DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 6 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document and Entity Information [Abstract] | ||
Entity registrant name | MERITOR INC | |
Entity central index key | 1,113,256 | |
Current fiscal year end date | --09-30 | |
Entity filer category | Large Accelerated Filer | |
Trading symbol | MTOR | |
Entity common stock, shares outstanding | 87,862,444 | |
Document period end date | Mar. 31, 2018 | |
Document fiscal year focus | 2,018 | |
Document type | 10-Q | |
Document fiscal period focus | Q2 | |
Amendment flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||||
Sales | $ 1,066 | $ 806 | $ 1,969 | $ 1,505 |
Cost of sales | (888) | (685) | (1,651) | (1,295) |
GROSS MARGIN | 178 | 121 | 318 | 210 |
Selling, general and administrative | (74) | (66) | (141) | (119) |
Restructuring costs | (1) | (4) | (3) | (4) |
Other operating expense, net | (11) | (2) | (12) | (5) |
OPERATING INCOME (LOSS) | 92 | 49 | 162 | 82 |
Other income (expense), net | 0 | 0 | (1) | 0 |
Equity in earnings of affiliates | 6 | 8 | 11 | 18 |
Interest income (expense), net | (16) | (21) | (40) | (42) |
INCOME (LOSS) BEFORE INCOME TAXES | 82 | 36 | 132 | 58 |
Benefit (provision) for income taxes | (22) | (13) | (105) | (19) |
INCOME FROM CONTINUING OPERATIONS | 60 | 23 | 27 | 39 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | (1) | 0 |
NET INCOME | 60 | 23 | 26 | 39 |
Less: Net income attributable to noncontrolling interests | (3) | (1) | (5) | (2) |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 57 | 22 | 21 | 37 |
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC. | ||||
Net income from continuing operations | 57 | 22 | 22 | 37 |
Loss from discontinued operations | 0 | 0 | (1) | 0 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | $ 57 | $ 22 | $ 21 | $ 37 |
BASIC EARNINGS (LOSS) PER SHARE | ||||
Continuing operations (in usd per share) | $ 0.64 | $ 0.25 | $ 0.25 | $ 0.42 |
Discontinued operations (in usd per share) | 0 | 0 | (0.01) | 0 |
Basic earnings per share (in usd per share) | 0.64 | 0.25 | 0.24 | 0.42 |
DILUTED EARNINGS (LOSS) PER SHARE | ||||
Continuing operations (in usd per share) | 0.63 | 0.24 | 0.24 | 0.41 |
Discontinued operations (in usd per share) | 0 | 0 | (0.01) | 0 |
Diluted earnings per share (in usd per share) | $ 0.63 | $ 0.24 | $ 0.23 | $ 0.41 |
Basic average common shares outstanding (in shares) | 88.6 | 88.2 | 88.6 | 87.7 |
Diluted average common shares outstanding (in shares) | 91.2 | 92 | 91.3 | 90.2 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 60 | $ 23 | $ 26 | $ 39 |
Foreign currency translation adjustments: | ||||
Attributable to Meritor, Inc. | 14 | 19 | 6 | (9) |
Attributable to noncontrolling interest | 0 | 1 | 1 | (1) |
Pension and other postretirement benefit related adjustments | 3 | 11 | 6 | 22 |
Unrealized gain on investments and foreign exchange contracts | 3 | 1 | 3 | 2 |
Other comprehensive income, net of tax | 20 | 32 | 16 | 14 |
Total comprehensive income (loss) | 80 | 55 | 42 | 53 |
Less: Comprehensive income attributable to noncontrolling interest | (3) | (2) | (6) | (1) |
Comprehensive income (loss) attributable to Meritor, Inc. | $ 77 | $ 53 | $ 36 | $ 52 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | |
CURRENT ASSETS: | |||
Cash and cash equivalents | [1] | $ 100 | $ 88 |
Restricted cash | 9 | 0 | |
Receivables trade and other, net | [1] | 581 | 789 |
Inventories | [1] | 455 | 378 |
Other current assets | 41 | 43 | |
TOTAL CURRENT ASSETS | 1,186 | 1,298 | |
NET PROPERTY | [1] | 459 | 474 |
GOODWILL | [1] | 418 | 414 |
OTHER ASSETS | [1] | 532 | 596 |
TOTAL ASSETS | 2,595 | 2,782 | |
CURRENT LIABILITIES: | |||
Short-term debt | 77 | 288 | |
Accounts and notes payable | [1] | 692 | 622 |
Other current liabilities | 249 | 272 | |
TOTAL CURRENT LIABILITIES | 1,018 | 1,182 | |
LONG-TERM DEBT | 728 | 750 | |
RETIREMENT BENEFITS | 291 | 314 | |
OTHER LIABILITIES | 244 | 239 | |
TOTAL LIABILITIES | 2,281 | 2,485 | |
COMMITMENTS AND CONTINGENCIES (See Note 20) | |||
MEZZANINE EQUITY: | |||
Convertible debt with cash settlement | 2 | 2 | |
EQUITY: | |||
Common stock (March 31, 2018 and September 30, 2017, 102.1 and 101.4 shares issued and 87.9 and 88.6 shares outstanding, respectively) | 102 | 101 | |
Additional paid-in capital | 775 | 765 | |
Retained earnings | 104 | 83 | |
Treasury stock, at cost (March 31, 2018 and September 30, 2017, 14.2 and 12.8 shares, respectively) | (169) | (136) | |
Accumulated other comprehensive loss | (530) | (545) | |
Total equity attributable to Meritor, Inc. | 282 | 268 | |
Noncontrolling interests | [1] | 30 | 27 |
TOTAL EQUITY | 312 | 295 | |
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | 2,595 | 2,782 | |
ASSETS, LIABILITIES, AND EQUITY HELD-FOR-SALE | |||
Net property | $ 3 | 3 | |
Cash and cash equivalents | 1 | ||
Receivables, trade and other, net | 13 | ||
Inventories | 2 | ||
Goodwill | 1 | ||
Other assets | 1 | ||
Accounts and notes payable | 12 | ||
Noncontrolling interests | $ 2 | ||
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common shares issued (in shares) | 102.1 | 101.4 |
Common shares outstanding (in shares) | 87.9 | 88.6 |
Treasury stock (in shares) | 14.2 | 12.8 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
OPERATING ACTIVITIES | |||
CASH PROVIDED BY OPERATING ACTIVITIES (See Note 10) | $ 72 | $ 30 | |
INVESTING ACTIVITIES | |||
Capital expenditures | (35) | (40) | |
Proceeds from prior year sale of equity method investment | 250 | 0 | |
Cash paid for investment in Transportation Power, Inc. | (3) | 0 | |
Proceeds from sale of a business | 4 | 0 | |
Net investing cash flows provided by discontinued operations | 0 | 2 | |
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | 216 | (38) | |
FINANCING ACTIVITIES | |||
Borrowings and securitization | (60) | 0 | |
Redemption of notes | (181) | 0 | |
Debt issuance costs | 0 | (4) | |
Other financing activities | (2) | (11) | |
Net change in debt | (243) | (15) | |
Repurchase of common stock | (33) | 0 | |
CASH USED FOR FINANCING ACTIVITIES | (276) | (15) | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 1 | |
CHANGE IN CASH AND CASH EQUIVALENTS | 12 | (22) | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 88 | [1] | 160 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 100 | [1] | $ 138 |
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity (Deficit) Attributable to Meritor, Inc. | Noncontrolling Interests |
Beginning balance at Sep. 30, 2016 | $ (186) | $ 99 | $ 876 | $ (241) | $ (136) | $ (809) | $ (211) | $ 25 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income (loss) | 53 | 37 | 15 | 52 | 1 | |||
Equity based compensation expense | 7 | 7 | 7 | |||||
Vesting of equity based awards | 2 | (2) | ||||||
Stock option exercises | 2 | 2 | 2 | |||||
Convertible debt with cash settlement | (13) | (13) | (13) | |||||
Noncontrolling interest dividends | (1) | (1) | ||||||
Ending Balance at Mar. 31, 2017 | (138) | 101 | 870 | (204) | (136) | (794) | (163) | 25 |
Beginning balance at Sep. 30, 2017 | 295 | 101 | 765 | 83 | (136) | (545) | 268 | 27 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income (loss) | 42 | 21 | 15 | 36 | 6 | |||
Equity based compensation expense | 10 | 10 | 10 | |||||
Vesting of equity based awards | 1 | (1) | ||||||
Repurchase of common stock | (33) | (33) | (33) | |||||
Other equity adjustments | (1) | 1 | 1 | (2) | ||||
Noncontrolling interest dividends | (1) | (1) | ||||||
Ending Balance at Mar. 31, 2018 | $ 312 | $ 102 | $ 775 | $ 104 | $ (169) | $ (530) | $ 282 | $ 30 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Mar. 31, 2018 | |
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 condensed consolidated financial statements are those of the company and its consolidated subsidiaries. Certain businesses are reported in discontinued operations in the condensed consolidated statement of operations, condensed consolidated statement of cash flows and related notes for all periods presented. Additional information regarding discontinued operations is discussed in Note 4 . In the opinion of the company, the unaudited condensed consolidated financial statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited consolidated financial statements and notes thereto included in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2017 , as amended. The condensed consolidated balance sheet data as of September 30, 2017 was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and six months ended March 31, 2018 are not necessarily indicative of the results for the full year. The company’s fiscal year ends on the Sunday nearest September 30, and its fiscal quarters generally end on the Sundays nearest December 31, March 31 and June 30. The second quarter of fiscal years 2018 and 2017 ended on April 1, 2018 and April 2, 2017 , respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and March 31 are used consistently throughout this report to represent the fiscal year end and second fiscal quarter end, respectively. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
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 unit awards and convertible securities, if applicable. A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions): Three Months Ended March 31, Six Months Ended March 31, 2018 2017 2018 2017 Basic average common shares outstanding 88.6 88.2 88.6 87.7 Impact of restricted shares, restricted share units and performance share units 1.6 1.1 1.6 1.2 Impact of convertible notes 1.0 2.7 1.1 1.3 Diluted average common shares outstanding 91.2 92.0 91.3 90.2 In November 2017, 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 $24.79 , which was the company’s share price on the grant date of December 1, 2017. The Board of Directors also approved a grant of 0.3 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 $24.79 , which was the company's share price on the grant date of December 1, 2017. 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, 2017 to September 30, 2020, measured at the end of the performance period. The number of performance share units that vest 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 0.3 million performance share units. In November 2016, 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 $12.77 , which was the company’s share price on the grant date of December 1, 2016. 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 $12.77 , which was the company's share price on the grant date of December 1, 2016. The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2019 goals for the three -year performance period of October 1, 2016 to September 30, 2019, measured at the end of the performance period. The number of performance share units will depend on meeting the established M2019 goals at the following weights: 50% associated with achieving an adjusted diluted earnings per share from continuing operations target, 25% associated with achieving revenue growth above market and 25% associated with achieving a net debt to adjusted EBITDA target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million performance share units. 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 that vest 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. For each of the three and six months ended March 31, 2018 , the dilutive impact of previously issued restricted shares, restricted share units and performance share units was 1.6 million shares. For the three and six months ended March 31, 2017 , the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 1.1 million and 1.2 million shares, respectively. For the three and six months ended March 31, 2018 , compensation cost related to restricted shares, restricted share units and performance share units was $5 million and $10 million , respectively. For the three and six months ended March 31, 2017 , compensation cost related to restricted shares, restricted share units and performance share units was $4 million and $7 million , respectively. For the three and six months ended March 31, 2018 , 1.0 million and 1.1 million shares, respectively, were included in the computation of diluted earnings per share, as the company's average stock price during these periods exceeded the conversion price for the 7.875 percent convertible notes due 2026. For the three and six months ended March 31, 2017 , 2.7 million and 1.3 million shares, respectively, were included in the computation of diluted earnings per share, as the company's average stock price during these periods exceeded the conversion price for the 7.875 percent convertible notes due 2026. |
New Accounting Standards
New Accounting Standards | 6 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2018 In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendment changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and presenting all items that affect earnings in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting components excluded from the assessment of hedge effectiveness. Changes to income statement classification and financial statement disclosures will be applied prospectively from the date of adoption. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. In October 2016, the FASB issued 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the 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 company adopted this standard in the first quarter of fiscal year 2018. Following adoption of this standard, all excess tax benefits and all tax deficiencies generated in the current and future periods will be prospectively recorded as income tax benefit or expense in the company’s consolidated statement of operations in the reporting period in which they occur. An income tax benefit of approximately $1 million was recognized in the quarterly period ended December 31, 2017 as a result of the adoption of ASU 2016-09 and a corresponding $1 million increase in income from continuing operations and net income was recognized during the period. The amendments in the guidance that require application using a modified retrospective transition method did not impact the company. Therefore, there was no cumulative-effect adjustment to retained earnings recognized as of October 2, 2017. The company has elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. 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 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. Accounting standards to be implemented In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 ("U.S. tax reform") from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842. ASU 2018-01 permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. The amendments in this update affect the guidance in ASU 2016-02, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2018-01 are the same as the effective date and transition requirements in ASU 2016-02 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 in connection with its planned implementation of ASU 2016-02 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements and provides guidance on when an entity would be required to apply modification accounting. This standard is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied prospectively. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 affects entities who own investments in callable debt securities and aligns the amortization period of premiums on callable debt securities to expectations incorporated in market pricing on the underlying securities. This standard is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effective adjustment directly to retained earnings at the beginning of the adoption period. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance requires entities to only include the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, are to be included in a separate line item(s) outside of any sub-total of operating income. ASU 2017-07 also provides guidance that only the service cost component of net benefit cost is eligible for capitalization. This standard is effective for public business entities for interim and annual periods beginning after December 15, 2017. The revisions in this amendment are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 provides guidance which defines an “in substance nonfinancial asset”; unifies guidance related to partial sales of nonfinancial assets; eliminates rules specifically addressing sales of real estate; removes exceptions to the financial asset derecognition model; and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The effective date and the transition requirements for the amendments in ASU 2017-05 are the same as the effective date and transition requirements in Topic 606, described below. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The revised guidance will be applied prospectively, and is effective for calendar year-end Securities and Exchange Commission ("SEC") filers in 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The new guidance is not expected to have a material impact on the company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. To be considered a business under the new guidance, it must include an input and a substantive process that together significantly contribute to the ability to create output. The amendment removes the evaluation of whether a market participant could replace missing elements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and will be applied prospectively. The potential impact of this new guidance will be assessed for future acquisitions or dispositions, but it is not expected to have a material impact on the company's consolidated financial statements. 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 FASB 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 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 accounting policies and 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 accounting policies and 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 2016-08, 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 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 on its accounting policies and 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 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 on its accounting policies and its consolidated financial statements. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations Results of discontinued operations are summarized as follows (in millions): Three Months Ended March 31, Six Months Ended March 31, 2018 2017 2018 2017 Sales $ — $ — $ — $ — Loss before income taxes $ — $ — $ (2 ) $ — Benefit from income taxes — — 1 — Loss from discontinued operations attributable to Meritor, Inc. $ — $ — $ (1 ) $ — Loss from discontinued operations attributable to the company for the six months ended March 31, 2018 was primarily related to changes in estimates related to legal costs incurred in connection with a previously divested business. Total discontinued operations assets as of March 31, 2018 and September 30, 2017 were $2 million and $1 million , respectively, and total discontinued operations liabilities as of March 31, 2018 and September 30, 2017 were $9 million and $6 million , respectively. |
Goodwill
Goodwill | 6 Months Ended |
Mar. 31, 2018 | |
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. Realignment of Reporting Units As discussed in Note 22 , "Business Segment Information," the company realigned its operations in the second quarter of fiscal year 2018, resulting in a change to its reportable segments. As a result of the change in reportable segments, the company's reporting units changed. The Commercial Truck & Trailer segment contains two reporting units. The Aftermarket & Industrial segment contains three reporting units. Goodwill was reassigned to the new reporting units using a relative fair value allocation. A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions): Commercial Truck & Trailer Aftermarket & Industrial Total Goodwill (1) $ 283 $ 146 $ 429 Accumulated impairment losses (1) — (15 ) (15 ) Beginning balance at September 30, 2017 (1) 283 131 414 Adjustment due to sale of a business (see Note 8) (1 ) — (1 ) Fabco measurement period adjustment (see Note 8) — (1 ) (1 ) Foreign currency translation 4 2 6 Balance at March 31, 2018 $ 286 $ 132 $ 418 (1) Amounts have been recast to reflect reportable segment changes (see Note 22 ). |
Restructuring Costs
