COVER PAGE
COVER PAGE - shares | 3 Months Ended | |
Dec. 31, 2020 | Feb. 02, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 3, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-15983 | |
Entity Registrant Name | MERITOR, INC. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 38-3354643 | |
Entity Address, Address Line One | 2135 West Maple Road | |
Entity Address, City or Town | Troy | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48084-7186 | |
City Area Code | 248 | |
Local Phone Number | 435-1000 | |
Title of 12(b) Security | Common Stock, $1 Par Value | |
Trading Symbol | MTOR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 72,535,263 | |
Amendment Flag | false | |
Entity Central Index Key | 0001113256 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Sales | $ 889 | $ 901 |
Cost of sales | (774) | (774) |
GROSS PROFIT | 115 | 127 |
Selling, general and administrative | (65) | (70) |
Other operating expense, net | (7) | (5) |
OPERATING INCOME | 43 | 52 |
Other income, net | 14 | 10 |
Equity in earnings of affiliates | 11 | 6 |
Interest expense, net | (28) | (14) |
INCOME BEFORE INCOME TAXES | 40 | 54 |
Provision for income taxes | (7) | (13) |
INCOME FROM CONTINUING OPERATIONS | 33 | 41 |
INCOME FROM DISCONTINUED OPERATIONS, net of tax | 0 | 0 |
NET INCOME | 33 | 41 |
Less: Net income attributable to noncontrolling interests | (1) | (2) |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | 32 | 39 |
NET INCOME ATTRIBUTABLE TO MERITOR, INC. | ||
Net income from continuing operations | 32 | 39 |
Income from discontinued operations | 0 | 0 |
Net income | $ 32 | $ 39 |
BASIC EARNINGS PER SHARE | ||
Continuing operations (in usd per share) | $ 0.44 | $ 0.50 |
Discontinued operations (in usd per share) | 0 | 0 |
Basic earnings per share (in usd per share) | 0.44 | 0.50 |
DILUTED EARNINGS PER SHARE | ||
Continuing operations (in usd per share) | 0.44 | 0.48 |
Discontinued operations (in usd per share) | 0 | 0 |
Diluted earnings per share (in usd per share) | $ 0.44 | $ 0.48 |
Basic average common shares outstanding (in shares) | 72.2 | 78.2 |
Diluted average common shares outstanding (in shares) | 73.2 | 80.7 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 33 | $ 41 |
Foreign currency translation adjustments: | ||
Attributable to Meritor, Inc. | 55 | 21 |
Attributable to noncontrolling interest | 1 | 0 |
Pension and other postretirement benefit related adjustments | 3 | 3 |
Unrealized gain on cash flow hedges | 1 | 2 |
Other comprehensive income, net of tax | 60 | 26 |
Total comprehensive income | 93 | 67 |
Less: Comprehensive income attributable to noncontrolling interest | (2) | (2) |
Comprehensive income attributable to Meritor, Inc. | $ 91 | $ 65 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 283 | $ 315 |
Receivables, trade and other, net | 466 | 479 |
Inventories | 473 | 435 |
Other current assets | 70 | 54 |
TOTAL CURRENT ASSETS | 1,292 | 1,283 |
NET PROPERTY | 520 | 515 |
GOODWILL | 507 | 501 |
OTHER ASSETS | 611 | 585 |
TOTAL ASSETS | 2,930 | 2,884 |
CURRENT LIABILITIES: | ||
Short-term debt | 15 | 39 |
Accounts and notes payable | 445 | 423 |
Other current liabilities | 251 | 264 |
TOTAL CURRENT LIABILITIES | 711 | 726 |
LONG-TERM DEBT | 1,189 | 1,188 |
RETIREMENT BENEFITS | 187 | 196 |
OTHER LIABILITIES | 278 | 279 |
TOTAL LIABILITIES | 2,365 | 2,389 |
COMMITMENTS AND CONTINGENCIES (See Note 16) | ||
EQUITY: | ||
Common stock (December 31, 2020 and September 30, 2020, 104.0 and 103.7 shares issued and 72.5 and 72.3 shares outstanding, respectively) | 106 | 105 |
Additional paid-in capital | 784 | 808 |
Retained earnings | 768 | 736 |
Treasury stock, at cost (December 31, 2020 and September 30, 2020, 31.4 and 31.4 shares, respectively) | (573) | (573) |
Accumulated other comprehensive loss | (555) | (614) |
Total equity attributable to Meritor, Inc. | 530 | 462 |
Noncontrolling interests | 35 | 33 |
TOTAL EQUITY | 565 | 495 |
TOTAL LIABILITIES AND EQUITY | $ 2,930 | $ 2,884 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Common shares issued (in shares) | 104 | 103.7 |
Common shares outstanding (in shares) | 72.5 | 72.3 |
Treasury stock (in shares) | 31.4 | 31.4 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
OPERATING ACTIVITIES | |||
Net income | $ 33 | $ 41 | |
Less: Income from discontinued operations, net of tax | 0 | 0 | |
Income from continuing operations | 33 | 41 | |
Adjustments to income from continuing operations to arrive at cash provided by (used for) operating activities: | |||
Depreciation and amortization | 27 | 24 | |
Deferred income tax expense | 1 | 3 | |
Restructuring costs | 6 | 5 | |
Equity in earnings of affiliates | (11) | (6) | |
Pension and retiree medical income | (13) | (10) | |
Loss on debt extinguishment | 8 | 0 | |
Other adjustments to income from continuing operations | 6 | 3 | |
Dividends received from equity method investments | 1 | 0 | |
Pension and retiree medical contributions | (3) | (3) | |
Restructuring payments | (4) | (7) | |
Changes in off-balance sheet accounts receivable securitization and factoring programs | 85 | 7 | |
Changes in receivables, inventories and accounts payable | (77) | (31) | |
Changes in other current assets and liabilities | (22) | (28) | |
Changes in other assets and liabilities | 7 | (16) | |
Operating cash flows provided by (used for) continuing operations | 44 | (18) | |
Operating cash flows used for discontinued operations | 0 | (1) | |
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 44 | (19) | |
INVESTING ACTIVITIES | |||
Capital expenditures | (10) | (16) | |
Other investing activities | (3) | 0 | |
CASH USED FOR INVESTING ACTIVITIES | (13) | (16) | |
FINANCING ACTIVITIES | |||
Securitization | 0 | 72 | |
Borrowings against revolving line of credit | 0 | 65 | |
Proceeds from debt issuance | 275 | 0 | |
Redemption of notes | (281) | 0 | |
Redemption of convertible notes | (53) | 0 | |
Debt issuance costs | (4) | 0 | |
Term loan payments | (4) | (3) | |
Net change in debt | (67) | 134 | |
Repurchase of common stock | 0 | (100) | |
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | (67) | 34 | |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 4 | 1 | |
CHANGE IN CASH AND CASH EQUIVALENTS | (32) | 0 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 315 | 108 | $ 108 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 283 | $ 108 | $ 315 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Equity Attributable to Meritor, Inc. | Noncontrolling Interests |
Beginning balance at Sep. 30, 2019 | $ 415 | $ 104 | $ 803 | $ 491 | $ (332) | $ (681) | $ 385 | $ 30 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 67 | 39 | 26 | 65 | 2 | |||
Equity based compensation expense | 3 | 3 | 3 | |||||
Vesting of equity based awards | 0 | 1 | (1) | |||||
Repurchase of common stock | (100) | (100) | (100) | |||||
Other equity adjustments | (1) | (1) | (1) | |||||
Ending Balance at Dec. 31, 2019 | 384 | 105 | 804 | 530 | (432) | (655) | 352 | 32 |
Beginning balance at Sep. 30, 2020 | 495 | 105 | 808 | 736 | (573) | (614) | 462 | 33 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 93 | 32 | 59 | 91 | 2 | |||
Equity based compensation expense | 6 | 6 | 6 | |||||
Vesting of equity based awards | 0 | 1 | (1) | |||||
Repurchase of convertible notes | (30) | (30) | (30) | |||||
Other equity adjustments | 1 | 1 | 1 | |||||
Ending Balance at Dec. 31, 2020 | $ 565 | $ 106 | $ 784 | $ 768 | $ (573) | $ (555) | $ 530 | $ 35 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2020 | |
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 products, 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. 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, 2020. The Condensed Consolidated Balance Sheet data as of September 30, 2020 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 months ended December 31, 2020 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 first quarter of fiscal years 2021 and 2020 ended on January 3, 2021 and December 29, 2019, respectively. Fiscal year 2020 ended on September 27, 2020. 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 December 31 are used consistently throughout this report to represent the fiscal year end and first fiscal quarter end, respectively. COVID-19 Pandemic Update In March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. The COVID-19 pandemic adversely affected the company's financial performance in the second, third and fourth quarters of fiscal year 2020, and could have an impact throughout fiscal year 2021. In response to the COVID-19 pandemic, government health officials have recommended and mandated precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar measures. The company has been operating as an essential business in the U.S. All of the company's facilities were fully operational at the end of fiscal year 2020 and during the first quarter of fiscal year 2021. Most of the company’s salaried employees are primarily working remotely until further notice. There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company's operations, supply chain and demand for its products. As a result, the ultimate impact on the company's business, financial condition and operating results cannot be reasonably estimated at this time. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Dec. 31, 2020 | |
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 December 31, 2020 2019 Basic average common shares outstanding 72.2 78.2 Impact of restricted shares, restricted share units and performance share units 1.0 1.6 Impact of convertible notes — 0.9 Diluted average common shares outstanding 73.2 80.7 In November 2020, the Board of Directors approved a grant of 0.3 million 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 $26.98, which was the company’s share price on the grant date of December 1, 2020. 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 $26.98, which was the company's share price on the grant date of December 1, 2020. 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, 2020 to September 30, 2023, 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 which are each weighted at 50%. 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. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2021 On October 1, 2020, the company implemented Accounting Standards Update ("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 debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The guidance had an impact on the company's accounting policies and procedures related to calculation of allowance for doubtful accounts receivable but did not have a material impact on its Condensed Consolidated Financial Statements. On October 1, 2020, the company implemented ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU add, modify, and eliminate certain disclosure requirements on fair value measurements in Topic 820. The guidance did not have a material impact on the company's Condensed Consolidated Financial Statements Accounting standards to be implemented The following represent the standards that may result in a significant change in practice and/or have a significant financial impact on the company. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for certain financial instruments with characteristics of debt and equity, including convertible instruments and contracts on an entity’s own equity. ASC 470-20 outlines five models to allocate the proceeds attributable to the issuance of a convertible debt instrument. This ASU removes from U.S. GAAP the separation models for convertible debt with a cash conversion feature (CCF) and convertible debt with a beneficial conversion feature (BCF). As a result of adopting this ASU, entities are not required to separately present in equity an embedded conversion feature in such debt. Instead, they should account for a convertible debt instrument wholly as debt. Applying the separation models in ASC 470-20 to convertible instruments with a CCF or BCF involves the recognition of a debt discount, which is amortized to interest expense. The elimination of CCF and BCF models will reduce reported interest expense and increase reported net income for convertible instruments issued within the scope of those models before the adoption of ASU 2020-06. The amendments in this ASU are required to be adopted by public business entities in fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but not |
