officer | Performance Objective One | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | |||||||||
Ten Customers | Customer Concentration Risk | Sales | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Number of significant customer | customer | 10 | 10 | ||||||||
Concentration risk from significant customers, percentage | 73.00% | 75.00% | 76.00% | |||||||
Three Customers | Customer Concentration Risk | Sales | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Number of significant customer | customer | 3 | 3 | ||||||||
Concentration risk from significant customers, percentage | 50.00% | 55.00% | 57.00% | |||||||
Three Customers | Customer Concentration Risk | Trade Accounts Receivable | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Number of significant customer | customer | 3 | 3 | ||||||||
Concentration risk from significant customers, percentage | 22.00% | 21.00% | ||||||||
New Accounting Pronouncement, Early Adoption, Effect | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Deferred tax asset reclassified | $ | $ 17 |
DISCONTINUED OPERATIONS - Summa
DISCONTINUED OPERATIONS - Summary of Discontinued Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Sales | $ 0 | $ 1 | $ 29 |
Operating losses, net | 0 | 0 | (8) |
Net loss on sales of businesses | 0 | 0 | (23) |
Environmental remediation charges (see Note 23) | 0 | 0 | (4) |
Litigation settlement | (3) | 0 | 0 |
Other, net | (4) | (2) | (2) |
Loss before income taxes | (7) | (2) | (37) |
Benefit for income taxes | 3 | 1 | 7 |
Loss from discontinued operations attributable to Meritor, Inc. | $ (4) | $ (1) | $ (30) |
DISCONTINUED OPERATIONS - Addit
DISCONTINUED OPERATIONS - Additional Information (Details) $ in Millions | Jan. 03, 2011USD ($)installment | Oct. 31, 2009 | Sep. 30, 2014USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) |
Discontinued operations assets | $ 1 | $ 4 | ||||
Discontinued operations liabilities | 6 | 10 | ||||
Net loss on sales of businesses | 0 | 0 | $ 23 | |||
Sales | 0 | 1 | 29 | |||
Notes receivable | 396 | 461 | ||||
Mascot | ||||||
Net loss on sales of businesses | $ 23 | |||||
Sales | 1 | $ 29 | ||||
MSSC | ||||||
Ownership before transaction | 57.00% | |||||
Exposure under Indemnity | 1 | 2 | ||||
EU Trailer | ||||||
Expense related to specific warranty matter | $ 5 | |||||
8%, Five Year Promissory Note | Body Systems | Promissory Notes | ||||||
Debt term | 5 years | |||||
Stated interest rate | 8.00% | |||||
Debt instrument, face amount | $ 15 | |||||
Number of installments | installment | 5 | |||||
Notes receivable | $ 0 | $ 3 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 402 | $ 431 | ||
Impairment | $ (15) | 0 | (15) | $ 0 |
Foreign currency translation | (12) | (14) | ||
Goodwill, ending balance | 402 | 390 | 402 | 431 |
Commercial Truck & Industrial | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 239 | 261 | ||
Impairment | 0 | (15) | ||
Foreign currency translation | (9) | (7) | ||
Goodwill, ending balance | 239 | 230 | 239 | 261 |
Aftermarket & Trailer | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 163 | 170 | ||
Impairment | 0 | 0 | ||
Foreign currency translation | (3) | (7) | ||
Goodwill, ending balance | $ 163 | $ 160 | $ 163 | $ 170 |
RESTRUCTURING COSTS - Changes i
RESTRUCTURING COSTS - Changes in Restructuring Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Reserve [Roll Forward] | |||||||||||
Restructuring reserve, period start | $ 10 | $ 11 | $ 10 | $ 11 | $ 12 | ||||||
Charges to continuing operations | $ 7 | $ 6 | $ 2 | 1 | $ 1 | $ 9 | $ 3 | 3 | 16 | 16 | 10 |
Asset write-offs | (1) | ||||||||||
Cash payments – continuing operations | (11) | (16) | (10) | ||||||||
Other | 1 | (1) | |||||||||
Restructuring reserve, period end | 16 | 10 | 16 | 10 | 11 | ||||||
Less: non-current restructuring reserves | (2) | (3) | (2) | (3) | |||||||
Restructuring reserves – current | 14 | 7 | 14 | 7 | |||||||
Employee Termination Benefits | |||||||||||
Restructuring Reserve [Roll Forward] | |||||||||||
Restructuring reserve, period start | 10 | 11 | 10 | 11 | 12 | ||||||
Charges to continuing operations | 15 | 15 | 10 | ||||||||
Asset write-offs | 0 | ||||||||||
Cash payments – continuing operations | (11) | (16) | (10) | ||||||||
Other | 1 | (1) | |||||||||
Restructuring reserve, period end | 15 | 10 | 15 | 10 | 11 | ||||||
Less: non-current restructuring reserves | (2) | (2) | |||||||||
Restructuring reserves – current | 13 | 13 | |||||||||
Asset Impairment | |||||||||||
Restructuring Reserve [Roll Forward] | |||||||||||
Restructuring reserve, period start | 0 | 0 | 0 | 0 | 0 | ||||||
Charges to continuing operations | 0 | 1 | 0 | ||||||||
Asset write-offs | (1) | ||||||||||
Cash payments – continuing operations | 0 | 0 | 0 | ||||||||
Other | 0 | 0 | |||||||||
Restructuring reserve, period end | 0 | 0 | 0 | 0 | 0 | ||||||
Less: non-current restructuring reserves | 0 | 0 | |||||||||
Restructuring reserves – current | 0 | 0 | |||||||||
Plant Shutdown & Other | |||||||||||
Restructuring Reserve [Roll Forward] | |||||||||||
Restructuring reserve, period start | $ 0 | $ 0 | 0 | 0 | 0 | ||||||
Charges to continuing operations | 1 | 0 | 0 | ||||||||
Asset write-offs | 0 | ||||||||||
Cash payments – continuing operations | 0 | 0 | 0 | ||||||||
Other | 0 | 0 | |||||||||
Restructuring reserve, period end | 1 | $ 0 | 1 | $ 0 | $ 0 | ||||||
Less: non-current restructuring reserves | 0 | 0 | |||||||||
Restructuring reserves – current | $ 1 | $ 1 |
RESTRUCTURING COSTS - Restructu
RESTRUCTURING COSTS - Restructuring Expense Recognized By Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | 22 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | $ 7 | $ 6 | $ 2 | $ 1 | $ 1 | $ 9 | $ 3 | $ 3 | $ 16 | $ 16 | $ 10 | |
Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 2 | 2 | 2 | 1 | ||||||||
Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 6 | 14 | 8 | |||||||||
Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 8 | 0 | 1 | |||||||||
Market related actions | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 8 | |||||||||||
Market related actions | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 2 | |||||||||||
Market related actions | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 5 | 5 | ||||||||||
Market related actions | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | $ 1 | 1 | ||||||||||
Aftermarket actions | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 5 | |||||||||||
Aftermarket actions | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
Aftermarket actions | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
Aftermarket actions | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | $ 5 | 5 | ||||||||||
South America labor reduction II | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 6 | |||||||||||
South America labor reduction II | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
South America labor reduction II | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 6 | |||||||||||
South America labor reduction II | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
M2016 footprint actions | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 5 | |||||||||||
M2016 footprint actions | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
M2016 footprint actions | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 5 | $ 7 | ||||||||||
M2016 footprint actions | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
Closure of engineering facility | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 2 | |||||||||||
Closure of engineering facility | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 2 | |||||||||||
Closure of engineering facility | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
Closure of engineering facility | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
European labor reductions | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 2 | |||||||||||
European labor reductions | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
European labor reductions | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 2 | |||||||||||
European labor reductions | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
South America labor reduction I | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 7 | |||||||||||
South America labor reduction I | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
South America labor reduction I | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 13 | 7 | ||||||||||
South America labor reduction I | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | |||||||||||
Other | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 3 | 1 | 3 | |||||||||
Other | Corporate | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 0 | 0 | 1 | |||||||||
Other | Commercial Truck & Industrial | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | 1 | 1 | 1 | |||||||||
Other | Aftermarket & Trailer | ||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||
Restructuring costs | $ 2 | $ 0 | $ 1 |
RESTRUCTURING COSTS - Additiona
RESTRUCTURING COSTS - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | 22 Months Ended | |||||||||
Sep. 30, 2016USD ($)position | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($)position | Dec. 31, 2014USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($)position | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 7 | $ 6 | $ 2 | $ 1 | $ 1 | $ 9 | $ 3 | $ 3 | $ 16 | $ 16 | $ 10 | ||
Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 2 | 2 | 2 | 1 | |||||||||
Employee separation | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 15 | 15 | 10 | ||||||||||
Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 6 | 14 | 8 | ||||||||||
Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 8 | 0 | 1 | ||||||||||
Market related actions | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs expected to incur | 10 | 10 | |||||||||||
Restructuring costs | 8 | ||||||||||||
Market related actions | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 2 | ||||||||||||
Market related actions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 5 | 5 | |||||||||||
Market related actions | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 1 | 1 | |||||||||||
Market related actions | Hourly and Salaried Positions | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions expected to be eliminated | position | 100 | ||||||||||||
Aftermarket actions | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 5 | ||||||||||||
Aftermarket actions | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
Aftermarket actions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
Aftermarket actions | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs expected to incur | $ 8 | 8 | |||||||||||
Restructuring costs | $ 5 | 5 | |||||||||||
Other | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 3 | 1 | 3 | ||||||||||
Other | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | 0 | 1 | ||||||||||
Other | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 1 | 1 | 1 | ||||||||||
Other | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 2 | 0 | 1 | ||||||||||
Other | Commercial Truck and Industrial, Aftermarket and Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 3 | ||||||||||||
M2016 footprint actions | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 5 | ||||||||||||
M2016 footprint actions | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
M2016 footprint actions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 5 | $ 7 | |||||||||||
M2016 footprint actions | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 0 | ||||||||||||
M2016 footprint actions | Hourly and Salaried Positions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 140 | ||||||||||||
South America labor reduction I | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 7 | ||||||||||||
South America labor reduction I | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
South America labor reduction I | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 13 | 7 | |||||||||||
South America labor reduction I | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 0 | ||||||||||||
South America labor reduction I | Hourly Positions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 420 | ||||||||||||
South America labor reduction I | Salaried Positions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 40 | ||||||||||||
Closure of engineering facility | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 2 | ||||||||||||
Closure of engineering facility | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 2 | ||||||||||||
Closure of engineering facility | Employee separation | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Cost incurred to date | 2 | 2 | 2 | ||||||||||
Closure of engineering facility | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
Closure of engineering facility | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
Closure of engineering facility | Hourly and Salaried Positions | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 30 | ||||||||||||
European labor reductions | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 2 | ||||||||||||
European labor reductions | Corporate | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | 0 | ||||||||||||
European labor reductions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Cost incurred to date | $ 2 | 2 | $ 2 | ||||||||||
Restructuring costs | 2 | ||||||||||||
European labor reductions | Aftermarket & Trailer | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Restructuring costs | $ 0 | ||||||||||||
European labor reductions | Hourly Positions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 20 | ||||||||||||
European labor reductions | Salaried Positions | Commercial Truck & Industrial | |||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||
Number of positions eliminated | position | 20 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | Jul. 09, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Business Acquisition [Line Items] | ||||
Ownership percentage | 100.00% | |||
Purchase price | $ 0 | $ 16 | $ 0 | |
Sypris Solutions, Inc. Manufacturing Facility | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 16 | |||
Fair value of net assets acquired | 16 | |||
Sistemas Automotrices De Mexico S.A. De C.V. | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 50.00% | 50.00% | 50.00% | |
Sistemas Automotrices De Mexico S.A. De C.V. | Corporate Joint Venture | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 50.00% | |||
Property, Plant and Equipment | Equipment | Sypris Solutions, Inc. Manufacturing Facility | ||||
Business Acquisition [Line Items] | ||||
Equipment held for sale | $ 2 |
ACCOUNTS RECEIVABLE FACTORING69
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION (Details) | 12 Months Ended | ||||||||||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Oct. 14, 2016EUR (€) | Oct. 14, 2016USD ($) | Sep. 30, 2016EUR (€) | Sep. 30, 2016USD ($) | Feb. 19, 2016EUR (€) | Feb. 19, 2016USD ($) | Sep. 30, 2015EUR (€) | Sep. 30, 2015USD ($) | |
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Costs associated with off-balance sheet factoring arrangements | $ 5,000,000 | $ 6,000,000 | $ 8,000,000 | ||||||||
Sweden Factoring Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Utilization of accounts receivable factoring facility under arrangement | € 121,000,000 | $ 135,000,000 | € 108,000,000 | $ 121,000,000 | |||||||
U.S Factoring Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Maximum limit for sale of eligible trade receivables | € 80,000,000 | $ 90,000,000 | 65,000,000 | 73,000,000 | |||||||
Utilization of accounts receivable factoring facility under arrangement | 39,000,000 | 44,000,000 | 74,000,000 | 83,000,000 | |||||||
United Kingdom Factoring Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Maximum limit for sale of eligible trade receivables | 25,000,000 | 28,000,000 | |||||||||
Utilization of accounts receivable factoring facility under arrangement | 6,000,000 | 6,000,000 | 8,000,000 | 8,000,000 | |||||||
Italy Factoring Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Maximum limit for sale of eligible trade receivables | 30,000,000 | 34,000,000 | |||||||||
Utilization of accounts receivable factoring facility under arrangement | € 22,000,000 | 24,000,000 | € 22,000,000 | 24,000,000 | |||||||
Other Factoring Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Utilization of accounts receivable factoring facility under arrangement | 10,000,000 | 18,000,000 | |||||||||
U.S. Securitization Financing Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Maximum limit for securitization financing arrangement | 100,000,000 | ||||||||||
Required ratio of total priority debt to EBITDA through period end | 2.25 | ||||||||||
Outstanding balance under accounts receivable securitization program | $ 0 | $ 0 | |||||||||
Subsequent Event | Sweden Factoring Facility | |||||||||||
Accounts Receivable Factoring and Securitization [Line Items] | |||||||||||
Maximum limit for sale of eligible trade receivables | € 155,000,000 | $ 174,000,000 |
GAIN ON SALE OF PROPERTY AND 70
GAIN ON SALE OF PROPERTY AND OTHER OPERATING EXPENSE, NET (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Other Income and Expenses [Abstract] | |||
Gain on sale of property | $ 2 | $ 3 | $ 0 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 125 | $ 133 |
Work in process | 26 | 28 |
Raw materials, parts and supplies | 165 | 177 |
Total | $ 316 | $ 338 |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Other Current Assets Disclosure [Abstract] | ||
Current deferred income tax assets (see Note 22) | $ 0 | $ 20 |
Asbestos-related recoveries (see Note 23) | 10 | 13 |
Prepaid and other | 23 | 17 |
Other current assets | $ 33 | $ 50 |
NET PROPERTY - Schedule of Net
NET PROPERTY - Schedule of Net Property (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property, gross | $ 1,269 | $ 1,287 |
Less: accumulated depreciation | (830) | (868) |
Net property | 439 | 419 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | 30 | 31 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | 231 | 214 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | 839 | 864 |
Company-owned tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | 113 | 116 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, gross | $ 56 | $ 62 |
NET PROPERTY - Additional Infor