Restructuring Costs | 6 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs Restructuring reserves, primarily related to unpaid employee termination benefits, were $ 5 million at March 31, 2018 and $6 million at September 30, 2017 . The changes in restructuring reserves for the six months ended March 31, 2018 and 2017 are as follows (in millions): Employee Termination Benefits Plant Shutdown & Other Total Beginning balance at September 30, 2017 $ 5 $ 1 $ 6 Activity during the period: Charges to continuing operations 3 — 3 Cash payments – continuing operations (3 ) (1 ) (4 ) Total restructuring reserves at March 31, 2018 5 — 5 Less: non-current restructuring reserves (2 ) — (2 ) Restructuring reserves – current, at March 31, 2018 $ 3 $ — $ 3 Balance at September 30, 2016 $ 15 $ 1 $ 16 Activity during the period: Charges to continuing operations 4 — 4 Cash payments – continuing operations (7 ) — (7 ) Other (1 ) — (1 ) Total restructuring reserves at March 31, 2017 11 1 12 Less: non-current restructuring reserves (1 ) — (1 ) Restructuring reserves – current, at March 31, 2017 $ 10 $ 1 $ 11 Restructuring Costs: During the first six months of fiscal year 2018, the company recorded restructuring costs of $3 million primarily associated with labor reduction programs in the Commercial Truck & Trailer segment and Aftermarket & Industrial segments. During the first six months of fiscal year 2017, the company recorded restructuring costs of $4 million primarily associated with a labor reduction program in the Commercial Truck & Trailer and Aftermarket & Industrial segments. |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For each interim reporting period, the company makes an estimate of the effective tax rate expected to be applicable for the full fiscal year pursuant to FASB ASC Topic 740-270, “Accounting for Income Taxes in Interim Periods.” The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections. Income tax expense (benefit) is allocated among continuing operations, discontinued operations and other comprehensive income (“OCI”). Such allocation is applied by tax jurisdiction, and in periods in which there is a pre-tax loss from continuing operations and pre-tax income in another category, such as discontinued operations or OCI, income tax expense is allocated to the other sources of income, with a related benefit recorded in continuing operations. On December 22, 2017, the U.S. government enacted the U.S. tax reform. The U.S. tax reform makes broad and complex changes to the U.S. tax code that will affect the company's fiscal year ending September 30, 2018, including, but not limited to, reducing the U.S. federal corporate tax rate and requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The U.S. tax reform reduces the federal corporate tax rate to 21 percent in the fiscal year ending September 30, 2018. Section 15 of the Internal Revenue Code stipulates that the company's fiscal year ending September 30, 2018 will have a blended corporate tax rate of 24.5 percent , which is based on the applicable tax rates before and after the U.S. tax reform and the number of days in the year. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the U.S. tax reform. SAB 118 provides a measurement period that should not extend beyond one year from the U.S. tax reform enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the U.S. tax reform for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the U.S. tax reform is incomplete but the company is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the U.S. tax reform. Specifically, the company included discrete tax expense in its first quarter financial statements for fiscal year 2018 related to provisional amounts under SAB 118 for the impact of the revaluation of U.S. deferred tax assets and liabilities due to the federal income tax rate reduction from 35 percent to 21 percent . In order to properly account for the blended tax rate in place for fiscal year 2018, the company estimated the deferred tax assets and liabilities expected to reverse during the current fiscal year and applied a tax rate of 24.5 percent . All other deferred tax assets and liabilities are expected to reverse in fiscal year 2019 or later and were revalued at 21 percent . Additionally, the company estimated its liability and included provisional amounts for the one-time transition tax as a discrete tax expense. The company will elect to offset the liability associated with this transition tax by utilizing foreign tax credit carryovers. The revaluation of the deferred tax assets and the transition tax resulted in a non-cash charge of $77 million in the first quarter of fiscal year 2018. In the second quarter of fiscal year 2018, a $1 million adjustment was made to reduce the revaluation of deferred tax assets, resulting in a net non-cash charge of $76 million for the six months ended March 31, 2018. Tax expense recognized in fiscal year 2018 related to the transition tax and rate change on net deferred tax assets and liabilities are considered provisional under SAB 118. The company will continue to refine its accumulated earnings and profit pools and the allocation of cash and non-cash earnings for purposes of calculating the transition tax liability. Additionally, net deferred tax assets were reevaluated as of the enactment date using estimated fiscal year 2018 utilization amounts. The company will update the impact of the rate change on the net deferred tax assets as it continues to account for deferred activity throughout the current year. The company has not accounted for the tax impacts related to the Global Intangible Low Tax Income (“GILTI”), Base Erosion Anti Abuse Tax (“BEAT”) or Foreign Derived Intangible Income (“FDII”) regimes or any of the other provisions of the U.S. tax reform that are not effective until fiscal year 2019. The company has elected to treat GILTI as a period cost and, therefore, has not recognized deferred taxes for basis differences that may reverse as GILTI tax in future periods. 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. In the first quarter of fiscal year 2018, a tax planning strategy was implemented that resulted in a $4 million tax benefit from the reversal of a tax valuation allowance in Sweden. As of March 31, 2018, the company continues to maintain the valuation allowances in Brazil, France, the U.K., along with certain U.S. states and 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 company has recently returned to profitability in Brazil. However, given the volatility in the Brazilian truck market, the company believes that sustaining profitability for a reasonable period of time is necessary before determining that a valuation allowance should be reversed. To the extent positive trends and forecasts of future profitability continue, including after development and review of the company’s 2019 annual operating plan, management’s conclusion regarding the need for a valuation allowance could change, leading to a reversal of all or a portion of the valuation allowance. The company anticipates the potential range of a full reversal to be approximately $8 million to $12 million. For the three months ended March 31, 2018, the company had approximately $11 million of net pre-tax income compared to $2 million of net pre-tax loss in the same period in fiscal year 2017 in tax jurisdictions in which tax expense (benefit) is not recorded. For the six months ended March 31, 2018, the company had approximately $13 million of net pre-tax income compared to $3 million of net pre-tax loss in the same period in fiscal year 2017 in tax jurisdictions in which tax expense (benefit) is not recorded. |
Acquisition and Divestiture
Acquisition and Divestiture | 6 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition and Divestiture | Acquisition and Divestiture Acquisition of Fabco Business On August 31, 2017, the company acquired certain assets, including the product portfolio and related technologies of Fabco Holdings, Inc., and its subsidiaries ("Fabco") and assumed certain liabilities, for a cash purchase price of $34 million. The Fabco acquisition was accounted for as a business combination. Since completion of initial estimates in the fourth quarter of fiscal year 2017, the company recorded a net $1 million measurement period adjustment to increase the provisional fair value of identifiable net assets acquired in the Fabco transaction, resulting in a corresponding $1 million decrease to goodwill. This adjustment was made to reflect additional available information and updated preliminary valuation results, which included valuation of trademarks, technology and customer relationships. The company is reviewing and may record other additional measurement period adjustments in fiscal year 2018. All goodwill resulting from the acquisition of Fabco was assigned to the Aftermarket and Industrial reportable segment. Estimated Fair Value As of September 30, 2017 Measurement Period Adjustments As of March 31, 2018 Purchase price $ 34 $ — $ 34 Acquired assets and liabilities Receivables 5 — 5 Inventories 13 (1 ) 12 Property, plant and equipment 9 (2 ) 7 Intangible assets — 3 3 Accounts payable (6 ) — (6 ) Other current liabilities (6 ) 1 (5 ) Total identifiable net assets acquired 15 1 16 Goodwill resulting from the acquisition of Fabco 19 (1 ) 18 $ 34 $ — $ 34 Divestiture of MHBC On February 7, 2018, Meritor completed the sale of its equity interest in MHBC. All assets and liabilities of the business were transferred at closing. As a result of the divestiture and prior period held for sale classification, a pretax impairment charge of $3 million previously recorded within other operating expense, net in the company’s condensed consolidated statement of operations for fiscal year 2017. |
Accounts Receivable Factoring a
Accounts Receivable Factoring and Securitization | 6 Months Ended |
Mar. 31, 2018 | |
Accounts Receivable Factoring And Securitization [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. Under this arrangement with Nordea Bank, which expires in March 2020, the company can sell up to, at any point in time, €155 million ( $191 million ) of eligible trade receivables. 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 consolidated balance sheet. The company had utilized €142 million ( $175 million ) and €139 million ( $164 million ) of this accounts receivable factoring facility as of March 31, 2018 and September 30, 2017 , respectively. The facility is backed by a 364 -day liquidity commitment from Nordea Bank which extends through February 12, 2019. The commitment is subject to standard terms and conditions for this type of arrangement. U.S. Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its U.S. subsidiaries through one of its U.S. subsidiaries. Under this arrangement with Nordea Bank, which expires in February 2019, the company can sell up to, at any point in time, €80 million ( $98 million ) of eligible trade receivables. 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 consolidated balance sheet. The company had utilized €36 million ( $44 million ) and €37 million ( $43 million ) of this accounts receivable factoring facility as of March 31, 2018 and September 30, 2017 , respectively. 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. On January 23, 2018, Meritor extended this United Kingdom factoring facility with Nordea Bank until February 2, 2022. All other terms of the agreement remain unchanged. Under this arrangement, the company can sell up to, at any point in time, €25 million ( $31 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 €8 million ( $10 million ) and €7 million ( $9 million ) of this accounts receivable factoring facility as of March 31, 2018 and September 30, 2017 , 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 with Nordea Bank, which expires in June 2022, the company can sell up to, at any point in time, €30 million ( $37 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 €28 million ( $34 million ) and €22 million ( $26 million ) of this accounts receivable factoring facility as of March 31, 2018 and September 30, 2017 , 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 consolidated balance sheet. Restricted cash amounts presented on the company’s condensed consolidated balance sheet relate to these other uncommitted factoring facilities and arise when cash received by the company related to factored receivables has not yet been remitted to the counterparty. The amount of factored receivables excluded from accounts receivable under these arrangements was $16 million and $19 million at March 31, 2018 and September 30, 2017 , respectively. Total costs associated with all of the off-balance sheet arrangements described above for the three months ended March 31, 2018 were insignificant. Total costs associated with all of the off-balance sheet arrangements described above for the three months ended March 31, 2017 were $1 million . Total costs associated with all of the off-balance sheet arrangements described above were $2 million in the six months ended March 31, 2018 and 2017, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations. On-balance sheet arrangements U.S. Securitization Facility: The company has a $100 million U.S. accounts receivables securitization facility with PNC Bank, which expires December 2020. The maximum permitted priority debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility is 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 condensed consolidated balance sheet. At March 31, 2018 and September 30, 2017 , $29 million and $89 million , respectively, were outstanding under this program. At March 31, 2018 , $1 million was outstanding for letters of credit under this program. At September 30, 2017 , no amounts were outstanding for letters of credit. 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 amounts exceeding the amounts shown as outstanding at fiscal quarter ends. |
Operating Cash Flows
Operating Cash Flows | 6 Months Ended |
Mar. 31, 2018 | |
Operating Cash Flow Disclosure [Abstract] | |
Operating Cash Flows | Operating Cash Flows The reconciliation of net income to cash flows provided by operating activities is as follows (in millions): Six Months Ended March 31, 2018 2017 OPERATING ACTIVITIES Net income $ 26 $ 39 Less: Loss from discontinued operations, net of tax (1 ) — Income from continuing operations 27 39 Adjustments to income from continuing operations to arrive at cash provided by operating activities: Depreciation and amortization 42 37 Deferred income tax expense 84 12 Loss on debt extinguishment 8 — Restructuring costs 3 4 Asset impairment charges 2 3 Equity in earnings of affiliates (11 ) (18 ) Pension and retiree medical expense (income) (16 ) 7 Other adjustments to income from continuing operations 9 8 Dividends received from equity method investments 6 13 Pension and retiree medical contributions (14 ) (19 ) Restructuring payments (4 ) (7 ) Changes in off-balance sheet accounts receivable securitization and factoring programs 19 19 Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations (83 ) (68 ) Operating cash flows provided by continuing operations 72 30 Operating cash flows provided by discontinued operations — — CASH PROVIDED BY OPERATING ACTIVITIES $ 72 $ 30 |
Inventories
Inventories | 6 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are stated at the lower of cost (using FIFO or average methods) or net realizable value (determined on the basis of estimated realizable values) and are summarized as follows (in millions): March 31, September 30, Finished goods $ 168 $ 139 Work in process 35 34 Raw materials, parts and supplies 252 205 Total $ 455 $ 378 |
Other Current Assets
Other Current Assets | 6 Months Ended |
Mar. 31, 2018 | |
Other Current Assets Disclosure [Abstract] | |
Other Current Assets | Other Current Assets Other current assets are summarized as follows (in millions): March 31, September 30, Asbestos-related recoveries (see Note 20) $ 10 $ 14 Prepaid and other 31 29 Other current assets $ 41 $ 43 |
Net Property
Net Property | 6 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Net Property | Net Property Net property is summarized as follows (in millions): March 31, September 30, Property at cost: Land and land improvements $ 30 $ 30 Buildings 238 240 Machinery and equipment 916 892 Company-owned tooling 131 126 Construction in progress 53 69 Total 1,368 1,357 Less: accumulated depreciation (909 ) (883 ) Net property $ 459 $ 474 |
Other Assets
Other Assets | 6 Months Ended |
Mar. 31, 2018 | |
Other Assets, Noncurrent [Abstract] | |
Other Assets | Other Assets Other assets are summarized as follows (in millions): March 31, September 30, Investments in non-consolidated joint ventures $ 105 $ 101 Asbestos-related recoveries (see Note 20) (1) 29 32 Unamortized revolver debt issuance costs 7 8 Capitalized software costs, net 25 27 Deferred income tax assets, net 146 229 Assets for uncertain tax positions 48 48 Prepaid pension costs 152 135 Other 20 16 Other assets $ 532 $ 596 (1) Includes reserves for Rockwell insurance policies in dispute. In accordance with FASB ASC Topic 350-40, costs relating to internally developed or purchased software in the preliminary project stage and the post-implementation stage are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software. The company holds a variable interest in a joint venture that is a variable interest entity ("VIE") 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 March 31, 2018 and September 30, 2017 , the company’s investment in the joint venture was $60 million and $54 million , respectively. TransPower In the first quarter of fiscal year 2018, Meritor completed a $3 million strategic investment in Transportation Power, Inc. (“TransPower”). The company holds a variable interest in TransPower, a VIE. TransPower develops electrical drive solutions and supplies integrated drive systems, full electric truck solutions and energy-storage subsystems to major manufacturers of trucks, school buses, refuse vehicles and terminal tractors. The company is not the primary beneficiary of TransPower, as other owners have control over the significant activities of TransPower, including the development of intellectual property and manufacturing. Therefore, the company does not consolidate TransPower. At March 31, 2018, the company’s investment in TransPower was $3 million , representing the company’s maximum exposure to loss. |
Other Current Liabilities
Other Current Liabilities | 6 Months Ended |
Mar. 31, 2018 | |
Other Current Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities are summarized as follows (in millions): March 31, September 30, Compensation and benefits $ 97 $ 117 Income taxes 18 11 Taxes other than income taxes 21 34 Accrued interest 11 9 Product warranties 17 18 Environmental reserves (see Note 20) 5 5 Restructuring (see Note 6) 3 5 Asbestos-related liabilities (see Note 20) 19 19 Indemnity obligations (see Note 20) 2 2 Other 56 52 Other current liabilities $ 249 $ 272 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 relationships 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): Six Months Ended March 31, 2018 2017 Total product warranties – beginning of period $ 45 $ 44 Accruals for product warranties 9 6 Payments (8 ) (7 ) Change in estimates and other 2 (3 ) Total product warranties – end of period 48 40 Less: Non-current product warranties (31 ) (24 ) Product warranties – current $ 17 $ 16 |
Other Liabilities
Other Liabilities | 6 Months Ended |
Mar. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities Other liabilities are summarized as follows (in millions): March 31, September 30, Asbestos-related liabilities (see Note 20) $ 121 $ 124 Restructuring (see Note 6) 2 1 Non-current deferred income tax liabilities 12 12 Liabilities for uncertain tax positions 30 32 Product warranties (see Note 15) 31 27 Environmental (see Note 20) 12 4 Indemnity obligations (see Note 20) 10 10 Other 26 29 Other liabilities $ 244 $ 239 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-Term debt, net of discounts where applicable, is summarized as follows (in millions): March 31, September 30, 3.25 percent convertible notes due 2037 (1)(3) $ 318 $ 317 4.0 percent convertible notes due 2027 (1)(4) 24 24 7.875 percent convertible notes due 2026 (1)(5) 22 22 6.75 percent notes due 2021 (2)(6) — 173 6.25 percent notes due 2024 (2)(7) 444 443 Capital lease obligation 9 12 Borrowings and securitization 29 89 Unamortized discount on convertible notes (8) (41 ) (42 ) Subtotal 805 1,038 Less: current maturities (77 ) (288 ) Long-term debt $ 728 $ 750 (1) The 3.25 percent convertible notes, 4.0 percent convertible notes and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2025, 2019 and 2020, respectively. (2) The 6.75 percent notes and 6.25 percent notes contain a call option, which allows for early redemption. (3) The 3.25 percent convertible notes are presented net of $7 million and $8 million unamortized issuance costs as of March 31, 2018 and September 30, 2017, respectively. (4) The 4.0 percent convertible notes are presented net of unamortized issuance costs of an insignificant amount as of March 31, 2018 and September 30, 2017. (5) The 7.875 percent convertible notes are presented net of unamortized issuance costs of an insignificant amount as of March 31, 2018 and September 30, 2017 , and $1 million original issuance discount as of March 31, 2018 and September 30, 2017 . (6) The 6.75 percent notes are presented net of $2 million unamortized issuance costs as of September 30, 2017 . (7) The 6.25 percent notes are presented net of $6 million and $7 million unamortized issuance costs as of March 31, 2018 and September 30, 2017 , respectively. (8) The carrying amount of the equity component related to convertible debt. Repurchase of Debt Securities On November 2, 2017, the company redeemed the remaining $175 million aggregate principal amount outstanding of the company's 6.75 percent notes due 2021 (the “ 6.75 Percent Notes”) at a price of $1,033.75 per $1,000 of principal amount, plus accrued and unpaid interest. The redemption resulted in a loss on debt extinguishment of approximately $8 million . The loss on debt extinguishment is included in Interest expense, net in the condensed consolidated statement of operations. The redemption was made pursuant to a special authorization from the Board of Directors in connection with the sale of the company's interest in Meritor WABCO Vehicle Control Systems ("Meritor WABCO") in the fourth quarter of fiscal year 2017. As of September 30, 2017, the the 6.75 Percent Notes were classified as current because company had announced its intention to redeem all of the remaining $175 million aggregate principal amount then outstanding. On September 28, 2017, the company redeemed $100 million of the $275 million aggregate principal amount outstanding of the company's 6.75 Percent Notes at a price of $1,033.75 per $1,000 of principal amount, plus accrued and unpaid interest. As a result, a loss on debt extinguishment of $5 million was recorded in the company's consolidated statement of operations within Interest expense, net during the fourth quarter of fiscal year 2017. The redemption was made under the company's July 2016 debt repurchase authorization (see Note 21 ). The company used the net proceeds, after issuance costs and discounts, of approximately $317 million from the offering of the 3.25 percent senior convertible notes due 2037 (the “ 3.25 Percent Convertible Notes”) to acquire portions of its outstanding 7.875 percent senior convertible notes due 2026 (the “ 7.875 Percent Convertible Notes”) and its 4.0 percent senior convertible notes due 2027 (the “ 4.0 Percent Convertible Notes”) in transactions that settled concurrently with the closing of the 3.25 Percent Convertible Note offering on September 22, 2017. In total, the company repurchased $117 million of the $140 million principal amount of its 7.875 Percent Convertible Notes and $119 million of the $143 million principal amount of its 4.0 Percent Convertible Notes. The 7.875 Percent Convertible Notes and 4.0 Percent Convertible Notes were repurchased at premiums equal to 130 percent and 16 percent , respectively, above their principal amount. These repurchases were accounted for as extinguishments of debt, and accordingly the company recognized a loss on debt extinguishment of $31 million in the aggregate ( $23 million with respect to the 7.875 Percent Convertible Notes and $8 million with respect to the 4.0 Percent Convertible Notes). The loss on extinguishment was recorded in the condensed consolidated statement of operations within Interest expense, net during fiscal year 2017. Current Classification of 4.0 Percent Convertible Notes The 4.0 Percent Convertible Notes were classified as current as of March 31, 2018 as the securities are redeemable at the option of the holder on February 15, 2019, at a repurchase price in cash equal to 100 percent of the accreted principal amount of the securities to be repurchased plus accrued and unpaid interest. The 4.0 Percent Convertible Notes were classified as noncurrent as of September 30, 2017. Current Classification of 7.875 Percent Convertible Notes The 7.875 Percent Convertible Notes were classified as current as of March 31, 2018 as the holders are entitled to convert all or a portion of their 7.875 Percent Convertible Notes at any time beginning April 2, 2018 and prior to the close of business on June 29, 2018 at a rate of 83.3333 shares of common stock per $1,000 principal amount at maturity of the 7.875 Percent Convertible Notes (representing a conversion price of approximately $12.00 per share). The 7.875 Percent Convertible Notes are convertible as the closing price of shares of the company's common stock for at least 20 trading days during the 30 consecutive trading-day period ending on March 29, 2018 was greater than 120 percent of the $12.00 conversion price associated with the 7.875 Percent Convertible Notes. The 7.875 Percent Convertible Notes were classified as current as of September 30, 2017 as the holders were entitled to convert all or a portion of their 7.875 Percent Convertible Notes at any time beginning October 1, 2017 and prior to the close of business on December 30, 2017 at a rate of 83.3333 shares of common stock per $1,000 principal amount at maturity of the 7.875 Percent Convertible Notes (representing a conversion price of approximately $12.00 per share). The 7.875 Percent Convertible Notes were convertible as the closing price of shares of the company's common stock for at least 20 trading days during the 30 consecutive trading-day period ending on September 29, 2017 was greater than 120 percent of the $12.00 conversion price associated with the 7.875 Percent Convertible Notes. The 7.875 Percent Convertible Notes surrendered for conversion, if any, would be settled in cash up to the principal amount at maturity of the 7.875 Percent Convertible Notes and cash, stock or a combination of cash and stock, at the company’s election, for the remainder of the conversion value of the 7.875 Percent Convertible Notes in excess of the principal amount at maturity and cash in lieu of any fractional shares, subject to and in accordance with the provisions of the indenture that governs the 7.875 Percent Convertible Notes. As a result of the 7.875 Percent Convertible Notes becoming currently convertible for cash up to the principal amount of $23 million at the holder's option, $2 million of permanent equity was reclassified as mezzanine equity. Revolving Credit Facility On March 31, 2017, the company amended and restated its revolving credit facility. Pursuant to the revolving credit agreement as amended, the company has a $525 million revolving credit facility that matures in March 2022. Additionally, $4 million was capitalized as deferred issuance costs and will be amortized over the term of the agreement. The availability under this facility is dependent upon various factors, including performance against certain financial covenants as highlighted below. 