Revenue
Revenue | 3 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of revenue In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three months ended December 31, 2020 and 2019 (in millions). Three Months Ended December 31, 2020 Primary Geographical Market Commercial Truck Aftermarket and Industrial Total U.S. $ 310 $ 170 $ 480 Canada — 12 12 Mexico 36 5 41 Total North America 346 187 533 Sweden 77 — 77 Italy 53 5 58 United Kingdom 41 2 43 Other Europe 2 35 37 Total Europe 173 42 215 Brazil 56 — 56 China 30 — 30 India 33 — 33 Other Asia-Pacific 22 — 22 Total sales $ 660 $ 229 $ 889 Three Months Ended December 31, 2019 (1) Primary Geographical Market Commercial Truck Aftermarket and Industrial Total U.S. $ 328 $ 206 $ 534 Canada — 14 14 Mexico 39 5 44 Total North America 367 225 592 Sweden 62 — 62 Italy 45 4 49 United Kingdom 33 2 35 Other Europe 1 37 38 Total Europe 141 43 184 Brazil 53 1 54 China 34 — 34 India 22 1 23 Other Asia-Pacific 14 — 14 Total sales $ 631 $ 270 $ 901 (1) Amounts for the three months ended December 31, 2019 have been recast to reflect reportable segment changes. |
Restructuring Costs
Restructuring Costs | 3 Months Ended |
Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs Restructuring reserves, primarily related to unpaid employee termination benefits, were $10 million each at December 31, 2020 and September 30, 2020. Restructuring costs are recorded within Other operating expense, net within the Condensed Consolidated Statement of Operations. The changes in restructuring reserves for the three months ended December 31, 2020 and 2019 are as follows (in millions): Total Balance at September 30, 2020 $ 10 Activity during the period: Charges 6 Cash payments (4) Other (2) Total restructuring reserves at December 31, 2020 10 Less: non-current restructuring reserves — Restructuring reserves – current, at December 31, 2020 $ 10 Balance at September 30, 2019 $ 8 Activity during the period: Charges 5 Cash payments (7) Other (1) Total restructuring reserves at December 31, 2019 5 Less: non-current restructuring reserves — Restructuring reserves – current, at December 31, 2019 $ 5 Global Restructuring Programs Fiscal Year 2021: On November 11, 2020, the company approved a restructuring plan to close three U.S. manufacturing plants and one European administration office in its Aftermarket and Industrial segment and consolidate their operations into existing facilities. The site closures include: • Chicago, Illinois • Livermore, California • Livonia, Michigan • Zurich, Switzerland The closures impact approximately 150 hourly and salaried workers. These restructuring plans are intended to optimize the company’s manufacturing footprint, reduce costs and increase efficiencies. With this restructuring plan, the company expects to incur approximately $19 million in restructuring charges in the Aftermarket and Industrial segment, consisting of an impact on long-lived assets of $9 million, severance related costs of $5 million and other associated costs of $5 million. During the first quarter of fiscal year 2021, the company incurred $5 million in restructuring costs related to this plan. Restructuring actions associated with this plan are expected to be substantially complete by the end of 2021. Global Restructuring Program Fiscal Year 2020: On June 2, 2020, the company approved and began executing a restructuring plan to reduce labor costs and align with current market forecasts. Under this plan, the company currently expects to incur approximately $15 million in employee severance costs that affects approximately eight percent of its global salaried positions, and will eliminate certain hourly roles. During fiscal year 2020, the company incurred $10 million in restructuring costs related to this plan of which $7 million was in the Commercial Truck segment and $3 million related to the Aftermarket and Industrial segment. During the first quarter of fiscal year 2021, the company incurred $1 million in restructuring costs related to this plan in the Commercial Truck segment. Restructuring actions associated with this plan are expected to be substantially complete by the end of fiscal year 2021. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesFor 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.For the three months ended December 31, 2020, and December 31, 2019 the company's effective tax rate was favorably impacted by approximately $13 million and $3 million, respectively, of net pre-tax income in tax jurisdictions in which tax expense (benefit) is not recorded. |
Accounts Receivable Factoring a
Accounts Receivable Factoring and Securitization | 3 Months Ended |
Dec. 31, 2020 | |
Accounts Receivable Factoring And Securitization [Abstract] | |
Accounts Receivable Factoring and Securitization | Accounts Receivable Factoring and Securitization The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows: Current Expiration Total Facility Size as of 12/31/20 Utilized as of 12/31/20 Utilized as of 9/30/20 EUR USD EUR USD EUR USD On-balance sheet arrangement Committed U.S. accounts receivable securitization (1) December 2022 N/A $ 95 N/A $ 4 N/A $ 3 Total on-balance sheet arrangement: (1) N/A $ 95 N/A $ 4 N/A $ 3 Off-balance sheet arrangements Committed Swedish factoring facility (2)(3) March 2024 € 155 $ 189 € 130 $ 158 € 86 $ 100 Committed U.S. factoring facility (2) February 2023 N/A 75 N/A 47 N/A 30 Uncommitted U.K. factoring facility February 2022 25 31 2 2 1 1 Uncommitted Italy factoring facility June 2022 30 37 23 28 8 9 Other uncommitted factoring facilities (4) None N/A N/A 16 20 12 14 Total off-balance sheet arrangements € 210 $ 332 € 171 $ 255 € 107 $ 154 (1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $4 million of letters of credit as of December 31, 2020 and $3 million as of September 30, 2020. (2) Actual amounts may exceed the bank's commitment at the bank's discretion. (3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2021. (4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion. |
Inventories
Inventories | 3 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions): December 31, September 30, Finished goods $ 126 $ 119 Work in process 45 38 Raw materials, parts and supplies 302 278 Total $ 473 $ 435 |
Net Property
Net Property | 3 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Net Property | Net Property Net property is summarized as follows (in millions): December 31, September 30, Property at cost: Land and land improvements $ 33 $ 32 Buildings 240 228 Machinery and equipment 1,053 1,002 Company-owned tooling 158 151 Construction in progress 44 63 Total 1,528 1,476 Less: accumulated depreciation (1,008) (961) Net property $ 520 $ 515 |
Other Assets
Other Assets | 3 Months Ended |
Dec. 31, 2020 | |
Other Assets, Noncurrent [Abstract] | |
Other Assets | Other Assets Other assets are summarized as follows (in millions): December 31, September 30, Prepaid pension costs $ 196 $ 179 Deferred income tax assets 30 30 Investments in non-consolidated joint ventures 119 107 Other 266 269 Other assets $ 611 $ 585 |
Other Current Liabilities
Other Current Liabilities | 3 Months Ended |
Dec. 31, 2020 | |
Other Liabilities, Current [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities are summarized as follows (in millions): December 31, September 30, Compensation and benefits $ 85 $ 91 Product warranties 20 19 Other 146 154 Other current liabilities $ 251 $ 264 Compensation and benefits includes the current portion of pension and retiree medical liability, accrued incentive compensation, salary and wages and accrued vacation, holiday and sick leave pay. A summary of the changes in product warranties is as follows (in millions): Three Months Ended December 31, 2020 2019 Total product warranties – beginning of period $ 54 $ 50 Accruals for product warranties 6 3 Payments (4) (7) Change in estimates and other 1 — Total product warranties – end of period 57 46 Less: non-current product warranties (37) (29) Product warranties – current $ 20 $ 17 |
Other Liabilities
Other Liabilities | 3 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities Other liabilities are summarized as follows (in millions): December 31, September 30, Asbestos-related liabilities (see Note 16) $ 65 $ 67 Liabilities for uncertain tax positions 75 73 Product warranties (see Note 11) 37 35 Other 101 104 Other liabilities $ 278 $ 279 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-Term debt, net of discounts where applicable, is summarized as follows (in millions): December 31, September 30, 3.25 percent convertible notes due 2037 $ 320 $ 320 7.875 percent convertible notes due 2026 — 23 4.50 percent notes due 2028 270 — 6.25 percent notes due 2025 295 295 6.25 percent notes due 2024 174 446 Term loan due 2024 161 166 Finance lease obligation 11 6 Unamortized discount on convertible notes (27) (29) Subtotal 1,204 1,227 Less: current maturities (15) (39) Long-term debt $ 1,189 $ 1,188 Repurchase of 7.875 Percent Convertible Notes On October 16, 2020, the company issued a notice of redemption for all of the $23 million aggregate principal amount outstanding of its 7.875 percent senior convertible notes due 2026 (the "7.875 Percent Convertible Notes"). As a result of the issuance of the notice of redemption, the 7.875 Percent Convertible Notes were convertible at any time prior to the close of business on November 30, 2020 at a rate of 83.3333 shares of common stock per $1,000 original principal amount of the 7.875 Percent Convertible Notes. All remaining outstanding 7.875 Percent Convertible Notes were surrendered in November 2020 for conversion and were settled in cash up to the accreted principal amount of the 7.875 Percent Convertible Notes and also settled in cash for the remainder of the conversion obligation in excess of the accreted principal amount, in accordance with the provisions of the indenture that governed the 7.875 Percent Convertible Notes. The conversion of the 7.875 Percent Convertible Notes was settled for $53 million, of which $23 million represented principal repayment and $30 million represented the payment of conversion in excess of the accreted principal. There was no loss on extinguishment. As of December 31, 2020, the 7.875 Percent Convertible Notes were fully redeemed. The 7.875 Percent Convertible Notes were classified as current as of September 30, 2020. Repurchase of 6.25 Percent Notes due 2024 On December 16, 2020, the company redeemed $275 million of the outstanding $450 million aggregate principal amount of its 6.25 percent notes due 2024 (the "6.25 Percent Notes due 2024") for an aggregate purchase price of $287 million (including accrued interest of $6 million). The redemption price was equal to 102.083% of the principal amount of the 6.25 Percent Notes due 2024 redeemed, plus accrued and unpaid interest, thereon up to but excluding the redemption date of December 16, 2020. These redemptions were accounted for as an extinguishment of debt, and accordingly the company recognized a loss on debt extinguishment of $8 million. The loss on extinguishment is recorded in the Condensed Consolidated Statement of Operations within Interest expense, net. As of December 31, 2020, $175 million principal amount of the 6.25 Percent Notes due 2024 remained outstanding. 