Exhibit 12
Meritor, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Amounts in millions, except the ratios)
| | Three months ended | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | Fiscal Year ended September 30, |
| | 2011 | | 2010 | | 2011 | | 2010 | | 2009 | | 2008 | | 2007 |
Earnings Available for Fixed Charges (A): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pre-tax income(loss) from continuing operations | | $ | 11 | | | $ | 18 | | | $ | 159 | | | $ | 76 | | | $ | (52 | ) | | $ | 131 | | | $ | (41 | ) |
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Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Equity in earnings of affiliates, net of dividends | | | (11 | ) | | | (9 | ) | | | (25 | ) | | | (37 | ) | | | 10 | | | | (18 | ) | | | (13 | ) |
| | | – | | | | 9 | | | | 134 | | | | 39 | | | | (42 | ) | | | 113 | | | | (54 | ) |
Add: fixed charges included in earnings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | 24 | | | | 27 | | | | 98 | | | | 114 | | | | 98 | | | | 101 | | | | 125 | |
Interest element of rentals | | | 2 | | | | 2 | | | | 6 | | | | 5 | | | | 6 | | | | 4 | | | | 5 | |
Total | | | 26 | | | | 29 | | | | 104 | | | | 119 | | | | 104 | | | | 105 | | | | 130 | |
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Total earnings available for fixed charges: | | $ | 26 | | | $ | 38 | | | $ | 238 | | | $ | 158 | | | $ | 62 | | | $ | 218 | | | $ | 76 | |
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Fixed Charges (B): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed charges included in earnings | | $ | 26 | | | $ | 29 | | | $ | 104 | | | $ | 119 | | | $ | 104 | | | $ | 105 | | | $ | 130 | |
Capitalized interest | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
Total fixed charges | | $ | 26 | | | $ | 29 | | | $ | 104 | | | $ | 119 | | | $ | 104 | | | $ | 105 | | | $ | 130 | |
|
Ratio of Earnings to Fixed Charges | | | 1.00 | | | 1.31 | | | | 2.29 | | | | 1.33 | | | | N/A (C | ) | | | 2.08 | | | | N/A (C | ) |
(A) | “Earnings” are defined as pre-tax income from continuing operations, adjusted for undistributed earnings of less than majority owned subsidiaries and fixed charges excluding capitalized interest. |
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(B) | “Fixed charges” are defined as interest on borrowings (whether expensed or capitalized), the portion of rental expense applicable to interest, and amortization of debt issuance costs. |
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(C) | The ratio coverage was less than 1:1 for fiscal years 2009 and 2007. The company would have needed to generate additional pretax earnings of $42 million and $54 million to achieve coverage of 1:1 for fiscal years 2009 and 2007, respectively. |