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 March 31, 2018 , the revolving credit facility was collateralized by approximately $808 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 March 31, 2018 , the margin over LIBOR rate was 275 basis points and the commitment fee was 37.5 basis points . Overnight revolving credit loans are at the prime rate plus a margin of 175 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 23 ). No borrowings were outstanding under the revolving credit facility at March 31, 2018 and September 30, 2017. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At March 31, 2018 and September 30, 2017, there were no letters of credit outstanding under the revolving credit facility. Debt Securities In December 2017, 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 2017 shelf registration statement superseded and replaced the shelf registration statement filed in December 2014, as amended. Capital Leases In March 2012, the company entered into a master lease agreement with Wells Fargo Equipment Finance, under which the company can enter into lease arrangements for equipment. Each 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 $2 million and $3 million outstanding under this capital lease arrangement as of March 31, 2018 and September 30, 2017, respectively. In addition, the company had another $7 million and $10 million outstanding through other capital lease arrangements at March 31, 2018 and September 30, 2017, respectively. 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, which expires in March 2019, the company has the right to obtain the issuance, renewal, extension and increase of letters of credit up to an aggregate availability of $25 million . This facility contains covenants and events of default generally similar to those existing in the company’s public debt indentures. There were $16 million and $18 million of letters of credit outstanding under this facility at March 31, 2018 and September 30, 2017, respectively. The company had another $6 million and $5 million of letters of credit outstanding through other letter of credit facilities at March 31, 2018 and September 30, 2017 , 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 were issued under an incentive program of the Brazilian government to fund working capital for Brazilian companies in exportation programs. The arrangements bore interest at 5.5 percent and had maturity dates in 2017. These financing arrangements were paid off at maturity, as of March 31, 2017. Other One of the company's consolidated joint ventures in China participates in a bills of exchange program to settle its obligations with its trade suppliers. These programs are common in China and generally require the participation of local banks. Under these programs, the company's joint venture issues notes payable through the participating banks to its trade suppliers. If the issued notes payable remain unpaid on their respective due dates, this could constitute an event of default under the company’s revolving credit facility if the defaulted amount exceeds $35 million per bank. As of March 31, 2018 and September 30, 2017, the company had $ 19 million and $24 million , respectively, outstanding under this program at more than one bank. |
Financial Instruments
Financial Instruments | 6 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial Instruments Fair values of financial instruments are summarized as follows (in millions): March 31, 2018 September 30, 2017 Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents $ 100 $ 100 $ 88 $ 88 Short-term debt 77 103 288 329 Long-term debt 728 796 750 859 Foreign exchange forward contracts (other assets) 1 1 — — Foreign exchange forward contracts (other liabilities) 1 1 3 3 Foreign currency option contracts (other assets) 1 1 3 3 The following table reflects the offsetting of derivative assets and liabilities (in millions): March 31, 2018 September 30, 2017 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Assets Foreign exchange forward contracts 1 — 1 — — — Derivative Liabilities Foreign exchange forward contracts 2 (1 ) 1 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 March 31, 2018 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 100 $ — $ — Short-term debt — 100 3 Long-term debt — 790 6 Foreign exchange forward contracts (other assets) — 1 — Foreign exchange forward contracts (other liabilities) — 1 — Foreign currency option contracts (other assets) — — 1 Fair value of financial instruments by the valuation hierarchy at September 30, 2017 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 88 $ — $ — Short-term debt — 325 4 Long-term debt — 851 8 Foreign exchange forward contracts (other assets) — — — Foreign exchange forward contracts (other liabilities) — 3 — Foreign currency option contracts (other assets) — — 3 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 condensed consolidated balance sheet for the three and six months ended March 31, 2018 and 2017 , respectively. No transfers of assets between any of the Levels occurred during these periods. Three months ended March 31, 2018 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of December 31, 2017 $ 2 $ 1 $ 3 Total unrealized gains (losses): Included in other income — — — Included in cost of sales (1 ) (1 ) (2 ) Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — — — Fair Value as of March 31, 2018 $ 1 $ — $ 1 Three months ended March 31, 2017 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of December 31, 2016 $ 1 $ 2 $ 3 Total unrealized gains (losses): Included in other income — — — Included in cost of sales 1 1 2 Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term 1 (1 ) — Fair Value as of March 31, 2017 $ 3 $ 2 $ 5 Six months ended March 31, 2018 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of September 30, 2017 $ 2 $ 1 $ 3 Total unrealized gains (losses): Included in other income — — — Included in cost of sales (1 ) (1 ) (2 ) Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — — — Fair Value as of March 31, 2018 $ 1 $ — $ 1 Six months ended March 31, 2017 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of September 30, 2016 $ — $ 2 $ 2 Total unrealized gains (losses): Included in other income — — — Included in cost of sales 1 2 3 Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term 2 (2 ) — Fair Value as of March 31, 2017 $ 3 $ 2 $ 5 (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 as of March 31, 2018 or September 30, 2017 . 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 18 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 exchange exposure on expected future Indian Rupee-denominated purchases. As of March 31, 2018 and September 30, 2017 , the notional amount of the company's Indian rupee foreign exchange contracts outstanding was $132 million and $172 million , respectively. 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. The company uses option contracts to mitigate the risk of volatility in the translation of euro earnings to U.S. dollars. As of March 31, 2018 and September 30, 2017 , the notional amount of the company's euro option contracts outstanding was $33 million and $58 million , respectively. These option contracts did not qualify for a hedge accounting election. Changes in fair value associated with these contracts are recorded in the consolidated statement of operations in other income, net. The company uses option contracts to mitigate the risk of volatility in the translation of Swedish krona to U.S. dollars. As of March 31, 2018 and September 30, 2017 , the notional amount of the company's Swedish krona option contracts outstanding was $33 million and $71 million , respectively. These option contracts did not qualify for a hedge accounting election. Changes in fair value associated with these contracts are recorded in the consolidated statement of operations in other income, net. The company uses option contracts to mitigate foreign exchange exposure on expected future South Korean won-denominated purchases. As of March 31, 2018 , the notional amount of the company's South Korean won foreign exchange contracts outstanding was $34 million . A s of September 30, 2017 , there were no South Korean won foreign exchange option contracts outstanding. 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. The fair value of foreign exchange option contracts is based on third-party proprietary models, which incorporate inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates and time utilizing market instruments with similar quality and maturity characteristics. |
Retirement Benefit Liabilities
Retirement Benefit Liabilities | 6 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
Retirement Benefit Liabilities | Retirement Benefit Liabilities Retirement benefit liabilities consisted of the following (in millions): March 31, September 30, Retiree medical liability $ 95 $ 104 Pension liability 206 219 Other 14 15 Subtotal 315 338 Less: current portion (included in compensation and benefits, Note 15) (24 ) (24 ) Retirement benefits $ 291 $ 314 The components of net periodic pension and retiree medical expense included in continuing operations for the three months ended March 31 are as follows (in millions): 2018 2017 Pension Retiree Medical Pension Retiree Medical Interest cost $ 14 $ — $ 13 $ 3 Assumed return on plan assets (25 ) — (24 ) — Amortization of prior service costs — (8 ) — — Recognized actuarial loss 7 4 8 3 Total expense (income) $ (4 ) $ (4 ) $ (3 ) $ 6 The components of net periodic pension and retiree medical expense included in continuing operations for the six months ended March 31 are as follows (in millions): 2018 2017 Pension Retiree Medical Pension Retiree Medical Interest cost $ 27 $ 1 $ 26 $ 7 Assumed return on plan assets (49 ) — (47 ) — Amortization of prior service costs — (17 ) — (1 ) Recognized actuarial loss 14 8 15 7 Total expense (income) $ (8 ) $ (8 ) $ (6 ) $ 13 |
Contingencies
Contingencies | 6 Months Ended |
Mar. 31, 2018 | |
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 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. Additionally, one site operated by a predecessor of the company has been proposed for addition to the Superfund National Priorities List. Management estimates the total reasonably possible costs the company could incur for the remediation of the nine Superfund sites at March 31, 2018 to be approximately $5 million , of which $2 million is probable and recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators. In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at March 31, 2018 to be approximately $24 million , of which $15 million is probable and recorded as a liability. Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 1.75 to 2.75 percent and is approximately $13 million at March 31, 2018 . The undiscounted estimate of these costs is approximately $15 million . The following are the components of the Superfund and non-Superfund environmental reserves (in millions): Superfund Sites Non-Superfund Sites Total Beginning balance at September 30, 2017 $ 2 $ 7 $ 9 Payments and other — (2 ) (2 ) Accruals — 10 10 Balance at March 31, 2018 $ 2 $ 15 $ 17 Environmental reserves are included in Other Current Liabilities (see Note 15 ) and Other Liabilities (see Note 16 ) in the condensed 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. 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. In May 2017, the company was served with a complaint filed against the company and other defendants by the Mississippi Attorney General in the Chancery Court of Grenada County, Mississippi. The complaint alleges that operations at the above-referenced Grenada facility caused contamination of off-site groundwater and surface waters. Subsequently, the company removed this action to the United States District Court for the Northern District of Mississippi. However, plaintiffs’ motion to remand the case to the Chancery Court was granted in March 2018. The company is also aware of additional property damage and personal injury lawsuits naming the company and others as defendants, which have been brought by current and former residents of the same neighborhood. The company has not yet been served with these complaints. The company intends to defend itself vigorously against these claims. The company believes at this time that liabilities associated with these cases, while possible, are not probable and estimable, and therefore has not recorded any accrual for them as of March 31, 2018 and September 30, 2017 . Further, a reasonably possible range of loss cannot be estimated at this time. 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 2,500 and 2,800 pending asbestos-related claims at March 31, 2018 and September 30, 2017 , 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): March 31, September 30, Pending and future claims $ 68 $ 68 Billed but unpaid claims 2 2 Asbestos-related liabilities $ 70 $ 70 Asbestos-related insurance recoveries $ 19 $ 25 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 Note 12 , Note 14 , Note 15 and Note 16 ). 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, 2017 , 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 $68 million to $82 million . After consultation with Bates White, management recognized a liability of $68 million as of each of March 31, 2018 and September 30, 2017 for pending and future claims over the next ten years . 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 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 2027; • 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; 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 $19 million and $25 million as of March 31, 2018 and September 30, 2017 , 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. Maremont maintained insurance coverage with other insurance carriers that management believed also covers 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 a part of this settlement, on December 12, 2015, Maremont received $17 million in cash, of which $5 million was recognized as a 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. During the first quarter of fiscal year 2017, the company recognized the remaining $3 million of the cash settlement proceeds as a reduction in asbestos expense. 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 firms, jurisdictions and diseases; 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 1,600 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at March 31, 2018 and September 30, 2017 . 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): March 31, September 30, Pending and future claims $ 63 $ 63 Billed but unpaid claims 2 2 Asbestos-related liabilities $ 65 $ 65 Asbestos-related insurance recoveries $ 37 $ 38 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, 2017 , 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 $63 million to $74 million . After consultation with Bates White, management recognized a liability for the pending and future claims over the next ten years of $63 million as of each of March 31, 2018 and September 30, 2017 . 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. 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 2027; • 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 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 the company’s prior experience; 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, in the fourth quarter of fiscal year 2016 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. During fiscal year 2017 and the first six months of fiscal year 2018, Rockwell recognized an additional $10 million and $4 million , respectively, of the cash settlement proceeds as a reduction in asbestos expense. Pursuant to the terms of a second settlement agreement, in the fourth quarter of fiscal year 2016 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 settlement agreements executed during the fourth quarter of fiscal year 2016, the company maintains a receivable of $7 million related to a previously executed coverage-in-place arrangement with other insurers. The insurance receivable for Rockwell's asbestos-related liabilities totaled $37 million and $38 million as of March 31, 2018 and September 30, 2017 , respectively. Included in these amounts are insurance receivables of $17 million as of each of March 31, 2018 and September 30, 2017 , which are associated with policies in dispute and have been fully reserved. 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 firms, jurisdictions and diseases; 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 each of March 31, 2018 and September 30, 2017 , the remaining estimated liability for this matter was approximately $10 million . In connection with the sale of its interest in MSSC in October 2009, the company provided certain indemnities 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. At each of March 31, 2018 and September 30, 2017 , the company's remaining exposure was approximately $1 million , which is included in other liabilities in the condensed 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 was potentially required to be remitted to certain tax jurisdictions for tax years 2010 through 2017. At March 31, 2018 and September 30, 2017 , the company’s estimate of the probable liability was $6 million and $12 million , respectively. In addition, various lawsuits, claims and proceedings, other than those specifically disclosed in the condensed 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. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity Common Stock and Debt 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 the company's debt covenants. As of March 31, 2018 , $33 million of common stock and $100 million in debt security repurchases had been made under these authorizations. Accumulated Other Comprehensive Loss ( “ AOCL ” ) The components of AOCL and the changes in AOCL by components, net of tax, for three months ended March 31, 2018 and 2017 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss Total Balance at December 31, 2017 $ (49 ) $ (497 ) $ (4 ) $ (550 ) Other comprehensive income before reclassification 14 — 3 17 Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Net current-period other comprehensive income $ 14 $ 3 $ 3 $ 20 Balance at March 31, 2018 $ (35 ) $ (494 ) $ (1 ) $ (530 ) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service costs $ (8 ) (a) Actuarial losses 11 (a) 3 Total before tax (1 ) Tax benefit Total reclassifications for the period $ 2 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 19 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 Total Balance at December 31, 2016 $ (94 ) $ (729 ) $ (2 ) $ (825 ) Other comprehensive income before reclassification 19 — 1 20 Amounts reclassified from accumulated other comprehensive loss — 11 — 11 Net current-period other comprehensive income $ 19 $ 11 $ 1 $ 31 Balance at March 31, 2017 $ (75 ) $ (718 ) $ (1 ) $ (794 ) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Actuarial losses $ 11 (b) 11 Total before tax (7 ) Tax expense Total reclassifications for the period $ 4 Net of tax (b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. The components of AOCL and the changes in AOCL by components, net of tax, for six months ended March 31, 2018 and 2017 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss Total Balance at September 30, 2017 $ (41 ) $ (500 ) $ (4 ) $ (545 ) Other comprehensive income before reclassification 6 1 3 10 Amounts reclassified from accumulated other comprehensive loss — 5 — 5 Net current-period other comprehensive income $ 6 $ 6 $ 3 $ 15 Balance at March 31, 2018 $ (35 ) $ (494 ) $ (1 ) $ (530 ) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service costs $ (17 ) (a) Actuarial losses 22 (a) 5 Total before tax (1 ) Tax benefit Total reclassifications for the period $ 4 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 19 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 Total Balance at September 30, 2016 $ (66 ) $ (740 ) $ (3 ) $ (809 ) Other comprehensive income (loss) before reclassification (9 ) 1 2 (6 ) Amounts reclassified from accumulated other comprehensive loss — 21 — 21 Net current-period other comprehensive income (loss) $ (9 ) $ 22 $ 2 $ 15 Balance at March 31, 2017 $ (75 ) $ (718 ) $ (1 ) $ (794 ) Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service costs $ (1 ) (a) Actuarial losses 22 (a) 21 Total before tax (7 ) Tax benefit Total reclassifications for the period $ 14 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 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. |
Business Segment Information