4.50 Percent Notes due 2028 On December 1, 2020, the company completed the offering and sale of $275 million aggregate principal amount of its 4.50% notes due 2028 (the "4.50 Percent Notes"), including related guarantees by the subsidiaries of the company who from time to time guarantee the company’s senior secured revolving credit facility as it may be amended, extended, replaced or refinanced, or any subsequent credit facility, to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons in offshore transactions outside the United States in reliance on Regulation S under the Securities Act in a private placement exempt from the registration requirements of the Securities Act. The net proceeds to the company from the sale of the 4.50 Percent Notes, after deducting estimated offering expenses payable by the company were approximately $270 million. The company used the net proceeds from the offering, together with cash on hand, to redeem approximately $275 million of the outstanding $450 million aggregate principal amount of its 6.25 Percent Notes due 2024, as described above. The 4.50 Percent Notes will mature on December 15, 2028 and bear interest at a fixed rate of 4.500% per annum. The company will pay interest on the 4.50 Percent Notes from December 1, 2020 semi-annually, in arrears, on June 15 and December 15 of each year, beginning June 15, 2021. The 4.50 Percent Notes constitute senior unsecured obligations of the company and rank equally in right of payment with its existing and future senior unsecured indebtedness, and effectively junior to its existing and future secured indebtedness to the extent of the security therefor. The 4.50 Percent Notes provide that, prior to December 15, 2023, the company may redeem, at its option, from time to time, the 4.50 Percent Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the 4.50 Percent Notes to be redeemed, plus (ii) the applicable premium as of the redemption date on the 4.50 Percent Notes to be redeemed, plus (iii) accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption date) on the 4.50 Percent Notes to be redeemed. The 4.50 Percent Notes provide that, on or after December 15, 2023, the company may redeem, at its option, from time to time, the 4.50 Percent Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 4.50 Percent Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption date) on the 4.50 Percent Notes to be redeemed, if redeemed during the 12-month period beginning on December 15 of the years indicated below: Year Redemption Price 2023 102.250 % 2024 101.125 % 2025 and thereafter 100.000 % The 4.50 Percent Notes also provide that, prior to December 15, 2023, the company may redeem, at its option, from time to time, up to 35% of the aggregate principal amount of the 4.50 Percent Notes with the net cash proceeds of one or more public sales of the company’s common stock at a redemption price equal to 104.500% of the principal amount of the 4.50 Percent Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the redemption date) on the 4.50 Percent Notes to be redeemed so long as at least 65% of the aggregate principal amount of the 4.50 Percent Notes remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock. If a change of control (as defined in the ninth supplemental indenture under which the 4.50 Percent Notes were issued) occurs, unless the company has exercised its right to redeem the 4.50 Percent Notes, each holder of the 4.50 Percent Notes may require the company to repurchase some or all of such holder’s 4.50 Percent Notes at a purchase price equal to 101% of the principal amount of the 4.50 Percent Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the repurchase date (subject to the right of holders of record on the relevant regular record date to receive interest due on an interest payment date that is on or prior to the repurchase date) on the 4.50 Percent Notes to be repurchased. Revolving Credit Facility On November 9, 2020, the company's senior secured revolving credit facility was increased by $60 million to $685 million through the addition of a new lender. At December 31, 2020 and September 30, 2020, there were no borrowings outstanding under the senior secured revolving credit facility. The senior secured revolving credit facility includes $100 million of availability for the issuance of letters of credit. At December 31, 2020 and September 30, 2020, there were no letters of credit outstanding under the senior secured revolving credit facility. Debt Securities In November 2020, the company filed a shelf registration statement with the SEC registering an indeterminate 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 November 2020 shelf registration statement superseded and replaced the company's shelf registration statement filed in December 2017. Other |
Financial Instruments
Financial Instruments | 3 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial Instruments Fair values of financial instruments are summarized as follows (in millions): December 31, 2020 September 30, 2020 Carrying Fair Carrying Fair Cash and cash equivalents $ 283 $ 283 $ 315 $ 315 Short-term debt 15 15 39 58 Long-term debt 1,189 1,311 1,188 1,259 Foreign currency option contracts (other assets) — — 1 1 Foreign exchange forward contracts (other assets) 2 2 — — Foreign exchange forward contracts (other liabilities) 1 1 1 1 The following table reflects the offsetting of derivative assets and liabilities (in millions): December 31, 2020 September 30, 2020 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Assets Foreign currency option contracts — — — 1 — 1 Foreign exchange forward contracts 2 — 2 — — — Derivative Liabilities Foreign exchange forward contracts 1 — 1 1 — 1 Fair Value 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 December 31, 2020 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 283 $ — $ — Short-term debt — — 15 Long-term debt — 1,159 152 Foreign exchange forward contracts (other assets) — 2 — Foreign exchange forward contracts (other liabilities) — 1 — Fair value of financial instruments by the valuation hierarchy at September 30, 2020 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 315 $ — $ — Short-term debt — 43 15 Long-term debt — 1,103 156 Foreign exchange forward contracts (other liabilities) — 1 — Foreign currency option contracts (other assets) — 1 — No transfers of assets between any of the Levels occurred during the three months ended December 31, 2020 and 2019. 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. 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. As of December 31, 2020 and September 30, 2020, the notional amount of the company's foreign exchange contracts outstanding under its foreign currency cash flow hedging program was $48 million and $65 million, respectively. 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, changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Income (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 foreign currency-denominated purchases. As of December 31, 2020 and September 30, 2020, the notional amount of the company's foreign exchange contracts outstanding was $30 million and $39 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 Condensed Consolidated Statement of Operations. The company uses option contracts to mitigate the risk of volatility in the translation of foreign currency earnings to U.S. dollars. As of December 31, 2020 and September 30, 2020, the notional amount of the company's option contracts outstanding was $19 million and $24 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 Condensed Consolidated Statement of Operations in other income, net. The fair value of foreign currency 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. Cross-currency swap contracts — The company has utilized cross-currency swap contracts to hedge a portion of its net investment in a foreign subsidiary against volatility in foreign exchange rates. These derivative instruments are designated and qualify as hedges of net investments in foreign operations using the spot method to assess effectiveness. Changes in fair values of the instruments are recognized in foreign currency translation adjustments, a component of other comprehensive income (loss) in the Condensed Consolidated Statement of Comprehensive Income (Loss), to offset the changes in the values of the net investments being hedged. In the third quarter of fiscal year 2019, the company entered into multiple cross-currency swaps with a combined notional amount of $225 million and maturities in October 2022. These swaps hedged a portion of the net investment in a certain European subsidiary against volatility in the euro/U.S. dollar foreign exchange rate. In the second quarter of fiscal year 2020, the company settled these cross-currency swap contracts and received proceeds of $11 million, $1 million of which related to net accrued interest receivable. The fair value of cross-currency swap 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. |
Retirement Benefit Liabilities
Retirement Benefit Liabilities | 3 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Retirement Benefit Liabilities | Retirement Benefit Liabilities Retirement benefit liabilities consisted of the following (in millions): December 31, September 30, Retiree medical liability $ 52 $ 52 Pension liability 129 139 Other 18 17 Subtotal 199 208 Less: current portion (included in compensation and benefits, Note 11) (12) (12) Retirement benefits $ 187 $ 196 The components of net periodic pension and retiree medical income included in continuing operations for the three months ended December 31 are as follows (in millions): 2020 2019 Pension Retiree Medical Pension Retiree Medical Interest cost $ (9) $ — $ (11) $ — Assumed return on plan assets 24 — 24 — Amortization of prior service benefit — 9 — 9 Recognized actuarial loss (8) (3) (8) (4) Total income $ 7 $ 6 $ 5 $ 5 For the three months ended December 31, 2020 and 2019, the non-service cost components of the net periodic pension and Other Post-Employment Benefits ("OPEB") income were $13 million and $10 million, respectively, and are presented in Other income, net. |
Contingencies