NET PROPERTY - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Sep. 30, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Impairment of long-lived assets | $ 2 | |
Minimum | Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property (in years) | 10 years | |
Minimum | Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property (in years) | 3 years | |
Maximum | Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property (in years) | 50 years | |
Maximum | Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property (in years) | 20 years | |
Maximum | Company-owned tooling | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property (in years) | 3 years |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Other Assets, Noncurrent [Abstract] | ||
Investments in non-consolidated joint ventures (see Note 13) | $ 100 | $ 96 |
Asbestos-related recoveries (see Note 23) | 49 | 42 |
Unamortized revolver debt issuance costs (see Note 16) | 7 | 10 |
Capitalized software costs, net | 29 | 28 |
Non-current deferred income tax assets (see Note 22) | 413 | 28 |
Assets for uncertain tax positions (see Note 22) | 35 | 3 |
Prepaid pension costs (see Note 21) | 123 | 110 |
Other | 4 | 15 |
Other assets | $ 760 | $ 332 |
INVESTMENTS IN NON-CONSOLIDAT76
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES - Non-Consolidated Joint Ventures and Direct Ownership Interests (Details) | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 100.00% | ||
Meritor WABCO Vehicle Control Systems (Commercial Truck & Industrial) | |||
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 50.00% | 50.00% | 50.00% |
Master Sistemas Automotivos Ltda. (Commercial Truck & Industrial) | |||
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 49.00% | 49.00% | 49.00% |
Sistemas Automotrices de Mexico S.A. de C.V. (Commercial Truck & Industrial) | |||
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 50.00% | 50.00% | 50.00% |
Ege Fren Sanayii ve Ticaret A.S. (Commercial Truck & Industrial) | |||
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 49.00% | 49.00% | 49.00% |
Automotive Axles Limited (Commercial Truck & Industrial) | |||
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 36.00% | 36.00% | 36.00% |
ZF Meritor LLC (Commercial Truck & Industrial) | |||
Schedule of Equity Method Investments [Line Items] | |||
Non-consolidated joint ventures and related direct ownership interest | 0.00% | 0.00% | 50.00% |
INVESTMENTS IN NON-CONSOLIDAT77
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES - Investments In Non-Consolidated Joint Ventures (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Segment Reporting Information [Line Items] | ||
Investments in non-consolidated joint ventures | $ 100 | $ 96 |
Commercial Truck & Industrial | ||
Segment Reporting Information [Line Items] | ||
Investments in non-consolidated joint ventures | 100 | 96 |
Aftermarket & Trailer | ||
Segment Reporting Information [Line Items] | ||
Investments in non-consolidated joint ventures | $ 0 | $ 0 |
INVESTMENTS IN NON-CONSOLIDAT78
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES - Equity in Earnings of Non-Consolidated Joint Ventures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | |||
Equity in earnings of affiliates | $ 36 | $ 39 | $ 38 |
Commercial Truck & Industrial | |||
Segment Reporting Information [Line Items] | |||
Equity in earnings of affiliates | 36 | 39 | 38 |
Aftermarket & Trailer | |||
Segment Reporting Information [Line Items] | |||
Equity in earnings of affiliates | $ 0 | $ 0 | $ 0 |
INVESTMENTS IN NON-CONSOLIDAT79
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES - Balance Sheet Information Of Non-Consolidated Joint Ventures (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Equity Method Investment, Summarized Financial Information, Assets [Abstract] | ||
Current assets | $ 337 | $ 393 |
Non-current assets | 151 | 140 |
Total assets | 488 | 533 |
Equity Method Investment, Summarized Financial Information, Liabilities [Abstract] | ||
Current liabilities | 192 | 239 |
Non-current liabilities | 103 | 111 |
Total liabilities | $ 295 | $ 350 |
INVESTMENTS IN NON-CONSOLIDAT80
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES - Income Statement Information Of Non-Consolidated Joint Ventures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||
Sales | $ 1,101 | $ 1,288 | $ 1,268 |
Gross profit | 165 | 187 | 167 |
Net income | $ 73 | $ 83 | $ 458 |
INVESTMENTS IN NON-CONSOLIDAT81
INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Jul. 31, 2014 | Jun. 30, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Litigation settlement | $ (3) | $ 0 | $ 0 | ||||||||||
Net income (loss) | $ 474 | $ 41 | $ 32 | $ 26 | $ (21) | $ 13 | $ 43 | $ 29 | 573 | 64 | 249 | ||
Equity in earnings of ZF Meritor | 0 | 0 | 190 | ||||||||||
Dividends received from the company's non-consolidated joint ventures | 37 | 32 | 36 | ||||||||||
Sales to non-consolidated joint ventures | 9 | 5 | 3 | ||||||||||
Sales excluded from non-consolidated joint ventures through intercompany eliminations | 124 | 135 | 141 | ||||||||||
Purchases from non-consolidated joint ventures | 753 | 855 | 760 | ||||||||||
Lease and services payments from non-consolidated joint ventures | 12 | 9 | $ 5 | ||||||||||
Amounts due from non-consolidated joint ventures | 22 | 35 | 22 | 35 | |||||||||
Amounts due to non-consolidated joint ventures | 84 | 107 | 84 | 107 | |||||||||
Maximum exposure to loss in non-consolidated joint venture | 45 | 42 | 45 | 42 | |||||||||
Antitrust Lawsuit | ZF Meritor LLC (Commercial Truck & Industrial) | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Litigation settlement | $ 500 | ||||||||||||
Proceeds from legal settlements | $ 400 | ||||||||||||
Antitrust Lawsuit | Meritor, Inc. | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Litigation settlement | 210 | ||||||||||||
Proceeds from legal settlements | 210 | ||||||||||||
Net income (loss) | 209 | ||||||||||||
Antitrust Lawsuit | Meritor, Inc. | Equity in earnings of ZF Meritor | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Equity in earnings of ZF Meritor | 190 | ||||||||||||
Antitrust Lawsuit | Meritor, Inc. | Selling, General and Administrative Expenses | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Reimbursement of legal fees | $ 20 | ||||||||||||
Automotive Axles Limited (Commercial Truck & Industrial) | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Fair value of investment | $ 59 | $ 57 | $ 59 | $ 57 |
OTHER CURRENT LIABILITIES - Sch
OTHER CURRENT LIABILITIES - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Other Current Liabilities Disclosure [Abstract] | |||
Compensation and benefits | $ 115 | $ 122 | |
Income taxes | 8 | 9 | |
Taxes other than income taxes | 21 | 23 | |
Accrued interest | 14 | 14 | |
Product warranties | 18 | 22 | $ 27 |
Restructuring (see Note 5) | 14 | 7 | |
Asbestos-related liabilities (see Note 23) | 18 | 17 | |
Indemnity obligations (see Note 23) | 2 | 2 | |
Other | 58 | 63 | |
Other current liabilities | $ 268 | $ 279 |
OTHER CURRENT LIABILITIES - S83
OTHER CURRENT LIABILITIES - Schedule of Product Warranties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Other Liabilities, Current [Roll Forward] | |||
Total product warranties - beginning of year | $ 48 | $ 51 | $ 57 |
Accruals for product warranties | 10 | 15 | 22 |
Payments | (14) | (18) | (22) |
Change in estimates and other | 0 | 0 | (6) |
Total product warranties - end of year | 44 | 48 | 51 |
Less: non-current product warranties (see Note 15) | (26) | (26) | (24) |
Product warranties | $ 18 | $ 22 | $ 27 |
OTHER LIABILITIES (Details)
OTHER LIABILITIES (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Other Liabilities Disclosure [Abstract] | |||
Asbestos-related liabilities (see Note 23) | $ 136 | $ 109 | |
Restructuring (see Note 5) | 2 | 3 | |
Non-current deferred income tax liabilities (see Note 22) | 12 | 99 | |
Liabilities for uncertain tax positions (see Note 22) | 16 | 15 | |
Product warranties (see Note 14) | 26 | 26 | $ 24 |
Environmental (see Note 23) | 6 | 8 | |
Indemnity obligations (see Note 23) | 11 | 13 | |
Other | 29 | 32 | |
Other liabilities | $ 238 | $ 305 |
LONG-TERM DEBT - Summary of Lon
LONG-TERM DEBT - Summary of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2012 |
Debt Instrument [Line Items] | ||||
Capital lease obligation | $ 16 | $ 17 | ||
Unamortized discount on convertible notes | (23) | (30) | ||
Subtotal | 996 | 1,051 | ||
Less: current maturities | (14) | (15) | ||
Long-term debt | 982 | 1,036 | ||
Unamortized issuance costs | 7 | 10 | ||
Unamortized discount on convertible notes | $ 23 | $ 30 | ||
4.625% convertible notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 4.625% | 4.625% | ||
4.00% convertible notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 4.00% | 4.00% | ||
Unamortized issuance costs | $ 1 | $ 1 | ||
7.875% convertible notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount on convertible notes | $ (9) | $ (10) | ||
Stated interest rate | 7.875% | 7.875% | ||
Unamortized issuance costs | $ 2 | $ 3 | ||
Unamortized discount on convertible notes | 9 | 10 | ||
6.75% notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Debt | $ 271 | $ 270 | ||
Stated interest rate | 6.75% | 6.75% | ||
Unamortized issuance costs | $ 4 | $ 5 | ||
6.25% notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Debt | $ 442 | $ 442 | ||
Stated interest rate | 6.25% | 6.25% | ||
Unamortized issuance costs | $ 8 | $ 8 | ||
Export financing arrangements and other | ||||
Debt Instrument [Line Items] | ||||
Debt | 10 | 18 | ||
Unamortized discount on convertible notes | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount on convertible notes | (14) | (20) | ||
Unamortized discount on convertible notes | 14 | 20 | ||
Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount on convertible notes | (14) | |||
Unamortized issuance costs | 15 | |||
Unamortized discount on convertible notes | 14 | |||
Convertible Notes | 4.625% convertible notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Debt | $ 0 | 55 | $ 300 | |
Stated interest rate | 4.625% | |||
Convertible Notes | 4.00% convertible notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Debt | $ 142 | $ 142 | ||
Stated interest rate | 4.00% | 4.00% | 4.00% | |
Convertible Notes | 7.875% convertible notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Debt | $ 129 | $ 127 | ||
Stated interest rate | 7.875% |
LONG-TERM DEBT - Revolving Cred
LONG-TERM DEBT - Revolving Credit Facility (Details) - Revolving Credit Facility | 12 Months Ended | ||
Sep. 30, 2016USD ($) | Jun. 02, 2016USD ($) | Sep. 30, 2015USD ($) | |
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 506,000,000 | ||
Unused capacity, commitment fee percentage | 0.50% | ||
Amount outstanding | $ 0 | $ 0 | |
Amount outstanding, letters of credit | $ 0 | $ 0 | |
Revolving Credit Facility with Conversion Election Agreement | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 466,000,000 | ||
Amended Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Collateral maximum test value | 1 | ||
Value of company assets collateralized | $ 693,000,000 | ||
Maximum limit on issuance of letters of credit | 100,000,000 | ||
Revolving Credit Facility - Amended - Matures In April 2017 | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 8,000,000 | $ 32,000,000 | |
Revolving Credit Facility - Amended - Matures In February 2019 | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 498,000,000 | ||
Triggering Event One | |||
Debt Instrument [Line Items] | |||
Required ratio of total priority debt to EBITDA through period end | 2.25 | ||
LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 3.25% | ||
Prime Rate | Overnight Revolving Credit Loans | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.25% |
LONG-TERM DEBT - Issuance of De
LONG-TERM DEBT - Issuance of Debt Securities - 2024 and 2021 Notes (Details) - USD ($) | Jun. 11, 2015 | Feb. 13, 2014 | May 31, 2013 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 20, 2014 | Dec. 31, 2012 |
Debt Instrument [Line Items] | ||||||||
Proceeds from debt issuances | $ 0 | $ 225,000,000 | $ 225,000,000 | |||||
6.25% notes due 2024 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from debt issuances | $ 225,000,000 | |||||||
Stated interest rate | 6.25% | 6.25% | ||||||
Debt | $ 442,000,000 | $ 442,000,000 | ||||||
6.25% notes due 2024 | Redemption Period, Equity Clawback | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 106.25% | |||||||
7.875% convertible notes due 2026 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate | 7.875% | 7.875% | ||||||
10.625% Notes Due 2018 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate | 10.625% | |||||||
6.75% notes due 2021 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate | 6.75% | 6.75% | ||||||
Debt | $ 271,000,000 | $ 270,000,000 | ||||||
8.125% Notes Due 2015 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate | 8.125% | 8.125% | ||||||
Corporate Debt Securities | 6.25% notes due 2024 | Redemption period one | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 103.125% | |||||||
Corporate Debt Securities | 6.25% notes due 2024 | Redemption period two | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 102.083% | |||||||
Corporate Debt Securities | 6.25% notes due 2024 | Redemption period three | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 101.042% | |||||||
Corporate Debt Securities | 6.25% notes due 2024 | Redemption period four | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 100.00% | |||||||
Corporate Debt Securities | 6.25% notes due 2024 | Change in Control Redemption | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 101.00% | |||||||
Corporate Debt Securities | 10.625% Notes Due 2018 | ||||||||
Debt Instrument [Line Items] | ||||||||
Repurchased amount of debt | $ 250,000,000 | |||||||
Stated interest rate | 1062.50% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 275,000,000 | |||||||
Debt term | 8 years | |||||||
Proceeds from debt issuances | $ 275,000,000 | |||||||
Percentage of principal amount that may be redeemed | 35.00% | |||||||
Percentage of principal amount outstanding | 65.00% | |||||||
Redemption price | 100.00% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | Redemption period one | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 105.063% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | Redemption period two | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 103.375% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | Redemption period three | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 101.688% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | Redemption period four | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 100.00% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | Redemption Period, Equity Clawback | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 106.75% | |||||||
Corporate Debt Securities | 6.75% notes due 2021 | Change in Control Redemption | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price percentage | 101.00% | |||||||
Corporate Debt Securities | 8.125% Notes Due 2015 | ||||||||
Debt Instrument [Line Items] | ||||||||
Repurchased amount of debt | $ 167,000,000 | |||||||
Promissory Notes | 6.25% notes due 2024 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 225,000,000 | $ 225,000,000 | ||||||
Debt term | 10 years | |||||||
Issuance price percentage | 10000.00% | |||||||
Debt | 450,000,000 | |||||||
Promissory Notes | 6.25% notes due 2024 | Redemption Period, Equity Clawback | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount redeemable | $ 79,000,000 | |||||||
Redemption, principal amount outstanding, minimum | $ 146,000,000 | |||||||
Redemption, written notice period | 90 days | |||||||
Convertible Notes | 7.875% convertible notes due 2026 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 250,000,000 | |||||||
Repurchased amount of debt | 110,000,000 | 110,000,000 | ||||||
Stated interest rate | 7.875% | |||||||
Repayments of convertible debt | $ 179,000,000 | 179,000,000 | ||||||
Debt | $ 129,000,000 | $ 127,000,000 |
LONG-TERM DEBT - Repurchase of
LONG-TERM DEBT - Repurchase of Debt Securities (Details) - USD ($) $ in Millions | Apr. 15, 2016 | Mar. 01, 2016 | Jun. 11, 2015 | Sep. 20, 2014 | Mar. 15, 2014 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2016 | Dec. 31, 2012 |
7.875% convertible notes due 2026 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 7.875% | 7.875% | 7.875% | |||||||||
4.00% convertible notes due 2027 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 4.00% | 4.00% | 4.00% | |||||||||
4.625% convertible notes due 2026 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 4.625% | 4.625% | 4.625% | |||||||||
Repurchase price percentage | 100.00% | 100.00% | ||||||||||
Repurchased amount of debt | $ 55 | |||||||||||
8.125% Notes Due 2015 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Extinguishment of debt, amount | $ 84 | |||||||||||
Stated interest rate | 8.125% | 8.125% | ||||||||||
Repurchase price percentage | 7.00% | |||||||||||
Net loss on debt extinguishment | $ (5) | |||||||||||
Unamortized discount and deferred issuance costs | 1 | |||||||||||
Redemption premium | $ 6 | |||||||||||
10.625% Notes Due 2018 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Extinguishment of debt, amount | $ 250 | |||||||||||
Stated interest rate | 10.625% | |||||||||||
Repurchase price percentage | 5.00% | |||||||||||
Net loss on debt extinguishment | $ (19) | |||||||||||
Unamortized discount and deferred issuance costs | 6 | |||||||||||
Redemption premium | $ 13 | |||||||||||
Convertible Notes | 7.875% convertible notes due 2026 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Extinguishment of debt, amount | $ 25 | $ 85 | $ 110 | |||||||||
Stated interest rate | 7.875% | |||||||||||
Repurchase price percentage | 58.00% | 64.00% | ||||||||||
Repayments of convertible debt | $ 179 | 179 | ||||||||||
Carrying amount of liability component | $ 121 | 121 | ||||||||||
Carrying amount of equity component | 58 | 58 | ||||||||||
Net loss on debt extinguishment | (24) | |||||||||||
Unamortized discount and deferred issuance costs | 14 | 14 | ||||||||||
Redemption premium | 10 | 10 | ||||||||||
Repurchased amount of debt | $ 110 | $ 110 | 110 | |||||||||