Business Segment Information | 6 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. On March 12, 2018, the company announced a realignment of operations to further drive long-term strategic objectives while also assigning new responsibilities as part of its commitment to leadership development. As part of this realignment, reportable segments changed. As of the second quarter of fiscal year 2018, the company's reportable segments are (1) Commercial Truck & Trailer and (2) Aftermarket & Industrial. Prior year reportable segment financial results have been recast for these changes. The company has two reportable segments at March 31, 2018 , as follows: • The Commercial Truck & Trailer segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks and other applications in North America, South America, Europe and Asia Pacific. It also supplies a wide variety of undercarriage products and systems for trailer applications in North America. This segment also includes the company's aftermarket businesses in Asia Pacific and South America. • The Aftermarket & Industrial segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers, primarily in North America and Europe. In addition, this segment supplies drivetrain systems and certain components, including axles, drivelines, brakes and suspension systems for military, construction, bus and coach, fire and emergency and other applications in North America. Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring expense, asset impairment charges and other special items as determined by management. Segment adjusted EBITDA excludes unallocated legacy and corporate income (expense), net. The company uses segment adjusted EBITDA as the primary basis for the CODM to evaluate the performance of each of its reportable segments. The accounting policies of the segments are the same as those applied in the condensed consolidated financial statements, except for the use of segment adjusted EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the segment. Segment information is summarized as follows (in millions): Commercial Truck Aftermarket Eliminations Total Three Months Ended March 31, 2018 External Sales $ 815 $ 251 $ — $ 1,066 Intersegment Sales 39 5 (44 ) — Total Sales $ 854 $ 256 $ (44 ) $ 1,066 Three Months Ended March 31, 2017 (1) External Sales $ 583 $ 223 $ — $ 806 Intersegment Sales 35 3 (38 ) — Total Sales $ 618 $ 226 $ (38 ) $ 806 Commercial Truck Aftermarket Eliminations Total Six Months Ended March 31, 2018 External Sales $ 1,493 $ 476 $ — $ 1,969 Intersegment Sales 74 9 (83 ) — Total Sales $ 1,567 $ 485 $ (83 ) $ 1,969 Six Months Ended March 31, 2017 (1) External Sales $ 1,090 $ 415 $ — $ 1,505 Intersegment Sales 65 7 (72 ) — Total Sales $ 1,155 $ 422 $ (72 ) $ 1,505 (1) Amounts for the three and six months ended March 31, 2017 have been recast to reflect reportable segment changes. Three Months Ended March 31, Six Months Ended March 31, 2018 2017 (2) 2018 2017 (2) Segment adjusted EBITDA: Commercial Truck & Trailer $ 96 $ 52 $ 165 $ 92 Aftermarket & Industrial 36 32 68 56 Segment adjusted EBITDA 132 84 233 148 Unallocated legacy and corporate expense, net (1) (10 ) (2 ) (12 ) (2 ) Interest expense, net (16 ) (21 ) (40 ) (42 ) Provision for income taxes (22 ) (13 ) (105 ) (19 ) Depreciation and amortization (21 ) (20 ) (42 ) (37 ) Noncontrolling interests (3 ) (1 ) (5 ) (2 ) Loss on sale of receivables — (1 ) (2 ) (2 ) Asset impairment charges (2 ) — (2 ) (3 ) Restructuring costs (1 ) (4 ) (3 ) (4 ) Income from continuing operations attributable to Meritor, Inc. $ 57 $ 22 $ 22 $ 37 (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) Amounts for the three and six months ended March 31, 2017 have been recast to reflect reportable segment changes. March 31, September 30, 2017 (3) Segment Assets: Commercial Truck & Trailer $ 1,820 $ 1,708 Aftermarket & Industrial 491 466 Total segment assets 2,311 2,174 Corporate (1) 563 869 Less: Accounts receivable sold under off-balance sheet factoring programs (2) (279 ) (261 ) Total assets $ 2,595 $ 2,782 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. (2) At March 31, 2018 and September 30, 2017 , segment assets include $279 million and $261 million , respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 9 ). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances. (3) Amounts as of September 30, 2017 have been recast to reflect reportable segment changes, including the reallocation of goodwill. |
Supplemental Guarantor Condense
Supplemental Guarantor Condensed Consolidating Financial Statements | 6 Months Ended |
Mar. 31, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Supplemental Guarantor Condensed Consolidating Financial Statements | Supplemental Guarantor Condensed Consolidating Financial Statements Rule 3-10 of Regulation S-X requires that separate financial information for issuers and guarantors of registered securities be filed in certain circumstances. Certain of the company's 100 -percent-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 notes outstanding under the company's indentures (see Note 17 ). 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 Regulation S-X Rules 3-10. 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 Guarantors are combined in the condensed consolidating financial statements. Three Months Ended March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 566 $ 500 $ — $ 1,066 Subsidiaries — 35 54 (89 ) — Total sales — 601 554 (89 ) 1,066 Cost of sales (15 ) (500 ) (462 ) 89 (888 ) GROSS MARGIN (15 ) 101 92 — 178 Selling, general and administrative (31 ) (27 ) (16 ) — (74 ) Restructuring costs — (1 ) — — (1 ) Other operating expense, net (9 ) (1 ) (1 ) — (11 ) OPERATING INCOME (LOSS) (55 ) 72 75 — 92 Other income (expense), net 34 (1 ) (33 ) — — Equity in earnings of affiliates — 4 2 — 6 Interest income (expense), net (28 ) 6 6 — (16 ) INCOME (LOSS) BEFORE INCOME TAXES (49 ) 81 50 — 82 Benefit (provision) for income taxes 8 (13 ) (17 ) — (22 ) Equity income from continuing operations of subsidiaries 98 24 — (122 ) — INCOME FROM CONTINUING OPERATIONS 57 92 33 (122 ) 60 LOSS FROM DISCONTINUED OPERATIONS, net of tax — — — — — NET INCOME 57 92 33 (122 ) 60 Less: Net income attributable to noncontrolling interests — — (3 ) — (3 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 57 $ 92 $ 30 $ (122 ) $ 57 Three Months Ended March 31, 2018 Parent Guarantors Non- Elims Consolidated Net income $ 57 $ 92 $ 33 $ (122 ) $ 60 Other comprehensive income, net of tax 20 19 21 (40 ) 20 Total comprehensive income 77 111 54 (162 ) 80 Less: Comprehensive income attributable to — — (3 ) — (3 ) Comprehensive income attributable to Meritor, Inc. $ 77 $ 111 $ 51 $ (162 ) $ 77 Three Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 391 $ 415 $ — $ 806 Subsidiaries — 30 14 (44 ) — Total sales — 421 429 (44 ) 806 Cost of sales (15 ) (345 ) (369 ) 44 (685 ) GROSS MARGIN (15 ) 76 60 — 121 Selling, general and administrative (20 ) (34 ) (12 ) — (66 ) Restructuring costs — (2 ) (2 ) — (4 ) Other operating expense, net (2 ) — — — (2 ) OPERATING INCOME (LOSS) (37 ) 40 46 — 49 Other income (expense), net 25 (5 ) (20 ) — — Equity in earnings of affiliates — 6 2 — 8 Interest income (expense), net (34 ) 9 4 — (21 ) INCOME (LOSS) BEFORE INCOME TAXES (46 ) 50 32 — 36 Benefit (provision) for income taxes 15 (15 ) (13 ) — (13 ) Equity income from continuing operations of subsidiaries 53 14 — (67 ) — INCOME FROM CONTINUING OPERATIONS 22 49 19 (67 ) 23 LOSS FROM DISCONTINUED OPERATIONS, net of tax — — — — — NET INCOME 22 49 19 (67 ) 23 Less: Net income attributable to noncontrolling interests — — (1 ) — (1 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 22 $ 49 $ 18 $ (67 ) $ 22 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. Three Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 22 $ 49 $ 19 $ (67 ) $ 23 Other comprehensive income 30 21 21 (40 ) 32 Total comprehensive income 52 70 40 (107 ) 55 Less: Comprehensive income attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive income attributable to Meritor, Inc. $ 52 $ 70 $ 38 $ (107 ) $ 53 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. Six Months Ended March 31, 2018 Parent Guarantors Non- Elims Consolidated Sales External $ — $ 1,034 $ 935 $ — $ 1,969 Subsidiaries — 67 98 (165 ) — Total sales — 1,101 1,033 (165 ) 1,969 Cost of sales (29 ) — (918 ) (869 ) 165 (1,651 ) GROSS MARGIN (29 ) 183 164 — 318 Selling, general and administrative (59 ) (47 ) (35 ) — (141 ) Restructuring costs — (1 ) (2 ) — (3 ) Other operating income (expense) (10 ) (1 ) (1 ) — (12 ) OPERATING INCOME (LOSS) (98 ) 134 126 — 162 Other income (loss), net 33 5 (39 ) — (1 ) Equity in earnings of affiliates — 8 3 — 11 Interest income (expense), net (65 ) 15 10 — (40 ) INCOME (LOSS) BEFORE INCOME TAXES (130 ) 162 100 — 132 Benefit (Provision) for income taxes (15 ) (62 ) (28 ) — (105 ) Equity income from continuing operations of subsidiaries 167 61 — (228 ) — INCOME FROM CONTINUING OPERATIONS 22 161 72 (228 ) 27 LOSS FROM DISCONTINUED OPERATIONS, net of tax (1 ) — — — (1 ) NET INCOME 21 161 72 (228 ) 26 Less: Net income attributable to noncontrolling interests — — (5 ) — (5 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 21 $ 161 $ 67 $ (228 ) $ 21 Six Months Ended March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated Net income (loss) $ 21 $ 161 $ 72 $ (228 ) $ 26 Other comprehensive income (loss) 15 12 14 (25 ) 16 Total comprehensive income (loss) 36 173 86 (253 ) 42 Less: Comprehensive income attributable to noncontrolling interests — — (6 ) — (6 ) Comprehensive income (loss) attributable to Meritor, Inc. $ 36 $ 173 $ 80 $ (253 ) $ 36 Six Months Ended March 31, 2017 (1) Parent Guarantors Non- Elims Consolidated Sales External $ — $ 716 $ 789 $ — $ 1,505 Subsidiaries — 56 26 (82 ) — Total sales — 772 815 (82 ) 1,505 Cost of sales (29 ) (642 ) (706 ) 82 (1,295 ) GROSS MARGIN (29 ) 130 109 — 210 Selling, general and administrative (43 ) (52 ) (24 ) — (119 ) Restructuring costs 2 (2 ) (4 ) — (4 ) Other operating expense (2 ) — (3 ) — (5 ) OPERATING INCOME (LOSS) (72 ) 76 78 — 82 Other income (loss), net 24 (5 ) (19 ) — — Equity in earnings of affiliates — 15 3 — 18 Interest income (expense), net (67 ) 19 6 — (42 ) INCOME (LOSS) BEFORE INCOME TAXES (115 ) 105 68 — 58 Benefit (Provision) for income taxes 35 (35 ) (19 ) — (19 ) Equity income from continuing operations of subsidiaries 117 41 — (158 ) — INCOME FROM CONTINUING OPERATIONS 37 111 49 (158 ) 39 LOSS FROM DISCONTINUED OPERATIONS, net of tax — — — — — NET INCOME 37 111 49 (158 ) 39 Less: Net income attributable to noncontrolling interests — — (2 ) — (2 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 37 $ 111 $ 47 $ (158 ) $ 37 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. Six Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 37 $ 111 $ 49 $ (158 ) $ 39 Other comprehensive income (loss) 14 (4 ) (6 ) 10 14 Total comprehensive income 51 107 43 (148 ) 53 Less: Comprehensive income attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive income attributable to Meritor, Inc. $ 51 $ 107 $ 42 $ (148 ) $ 52 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS: Cash and cash equivalents $ 9 $ 5 $ 86 $ — $ 100 Restricted cash — — 9 — 9 Receivables trade and other, net 1 44 536 — 581 Inventories — 215 240 — 455 Other current assets 4 7 30 — 41 TOTAL CURRENT ASSETS 14 271 901 — 1,186 NET PROPERTY (1) 20 220 219 — 459 GOODWILL — 239 179 — 418 OTHER ASSETS 187 117 228 — 532 INVESTMENTS IN SUBSIDIARIES 3,426 872 — (4,298 ) — TOTAL ASSETS $ 3,647 $ 1,719 $ 1,527 $ (4,298 ) $ 2,595 CURRENT LIABILITIES: Short-term debt $ 46 $ 1 $ 30 $ — $ 77 Accounts and notes payable 51 268 373 — 692 Other current liabilities 73 50 126 — 249 TOTAL CURRENT LIABILITIES 170 319 529 — 1,018 LONG-TERM DEBT 723 — 5 — 728 RETIREMENT BENEFITS 269 — 22 — 291 INTERCOMPANY PAYABLE (RECEIVABLE) 2,156 (2,507 ) 351 — — OTHER LIABILITIES 45 91 108 — 244 MEZZANINE EQUITY 2 — — — 2 EQUITY ATTRIBUTABLE TO MERITOR, INC. 282 3,816 482 (4,298 ) 282 NONCONTROLLING INTERESTS — — 30 — 30 TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 3,647 $ 1,719 $ 1,527 $ (4,298 ) $ 2,595 (1) As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. These assets and liabilities held for sale are included in the Non-Guarantor column, other than $1 million of Net property that is included in the Guarantor column. September 30, 2017 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS: Cash and cash equivalents (1) $ 10 $ 3 $ 75 $ — $ 88 Receivables trade and other, net (1) — 296 493 — 789 Inventories (1) — 184 194 — 378 Other current assets 5 6 32 — 43 TOTAL CURRENT ASSETS 15 489 794 — 1,298 NET PROPERTY (1) 21 227 226 — 474 GOODWILL (1) — 237 177 — 414 OTHER ASSETS (1) 271 106 219 — 596 INVESTMENTS IN SUBSIDIARIES 3,222 787 — (4,009 ) — TOTAL ASSETS $ 3,529 $ 1,846 $ 1,416 $ (4,009 ) $ 2,782 CURRENT LIABILITIES: Short-term debt $ 195 $ 2 $ 91 $ — $ 288 Accounts and notes payable (1) 55 246 321 — 622 Other current liabilities 69 69 134 — 272 TOTAL CURRENT LIABILITIES 319 317 546 — 1,182 LONG-TERM DEBT 743 — 7 — 750 RETIREMENT BENEFITS 291 — 23 — 314 INTERCOMPANY PAYABLE (RECEIVABLE) 1,866 (2,160 ) 294 — — OTHER LIABILITIES 40 93 106 — 239 MEZZANINE EQUITY 2 — — — 2 EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. 268 3,596 413 (4,009 ) 268 NONCONTROLLING INTERESTS (1) — — 27 — 27 TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 3,529 $ 1,846 $ 1,416 $ (4,009 ) $ 2,782 (1) As of September 30, 2017, Assets and Liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property, including land, buildings and equipment; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. These assets and liabilities held for sale are included in the Non-Guarantors column, other than $1 million of Net property that is included in the Guarantor column. Six Months Ended March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (50 ) $ 20 $ 102 $ — $ 72 INVESTING ACTIVITIES Capital expenditures (2 ) (17 ) (16 ) — (35 ) Proceeds from sale of a business 4 — — — 4 Proceeds from prior year sale of equity method investment 250 — — — 250 Cash paid for investment in Transportation Power, Inc. (3 ) — — — (3 ) CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 249 (17 ) (16 ) — 216 FINANCING ACTIVITIES Borrowings and securitization — — (60 ) — (60 ) Redemption of notes (181 ) — — — (181 ) Repurchase of common stock (33 ) — — — (33 ) Intercompany advances 15 — (15 ) — — Other financing activities (1 ) (1 ) — — (2 ) CASH USED FOR FINANCING ACTIVITIES (200 ) (1 ) (75 ) — (276 ) EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — — — — CHANGE IN CASH AND CASH EQUIVALENTS (1 ) 2 11 — 12 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10 3 75 — 88 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9 $ 5 $ 86 $ — $ 100 Six Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (51 ) $ 21 $ 60 $ — $ 30 INVESTING ACTIVITIES Capital expenditures (6 ) (21 ) (13 ) — (40 ) Net investing cash flows provided by discontinued operations — 2 — — 2 CASH USED FOR INVESTING ACTIVITIES (6 ) (19 ) (13 ) — (38 ) FINANCING ACTIVITIES Debt issuance costs (4 ) — — — (4 ) Intercompany advances 38 — (38 ) — — Other financing activities — (2 ) (9 ) — (11 ) CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 34 (2 ) (47 ) — (15 ) EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — 1 — 1 CHANGE IN CASH AND CASH EQUIVALENTS (23 ) — 1 — (22 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 90 4 66 — 160 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 67 $ 4 $ 67 $ — $ 138 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. 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 Securities and Exchange Commission. As of March 31, 2018 and September 30, 2017 , Parent-only obligations included $ 280 million and $303 million of pension and retiree medical benefits, respectively (see Note 19 ). All debt is debt of the Parent other than $ 36 million and $100 million at March 31, 2018 and September 30, 2017 , respectively (see Note 17 ), and is primarily related to U.S. accounts receivable securitization and capital lease obligations. There were $ 29 million and $1 million of cash dividends paid to the Parent by subsidiaries and investments accounted for by the equity method for the six months ended March 31, 2018 and March 31, 2017 , respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 30, 2018, the company acquired substantially all of the assets of AA Gear & Manufacturing, Inc. and its subsidiaries (“AAG”) for a cash purchase price of approximately $35 million . The AAG acquisition will be accounted for as a business combination. AAG provides low-to-medium volume batch manufacturing for complex gear and shaft applications, as well as quick-turnaround prototyping solutions and emergency plant support. The company has a strong manufacturing engineering team with a reputation for solving customers’ technical issues as a means to building long-term customer relationships. Those relationships include some of the world’s leading manufacturers across a wide range of attractive end markets including agriculture, construction, heavy truck, diversified industrial and automotive. On April 13, 2018, the company purchased an additional $1.5 million of TransPower preferred shares. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Standards | Accounting standards implemented during fiscal year 2018 In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendment changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and presenting all items that affect earnings in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting components excluded from the assessment of hedge effectiveness. Changes to income statement classification and financial statement disclosures will be applied prospectively from the date of adoption. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. In October 2016, the FASB issued 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the 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 company adopted this standard in the first quarter of fiscal year 2018. Following adoption of this standard, all excess tax benefits and all tax deficiencies generated in the current and future periods will be prospectively recorded as income tax benefit or expense in the company’s consolidated statement of operations in the reporting period in which they occur. An income tax benefit of approximately $1 million was recognized in the quarterly period ended December 31, 2017 as a result of the adoption of ASU 2016-09 and a corresponding $1 million increase in income from continuing operations and net income was recognized during the period. The amendments in the guidance that require application using a modified retrospective transition method did not impact the company. Therefore, there was no cumulative-effect adjustment to retained earnings recognized as of October 2, 2017. The company has elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. 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 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. 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 company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements. Accounting standards to be implemented In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 ("U.S. tax reform") from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842. ASU 2018-01 permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. The amendments in this update affect the guidance in ASU 2016-02, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2018-01 are the same as the effective date and transition requirements in ASU 2016-02 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 in connection with its planned implementation of ASU 2016-02 and is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements and provides guidance on when an entity would be required to apply modification accounting. This standard is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied prospectively. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 affects entities who own investments in callable debt securities and aligns the amortization period of premiums on callable debt securities to expectations incorporated in market pricing on the underlying securities. This standard is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effective adjustment directly to retained earnings at the beginning of the adoption period. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance requires entities to only include the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, are to be included in a separate line item(s) outside of any sub-total of operating income. ASU 2017-07 also provides guidance that only the service cost component of net benefit cost is eligible for capitalization. This standard is effective for public business entities for interim and annual periods beginning after December 15, 2017. The revisions in this amendment are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 provides guidance which defines an “in substance nonfinancial asset”; unifies guidance related to partial sales of nonfinancial assets; eliminates rules specifically addressing sales of real estate; removes exceptions to the financial asset derecognition model; and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The effective date and the transition requirements for the amendments in ASU 2017-05 are the same as the effective date and transition requirements in Topic 606, described below. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The revised guidance will be applied prospectively, and is effective for calendar year-end Securities and Exchange Commission ("SEC") filers in 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The new guidance is not expected to have a material impact on the company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. To be considered a business under the new guidance, it must include an input and a substantive process that together significantly contribute to the ability to create output. The amendment removes the evaluation of whether a market participant could replace missing elements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and will be applied prospectively. The potential impact of this new guidance will be assessed for future acquisitions or dispositions, but it is not expected to have a material impact on the company's consolidated financial statements. 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 FASB 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 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 accounting policies and 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 accounting policies and 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 2016-08, 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 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 on its accounting policies and 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 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 on its accounting policies and its consolidated financial statements. |
Inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or net realizable value (determined on the basis of estimated realizable values) |
