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DOCUMENT AND ENTITY INFORMATION - USD ($)	12 Months Ended
DOCUMENT AND ENTITY INFORMATION - USD ($)	Sep. 30, 2013	Nov. 14, 2013	Mar. 28, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	MERITOR INC
Entity Central Index Key	0001113256
Current Fiscal Year End Date	--09-29
Entity Filer Category	Large Accelerated Filer
Trading Symbol	MTOR
Entity Common Stock, Shares Outstanding		97,446,316
Document Period End Date	Sep. 30, 2013
Document Type	10-K
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2013
Amendment Flag	false
Entity Well-Known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 452,642,563

CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
Sales	$ 3,701	$ 4,418	$ 4,622
Cost of sales	(3,308)	(3,933)	(4,146)
GROSS MARGIN	393	485	476
Selling, general and administrative	(254)	(285)	(278)
Pension settlement losses	(109)	0	0
Restructuring costs	(26)	(39)	(22)
Gain on sale of property	0	16	0
Other operating expense, net	(3)	(4)	(2)
OPERATING INCOME	1	173	174
Other income, net	3	7	10
Gain on sale of equity investment	125	0	0
Equity in earnings of affiliates	42	52	70
Interest expense, net	(126)	(95)	(95)
INCOME BEFORE INCOME TAXES	45	137	159
Provision for income taxes	(63)	(56)	(77)
INCOME (LOSS) FROM CONTINUING OPERATIONS	(18)	81	82
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(2)	(18)	(2)
NET INCOME (LOSS)	(20)	63	80
Less: Net income attributable to noncontrolling interests	(2)	(11)	(17)
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.	(22)	52	63
NET INCOME (LOSS) ATTRIBUTABLE TO MERITOR, INC.
Net income (loss) from continuing operations	(20)	70	65
Loss from discontinued operations	(2)	(18)	(2)
Net income (loss)	$ (22)	$ 52	$ 63
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	$ (0.20)	$ 0.73	$ 0.69
Discontinued operations (in dollars per share)	(0.02)	(0.19)	(0.02)
Basic earnings (loss) per share (in dollars per share)	(0.22)	0.54	0.67
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations (in dollars per share)	(0.20)	0.72	0.67
Discontinued operations (in dollars per share)	(0.02)	(0.18)	(0.02)
Diluted earnings (loss) per share (in dollars per share)	$ (0.22)	$ 0.54	$ 0.65
Basic average common shares outstanding (in shares)	97.1	95.9	94.1
Diluted average common shares outstanding (in shares)	97.1	97.2	96.9

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) Statement - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
Net income (loss)	$ (20)	$ 63	$ 80
Foreign currency translation adjustments	(32)	(18)	(7)
Pension and other postretirement benefit related adjustments (net of tax of $12, $2 and $2 at September 30, 2013, 2012 and 2011, respectively)	218	(68)	44
Impact of sale of business and equity investment	0	0	(53)
Unrealized loss on investments and foreign exchange contracts	(5)	1	(1)
Reclassification adjustment for gain on sale of investments	0	(2)	0
Total Comprehensive income (loss)	161	(24)	63
Less: Comprehensive income attributable to noncontrolling interest	(2)	(10)	(17)
Comprehensive income (loss) attributable to Meritor, Inc.	$ 159	$ (34)	$ 46

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
Pension and other postretirement benefit, tax	$ 12	$ 2	$ 2

- Definition

Tax effect, net of reclassification adjustments, of the change in accumulated other comprehensive income (loss) related to pension and other postretirement benefit plans, attributable to the parent entity.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (c)(3)
-URI http://asc.fasb.org/extlink&oid=18733093&loc=SL4573702-111684

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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