Convertible Notes | 4.00% convertible notes due 2027 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Extinguishment of debt, amount | $ 4 | $ 15 | $ 19 | $ 38 | ||||||||
Stated interest rate | 4.00% | 4.00% | 4.00% | 4.00% | ||||||||
Repurchase price percentage | 5.00% | 6.00% | 7.00% | |||||||||
Net loss on debt extinguishment | $ (5) | |||||||||||
Convertible Notes | 4.625% convertible notes due 2026 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 4.625% | |||||||||||
Repurchased amount of debt | $ 55 | $ 245 |
LONG-TERM DEBT - Convertible No
LONG-TERM DEBT - Convertible Notes (Details) | 1 Months Ended | 12 Months Ended | |||||
Dec. 31, 2012USD ($)$ / sharesshares | Sep. 30, 2016USD ($)d$ / sharesshares | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Mar. 01, 2016USD ($) | Jun. 11, 2015USD ($) | Feb. 27, 2007USD ($) | |
Debt Instrument [Line Items] | |||||||
Loss on debt extinguishment | $ 0 | $ 25,000,000 | $ 31,000,000 | ||||
7.875% convertible notes due 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 7.875% | 7.875% | |||||
4.625% convertible notes due 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 4.625% | 4.625% | |||||
Repurchased amount of debt | $ 55,000,000 | ||||||
4.00% convertible notes due 2027 | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 4.00% | 4.00% | |||||
Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Threshold trading days | d | 20 | ||||||
Threshold consecutive trading days | 30 days | ||||||
Threshold percentage of stock price trigger | 120.00% | ||||||
Loss on debt extinguishment | $ 0 | $ 24,000,000 | $ 5,000,000 | ||||
Convertible Notes | 7.875% convertible notes due 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 250,000,000 | ||||||
Stated interest rate | 7.875% | ||||||
Initial principal amount per note | 900 | ||||||
Face principal amount per note | $ 1,000 | ||||||
Effective interest rates on convertible notes: | 10.90% | ||||||
Proceeds from convertible debt | $ 220,000,000 | ||||||
Equivalent shares of common stock per 1000 principal amount of convertible notes | shares | 83.3333 | ||||||
Conversion price | $ / shares | $ 12 | ||||||
Repurchased amount of debt | 110,000,000 | $ 110,000,000 | |||||
Long-term debt | $ 129,000,000 | 127,000,000 | |||||
Carrying amount of equity component | 58,000,000 | ||||||
Convertible Notes | 4.625% convertible notes due 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate | 4.625% | ||||||
Repurchased amount of debt | $ 245,000,000 | $ 55,000,000 | |||||
Long-term debt | 300,000,000 | $ 0 | $ 55,000,000 | ||||
Convertible note repurchase price | $ 236,000,000 | ||||||
Convertible Notes | 4.00% convertible notes due 2027 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 200,000,000 | ||||||
Stated interest rate | 4.00% | 4.00% | 4.00% | ||||
Redemption price | 100.00% | ||||||
Long-term debt | $ 142,000,000 | $ 142,000,000 | |||||
Redemption option price | 100.00% | ||||||
Convertible Notes | Convertible Notes 2007 | |||||||
Debt Instrument [Line Items] | |||||||
Equivalent shares of common stock per 1000 principal amount of convertible notes | shares | 37.4111 | ||||||
Conversion price | $ / shares | $ 26.73 | ||||||
Maximum number of shares of common stock convertible notes are convertible into | shares | 5,000,000 | ||||||
Convertible Notes | Convertible Notes 2013 | |||||||
Debt Instrument [Line Items] | |||||||
Effective interest rates on convertible notes: | 10.90% | ||||||
Redemption price | 100.00% | ||||||
Maximum number of shares of common stock convertible notes are convertible into | shares | 11,000,000 | ||||||
Triggering Event One | Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Threshold trading days | d | 5 | ||||||
Threshold consecutive trading days | 5 days | ||||||
Threshold percentage of stock price trigger | 97.00% | ||||||
Triggering Event One | Convertible Notes | Convertible Notes 2013 | |||||||
Debt Instrument [Line Items] | |||||||
Threshold trading days | d | 20 | ||||||
Threshold consecutive trading days | 30 days | ||||||
Threshold percentage of stock price trigger | 120.00% | ||||||
Triggering Event Two | Convertible Notes | Convertible Notes 2013 | |||||||
Debt Instrument [Line Items] | |||||||
Threshold trading days | d | 5 | ||||||
Threshold consecutive trading days | 5 days | ||||||
Threshold percentage of stock price trigger | 97.00% |
LONG-TERM DEBT - Summaries of C
LONG-TERM DEBT - Summaries of Convertible Notes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Debt Instrument [Line Items] | |||
Principal amount of convertible notes | $ 283 | $ 338 | |
Unamortized discount on convertible notes | (23) | (30) | |
Net carrying value | 260 | 308 | |
Repurchase of convertible notes | 0 | 25 | $ 31 |
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Unamortized discount on convertible notes | (14) | ||
Contractual interest coupon | 18 | 26 | 30 |
Amortization of debt discount | 8 | 8 | 9 |
Repurchase of convertible notes | 0 | 24 | 5 |
Total | $ 26 | $ 58 | $ 44 |
2027 | Convertible Notes | |||
Debt Instrument [Line Items] | |||
Total amortization period for debt discount (in years): | 12 years | ||
Remaining amortization period for debt discount (in years): | 3 years | ||
Effective interest rates on convertible notes: | 7.70% | ||
2013 | Convertible Notes | |||
Debt Instrument [Line Items] | |||
Total amortization period for debt discount (in years): | 8 years | ||
Remaining amortization period for debt discount (in years): | 4 years | ||
Effective interest rates on convertible notes: | 10.90% |
LONG-TERM DEBT - Debt Maturitie
LONG-TERM DEBT - Debt Maturities (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Debt Instrument [Line Items] | |||
Unamortized discount on convertible notes | $ 23 | $ 30 | |
Unamortized issuance costs | 7 | 10 | |
4.00% convertible notes due 2027 | |||
Debt Instrument [Line Items] | |||
Unamortized issuance costs | $ 1 | $ 1 | |
Stated interest rate | 4.00% | 4.00% | |
7.875% convertible notes due 2026 | |||
Debt Instrument [Line Items] | |||
Unamortized discount on convertible notes | $ 9 | $ 10 | |
Unamortized issuance costs | $ 2 | $ 3 | |
Stated interest rate | 7.875% | 7.875% | |
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Unamortized discount on convertible notes | $ 14 | ||
Unamortized issuance costs | 15 | ||
Original issuance discount | 9 | ||
Convertible Notes | Debt maturities at Principal Amount | |||
Long-term debt by fiscal year maturity [Abstract] | |||
Long-term debt, total | 1,034 | ||
2,017 | 14 | ||
2,018 | 4 | ||
2,019 | 2 | ||
2,020 | 1 | ||
2,021 | 277 | ||
Thereafter | $ 736 | ||
Convertible Notes | 4.00% convertible notes due 2027 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 4.00% | 4.00% | 4.00% |
Long-term debt by fiscal year maturity [Abstract] | |||
Long-term debt, total | $ 142 | $ 142 | |
Convertible Notes | 7.875% convertible notes due 2026 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 7.875% | ||
Long-term debt by fiscal year maturity [Abstract] | |||
Long-term debt, total | $ 129 | $ 127 |
LONG-TERM DEBT - Capital Leases
LONG-TERM DEBT - Capital Leases (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Future Minimum Payments Due by Fiscal Year Maturity | ||
Capital lease obligation, total | $ 20 | |
Capital lease obligation, 2016 | 6 | |
Capital lease obligation, 2017 | 4 | |
Capital lease obligation, 2018 | 3 | |
Capital lease obligation, 2019 | 2 | |
Capital lease obligation, 2020 | 2 | |
Capital lease obligation, Thereafter | 3 | |
Less amounts representing interest, total | (4) | |
Amounts representing interest, 2016 | (1) | |
Amounts representing interest, 2017 | (1) | |
Amounts representing interest, 2018 | (1) | |
Amounts representing interest, 2019 | (1) | |
Amounts representing interest, 2020 | 0 | |
Amounts representing interest, Thereafter | 0 | |
Principal on capital lease, total | 16 | |
Principal on capital lease, 2016 | 5 | |
Principal on capital lease, 2017 | 3 | |
Principal on capital lease, 2018 | 2 | |
Principal on capital lease, 2019 | 1 | |
Principal on capital lease, 2020 | 2 | |
Principal on capital lease, Thereafter | 3 | |
Financing Arrangements For Capital Leases | ||
Capital Leased Assets [Line Items] | ||
Maximum amount of financing for progress payments for equipment under construction | $ 10 | |
Financing Arrangements For Capital Leases | Thirty-Day LIBOR | ||
Capital Leased Assets [Line Items] | ||
Basis spread on variable rate | 4.75% | |
Capital Lease Arrangements | ||
Capital Leased Assets [Line Items] | ||
Capital lease term | 60 months | |
Amount outstanding under capital leases | $ 7 | $ 10 |
Capital Lease Arrangements | Five-Year Swap Rate | ||
Capital Leased Assets [Line Items] | ||
Basis spread on variable rate | 5.64% | |
Other Capital Lease Arrangements | ||
Capital Leased Assets [Line Items] | ||
Amount outstanding under capital leases | $ 9 | $ 7 |
LONG-TERM DEBT - Letter of Cred
LONG-TERM DEBT - Letter of Credit Facilities (Details) - USD ($) $ in Millions | Mar. 19, 2019 | Sep. 30, 2016 | Sep. 30, 2015 | Feb. 21, 2014 |
Standby Letters of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum limit on issuance of letters of credit | $ 30 | |||
Amount outstanding, letters of credit | $ 23 | $ 24 | ||
Other Letters of Credit Arrangements | ||||
Debt Instrument [Line Items] | ||||
Amount outstanding, letters of credit | $ 5 | $ 6 | ||
Forecasted | Standby Letters of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum limit on issuance of letters of credit | $ 25 |
LONG-TERM DEBT - Export Financi
LONG-TERM DEBT - Export Financing Arrangements and Other (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Export financing arrangements and other | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 10 | $ 18 |
Promissory Notes | Export financing arrangements and other | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.50% | |
Brazil | Promissory Notes | Export financing arrangements and other | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 9 | 18 |
China | Notes Payable to Banks | Other Export Financing Arrangements | ||
Debt Instrument [Line Items] | ||
Long-term debt | 10 | $ 13 |
Debt default, amount | $ 35 |
LONG-TERM DEBT - Operating Leas
LONG-TERM DEBT - Operating Leases (Details) $ in Millions | Sep. 30, 2016USD ($) |
Future Minimum Lease Payments Under Operating Leases | |
2,017 | $ 16 |
2,018 | 15 |
2,019 | 15 |
2,020 | 14 |
2,021 | 11 |
Thereafter | $ 26 |
FINANCIAL INSTRUMENTS - Additio
FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Notional amount of foreign exchange contracts outstanding | $ 190,000,000 | $ 137,000,000 | $ 47,000,000 | |
Maximum | Foreign Exchange Forward | ||||
Derivative [Line Items] | ||||
Term of derivative contract | 16 years | |||
India, Rupees | Foreign Currency Option Contracts | ||||
Derivative [Line Items] | ||||
Notional amount of foreign exchange contracts outstanding | $ 174,000,000 | |||
Brazil, Brazil Real | Foreign Currency Option Contracts | ||||
Derivative [Line Items] | ||||
Notional amount of foreign exchange contracts outstanding | 48,000,000 | |||
Sweden, Kronor | Foreign Currency Option Contracts | Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amount of foreign exchange contracts outstanding | $ 19,000,000 | 30,000,000 | ||
Euro Member Countries, Euro | Foreign Currency Option Contracts | Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amount of foreign exchange contracts outstanding | $ 21,000,000 | $ 27,000,000 |
FINANCIAL INSTRUMENTS - The Imp
FINANCIAL INSTRUMENTS - The Impact of Derivatives on Comprehensive Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Designated as Hedging Instrument | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain (loss) recognized in AOCL (effective portion) | $ (3) | $ 3 | $ 3 |
Designated as Hedging Instrument | Cost of Sales | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain (loss) reclassified from AOCL into income (effective portion) | (4) | 6 | 1 |
Not Designated as Hedging Instrument | Cost of Sales | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain recognized in income | (1) | 2 | 0 |
Not Designated as Hedging Instrument | Other Income (expense) | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain recognized in income | $ (1) | $ 2 | $ 0 |
FINANCIAL INSTRUMENTS - Fair Va
FINANCIAL INSTRUMENTS - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Carrying Value | ||
Fair Value | ||
Cash and cash equivalents | $ 160 | $ 193 |
Short-term debt | 14 | 15 |
Long-term debt | 982 | 1,036 |
Fair Value | ||
Fair Value | ||
Cash and cash equivalents | 160 | 193 |
Short-term debt | 14 | 15 |
Long-term debt | 1,051 | 1,123 |
Foreign Exchange Forward | Carrying Value | ||
Fair Value | ||
Foreign exchange forward contracts (other assets) | 1 | 1 |
Foreign exchange forward contracts (other liabilities) | 2 | 3 |
Foreign Exchange Forward | Fair Value | ||
Fair Value | ||
Foreign exchange forward contracts (other assets) | 1 | 1 |
Foreign exchange forward contracts (other liabilities) | 2 | 3 |
Foreign Currency Option Contracts | Carrying Value | ||
Fair Value | ||
Short-term foreign currency option contracts (other assets) | 0 | 1 |
Long-term foreign currency option contracts (other assets) | 2 | 1 |
Foreign Currency Option Contracts | Fair Value | ||
Fair Value | ||
Short-term foreign currency option contracts (other assets) | 0 | 1 |
Long-term foreign currency option contracts (other assets) | $ 2 | $ 1 |
FINANCIAL INSTRUMENTS - Offsett
FINANCIAL INSTRUMENTS - Offsetting of Derivative Assets and Liabilities (Details) - Foreign Exchange Forward - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Offsetting Derivative Asset | ||
Gross Amounts Recognized | $ 1 | $ 1 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | 1 | 1 |
Offsetting Derivative Liabilities | ||
Gross Amounts Recognized | 2 | 3 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | $ 2 | $ 3 |
FINANCIAL INSTRUMENTS - Fair100
FINANCIAL INSTRUMENTS - Fair Value of Financial Instruments by the Valuation Hierarchy (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Level 1 | ||
Derivatives, Fair Value [Line Items] | ||
Cash and cash equivalents | $ 160 | $ 193 |
Short-term debt | 0 | 0 |
Long-term debt | 0 | 0 |
Level 2 | ||
Derivatives, Fair Value [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 0 | 0 |
Long-term debt | 1,040 | 1,102 |
Level 3 | ||
Derivatives, Fair Value [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 14 | 15 |
Long-term debt | 11 | 21 |
Foreign Exchange Forward | Level 1 | ||
Derivatives, Fair Value [Line Items] | ||
Foreign exchange forward contracts (other assets) | 0 | 0 |
Foreign exchange forward contracts (other liabilities) | 0 | 0 |
Foreign Exchange Forward | Level 2 | ||
Derivatives, Fair Value [Line Items] | ||
Foreign exchange forward contracts (other assets) | 1 | 1 |
Foreign exchange forward contracts (other liabilities) | 2 | 3 |
Foreign Exchange Forward | Level 3 | ||
Derivatives, Fair Value [Line Items] | ||
Foreign exchange forward contracts (other assets) | 0 | 0 |
Foreign exchange forward contracts (other liabilities) | 0 | 0 |
Foreign Currency Option Contracts | Level 1 | ||
Derivatives, Fair Value [Line Items] | ||
Short-term foreign currency option contracts (asset) | 0 | 0 |
Long-term foreign currency option contracts (asset) | 0 | 0 |
Foreign Currency Option Contracts | Level 2 | ||
Derivatives, Fair Value [Line Items] | ||
Short-term foreign currency option contracts (asset) | 0 | 0 |
Long-term foreign currency option contracts (asset) | 0 | 0 |
Foreign Currency Option Contracts | Level 3 | ||
Derivatives, Fair Value [Line Items] | ||
Short-term foreign currency option contracts (asset) | 0 | 1 |
Long-term foreign currency option contracts (asset) | $ 2 | $ 1 |
FINANCIAL INSTRUMENTS - Changes
FINANCIAL INSTRUMENTS - Changes in Fair Value of Level 3 Financial Assets and Liabilities (Details) - Level 3 - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Fair Value, beginning balance | $ 2 | $ 3 |
Purchases, issuances, sales and settlements: | ||
Purchases | 1 | 6 |
Settlements | 2 | (11) |
Transfer in and / or out of Level 3 | 0 | 0 |
Reclass between short-term and long-term | 0 | 1 |
Fair Value, ending balance | 2 | 2 |
Foreign Currency Option Contracts | Other Current Assets | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Fair Value, beginning balance | 1 | 2 |
Purchases, issuances, sales and settlements: | ||
Purchases | 1 | 6 |
Settlements | 0 | (10) |
Transfer in and / or out of Level 3 | 0 | 0 |
Reclass between short-term and long-term | 0 | 0 |
Fair Value, ending balance | 0 | 1 |
Foreign Currency Option Contracts | Other Noncurrent Assets | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Fair Value, beginning balance | 1 | 1 |
Purchases, issuances, sales and settlements: | ||
Purchases | 0 | 0 |
Settlements | 2 | (1) |
Transfer in and / or out of Level 3 | 0 | 0 |
Reclass between short-term and long-term | 0 | 1 |
Fair Value, ending balance | 2 | 1 |
Other Income | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Total unrealized gains (losses) | (2) | (1) |
Total realized gains (losses) | 0 | 2 |
Other Income | Foreign Currency Option Contracts | Other Current Assets | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Total unrealized gains (losses) | (2) | (1) |
Total realized gains (losses) | 0 | 2 |
Other Income | Foreign Currency Option Contracts | Other Noncurrent Assets | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Total unrealized gains (losses) | 0 | 0 |
Total realized gains (losses) | 0 | 0 |
Cost of Sales | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Total unrealized gains (losses) | (1) | (1) |
Total realized gains (losses) | 0 | 3 |
Cost of Sales | Foreign Currency Option Contracts | Other Current Assets | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Total unrealized gains (losses) | 0 | (1) |
Total realized gains (losses) | 0 | 3 |
Cost of Sales | Foreign Currency Option Contracts | Other Noncurrent Assets | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Total unrealized gains (losses) | (1) | 0 |
Total realized gains (losses) | $ 0 | $ 0 |
SHAREHOLDERS' EQUITY - Addition
SHAREHOLDERS' EQUITY - Additional Information (Details) - USD ($) | Jun. 11, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jul. 21, 2016 | Mar. 01, 2016 | May 31, 2015 | Jan. 31, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2012 |