Environmental | 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 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of basic average common shares outstanding | A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions): Three Months Ended March 31, Six Months Ended March 31, 2018 2017 2018 2017 Basic average common shares outstanding 88.6 88.2 88.6 87.7 Impact of restricted shares, restricted share units and performance share units 1.6 1.1 1.6 1.2 Impact of convertible notes 1.0 2.7 1.1 1.3 Diluted average common shares outstanding 91.2 92.0 91.3 90.2 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of discontinued operations | Results of discontinued operations are summarized as follows (in millions): Three Months Ended March 31, Six Months Ended March 31, 2018 2017 2018 2017 Sales $ — $ — $ — $ — Loss before income taxes $ — $ — $ (2 ) $ — Benefit from income taxes — — 1 — Loss from discontinued operations attributable to Meritor, Inc. $ — $ — $ (1 ) $ — |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of the changes in carrying value of goodwill | A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions): Commercial Truck & Trailer Aftermarket & Industrial Total Goodwill (1) $ 283 $ 146 $ 429 Accumulated impairment losses (1) — (15 ) (15 ) Beginning balance at September 30, 2017 (1) 283 131 414 Adjustment due to sale of a business (see Note 8) (1 ) — (1 ) Fabco measurement period adjustment (see Note 8) — (1 ) (1 ) Foreign currency translation 4 2 6 Balance at March 31, 2018 $ 286 $ 132 $ 418 (1) Amounts have been recast to reflect reportable segment changes (see Note 22 ). |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of changes in restructuring reserves | The changes in restructuring reserves for the six months ended March 31, 2018 and 2017 are as follows (in millions): Employee Termination Benefits Plant Shutdown & Other Total Beginning balance at September 30, 2017 $ 5 $ 1 $ 6 Activity during the period: Charges to continuing operations 3 — 3 Cash payments – continuing operations (3 ) (1 ) (4 ) Total restructuring reserves at March 31, 2018 5 — 5 Less: non-current restructuring reserves (2 ) — (2 ) Restructuring reserves – current, at March 31, 2018 $ 3 $ — $ 3 Balance at September 30, 2016 $ 15 $ 1 $ 16 Activity during the period: Charges to continuing operations 4 — 4 Cash payments – continuing operations (7 ) — (7 ) Other (1 ) — (1 ) Total restructuring reserves at March 31, 2017 11 1 12 Less: non-current restructuring reserves (1 ) — (1 ) Restructuring reserves – current, at March 31, 2017 $ 10 $ 1 $ 11 |
Acquisition and Divestiture (Ta
Acquisition and Divestiture (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | Estimated Fair Value As of September 30, 2017 Measurement Period Adjustments As of March 31, 2018 Purchase price $ 34 $ — $ 34 Acquired assets and liabilities Receivables 5 — 5 Inventories 13 (1 ) 12 Property, plant and equipment 9 (2 ) 7 Intangible assets — 3 3 Accounts payable (6 ) — (6 ) Other current liabilities (6 ) 1 (5 ) Total identifiable net assets acquired 15 1 16 Goodwill resulting from the acquisition of Fabco 19 (1 ) 18 $ 34 $ — $ 34 |
Operating Cash Flows (Tables)
Operating Cash Flows (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Operating Cash Flow Disclosure [Abstract] | |
Schedule of operating cash flows | The reconciliation of net income to cash flows provided by operating activities is as follows (in millions): Six Months Ended March 31, 2018 2017 OPERATING ACTIVITIES Net income $ 26 $ 39 Less: Loss from discontinued operations, net of tax (1 ) — Income from continuing operations 27 39 Adjustments to income from continuing operations to arrive at cash provided by operating activities: Depreciation and amortization 42 37 Deferred income tax expense 84 12 Loss on debt extinguishment 8 — Restructuring costs 3 4 Asset impairment charges 2 3 Equity in earnings of affiliates (11 ) (18 ) Pension and retiree medical expense (income) (16 ) 7 Other adjustments to income from continuing operations 9 8 Dividends received from equity method investments 6 13 Pension and retiree medical contributions (14 ) (19 ) Restructuring payments (4 ) (7 ) Changes in off-balance sheet accounts receivable securitization and factoring programs 19 19 Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations (83 ) (68 ) Operating cash flows provided by continuing operations 72 30 Operating cash flows provided by discontinued operations — — CASH PROVIDED BY OPERATING ACTIVITIES $ 72 $ 30 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or net realizable value (determined on the basis of estimated realizable values) and are summarized as follows (in millions): March 31, September 30, Finished goods $ 168 $ 139 Work in process 35 34 Raw materials, parts and supplies 252 205 Total $ 455 $ 378 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Other Current Assets Disclosure [Abstract] | |
Summary of other current assets | Other current assets are summarized as follows (in millions): March 31, September 30, Asbestos-related recoveries (see Note 20) $ 10 $ 14 Prepaid and other 31 29 Other current assets $ 41 $ 43 |
Net Property (Tables)
Net Property (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of net property | Net property is summarized as follows (in millions): March 31, September 30, Property at cost: Land and land improvements $ 30 $ 30 Buildings 238 240 Machinery and equipment 916 892 Company-owned tooling 131 126 Construction in progress 53 69 Total 1,368 1,357 Less: accumulated depreciation (909 ) (883 ) Net property $ 459 $ 474 |
Other Assets (Tables)
Other Assets (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Other Assets, Noncurrent [Abstract] | |
Summary of other assets | Other assets are summarized as follows (in millions): March 31, September 30, Investments in non-consolidated joint ventures $ 105 $ 101 Asbestos-related recoveries (see Note 20) (1) 29 32 Unamortized revolver debt issuance costs 7 8 Capitalized software costs, net 25 27 Deferred income tax assets, net 146 229 Assets for uncertain tax positions 48 48 Prepaid pension costs 152 135 Other 20 16 Other assets $ 532 $ 596 (1) Includes reserves for Rockwell insurance policies in dispute. |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Other Current Liabilities Disclosure [Abstract] | |
Summary of other current liabilities | Other current liabilities are summarized as follows (in millions): March 31, September 30, Compensation and benefits $ 97 $ 117 Income taxes 18 11 Taxes other than income taxes 21 34 Accrued interest 11 9 Product warranties 17 18 Environmental reserves (see Note 20) 5 5 Restructuring (see Note 6) 3 5 Asbestos-related liabilities (see Note 20) 19 19 Indemnity obligations (see Note 20) 2 2 Other 56 52 Other current liabilities $ 249 $ 272 |
Summary of the changes in product warranties | A summary of the changes in product warranties is as follows (in millions): Six Months Ended March 31, 2018 2017 Total product warranties – beginning of period $ 45 $ 44 Accruals for product warranties 9 6 Payments (8 ) (7 ) Change in estimates and other 2 (3 ) Total product warranties – end of period 48 40 Less: Non-current product warranties (31 ) (24 ) Product warranties – current $ 17 $ 16 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Summary of other liabilities | Other liabilities are summarized as follows (in millions): March 31, September 30, Asbestos-related liabilities (see Note 20) $ 121 $ 124 Restructuring (see Note 6) 2 1 Non-current deferred income tax liabilities 12 12 Liabilities for uncertain tax positions 30 32 Product warranties (see Note 15) 31 27 Environmental (see Note 20) 12 4 Indemnity obligations (see Note 20) 10 10 Other 26 29 Other liabilities $ 244 $ 239 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Summary of long-term debt | Long-Term debt, net of discounts where applicable, is summarized as follows (in millions): March 31, September 30, 3.25 percent convertible notes due 2037 (1)(3) $ 318 $ 317 4.0 percent convertible notes due 2027 (1)(4) 24 24 7.875 percent convertible notes due 2026 (1)(5) 22 22 6.75 percent notes due 2021 (2)(6) — 173 6.25 percent notes due 2024 (2)(7) 444 443 Capital lease obligation 9 12 Borrowings and securitization 29 89 Unamortized discount on convertible notes (8) (41 ) (42 ) Subtotal 805 1,038 Less: current maturities (77 ) (288 ) Long-term debt $ 728 $ 750 (1) The 3.25 percent convertible notes, 4.0 percent convertible notes and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2025, 2019 and 2020, respectively. (2) The 6.75 percent notes and 6.25 percent notes contain a call option, which allows for early redemption. (3) The 3.25 percent convertible notes are presented net of $7 million and $8 million unamortized issuance costs as of March 31, 2018 and September 30, 2017, respectively. (4) The 4.0 percent convertible notes are presented net of unamortized issuance costs of an insignificant amount as of March 31, 2018 and September 30, 2017. (5) The 7.875 percent convertible notes are presented net of unamortized issuance costs of an insignificant amount as of March 31, 2018 and September 30, 2017 , and $1 million original issuance discount as of March 31, 2018 and September 30, 2017 . (6) The 6.75 percent notes are presented net of $2 million unamortized issuance costs as of September 30, 2017 . (7) The 6.25 percent notes are presented net of $6 million and $7 million unamortized issuance costs as of March 31, 2018 and September 30, 2017 , respectively. (8) The carrying amount of the equity component related to convertible debt. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of financial instruments | Fair values of financial instruments are summarized as follows (in millions): March 31, 2018 September 30, 2017 Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents $ 100 $ 100 $ 88 $ 88 Short-term debt 77 103 288 329 Long-term debt 728 796 750 859 Foreign exchange forward contracts (other assets) 1 1 — — Foreign exchange forward contracts (other liabilities) 1 1 3 3 Foreign currency option contracts (other assets) 1 1 3 3 |
Offsetting of derivative assets and liabilities | The following table reflects the offsetting of derivative assets and liabilities (in millions): March 31, 2018 September 30, 2017 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Assets Foreign exchange forward contracts 1 — 1 — — — Derivative Liabilities Foreign exchange forward contracts 2 (1 ) 1 3 — 3 |
Fair value of financial instruments by valuation hierarchy | Fair value of financial instruments by the valuation hierarchy at March 31, 2018 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 100 $ — $ — Short-term debt — 100 3 Long-term debt — 790 6 Foreign exchange forward contracts (other assets) — 1 — Foreign exchange forward contracts (other liabilities) — 1 — Foreign currency option contracts (other assets) — — 1 Fair value of financial instruments by the valuation hierarchy at September 30, 2017 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 88 $ — $ — Short-term debt — 325 4 Long-term debt — 851 8 Foreign exchange forward contracts (other assets) — — — Foreign exchange forward contracts (other liabilities) — 3 — Foreign currency option contracts (other assets) — — 3 |
Reconciliation of changes in fair value | 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 condensed consolidated balance sheet for the three and six months ended March 31, 2018 and 2017 , respectively. No transfers of assets between any of the Levels occurred during these periods. Three months ended March 31, 2018 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of December 31, 2017 $ 2 $ 1 $ 3 Total unrealized gains (losses): Included in other income — — — Included in cost of sales (1 ) (1 ) (2 ) Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — — — Fair Value as of March 31, 2018 $ 1 $ — $ 1 Three months ended March 31, 2017 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of December 31, 2016 $ 1 $ 2 $ 3 Total unrealized gains (losses): Included in other income — — — Included in cost of sales 1 1 2 Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term 1 (1 ) — Fair Value as of March 31, 2017 $ 3 $ 2 $ 5 Six months ended March 31, 2018 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of September 30, 2017 $ 2 $ 1 $ 3 Total unrealized gains (losses): Included in other income — — — Included in cost of sales (1 ) (1 ) (2 ) Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term — — — Fair Value as of March 31, 2018 $ 1 $ — $ 1 Six months ended March 31, 2017 (in millions) Short-term foreign currency option contracts Long-term foreign currency option contracts Total Fair Value as of September 30, 2016 $ — $ 2 $ 2 Total unrealized gains (losses): Included in other income — — — Included in cost of sales 1 2 3 Total realized gains (losses): Included in other income — — — Included in cost of sales — — — Purchases, issuances, sales and settlements: Purchases — — — Settlements — — — Transfer in and / or out of Level 3 (1) — — — Reclass between short-term and long-term 2 (2 ) — Fair Value as of March 31, 2017 $ 3 $ 2 $ 5 (1) Transfers as of the last day of the reporting period. |
Retirement Benefit Liabilities
Retirement Benefit Liabilities (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
Summary of retirement benefit liabilities | Retirement benefit liabilities consisted of the following (in millions): March 31, September 30, Retiree medical liability $ 95 $ 104 Pension liability 206 219 Other 14 15 Subtotal 315 338 Less: current portion (included in compensation and benefits, Note 15) (24 ) (24 ) Retirement benefits $ 291 $ 314 |
Components of net periodic pension and retiree medical expense | The components of net periodic pension and retiree medical expense included in continuing operations for the three months ended March 31 are as follows (in millions): 2018 2017 Pension Retiree Medical Pension Retiree Medical Interest cost $ 14 $ — $ 13 $ 3 Assumed return on plan assets (25 ) — (24 ) — Amortization of prior service costs — (8 ) — — Recognized actuarial loss 7 4 8 3 Total expense (income) $ (4 ) $ (4 ) $ (3 ) $ 6 The components of net periodic pension and retiree medical expense included in continuing operations for the six months ended March 31 are as follows (in millions): 2018 2017 Pension Retiree Medical Pension Retiree Medical Interest cost $ 27 $ 1 $ 26 $ 7 Assumed return on plan assets (49 ) — (47 ) — Amortization of prior service costs — (17 ) — (1 ) Recognized actuarial loss 14 8 15 7 Total expense (income) $ (8 ) $ (8 ) $ (6 ) $ 13 |
Contingencies (Tables)
Contingencies (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of environmental reserves | The following are the components of the Superfund and non-Superfund environmental reserves (in millions): Superfund Sites Non-Superfund Sites Total Beginning balance at September 30, 2017 $ 2 $ 7 $ 9 Payments and other — (2 ) (2 ) Accruals — 10 10 Balance at March 31, 2018 $ 2 $ 15 $ 17 |
Asbestos related reserves and recoveries | Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions): March 31, September 30, Pending and future claims $ 68 $ 68 Billed but unpaid claims 2 2 Asbestos-related liabilities $ 70 $ 70 Asbestos-related insurance recoveries $ 19 $ 25 The Rockwell legacy asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions): March 31, September 30, Pending and future claims $ 63 $ 63 Billed but unpaid claims 2 2 Asbestos-related liabilities $ 65 $ 65 Asbestos-related insurance recoveries $ 37 $ 38 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive loss | The components of AOCL and the changes in AOCL by components, net of tax, for six months ended March 31, 2018 and 2017 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss Total Balance at September 30, 2017 $ (41 ) $ (500 ) $ (4 ) $ (545 ) Other comprehensive income before reclassification 6 1 3 10 Amounts reclassified from accumulated other comprehensive loss — 5 — 5 Net current-period other comprehensive income $ 6 $ 6 $ 3 $ 15 Balance at March 31, 2018 $ (35 ) $ (494 ) $ (1 ) $ (530 ) The components of AOCL and the changes in AOCL by components, net of tax, for three months ended March 31, 2018 and 2017 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss Total Balance at December 31, 2017 $ (49 ) $ (497 ) $ (4 ) $ (550 ) Other comprehensive income before reclassification 14 — 3 17 Amounts reclassified from accumulated other comprehensive loss — 3 — 3 Net current-period other comprehensive income $ 14 $ 3 $ 3 $ 20 Balance at March 31, 2018 $ (35 ) $ (494 ) $ (1 ) $ (530 ) Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss Total Balance at September 30, 2016 $ (66 ) $ (740 ) $ (3 ) $ (809 ) Other comprehensive income (loss) before reclassification (9 ) 1 2 (6 ) Amounts reclassified from accumulated other comprehensive loss — 21 — 21 Net current-period other comprehensive income (loss) $ (9 ) $ 22 $ 2 $ 15 Balance at March 31, 2017 $ (75 ) $ (718 ) $ (1 ) $ (794 ) Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Loss Total Balance at December 31, 2016 $ (94 ) $ (729 ) $ (2 ) $ (825 ) Other comprehensive income before reclassification 19 — 1 20 Amounts reclassified from accumulated other comprehensive loss — 11 — 11 Net current-period other comprehensive income $ 19 $ 11 $ 1 $ 31 Balance at March 31, 2017 $ (75 ) $ (718 ) $ (1 ) $ (794 ) |
Reclassification out of accumulated other comprehensive income | Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service costs $ (1 ) (a) Actuarial losses 22 (a) 21 Total before tax (7 ) Tax benefit Total reclassifications for the period $ 14 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 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Actuarial losses $ 11 (b) 11 Total before tax (7 ) Tax expense Total reclassifications for the period $ 4 Net of tax (b) These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service costs $ (8 ) (a) Actuarial losses 11 (a) 3 Total before tax (1 ) Tax benefit Total reclassifications for the period $ 2 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 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Consolidated Statement of Operations Employee Benefit Related Adjustment Prior service costs $ (17 ) (a) Actuarial losses 22 (a) 5 Total before tax (1 ) Tax benefit Total reclassifications for the period $ 4 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 19 for additional details), which is recorded in cost of sales and selling, general and administrative expenses. |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of segment information | Segment information is summarized as follows (in millions): Commercial Truck Aftermarket Eliminations Total Three Months Ended March 31, 2018 External Sales $ 815 $ 251 $ — $ 1,066 Intersegment Sales 39 5 (44 ) — Total Sales $ 854 $ 256 $ (44 ) $ 1,066 Three Months Ended March 31, 2017 (1) External Sales $ 583 $ 223 $ — $ 806 Intersegment Sales 35 3 (38 ) — Total Sales $ 618 $ 226 $ (38 ) $ 806 Commercial Truck Aftermarket Eliminations Total Six Months Ended March 31, 2018 External Sales $ 1,493 $ 476 $ — $ 1,969 Intersegment Sales 74 9 (83 ) — Total Sales $ 1,567 $ 485 $ (83 ) $ 1,969 Six Months Ended March 31, 2017 (1) External Sales $ 1,090 $ 415 $ — $ 1,505 Intersegment Sales 65 7 (72 ) — Total Sales $ 1,155 $ 422 $ (72 ) $ 1,505 (1) Amounts for the three and six months ended March 31, 2017 have been recast to reflect reportable segment changes. |
Segment income attributable to parent | Three Months Ended March 31, Six Months Ended March 31, 2018 2017 (2) 2018 2017 (2) Segment adjusted EBITDA: Commercial Truck & Trailer $ 96 $ 52 $ 165 $ 92 Aftermarket & Industrial 36 32 68 56 Segment adjusted EBITDA 132 84 233 148 Unallocated legacy and corporate expense, net (1) (10 ) (2 ) (12 ) (2 ) Interest expense, net (16 ) (21 ) (40 ) (42 ) Provision for income taxes (22 ) (13 ) (105 ) (19 ) Depreciation and amortization (21 ) (20 ) (42 ) (37 ) Noncontrolling interests (3 ) (1 ) (5 ) (2 ) Loss on sale of receivables — (1 ) (2 ) (2 ) Asset impairment charges (2 ) — (2 ) (3 ) Restructuring costs (1 ) (4 ) (3 ) (4 ) Income from continuing operations attributable to Meritor, Inc. $ 57 $ 22 $ 22 $ 37 (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) Amounts for the three and six months ended March 31, 2017 have been recast to reflect reportable segment changes. |
Schedule of segment assets | March 31, September 30, 2017 (3) Segment Assets: Commercial Truck & Trailer $ 1,820 $ 1,708 Aftermarket & Industrial 491 466 Total segment assets 2,311 2,174 Corporate (1) 563 869 Less: Accounts receivable sold under off-balance sheet factoring programs (2) (279 ) (261 ) Total assets $ 2,595 $ 2,782 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. (2) At March 31, 2018 and September 30, 2017 , segment assets include $279 million and $261 million , respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 9 ). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances. (3) Amounts as of September 30, 2017 have been recast to reflect reportable segment changes, including the reallocation of goodwill. |
Supplemental Guarantor Conden51
Supplemental Guarantor Condensed Consolidating Financial Statements (Tables) | 6 Months Ended |
Mar. 31, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Schedule of condensed consolidating statement of operations | Three Months Ended March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 566 $ 500 $ — $ 1,066 Subsidiaries — 35 54 (89 ) — Total sales — 601 554 (89 ) 1,066 Cost of sales (15 ) (500 ) (462 ) 89 (888 ) GROSS MARGIN (15 ) 101 92 — 178 Selling, general and administrative (31 ) (27 ) (16 ) — (74 ) Restructuring costs — (1 ) — — (1 ) Other operating expense, net (9 ) (1 ) (1 ) — (11 ) OPERATING INCOME (LOSS) (55 ) 72 75 — 92 Other income (expense), net 34 (1 ) (33 ) — — Equity in earnings of affiliates — 4 2 — 6 Interest income (expense), net (28 ) 6 6 — (16 ) INCOME (LOSS) BEFORE INCOME TAXES (49 ) 81 50 — 82 Benefit (provision) for income taxes 8 (13 ) (17 ) — (22 ) Equity income from continuing operations of subsidiaries 98 24 — (122 ) — INCOME FROM CONTINUING OPERATIONS 57 92 33 (122 ) 60 LOSS FROM DISCONTINUED OPERATIONS, net of tax — — — — — NET INCOME 57 92 33 (122 ) 60 Less: Net income attributable to noncontrolling interests — — (3 ) — (3 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 57 $ 92 $ 30 $ (122 ) $ 57 Three Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated Sales External $ — $ 391 $ 415 $ — $ 806 Subsidiaries — 30 14 (44 ) — Total sales — 421 429 (44 ) 806 Cost of sales (15 ) (345 ) (369 ) 44 (685 ) GROSS MARGIN (15 ) 76 60 — 121 Selling, general and administrative (20 ) (34 ) (12 ) — (66 ) Restructuring costs — (2 ) (2 ) — (4 ) Other operating expense, net (2 ) — — — (2 ) OPERATING INCOME (LOSS) (37 ) 40 46 — 49 Other income (expense), net 25 (5 ) (20 ) — — Equity in earnings of affiliates — 6 2 — 8 Interest income (expense), net (34 ) 9 4 — (21 ) INCOME (LOSS) BEFORE INCOME TAXES (46 ) 50 32 — 36 Benefit (provision) for income taxes 15 (15 ) (13 ) — (13 ) Equity income from continuing operations of subsidiaries 53 14 — (67 ) — INCOME FROM CONTINUING OPERATIONS 22 49 19 (67 ) 23 LOSS FROM DISCONTINUED OPERATIONS, net of tax — — — — — NET INCOME 22 49 19 (67 ) 23 Less: Net income attributable to noncontrolling interests — — (1 ) — (1 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 22 $ 49 $ 18 $ (67 ) $ 22 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. Six Months Ended March 31, 2018 Parent Guarantors Non- Elims Consolidated Sales External $ — $ 1,034 $ 935 $ — $ 1,969 Subsidiaries — 67 98 (165 ) — Total sales — 1,101 1,033 (165 ) 1,969 Cost of sales (29 ) — (918 ) (869 ) 165 (1,651 ) GROSS MARGIN (29 ) 183 164 — 318 Selling, general and administrative (59 ) (47 ) (35 ) — (141 ) Restructuring costs — (1 ) (2 ) — (3 ) Other operating income (expense) (10 ) (1 ) (1 ) — (12 ) OPERATING INCOME (LOSS) (98 ) 134 126 — 162 Other income (loss), net 33 5 (39 ) — (1 ) Equity in earnings of affiliates — 8 3 — 11 Interest income (expense), net (65 ) 15 10 — (40 ) INCOME (LOSS) BEFORE INCOME TAXES (130 ) 162 100 — 132 Benefit (Provision) for income taxes (15 ) (62 ) (28 ) — (105 ) Equity income from continuing operations of subsidiaries 167 61 — (228 ) — INCOME FROM CONTINUING OPERATIONS 22 161 72 (228 ) 27 LOSS FROM DISCONTINUED OPERATIONS, net of tax (1 ) — — — (1 ) NET INCOME 21 161 72 (228 ) 26 Less: Net income attributable to noncontrolling interests — — (5 ) — (5 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 21 $ 161 $ 67 $ (228 ) $ 21 Six Months Ended March 31, 2017 (1) Parent Guarantors Non- Elims Consolidated Sales External $ — $ 716 $ 789 $ — $ 1,505 Subsidiaries — 56 26 (82 ) — Total sales — 772 815 (82 ) 1,505 Cost of sales (29 ) (642 ) (706 ) 82 (1,295 ) GROSS MARGIN (29 ) 130 109 — 210 Selling, general and administrative (43 ) (52 ) (24 ) — (119 ) Restructuring costs 2 (2 ) (4 ) — (4 ) Other operating expense (2 ) — (3 ) — (5 ) OPERATING INCOME (LOSS) (72 ) 76 78 — 82 Other income (loss), net 24 (5 ) (19 ) — — Equity in earnings of affiliates — 15 3 — 18 Interest income (expense), net (67 ) 19 6 — (42 ) INCOME (LOSS) BEFORE INCOME TAXES (115 ) 105 68 — 58 Benefit (Provision) for income taxes 35 (35 ) (19 ) — (19 ) Equity income from continuing operations of subsidiaries 117 41 — (158 ) — INCOME FROM CONTINUING OPERATIONS 37 111 49 (158 ) 39 LOSS FROM DISCONTINUED OPERATIONS, net of tax — — — — — NET INCOME 37 111 49 (158 ) 39 Less: Net income attributable to noncontrolling interests — — (2 ) — (2 ) NET INCOME ATTRIBUTABLE TO MERITOR, INC. $ 37 $ 111 $ 47 $ (158 ) $ 37 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. |