CONSOLIDATED BALANCE SHEET - USD ($) $ in Millions	Sep. 30, 2013	Sep. 30, 2012
ASSETS
Cash and cash equivalents	$ 318	$ 257
Receivables, trade and other, net	596	542
Inventories	414	438
Other current assets	56	61
TOTAL CURRENT ASSETS	1,384	1,298
NET PROPERTY	417	417
GOODWILL	434	433
OTHER ASSETS	335	353
TOTAL ASSETS	2,570	2,501
LIABILITIES AND EQUITY (DEFICIT)
Short-term debt	13	18
Accounts and notes payable	694	697
Other current liabilities	339	313
TOTAL CURRENT LIABILITIES	1,046	1,028
LONG-TERM DEBT	1,125	1,042
RETIREMENT BENEFITS	886	1,075
OTHER LIABILITIES	335	338
TOTAL LIABILITIES	3,392	3,483
COMMITMENTS AND CONTINGENCIES (NOTE 22)
EQUITY (DEFICIT):
Common stock (September 30, 2013 and 2012, 97.4 and 96.5 shares issued and outstanding, respectively)	97	96
Additional paid-in capital	914	901
Accumulated deficit	(1,127)	(1,105)
Accumulated other comprehensive loss	(734)	(915)
Total deficit attributable to Meritor, Inc.	(850)	(1,023)
Noncontrolling interests	28	41
TOTAL DEFICIT	(822)	(982)
TOTAL LIABILITIES AND DEFICIT	$ 2,570	$ 2,501

CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions	Sep. 30, 2013	Sep. 30, 2012
Statement of Financial Position [Abstract]
Common stock, shares issued	97.4	96.5
Common stock, shares outstanding	97.4	96.5

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (see Note 25)	$ (96)	$ 77	$ 41
INVESTING ACTIVITIES
Capital expenditures	(54)	(89)	(105)
Proceeds from sale of equity investment	182	0	0
Proceeds from sale of property	0	18	0
Other investing activities	3	3	2
Net investing cash flows provided by (used for) continuing operations	131	(68)	(103)
Net investing cash flows provided by (used for) discontinued operations	6	28	(69)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	137	(40)	(172)
FINANCING ACTIVITIES
Proceeds from debt issuances	500	100	0
Repayment of notes and term loan	(475)	(86)	0
Other borrowings	11	0	0
Net change in debt	36	14	0
Debt issuance costs	(12)	(12)	0
Other financing cash flows	0	0	6
CASH PROVIDED BY FINANCING ACTIVITIES	24	2	6
EFFECT OF CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(4)	1	(1)
CHANGE IN CASH AND CASH EQUIVALENTS	61	40	(126)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	257	217	343
CASH AND CASH EQUIVALENTS AT END OF YEAR	$ 318	$ 257	$ 217

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - USD ($) $ in Millions	Total	Total Deficit Attributable to Meritor, Inc. [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]
Beginning balance at Sep. 30, 2010	$ (1,023)	$ (1,054)	$ 92	$ 886	$ (1,220)	$ (812)	$ 31
Comprehensive income (loss)	63	46			63	(17)	17
Exercise of stock options	6	6	2	4
Equity based compensation expense	7	7		7
Non-controlling interest dividends	(14)						(14)
Ending Balance at Sep. 30, 2011	(961)	(995)	94	897	(1,157)	(829)	34
Comprehensive income (loss)	(24)	(34)			52	(86)	10
Vesting of restricted stock	0		2	(2)
Equity based compensation expense	6	6		6
Non-controlling interest dividends	(3)						(3)
Ending Balance at Sep. 30, 2012	(982)	(1,023)	96	901	(1,105)	(915)	41
Comprehensive income (loss)	161	159			(22)	181	2
Vesting of restricted stock	0		1	(1)
Repurchase of convertible notes	(2)	(2)		(2)
Issuance of convertible notes	9	9		9
Equity based compensation expense	5	5		5
Non-controlling interest dividends	(15)						(15)
Other	2	2		2
Ending Balance at Sep. 30, 2013	$ (822)	$ (850)	$ 97	$ 914	$ (1,127)	$ (734)	$ 28

- Definition

This element represents the amount of recognized equity-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized). Alternate captions include the words "stock-based compensation".

+ References

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-Name Statement of Financial Accounting Standard (FAS)
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+ Details

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the economic entity, including both controlling (parent) and noncontrolling interests. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, including any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References + Details

- Definition

Amount of stockholders' equity (deficit), net of receivables from officers, directors, owners, and affiliates of the entity, attributable to both the parent and noncontrolling interests. Amount excludes temporary equity. Alternate caption for the concept is permanent equity.