Class of Stock [Line Items] | ||||||||||
Common stock authorized (in shares) | 500,000,000 | |||||||||
Common stock par value | $ 1 | |||||||||
Preferred stock authorized (in shares) | 30,000,000 | |||||||||
Common stock reserved for issuance under long-term incentive plan (in shares) | 10,000,000 | |||||||||
Common stock available for future grants under long-term incentive plan (in shares) | 2,900,000 | |||||||||
Treasury stock acquired during period (in shares) | 8,700,000 | |||||||||
Repurchase of common stock | $ 81,000,000 | $ 55,000,000 | ||||||||
Treasury stock acquired to date, at cost (in shares) | 12,800,000 | 4,200,000 | ||||||||
Treasury stock, at cost including commission | $ 136,000,000 | $ 55,000,000 | ||||||||
M2016 Strategy | Equity And Equity-Linked Securities, Including Convertible Debt Securities | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock repurchase, authorized amount | $ 210,000,000 | |||||||||
Debt Securities | ||||||||||
Class of Stock [Line Items] | ||||||||||
Principal amount repurchased | $ 0 | |||||||||
Repurchase program, authorized amount | $ 150,000,000 | $ 150,000,000 | ||||||||
4.00% convertible notes due 2027 | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stated interest rate | 4.00% | 4.00% | ||||||||
4.00% convertible notes due 2027 | Convertible Notes | ||||||||||
Class of Stock [Line Items] | ||||||||||
Principal amount repurchased | $ 19,000,000 | |||||||||
Stated interest rate | 4.00% | 4.00% | 4.00% | |||||||
4.625% convertible notes due 2026 | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stated interest rate | 4.625% | 4.625% | ||||||||
Repurchased amount of debt | $ 55,000,000 | |||||||||
4.625% convertible notes due 2026 | Convertible Notes | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stated interest rate | 4.625% | |||||||||
Repurchased amount of debt | $ 55,000,000 | $ 245,000,000 | ||||||||
7.875% convertible notes due 2026 | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stated interest rate | 7.875% | 7.875% | ||||||||
7.875% convertible notes due 2026 | Convertible Notes | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stated interest rate | 7.875% | |||||||||
Repurchase program, authorized amount | $ 175,000,000 | |||||||||
Repurchased amount of debt | $ 110,000,000 | $ 110,000,000 | ||||||||
Repayments of convertible debt | $ 179,000,000 | $ 179,000,000 | ||||||||
Series A Junior Preferred Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock authorized (in shares) | 2,000,000 | |||||||||
Preferred stock issued (in shares) | 0 | |||||||||
Common Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock repurchase, authorized amount | $ 100,000,000 | |||||||||
Repurchase of common stock | $ 0 |
SHAREHOLDERS' EQUITY - Componen
SHAREHOLDERS' EQUITY - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Beginning balance | $ (766) | $ (749) | $ (734) |
Other comprehensive income (loss) before reclassification | (78) | (120) | (39) |
Amounts reclassified from accumulated other comprehensive loss - net of tax | 35 | 103 | 24 |
Net current-period other comprehensive income (loss) | (43) | (17) | (15) |
Ending balance | (809) | (766) | (749) |
Foreign Currency Translation | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Beginning balance | (54) | 41 | 61 |
Other comprehensive income (loss) before reclassification | (12) | (96) | (20) |
Amounts reclassified from accumulated other comprehensive loss - net of tax | 0 | 1 | 0 |
Net current-period other comprehensive income (loss) | (12) | (95) | (20) |
Ending balance | (66) | (54) | 41 |
Employee Benefit Related Adjustments | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Beginning balance | (705) | (789) | (792) |
Other comprehensive income (loss) before reclassification | (70) | (18) | (21) |
Amounts reclassified from accumulated other comprehensive loss - net of tax | 35 | 102 | 24 |
Net current-period other comprehensive income (loss) | (35) | 84 | 3 |
Ending balance | (740) | (705) | (789) |
Unrealized Loss, net of tax | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Beginning balance | (7) | (1) | (3) |
Other comprehensive income (loss) before reclassification | 4 | (6) | 2 |
Amounts reclassified from accumulated other comprehensive loss - net of tax | 0 | 0 | 0 |
Net current-period other comprehensive income (loss) | 4 | (6) | 2 |
Ending balance | $ (3) | $ (7) | $ (1) |
SHAREHOLDERS' EQUITY - Changes
SHAREHOLDERS' EQUITY - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Net income (loss) before tax | $ 579 | $ 66 | $ 284 | ||||||||
Tax (benefit) expense | $ 446 | $ (8) | $ (7) | $ (7) | $ 18 | $ (6) | $ (6) | $ (7) | 424 | (1) | (31) |
Net income (loss) after tax | $ (474) | $ (42) | $ (32) | $ (27) | $ 22 | $ (14) | $ (43) | $ (30) | (575) | (65) | (254) |
Amount Reclassified from Accumulated Other Comprehensive Loss | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Net income (loss) after tax | (35) | (103) | (24) | ||||||||
Amount Reclassified from Accumulated Other Comprehensive Loss | Employee Benefit Related Adjustments | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Amortization of prior service costs | (1) | (1) | (7) | ||||||||
Amortization of actuarial losses | 36 | 47 | 46 | ||||||||
Recognized prior service costs due to settlement | 56 | (15) | |||||||||
Net income (loss) before tax | 35 | 102 | 24 | ||||||||
Tax (benefit) expense | 0 | 0 | 0 | ||||||||
Net income (loss) after tax | $ (35) | (102) | $ (24) | ||||||||
Amount Reclassified from Accumulated Other Comprehensive Loss | Accumulated Defined Benefit Plan Adjustment, Other | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Other reclassification adjustment | 1 | ||||||||||
Net income (loss) before tax | 1 | ||||||||||
Tax (benefit) expense | 0 | ||||||||||
Net income (loss) after tax | $ (1) |
EQUITY BASED COMPENSATION - Add
EQUITY BASED COMPENSATION - Additional Information (Details) - USD ($) | Dec. 01, 2015 | Dec. 01, 2014 | Dec. 02, 2013 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | Dec. 01, 2013 | Nov. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Compensation expense recognized for share based payments | $ 9,000,000 | $ 10,000,000 | $ 8,000,000 | |||||||
Weighted average fair value (usd per share) | $ 9.88 | |||||||||
Stock Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock options expiration period | 10 years | |||||||||
Vesting term | 3 years | |||||||||
Options granted (in shares) | 0 | 0 | 0 | |||||||
Compensation expense recognized for share based payments | $ 0 | $ 0 | $ 1,200,000 | |||||||
Stock options exercised (in shares) | 0 | 0 | 0 | |||||||
Restricted Stock Units (RSUs) | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Vesting term | 3 years | |||||||||
Shares granted in period (in shares) | 700,000 | 500,000 | 200,000 | |||||||
Weighted average grant-date fair value non-vested restricted shares and share units granted during period (usd per share) | $ 9.72 | $ 13.91 | $ 9.23 | |||||||
Equity instruments other than options outstanding (in shares) | 1,200,000 | |||||||||
Weighted average fair value (usd per share) | $ 11 | |||||||||
Restricted Stock Units (RSUs) | Executive Officer | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Vesting term | 3 years | 3 years | ||||||||
Shares granted in period (in shares) | 500,000 | 400,000 | ||||||||
Exercise price (usd per share) | $ 10.51 | $ 13.74 | ||||||||
Restricted Stock and Restricted Stock Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Compensation expense recognized for share based payments | $ 5,000,000 | $ 4,000,000 | $ 4,000,000 | |||||||
Weighted average grant-date fair value non-vested restricted shares and share units granted during period (usd per share) | $ 9.72 | |||||||||
Equity instruments other than options outstanding (in shares) | 1,232,000 | 1,447,000 | ||||||||
Weighted average fair value (usd per share) | $ 11 | $ 8.23 | ||||||||
Total unrecognized compensation costs related to non-vested equity compensation arrangements | $ 8,000,000 | |||||||||
Weighted average period for compensation cost recognition | 1 year 5 months 27 days | |||||||||
Granted (in shares) | 713,000 | |||||||||
Performance Shares | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Compensation expense recognized for share based payments | $ 6,000,000 | $ 8,000,000 | $ 4,000,000 | |||||||
Weighted average grant-date fair value non-vested restricted shares and share units granted during period (usd per share) | $ 10.31 | |||||||||
Equity instruments other than options outstanding (in shares) | 2,660,000 | 2,310,000 | ||||||||
Weighted average fair value (usd per share) | $ 9.88 | $ 10.01 | ||||||||
Total unrecognized compensation costs related to non-vested equity compensation arrangements | $ 15,900,000 | |||||||||
Weighted average period for compensation cost recognition | 3 years 8 months 27 days | |||||||||
Granted (in shares) | 810,000 | |||||||||
Performance Shares | Executive Officer | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares issuable per performance share unit (in shares) | 1 | 1 | 1 | |||||||
Exercise price (usd per share) | $ 10.51 | $ 13.74 | $ 7.97 | |||||||
Shares authorized for grant (in shares) | 700,000 | 600,000 | ||||||||
Performance period | 3 years | 3 years | 3 years | |||||||
Performance Shares | Executive Officer | Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Performance-based vesting percentage | 0.00% | 0.00% | 0.00% | |||||||
Performance Shares | Executive Officer | Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Performance-based vesting percentage | 200.00% | 200.00% | 200.00% | |||||||
Performance Shares | Executive Officer | Performance Objective One | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | 75.00% | ||||||||
Performance Shares | Executive Officer | Performance Objective Two | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | 25.00% | 25.00% | |||||||
Performance Shares | Executive Officer | Performance Objective Three | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights percentage | 25.00% | |||||||||
M2016 Strategy | Performance Shares | Executive Officer | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares authorized for grant (in shares) | 1,800,000 | |||||||||
M2016 Strategy | Performance Shares | Executive Officer | Performance Objective One | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% |
EQUITY BASED COMPENSATION - Rol
EQUITY BASED COMPENSATION - Rollforward of Stock Options (Details) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Options Outstanding [Roll Forward] | |
Outstanding - beginning of year (in shares) | shares | 650 |
Cancelled or expired (in shares) | shares | (417) |
Outstanding - end of year (in shares) | shares | 233 |
Exercisable - end of year (in shares) | shares | 233 |
Options Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Exercise Price - outstanding options - beginning of year (usd per share) | $ / shares | $ 10.32 |
Exercise Price - cancelled or expired (usd per share) | $ / shares | 11.50 |
Exercise Price - outstanding options - end of year (usd per share) | $ / shares | 8.22 |
Exercise Price - exercisable options (usd per share) | $ / shares | $ 8.22 |
Remaining Contractual Life (years) - outstanding | 1 year 10 months 25 days |
Remaining Contractual Life (years) - exercisable | 1 year 10 months 25 days |
Aggregate Intrinsic Value - outstanding options | $ | $ 0 |
Aggregate Intrinsic Value - exercisable options | $ | $ 0 |
EQUITY BASED COMPENSATION - 107
EQUITY BASED COMPENSATION - Rollforward of Restricted Stock, Restricted Share, and Performance Share Units and Activity (Details) shares in Thousands | 12 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Weighted-Average Grant-Date Fair Value | |
Non-vested - end of year, weighted-average grant-day fair value (usd per share) | $ 9.88 |
Restricted Stock and Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested - beginning of year (in shares) | shares | 1,447 |
Granted (in shares) | shares | 713 |
Vested (in shares) | shares | (744) |
Forfeited (in shares) | shares | (184) |
Non-vested - end of year (in shares) | shares | 1,232 |
Weighted-Average Grant-Date Fair Value | |
Non-vested - beginning of year, weighted-average grant-day fair value (usd per share) | $ 8.23 |
Granted, weighted-average grant-day fair value (usd per share) | 9.72 |
Vested, weighted-average grant-day fair value (usd per share) | 4.44 |
Forfeited, weighted-average grant-day fair value (usd per share) | 12.14 |
Non-vested - end of year, weighted-average grant-day fair value (usd per share) | $ 11 |
Performance Shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested - beginning of year (in shares) | shares | 2,310 |
Granted (in shares) | shares | 810 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (460) |
Non-vested - end of year (in shares) | shares | 2,660 |
Weighted-Average Grant-Date Fair Value | |
Non-vested - beginning of year, weighted-average grant-day fair value (usd per share) | $ 10.01 |
Granted, weighted-average grant-day fair value (usd per share) | 10.31 |
Vested, weighted-average grant-day fair value (usd per share) | 0 |
Forfeited, weighted-average grant-day fair value (usd per share) | 11.31 |
Non-vested - end of year, weighted-average grant-day fair value (usd per share) | $ 9.88 |
RETIREMENT MEDICAL PLANS - Reti
RETIREMENT MEDICAL PLANS - Retiree Medical Liability Expense Assumptions (Details) | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Assumptions Used In Measurement of Retiree Medical Liability and Expense | |||
Health care cost trend rate (weighted average) | 7.10% | ||
U.S. Retiree Medical Plan | |||
Assumptions Used In Measurement of Retiree Medical Liability and Expense | |||
Discount Rate | 3.45% | 4.20% | 4.20% |
Health care cost trend rate (weighted average) | 7.10% | 7.00% | 7.40% |
Ultimate health care trend rate | 4.75% | 5.00% | 5.00% |
Year ultimate rate is reached | 2,024 | 2,022 | 2,022 |
RETIREMENT MEDICAL PLANS - R109
RETIREMENT MEDICAL PLANS - Retiree Medical Liability Components As of Balance Sheet Date (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Benefit obligation | $ 1,728 | $ 1,656 | |
U.S. Retiree Medical Plan | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Benefit obligation | 445 | 436 | $ 477 |
U.S. Retiree Medical Plan | Retirees | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Benefit obligation | 444 | 433 | |
U.S. Retiree Medical Plan | Employees eligible to retire | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Benefit obligation | $ 1 | $ 3 |
RETIREMENT MEDICAL PLANS - Roll
RETIREMENT MEDICAL PLANS - Rollforward Of Retiree Medical Liability (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Beginning of year | $ 1,656 | ||
Actuarial loss (gain) | 30 | ||
End of year | 1,728 | $ 1,656 | |
U.S. Retiree Medical Plan | |||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Beginning of year | 436 | 477 | |
Service cost | 0 | 0 | $ 0 |
Interest cost | 18 | 19 | 23 |
Participant contributions | 0 | 2 | |
Actuarial loss (gain) | 27 | (19) | |
Foreign currency rate changes | 0 | (3) | |
Benefit payments | (36) | (40) | |
End of year | 445 | 436 | $ 477 |
Other | 2 | 2 | |
Retiree medical liability | $ 447 | $ 438 |
RETIREMENT MEDICAL PLANS - R111
RETIREMENT MEDICAL PLANS - Retiree Medical Liability Current and Long Term Components (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Retiree Medical Liability Current And Long Term Components | ||
Long-term — included in retirement benefits | $ 703 | $ 632 |
U.S. Retiree Medical Plan | ||
Retiree Medical Liability Current And Long Term Components | ||
Current — included in compensation and benefits | 33 | 33 |
Long-term — included in retirement benefits | 414 | 405 |
Retiree medical liability | $ 447 | $ 438 |
RETIREMENT MEDICAL PLANS - Amou
RETIREMENT MEDICAL PLANS - Amount Of Retiree Medical Obligations Recorded In Accumulated Other Comprehensive Loss Net Of Tax (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Pension and other postretirement benefit, tax | $ 33 | $ 5 | $ 2 |
U.S. Retiree Medical Plan | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Balance, beginning | 89 | 129 | |
Net actuarial loss for the year | 27 | (19) | |
Amortization for the year | (12) | (21) | |
Pension and other postretirement benefit, tax | (8) | ||
Balance, ending | 96 | 89 | 129 |
U.S. Retiree Medical Plan | Net Actuarial Loss | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Balance, beginning | 101 | 142 | |
Net actuarial loss for the year | 27 | (19) | |
Amortization for the year | (13) | (22) | |
Pension and other postretirement benefit, tax | (8) | ||
Balance, ending | 107 | 101 | 142 |
U.S. Retiree Medical Plan | Prior Service Cost (Benefit) | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Balance, beginning | (12) | (13) | |
Net actuarial loss for the year | 0 | 0 | |
Amortization for the year | 1 | 1 | |
Pension and other postretirement benefit, tax | 0 | ||
Balance, ending | $ (11) | $ (12) | $ (13) |
RETIREMENT MEDICAL PLANS - Comp
RETIREMENT MEDICAL PLANS - Components Of Retiree Medical Expense (Details) - U.S. Retiree Medical Plan - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | $ 0 | $ 0 | $ 0 | |
Interest cost | 18 | 19 | 23 | |
Amortization of - Prior service cost (benefit) | (1) | (1) | (7) | |
Actuarial losses | 13 | 22 | 23 | |
Recognized prior service costs due to curtailment | $ (15) | 0 | 0 | (15) |
Retiree medical expense - total company | $ 30 | $ 40 | $ 24 |
RETIREMENT MEDICAL PLANS - R114
RETIREMENT MEDICAL PLANS - Retiree Medical Plan Effect Of One Percentage Point Change In Assumed Health Care Cost Trend Rates (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Retiree Medical Plan Effect Of One Percentage Point Change In Assumed Health Care Cost Trend Rates [Abstract] | ||
Effect on total service and interest cost 1% increase | $ 1 | $ 2 |
Effect on total service and interest cost 1% decrease | (1) | (1) |
Effect on APBO 1% increase | 40 | 39 |
Effect on APBO 1% decrease | $ (35) | $ (34) |
RETIREMENT MEDICAL PLANS - R115
RETIREMENT MEDICAL PLANS - Retiree Medical Plan Estimated Future Benefit Payments (Details) - U.S. Retiree Medical Plan $ in Millions | Sep. 30, 2016USD ($) |
Gross Benefit Payments | |
Fiscal 2,017 | $ 40 |
Fiscal 2,018 | 40 |