Schedule of condensed consolidating statement of comprehensive income (loss) | Three Months Ended March 31, 2018 Parent Guarantors Non- Elims Consolidated Net income $ 57 $ 92 $ 33 $ (122 ) $ 60 Other comprehensive income, net of tax 20 19 21 (40 ) 20 Total comprehensive income 77 111 54 (162 ) 80 Less: Comprehensive income attributable to — — (3 ) — (3 ) Comprehensive income attributable to Meritor, Inc. $ 77 $ 111 $ 51 $ (162 ) $ 77 Three Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 22 $ 49 $ 19 $ (67 ) $ 23 Other comprehensive income 30 21 21 (40 ) 32 Total comprehensive income 52 70 40 (107 ) 55 Less: Comprehensive income attributable to noncontrolling interests — — (2 ) — (2 ) Comprehensive income attributable to Meritor, Inc. $ 52 $ 70 $ 38 $ (107 ) $ 53 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. Six Months Ended March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated Net income (loss) $ 21 $ 161 $ 72 $ (228 ) $ 26 Other comprehensive income (loss) 15 12 14 (25 ) 16 Total comprehensive income (loss) 36 173 86 (253 ) 42 Less: Comprehensive income attributable to noncontrolling interests — — (6 ) — (6 ) Comprehensive income (loss) attributable to Meritor, Inc. $ 36 $ 173 $ 80 $ (253 ) $ 36 Six Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated Net income $ 37 $ 111 $ 49 $ (158 ) $ 39 Other comprehensive income (loss) 14 (4 ) (6 ) 10 14 Total comprehensive income 51 107 43 (148 ) 53 Less: Comprehensive income attributable to noncontrolling interests — — (1 ) — (1 ) Comprehensive income attributable to Meritor, Inc. $ 51 $ 107 $ 42 $ (148 ) $ 52 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. |
Schedule of condensed consolidating balance sheet | March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS: Cash and cash equivalents $ 9 $ 5 $ 86 $ — $ 100 Restricted cash — — 9 — 9 Receivables trade and other, net 1 44 536 — 581 Inventories — 215 240 — 455 Other current assets 4 7 30 — 41 TOTAL CURRENT ASSETS 14 271 901 — 1,186 NET PROPERTY (1) 20 220 219 — 459 GOODWILL — 239 179 — 418 OTHER ASSETS 187 117 228 — 532 INVESTMENTS IN SUBSIDIARIES 3,426 872 — (4,298 ) — TOTAL ASSETS $ 3,647 $ 1,719 $ 1,527 $ (4,298 ) $ 2,595 CURRENT LIABILITIES: Short-term debt $ 46 $ 1 $ 30 $ — $ 77 Accounts and notes payable 51 268 373 — 692 Other current liabilities 73 50 126 — 249 TOTAL CURRENT LIABILITIES 170 319 529 — 1,018 LONG-TERM DEBT 723 — 5 — 728 RETIREMENT BENEFITS 269 — 22 — 291 INTERCOMPANY PAYABLE (RECEIVABLE) 2,156 (2,507 ) 351 — — OTHER LIABILITIES 45 91 108 — 244 MEZZANINE EQUITY 2 — — — 2 EQUITY ATTRIBUTABLE TO MERITOR, INC. 282 3,816 482 (4,298 ) 282 NONCONTROLLING INTERESTS — — 30 — 30 TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 3,647 $ 1,719 $ 1,527 $ (4,298 ) $ 2,595 (1) As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. These assets and liabilities held for sale are included in the Non-Guarantor column, other than $1 million of Net property that is included in the Guarantor column. September 30, 2017 Parent Guarantors Non- Guarantors Elims Consolidated CURRENT ASSETS: Cash and cash equivalents (1) $ 10 $ 3 $ 75 $ — $ 88 Receivables trade and other, net (1) — 296 493 — 789 Inventories (1) — 184 194 — 378 Other current assets 5 6 32 — 43 TOTAL CURRENT ASSETS 15 489 794 — 1,298 NET PROPERTY (1) 21 227 226 — 474 GOODWILL (1) — 237 177 — 414 OTHER ASSETS (1) 271 106 219 — 596 INVESTMENTS IN SUBSIDIARIES 3,222 787 — (4,009 ) — TOTAL ASSETS $ 3,529 $ 1,846 $ 1,416 $ (4,009 ) $ 2,782 CURRENT LIABILITIES: Short-term debt $ 195 $ 2 $ 91 $ — $ 288 Accounts and notes payable (1) 55 246 321 — 622 Other current liabilities 69 69 134 — 272 TOTAL CURRENT LIABILITIES 319 317 546 — 1,182 LONG-TERM DEBT 743 — 7 — 750 RETIREMENT BENEFITS 291 — 23 — 314 INTERCOMPANY PAYABLE (RECEIVABLE) 1,866 (2,160 ) 294 — — OTHER LIABILITIES 40 93 106 — 239 MEZZANINE EQUITY 2 — — — 2 EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. 268 3,596 413 (4,009 ) 268 NONCONTROLLING INTERESTS (1) — — 27 — 27 TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 3,529 $ 1,846 $ 1,416 $ (4,009 ) $ 2,782 (1) As of September 30, 2017, Assets and Liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property, including land, buildings and equipment; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. These assets and liabilities held for sale are included in the Non-Guarantors column, other than $1 million of Net property that is included in the Guarantor column. |
Schedule of condensed consolidating statement of cash flows | Six Months Ended March 31, 2018 Parent Guarantors Non- Guarantors Elims Consolidated CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (50 ) $ 20 $ 102 $ — $ 72 INVESTING ACTIVITIES Capital expenditures (2 ) (17 ) (16 ) — (35 ) Proceeds from sale of a business 4 — — — 4 Proceeds from prior year sale of equity method investment 250 — — — 250 Cash paid for investment in Transportation Power, Inc. (3 ) — — — (3 ) CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 249 (17 ) (16 ) — 216 FINANCING ACTIVITIES Borrowings and securitization — — (60 ) — (60 ) Redemption of notes (181 ) — — — (181 ) Repurchase of common stock (33 ) — — — (33 ) Intercompany advances 15 — (15 ) — — Other financing activities (1 ) (1 ) — — (2 ) CASH USED FOR FINANCING ACTIVITIES (200 ) (1 ) (75 ) — (276 ) EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — — — — CHANGE IN CASH AND CASH EQUIVALENTS (1 ) 2 11 — 12 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10 3 75 — 88 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9 $ 5 $ 86 $ — $ 100 Six Months Ended March 31, 2017 (1) Parent Guarantors Non- Guarantors Elims Consolidated CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $ (51 ) $ 21 $ 60 $ — $ 30 INVESTING ACTIVITIES Capital expenditures (6 ) (21 ) (13 ) — (40 ) Net investing cash flows provided by discontinued operations — 2 — — 2 CASH USED FOR INVESTING ACTIVITIES (6 ) (19 ) (13 ) — (38 ) FINANCING ACTIVITIES Debt issuance costs (4 ) — — — (4 ) Intercompany advances 38 — (38 ) — — Other financing activities — (2 ) (9 ) — (11 ) CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 34 (2 ) (47 ) — (15 ) EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS — — 1 — 1 CHANGE IN CASH AND CASH EQUIVALENTS (23 ) — 1 — (22 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 90 4 66 — 160 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 67 $ 4 $ 67 $ — $ 138 (1) Amounts have been recast to reflect the release of certain guarantors in accordance with the company’s senior secured revolving credit facility. |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation of common shares (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||||
Basic average common shares outstanding (in shares) | 88.6 | 88.2 | 88.6 | 87.7 |
Impact of restricted shares, restricted share units and performance share units (in shares) | 1.6 | 1.1 | 1.6 | 1.2 |
Impact of convertible notes (in shares) | 1 | 2.7 | 1.1 | 1.3 |
Diluted average common shares outstanding (in shares) | 91.2 | 92 | 91.3 | 90.2 |
Earnings per Share - Additional
Earnings per Share - Additional information (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 01, 2017 | Dec. 01, 2016 | Dec. 01, 2015 | Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2015 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Impact of restricted shares, restricted share units and performance share units (in shares) | 1,600,000 | 1,100,000 | 1,600,000 | 1,200,000 | ||||||
Share-based compensation expense | $ 5 | $ 4 | $ 10 | $ 7 | ||||||
Impact of convertible notes (in shares) | 1,000,000 | 2,700,000 | 1,100,000 | 1,300,000 | ||||||
Convertible Notes Payable | 7.875% Convertible Notes Due 2026 | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Interest rate | 7.875% | 7.875% | ||||||||
Executive Officer | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Number or shares issuable per performance share unit (in shares) | 1 | 1 | 1 | |||||||
Executive Officer | Performance Shares | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Exercise price (in usd per share) | $ 24.79 | $ 12.77 | $ 10.51 | |||||||
Executive Officer | Performance Shares | Performance period of October 1, 2017 to September 30, 2020 | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance period | 3 years | |||||||||
Shares authorized for grant (in shares) | 300,000 | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2017 to September 30, 2020 | Minimum | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance-based vesting percentage | 0.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2017 to September 30, 2020 | Maximum | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance-based vesting percentage | 200.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2017 to September 30, 2020 | Performance Objective One | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2017 to September 30, 2020 | Performance Objective Two | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2016 to September 30, 2019 | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance period | 3 years | |||||||||
Shares authorized for grant (in shares) | 600,000 | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2016 to September 30, 2019 | Minimum | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance-based vesting percentage | 0.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2016 to September 30, 2019 | Maximum | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance-based vesting percentage | 200.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2016 to September 30, 2019 | Performance Objective One | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2016 to September 30, 2019 | Performance Objective Two | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 25.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2016 to September 30, 2019 | Performance Objective Three | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 25.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2015 to September 30, 2018 | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance period | 3 years | |||||||||
Shares authorized for grant (in shares) | 700,000 | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2015 to September 30, 2018 | Minimum | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance-based vesting percentage | 0.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2015 to September 30, 2018 | Maximum | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Performance-based vesting percentage | 200.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2015 to September 30, 2018 | Performance Objective One | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | |||||||||
Executive Officer | Performance Shares | Performance period of October 1, 2015 to September 30, 2018 | Performance Objective Two | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Award vesting rights percentage | 50.00% | |||||||||
Executive Officer | Restricted Share Units (RSUs) | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||
Exercise price (in usd per share) | $ 12.77 | $ 10.51 | ||||||||
Shares granted (in shares) | 300,000 | 500,000 | 500,000 | |||||||
Vesting period | 3 years | 3 years | 3 years |
New Accounting Standards (Detai
New Accounting Standards (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Income tax benefit | $ (1) | ||||
Increase in income from continuing operations | $ 60 | $ 23 | $ 27 | $ 39 | |
Accounting Standards Update 2016-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Increase in income from continuing operations | $ (1) |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |||||
Sales | $ 0 | $ 0 | $ 0 | $ 0 | |
Loss before income taxes | 0 | 0 | (2) | 0 | |
Benefit from income taxes | 0 | 0 | 1 | 0 | |
Loss from discontinued operations attributable to Meritor, Inc. | 0 | $ 0 | (1) | $ 0 | |
Discontinued operations, assets | 2 | 2 | $ 1 | ||
Discontinued operations, liabilities | $ 9 | $ 9 | $ 6 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 6 Months Ended | ||
Mar. 31, 2018USD ($)unitsegment | Sep. 30, 2017USD ($) | ||
Goodwill [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Goodwill | $ 429 | ||
Accumulated impairment losses | (15) | ||
Goodwill [Roll Forward] | |||
Goodwill net, Beginning balance | [1] | $ 414 | |
Adjustment due to sale of a business (see Note 8) | (1) | ||
Fabco measurement period adjustment (see Note 8) | (1) | ||
Foreign currency translation | 6 | ||
Goodwill net, Ending balance | [1] | $ 418 | |
Commercial Truck & Trailer | |||
Goodwill [Line Items] | |||
Number of reporting units | unit | 2 | ||
Goodwill | 283 | ||
Accumulated impairment losses | 0 | ||
Goodwill [Roll Forward] | |||
Goodwill net, Beginning balance | $ 283 | ||
Adjustment due to sale of a business (see Note 8) | (1) | ||
Fabco measurement period adjustment (see Note 8) | 0 | ||
Foreign currency translation | 4 | ||
Goodwill net, Ending balance | $ 286 | ||
Aftermarket & Industrial | |||
Goodwill [Line Items] | |||
Number of reporting units | unit | 3 | ||
Goodwill | 146 | ||
Accumulated impairment losses | $ (15) | ||
Goodwill [Roll Forward] | |||
Goodwill net, Beginning balance | $ 131 | ||
Adjustment due to sale of a business (see Note 8) | 0 | ||
Fabco measurement period adjustment (see Note 8) | (1) | ||
Foreign currency translation | 2 | ||
Goodwill net, Ending balance | $ 132 | ||
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Restructuring Costs (Details)
Restructuring Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | |
Restructuring Reserve [Roll Forward] | |||||
Beginning balance | $ 6 | $ 16 | |||
Charges to continuing operations | $ 1 | $ 4 | 3 | 4 | |
Cash payments – continuing operations | (4) | (7) | |||
Other | (1) | ||||
Ending balance | 5 | 12 | 5 | 12 | |
Less: non-current restructuring reserves | (2) | (1) | (2) | (1) | $ (1) |
Restructuring reserves – current | 3 | 11 | 3 | 11 | $ 5 |
Employee Termination Benefits | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning balance | 5 | 15 | |||
Charges to continuing operations | 3 | 4 | |||
Cash payments – continuing operations | (3) | (7) | |||
Other | (1) | ||||
Ending balance | 5 | 11 | 5 | 11 | |
Less: non-current restructuring reserves | (2) | (1) | (2) | (1) | |
Restructuring reserves – current | 3 | 10 | 3 | 10 | |
Employee Termination Benefits | Commercial Truck & Trailer and Aftermarket and Industrial Segments | |||||
Restructuring Reserve [Roll Forward] | |||||
Charges to continuing operations | 3 | 4 | |||
Plant Shutdown & Other | |||||
Restructuring Reserve [Roll Forward] | |||||
Beginning balance | 1 | 1 | |||
Charges to continuing operations | 0 | 0 | |||
Cash payments – continuing operations | (1) | 0 | |||
Other | 0 | ||||
Ending balance | 0 | 1 | 0 | 1 | |
Less: non-current restructuring reserves | 0 | 0 | 0 | 0 | |
Restructuring reserves – current | $ 0 | $ 1 | $ 0 | $ 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Blended federal income tax rate | 24.50% | ||||
Transition tax charge to income | $ 77 | ||||
Adjustment to reduce revaluation of deferred tax assets | 1 | ||||
Noncash charge due to revaluation of DTA | $ 76 | ||||
Benefit from reversal of valuation allowance | $ 4 | ||||
Net pre-tax income (loss) tax benefit not recorded | $ 11 | $ (2) | $ 13 | $ (3) |
Acquisition and Divestiture - A
Acquisition and Divestiture - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | ||
Adjustment decreasing goodwill | $ 1 | |
Impairment charge for assets held for sale | $ 3 | |
Fabco | ||
Business Acquisition [Line Items] | ||
Measurement period adjustment, decrease in liabilities assumed | 1 | |
Adjustment decreasing goodwill | $ 1 |
Acquisition and Divestiture -60
Acquisition and Divestiture - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Sep. 30, 2017 | ||
Acquired assets and liabilities | |||
Goodwill resulting from the acquisition of Fabco | [1] | $ 418 | $ 414 |
Measurement Period Adjustments | |||
Goodwill resulting from the acquisition of Fabco | (1) | ||
Fabco | |||
Business Acquisition [Line Items] | |||
Purchase price | 34 | 34 | |
Acquired assets and liabilities | |||
Receivables | 5 | 5 | |
Inventories | 12 | 13 | |
Property, plant and equipment | 7 | 9 | |
Intangible assets | 3 | 0 | |
Accounts payable | (6) | (6) | |
Other current liabilities | (5) | (6) | |
Total identifiable net assets acquired | 16 | 15 | |
Goodwill resulting from the acquisition of Fabco | 18 | 19 | |
Acquired assets and liabilities | 34 | $ 34 | |
Measurement Period Adjustments | |||
Inventories | (1) | ||
Property, plant and equipment | (2) | ||
Intangible assets | 3 | ||
Other current liabilities | 1 | ||
Total identifiable net assets acquired | 1 | ||
Goodwill resulting from the acquisition of Fabco | $ (1) | ||
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Accounts Receivable Factoring61
Accounts Receivable Factoring and Securitization (Details) € in Millions | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2017USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2018EUR (€) | Mar. 31, 2018USD ($) | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | |
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Costs associated with off balance sheet factoring arrangements | $ 1,000,000 | $ 2,000,000 | $ 2,000,000 | ||||
Swedish Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Maximum limit for sale of eligible trade receivables | € 155 | $ 191,000,000 | |||||
Utilization of accounts receivable factoring facility under arrangement | 142 | 175,000,000 | € 139 | $ 164,000,000 | |||
Liquidity commitment | 364 days | ||||||
U.S Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Maximum limit for sale of eligible trade receivables | 80 | 98,000,000 | |||||
Utilization of accounts receivable factoring facility under arrangement | 36 | 44,000,000 | 37 | 43,000,000 | |||
United Kingdom Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Maximum limit for sale of eligible trade receivables | 25 | 31,000,000 | |||||
Utilization of accounts receivable factoring facility under arrangement | 8 | 10,000,000 | 7 | 9,000,000 | |||
Italy Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Maximum limit for sale of eligible trade receivables | 30 | 37,000,000 | |||||
Utilization of accounts receivable factoring facility under arrangement | € 28 | 34,000,000 | € 22 | 26,000,000 | |||
Other Factoring Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Utilization of accounts receivable factoring facility under arrangement | 16,000,000 | 19,000,000 | |||||
U.S. Securitization Financing Facility | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Maximum limit for securitization financing arrangement | 100,000,000 | ||||||
Debt-to-EBITDA ratio | 2.25 | ||||||
Outstanding balance under accounts receivable securitization program | 29,000,000 | 89,000,000 | |||||
U.S. Securitization Financing Facility | Letter of Credit | |||||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||||
Letters of credit outstanding | $ 1,000,000 | $ 0 |
Operating Cash Flows (Details)
Operating Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
OPERATING ACTIVITIES | ||||
NET INCOME | $ 60 | $ 23 | $ 26 | $ 39 |
Less: Loss from discontinued operations, net of tax | 0 | 0 | (1) | 0 |
Income from continuing operations | 60 | 23 | 27 | 39 |
Adjustments to income from continuing operations to arrive at cash provided by operating activities: | ||||
Depreciation and amortization | 42 | 37 | ||
Deferred income tax expense | 84 | 12 | ||
Loss on debt extinguishment | 8 | 0 | ||
Restructuring costs | 1 | 4 | 3 | 4 |
Asset impairment charges | 2 | 3 | ||
Equity in earnings of affiliates | $ (6) | $ (8) | (11) | (18) |
Pension and retiree medical expense (income) | (16) | 7 | ||
Other adjustments to income from continuing operations | 9 | 8 | ||
Dividends received from equity method investments | 6 | 13 | ||
Pension and retiree medical contributions | (14) | (19) | ||
Restructuring payments | (4) | (7) | ||
Changes in off-balance sheet accounts receivable securitization and factoring programs | 19 | 19 | ||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, foreign currency adjustments and discontinued operations | (83) | (68) | ||
Operating cash flows provided by continuing operations | 72 | 30 | ||
Operating cash flows provided by discontinued operations | 0 | 0 | ||
CASH PROVIDED BY OPERATING ACTIVITIES | $ 72 | $ 30 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |||
Finished goods | $ 168 | $ 139 | |
Work in process | 35 | 34 | |
Raw materials, parts and supplies | 252 | 205 | |
Total inventories | [1] | $ 455 | $ 378 |
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Other Current Assets Disclosure [Abstract] | ||
Asbestos-related recoveries (see Note 20) | $ 10 | $ 14 |
Prepaid and other | 31 | 29 |
Other current assets | $ 41 | $ 43 |
Net Property (Details)
Net Property (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Property at cost | $ 1,368 | $ 1,357 | |
Less: accumulated depreciation | (909) | (883) | |
Net property | [1] | 459 | 474 |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property at cost | 30 | 30 | |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Property at cost | 238 | 240 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property at cost | 916 | 892 | |
Company-owned tooling | |||
Property, Plant and Equipment [Line Items] | |||
Property at cost | 131 | 126 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property at cost | $ 53 | $ 69 | |
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Other Assets - Summary of other