+ References + Details

BASIS OF PRESENTATION	12 Months Ended
BASIS OF PRESENTATION	Sep. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION Meritor, Inc. (the "company" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems and components to original equipment manufacturers (“OEMs”) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, off-highway, military, bus and coach and other industrial OEMs and certain aftermarkets. The consolidated financial statements are those of the company and its consolidated subsidiaries. Certain businesses are reported in discontinued operations in the consolidated statement of operations, statement of cash flows and related notes for all periods presented. Additional information regarding discontinued operations is discussed in Note 3. The company’s fiscal year ends on the Sunday nearest September 30. The 2013, 2012 and 2011 fiscal years ended on September 29, 2013, September 30, 2012, and October 2, 2011. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 is used consistently throughout this report to represent the fiscal year end. The company has evaluated subsequent events through the date that the consolidated financial statements were issued.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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-Name Statement of Position (SOP)
-Number 94-6
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+ Details

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (U.S.) (GAAP) requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from these estimates. Significant estimates and assumptions were used to review goodwill and other long-lived assets, for impairment (see Notes 4 and 10), costs associated with the company’s restructuring actions (see Note 5), product warranty liabilities (see Note 13), long-term incentive compensation plan obligations (see Note 18), retiree medical and pension obligations (see Notes 19 and 20), income taxes (see Note 21), and contingencies including asbestos and environmental matters (see Note 22).

Concentration of Credit Risk

In the normal course of business, the company provides credit to customers. The company limits its credit risk by performing ongoing credit evaluations of its customers and maintaining reserves for potential credit losses and through accounts receivable factoring programs. The company’s accounts receivable is due from medium- and heavy-duty truck OEMs, specialty vehicle manufacturers, aftermarket customers, and trailer producers. The company’s ten largest customers accounted for 71 percent of sales in fiscal 2013. Sales to the company's top three customers were 49 percent and 48 percent of total sales in fiscal 2013 and 2012, respectively. At September 30, 2013 and 2012, 21 percent and 20 percent, respectively, of the company's trade accounts receivable are from the company's three largest customers.

Consolidation and Joint Ventures

The consolidated financial statements include the accounts of the company and those subsidiaries in which the company has control. All intercompany balances and transactions are eliminated in consolidation. The results of operations of controlled subsidiaries are included in the consolidated financial statements and are offset by a related noncontrolling interest recorded for the noncontrolling partners’ ownership. Investments in affiliates that are not controlled or majority-owned are reported using the equity method of accounting (see Note 12).

Foreign Currency

Local currencies are generally considered the functional currencies for operations outside the U.S. For operations reporting in local currencies, assets and liabilities are translated at year-end exchange rates with cumulative currency translation adjustments included as a component of Accumulated Other Comprehensive Loss in the consolidated balance sheet. Income and expense items are translated at average rates of exchange during the year.

Impairment of Long-Lived Assets

Long-lived assets, excluding goodwill, to be held and used are reviewed for impairment whenever adverse events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value exceeds the fair value.

Long-lived assets held for sale are recorded at the lower of their carrying amount or estimated fair value less cost to sell.

Discontinued Operations

A business component that either has been disposed of or is classified as held for sale is reported as discontinued operations if the cash flows of the component have been or will be eliminated from the ongoing operations of the company and the company will no longer have any significant continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated statement of operations and consolidated statement of cash flows (see Note 3).

Revenue Recognition

Revenues are recognized upon shipment of product and transfer of ownership to the customer. Provisions for customer sales allowances and incentives are recorded as a reduction of sales at the time of product shipment.

Allowance for Doubtful Accounts

An allowance for uncollectible trade receivables is recorded when accounts are deemed uncollectible based on consideration of write-off history, aging analysis, and any specific, known troubled accounts.

Earnings per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each year. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted stock, and convertible securities, if applicable.