Fiscal 2,019 | 40 |
Fiscal 2,020 | 40 |
Fiscal 2,021 | 40 |
Fiscal 2022 – 2026 | 184 |
Gross Receipts | |
Fiscal 2,017 | 7 |
Fiscal 2,018 | 7 |
Fiscal 2,019 | 7 |
Fiscal 2,020 | 7 |
Fiscal 2,021 | 7 |
Fiscal 2022 – 2026 | $ 34 |
RETIREMENT MEDICAL PLANS - Addi
RETIREMENT MEDICAL PLANS - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 26, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Health care cost trend rate (weighted average) | 7.10% | |||||||
Reduction in APBO from subsidy | $ 35,000,000 | $ 25,000,000 | ||||||
Net actuarial loss estimated to be amortized from accumulated other comprehensive loss | $ 15,000,000 | |||||||
The prior service benefit estimated to be amortized from accumulated other comprehensive loss to periodic benefits cost | (3,000,000) | |||||||
U.S. Retiree Medical Plan | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Liability for retroactive benefits | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | |||||
Average period of amortization, inactive plan participants | 10 years | |||||||
Decrease in benefit obligations | $ 18,000,000 | |||||||
Curtailment gain | $ 16,000,000 | |||||||
Decrease in retiree medical expense | $ 15,000,000 | $ 0 | $ 0 | $ 15,000,000 | ||||
Health care cost trend rate (weighted average) | 7.10% | 7.00% | 7.40% | |||||
Average remaining service period of active participants | 10 years | |||||||
U.S. Retiree Medical Plan | Minimum | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Face amount of employee life insurance coverage per employee | $ 3,750 | |||||||
U.S. Retiree Medical Plan | Maximum | ||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||||
Face amount of employee life insurance coverage per employee | $ 15,000 |
RETIREMENT PENSION PLANS - Addi
RETIREMENT PENSION PLANS - Additional Information (Details) | Jan. 02, 2008employee | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2013USD ($) |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Pension settlement losses | $ 0 | $ 59,000,000 | $ 0 | |||
Net actuarial loss (gain) for the year | 30,000,000 | |||||
Defined contribution savings plan expense | $ 16,000,000 | 15,000,000 | $ 14,000,000 | |||
U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Average period of amortization, inactive plan participants | 21 years | |||||
Number of employees earning service for an additional transition period (ending June 30, 2011) | employee | 3,800 | |||||
Settlements | $ 0 | 0 | ||||
Lump sum distribution - maximum | $ 5,000 | |||||
Lump sum distribution - minimum | $ 1,000 | |||||
Settlements, plan assets | 0 | 0 | ||||
Net actuarial loss (gain) for the year | 105,000,000 | $ 10,000,000 | ||||
Unfunded investment commitments | 20,000,000 | |||||
Non-U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Rate of compensation increase | 2.00% | 2.00% | ||||
Pension settlement losses | $ 59,000,000 | |||||
Settlements | 0 | $ 111,000,000 | ||||
Settlements, plan assets | 0 | 20,000,000 | ||||
Net actuarial loss (gain) for the year | $ 115,000,000 | 48,000,000 | ||||
Non-U.S. Plans | UNITED KINGDOM | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Average period of amortization, inactive plan participants | 27 years | |||||
Non-U.S. Plans | CANADA | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Pension settlement losses | 16,000,000 | |||||
Settlements | 16,000,000 | |||||
Settlements, plan assets | 20,000,000 | |||||
Non-U.S. Plans | GERMANY | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Pension settlement losses | $ 43,000,000 | |||||
Settlements | 91,000,000 | |||||
Equity Investments | U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 30.00% | |||||
Target asset allocation, maximum | 50.00% | |||||
Fixed Income Investments | U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 30.00% | |||||
Target asset allocation, maximum | 50.00% | |||||
Fixed Income Investments | Non-U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 30.00% | |||||
Target asset allocation, maximum | 60.00% | |||||
Alternative investments measured at net asset value | U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 10.00% | |||||
Target asset allocation, maximum | 30.00% | |||||
Alternative investments measured at net asset value | Non-U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 10.00% | |||||
Target asset allocation, maximum | 30.00% | |||||
Equity Securities | Non-U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 15.00% | |||||
Target asset allocation, maximum | 35.00% | |||||
Real estate measured at net asset value | Non-U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Target asset allocation, minimum | 0.00% | |||||
Target asset allocation, maximum | 10.00% | |||||
Change in Assumptions for Pension Plans | U.S. Plans | ||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||||
Pension obligations increase | $ 24,000,000 |
RETIREMENT PENSION PLANS - Sche
RETIREMENT PENSION PLANS - Schedule of US Pension Benefit Obligation Expense and Net Expense Assumptions (Details) - U.S. Plans | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Assumed return on plan assets (beginning of the year) | 7.75% | 8.00% | 8.00% |
Minimum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount Rate | 3.50% | 4.25% | 4.20% |
Maximum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount Rate | 3.55% | 4.35% | 4.30% |
RETIREMENT PENSION PLANS - S119
RETIREMENT PENSION PLANS - Schedule of Non-US Pension Benefit Obligation Expense and Net Expense Assumptions (Details) - Non-U.S. Plans | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Assumed return on plan assets (beginning of the year) | 6.00% | ||
Rate of compensation increase | 2.00% | ||
Minimum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount Rate | 1.00% | 1.90% | |
Assumed return on plan assets (beginning of the year) | 2.25% | 2.25% | |
Rate of compensation increase | 2.00% | ||
Maximum | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount Rate | 2.50% | 3.80% | 4.10% |
Assumed return on plan assets (beginning of the year) | 7.25% | 7.25% | |
Rate of compensation increase | 3.00% | ||
UNITED KINGDOM | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount Rate | 2.50% | 3.80% | 4.10% |
Assumed return on plan assets (beginning of the year) | 6.00% | 7.25% | 7.25% |
RETIREMENT PENSION PLANS - Roll
RETIREMENT PENSION PLANS - Rollforward of Pension Liability and Pension Plan Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Change in PBO | |||
Beginning of year | $ 1,656 | ||
Actuarial loss (gain) | 30 | ||
End of year | 1,728 | $ 1,656 | |
Change in plan assets | |||
Fair value of assets - beginning of year | 1,547 | ||
Fair value of assets - end of year | 1,568 | 1,547 | |
U.S. Plans | |||
Change in PBO | |||
Beginning of year | 1,042 | 1,059 | |
Service cost | 0 | 1 | |
Interest cost | 45 | 44 | |
Actuarial loss (gain) | 105 | 10 | |
Settlements | 0 | 0 | |
Benefit payments | (80) | (72) | |
Foreign currency rate changes | 0 | 0 | |
End of year | 1,112 | 1,042 | $ 1,059 |
Change in plan assets | |||
Fair value of assets - beginning of year | 830 | 832 | |
Actual return on plan assets | 79 | 65 | |
Employer contributions | 5 | 5 | |
Settlements | 0 | 0 | |
Benefit payments | (80) | (72) | |
Foreign currency rate changes | 0 | 0 | |
Fair value of assets - end of year | 834 | 830 | 832 |
Funded status | (278) | (212) | |
Non-U.S. Plans | |||
Change in PBO | |||
Beginning of year | 614 | 735 | |
Service cost | 1 | 1 | |
Interest cost | 20 | 26 | |
Actuarial loss (gain) | 115 | 48 | |
Settlements | 0 | (111) | |
Benefit payments | (35) | (29) | |
Foreign currency rate changes | (99) | (56) | |
End of year | 616 | 614 | 735 |
Change in plan assets | |||
Fair value of assets - beginning of year | 717 | 743 | |
Actual return on plan assets | 169 | 67 | |
Employer contributions | 1 | 7 | |
Settlements | 0 | (20) | |
Benefit payments | (35) | (29) | |
Foreign currency rate changes | (118) | (51) | |
Fair value of assets - end of year | 734 | 717 | 743 |
Funded status | 118 | 103 | |
Total Pension Plans | |||
Change in PBO | |||
Beginning of year | 1,656 | 1,794 | |
Service cost | 1 | 2 | 2 |
Interest cost | 65 | 70 | 80 |
Actuarial loss (gain) | 220 | 58 | |
Settlements | 0 | (111) | |
Benefit payments | (115) | (101) | |
Foreign currency rate changes | (99) | (56) | |
End of year | 1,728 | 1,656 | 1,794 |
Change in plan assets | |||
Fair value of assets - beginning of year | 1,547 | 1,575 | |
Actual return on plan assets | 248 | 132 | |
Employer contributions | 6 | 12 | |
Settlements | 0 | (20) | |
Benefit payments | (115) | (101) | |
Foreign currency rate changes | (118) | (51) | |
Fair value of assets - end of year | 1,568 | 1,547 | $ 1,575 |
Funded status | $ (160) | $ (109) |
RETIREMENT PENSION PLANS - S121
RETIREMENT PENSION PLANS - Schedule of Balance Sheet Classification of Net Pension Liability (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Retirement benefits-non-current | $ (703) | $ (632) |
U.S. Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Non-current assets | 0 | 0 |
Current liabilities | (6) | (5) |
Retirement benefits-non-current | (272) | (207) |
Net amount recognized | (278) | (212) |
Non-U.S. Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Non-current assets | 123 | 110 |
Current liabilities | 0 | 0 |
Retirement benefits-non-current | (5) | (7) |
Net amount recognized | 118 | 103 |
Total Pension Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Non-current assets | 123 | 110 |
Current liabilities | (6) | (5) |
Retirement benefits-non-current | (277) | (214) |
Net amount recognized | $ (160) | $ (109) |
RETIREMENT PENSION PLANS - S122
RETIREMENT PENSION PLANS - Schedule of Pension Costs Recognized in Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Pension and other postretirement benefit, tax | $ 33 | $ 5 | $ 2 |
U.S. Plans | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Settlements | 0 | 0 | |
U.S. Plans | Net Actuarial Loss | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Balance, beginning | 410 | 419 | |
Net actuarial loss for the year | 87 | 8 | |
Amortization for the year | (18) | (17) | |
Pension and other postretirement benefit, tax | (25) | 0 | |
Settlements | 0 | ||
Balance, ending | 454 | 410 | 419 |
Non-U.S. Plans | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Settlements | 0 | 111 | |
Non-U.S. Plans | Net Actuarial Loss | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Balance, beginning | 206 | 241 | |
Net actuarial loss for the year | (11) | 24 | |
Amortization for the year | (5) | (8) | |
Pension and other postretirement benefit, tax | 0 | 5 | |
Settlements | (56) | ||
Balance, ending | 190 | 206 | 241 |
Total Pension Plans | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Settlements | 0 | 111 | |
Total Pension Plans | Net Actuarial Loss | |||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | |||
Balance, beginning | 616 | 660 | |
Net actuarial loss for the year | 76 | 32 | |
Amortization for the year | (23) | (25) | |
Pension and other postretirement benefit, tax | (25) | 5 | |
Settlements | (56) | ||
Balance, ending | $ 644 | $ 616 | $ 660 |
RETIREMENT PENSION PLANS - Pens
RETIREMENT PENSION PLANS - Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Compensation and Retirement Disclosure [Abstract] | ||
Pension liability | $ 277 | $ 214 |
Retiree medical liability — long term (see Note 20) | 414 | 405 |
Other | 12 | 13 |
Total retirement benefits | $ 703 | $ 632 |
RETIREMENT PENSION PLANS - S124
RETIREMENT PENSION PLANS - Schedule of Projected Benefit Obligation Accumulated Benefit Obligation and Plan Assets (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Compensation and Retirement Disclosure [Abstract] | ||
ABO Exceeds Assets, PBO | $ 1,116 | $ 1,057 |
ABO Exceeds Assets, ABO | 1,116 | 1,057 |
ABO Exceeds Assets, Plan Assets | 834 | 838 |
Assets Exceed ABO, PBO | 612 | 599 |
Assets Exceed ABO, ABO | 612 | 598 |
Assets Exceed ABO, Plan Assets | 734 | 709 |
PBO | 1,728 | 1,656 |
ABO | 1,728 | 1,655 |
Total assets at fair value | $ 1,568 | $ 1,547 |
RETIREMENT PENSION PLANS - S125
RETIREMENT PENSION PLANS - Schedule of Net Periodic Pension Benefit Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Settlement loss | $ 0 | $ 59 | $ 0 |
Total Pension Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Service cost | 1 | 2 | 2 |
Interest cost | 65 | 70 | 80 |
Assumed rate of return on plan assets | (99) | (111) | (104) |
Amortization of - Actuarial losses | 23 | 26 | 23 |
Settlement loss | 0 | 59 | 0 |
Retiree medical expense - total company | $ (10) | $ 46 | $ 1 |
RETIREMENT PENSION PLANS - P126
RETIREMENT PENSION PLANS - Pension Plan Investments Measured at Fair Value by Level Within Fair Value Hierarchy (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | $ 1,568 | $ 1,547 | |
U.S. Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 834 | 830 | $ 832 |
U.S. Plans | U.S. – Large cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 71 | 88 | |
U.S. Plans | U.S. – Small cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 22 | 21 | |
U.S. Plans | Private equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 11 | 15 | |
U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 41 | 53 | |
U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 152 | 160 | |
U.S. Plans | Total equity investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 297 | 337 | |
U.S. Plans | U.S. fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 275 | 271 | |
U.S. Plans | Emerging fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 20 | 20 | |
U.S. Plans | Partnerships fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 1 | 1 | |
U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 45 | 45 | |
U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 341 | 337 | |
U.S. Plans | Alternatives – Partnerships | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 77 | 84 | |
U.S. Plans | Alternatives – Partnerships measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 84 | 65 | |
U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 35 | 7 | |
U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 834 | 830 | |
Non-U.S. Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 143 | 161 | |
Total assets at fair value | 734 | 717 | $ 743 |
Non-U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 61 | 55 | |
Non-U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 82 | 106 | |
Non-U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 198 | 158 | |
Non-U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 420 | 344 | |
Non-U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 14 | 28 | |
Non-U.S. Plans | Other fixed income investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 222 | 186 | |
Non-U.S. Plans | Commingled funds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Comingled funds | 6 | 8 | |
Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 114 | ||
Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 133 | ||
Non-U.S. Plans | Real estate measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Real estate | 37 | 43 | |
Non-U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 734 | 717 | |
Level 1 | U.S. Plans | U.S. – Large cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 71 | 88 | |
Level 1 | U.S. Plans | U.S. – Small cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 22 | 21 | |
Level 1 | U.S. Plans | Private equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 1 | U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 41 | 53 | |
Level 1 | U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 1 | U.S. Plans | Total equity investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 134 | 162 | |
Level 1 | U.S. Plans | U.S. fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 10 | 8 | |
Level 1 | U.S. Plans | Emerging fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 1 | U.S. Plans | Partnerships fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 1 | U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 1 | U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 10 | 8 | |
Level 1 | U.S. Plans | Alternatives – Partnerships | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | 0 | |
Level 1 | U.S. Plans | Alternatives – Partnerships measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | 0 | |
Level 1 | U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 0 | 0 | |
Level 1 | U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 144 | 170 | |
Level 1 | Non-U.S. Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 61 | 55 | |
Level 1 | Non-U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 61 | 55 | |
Level 1 | Non-U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 1 | Non-U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 1 | Non-U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 1 | Non-U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 0 | 0 | |
Level 1 | Non-U.S. Plans | Other fixed income investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 1 | Non-U.S. Plans | Commingled funds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Comingled funds | 0 | 0 | |
Level 1 | Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | ||
Level 1 | Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | ||
Level 1 | Non-U.S. Plans | Real estate measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Real estate | 0 | 0 | |
Level 1 | Non-U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 61 | 55 | |
Level 2 | U.S. Plans | U.S. – Large cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | U.S. Plans | U.S. – Small cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | U.S. Plans | Private equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | U.S. Plans | Total equity investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | U.S. Plans | U.S. fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 265 | 263 | |
Level 2 | U.S. Plans | Emerging fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 20 | 20 | |
Level 2 | U.S. Plans | Partnerships fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 2 | U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 2 | U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 285 | 283 | |
Level 2 | U.S. Plans | Alternatives – Partnerships | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | 0 | |
Level 2 | U.S. Plans | Alternatives – Partnerships measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | 0 | |