Other Assets - Summary of other assets (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | |
Other Assets, Noncurrent [Abstract] | |||
Investments in non-consolidated joint ventures | $ 105 | $ 101 | |
Asbestos-related recoveries (see Note 20) | 29 | 32 | |
Unamortized revolver debt issuance costs | 7 | 8 | |
Capitalized software costs, net | 25 | 27 | |
Deferred income tax assets, net | 146 | 229 | |
Assets for uncertain tax positions | 48 | 48 | |
Prepaid pension costs | 152 | 135 | |
Other | 20 | 16 | |
Other assets | [1] | $ 532 | $ 596 |
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Other Assets - Additional infor
Other Assets - Additional information (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Variable Interest Entity, Not Primary Beneficiary | ||
Schedule of Equity Method Investments [Line Items] | ||
Strategic investment | $ 3 | |
Equity Method Joint Venture | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments in joint venture | $ 60 | $ 54 |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of other current liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 |
Other Current Liabilities Disclosure [Abstract] | |||
Compensation and benefits | $ 97 | $ 117 | |
Income taxes | 18 | 11 | |
Taxes other than income taxes | 21 | 34 | |
Accrued interest | 11 | 9 | |
Product warranties | 17 | 18 | $ 16 |
Environmental reserves (see Note 20) | 5 | 5 | |
Restructuring (see Note 6) | 3 | 5 | $ 11 |
Asbestos-related liabilities (see Note 20) | 19 | 19 | |
Indemnity obligations (see Note 20) | 2 | 2 | |
Other | 56 | 52 | |
Other current liabilities | $ 249 | $ 272 |
Other Current Liabilities - S69
Other Current Liabilities - Summary of changes in product warranties (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Total product warranties – beginning of period | $ 45 | $ 44 | |
Accruals for product warranties | 9 | 6 | |
Payments | (8) | (7) | |
Change in estimates and other | 2 | (3) | |
Total product warranties – end of period | 48 | 40 | |
Less: Non-current product warranties | (31) | (24) | $ (27) |
Product warranties – current | $ 17 | $ 16 | $ 18 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 |
Other Liabilities Disclosure [Abstract] | |||
Asbestos-related liabilities (see Note 20) | $ 121 | $ 124 | |
Restructuring (see Note 6) | 2 | 1 | $ 1 |
Non-current deferred income tax liabilities | 12 | 12 | |
Liabilities for uncertain tax positions | 30 | 32 | |
Product warranties (see Note 15) | 31 | 27 | $ 24 |
Environmental (see Note 20) | 12 | 4 | |
Indemnity obligations (see Note 20) | 10 | 10 | |
Other | 26 | 29 | |
Other liabilities | $ 244 | $ 239 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 22, 2017 |
Debt Instrument [Line Items] | |||
Capital lease obligation | $ 9 | $ 12 | |
Subtotal | 805 | 1,038 | |
Less: current maturities | (77) | (288) | |
Long-term debt | 728 | 750 | |
Unamortized issuance cost | 7 | 8 | |
Convertible Notes Payable | |||
Debt Instrument [Line Items] | |||
Unamortized discount on convertible notes | (41) | (42) | |
3.25% convertible notes due 2037 | Convertible Notes Payable | |||
Debt Instrument [Line Items] | |||
Debt | $ 318 | 317 | |
Interest rate | 3.25% | ||
Unamortized issuance cost | $ 7 | 8 | |
4.0% convertible notes due 2027 | Convertible Notes Payable | |||
Debt Instrument [Line Items] | |||
Debt | $ 24 | 24 | $ 143 |
Interest rate | 4.00% | ||
7.875% Convertible Notes Due 2026 | Convertible Notes Payable | |||
Debt Instrument [Line Items] | |||
Debt | $ 22 | 22 | $ 140 |
Interest rate | 7.875% | ||
Original issuance discount | $ 1 | 1 | |
6.75% notes due 2021 | |||
Debt Instrument [Line Items] | |||
Debt | $ 0 | $ 173 | |
Interest rate | 6.75% | 6.75% | |
Unamortized issuance cost | $ 2 | ||
6.25% notes due 2024 | |||
Debt Instrument [Line Items] | |||
Debt | $ 444 | 443 | |
Interest rate | 6.25% | ||
Unamortized issuance cost | $ 6 | 7 | |
Borrowings and securitization | |||
Debt Instrument [Line Items] | |||
Borrowings and securitization | $ 29 | $ 89 |
Long-Term Debt - Repurchases of
Long-Term Debt - Repurchases of Debt Securities (Details) - USD ($) | Nov. 02, 2017 | Sep. 28, 2017 | Sep. 22, 2017 | Sep. 30, 2017 | Mar. 31, 2018 | May 31, 2013 |
6.75% notes due 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 6.75% | 6.75% | ||||
Long-term debt outstanding | $ 173,000,000 | $ 0 | ||||
Senior Notes | 6.75% notes due 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount of convertible notes repurchased | $ 175,000,000 | |||||
Redemption premium | 1,033.75 | |||||
Loss on debt extinguishment | $ 8,000,000 | 5,000,000 | ||||
Repurchased amount | $ 100,000,000 | |||||
Principle amount of debt | $ 275,000,000 | |||||
Convertible Notes Payable | 3.25% convertible notes due 2037 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 3.25% | |||||
Net proceeds received | $ 317,000,000 | |||||
Long-term debt outstanding | 317,000,000 | $ 318,000,000 | ||||
Convertible Notes Payable | 7.875% Convertible Notes Due 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 7.875% | |||||
Loss on debt extinguishment | 23,000,000 | |||||
Repurchased amount | 117,000,000 | |||||
Principle amount of debt | $ 23,000,000 | |||||
Long-term debt outstanding | $ 140,000,000 | 22,000,000 | $ 22,000,000 | |||
Repurchase price percentage | 130.00% | |||||
Convertible Notes Payable | 4.0% convertible notes due 2027 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 4.00% | |||||
Loss on debt extinguishment | $ 8,000,000 | |||||
Repurchased amount | 119,000,000 | |||||
Long-term debt outstanding | $ 143,000,000 | $ 24,000,000 | $ 24,000,000 | |||
Repurchase price percentage | 16.00% | |||||
Convertible Notes Payable | Convertible Notes at 7.875% and 4.00% | ||||||
Debt Instrument [Line Items] | ||||||
Loss on debt extinguishment | $ 31,000,000 |
Long-Term Debt - Current Classi
Long-Term Debt - Current Classification of Notes (Details) - Convertible Notes Payable | 6 Months Ended |
Mar. 31, 2018USD ($)trading_day$ / shares | |
7.875% Convertible Notes Due 2026 | |
Debt Instrument [Line Items] | |
Interest rate | 7.875% |
Trading days | trading_day | 20 |
Consecutive trading days | trading_day | 30 |
Conversion price threshold percentage | 120.00% |
Principle amount of debt | $ | $ 23,000,000 |
Permanent equity reclassified as mezzanine equity | $ | $ 2,000,000 |
7.875% Convertible Notes Due 2026 | Redemption Period One | |
Debt Instrument [Line Items] | |
Conversion ratio of common stock per principal | 83.3333 |
Conversion price (in usd per share) | $ / shares | $ 12 |
4.0% convertible notes due 2027 | |
Debt Instrument [Line Items] | |
Interest rate | 4.00% |
Redemption price | 100.00% |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility (Details) - Revolving Credit Facility | 6 Months Ended | ||
Mar. 31, 2018USD ($) | Sep. 30, 2017USD ($) | Mar. 31, 2017USD ($) | |
Line of Credit Facility [Line Items] | |||
Borrowings outstanding | $ 0 | $ 0 | |
Letters of credit outstanding | $ 0 | $ 0 | |
LIBOR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 275.00% | ||
Unused capacity, commitment fee percentage | 37.50% | ||
Triggering Event One | |||
Line of Credit Facility [Line Items] | |||
Debt-to-EBITDA ratio | 2.25 | ||
Amended Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 525,000,000 | ||
Deferred issuance cost | $ 4,000,000 | ||
Collateral test, maximum ratio | 1 | ||
Value of company assets collateralized | $ 808,000,000 | ||
Maximum limit on issuance, letters of credit | $ 100,000,000 | ||
Overnight Revolving Credit Loans | Prime Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 175.00% |
Long-Term Debt - Capital Leases
Long-Term Debt - Capital Leases (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Mar. 31, 2012 | Mar. 31, 2018 | Sep. 30, 2017 | |
Debt Instrument [Line Items] | |||
Outstanding capital lease obligations | $ 9 | $ 12 | |
Capital Lease Arrangements | |||
Debt Instrument [Line Items] | |||
Capital lease, term | 60 months | ||
Outstanding capital lease obligations | 2 | 3 | |
Financing Arrangements For Capital Leases | Five-Year Swap Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 564.00% | ||
Other Capital Lease Arrangements | |||
Debt Instrument [Line Items] | |||
Outstanding capital lease obligations | $ 7 | $ 10 |
Long-Term Debt - Letter of Cred
Long-Term Debt - Letter of Credit Facilities (Details) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 | Feb. 21, 2014 |
Other Letters of Credit Arrangements | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding | $ 6,000,000 | $ 5,000,000 | |
Standby Letters of Credit | |||
Line of Credit Facility [Line Items] | |||
Maximum limit on issuance, letters of credit | $ 25,000,000 | ||
Letters of credit outstanding | $ 16,000,000 | $ 18,000,000 |
Long-Term Debt - Export Financi
Long-Term Debt - Export Financing Arrangements and Other (Details) - USD ($) | Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 |
Brazil | Note payable | Export Financing Arrangement | |||
Debt Instrument [Line Items] | |||
Interest rate | 5.50% | ||
China | Notes Payable to Banks | Other Export Financing Arrangements | |||
Debt Instrument [Line Items] | |||
Debt default, amount | $ 35,000,000 | ||
Long-term debt outstanding | $ 19,000,000 | $ 24,000,000 |
Financial Instruments - Fair Va
Financial Instruments - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 100 | $ 88 |
Short-term debt | 77 | 288 |
Long-term debt | 728 | 750 |
Carrying Value | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | 1 | 0 |
Foreign exchange forward contracts (other liabilities) | 1 | 3 |
Carrying Value | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | 1 | 3 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 100 | 88 |
Short-term debt | 103 | 329 |
Long-term debt | 796 | 859 |
Fair Value | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | 1 | 0 |
Foreign exchange forward contracts (other liabilities) | 1 | 3 |
Fair Value | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other assets) | $ 1 | $ 3 |
Financial Instruments - Offsett
Financial Instruments - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Derivative Assets | ||
Gross Amounts Recognized | $ 1 | $ 0 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | 1 | 0 |
Derivative Liabilities | ||
Gross Amounts Recognized | 2 | 3 |
Gross Amounts Offset | (1) | 0 |
Net Amounts Reported | $ 1 | $ 3 |
Financial Instruments - Fair 80
Financial Instruments - Fair Value of Financial Instruments by Valuation Hierarchy (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 100 | $ 88 |
Short-term debt | 0 | 0 |
Long-term debt | 0 | 0 |
Level 1 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other liabilities) | 0 | 0 |
Foreign currency option contracts (asset) | 0 | 0 |
Level 1 | Foreign currency option contracts | Short-term | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency option contracts (asset) | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 100 | 325 |
Long-term debt | 790 | 851 |
Level 2 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other liabilities) | 1 | 3 |
Foreign currency option contracts (asset) | 1 | 0 |
Level 2 | Foreign currency option contracts | Short-term | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency option contracts (asset) | 0 | 0 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 3 | 4 |
Long-term debt | 6 | 8 |
Level 3 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign exchange forward contracts (other liabilities) | 0 | 0 |
Foreign currency option contracts (asset) | 0 | 0 |
Level 3 | Foreign currency option contracts | Short-term | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency option contracts (asset) | $ 1 | $ 3 |
Financial Instruments - Reconci
Financial Instruments - Reconciliation of Changes in Fair Value (Details) - Level 3 - Foreign currency option contracts - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Fair Value, beginning of period | $ 3 | $ 3 | $ 3 | $ 2 |
Purchases, issuances, sales and settlements: | ||||
Purchases | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfer in and / or out of Level 3 | 0 | 0 | 0 | 0 |
Reclass between short-term and long-term | 0 | 0 | 0 | 0 |
Fair Value, end of period | 1 | 5 | 1 | 5 |
Short-term | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Fair Value, beginning of period | 2 | 1 | 2 | 0 |
Purchases, issuances, sales and settlements: | ||||
Purchases | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfer in and / or out of Level 3 | 0 | 0 | 0 | 0 |
Reclass between short-term and long-term | 0 | 1 | 0 | 2 |
Fair Value, end of period | 1 | 3 | 1 | 3 |
Long-term | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Fair Value, beginning of period | 1 | 2 | 1 | 2 |
Purchases, issuances, sales and settlements: | ||||
Purchases | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfer in and / or out of Level 3 | 0 | 0 | 0 | 0 |
Reclass between short-term and long-term | 0 | (1) | 0 | (2) |
Fair Value, end of period | 0 | 2 | 0 | 2 |
Included in other income | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Total unrealized gains (losses) | 0 | 0 | 0 | 0 |
Total realized gains (losses) | 0 | 0 | 0 | 0 |
Included in other income | Short-term | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Total unrealized gains (losses) | 0 | 0 | 0 | 0 |
Total realized gains (losses) | 0 | 0 | 0 | 0 |
Included in other income | Long-term | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Total unrealized gains (losses) | 0 | 0 | 0 | 0 |
Total realized gains (losses) | 0 | 0 | 0 | 0 |
Included in cost of sales | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Total unrealized gains (losses) | (2) | 2 | (2) | 3 |
Total realized gains (losses) | 0 | 0 | 0 | 0 |
Included in cost of sales | Short-term | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Total unrealized gains (losses) | (1) | 1 | (1) | 1 |
Total realized gains (losses) | 0 | 0 | 0 | 0 |
Included in cost of sales | Long-term | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Total unrealized gains (losses) | (1) | 1 | (1) | 2 |
Total realized gains (losses) | $ 0 | $ 0 | $ 0 | $ 0 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2018 | Sep. 30, 2017 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Cash equivalents | $ 0 | $ 0 |
Foreign exchange forward contracts | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Term of foreign exchange forward contract | 18 months | |
Foreign currency option contracts | India, Rupees | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Foreign currency contract, notional amount | $ 132,000,000 | 172,000,000 |
Foreign currency option contracts | Sweden, Krona | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Foreign currency contract, notional amount | 33,000,000 | 71,000,000 |
Foreign currency option contracts | Euro | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Foreign currency contract, notional amount | 33,000,000 | 58,000,000 |
Foreign currency option contracts | Korea (South), Won | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Foreign currency contract, notional amount | $ 34,000,000 | $ 0 |
Retirement Benefit Liabilitie83
Retirement Benefit Liabilities - Summary of retirement benefits (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Retirement Benefits [Abstract] | ||
Retiree medical liability | $ 95 | $ 104 |
Pension liability | 206 | 219 |
Other | 14 | 15 |
Subtotal | 315 | 338 |
Less: current portion (included in compensation and benefits, Note 15) | (24) | (24) |
Retirement benefits | $ 291 | $ 314 |
Retirement Benefit Liabilitie84
Retirement Benefit Liabilities - Components of net periodic pension and retiree medical expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Pension | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | $ 14 | $ 13 | $ 27 | $ 26 |
Assumed return on plan assets | (25) | (24) | (49) | (47) |
Amortization of prior service costs | 0 | 0 | 0 | 0 |
Recognized actuarial loss | 7 | 8 | 14 | 15 |
Total expense (income) | (4) | (3) | (8) | (6) |
Retiree Medical | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | 0 | 3 | 1 | 7 |
Assumed return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service costs | (8) | 0 | (17) | (1) |
Recognized actuarial loss | 4 | 3 | 8 | 7 |
Total expense (income) | $ (4) | $ 6 | $ (8) | $ 13 |
Contingencies - Additional Info
Contingencies - Additional Information (Details) $ in Millions | Dec. 12, 2015USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Mar. 31, 2018USD ($)siteclaim | Sep. 30, 2017USD ($)claim | Sep. 30, 2009USD ($) |
Loss Contingencies [Line Items] | ||||||
Environmental accrual balance | $ 17 | $ 9 | ||||
Discounted amount environmental accrual for on-going operations maintenance and monitoring | 13 | |||||
Undiscounted amount environmental accrual for on-going operations maintenance and monitoring | 15 | |||||
Maremont Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Environmental accrual balance | $ 70 | $ 70 | ||||
Number of pending claims | claim | 2,500 | 2,800 | ||||
Obligation period for asbestos personal injury claims | 10 years | |||||
Pending and future claims | $ 68 | $ 68 | ||||
Estimated insurance recoveries | 19 | 25 | ||||
Maremont Asbestos | Insurance Settlement | ||||||
Loss Contingencies [Line Items] | ||||||
Cash settlement awarded from others | $ 17 | |||||
Litigation settlement, expense | 5 | $ 3 | $ 9 | |||
Increased liability | $ 12 | |||||
Rockwell Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Environmental accrual balance | $ 65 | $ 65 | ||||
Number of pending claims | claim | 1,600 | 1,600 | ||||
Obligation period for asbestos personal injury claims | 10 years | |||||
Pending and future claims | $ 63 | $ 63 | ||||
Estimated insurance recoveries | 37 | 38 | ||||
Rockwell Asbestos | Insurance Settlement | ||||||
Loss Contingencies [Line Items] | ||||||
Cash settlement awarded from others | 32 | |||||
Litigation settlement, expense | 10 | $ 4 | 10 | |||
Increased liability | 22 | |||||
Receivable recorded | 12 | |||||
Rockwell Asbestos | Insurance Settlement 2 | ||||||
Loss Contingencies [Line Items] | ||||||
Receivable recorded | $ 7 | |||||
Low Range | ||||||
Loss Contingencies [Line Items] | ||||||
Site contingency, accrual, discount rate | 1.75% | |||||
Low Range | Maremont Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Possible loss | 68 | |||||
Low Range | Rockwell Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Possible loss | 63 | |||||
High Range | ||||||
Loss Contingencies [Line Items] | ||||||
Site contingency, accrual, discount rate | 2.75% | |||||
High Range | Maremont Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Possible loss | 82 | |||||
High Range | Rockwell Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Possible loss | 74 | |||||
Superfund Sites | ||||||
Loss Contingencies [Line Items] | ||||||
Number of Superfund environmental sites | site | 9 | |||||
Environmental costs reasonably possible | $ 5 | |||||
Environmental accrual balance | 2 | 2 | ||||
Non-Superfund Sites | ||||||
Loss Contingencies [Line Items] | ||||||
Environmental costs reasonably possible | 24 | |||||
Environmental accrual balance | 15 | 7 | ||||
Insurance Receivables | Rockwell Asbestos | ||||||
Loss Contingencies [Line Items] | ||||||
Estimated insurance recoveries | 17 | 17 | ||||
Indemnity Obligations | ||||||
Loss Contingencies [Line Items] | ||||||
Guarantee obligations recorded | 10 | 10 | $ 28 | |||
MSSC | ||||||
Loss Contingencies [Line Items] | ||||||
Indemnity obligations liability | 1 | 1 | ||||
Value Added Tax | Future tax years | ||||||
Loss Contingencies [Line Items] | ||||||
Increased liability | $ 6 | $ 12 |
Contingencies - Summary of envi
Contingencies - Summary of environmental reserves (Details) $ in Millions | 6 Months Ended |
Mar. 31, 2018USD ($) | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Beginning balance | $ 9 |
Payments and other | (2) |
Accruals | 10 |
Ending balance | 17 |
Superfund Sites | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Beginning balance | 2 |
Payments and other | 0 |
Accruals | 0 |
Ending balance | 2 |
Non-Superfund Sites | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |
Beginning balance | 7 |
Payments and other | (2) |
Accruals | 10 |
Ending balance | $ 15 |
Contingencies - Asbestos relate
Contingencies - Asbestos related reserves and recoveries (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Loss Contingencies [Line Items] | ||
Asbestos-related liabilities | $ 17 | $ 9 |
Maremont Asbestos | ||
Loss Contingencies [Line Items] | ||
Pending and future claims | 68 | 68 |
Billed but unpaid claims | 2 | 2 |
Asbestos-related liabilities | 70 | 70 |
Asbestos-related insurance recoveries | 19 | 25 |
Rockwell Asbestos | ||
Loss Contingencies [Line Items] | ||
Pending and future claims | 63 | 63 |
Billed but unpaid claims | 2 | 2 |
Asbestos-related liabilities | 65 | 65 |
Asbestos-related insurance recoveries | $ 37 | $ 38 |
Shareholders' Equity - Common S
Shareholders' Equity - Common Stock and Debt Repurchase Authorizations (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2018 | Jul. 21, 2016 | |
Debt Securities | ||
Class of Stock [Line Items] | ||
Debt repurchase program, amount authorized | $ 150,000,000 | |
Principal amount of debt securities repurchased | $ 100,000,000 | |
Common Stock | ||
Class of Stock [Line Items] | ||
Authorized repurchase of securities, with debt reduction target | $ 100,000,000 | |
Stock repurchased during period | $ 33,000,000 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning balance | $ (550) | $ (825) | $ (545) | $ (809) |
Other comprehensive income before reclassification | 17 | 20 | 10 | (6) |
Amounts reclassified from accumulated other comprehensive loss | 3 | 11 | 5 | 21 |
Net current-period other comprehensive income | 20 | 31 | 15 | 15 |
Ending balance | (530) | (794) | (530) | (794) |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning balance | (49) | (94) | (41) | (66) |
Other comprehensive income before reclassification | 14 | 19 | 6 | (9) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Net current-period other comprehensive income | 14 | 19 | 6 | (9) |
Ending balance | (35) | (75) | (35) | (75) |
Employee Benefit Related Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning balance | (497) | (729) | (500) | (740) |
Other comprehensive income before reclassification | 0 | 0 | 1 | 1 |
Amounts reclassified from accumulated other comprehensive loss | 3 | 11 | 5 | 21 |
Net current-period other comprehensive income | 3 | 11 | 6 | 22 |
Ending balance | (494) | (718) | (494) | (718) |
Unrealized Loss | ||||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||||
Beginning balance | (4) | (2) | (4) | (3) |
Other comprehensive income before reclassification | 3 | 1 | 3 | 2 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Net current-period other comprehensive income | 3 | 1 | 3 | 2 |
Ending balance | $ (1) | $ (1) | $ (1) | $ (1) |
Shareholders' Equity - Reclassi
Shareholders' Equity - Reclassifications from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total reclassifications for the period | $ 3 | $ 11 | $ 5 | $ 21 |
Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total reclassifications for the period | 2 | 4 | 14 | |
Amount Reclassified from Accumulated Other Comprehensive Income | Prior service costs | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Prior service costs | (8) | (17) | (1) | |