Contingencies | 3 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Environmental Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties. The company has been designated as a potentially responsible party at ten 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. Superfund is a United States federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants. Management estimates the total reasonably possible costs the company could incur for the remediation of the ten Superfund sites at December 31, 2020 to be approximately $23 million, of which $11 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 December 31, 2020 to be approximately $13 million, of which $4 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 0 to 1.50 percent and is approximately $13 million at December 31, 2020. 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, 2020 $ 11 $ 5 $ 16 Payments and other (1) (1) (2) Accruals 1 — 1 Ending Balance at December 31, 2020 $ 11 $ 4 $ 15 Environmental reserves are included in Other Current Liabilities (see Note 11) and Other Liabilities (see Note 12) 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 alleged 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 April, May and July 2018, the company was served with additional property damage, personal injury and wrongful death lawsuits naming the company and others as defendants, which were brought by current and former residents of the same neighborhood. 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 alleged 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, where the proceeding is still pending. The company entered into settlement negotiations with the plaintiffs in the property damage, personal injury and wrongful death lawsuits and recorded an accrual in the second quarter of fiscal year 2019. The company resolved all of property damage, personal injury and wrongful death lawsuits in the first quarter of fiscal year 2021. Asbestos Rockwell International Corporation ("Rockwell") — ArvinMeritor, Inc. ("AM"), a predecessor of Meritor, along with many other companies, has 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. There were approximately 1,200 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at December 31, 2020 and September 30, 2020. A significant portion of the claims do not identify any Rockwell products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell products, and past experience has shown that the vast majority of the claimants will likely never identify any of Rockwell 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 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. Pending and Future Claims : The company engaged a third-party advisor with extensive experience in assessing asbestos-related liabilities to conduct a study to estimate its potential undiscounted liability for pending and future asbestos-related claims as of September 30, 2020. Management continuously monitors the underlying claims data and experience for the purpose of assessing the appropriateness of the assumptions used to estimate the liability. As of September 30, 2020, the best estimate of the company's obligation for asbestos-related claims over the next 38 years was $78 million. The company recognized a liability for pending and future claims over the next 38 years of $76 million as of December 31, 2020 and $78 million as of September 30, 2020. 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. Recoveries : AM has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for a significant portion of these claims. The insurance receivables for Rockwell asbestos-related liabilities totaled $60 million and $62 million as of December 31, 2020 and September 30, 2020, respectively. The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Rockwell could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Rockwell in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; the company’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. Indemnification The company has provided indemnities in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos, labor and employment-related matters, and the periods of indemnification vary in duration. The company is not aware of any claims or other information that would give rise to material payments under such indemnification obligations. Other |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity There were no dividends declared or paid in the first quarter of fiscal years 2021 and 2020. The payment of cash dividends and the amount of any dividend are subject to review and change at the discretion of the company's Board of Directors. Common Stock and Debt Repurchase Authorizations On November 7, 2019, the Board of Directors authorized the repurchase of up to $325 million of the company's common stock, which was an increase from the prior $250 million authorization approved on July 26, 2019. Repurchases can be made from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. As of the end of fiscal year 2020, the company had repurchased 11.8 million shares of common stock for $266 million (including commission costs) pursuant to this authorization. There were no repurchases in the first quarter of fiscal year 2021. As of December 31, 2020, the amount remaining available for repurchases under this common stock repurchase authorization was $59 million. On March 25, 2020, the company suspended activity under its share repurchase program as a result of uncertainties in the global economy due to the COVID-19 pandemic. On November 2, 2018, the Board of Directors authorized the repurchase of up to $200 million of the company's common stock and up to $100 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, subject to compliance with legal and regulatory requirements and the company's debt covenants. The remaining authority under the common stock repurchase authorization was superseded by the July 2019 authorization described above. As of December 31, 2020 and September 30, 2020, the amount remaining available for repurchase under this debt repurchase authorization was $76 million. In November 2020, we filed a shelf registration statement with the Securities and Exchange Commission ("SEC"), registering an indeterminate amount of debt and/or equity securities that we may offer in one or more offerings on terms to be determined at the time of sale. Accumulated Other Comprehensive Loss ("AOCL") The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended December 31, 2020 and December 31, 2019 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2020 $ (129) $ (483) $ (2) $ (614) Other comprehensive income before reclassification 55 1 1 57 Amounts reclassified from accumulated other comprehensive loss — 2 — 2 Net current-period other comprehensive income 55 3 1 59 Balance at December 31, 2020 $ (74) $ (480) $ (1) $ (555) 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 benefit $ (9) (a) Actuarial losses 11 (a) 2 Total before tax — 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 15 for additional details), which is recorded in other income (expense), net. Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2019 $ (107) $ (572) $ (2) $ (681) Other comprehensive income before reclassification 21 — — 21 Amounts reclassified from accumulated other comprehensive loss — 3 2 5 Net current-period other comprehensive income $ 21 $ 3 $ 2 $ 26 Balance at December 31, 2019 $ (86) $ (569) $ — $ (655) 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 benefit $ (9) (b) Actuarial losses 12 (b) 3 Total before tax — Tax benefit Total reclassifications for the period $ 3 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 15 for additional details), which is recorded in other income (expense), net. |
Business Segment Information
Business Segment Information | 3 Months Ended |
Dec. 31, 2020 | |
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. In the third quarter of fiscal year 2020, the company realigned its operations resulting in a change to its operating and reportable segments. As of the third quarter of fiscal year 2020, the reportable segments are (1) Commercial Truck and (2) Aftermarket and Industrial. Prior year reportable segment financial results have been recast for these changes. The company has two reportable segments at December 31, 2020, as follows: • The Commercial Truck segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks and other applications in North America, South America, Europe and Asia Pacific. It also supplies a variety of undercarriage products and systems for trailer applications in North America. This segment includes our aftermarket businesses in Asia Pacific and South America. • The Aftermarket and Industrial segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers, primarily in North America and Europe. In addition, this segment supplies drivetrain systems and certain components, including axles, drivelines, brakes and suspension systems for military, construction, bus and coach, fire and emergency and other applications in North America and Europe. Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring expense, asset impairment charges and other special items as determined by management. Segment adjusted EBITDA excludes unallocated legacy and corporate income (expense), net. The company uses segment adjusted EBITDA as the primary basis for the CODM to evaluate the performance of each of its reportable segments. The accounting policies of the segments are the same as those applied in the Condensed Consolidated Financial Statements, except for the use of segment adjusted EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the segment. Segment information is summarized as follows (in millions): Commercial Truck Aftermarket and Industrial Eliminations Total Three Months Ended December 31, 2020 External Sales $ 660 $ 229 $ — $ 889 Intersegment Sales 31 5 (36) — Total Sales $ 691 $ 234 $ (36) $ 889 Three Months Ended December 31, 2019 (1) External Sales $ 631 $ 270 $ — $ 901 Intersegment Sales 32 5 (37) — Total Sales $ 663 $ 275 $ (37) $ 901 (1) Amounts for the three months ended December 31, 2019 have been recast to reflect reportable segment changes. Three Months Ended December 31, 2020 2019 (2) Segment adjusted EBITDA: Commercial Truck $ 63 $ 57 Aftermarket and Industrial 35 39 Segment adjusted EBITDA 98 96 Unallocated legacy and corporate expense, net (1) 4 2 Interest expense, net (28) (14) Provision for income taxes (7) (13) Depreciation and amortization (27) (24) Noncontrolling interests (1) (2) Loss on sale of receivables (1) (1) Restructuring (6) (5) Income from continuing operations attributable to Meritor, Inc. $ 32 $ 39 (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 months ended December 31, 2019 have been recast to reflect reportable segment changes. December 31, September 30, Segment Assets: Commercial Truck $ 1,836 $ 1,666 Aftermarket and Industrial 652 658 Total segment assets 2,488 2,324 Corporate (1) 697 714 Less: Accounts receivable sold under off-balance sheet factoring programs (2) (255) (154) Total assets $ 2,930 $ 2,884 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. |
New Accounting Standards (Polic
New Accounting Standards (Policies) | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