Level 2 | U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 35 | 7 | |
Level 2 | U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 320 | 290 | |
Level 2 | Non-U.S. Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | Non-U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | Non-U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 2 | Non-U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 2 | Non-U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 222 | 186 | |
Level 2 | Non-U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 14 | 28 | |
Level 2 | Non-U.S. Plans | Other fixed income investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 222 | 186 | |
Level 2 | Non-U.S. Plans | Commingled funds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Comingled funds | 6 | 8 | |
Level 2 | Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | ||
Level 2 | Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | ||
Level 2 | Non-U.S. Plans | Real estate measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Real estate | 0 | 0 | |
Level 2 | Non-U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 242 | 222 | |
Level 3 | U.S. Plans | U.S. – Large cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | U.S. Plans | U.S. – Small cap | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | U.S. Plans | Private equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 11 | 15 | |
Level 3 | U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | U.S. Plans | Total equity investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 11 | 15 | |
Level 3 | U.S. Plans | U.S. fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 3 | U.S. Plans | Emerging fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 3 | U.S. Plans | Partnerships fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 1 | 1 | |
Level 3 | U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 3 | U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 1 | 1 | |
Level 3 | U.S. Plans | Alternatives – Partnerships | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 77 | 84 | |
Level 3 | U.S. Plans | Alternatives – Partnerships measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | 0 | |
Level 3 | U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 0 | 0 | |
Level 3 | U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | 89 | 100 | |
Level 3 | Non-U.S. Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | Non-U.S. Plans | International equity | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | Non-U.S. Plans | Equity investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Equity investments | 0 | 0 | |
Level 3 | Non-U.S. Plans | Fixed income investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 3 | Non-U.S. Plans | Total fixed income | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 3 | Non-U.S. Plans | Cash and cash equivalents | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Cash and cash equivalents | 0 | 0 | |
Level 3 | Non-U.S. Plans | Other fixed income investments | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Fixed income investments | 0 | 0 | |
Level 3 | Non-U.S. Plans | Commingled funds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Comingled funds | 0 | 0 | |
Level 3 | Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | ||
Level 3 | Non-U.S. Plans | Alternative investments measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Alternative investments | 0 | ||
Level 3 | Non-U.S. Plans | Real estate measured at net asset value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Real estate | 0 | 0 | |
Level 3 | Non-U.S. Plans | Total assets at fair value | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Total assets at fair value | $ 0 | $ 0 |
RETIREMENT PENSION PLANS - Chan
RETIREMENT PENSION PLANS - Changes in Level 3, Pension Plan Investments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
U.S. Plans | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Return on Plan Assets: Attributable to Assets Held at Period End | $ 79 | $ 65 |
Non-U.S. Plans | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Return on Plan Assets: Attributable to Assets Held at Period End | 169 | 67 |
Level 3 | U.S. Plans | Private equity | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair Value, beginning of period | 15 | 15 |
Return on Plan Assets: Attributable to Assets Held at Period End | (4) | 0 |
Purchases | 0 | 0 |
Settlements | 0 | 0 |
Net Transfers Into (Out of) Level 3 | 0 | 0 |
Fair Value, end of period | 11 | 15 |
Level 3 | U.S. Plans | Partnerships Fixed Income | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair Value, beginning of period | 1 | 1 |
Return on Plan Assets: Attributable to Assets Held at Period End | 0 | 0 |
Purchases | 0 | 0 |
Settlements | 0 | 0 |
Net Transfers Into (Out of) Level 3 | 0 | 0 |
Fair Value, end of period | 1 | 1 |
Level 3 | U.S. Plans | Alternatives – Partnerships | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair Value, beginning of period | 84 | 58 |
Return on Plan Assets: Attributable to Assets Held at Period End | (5) | 19 |
Purchases | 0 | 8 |
Settlements | (2) | (1) |
Net Transfers Into (Out of) Level 3 | 0 | 0 |
Fair Value, end of period | 77 | 84 |
Level 3 | U.S. Plans | Total Level 3 fair value | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair Value, beginning of period | 100 | 74 |
Return on Plan Assets: Attributable to Assets Held at Period End | (9) | 19 |
Purchases | 0 | 8 |
Settlements | (2) | (1) |
Net Transfers Into (Out of) Level 3 | 0 | 0 |
Fair Value, end of period | $ 89 | $ 100 |
RETIREMENT PENSION PLANS - P128
RETIREMENT PENSION PLANS - Pension Plan Estimated Future Contributions and Benefit Payments (Details) $ in Millions | 12 Months Ended |
Sep. 30, 2016USD ($) | |
U.S. Plans | |
Expected employer contributions: | |
Expected employer contributions, year one | $ 5 |
Expected benefit payments: | |
Fiscal 2,017 | 78 |
Fiscal 2,018 | 76 |
Fiscal 2,019 | 74 |
Fiscal 2,020 | 73 |
Fiscal 2,021 | 71 |
Fiscal 2022 – 2026 | 336 |
Non-U.S. Plans | |
Expected employer contributions: | |
Expected employer contributions, year one | 1 |
Expected benefit payments: | |
Fiscal 2,017 | 20 |
Fiscal 2,018 | 20 |
Fiscal 2,019 | 21 |
Fiscal 2,020 | 22 |
Fiscal 2,021 | 22 |
Fiscal 2022 – 2026 | 121 |
Total Pension Plans | |
Expected employer contributions: | |
Expected employer contributions, year one | 6 |
Expected benefit payments: | |
Fiscal 2,017 | 98 |
Fiscal 2,018 | 96 |
Fiscal 2,019 | 95 |
Fiscal 2,020 | 95 |
Fiscal 2,021 | 93 |
Fiscal 2022 – 2026 | $ 457 |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Before Income Tax (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | |||
U.S. income | $ 71 | $ 24 | $ 204 |
Foreign income | 84 | 43 | 111 |
INCOME BEFORE INCOME TAXES | $ 155 | $ 67 | $ 315 |
INCOME TAXES - Components of th
INCOME TAXES - Components of the Benefit (Provision) for Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Current tax benefit (expense): | |||||||||||
U.S. | $ (1) | $ (4) | $ (1) | ||||||||
Foreign | 11 | (20) | (32) | ||||||||
State and local | (1) | (1) | 0 | ||||||||
Total current tax benefit (expense) | 9 | (25) | (33) | ||||||||
Deferred tax benefit (expense): | |||||||||||
U.S. | 394 | 3 | (1) | ||||||||
Foreign | (22) | 21 | 3 | ||||||||
State and local | 43 | 0 | 0 | ||||||||
Total deferred tax benefit | 415 | 24 | 2 | ||||||||
Income tax benefit (expense) | $ 446 | $ (8) | $ (7) | $ (7) | $ 18 | $ (6) | $ (6) | $ (7) | $ 424 | $ (1) | $ (31) |
INCOME TAXES - Summary of the T
INCOME TAXES - Summary of the Tax Effects of Temporary Differences (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Accrued compensation and benefits | $ 21 | $ 27 |
Accrued product warranties | 13 | 19 |
Inventory costs | 8 | 20 |
Receivables | 15 | 16 |
Accrued retiree healthcare benefits | 169 | 175 |
Retirement pension plans | 119 | 95 |
Property | 7 | 9 |
Loss and credit carryforwards | 455 | 487 |
Other | 67 | 77 |
Sub-total | 874 | 925 |
Less: Valuation allowances | (379) | (834) |
Deferred income taxes - asset | 495 | 91 |
Taxes on undistributed income | (7) | (51) |
Intangible assets | (82) | (85) |
Debt basis difference | (5) | (8) |
Deferred income taxes - liability | (94) | (144) |
Net deferred income tax assets | $ 401 | |
Net deferred income tax liabilities | (53) | |
Restatement Adjustment | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Loss and credit carryforwards | (121) | |
Less: Valuation allowances | (127) | |
Taxes on undistributed income | $ (6) |
INCOME TAXES - Schedule of Net
INCOME TAXES - Schedule of Net Current and Non-Current Deferred Income Tax Assets (Liabilities) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 |
Income Tax Disclosure [Abstract] | ||
Other current assets (see Note 10) | $ 0 | $ 20 |
Other current liabilities | 0 | (2) |
Net current deferred income taxes — asset | 0 | 18 |
Other assets (see Note 12) | 413 | 28 |
Other liabilities (see Note 15) | (12) | (99) |
Net non-current deferred income taxes — asset (liability) | $ 401 | |
Net non-current deferred income taxes — asset (liability) | $ (71) |
INCOME TAXES - Tax Credit Carry
INCOME TAXES - Tax Credit Carryforwards and Deferred Tax Assets (Details) $ in Millions | Sep. 30, 2016USD ($) |
Operating Loss Carryforwards [Line Items] | |
Net Operating Losses and Tax Credit Carryforwards | $ 455 |
Valuation Allowances on these Deferred Tax Assets | 341 |
2017-2021 | |
Operating Loss Carryforwards [Line Items] | |
Net Operating Losses and Tax Credit Carryforwards | 25 |
Valuation Allowances on these Deferred Tax Assets | 24 |
2022-2031 | |
Operating Loss Carryforwards [Line Items] | |
Net Operating Losses and Tax Credit Carryforwards | 160 |
Valuation Allowances on these Deferred Tax Assets | 56 |
2032-2036 | |
Operating Loss Carryforwards [Line Items] | |
Net Operating Losses and Tax Credit Carryforwards | 10 |
Valuation Allowances on these Deferred Tax Assets | 8 |
Indefinite | |
Operating Loss Carryforwards [Line Items] | |
Net Operating Losses and Tax Credit Carryforwards | 260 |
Valuation Allowances on these Deferred Tax Assets | $ 253 |
INCOME TAXES - Income Tax (Bene
INCOME TAXES - Income Tax (Benefit) Provision at the U.S Statutory Rate (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Statutory tax rate | 35.00% | 35.00% | 35.00% | ||||||||
Foreign tax rate | 35.00% | 35.00% | 35.00% | ||||||||
Expense for income taxes at statutory tax rate of 35% | $ (54) | $ (23) | $ (110) | ||||||||
State and local income taxes | (7) | (1) | 0 | ||||||||
Foreign income taxed at rates other than 35% | 5 | 7 | 13 | ||||||||
Joint venture equity income | 3 | 3 | 5 | ||||||||
Tax effect of nonfunctional currency transaction | (30) | 0 | (4) | ||||||||
Correlated tax relief | 51 | 0 | 0 | ||||||||
U.S. tax impact on distributions from subsidiaries and joint ventures | 14 | (11) | (26) | ||||||||
Nondeductible expenses | (12) | (9) | (10) | ||||||||
Tax credits | 61 | 0 | 0 | ||||||||
Valuation allowances | 418 | 49 | 113 | ||||||||
Tax rate change | (14) | 0 | 0 | ||||||||
Other | (11) | (16) | (12) | ||||||||
Income tax benefit (expense) | $ 446 | $ (8) | $ (7) | $ (7) | $ 18 | $ (6) | $ (6) | $ (7) | 424 | (1) | (31) |
Restatement Adjustment | |||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||
Tax effect of nonfunctional currency transaction | (4) | ||||||||||
U.S. tax impact on distributions from subsidiaries and joint ventures | 7 | (8) | |||||||||
Valuation allowances | 2 | (24) | |||||||||
Other | $ (9) | $ (12) | |||||||||
Income tax benefit (expense) | $ 61 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning balance | $ 207 | $ 209 | $ 190 |
Additions to tax positions recorded during the current year | 39 | 15 | 28 |
Reductions to tax position recorded in prior years | 0 | (2) | (2) |
Reductions to tax positions due to lapse of statutory limits | (3) | (11) | (7) |
Translation, other | 0 | (4) | 0 |
Unrecognized tax benefits, ending balance | 243 | 207 | 209 |
Restatement Adjustment | |||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning balance | $ 131 | 121 | |
Unrecognized tax benefits, ending balance | $ 131 | $ 121 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax [Line Items] | ||||||
Subsidiary, ownership percentage | 100.00% | |||||
Undistributed earnings in foreign subsidiaries on which income taxes have not been provided | $ 687 | $ 686 | ||||
Correlated tax relief | 51 | 0 | $ 0 | |||
Non-cash benefit related to certain judicial decisions, reinvestment assertions | 210 | |||||
Gross unrecognized tax benefits | $ 243 | $ 207 | 243 | 207 | $ 209 | $ 190 |
Unrecognized tax benefits that would impact effective tax rate | 215 | 215 | ||||
Interest on uncertain tax positions accrued | 4 | 3 | 4 | 3 | ||
Penalties on uncertain tax positions accrued | 2 | 2 | 2 | 2 | ||
Income tax penalties and interest expense | 8 | |||||
U.S. | ||||||
Income Tax [Line Items] | ||||||
Non-cash expense (benefit) for the reversal of valuation allowances | $ (438) | (438) | ||||
Italy, Mexico, Sweden and Germany | ||||||
Income Tax [Line Items] | ||||||
Non-cash expense (benefit) for the reversal of valuation allowances | $ (16) | $ (16) | ||||
Brazil | ||||||
Income Tax [Line Items] | ||||||
Non-cash expense (benefit) for the reversal of valuation allowances | $ 9 |
CONTINGENCIES - Environmental L
CONTINGENCIES - Environmental Loss Contingencies by Site (Details) $ in Millions | 12 Months Ended |
Sep. 30, 2016USD ($) | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Environmental Contingencies, beginning balance | $ 16 |
Payments and other | (6) |
Accruals | 3 |
Environmental Contingencies, ending balance | 13 |
Superfund Sites | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Environmental Contingencies, beginning balance | 2 |
Payments and other | 0 |
Accruals | 0 |
Environmental Contingencies, ending balance | 2 |
Non-Superfund Sites | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Environmental Contingencies, beginning balance | 14 |
Payments and other | (6) |
Accruals | 3 |
Environmental Contingencies, ending balance | $ 11 |
CONTINGENCIES - Asbestos Relate
CONTINGENCIES - Asbestos Related Reserves and Recoveries (Details) - USD ($) | Sep. 30, 2016 | Sep. 30, 2015 |
Loss Contingencies [Line Items] | ||
Asbestos-related liabilities | $ 13,000,000 | $ 16,000,000 |
Maremont Asbestos | ||
Loss Contingencies [Line Items] | ||
Pending and future claims | 70,000,000 | 71,000,000 |
Billed but unpaid claims | 2,000,000 | 3,000,000 |
Asbestos-related liabilities | 72,000,000 | 74,000,000 |
Asbestos-related insurance recoveries | 32,000,000 | 41,000,000 |
Rockwell Asbestos | ||
Loss Contingencies [Line Items] | ||
Pending and future claims | 60,000,000 | 55,000,000 |
Billed but unpaid claims | 1,000,000 | 3,000,000 |
Asbestos-related liabilities | 61,000,000 | 58,000,000 |
Asbestos-related insurance recoveries | $ 27,000,000 | $ 14,000,000 |
CONTINGENCIES - Additional Info
CONTINGENCIES - Additional Information (Details) | Dec. 12, 2015USD ($) | Sep. 30, 2016USD ($)claim | Sep. 30, 2016USD ($)claim | Jun. 30, 2016USD ($) | Sep. 30, 2015USD ($)claim | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($)siteclaim | Sep. 30, 2015USD ($)claim | Sep. 30, 2014USD ($) | Sep. 30, 2009USD ($) |
Loss Contingencies [Line Items] | ||||||||||
Environmental contingencies accrued | $ 13,000,000 | $ 13,000,000 | $ 16,000,000 | $ 13,000,000 | $ 16,000,000 | |||||
Estimated environmental liabilities for ongoing operations, maintenance and monitoring discounted amount | 7,000,000 | 7,000,000 | 7,000,000 | |||||||
Estimated environmental liabilities for ongoing operations, maintenance and monitoring undiscounted amount | 8,000,000 | 8,000,000 | 8,000,000 | |||||||
Litigation settlement | (3,000,000) | 0 | $ 0 | |||||||
Indemnity Obligations | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Guarantee obligations recorded | $ 11,000,000 | $ 11,000,000 | 13,000,000 | $ 11,000,000 | 13,000,000 | $ 28,000,000 | ||||
Body Systems | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss contingency accrual | 6,000,000 | |||||||||
Indemnity obligations liability | 2,000,000 | |||||||||
Gain (loss) related to litigation settlement | $ 6,000,000 | |||||||||
Super Fund | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Number of superfund sites | site | 9 | |||||||||
Minimum | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental liabilities discounted rate | 1.00% | 1.00% | 1.00% | |||||||
Maximum | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental liabilities discounted rate | 2.75% | 2.75% | 2.75% | |||||||
Maremont Asbestos | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental contingencies accrued | $ 72,000,000 | $ 72,000,000 | $ 74,000,000 | $ 72,000,000 | $ 74,000,000 | |||||
Number of pending asbestos-related claims | claim | 5,800 | 5,800 | 5,600 | 5,800 | 5,600 | |||||
Period for incurring loss | 10 years | |||||||||
Loss contingency accrual | $ 70,000,000 | $ 70,000,000 | $ 71,000,000 | $ 70,000,000 | $ 71,000,000 | |||||
Charge based on annual valuation of asbestos | 2,000,000 | 2,000,000 | ||||||||
Insurance receivable | 32,000,000 | 32,000,000 | 41,000,000 | 32,000,000 | 41,000,000 | |||||
Asbestos-related insurance recoveries | 32,000,000 | 32,000,000 | 41,000,000 | 32,000,000 | 41,000,000 | |||||
Maremont Asbestos | Minimum | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss Contingency, Estimate of Possible Loss | 70,000,000 | 70,000,000 | 70,000,000 | |||||||
Maremont Asbestos | Maximum | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss Contingency, Estimate of Possible Loss | 83,000,000 | 83,000,000 | 83,000,000 | |||||||
Rockwell Asbestos | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental contingencies accrued | $ 61,000,000 | $ 61,000,000 | $ 58,000,000 | $ 61,000,000 | $ 58,000,000 | |||||
Number of pending asbestos-related claims | claim | 3,200 | 3,200 | 3,000 | 3,200 | 3,000 | |||||
Loss Contingency, Estimate of Possible Loss | $ 60,000,000 | $ 60,000,000 | $ 55,000,000 | $ 60,000,000 | $ 55,000,000 | |||||
Charge based on annual valuation of asbestos | 9,000,000 | 2,000,000 | 4,000,000 | |||||||
Insurance receivable | 9,000,000 | 9,000,000 | 9,000,000 | $ 9,000,000 | 9,000,000 | |||||
Period for settlement | 10 years | |||||||||