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



	Year Ended September 30,
	2013	2012	2011
Basic average common shares outstanding	97.1	95.9	94.1
Impact of stock options	—	—	0.1
Impact of restricted shares and share units	—	1.3	2.7
Diluted average common shares outstanding	97.1	97.2	96.9

At September 30, 2013, 2012, and 2011 options to purchase 0.9 million, 0.7 million, and 0.5 million shares of common stock, respectively, were not included in the computation of diluted earnings per share because their exercise price exceeded the average market price for the twelve month period and thus their inclusion would be anti-dilutive. The potential effects of restricted shares and share units were excluded from the diluted earnings per share calculation for the fiscal year ended September 30, 2013 because their inclusion in a net loss period would reduce the net loss per share. Therefore, 0.8 million shares of restricted stock were excluded from the computation of diluted earnings per share for the fiscal year ended September 30, 2013. The company’s convertible senior unsecured notes are excluded from the computation of diluted earnings per share for each period presented, as the company’s average stock price during each period is less than the conversion price.

Other

Other significant accounting policies are included in the related notes, specifically, goodwill (Note 4), inventories (Note 8), property and depreciation (Note 10), capitalized software (Note 11), product warranties (Note 13), financial instruments (Note 16), equity based compensation (Note 18), retirement medical plans (Note 19), retirement pension plans (Note 20), income taxes (Note 21) and environmental and asbestos-related liabilities (Note 22).

Accounting standards to be implemented

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 which clarifies which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. The new disclosure requirements are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. As such, ASU 2013-01 will be effective October 1, 2013 for the company and will be applied prospectively. The company does not believe the adoption will have a significant impact on the company's consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires reclassification adjustments for items that are reclassified from accumulated other comprehensive income to net income be presented on the financial statements or in a note to the financial statements. The new disclosure requirements are effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. As such, ASU 2013-02 will be effective October 1, 2013 for the company and will be applied prospectively. The company does not believe the adoption will have a significant impact on the company's consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 eliminates the option of presenting unrecognized tax benefits as a liability or as a reduction of a deferred tax asset for a net operating loss or tax credit carryforward. An unrecognized tax benefit, or portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The new disclosure requirements are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 with early adoption permitted. As such, ASU 2013-01 will be effective October 1, 2014 for the company and will be applied prospectively. The company does not believe the adoption will have a significant impact on the company's consolidated financial statements.

Accounting standards implemented during fiscal year 2013

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The guidance eliminated the option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The company adopted this guidance at the beginning of its first quarter of fiscal year 2013 and has reported Comprehensive Income as a separate but consecutive statement.

DISCONTINUED OPERATIONS

12 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

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



	Year Ended September 30,
	2013			2012			2011
Sales	$	—		$	2		$	368
Operating income, net	$	—		$	—		$	11
Net gain (loss) on sales of businesses	—			(1		)	19
Charge for contingency and indemnity obligation (see Note 22)	—			(10		)	(4		)
Restructuring costs	—			(1		)	(9		)
Environmental remediation charges (see Note 22)	(5		)	(3		)	(4		)
Other	(1		)	(6		)	(12		)
Income (loss) before income taxes	(6		)	(21		)	1
Benefit (provision) for income taxes	4			3			(3		)
Loss from discontinued operations attributable to Meritor, Inc.	$	(2	)	$	(18	)	$	(2	)

Prior Period Divestitures

In conjunction with the company’s long-term strategic objective to focus on supplying the commercial vehicle on- and off-highway markets for original equipment manufacturers, aftermarket and industrial customers, the company divested its Light Vehicle Systems (LVS) business groups in various transactions. In November 2011, the company sold its damper business located in Leicester, England. With the sale of this business, the company completed the divestiture of its LVS businesses. Results of the company’s LVS businesses are reflected in discontinued operations for all periods presented.

EU Trailer

In the second quarter of fiscal year 2011, the company announced the planned closure of its EU Trailer business which was part of the company’s Aftermarket & Trailer segment. All manufacturing operations and use of productive assets ceased prior to September 30, 2011. The company sold certain long-lived and current assets of the business to a third party and recognized a loss of approximately $2 million during the fourth quarter of fiscal year 2011 in connection with the sale. In addition, the company recognized $8 million of restructuring charges associated with the closure of EU Trailer business in fiscal year 2011. Additional restructuring charges of $1 million were recognized in fiscal year 2012. These charges are included in loss from discontinued operations in the accompanying consolidated statement of operations. Total sales from this business were $59 million in fiscal year 2011.