New Accounting Standards | New Accounting Standards Accounting standards implemented during fiscal year 2021 On October 1, 2020, the company implemented Accounting Standards Update ("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 debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The guidance had an impact on the company's accounting policies and procedures related to calculation of allowance for doubtful accounts receivable but did not have a material impact on its Condensed Consolidated Financial Statements. On October 1, 2020, the company implemented ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU add, modify, and eliminate certain disclosure requirements on fair value measurements in Topic 820. The guidance did not have a material impact on the company's Condensed Consolidated Financial Statements Accounting standards to be implemented The following represent the standards that may result in a significant change in practice and/or have a significant financial impact on the company. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). The ASU simplifies the accounting for certain financial instruments with characteristics of debt and equity, including convertible instruments and contracts on an entity’s own equity. ASC 470-20 outlines five models to allocate the proceeds attributable to the issuance of a convertible debt instrument. This ASU removes from U.S. GAAP the separation models for convertible debt with a cash conversion feature (CCF) and convertible debt with a beneficial conversion feature (BCF). As a result of adopting this ASU, entities are not required to separately present in equity an embedded conversion feature in such debt. Instead, they should account for a convertible debt instrument wholly as debt. Applying the separation models in ASC 470-20 to convertible instruments with a CCF or BCF involves the recognition of a debt discount, which is amortized to interest expense. The elimination of CCF and BCF models will reduce reported interest expense and increase reported net income for convertible instruments issued within the scope of those models before the adoption of ASU 2020-06. The amendments in this ASU are required to be adopted by public business entities in fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but not |
Inventories | Inventories Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) |
Fair Value | Fair Value 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. |
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 party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of 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 December 31, 2020 2019 Basic average common shares outstanding 72.2 78.2 Impact of restricted shares, restricted share units and performance share units 1.0 1.6 Impact of convertible notes — 0.9 Diluted average common shares outstanding 73.2 80.7 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Operating Segment | In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three months ended December 31, 2020 and 2019 (in millions). Three Months Ended December 31, 2020 Primary Geographical Market Commercial Truck Aftermarket and Industrial Total U.S. $ 310 $ 170 $ 480 Canada — 12 12 Mexico 36 5 41 Total North America 346 187 533 Sweden 77 — 77 Italy 53 5 58 United Kingdom 41 2 43 Other Europe 2 35 37 Total Europe 173 42 215 Brazil 56 — 56 China 30 — 30 India 33 — 33 Other Asia-Pacific 22 — 22 Total sales $ 660 $ 229 $ 889 Three Months Ended December 31, 2019 (1) Primary Geographical Market Commercial Truck Aftermarket and Industrial Total U.S. $ 328 $ 206 $ 534 Canada — 14 14 Mexico 39 5 44 Total North America 367 225 592 Sweden 62 — 62 Italy 45 4 49 United Kingdom 33 2 35 Other Europe 1 37 38 Total Europe 141 43 184 Brazil 53 1 54 China 34 — 34 India 22 1 23 Other Asia-Pacific 14 — 14 Total sales $ 631 $ 270 $ 901 (1) Amounts for the three months ended December 31, 2019 have been recast to reflect reportable segment changes. |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Changes in Restructuring Reserves | The changes in restructuring reserves for the three months ended December 31, 2020 and 2019 are as follows (in millions): Total Balance at September 30, 2020 $ 10 Activity during the period: Charges 6 Cash payments (4) Other (2) Total restructuring reserves at December 31, 2020 10 Less: non-current restructuring reserves — Restructuring reserves – current, at December 31, 2020 $ 10 Balance at September 30, 2019 $ 8 Activity during the period: Charges 5 Cash payments (7) Other (1) Total restructuring reserves at December 31, 2019 5 Less: non-current restructuring reserves — Restructuring reserves – current, at December 31, 2019 $ 5 |
Accounts Receivable Factoring_2
Accounts Receivable Factoring and Securitization (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Accounts Receivable Factoring And Securitization [Abstract] | |
Schedule of Accounts Receivable Factoring and Securitization | The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows: Current Expiration Total Facility Size as of 12/31/20 Utilized as of 12/31/20 Utilized as of 9/30/20 EUR USD EUR USD EUR USD On-balance sheet arrangement Committed U.S. accounts receivable securitization (1) December 2022 N/A $ 95 N/A $ 4 N/A $ 3 Total on-balance sheet arrangement: (1) N/A $ 95 N/A $ 4 N/A $ 3 Off-balance sheet arrangements Committed Swedish factoring facility (2)(3) March 2024 € 155 $ 189 € 130 $ 158 € 86 $ 100 Committed U.S. factoring facility (2) February 2023 N/A 75 N/A 47 N/A 30 Uncommitted U.K. factoring facility February 2022 25 31 2 2 1 1 Uncommitted Italy factoring facility June 2022 30 37 23 28 8 9 Other uncommitted factoring facilities (4) None N/A N/A 16 20 12 14 Total off-balance sheet arrangements € 210 $ 332 € 171 $ 255 € 107 $ 154 (1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $4 million of letters of credit as of December 31, 2020 and $3 million as of September 30, 2020. (2) Actual amounts may exceed the bank's commitment at the bank's discretion. (3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2021. (4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions): December 31, September 30, Finished goods $ 126 $ 119 Work in process 45 38 Raw materials, parts and supplies 302 278 Total $ 473 $ 435 |
Net Property (Tables)
Net Property (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Net Property | Net property is summarized as follows (in millions): December 31, September 30, Property at cost: Land and land improvements $ 33 $ 32 Buildings 240 228 Machinery and equipment 1,053 1,002 Company-owned tooling 158 151 Construction in progress 44 63 Total 1,528 1,476 Less: accumulated depreciation (1,008) (961) Net property $ 520 $ 515 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Other Assets, Noncurrent [Abstract] | |
Schedule of Other Assets | Other assets are summarized as follows (in millions): December 31, September 30, Prepaid pension costs $ 196 $ 179 Deferred income tax assets 30 30 Investments in non-consolidated joint ventures 119 107 Other 266 269 Other assets $ 611 $ 585 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Other Liabilities, Current [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities are summarized as follows (in millions): December 31, September 30, Compensation and benefits $ 85 $ 91 Product warranties 20 19 Other 146 154 Other current liabilities $ 251 $ 264 |
Schedule of Changes in Product Warranties | A summary of the changes in product warranties is as follows (in millions): Three Months Ended December 31, 2020 2019 Total product warranties – beginning of period $ 54 $ 50 Accruals for product warranties 6 3 Payments (4) (7) Change in estimates and other 1 — Total product warranties – end of period 57 46 Less: non-current product warranties (37) (29) Product warranties – current $ 20 $ 17 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | Other liabilities are summarized as follows (in millions): December 31, September 30, Asbestos-related liabilities (see Note 16) $ 65 $ 67 Liabilities for uncertain tax positions 75 73 Product warranties (see Note 11) 37 35 Other 101 104 Other liabilities $ 278 $ 279 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-Term debt, net of discounts where applicable, is summarized as follows (in millions): December 31, September 30, 3.25 percent convertible notes due 2037 $ 320 $ 320 7.875 percent convertible notes due 2026 — 23 4.50 percent notes due 2028 270 — 6.25 percent notes due 2025 295 295 6.25 percent notes due 2024 174 446 Term loan due 2024 161 166 Finance lease obligation 11 6 Unamortized discount on convertible notes (27) (29) Subtotal 1,204 1,227 Less: current maturities (15) (39) Long-term debt $ 1,189 $ 1,188 |
Schedule of Debt Instrument Redemption | Year Redemption Price 2023 102.250 % 2024 101.125 % 2025 and thereafter 100.000 % |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Financial Instruments | Fair values of financial instruments are summarized as follows (in millions): December 31, 2020 September 30, 2020 Carrying Fair Carrying Fair Cash and cash equivalents $ 283 $ 283 $ 315 $ 315 Short-term debt 15 15 39 58 Long-term debt 1,189 1,311 1,188 1,259 Foreign currency option contracts (other assets) — — 1 1 Foreign exchange forward contracts (other assets) 2 2 — — Foreign exchange forward contracts (other liabilities) 1 1 1 1 |
Schedule of Offsetting of Derivative Assets and Liabilities | The following table reflects the offsetting of derivative assets and liabilities (in millions): December 31, 2020 September 30, 2020 Gross Gross Amounts Net Amounts Gross Gross Amounts Net Amounts Derivative Assets Foreign currency option contracts — — — 1 — 1 Foreign exchange forward contracts 2 — 2 — — — Derivative Liabilities Foreign exchange forward contracts 1 — 1 1 — 1 |
Schedule of Fair Value of Financial Instruments by Valuation Hierarchy | Fair value of financial instruments by the valuation hierarchy at December 31, 2020 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 283 $ — $ — Short-term debt — — 15 Long-term debt — 1,159 152 Foreign exchange forward contracts (other assets) — 2 — Foreign exchange forward contracts (other liabilities) — 1 — Fair value of financial instruments by the valuation hierarchy at September 30, 2020 is as follows (in millions): Level 1 Level 2 Level 3 Cash and cash equivalents $ 315 $ — $ — Short-term debt — 43 15 Long-term debt — 1,103 156 Foreign exchange forward contracts (other liabilities) — 1 — Foreign currency option contracts (other assets) — 1 — |
Retirement Benefit Liabilities
Retirement Benefit Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of Retirement Benefit Liabilities | Retirement benefit liabilities consisted of the following (in millions): December 31, September 30, Retiree medical liability $ 52 $ 52 Pension liability 129 139 Other 18 17 Subtotal 199 208 Less: current portion (included in compensation and benefits, Note 11) (12) (12) Retirement benefits $ 187 $ 196 |
Schedule of Components of Net Periodic Pension and Retiree Medical Income | The components of net periodic pension and retiree medical income included in continuing operations for the three months ended December 31 are as follows (in millions): 2020 2019 Pension Retiree Medical Pension Retiree Medical Interest cost $ (9) $ — $ (11) $ — Assumed return on plan assets 24 — 24 — Amortization of prior service benefit — 9 — 9 Recognized actuarial loss (8) (3) (8) (4) Total income $ 7 $ 6 $ 5 $ 5 |
Contingencies (Tables)