Asbestos-related insurance recoveries | 27,000,000 | 27,000,000 | 14,000,000 | $ 27,000,000 | 14,000,000 | |||||
Rockwell Asbestos | Minimum | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss Contingency, Estimate of Possible Loss | 60,000,000 | 60,000,000 | 60,000,000 | |||||||
Rockwell Asbestos | Maximum | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss Contingency, Estimate of Possible Loss | 75,000,000 | 75,000,000 | 75,000,000 | |||||||
Home Insurance Company | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Litigation settlement | $ 3,000,000 | |||||||||
Asbestos-related insurance recoveries | 6,000,000 | |||||||||
TL Trailer Axles | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Litigation settlement | $ 6,000,000 | |||||||||
Superfund Sites | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental costs reasonably possible | 9,000,000 | 9,000,000 | 9,000,000 | |||||||
Environmental contingencies accrued | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | |||||
Environmental remediation costs | 1,000,000 | |||||||||
Non-Superfund Sites | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental costs reasonably possible | 28,000,000 | 28,000,000 | 28,000,000 | |||||||
Environmental contingencies accrued | 11,000,000 | 11,000,000 | 14,000,000 | 11,000,000 | 14,000,000 | |||||
Environmental remediation costs | 3,000,000 | 3,000,000 | 5,000,000 | |||||||
Other Income (expense) | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental remediation costs | 3,000,000 | 2,000,000 | 2,000,000 | |||||||
Discontinued Operations | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Environmental remediation costs | $ 4,000,000 | |||||||||
Tax Years 2008 Through 2015 | Value Added Tax | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss contingency accrual | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Insurance Settlement | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Litigation settlement expense | 31,000,000 | |||||||||
Insurance Settlement | Maremont Asbestos | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss contingency accrual | $ 12,000,000 | 3,000,000 | 3,000,000 | 3,000,000 | ||||||
Litigation settlement | 17,000,000 | |||||||||
Litigation settlement expense | $ 5,000,000 | 9,000,000 | ||||||||
Insurance Settlement | Rockwell Asbestos | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Loss contingency accrual | 22,000,000 | 22,000,000 | 22,000,000 | |||||||
Insurance receivable | 12,000,000 | 12,000,000 | 12,000,000 | |||||||
Litigation settlement | 32,000,000 | |||||||||
Litigation settlement expense | 10,000,000 | |||||||||
Coverage-in-place arrangement with other insurers | Rockwell Asbestos | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Insurance receivable | 6,000,000 | 6,000,000 | 6,000,000 | |||||||
MSSC | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Exposure under Indemnity | $ 1,000,000 | $ 1,000,000 | $ 2,000,000 | $ 1,000,000 | $ 2,000,000 |
BUSINESS SEGMENT INFORMATION -
BUSINESS SEGMENT INFORMATION - Summary of Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Total sales | $ 728 | $ 841 | $ 821 | $ 809 | $ 853 | $ 909 | $ 864 | $ 879 | $ 3,199 | $ 3,505 | $ 3,766 |
Commercial Truck & Industrial | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | 2,369 | 2,649 | 2,876 | ||||||||
Aftermarket & Trailer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | 830 | 856 | 890 | ||||||||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | 3,199 | 3,505 | 3,766 | ||||||||
Operating Segments | Commercial Truck & Industrial | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | 2,445 | 2,739 | 2,980 | ||||||||
Operating Segments | Aftermarket & Trailer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | 860 | 884 | 920 | ||||||||
Eliminations | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | (106) | (118) | (134) | ||||||||
Eliminations | Commercial Truck & Industrial | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | 76 | 90 | 104 | ||||||||
Eliminations | Aftermarket & Trailer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total sales | $ 30 | $ 28 | $ 30 |
BUSINESS SEGMENT INFORMATION141
BUSINESS SEGMENT INFORMATION - Segment Income Attributable to Parent (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Interest expense, net | $ (84) | $ (105) | $ (130) | ||||||||
Benefit (provision) for income taxes | $ 446 | $ (8) | $ (7) | $ (7) | $ 18 | $ (6) | $ (6) | $ (7) | 424 | (1) | (31) |
Depreciation and amortization | (67) | (65) | (67) | ||||||||
Restructuring costs | (7) | (6) | (2) | (1) | (1) | (9) | (3) | (3) | (16) | (16) | (10) |
Pension settlement losses | 0 | (59) | 0 | ||||||||
Goodwill and asset impairment charges | 0 | (17) | 0 | ||||||||
Noncontrolling interests | (2) | (1) | (5) | ||||||||
Income from continuing operations attributable to Meritor, Inc. | $ 474 | $ 42 | $ 33 | $ 28 | $ (21) | $ 15 | $ 39 | $ 32 | 577 | 65 | 279 |
Commercial Truck & Industrial | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Depreciation and amortization | (59) | (59) | (61) | ||||||||
Restructuring costs | (6) | (14) | (8) | ||||||||
Aftermarket & Trailer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Depreciation and amortization | (8) | (6) | (6) | ||||||||
Restructuring costs | (8) | 0 | (1) | ||||||||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Segment EBITDA | 323 | 339 | 324 | ||||||||
Operating Segments | Commercial Truck & Industrial | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Segment EBITDA | 208 | 216 | 218 | ||||||||
Operating Segments | Aftermarket & Trailer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Segment EBITDA | 115 | 123 | 106 | ||||||||
Segment Reconciling Items | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Unallocated legacy and corporate income (expense), net | 4 | (5) | (10) | ||||||||
Interest expense, net | (84) | (105) | (130) | ||||||||
Benefit (provision) for income taxes | 424 | (1) | (31) | ||||||||
Depreciation and amortization | (67) | (65) | (67) | ||||||||
Loss on sale of receivables | (5) | (5) | (8) | ||||||||
Restructuring costs | (16) | (16) | (10) | ||||||||
Antitrust settlement with Eaton, net of tax | 0 | 0 | 208 | ||||||||
Reduction of specific warranty contingency, net of supplier recovery | 0 | 0 | 8 | ||||||||
Pension settlement losses | 0 | (59) | 0 | ||||||||
Goodwill and asset impairment charges | 0 | (17) | 0 | ||||||||
Noncontrolling interests | $ (2) | $ (1) | $ (5) |
BUSINESS SEGMENT INFORMATION142
BUSINESS SEGMENT INFORMATION - Schedule of Segment Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | |||
Total depreciation and amortization | $ 67 | $ 65 | $ 67 |
Total capital expenditures | 93 | 79 | 77 |
TOTAL ASSETS | 2,494 | 2,195 | |
Commercial Truck & Industrial | |||
Segment Reporting Information [Line Items] | |||
Total depreciation and amortization | 59 | 59 | 61 |
Total capital expenditures | 83 | 71 | 71 |
Aftermarket & Trailer | |||
Segment Reporting Information [Line Items] | |||
Total depreciation and amortization | 8 | 6 | 6 |
Total capital expenditures | 10 | 8 | 6 |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 1,869 | 2,017 | |
Operating Segments | Commercial Truck & Industrial | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 1,433 | 1,569 | |
Operating Segments | Aftermarket & Trailer | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 436 | 448 | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 845 | 434 | |
Segment Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Total depreciation and amortization | 67 | 65 | $ 67 |
Less: Accounts receivable sold under off-balance sheet factoring programs | $ (220) | $ (256) |
BUSINESS SEGMENT INFORMATION143
BUSINESS SEGMENT INFORMATION - Schedule of Revenues and Assets by Geographical Areas (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | $ 728 | $ 841 | $ 821 | $ 809 | $ 853 | $ 909 | $ 864 | $ 879 | $ 3,199 | $ 3,505 | $ 3,766 |
Total assets excluding discontinued operations | 2,494 | 2,195 | 2,494 | 2,195 | |||||||
U.S. | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 1,617 | 1,733 | 1,466 | ||||||||
Total assets excluding discontinued operations | 1,359 | 995 | 1,359 | 995 | |||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 67 | 70 | 68 | ||||||||
Total assets excluding discontinued operations | 33 | 30 | 33 | 30 | |||||||
Mexico | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 390 | 491 | 652 | ||||||||
Total assets excluding discontinued operations | 202 | 236 | 202 | 236 | |||||||
Total North America | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 2,074 | 2,294 | 2,186 | ||||||||
Total assets excluding discontinued operations | 1,594 | 1,261 | 1,594 | 1,261 | |||||||
Sweden | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 250 | 325 | 369 | ||||||||
Total assets excluding discontinued operations | 104 | 108 | 104 | 108 | |||||||
Italy | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 201 | 204 | 234 | ||||||||
Total assets excluding discontinued operations | 65 | 77 | 65 | 77 | |||||||
United Kingdom | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 136 | 76 | 82 | ||||||||
Total assets excluding discontinued operations | 212 | 211 | 212 | 211 | |||||||
Other Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 86 | 90 | 111 | ||||||||
Total assets excluding discontinued operations | 164 | 176 | 164 | 176 | |||||||
Total Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 673 | 695 | 796 | ||||||||
Total assets excluding discontinued operations | 545 | 572 | 545 | 572 | |||||||
Brazil | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 130 | 198 | 408 | ||||||||
Total assets excluding discontinued operations | 146 | 136 | 146 | 136 | |||||||
China | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 84 | 90 | 146 | ||||||||
Total assets excluding discontinued operations | 97 | 118 | 97 | 118 | |||||||
India | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 152 | 140 | 114 | ||||||||
Other Asia-Pacific | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total sales | 86 | 88 | $ 116 | ||||||||
Total assets excluding discontinued operations | $ 112 | $ 108 | $ 112 | $ 108 |
BUSINESS SEGMENT INFORMATION144
BUSINESS SEGMENT INFORMATION - Additional Information (Details) - segment | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Number of reportable segments | 2 | ||
Percentage of sales to major customers | 10.00% | ||
AB Volvo | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Percentage of sales to major customers | 23.00% | 24.00% | 27.00% |
Daimler AG | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Percentage of sales to major customers | 18.00% | 20.00% | 18.00% |
Navistar | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Percentage of sales to major customers | 9.00% | 11.00% | 12.00% |
QUARTERLY FINANCIAL INFORMAT145
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - Summary of Unaudited Quarterly Results (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Sales | $ 728 | $ 841 | $ 821 | $ 809 | $ 853 | $ 909 | $ 864 | $ 879 | $ 3,199 | $ 3,505 | $ 3,766 |
Cost of sales | (644) | (714) | (700) | (705) | (745) | (785) | (749) | (764) | (2,763) | (3,043) | (3,279) |
Gross margin | 84 | 127 | 121 | 104 | 108 | 124 | 115 | 115 | 436 | 462 | 487 |
Benefit (provision) for income taxes | 446 | (8) | (7) | (7) | 18 | (6) | (6) | (7) | 424 | (1) | (31) |
Net income | 474 | 42 | 32 | 27 | (22) | 14 | 43 | 30 | 575 | 65 | 254 |
Income from continuing operations attributable to Meritor, Inc. | 474 | 42 | 33 | 28 | (21) | 15 | 39 | 32 | 577 | 65 | 279 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ 474 | $ 41 | $ 32 | $ 26 | $ (21) | $ 13 | $ 43 | $ 29 | $ 573 | $ 64 | $ 249 |
Basic earnings (loss) per share from continuing operations (in dollars per share) | $ 5.47 | $ 0.47 | $ 0.36 | $ 0.30 | $ (0.22) | $ 0.15 | $ 0.40 | $ 0.33 | $ 6.40 | $ 0.67 | $ 2.86 |
Diluted earnings (loss) per share from continuing operations (in dollars per share) | $ 5.34 | $ 0.46 | $ 0.36 | $ 0.30 | $ (0.22) | $ 0.15 | $ 0.38 | $ 0.32 | $ 6.27 | $ 0.65 | $ 2.81 |
QUARTERLY FINANCIAL INFORMAT146
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Quarterly Financial Information [Line Items] | ||||||||||||
Restructuring costs | $ 7 | $ 6 | $ 2 | $ 1 | $ 1 | $ 9 | $ 3 | $ 3 | $ 16 | $ 16 | $ 10 | |
Income tax expense (benefit) | (446) | 8 | 7 | 7 | (18) | 6 | 6 | 7 | (424) | 1 | 31 | |
Net income (loss) | 474 | $ 41 | $ 32 | $ 26 | (21) | $ 13 | $ 43 | $ 29 | 573 | 64 | 249 | |
Pension settlement losses | 0 | 59 | 0 | |||||||||
Goodwill impairment | 15 | 0 | 15 | 0 | ||||||||
Impairment of long-lived assets | 2 | |||||||||||
Non-U.S. Plans | ||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||
Pension settlement losses | 59 | |||||||||||
U.S. Retiree Medical Plan | ||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||
Recognized prior service costs due to curtailment | $ 15 | 0 | 0 | $ 15 | ||||||||
U.S. | ||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||
Non-cash expense (benefit) for the reversal of valuation allowances | (438) | (438) | ||||||||||
Income tax expense (benefit) | (25) | |||||||||||
Brazil | ||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||
Non-cash expense (benefit) for the reversal of valuation allowances | $ 9 | |||||||||||
Income tax expense (benefit) | 9 | |||||||||||
Italy, Mexico, Sweden and Germany | ||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||
Non-cash expense (benefit) for the reversal of valuation allowances | $ (16) | $ (16) | ||||||||||
Insurance Settlement | ||||||||||||
Quarterly Financial Information [Line Items] | ||||||||||||
Litigation settlement expense | $ 31 |
OPERATING CASH FLOWS AND OTH147
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION - Schedule of Operating Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Cash Flow Disclosure [Abstract] | |||||||||||
Net income | $ 474 | $ 42 | $ 32 | $ 27 | $ (22) | $ 14 | $ 43 | $ 30 | $ 575 | $ 65 | $ 254 |
Less: Loss from discontinued operations, net of tax | (4) | (1) | (30) | ||||||||
Income from continuing operations | 579 | 66 | 284 | ||||||||
Adjustments to income from continuing operations to arrive at cash provided by (used for) operating activities: | |||||||||||
Depreciation and amortization | 67 | 65 | 67 | ||||||||
Deferred income tax benefit | (415) | (24) | (2) | ||||||||
Restructuring costs | 16 | 16 | 10 | ||||||||
Loss on debt extinguishment | 0 | 25 | 31 | ||||||||
Goodwill and asset impairment | 0 | 17 | 0 | ||||||||
Equity in earnings of ZF Meritor | 0 | 0 | (190) | ||||||||
Equity in earnings of other affiliates | (36) | (39) | (38) | ||||||||
Stock compensation expense | 9 | 10 | 8 | ||||||||
Provision for doubtful accounts | 2 | 2 | 0 | ||||||||
Pension and retiree medical expense | 20 | 82 | 25 | ||||||||
Gain on sale of property | (2) | (3) | 0 | ||||||||
Dividends received from ZF Meritor | 0 | 0 | 190 | ||||||||
Dividends received from other equity method investments | 37 | 32 | 36 | ||||||||
Pension and retiree medical contributions | (42) | (141) | (177) | ||||||||
Restructuring payments | (11) | (16) | (10) | ||||||||
Changes in off-balance sheet receivable securitization and factoring programs | (31) | 39 | (46) | ||||||||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations: | |||||||||||
Receivables | 89 | 54 | 34 | ||||||||
Inventories | 28 | 4 | (9) | ||||||||
Accounts payable | (89) | (70) | (5) | ||||||||
Other current assets and liabilities | (18) | (52) | 19 | ||||||||
Other assets and liabilities | 6 | 40 | 0 | ||||||||
Operating cash flows provided by continuing operations | 209 | 107 | 227 | ||||||||
Operating cash flows used for discontinued operations | (5) | (10) | (12) | ||||||||
CASH PROVIDED BY OPERATING ACTIVITIES | $ 204 | $ 97 | $ 215 |
OPERATING CASH FLOWS AND OTH148
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION - Schedule of Supplemental Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Balance sheet data: | |||
Allowance for doubtful accounts | $ 6 | $ 9 | $ 6 |
Statement of operations data: | |||
Maintenance and repairs expense | 45 | 52 | 59 |
Research, development and engineering expense | 68 | 69 | 71 |
Depreciation expense | 61 | 60 | 62 |
Rental expense | 15 | 11 | 16 |
Interest income | 3 | 9 | 2 |
Interest expense | (87) | (114) | (132) |
Statement of cash flows data: | |||
Interest payments | 71 | 64 | 84 |
Income tax payments, net of refunds | 24 | 14 | 26 |
Non-cash investing activities - capital asset additions from capital leases | $ 0 | $ 9 | $ 5 |
SUPPLEMENTAL PARENT AND GUAR149
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Sales | |||||||||||
External | $ 3,199 | $ 3,505 | $ 3,766 | ||||||||
Subsidiaries | 0 | 0 | 0 | ||||||||
Total sales | $ 728 | $ 841 | $ 821 | $ 809 | $ 853 | $ 909 | $ 864 | $ 879 | 3,199 | 3,505 | 3,766 |
Cost of sales | (644) | (714) | (700) | (705) | (745) | (785) | (749) | (764) | (2,763) | (3,043) | (3,279) |
Gross margin | 84 | 127 | 121 | 104 | 108 | 124 | 115 | 115 | 436 | 462 | 487 |
Selling, general and administrative | (213) | (243) | (258) | ||||||||
Pension settlement losses | 0 | (59) | 0 | ||||||||
Restructuring costs | (7) | (6) | (2) | (1) | (1) | (9) | (3) | (3) | (16) | (16) | (10) |
Goodwill impairment | (15) | 0 | (15) | 0 | |||||||
Other operating expense, net | (3) | (1) | (2) | ||||||||
OPERATING INCOME | 204 | 128 | 217 | ||||||||
Other income, net | (1) | 5 | 0 | ||||||||
Equity in earnings of ZF Meritor | 0 | 0 | 190 | ||||||||
Equity in earnings of affiliates | 36 | 39 | 38 | ||||||||
Interest income (expense), net | (84) | (105) | (130) | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 155 | 67 | 315 | ||||||||
Benefit (provision) for income taxes | 446 | (8) | (7) | (7) | 18 | (6) | (6) | (7) | 424 | (1) | (31) |
Equity income from continuing operations of subsidiaries | 0 | 0 | 0 | ||||||||
Net income (loss) before tax | 579 | 66 | 284 | ||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (4) | (1) | (30) | ||||||||
Net income | 474 | 42 | 32 | 27 | (22) | 14 | 43 | 30 | 575 | 65 | 254 |
Less: Net income attributable to noncontrolling interests | (2) | (1) | (5) | ||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ 474 | $ 41 | $ 32 | $ 26 | $ (21) | $ 13 | $ 43 | $ 29 | 573 | 64 | 249 |
Other equity method investments | |||||||||||
Sales | |||||||||||
Equity in earnings of affiliates | 36 | ||||||||||