Amount Reclassified from Accumulated Other Comprehensive Income | Actuarial losses | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total before tax | 11 | 11 | 22 | 22 |
Amount Reclassified from Accumulated Other Comprehensive Income | Employee Benefit Related Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total before tax | 3 | 11 | 5 | 21 |
Tax expense (benefit) | $ (1) | (7) | $ (1) | $ (7) |
Total reclassifications for the period | $ 4 |
Business Segment Information -
Business Segment Information - Summary of Segment Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Total Sales | $ 1,066 | $ 806 | $ 1,969 | $ 1,505 |
Commercial Truck & Trailer | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | 815 | 583 | 1,493 | 1,090 |
Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | 251 | 223 | 476 | 415 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | 1,066 | 806 | 1,969 | 1,505 |
Operating Segments | Commercial Truck & Trailer | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | 854 | 618 | 1,567 | 1,155 |
Operating Segments | Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | 256 | 226 | 485 | 422 |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | (44) | (38) | (83) | (72) |
Eliminations | Commercial Truck & Trailer | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | 39 | 35 | 74 | 65 |
Eliminations | Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Total Sales | $ 5 | $ 3 | $ 9 | $ 7 |
Business Segment Information 92
Business Segment Information - Segment Income Attributable to Parent (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||||
Interest income (expense), net | $ (16) | $ (21) | $ (40) | $ (42) |
Provision for income taxes | (22) | (13) | (105) | (19) |
Depreciation and amortization | (42) | (37) | ||
Noncontrolling interests | (3) | (1) | (5) | (2) |
Asset impairment charges | (2) | (3) | ||
Restructuring costs | (1) | (4) | (3) | (4) |
Income from continuing operations attributable to Meritor, Inc. | 57 | 22 | 22 | 37 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment adjusted EBITDA | 132 | 84 | 233 | 148 |
Operating Segments | Commercial Truck & Trailer | ||||
Segment Reporting Information [Line Items] | ||||
Segment adjusted EBITDA | 96 | 52 | 165 | 92 |
Operating Segments | Aftermarket & Industrial | ||||
Segment Reporting Information [Line Items] | ||||
Segment adjusted EBITDA | 36 | 32 | 68 | 56 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Unallocated legacy and corporate expense, net | (10) | (2) | (12) | (2) |
Interest income (expense), net | (16) | (21) | (40) | (42) |
Provision for income taxes | (22) | (13) | (105) | (19) |
Depreciation and amortization | (21) | (20) | (42) | (37) |
Noncontrolling interests | (3) | (1) | (5) | (2) |
Loss on sale of receivables | 0 | (1) | (2) | (2) |
Asset impairment charges | (2) | 0 | (2) | (3) |
Restructuring costs | $ (1) | $ (4) | $ (3) | $ (4) |
Business Segment Information 93
Business Segment Information - Schedule of Segment Assets (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 2,595 | $ 2,782 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,311 | 2,174 |
Operating Segments | Commercial Truck & Trailer | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,820 | 1,708 |
Operating Segments | Aftermarket & Industrial | ||
Segment Reporting Information [Line Items] | ||
Total assets | 491 | 466 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 563 | 869 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Less: Accounts receivable sold under off-balance sheet factoring programs | $ (279) | $ (261) |
Supplemental Guarantor Conden94
Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||
Parent's total ownership, percentage | 100.00% | ||
Parent | |||
Condensed Financial Statements, Captions [Line Items] | |||
Pension and retiree benefits, parent obligation | $ 280 | $ 303 | |
Proceeds from investment in subsidiary | 29 | $ 1 | |
Subsidiaries | |||
Condensed Financial Statements, Captions [Line Items] | |||
Debt and capital lease obligations, subsidiary portion | $ 36 | $ 100 |
Supplemental Guarantor Conden95
Supplemental Guarantor Condensed Consolidating Financial Statements - Condensed Consolidating Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Sales | ||||
Total Sales | $ 1,066 | $ 806 | $ 1,969 | $ 1,505 |
Cost of sales | (888) | (685) | (1,651) | (1,295) |
GROSS MARGIN | 178 | 121 | 318 | 210 |
Selling, general and administrative | (74) | (66) | (141) | (119) |
Restructuring costs | (1) | (4) | (3) | (4) |
Other operating income (expense) | (11) | (2) | (12) | (5) |
OPERATING INCOME (LOSS) | 92 | 49 | 162 | 82 |
Other income (expense), net | 0 | 0 | (1) | 0 |
Equity in earnings of affiliates | 6 | 8 | 11 | 18 |
Interest income (expense), net | (16) | (21) | (40) | (42) |
INCOME (LOSS) BEFORE INCOME TAXES | 82 | 36 | 132 | 58 |
Benefit (provision) for income taxes | (22) | (13) | (105) | (19) |
Equity income from continuing operations of subsidiaries | 0 | 0 | 0 | 0 |
INCOME FROM CONTINUING OPERATIONS | 60 | 23 | 27 | 39 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | (1) | 0 |
NET INCOME | 60 | 23 | 26 | 39 |
Less: Net income attributable to noncontrolling interests | (3) | (1) | (5) | (2) |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 57 | 22 | 21 | 37 |
Elims | ||||
Sales | ||||
Total Sales | (89) | (44) | (165) | (82) |
Cost of sales | 89 | 44 | 165 | 82 |
GROSS MARGIN | 0 | 0 | 0 | 0 |
Selling, general and administrative | 0 | 0 | 0 | 0 |
Restructuring costs | 0 | 0 | 0 | 0 |
Other operating income (expense) | 0 | 0 | 0 | 0 |
OPERATING INCOME (LOSS) | 0 | 0 | 0 | 0 |
Other income (expense), net | 0 | 0 | 0 | 0 |
Equity in earnings of affiliates | 0 | 0 | 0 | 0 |
Interest income (expense), net | 0 | 0 | 0 | 0 |
INCOME (LOSS) BEFORE INCOME TAXES | 0 | 0 | 0 | 0 |
Benefit (provision) for income taxes | 0 | 0 | 0 | 0 |
Equity income from continuing operations of subsidiaries | (122) | (67) | (228) | (158) |
INCOME FROM CONTINUING OPERATIONS | (122) | (67) | (228) | (158) |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | 0 | 0 |
NET INCOME | (122) | (67) | (228) | (158) |
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | (122) | (67) | (228) | (158) |
Parent | ||||
Sales | ||||
Total Sales | 0 | 0 | 0 | 0 |
Parent | Reportable Legal Entities | ||||
Sales | ||||
Total Sales | 0 | 0 | 0 | 0 |
Cost of sales | (15) | (15) | (29) | (29) |
GROSS MARGIN | (15) | (15) | (29) | (29) |
Selling, general and administrative | (31) | (20) | (59) | (43) |
Restructuring costs | 0 | 0 | 0 | 2 |
Other operating income (expense) | (9) | (2) | (10) | (2) |
OPERATING INCOME (LOSS) | (55) | (37) | (98) | (72) |
Other income (expense), net | 34 | 25 | 33 | 24 |
Equity in earnings of affiliates | 0 | 0 | 0 | 0 |
Interest income (expense), net | (28) | (34) | (65) | (67) |
INCOME (LOSS) BEFORE INCOME TAXES | (49) | (46) | (130) | (115) |
Benefit (provision) for income taxes | 8 | 15 | (15) | 35 |
Equity income from continuing operations of subsidiaries | 98 | 53 | 167 | 117 |
INCOME FROM CONTINUING OPERATIONS | 57 | 22 | 22 | 37 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | (1) | 0 |
NET INCOME | 57 | 22 | 21 | 37 |
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 57 | 22 | 21 | 37 |
Parent | Elims | ||||
Sales | ||||
Total Sales | 0 | 0 | 0 | 0 |
Guarantors | ||||
Sales | ||||
Total Sales | 566 | 391 | 1,034 | 716 |
Guarantors | Reportable Legal Entities | ||||
Sales | ||||
Total Sales | 601 | 421 | 1,101 | 772 |
Cost of sales | (500) | (345) | (918) | (642) |
GROSS MARGIN | 101 | 76 | 183 | 130 |
Selling, general and administrative | (27) | (34) | (47) | (52) |
Restructuring costs | (1) | (2) | (1) | (2) |
Other operating income (expense) | (1) | 0 | (1) | 0 |
OPERATING INCOME (LOSS) | 72 | 40 | 134 | 76 |
Other income (expense), net | (1) | (5) | 5 | (5) |
Equity in earnings of affiliates | 4 | 6 | 8 | 15 |
Interest income (expense), net | 6 | 9 | 15 | 19 |
INCOME (LOSS) BEFORE INCOME TAXES | 81 | 50 | 162 | 105 |
Benefit (provision) for income taxes | (13) | (15) | (62) | (35) |
Equity income from continuing operations of subsidiaries | 24 | 14 | 61 | 41 |
INCOME FROM CONTINUING OPERATIONS | 92 | 49 | 161 | 111 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | 0 | 0 |
NET INCOME | 92 | 49 | 161 | 111 |
Less: Net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 92 | 49 | 161 | 111 |
Guarantors | Elims | ||||
Sales | ||||
Total Sales | 35 | 30 | 67 | 56 |
Non- Guarantors | ||||
Sales | ||||
Total Sales | 500 | 415 | 935 | 789 |
Non- Guarantors | Reportable Legal Entities | ||||
Sales | ||||
Total Sales | 554 | 429 | 1,033 | 815 |
Cost of sales | (462) | (369) | (869) | (706) |
GROSS MARGIN | 92 | 60 | 164 | 109 |
Selling, general and administrative | (16) | (12) | (35) | (24) |
Restructuring costs | 0 | (2) | (2) | (4) |
Other operating income (expense) | (1) | 0 | (1) | (3) |
OPERATING INCOME (LOSS) | 75 | 46 | 126 | 78 |
Other income (expense), net | (33) | (20) | (39) | (19) |
Equity in earnings of affiliates | 2 | 2 | 3 | 3 |
Interest income (expense), net | 6 | 4 | 10 | 6 |
INCOME (LOSS) BEFORE INCOME TAXES | 50 | 32 | 100 | 68 |
Benefit (provision) for income taxes | (17) | (13) | (28) | (19) |
Equity income from continuing operations of subsidiaries | 0 | 0 | 0 | 0 |
INCOME FROM CONTINUING OPERATIONS | 33 | 19 | 72 | 49 |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 | 0 | 0 |
NET INCOME | 33 | 19 | 72 | 49 |
Less: Net income attributable to noncontrolling interests | (3) | (1) | (5) | (2) |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 30 | 18 | 67 | 47 |
Non- Guarantors | Elims | ||||
Sales | ||||
Total Sales | $ 54 | $ 14 | $ 98 | $ 26 |
Supplemental Guarantor Conden96
Supplemental Guarantor Condensed Consolidating Financial Statements - Condensed Consolidating Statement of Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Statement of Income Captions [Line Items] | ||||
Net income (loss) | $ 60 | $ 23 | $ 26 | $ 39 |
Other comprehensive income (loss) | 20 | 32 | 16 | 14 |
Total comprehensive income (loss) | 80 | 55 | 42 | 53 |
Less: Comprehensive income attributable to noncontrolling interest | (3) | (2) | (6) | (1) |
Comprehensive income (loss) attributable to Meritor, Inc. | 77 | 53 | 36 | 52 |
Elims | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income (loss) | (122) | (67) | (228) | (158) |
Other comprehensive income (loss) | (40) | (40) | (25) | 10 |
Total comprehensive income (loss) | (162) | (107) | (253) | (148) |
Less: Comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | 0 |
Comprehensive income (loss) attributable to Meritor, Inc. | (162) | (107) | (253) | (148) |
Parent | Reportable Legal Entities | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income (loss) | 57 | 22 | 21 | 37 |
Other comprehensive income (loss) | 20 | 30 | 15 | 14 |
Total comprehensive income (loss) | 77 | 52 | 36 | 51 |
Less: Comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | 0 |
Comprehensive income (loss) attributable to Meritor, Inc. | 77 | 52 | 36 | 51 |
Guarantors | Reportable Legal Entities | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income (loss) | 92 | 49 | 161 | 111 |
Other comprehensive income (loss) | 19 | 21 | 12 | (4) |
Total comprehensive income (loss) | 111 | 70 | 173 | 107 |
Less: Comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | 0 |
Comprehensive income (loss) attributable to Meritor, Inc. | 111 | 70 | 173 | 107 |
Non- Guarantors | Reportable Legal Entities | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Net income (loss) | 33 | 19 | 72 | 49 |
Other comprehensive income (loss) | 21 | 21 | 14 | (6) |
Total comprehensive income (loss) | 54 | 40 | 86 | 43 |
Less: Comprehensive income attributable to noncontrolling interest | (3) | (2) | (6) | (1) |
Comprehensive income (loss) attributable to Meritor, Inc. | $ 51 | $ 38 | $ 80 | $ 42 |
Supplemental Guarantor Conden97
Supplemental Guarantor Condensed Consolidating Financial Statements - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | |||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ 100 | [1] | $ 88 | [1] | $ 138 | $ 160 | |
Restricted cash | 9 | 0 | |||||
Receivables trade and other, net | [1] | 581 | 789 | ||||
Inventories | [1] | 455 | 378 | ||||
Other current assets | 41 | 43 | |||||
TOTAL CURRENT ASSETS | 1,186 | 1,298 | |||||
NET PROPERTY | [1] | 459 | 474 | ||||
GOODWILL | [1] | 418 | 414 | ||||
OTHER ASSETS | [1] | 532 | 596 | ||||
INVESTMENTS IN SUBSIDIARIES | 0 | 0 | |||||
TOTAL ASSETS | 2,595 | 2,782 | |||||
CURRENT LIABILITIES: | |||||||
Short-term debt | 77 | 288 | |||||
Accounts and notes payable | [1] | 692 | 622 | ||||
Other current liabilities | 249 | 272 | |||||
TOTAL CURRENT LIABILITIES | 1,018 | 1,182 | |||||
LONG-TERM DEBT | 728 | 750 | |||||
RETIREMENT BENEFITS | 291 | 314 | |||||
INTERCOMPANY PAYABLE (RECEIVABLE) | 0 | 0 | |||||
OTHER LIABILITIES | 244 | 239 | |||||
MEZZANINE EQUITY | 2 | 2 | |||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | 282 | 268 | |||||
NONCONTROLLING INTERESTS | [1] | 30 | 27 | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | 2,595 | 2,782 | |||||
ASSETS, LIABILITIES, AND EQUITY HELD-FOR-SALE | |||||||
Cash and cash equivalents | 1 | ||||||
Receivables, trade and other, net | 13 | ||||||
Inventories | 2 | ||||||
Net property | 3 | 3 | |||||
Goodwill | 1 | ||||||
Other assets | 1 | ||||||
Accounts and notes payable | 12 | ||||||
Noncontrolling interests | 2 | ||||||
Elims | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | 0 | 0 | 0 | 0 | |||
Restricted cash | 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 | (4,298) | (4,009) | |||||
TOTAL ASSETS | (4,298) | (4,009) | |||||
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 | |||||
MEZZANINE EQUITY | 0 | 0 | |||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | (4,298) | (4,009) | |||||
NONCONTROLLING INTERESTS | 0 | 0 | |||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | (4,298) | (4,009) | |||||
Parent | Reportable Legal Entities | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | 9 | 10 | 67 | 90 | |||
Restricted cash | 0 | ||||||
Receivables trade and other, net | 1 | 0 | |||||
Inventories | 0 | 0 | |||||
Other current assets | 4 | 5 | |||||
TOTAL CURRENT ASSETS | 14 | 15 | |||||
NET PROPERTY | 20 | 21 | |||||
GOODWILL | 0 | 0 | |||||
OTHER ASSETS | 187 | 271 | |||||
INVESTMENTS IN SUBSIDIARIES | 3,426 | 3,222 | |||||
TOTAL ASSETS | 3,647 | 3,529 | |||||
CURRENT LIABILITIES: | |||||||
Short-term debt | 46 | 195 | |||||
Accounts and notes payable | 51 | 55 | |||||
Other current liabilities | 73 | 69 | |||||
TOTAL CURRENT LIABILITIES | 170 | 319 | |||||
LONG-TERM DEBT | 723 | 743 | |||||
RETIREMENT BENEFITS | 269 | 291 | |||||
INTERCOMPANY PAYABLE (RECEIVABLE) | 2,156 | 1,866 | |||||
OTHER LIABILITIES | 45 | 40 | |||||
MEZZANINE EQUITY | 2 | 2 | |||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | 282 | 268 | |||||
NONCONTROLLING INTERESTS | 0 | 0 | |||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | 3,647 | 3,529 | |||||
Guarantors | Reportable Legal Entities | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | 5 | 3 | 4 | 4 | |||
Restricted cash | 0 | ||||||
Receivables trade and other, net | 44 | 296 | |||||
Inventories | 215 | 184 | |||||
Other current assets | 7 | 6 | |||||
TOTAL CURRENT ASSETS | 271 | 489 | |||||
NET PROPERTY | 220 | 227 | |||||
GOODWILL | 239 | 237 | |||||
OTHER ASSETS | 117 | 106 | |||||
INVESTMENTS IN SUBSIDIARIES | 872 | 787 | |||||
TOTAL ASSETS | 1,719 | 1,846 | |||||
CURRENT LIABILITIES: | |||||||
Short-term debt | 1 | 2 | |||||
Accounts and notes payable | 268 | 246 | |||||
Other current liabilities | 50 | 69 | |||||
TOTAL CURRENT LIABILITIES | 319 | 317 | |||||
LONG-TERM DEBT | 0 | 0 | |||||
RETIREMENT BENEFITS | 0 | 0 | |||||
INTERCOMPANY PAYABLE (RECEIVABLE) | (2,507) | (2,160) | |||||
OTHER LIABILITIES | 91 | 93 | |||||
MEZZANINE EQUITY | 0 | 0 | |||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | 3,816 | 3,596 | |||||
NONCONTROLLING INTERESTS | 0 | 0 | |||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | 1,719 | 1,846 | |||||
ASSETS, LIABILITIES, AND EQUITY HELD-FOR-SALE | |||||||
Net property | 1 | 1 | |||||
Non- Guarantors | Reportable Legal Entities | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | 86 | 75 | $ 67 | $ 66 | |||
Restricted cash | 9 | ||||||
Receivables trade and other, net | 536 | 493 | |||||
Inventories | 240 | 194 | |||||
Other current assets | 30 | 32 | |||||
TOTAL CURRENT ASSETS | 901 | 794 | |||||
NET PROPERTY | 219 | 226 | |||||
GOODWILL | 179 | 177 | |||||
OTHER ASSETS | 228 | 219 | |||||
INVESTMENTS IN SUBSIDIARIES | 0 | 0 | |||||
TOTAL ASSETS | 1,527 | 1,416 | |||||
CURRENT LIABILITIES: | |||||||
Short-term debt | 30 | 91 | |||||
Accounts and notes payable | 373 | 321 | |||||
Other current liabilities | 126 | 134 | |||||
TOTAL CURRENT LIABILITIES | 529 | 546 | |||||
LONG-TERM DEBT | 5 | 7 | |||||
RETIREMENT BENEFITS | 22 | 23 | |||||
INTERCOMPANY PAYABLE (RECEIVABLE) | 351 | 294 | |||||
OTHER LIABILITIES | 108 | 106 | |||||
MEZZANINE EQUITY | 0 | 0 | |||||
EQUITY (DEFICIT) ATTRIBUTABLE TO MERITOR, INC. | 482 | 413 | |||||
NONCONTROLLING INTERESTS | 30 | 27 | |||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | $ 1,527 | $ 1,416 | |||||
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Supplemental Guarantor Conden98
Supplemental Guarantor Condensed Consolidating Financial Statements - Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Condensed Cash Flow Statements, Captions [Line Items] | |||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | $ 72 | $ 30 | |
INVESTING ACTIVITIES | |||
Capital expenditures | (35) | (40) | |
Proceeds from sale of a business | 4 | 0 | |
Proceeds from prior year sale of equity method investment | 250 | 0 | |
Cash paid for investment in Transportation Power, Inc. | (3) | 0 | |
Net investing cash flows provided by discontinued operations | 0 | 2 | |
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | 216 | (38) | |
FINANCING ACTIVITIES | |||
Borrowings and securitization | (60) | 0 | |
Redemption of notes | (181) | 0 | |
Debt issuance costs | 0 | (4) | |
Repurchase of common stock | (33) | 0 | |
Intercompany advances | 0 | 0 | |
Other financing activities | (2) | (11) | |
CASH USED FOR FINANCING ACTIVITIES | (276) | (15) | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 1 | |
CHANGE IN CASH AND CASH EQUIVALENTS | 12 | (22) | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 88 | [1] | 160 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 100 | [1] | 138 |
Elims | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 0 | 0 | |
INVESTING ACTIVITIES | |||
Capital expenditures | 0 | 0 | |
Proceeds from sale of a business | 0 | ||
Proceeds from prior year sale of equity method investment | 0 | ||
Cash paid for investment in Transportation Power, Inc. | 0 | ||
Net investing cash flows provided by discontinued operations | 0 | ||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | 0 | 0 | |
FINANCING ACTIVITIES | |||
Borrowings and securitization | 0 | ||
Redemption of notes | 0 | ||
Debt issuance costs | 0 | ||
Repurchase of common stock | 0 | ||
Intercompany advances | 0 | 0 | |
Other financing activities | 0 | 0 | |
CASH USED FOR FINANCING ACTIVITIES | 0 | 0 | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |
CHANGE IN CASH AND CASH EQUIVALENTS | 0 | 0 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 0 | 0 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 0 | 0 | |
Parent | Reportable Legal Entities | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | (50) | (51) | |
INVESTING ACTIVITIES | |||
Capital expenditures | (2) | (6) | |
Proceeds from sale of a business | 4 | ||
Proceeds from prior year sale of equity method investment | 250 | ||
Cash paid for investment in Transportation Power, Inc. | (3) | ||
Net investing cash flows provided by discontinued operations | 0 | ||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | 249 | (6) | |
FINANCING ACTIVITIES | |||
Borrowings and securitization | 0 | ||
Redemption of notes | (181) | ||
Debt issuance costs | (4) | ||
Repurchase of common stock | (33) | ||
Intercompany advances | 15 | 38 | |
Other financing activities | (1) | 0 | |
CASH USED FOR FINANCING ACTIVITIES | (200) | 34 | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |
CHANGE IN CASH AND CASH EQUIVALENTS | (1) | (23) | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 10 | 90 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 9 | 67 | |
Guarantors | Reportable Legal Entities | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 20 | 21 | |
INVESTING ACTIVITIES | |||
Capital expenditures | (17) | (21) | |
Proceeds from sale of a business | 0 | ||
Proceeds from prior year sale of equity method investment | 0 | ||
Cash paid for investment in Transportation Power, Inc. | 0 | ||
Net investing cash flows provided by discontinued operations | 2 | ||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | (17) | (19) | |
FINANCING ACTIVITIES | |||
Borrowings and securitization | 0 | ||
Redemption of notes | 0 | ||
Debt issuance costs | 0 | ||
Repurchase of common stock | 0 | ||
Intercompany advances | 0 | 0 | |
Other financing activities | (1) | (2) | |
CASH USED FOR FINANCING ACTIVITIES | (1) | (2) | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 0 | |
CHANGE IN CASH AND CASH EQUIVALENTS | 2 | 0 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3 | 4 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 5 | 4 | |
Non- Guarantors | Reportable Legal Entities | |||
Condensed Cash Flow Statements, Captions [Line Items] | |||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 102 | 60 | |
INVESTING ACTIVITIES | |||
Capital expenditures | (16) | (13) | |
Proceeds from sale of a business | 0 | ||
Proceeds from prior year sale of equity method investment | 0 | ||
Cash paid for investment in Transportation Power, Inc. | 0 | ||
Net investing cash flows provided by discontinued operations | 0 | ||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | (16) | (13) | |
FINANCING ACTIVITIES | |||
Borrowings and securitization | (60) | ||
Redemption of notes | 0 | ||
Debt issuance costs | 0 | ||
Repurchase of common stock | 0 | ||
Intercompany advances | (15) | (38) | |
Other financing activities | 0 | (9) | |
CASH USED FOR FINANCING ACTIVITIES | (75) | (47) | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 0 | 1 | |
CHANGE IN CASH AND CASH EQUIVALENTS | 11 | 1 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 75 | 66 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 86 | $ 67 | |
[1] | As of March 31, 2018, Assets and liabilities held for sale consisted of $3 million Net property. As of September 30, 2017, Assets and liabilities held for sale were: (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests. |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Apr. 30, 2018 | Apr. 13, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Subsequent Event [Line Items] | ||||
Cash paid for investments | $ 3 | $ 0 | ||
AA Gear & Manufacturing, Inc. | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Purchase price | $ 35 | |||
Preferred Stock | TransPower | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Cash paid for investments | $ 1.5 |