Contingencies (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule 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, 2020 $ 11 $ 5 $ 16 Payments and other (1) (1) (2) Accruals 1 — 1 Ending Balance at December 31, 2020 $ 11 $ 4 $ 15 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended December 31, 2020 and December 31, 2019 are as follows (in millions): Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2020 $ (129) $ (483) $ (2) $ (614) Other comprehensive income before reclassification 55 1 1 57 Amounts reclassified from accumulated other comprehensive loss — 2 — 2 Net current-period other comprehensive income 55 3 1 59 Balance at December 31, 2020 $ (74) $ (480) $ (1) $ (555) Foreign Currency Translation Employee Benefit Related Adjustments Unrealized Income (Loss) on cash flow hedges Total Balance at September 30, 2019 $ (107) $ (572) $ (2) $ (681) Other comprehensive income before reclassification 21 — — 21 Amounts reclassified from accumulated other comprehensive loss — 3 2 5 Net current-period other comprehensive income $ 21 $ 3 $ 2 $ 26 Balance at December 31, 2019 $ (86) $ (569) $ — $ (655) |
Schedule of 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 benefit $ (9) (a) Actuarial losses 11 (a) 2 Total before tax — 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 15 for additional details), which is recorded in other income (expense), net. 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 benefit $ (9) (b) Actuarial losses 12 (b) 3 Total before tax — Tax benefit Total reclassifications for the period $ 3 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 15 for additional details), which is recorded in other income (expense), net. |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Segment information is summarized as follows (in millions): Commercial Truck Aftermarket and Industrial Eliminations Total Three Months Ended December 31, 2020 External Sales $ 660 $ 229 $ — $ 889 Intersegment Sales 31 5 (36) — Total Sales $ 691 $ 234 $ (36) $ 889 Three Months Ended December 31, 2019 (1) External Sales $ 631 $ 270 $ — $ 901 Intersegment Sales 32 5 (37) — Total Sales $ 663 $ 275 $ (37) $ 901 (1) Amounts for the three months ended December 31, 2019 have been recast to reflect reportable segment changes. |
Schedule of Segment Income Attributable to Parent | Three Months Ended December 31, 2020 2019 (2) Segment adjusted EBITDA: Commercial Truck $ 63 $ 57 Aftermarket and Industrial 35 39 Segment adjusted EBITDA 98 96 Unallocated legacy and corporate expense, net (1) 4 2 Interest expense, net (28) (14) Provision for income taxes (7) (13) Depreciation and amortization (27) (24) Noncontrolling interests (1) (2) Loss on sale of receivables (1) (1) Restructuring (6) (5) Income from continuing operations attributable to Meritor, Inc. $ 32 $ 39 (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 months ended December 31, 2019 have been recast to reflect reportable segment changes. |
Schedule of Segment Assets | December 31, September 30, Segment Assets: Commercial Truck $ 1,836 $ 1,666 Aftermarket and Industrial 652 658 Total segment assets 2,488 2,324 Corporate (1) 697 714 Less: Accounts receivable sold under off-balance sheet factoring programs (2) (255) (154) Total assets $ 2,930 $ 2,884 (1) Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation of Average Common Shares Outstanding (Details) - shares shares in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Basic average common shares outstanding (in shares) | 72.2 | 78.2 |
Impact of restricted shares, restricted share units and performance share units (in shares) | 1 | 1.6 |
Impact of convertible notes (in shares) | 0 | 0.9 |
Diluted average common shares outstanding (in shares) | 73.2 | 80.7 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Details) - Executives - $ / shares | Dec. 01, 2020 | Nov. 30, 2020 |
Performance shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for grant (in shares) | 300,000 | |
Number or shares issuable per performance share unit (in shares) | 1 | |
Fair value on grant date (in usd per share) | $ 26.98 | |
Performance period | 3 years | |
Shares granted (in shares) | 300,000 | |
Performance shares | Vesting after three-year performance period | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighting for each of four performance metrics (percent) | 50.00% | |
Performance shares | Vesting after three-year performance period | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 0.00% | |
Performance shares | Vesting after three-year performance period | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 200.00% | |
Restricted share units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for grant (in shares) | 300,000 | |
Fair value on grant date (in usd per share) | $ 26.98 | |
Vesting period | 3 years |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Sales | $ 889 | $ 901 | |
Trade receivables, net | 439 | $ 421 | |
U.S. | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 480 | 534 | |
Canada | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 12 | 14 | |
Mexico | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 41 | 44 | |
Total North America | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 533 | 592 | |
Sweden | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 77 | 62 | |
Italy | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 58 | 49 | |
United Kingdom | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 43 | 35 | |
Other Europe | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 37 | 38 | |
Total Europe | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 215 | 184 | |
Brazil | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 56 | 54 | |
China | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 30 | 34 | |
India | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 33 | 23 | |
Other Asia-Pacific | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 22 | 14 | |
Commercial Truck | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 660 | 631 | |
Commercial Truck | U.S. | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 310 | 328 | |
Commercial Truck | Canada | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 0 | 0 | |
Commercial Truck | Mexico | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 36 | 39 | |
Commercial Truck | Total North America | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 346 | 367 | |
Commercial Truck | Sweden | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 77 | 62 | |
Commercial Truck | Italy | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 53 | 45 | |
Commercial Truck | United Kingdom | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 41 | 33 | |
Commercial Truck | Other Europe | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 2 | 1 | |
Commercial Truck | Total Europe | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 173 | 141 | |
Commercial Truck | Brazil | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 56 | 53 | |
Commercial Truck | China | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 30 | 34 | |
Commercial Truck | India | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 33 | 22 | |
Commercial Truck | Other Asia-Pacific | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 22 | 14 | |
Aftermarket and Industrial | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 229 | 270 | |
Aftermarket and Industrial | U.S. | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 170 | 206 | |
Aftermarket and Industrial | Canada | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 12 | 14 | |
Aftermarket and Industrial | Mexico | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 5 | 5 | |
Aftermarket and Industrial | Total North America | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 187 | 225 | |
Aftermarket and Industrial | Sweden | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 0 | 0 | |
Aftermarket and Industrial | Italy | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 5 | 4 | |
Aftermarket and Industrial | United Kingdom | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 2 | 2 | |
Aftermarket and Industrial | Other Europe | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 35 | 37 | |
Aftermarket and Industrial | Total Europe | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 42 | 43 | |
Aftermarket and Industrial | Brazil | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 0 | 1 | |
Aftermarket and Industrial | China | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 0 | 0 | |
Aftermarket and Industrial | India | |||
Disaggregation of Revenue [Line Items] | |||
Sales | 0 | 1 | |
Aftermarket and Industrial | Other Asia-Pacific | |||
Disaggregation of Revenue [Line Items] | |||
Sales | $ 0 | $ 0 |
Restructuring Costs - Changes i
Restructuring Costs - Changes in Restructuring Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Restructuring Reserve [Roll Forward] | |||
Beginning balance | $ 10 | $ 8 | $ 8 |
Activity during the period: | |||
Charges | 6 | 5 | |
Cash payments | (4) | (7) | |
Other | (2) | (1) | |
Ending balance | 10 | 5 | $ 10 |
Less: non-current restructuring reserves | 0 | 0 | |
Restructuring reserves – current | $ 10 | $ 5 |
Restructuring Costs - Additiona
Restructuring Costs - Additional Information (Details) $ in Millions | Nov. 11, 2020USD ($)positionplantoffice | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2020USD ($) | Jun. 02, 2020USD ($) | Sep. 30, 2019USD ($) |
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring reserves | $ 10 | $ 5 | $ 10 | $ 8 | ||
Restructuring costs | 6 | $ 5 | ||||
Global Restructuring Programs 2021 | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of positions expected to be eliminated | position | 150 | |||||
Global Restructuring Programs 2021 | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs expected to be incurred | $ 19 | |||||
Restructuring costs | 5 | |||||
Global Restructuring Programs 2021 | Employee severance | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs expected to be incurred | 5 | |||||
Global Restructuring Programs 2021 | Asset Impairment | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs expected to be incurred | 9 | |||||
Global Restructuring Programs 2021 | Other Restructuring | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs expected to be incurred | $ 5 | |||||
Global Restructuring Programs 2021 | Total Europe | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Expected number of facilities to close | office | 1 | |||||
Global Restructuring Programs 2021 | U.S. | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Expected number of facilities to close | plant | 3 | |||||
Global Restructuring Programs 2020 | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs | 10 | |||||
Global Restructuring Programs 2020 | Commercial Truck | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs | $ 1 | 7 | ||||
Global Restructuring Programs 2020 | Aftermarket and Industrial | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs | $ 3 | |||||
Global Restructuring Programs 2020 | Employee severance | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring costs expected to be incurred | $ 15 | |||||
Percentage of global salaried positions affected | 8.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Net pre-tax income (loss) tax benefit not recorded | $ 13 | $ 3 |
Accounts Receivable Factoring_3
Accounts Receivable Factoring and Securitization (Details) € in Millions, $ in Millions | 3 Months Ended | ||||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020EUR (€) | Sep. 30, 2020USD ($) | Sep. 30, 2020EUR (€) | |
Accounts Receivable Factoring And Securitization [Line Items] | |||||