Reportable Legal Entities | Parent | |||||||||||
Sales | |||||||||||
External | 0 | 0 | 0 | ||||||||
Subsidiaries | 0 | 0 | 0 | ||||||||
Total sales | 0 | 0 | 0 | ||||||||
Cost of sales | (57) | (52) | (56) | ||||||||
Gross margin | (57) | (52) | (56) | ||||||||
Selling, general and administrative | (64) | (53) | (65) | ||||||||
Pension settlement losses | 0 | ||||||||||
Restructuring costs | (7) | (2) | 0 | ||||||||
Goodwill impairment | 0 | ||||||||||
Other operating expense, net | (3) | (2) | (1) | ||||||||
OPERATING INCOME | (131) | (109) | (122) | ||||||||
Other income, net | 34 | 36 | 35 | ||||||||
Equity in earnings of ZF Meritor | 0 | ||||||||||
Equity in earnings of affiliates | 0 | 0 | |||||||||
Interest income (expense), net | (117) | (138) | (159) | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (214) | (211) | (246) | ||||||||
Benefit (provision) for income taxes | 526 | (2) | 0 | ||||||||
Equity income from continuing operations of subsidiaries | 265 | 278 | 525 | ||||||||
Net income (loss) before tax | 577 | 65 | 279 | ||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (4) | (1) | (30) | ||||||||
Net income | 573 | 64 | 249 | ||||||||
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | ||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 573 | 64 | 249 | ||||||||
Reportable Legal Entities | Parent | Other equity method investments | |||||||||||
Sales | |||||||||||
Equity in earnings of affiliates | 0 | ||||||||||
Reportable Legal Entities | Guarantors | |||||||||||
Sales | |||||||||||
External | 1,616 | 1,734 | 1,467 | ||||||||
Subsidiaries | 112 | 129 | 142 | ||||||||
Total sales | 1,728 | 1,863 | 1,609 | ||||||||
Cost of sales | (1,439) | (1,579) | (1,343) | ||||||||
Gross margin | 289 | 284 | 266 | ||||||||
Selling, general and administrative | (75) | (118) | (102) | ||||||||
Pension settlement losses | 0 | ||||||||||
Restructuring costs | (4) | (5) | (1) | ||||||||
Goodwill impairment | (15) | ||||||||||
Other operating expense, net | 0 | (2) | (1) | ||||||||
OPERATING INCOME | 210 | 144 | 162 | ||||||||
Other income, net | (35) | 18 | 23 | ||||||||
Equity in earnings of ZF Meritor | 190 | ||||||||||
Equity in earnings of affiliates | 36 | 30 | |||||||||
Interest income (expense), net | 27 | 26 | 35 | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 234 | 224 | 440 | ||||||||
Benefit (provision) for income taxes | (88) | 2 | (1) | ||||||||
Equity income from continuing operations of subsidiaries | 106 | 38 | 71 | ||||||||
Net income (loss) before tax | 252 | 264 | 510 | ||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (4) | (2) | (31) | ||||||||
Net income | 248 | 262 | 479 | ||||||||
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | ||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 248 | 262 | 479 | ||||||||
Reportable Legal Entities | Guarantors | Other equity method investments | |||||||||||
Sales | |||||||||||
Equity in earnings of affiliates | 32 | ||||||||||
Reportable Legal Entities | Non- Guarantors | |||||||||||
Sales | |||||||||||
External | 1,583 | 1,771 | 2,299 | ||||||||
Subsidiaries | 61 | 71 | 62 | ||||||||
Total sales | 1,644 | 1,842 | 2,361 | ||||||||
Cost of sales | (1,440) | (1,612) | (2,084) | ||||||||
Gross margin | 204 | 230 | 277 | ||||||||
Selling, general and administrative | (74) | (72) | (91) | ||||||||
Pension settlement losses | (59) | ||||||||||
Restructuring costs | (5) | (9) | (9) | ||||||||
Goodwill impairment | 0 | ||||||||||
Other operating expense, net | 0 | 3 | 0 | ||||||||
OPERATING INCOME | 125 | 93 | 177 | ||||||||
Other income, net | 0 | (49) | (58) | ||||||||
Equity in earnings of ZF Meritor | 0 | ||||||||||
Equity in earnings of affiliates | 3 | 8 | |||||||||
Interest income (expense), net | 6 | 7 | (6) | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 135 | 54 | 121 | ||||||||
Benefit (provision) for income taxes | (14) | (1) | (30) | ||||||||
Equity income from continuing operations of subsidiaries | 0 | 0 | 0 | ||||||||
Net income (loss) before tax | 121 | 53 | 91 | ||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | (2) | (3) | (12) | ||||||||
Net income | 119 | 50 | 79 | ||||||||
Less: Net income attributable to noncontrolling interests | (2) | (1) | (5) | ||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 117 | 49 | 74 | ||||||||
Reportable Legal Entities | Non- Guarantors | Other equity method investments | |||||||||||
Sales | |||||||||||
Equity in earnings of affiliates | 4 | ||||||||||
Elims | |||||||||||
Sales | |||||||||||
External | 0 | 0 | 0 | ||||||||
Subsidiaries | (173) | (200) | (204) | ||||||||
Total sales | (173) | (200) | (204) | ||||||||
Cost of sales | 173 | 200 | 204 | ||||||||
Gross margin | 0 | 0 | 0 | ||||||||
Selling, general and administrative | 0 | 0 | 0 | ||||||||
Pension settlement losses | 0 | ||||||||||
Restructuring costs | 0 | 0 | 0 | ||||||||
Goodwill impairment | 0 | ||||||||||
Other operating expense, net | 0 | 0 | 0 | ||||||||
OPERATING INCOME | 0 | 0 | 0 | ||||||||
Other income, net | 0 | 0 | 0 | ||||||||
Equity in earnings of ZF Meritor | 0 | ||||||||||
Equity in earnings of affiliates | 0 | 0 | |||||||||
Interest income (expense), net | 0 | 0 | 0 | ||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 0 | 0 | 0 | ||||||||
Benefit (provision) for income taxes | 0 | 0 | 0 | ||||||||
Equity income from continuing operations of subsidiaries | (371) | (316) | (596) | ||||||||
Net income (loss) before tax | (371) | (316) | (596) | ||||||||
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 6 | 5 | 43 | ||||||||
Net income | (365) | (311) | (553) | ||||||||
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | ||||||||
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | (365) | $ (311) | $ (553) | ||||||||
Elims | Other equity method investments | |||||||||||
Sales | |||||||||||
Equity in earnings of affiliates | $ 0 |
SUPPLEMENTAL PARENT AND GUAR150
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income | $ 474 | $ 42 | $ 32 | $ 27 | $ (22) | $ 14 | $ 43 | $ 30 | $ 575 | $ 65 | $ 254 |
Other comprehensive income (loss) | (43) | (19) | (15) | ||||||||
Total comprehensive income | 532 | 46 | 239 | ||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | (2) | 1 | (5) | ||||||||
Comprehensive income (loss) attributable to Meritor, Inc. | 530 | 47 | 234 | ||||||||
Reportable Legal Entities | Parent | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income | 573 | 64 | 249 | ||||||||
Other comprehensive income (loss) | (43) | (19) | (15) | ||||||||
Total comprehensive income | 530 | 45 | 234 | ||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | 0 | 2 | 0 | ||||||||
Comprehensive income (loss) attributable to Meritor, Inc. | 530 | 47 | 234 | ||||||||
Reportable Legal Entities | Guarantors | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income | 248 | 262 | 479 | ||||||||
Other comprehensive income (loss) | 55 | (61) | (54) | ||||||||
Total comprehensive income | 303 | 201 | 425 | ||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | 0 | 0 | 0 | ||||||||
Comprehensive income (loss) attributable to Meritor, Inc. | 303 | 201 | 425 | ||||||||
Reportable Legal Entities | Non- Guarantors | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income | 119 | 50 | 79 | ||||||||
Other comprehensive income (loss) | (44) | (16) | 25 | ||||||||
Total comprehensive income | 75 | 34 | 104 | ||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | (2) | (1) | (5) | ||||||||
Comprehensive income (loss) attributable to Meritor, Inc. | 73 | 33 | 99 | ||||||||
Elims | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income | (365) | (311) | (553) | ||||||||
Other comprehensive income (loss) | (11) | 77 | 29 | ||||||||
Total comprehensive income | (376) | (234) | (524) | ||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | 0 | 0 | 0 | ||||||||
Comprehensive income (loss) attributable to Meritor, Inc. | $ (376) | $ (234) | $ (524) |
SUPPLEMENTAL PARENT AND GUAR151
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
CURRENT ASSETS | ||||
Cash and cash equivalents | $ 160 | $ 193 | $ 247 | $ 318 |
Receivables, trade and other, net | 396 | 461 | ||
Inventories | 316 | 338 | ||
Other current assets | 33 | 50 | ||
TOTAL CURRENT ASSETS | 905 | 1,042 | ||
NET PROPERTY | 439 | 419 | ||
GOODWILL | 390 | 402 | 431 | |
OTHER ASSETS | 760 | 332 | ||
INVESTMENTS IN SUBSIDIARIES | 0 | 0 | ||
TOTAL ASSETS | 2,494 | 2,195 | ||
CURRENT LIABILITIES | ||||
Short-term debt | 14 | 15 | ||
Accounts and notes payable | 475 | 574 | ||
Other current liabilities | 268 | 279 | ||
TOTAL CURRENT LIABILITIES | 757 | 868 | ||
LONG-TERM DEBT | 982 | 1,036 | ||
RETIREMENT BENEFITS | 703 | 632 | ||
INTERCOMPANY PAYABLE (RECEIVABLE) | 0 | 0 | ||
OTHER LIABILITIES | 238 | 305 | ||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | (211) | (671) | ||
NONCONTROLLING INTERESTS | 25 | 25 | ||
TOTAL LIABILITIES AND DEFICIT | 2,494 | 2,195 | ||
Reportable Legal Entities | Parent | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | 90 | 73 | 71 | 144 |
Receivables, trade and other, net | 1 | 1 | ||
Inventories | 0 | 0 | ||
Other current assets | 5 | 4 | ||
TOTAL CURRENT ASSETS | 96 | 78 | ||
NET PROPERTY | 22 | 15 | ||
GOODWILL | 0 | 0 | ||
OTHER ASSETS | 447 | 61 | ||
INVESTMENTS IN SUBSIDIARIES | 2,575 | 2,354 | ||
TOTAL ASSETS | 3,140 | 2,508 | ||
CURRENT LIABILITIES | ||||
Short-term debt | 1 | 1 | ||
Accounts and notes payable | 42 | 55 | ||
Other current liabilities | 90 | 93 | ||
TOTAL CURRENT LIABILITIES | 133 | 149 | ||
LONG-TERM DEBT | 971 | 1,017 | ||
RETIREMENT BENEFITS | 680 | 603 | ||
INTERCOMPANY PAYABLE (RECEIVABLE) | 1,534 | 1,365 | ||
OTHER LIABILITIES | 34 | 45 | ||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | (212) | (671) | ||
NONCONTROLLING INTERESTS | 0 | 0 | ||
TOTAL LIABILITIES AND DEFICIT | 3,140 | 2,508 | ||
Reportable Legal Entities | Guarantors | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | 4 | 6 | 5 | 6 |
Receivables, trade and other, net | 39 | 40 | ||
Inventories | 143 | 159 | ||
Other current assets | 12 | 20 | ||
TOTAL CURRENT ASSETS | 198 | 225 | ||
NET PROPERTY | 198 | 183 | ||
GOODWILL | 219 | 219 | ||
OTHER ASSETS | 132 | 129 | ||
INVESTMENTS IN SUBSIDIARIES | 679 | 313 | ||
TOTAL ASSETS | 1,426 | 1,069 | ||
CURRENT LIABILITIES | ||||
Short-term debt | 4 | 4 | ||
Accounts and notes payable | 172 | 213 | ||
Other current liabilities | 74 | 83 | ||
TOTAL CURRENT LIABILITIES | 250 | 300 | ||
LONG-TERM DEBT | 3 | 6 | ||
RETIREMENT BENEFITS | 0 | 0 | ||
INTERCOMPANY PAYABLE (RECEIVABLE) | (1,768) | (1,886) | ||
OTHER LIABILITIES | 162 | 217 | ||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | 2,779 | 2,432 | ||
NONCONTROLLING INTERESTS | 0 | 0 | ||
TOTAL LIABILITIES AND DEFICIT | 1,426 | 1,069 | ||
Reportable Legal Entities | Non- Guarantors | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | 66 | 114 | 171 | 168 |
Receivables, trade and other, net | 356 | 420 | ||
Inventories | 173 | 179 | ||
Other current assets | 16 | 26 | ||
TOTAL CURRENT ASSETS | 611 | 739 | ||
NET PROPERTY | 219 | 221 | ||
GOODWILL | 171 | 183 | ||
OTHER ASSETS | 181 | 142 | ||
INVESTMENTS IN SUBSIDIARIES | 0 | 0 | ||
TOTAL ASSETS | 1,182 | 1,285 | ||
CURRENT LIABILITIES | ||||
Short-term debt | 9 | 10 | ||
Accounts and notes payable | 261 | 306 | ||
Other current liabilities | 104 | 103 | ||
TOTAL CURRENT LIABILITIES | 374 | 419 | ||
LONG-TERM DEBT | 8 | 13 | ||
RETIREMENT BENEFITS | 23 | 29 | ||
INTERCOMPANY PAYABLE (RECEIVABLE) | 234 | 521 | ||
OTHER LIABILITIES | 42 | 43 | ||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | 476 | 235 | ||
NONCONTROLLING INTERESTS | 25 | 25 | ||
TOTAL LIABILITIES AND DEFICIT | 1,182 | 1,285 | ||
Elims | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 |
Receivables, trade and other, 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 | (3,254) | (2,667) | ||
TOTAL ASSETS | (3,254) | (2,667) | ||
CURRENT LIABILITIES | ||||
Short-term debt | 0 | 0 | ||
Accounts and notes 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. | (3,254) | (2,667) | ||
NONCONTROLLING INTERESTS | 0 | 0 | ||
TOTAL LIABILITIES AND DEFICIT | $ (3,254) | $ (2,667) |
SUPPLEMENTAL PARENT AND GUAR152
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule of Statement of Cash Flows [Line Items] | |||
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES | $ 204 | $ 97 | $ 215 |
INVESTING ACTIVITIES | |||
Capital expenditures | (93) | (79) | (77) |
Proceeds from sale of property | 4 | 4 | 0 |
Cash paid for acquisition of Morganton | 0 | (16) | 0 |
Other investing activities | (1) | 0 | 0 |
Net cash flows provided by (used for) discontinued operations | 4 | 4 | 7 |
CASH USED FOR INVESTING ACTIVITIES | (86) | (87) | (70) |
FINANCING ACTIVITIES | |||
Proceeds from debt issuances | 0 | 225 | 225 |
Repayment of notes and term loan | (55) | (199) | (439) |
Other financing activities | (16) | (9) | 12 |
Repurchase of common stock | (81) | (55) | 0 |
Debt issuance costs | 0 | 4 | 10 |
Intercompany advances | 0 | 0 | |
CASH USED FOR FINANCING ACTIVITIES | (152) | (42) | (212) |
EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | (22) | (4) |
CHANGE IN CASH AND CASH EQUIVALENTS | (33) | (54) | (71) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 193 | 247 | 318 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 160 | 193 | 247 |
Reportable Legal Entities | Parent | |||
Schedule of Statement of Cash Flows [Line Items] | |||
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 196 | 57 | 245 |
INVESTING ACTIVITIES | |||
Capital expenditures | (19) | (4) | (4) |
Proceeds from sale of property | 0 | 0 | |
Cash paid for acquisition of Morganton | 0 | ||
Other investing activities | 0 | ||
Net cash flows provided by (used for) discontinued operations | 0 | 0 | 0 |
CASH USED FOR INVESTING ACTIVITIES | (19) | (4) | (4) |
FINANCING ACTIVITIES | |||
Proceeds from debt issuances | 225 | 225 | |
Repayment of notes and term loan | (55) | (199) | (439) |
Other financing activities | (1) | 0 | 0 |
Repurchase of common stock | (81) | (55) | |
Debt issuance costs | 4 | 10 | |
Intercompany advances | (23) | (90) | |
CASH USED FOR FINANCING ACTIVITIES | (160) | (33) | (314) |
EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | 0 |
CHANGE IN CASH AND CASH EQUIVALENTS | 17 | 2 | (73) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 73 | 71 | 144 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 90 | 73 | 71 |
Reportable Legal Entities | Guarantors | |||
Schedule of Statement of Cash Flows [Line Items] | |||
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 40 | 62 | 34 |
INVESTING ACTIVITIES | |||
Capital expenditures | (43) | (41) | (37) |
Proceeds from sale of property | 4 | 0 | |
Cash paid for acquisition of Morganton | (16) | ||
Other investing activities | 0 | ||
Net cash flows provided by (used for) discontinued operations | 1 | 1 | 4 |
CASH USED FOR INVESTING ACTIVITIES | (38) | (56) | (33) |
FINANCING ACTIVITIES | |||
Proceeds from debt issuances | 0 | 0 | |
Repayment of notes and term loan | 0 | 0 | 0 |
Other financing activities | (4) | (5) | (2) |
Repurchase of common stock | 0 | 0 | |
Debt issuance costs | 0 | 0 | |
Intercompany advances | 0 | 0 | |
CASH USED FOR FINANCING ACTIVITIES | (4) | (5) | (2) |
EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | 0 |
CHANGE IN CASH AND CASH EQUIVALENTS | (2) | 1 | (1) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 6 | 5 | 6 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 4 | 6 | 5 |
Reportable Legal Entities | Non- Guarantors | |||
Schedule of Statement of Cash Flows [Line Items] | |||
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES | (32) | (22) | (64) |
INVESTING ACTIVITIES | |||
Capital expenditures | (31) | (34) | (36) |
Proceeds from sale of property | 0 | 4 | |
Cash paid for acquisition of Morganton | 0 | ||
Other investing activities | (1) | ||
Net cash flows provided by (used for) discontinued operations | 3 | 3 | 3 |
CASH USED FOR INVESTING ACTIVITIES | (29) | (27) | (33) |
FINANCING ACTIVITIES | |||
Proceeds from debt issuances | 0 | 0 | |
Repayment of notes and term loan | 0 | 0 | 0 |
Other financing activities | (11) | (4) | 14 |
Repurchase of common stock | 0 | 0 | |
Debt issuance costs | 0 | 0 | |
Intercompany advances | 23 | 90 | |
CASH USED FOR FINANCING ACTIVITIES | 12 | (4) | 104 |
EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 1 | (22) | (4) |
CHANGE IN CASH AND CASH EQUIVALENTS | (48) | (57) | 3 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 114 | 171 | 168 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 66 | 114 | 171 |
Elims | |||
Schedule of Statement of Cash Flows [Line Items] | |||
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 0 | 0 | 0 |
INVESTING ACTIVITIES | |||
Capital expenditures | 0 | 0 | 0 |
Proceeds from sale of property | 0 | 0 | |
Cash paid for acquisition of Morganton | 0 | ||
Other investing activities | 0 | ||
Net cash flows provided by (used for) discontinued operations | 0 | 0 | 0 |
CASH USED FOR INVESTING ACTIVITIES | 0 | 0 | 0 |
FINANCING ACTIVITIES | |||
Proceeds from debt issuances | 0 | 0 | |
Repayment of notes and term loan | 0 | 0 | 0 |
Other financing activities | 0 | 0 | 0 |
Repurchase of common stock | 0 | 0 | |
Debt issuance costs | 0 | 0 | |
Intercompany advances | 0 | 0 | |
CASH USED FOR FINANCING ACTIVITIES | 0 | 0 | 0 |
EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | 0 |
CHANGE IN CASH AND CASH EQUIVALENTS | 0 | 0 | 0 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 0 | 0 | 0 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ 0 | $ 0 | $ 0 |
SUPPLEMENTAL PARENT AND GUAR153
SUPPLEMENTAL PARENT AND GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | |
Supplemental Disclosures [Line Items] | |||
Ownership percentage | 100.00% | ||
Threshold for reporting consolidating financial statements | 25.00% | ||
Minimum amount of subsidiary restricted assets that exceed consolidated net assets, as a percentage | 25.00% | ||
Amount of restricted net assets for consolidated and unconsolidated subsidiaries | $ 36 | ||
Parent | |||
Supplemental Disclosures [Line Items] | |||
Pension and Retiree Medical Liabilities | 708 | $ 631 | |
Proceeds from consolidated subsidiaries and equity method investments | 25 | 37 | $ 5 |
Subsidiaries | |||
Supplemental Disclosures [Line Items] | |||
Debt and capital lease obligations | $ 24 | $ 33 |