Gabriel Europe

On February 6, 2011, the company sold its Gabriel Europe (Bonneval) facility to TRW Automotive Holdings France. Gabriel Europe manufactured ride control parts (shock absorbers) for sale in Europe. In connection with the sale, the company made a cash capital contribution of $15 million to Gabriel Europe prior to the completion of the sale transaction. This capital contribution is included in net investing cash flows used for discontinued operations in the accompanying consolidated statement of cash flows. In connection with the sale of Gabriel Europe business, the company recognized a pre-tax loss of $13 million ($13 million after tax) in fiscal year 2011.

Body Systems

On January 3, 2011, the company completed the sale of its Body Systems business to Inteva Products Holding Coöperatieve U.A., an assignee of 81 Acquisition LLC and an affiliate of Inteva Products, LLC. Pursuant to the sale agreement signed in August 2010, total consideration was approximately $35 million, subject to certain potential adjustments for items such as working capital fluctuations. The actual purchase price at the closing was $27 million (excluding estimated closing expenses for outside advisory fees of $12 million), consisting of $12 million in cash at closing (adjusted for estimated balances in working capital and other items at the time of the closing) and a five-year, 8-percent promissory note for $15 million, payable in five annual installments beginning in January 2012. The current portion of the promissory note is included in receivables, trade and other, net in the accompanying consolidated balance sheet. The long-term portion of the note is included in other assets in the accompanying consolidated balance sheet.

In addition to the purchase price, the company was entitled to receive the cash held at the time of the sale by the Body Systems entities operating in China and Brazil of approximately $33 million, before applicable taxes and other withholding, at such time as it becomes available for distribution, as provided in the sale agreement. At September 30, 2011, the company recognized a receivable of approximately $28 million, net of applicable taxes and other withholding, for cash balances available for distribution based on the then-current distribution capacity. The company expects to recognize a receivable for the remaining amount of approximately $3 million, before applicable taxes and other withholding, at such time when the balance becomes available for distribution by the respective entities. During fiscal year 2012, the company received approximately $24 million, net of withholdings, of cash balances for which a receivable was recorded at September 30, 2011. Cash flows associated with the receipt of cash balances in fiscal year 2012 and outflows associated with the sale of Body Systems are included in net investing cash flows used for for discontinued operations in the accompanying consolidated statement of cash flows.

In connection with the sale of Body Systems business, the company recognized a pre-tax gain of $32 million ($32 million after tax) in fiscal year 2011. Upon sale of the Body Systems business, net accumulated foreign currency translation gains of $62 million were recognized into income and included in the gain on sale of this business. These net accumulated foreign currency translation gains were previously deferred and included in accumulated other comprehensive loss in the condensed consolidated statement of equity (deficit).

The sale agreement contains certain customary representations, warranties and covenants of the seller and the purchaser as further set forth in the agreement. The agreement also includes provisions governing post-closing indemnities between the seller and the purchaser for losses arising from specified events.

Meritor Suspension Systems Company (MSSC)

On June 24, 2009, the company entered into a binding letter of intent to sell its 57 percent interest in MSSC, a joint venture that manufactured and supplied automotive coil springs, torsion bars and stabilizer bars in North America, to the joint venture partner, a subsidiary of Mitsubishi Steel Mfg. Co., LTD (MSM). The sale transaction closed in October 2009. The purchase price was $13 million, which included a cash dividend of $12 million received by the company in June 2009. The remaining purchase price was received by the company at the time of closing. In connection with the sale of its interest in MSSC, the company provided certain indemnifications to the buyer for its share of potential obligations related to pension funding shortfall, environmental and other contingencies, and valuation of certain accounts receivable and inventories. The company’s estimated exposure under these indemnities at September 30, 2013 and September 30, 2012 is approximately $11 million and $14 million, respectively, and is included in other current liabilities and other liabilities in the consolidated balance sheet.

The following summarizes significant items included in loss from discontinued operations in the consolidated statement of operations for the fiscal years ended September 30, 2013, 2012 and 2011:

Sales from discontinued operations in fiscal years 2012 and 2011 were $2 million and $368 million, respectively. Sales in fiscal year 2012 were related to our damper business located in Leicester, England, which was sold in November 2011. Sales in the fiscal year 2011 included $298 million in Body Systems and $59 million in EU Trailer. The remaining sales in fiscal year 2011 were in Gabriel Europe and the damper business in Leicester, England.