On-balance sheet arrangement, Total Facility Size | $ 95 | ||||
On-balance sheet arrangement, Utilized | 4 | $ 3 | |||
Off-balance sheet arrangement, Total Facility Size | 332 | € 210 | |||
Off-balance sheet arrangement, Utilized | 255 | 171 | 154 | € 107 | |
Costs associated with off balance sheet factoring arrangements | 1 | $ 1 | |||
Committed U.S. accounts receivable securitization | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
On-balance sheet arrangement, Total Facility Size | 95 | ||||
On-balance sheet arrangement, Utilized | 4 | 3 | |||
Committed U.S. accounts receivable securitization | Letter of Credit | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
Letters of credit outstanding | 4 | 3 | |||
Committed Swedish factoring facility | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
Off-balance sheet arrangement, Total Facility Size | 189 | 155 | |||
Off-balance sheet arrangement, Utilized | $ 158 | 130 | 100 | 86 | |
Liquidity commitment | 364 days | ||||
Committed U.S. factoring facility | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
Off-balance sheet arrangement, Total Facility Size | $ 75 | ||||
Off-balance sheet arrangement, Utilized | 47 | 30 | |||
Uncommitted U.K. factoring facility | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
Off-balance sheet arrangement, Total Facility Size | 31 | 25 | |||
Off-balance sheet arrangement, Utilized | 2 | 2 | 1 | 1 | |
Uncommitted Italy factoring facility | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
Off-balance sheet arrangement, Total Facility Size | 37 | 30 | |||
Off-balance sheet arrangement, Utilized | 28 | 23 | 9 | 8 | |
Other uncommitted factoring facilities | |||||
Accounts Receivable Factoring And Securitization [Line Items] | |||||
Off-balance sheet arrangement, Utilized | $ 20 | € 16 | $ 14 | € 12 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 126 | $ 119 |
Work in process | 45 | 38 |
Raw materials, parts and supplies | 302 | 278 |
Total inventories | $ 473 | $ 435 |
Net Property (Details)
Net Property (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property at cost | $ 1,528 | $ 1,476 |
Less: accumulated depreciation | (1,008) | (961) |
Net property | 520 | 515 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 33 | 32 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 240 | 228 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 1,053 | 1,002 |
Company-owned tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | 158 | 151 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property at cost | $ 44 | $ 63 |
Other Assets - Summary of Other
Other Assets - Summary of Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Other Assets, Noncurrent [Abstract] | ||
Prepaid pension costs | $ 196 | $ 179 |
Deferred income tax assets | 30 | 30 |
Investments in non-consolidated joint ventures | 119 | 107 |
Other | 266 | 269 |
Other assets | $ 611 | $ 585 |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Other Liabilities, Current [Abstract] | |||
Compensation and benefits | $ 85 | $ 91 | |
Product warranties | 20 | 19 | $ 17 |
Other | 146 | 154 | |
Other current liabilities | $ 251 | $ 264 |
Other Current Liabilities - S_2
Other Current Liabilities - Summary of Changes in Product Warranties (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Total product warranties – beginning of period | $ 54 | $ 50 | |
Accruals for product warranties | 6 | 3 | |
Payments | (4) | (7) | |
Change in estimates and other | 1 | 0 | |
Total product warranties – end of period | 57 | 46 | |
Less: non-current product warranties | (37) | (29) | $ (35) |
Product warranties – current | $ 20 | $ 17 | $ 19 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | |||
Asbestos-related liabilities (see Note 16) | $ 65 | $ 67 | |
Liabilities for uncertain tax positions | 75 | 73 | |
Product warranties (see Note 11) | 37 | 35 | $ 29 |
Other | 101 | 104 | |
Other liabilities | $ 278 | $ 279 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 16, 2020 | Dec. 01, 2020 | Oct. 16, 2020 | Sep. 30, 2020 |
Debt Instrument [Line Items] | |||||
Finance lease obligation | $ 11 | $ 6 | |||
Subtotal | 1,204 | 1,227 | |||
Less: current maturities | (15) | (39) | |||
Long-term debt | 1,189 | 1,188 | |||
Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Unamortized discount on convertible notes | $ (27) | (29) | |||
3.25 percent convertible notes due 2037 | Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 3.25% | ||||
Debt | $ 320 | 320 | |||
7.875 percent convertible notes due 2026 | Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 7.875% | 7.875% | |||
Debt | $ 0 | $ 23 | 23 | ||
4.50 percent notes due 2028 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 4.50% | 4.50% | |||
Long-term debt outstanding | $ 270 | 0 | |||
6.25 percent notes due 2025 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 6.25% | ||||
Long-term debt outstanding | $ 295 | 295 | |||
6.25 percent notes due 2024 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 6.25% | 6.25% | |||
Debt | $ 175 | $ 450 | $ 450 | ||
Long-term debt outstanding | 174 | 446 | |||
Term loan due 2024 | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Long-term debt outstanding | $ 161 | $ 166 |
Long-Term Debt - 7.875 Percent
Long-Term Debt - 7.875 Percent Convertible Notes (Details) | Oct. 16, 2020USD ($) | Nov. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2020USD ($) |
Debt Instrument [Line Items] | |||||
Redemption of convertible notes | $ 53,000,000 | $ 0 | |||
Loss on debt extinguishment | $ (8,000,000) | $ 0 | |||
7.875 percent convertible notes due 2026 | |||||
Debt Instrument [Line Items] | |||||
Redemption of convertible notes | $ 53,000,000 | ||||
Convertible Notes | 7.875 percent convertible notes due 2026 | |||||
Debt Instrument [Line Items] | |||||
Interest rate (percent) | 7.875% | 7.875% | |||
Debt | $ 23,000,000 | $ 0 | $ 23,000,000 | ||
Principal amount of convertible notes repurchased | 23,000,000 | ||||
Debt instrument, repurchase amount in excess of accreted principal | 30,000,000 | ||||
Loss on debt extinguishment | $ 0 | ||||
Convertible Notes | 7.875 percent convertible notes due 2026 | Redemption Period One | |||||
Debt Instrument [Line Items] | |||||
Conversion ratio of common stock per principal | 83.3333 | ||||
Principal amount per note for conversion | $ 1,000 |
Long-Term Debt - 6.25 Percent N
Long-Term Debt - 6.25 Percent Notes (Details) - USD ($) | Dec. 16, 2020 | Dec. 01, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Early repayment of senior debt | $ 281,000,000 | $ 0 | ||
Loss on debt extinguishment | $ 8,000,000 | $ 0 | ||
Senior Notes | 6.25 percent notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Interest rate (percent) | 6.25% | 6.25% | ||
Early repayment of senior debt | $ 275,000,000 | $ 275,000,000 | ||
Debt | $ 450,000,000 | $ 450,000,000 | $ 175,000,000 | |
Redemption Price | 102.083% | |||
Loss on debt extinguishment | $ 8,000,000 | |||
Debt instrument aggregate purchase price | 287,000,000 | |||
Debt instrument, accrued interest repurchase amount | $ 6,000,000 |
Long-Term Debt - 4.50 Percent N
Long-Term Debt - 4.50 Percent Notes (Details) - USD ($) | Dec. 16, 2020 | Dec. 01, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Early repayment of senior debt | $ 281,000,000 | $ 0 | ||
4.50 percent notes due 2028 | Prior to December 15, 2023 | ||||
Debt Instrument [Line Items] | ||||
Redemption Price | 104.50% | |||
4.50 percent notes due 2028 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Interest rate (percent) | 4.50% | 4.50% | ||
Principle amount of debt | $ 275,000,000 | |||
Proceeds from debt issuances | $ 270,000,000 | |||
Percentage of principal that may be redeemed | 35.00% | |||
Percentage of principal outstanding | 65.00% | |||
4.50 percent notes due 2028 | Senior Notes | Prior to December 15, 2023 | ||||
Debt Instrument [Line Items] | ||||
Redemption Price | 100.00% | |||
4.50 percent notes due 2028 | Senior Notes | 2023 | ||||
Debt Instrument [Line Items] | ||||
Redemption Price | 102.25% | |||
4.50 percent notes due 2028 | Senior Notes | 2024 | ||||
Debt Instrument [Line Items] | ||||
Redemption Price | 101.125% | |||
4.50 percent notes due 2028 | Senior Notes | 2025 and thereafter | ||||
Debt Instrument [Line Items] | ||||
Redemption Price | 100.00% | |||
4.50 percent notes due 2028 | Senior Notes | Change In Control Redemption | ||||
Debt Instrument [Line Items] | ||||
Redemption Price | 101.00% | |||
6.25 percent notes due 2024 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Interest rate (percent) | 6.25% | 6.25% | ||
Early repayment of senior debt | $ 275,000,000 | $ 275,000,000 | ||
Debt | $ 450,000,000 | $ 450,000,000 | $ 175,000,000 | |
Redemption Price | 102.083% |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility (Details) - Revolving Credit Facility - USD ($) | Nov. 09, 2020 | Dec. 31, 2020 | Sep. 30, 2020 |
Line of Credit Facility [Line Items] | |||
Borrowings outstanding | $ 0 | $ 0 | |
Letters of credit outstanding | 0 | $ 0 | |
Amended Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility increased | $ 60,000,000 | ||
Maximum borrowing capacity | $ 685,000,000 | ||
Maximum limit on issuance, letters of credit | $ 100,000,000 |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) - China - Notes Payable to Banks - Other Export Financing Arrangements - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Debt Instrument [Line Items] | ||
Debt default, amount | $ 35 | |
Long-term debt outstanding | $ 21 | $ 16 |
Financial Instruments - Fair Va
Financial Instruments - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 283 | $ 315 |
Short-term debt | 15 | 39 |
Long-term debt | 1,189 | 1,188 |
Carrying Value | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | 2 | 0 |
Foreign currency contract liabilities | 1 | 1 |
Carrying Value | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | 0 | 1 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 283 | 315 |
Short-term debt | 15 | 58 |
Long-term debt | 1,311 | 1,259 |
Fair Value | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | 2 | 0 |
Foreign currency contract liabilities | 1 | 1 |
Fair Value | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | $ 0 | $ 1 |
Financial Instruments - Offsett
Financial Instruments - Offsetting of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Foreign currency option contracts | ||
Derivative Assets | ||
Gross Amounts Recognized | $ 0 | $ 1 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | 0 | 1 |
Foreign exchange forward contracts | ||
Derivative Assets | ||
Gross Amounts Recognized | 2 | 0 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | 2 | 0 |
Derivative Liabilities | ||
Gross Amounts Recognized | 1 | 1 |
Gross Amounts Offset | 0 | 0 |
Net Amounts Reported | $ 1 | $ 1 |
Financial Instruments - Fair _2
Financial Instruments - Fair Value of Financial Instruments by Valuation Hierarchy (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 283 | $ 315 |
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 currency contract liabilities | 0 | 0 |
Cross-currency swaps (other assets) | 0 | |
Level 1 | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | 0 | |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 0 | 43 |
Long-term debt | 1,159 | 1,103 |
Level 2 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract liabilities | 1 | 1 |
Cross-currency swaps (other assets) | 2 | |
Level 2 | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | 1 | |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Short-term debt | 15 | 15 |
Long-term debt | 152 | 156 |
Level 3 | Foreign exchange forward contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract liabilities | 0 | 0 |
Cross-currency swaps (other assets) | $ 0 | |
Level 3 | Foreign currency option contracts | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Foreign currency contract assets | $ 0 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Details) - USD ($) | 3 Months Ended | |||
Dec. 31, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2019 | |
Foreign exchange forward contracts | Cash flow hedge | Designated as hedging instrument | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Term of derivative contract | 18 months | |||
Aggregate notional amount | $ 48,000,000 | $ 65,000,000 | ||
Foreign currency option contracts, purchase risk | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Aggregate notional amount | 30,000,000 | 39,000,000 | ||
Foreign currency option contracts, translation risk | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Aggregate notional amount | $ 19,000,000 | $ 24,000,000 | ||
Cross-currency swaps | Net investment hedge | Designated as hedging instrument | ||||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Aggregate notional amount | $ 225,000,000 | |||
Proceeds from settlement of swap contracts | $ 11,000,000 | |||
Component of proceeds that was previously in net accrued interest receivable | $ 1,000,000 |
Retirement Benefit Liabilitie_2
Retirement Benefit Liabilities - Summary of Retirement Benefits (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Retirement Benefits [Abstract] | ||
Retiree medical liability | $ 52 | $ 52 |
Pension liability | 129 | 139 |
Other | 18 | 17 |
Subtotal | 199 | 208 |
Less: current portion (included in compensation and benefits, Note 11) | (12) | (12) |
Retirement benefits | $ 187 | $ 196 |
Retirement Benefit Liabilitie_3
Retirement Benefit Liabilities - Components of Net Periodic Pension and Retiree Medical Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Pension | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Interest cost | $ (9) | $ (11) |
Assumed return on plan assets | 24 | 24 |
Amortization of prior service benefit | 0 | 0 |
Recognized actuarial loss | (8) | (8) |
Total income | 7 | 5 |
Retiree Medical | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Interest cost | 0 | 0 |
Assumed return on plan assets | 0 | 0 |
Amortization of prior service benefit | 9 | 9 |
Recognized actuarial loss | (3) | (4) |
Total income | $ 6 | $ 5 |
Retirement Benefit Liabilitie_4
Retirement Benefit Liabilities - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Non-service cost components of the net periodic pension and OPEB income | $ 13 | $ 10 |
Contingencies - Additional Info
Contingencies - Additional Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended |
Dec. 31, 2020USD ($)siteclaim | Sep. 30, 2020USD ($)claim | |
Loss Contingencies [Line Items] | ||
Environmental accrual balance | $ 15 | $ 16 |
Discounted amount environmental accrual for on-going operations maintenance and monitoring | 13 | |
Undiscounted amount environmental accrual for on-going operations maintenance and monitoring | $ 15 | |
Rockwell Asbestos | ||
Loss Contingencies [Line Items] | ||
Number of pending claims | claim | 1,200 | 1,200 |
Obligation period for asbestos personal injury claims | 38 years | 38 years |
Pending and future claims | $ 76 | $ 78 |
Asbestos-related insurance recoveries | $ 60 | 62 |
Low Range | ||
Loss Contingencies [Line Items] | ||
Site contingency, accrual, discount rate | 0.00% | |
Low Range | Rockwell Asbestos | ||
Loss Contingencies [Line Items] | ||
Possible loss | 78 | |
High Range | ||
Loss Contingencies [Line Items] | ||
Site contingency, accrual, discount rate | 1.50% | |
Superfund Sites | ||
Loss Contingencies [Line Items] | ||
Number of Superfund environmental sites | site | 10 | |
Environmental costs reasonably possible | $ 23 | |
Environmental accrual balance | 11 | 11 |
Non-Superfund Sites | ||
Loss Contingencies [Line Items] | ||
Environmental costs reasonably possible | 13 | |
Environmental accrual balance | $ 4 | $ 5 |
Contingencies - Summary of Envi
Contingencies - Summary of Environmental Reserves (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2020USD ($) | |
Environmental Reserves | |
Beginning balance | $ 16 |
Payments and other | (2) |
Accruals | 1 |
Ending balance | 15 |
Superfund Sites | |
Environmental Reserves | |
Beginning balance | 11 |
Payments and other | (1) |
Accruals | 1 |
Ending balance | 11 |
Non-Superfund Sites | |
Environmental Reserves | |
Beginning balance | 5 |
Payments and other | (1) |
Accruals | 0 |
Ending balance | $ 4 |
Shareholders' Equity - Common S
Shareholders' Equity - Common Stock and Debt Repurchase Authorizations (Details) - USD ($) shares in Millions | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Nov. 07, 2019 | Jul. 26, 2019 | Nov. 02, 2018 | |
Class of Stock [Line Items] | ||||||
Dividends declared or paid | $ 0 | $ 0 | ||||
Repurchase Program, November 2018 | ||||||
Class of Stock [Line Items] | ||||||
Debt repurchase program, amount authorized | $ 100,000,000 | |||||
Remaining authorized repurchase amount under debt repurchase | $ 76,000,000 | |||||
Common Stock | Repurchase Progam, November 2019 | ||||||
Class of Stock [Line Items] | ||||||
Authorized repurchase of securities, with debt reduction target (up to) | $ 325,000,000 | $ 250,000,000 | ||||
Number of shares authorized to be repurchased (in shares) | 11.8 | |||||
Shares repurchased during period | $ 266,000,000 | |||||
Remaining authorized repurchase amount under the stock repurchase program | $ 59,000,000 | |||||
Common Stock | Repurchase Program, November 2018 | ||||||
Class of Stock [Line Items] | ||||||
Authorized repurchase of securities, with debt reduction target (up to) | $ 200,000,000 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||
Beginning balance | $ 495 | $ 415 |
Other comprehensive income before reclassification | 57 | 21 |
Amounts reclassified from accumulated other comprehensive loss | 2 | 5 |
Net current-period other comprehensive income | 59 | 26 |
Ending Balance | 565 | 384 |
Foreign Currency Translation | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||
Beginning balance | (129) | (107) |
Other comprehensive income before reclassification | 55 | 21 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 |
Net current-period other comprehensive income | 55 | 21 |
Ending Balance | (74) | (86) |
Employee Benefit Related Adjustments | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||
Beginning balance | (483) | (572) |
Other comprehensive income before reclassification | 1 | 0 |
Amounts reclassified from accumulated other comprehensive loss | 2 | 3 |
Net current-period other comprehensive income | 3 | 3 |
Ending Balance | (480) | (569) |
Unrealized Income (Loss) on cash flow hedges | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||
Beginning balance | (2) | (2) |
Other comprehensive income before reclassification | 1 | 0 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 2 |
Net current-period other comprehensive income | 1 | 2 |
Ending Balance | (1) | 0 |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Roll Forward] | ||
Beginning balance | (614) | (681) |
Ending Balance | $ (555) | $ (655) |
Shareholders' Equity - Changes
Shareholders' Equity - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Employee Benefit Related Adjustment | $ 14 | $ 10 |
Tax benefit | (7) | (13) |
NET INCOME | 33 | 41 |
Amount Reclassified from Accumulated Other Comprehensive Income | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
NET INCOME | 2 | 3 |
Amount Reclassified from Accumulated Other Comprehensive Income | Prior service benefit | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Employee Benefit Related Adjustment | (9) | (9) |
Amount Reclassified from Accumulated Other Comprehensive Income | Actuarial losses | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Employee Benefit Related Adjustment | 11 | 12 |
Amount Reclassified from Accumulated Other Comprehensive Income | Employee Benefit Related Adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Total before tax | 2 | 3 |
Tax benefit | $ 0 | $ 0 |
Business Segment Information -
Business Segment Information - Summary of Segment Information (Details) $ in Millions | 3 Months Ended | |
Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Sales | $ 889 | $ 901 |
External Sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 889 | 901 |
Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Sales | 660 | 631 |
Aftermarket and Industrial | ||
Segment Reporting Information [Line Items] | ||
Sales | 229 | 270 |
Reportable Segments | Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Sales | 691 | 663 |
Reportable Segments | Commercial Truck | External Sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 660 | 631 |
Reportable Segments | Aftermarket and Industrial | ||
Segment Reporting Information [Line Items] | ||
Sales | 234 | 275 |
Reportable Segments | Aftermarket and Industrial | External Sales | ||
Segment Reporting Information [Line Items] | ||
Sales | 229 | 270 |
Eliminations | ||
Segment Reporting Information [Line Items] | ||
Sales | 36 | 37 |
Eliminations | Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Sales | 31 | 32 |
Eliminations | Aftermarket and Industrial | ||
Segment Reporting Information [Line Items] | ||
Sales | $ 5 | $ 5 |
Business Segment Information _2
Business Segment Information - Segment Income Attributable to Parent (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Interest expense, net | $ (28) | $ (14) |
Provision for income taxes | (7) | (13) |
Depreciation and amortization | (27) | (24) |
Noncontrolling interests | (1) | (2) |
Restructuring | (6) | (5) |
Income from continuing operations attributable to Meritor, Inc. | 32 | 39 |
Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Segment adjusted EBITDA | 98 | 96 |
Reportable Segments | Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Segment adjusted EBITDA | 63 | 57 |
Reportable Segments | Aftermarket and Industrial | ||
Segment Reporting Information [Line Items] | ||
Segment adjusted EBITDA | 35 | 39 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Unallocated Legacy and Corporate Costs | 4 | 2 |
Interest expense, net | (28) | (14) |
Provision for income taxes | (7) | (13) |
Depreciation and amortization | (27) | (24) |
Noncontrolling interests | (1) | (2) |
Loss on sale of receivables | (1) | (1) |
Restructuring | $ (6) | $ (5) |
Business Segment Information _3
Business Segment Information - Schedule of Segment Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 2,930 | $ 2,884 |
Reportable Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,488 | 2,324 |
Reportable Segments | Commercial Truck | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,836 | 1,666 |
Reportable Segments | Aftermarket and Industrial | ||
Segment Reporting Information [Line Items] | ||
Total assets | 652 | 658 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 697 | 714 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Less: Accounts receivable sold under off-balance sheet factoring programs | $ (255) | $ (154) |