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

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

Charge for legal contingency and indemnity obligation: On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that several filter manufacturers and their affiliated corporate entities, including a prior subsidiary of the company, engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive filters. This suit was a purported class action on behalf of direct purchasers of filters from the defendants. Several parallel purported class actions, including on behalf of indirect purchasers of filters, were filed by other plaintiffs in a variety of jurisdictions in the United States and Canada. The U.S. cases were consolidated into a multi-district litigation proceeding in Federal court for the Northern District of Illinois. On April 16, 2009, the Attorney General of the State of Florida filed a complaint with the U.S. District Court for the Northern District of Illinois based on these same allegations. In April 2012, the company settled with the U.S. indirect purchasers for $3.1 million resolving their portion of the suit. In August 2012, the company entered into a settlement agreement for the remaining claims with the U.S. direct purchasers for $8.3 million. During the fourth quarter of fiscal year 2013, the company settled with the remaining plaintiffs in the litigation actions in Canada for an immaterial amount. The issues in the litigation have been resolved.

Restructuring costs: In fiscal years 2012 and 2011, the company recognized $1 million and $8 million, respectively, of restructuring charges associated with the closure of its EU Trailer business. The remaining restructuring charges in fiscal year 2011 were related to employee severance costs at the company's Gabriel Europe business prior to the sale in the second quarter.

Environmental remediation charges: Environmental remediation charges relate to environmental obligations related to certain discontinued operations. These charges primarily relate to changes in estimates and adjustments related to certain liabilities retained from previously divested business and indemnities provided at the time of sale.

Other: During the fourth quarter of fiscal year 2011, the company recognized $2 million of losses associated with the sale of certain assets in connection with the closure of its EU Trailer business. The company also recognized $4 million of costs associated with the sale of Body Systems business during the second quarter of fiscal year 2011. The remaining charges primarily relate to changes in estimates and adjustments to certain assets and liabilities retained from previously sold businesses and indemnities provided at the time of sale.

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 144
-Paragraph 43-48
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

GOODWILL

12 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

In accordance with FASB Accounting Standards Codification (ASC) Topic 350-20, “Intangibles – Goodwill and Other”, goodwill is reviewed for impairment annually during the fourth quarter of the fiscal year or more frequently if certain indicators arise. If business conditions or other factors cause the operating results and cash flows of a reporting unit to decline, the company may be required to record impairment charges for goodwill at that time. The company tests goodwill for impairment at a level of reporting referred to as a reporting unit, which is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. When two or more components of an operating segment have similar economic characteristics, the components are aggregated and deemed a single reporting unit. An operating segment is deemed to be a reporting unit if all of its components are similar, if none of its components is a reporting unit, or if the segment comprises only a single component.

Reorganization of Reporting Units

As discussed in Note 23, "Business Segment Information," the company reorganized its management reporting structure in the first quarter of fiscal year 2013 resulting in two reportable segments. As a result of the change in reporting segments, the company's reporting units changed. The Commercial Truck and Industrial segment now contains two reporting units. The Aftermarket and Trailer segment remains a single reporting unit. Goodwill was reassigned to the new reporting units using a relative fair value allocation. Giving specific consideration to the changes in reporting units, the company did not observe any factors which caused the company to believe that goodwill was more likely than not impaired at the date of reallocation.

Annual Impairment Analysis

In September 2011, the FASB issued revised guidance which allows entities to perform an initial qualitative evaluation to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform step one of the required two-step impairment test. As allowed by the revised guidance, the company has elected to bypass the qualitative assessment at fiscal year 2013 and proceed directly to the two-step impairment test.

Excluding the qualitative evaluation discussed above, the goodwill impairment review is a two-step process. Step one consists of a comparison of the fair value of a reporting unit with its carrying amount. An impairment loss may be recognized if the review indicates that the carrying value of a reporting unit exceeds its fair value. Estimates of fair value are primarily determined by using discounted cash flows and market multiples on earnings. If the carrying amount of a reporting unit exceeds its fair value, step two requires the fair value of the reporting unit to be allocated to the underlying assets and liabilities of that reporting unit, resulting in an implied fair value of goodwill. If the carrying amount of the goodwill of the reporting unit exceeds the implied fair value, an impairment charge is recorded equal to the excess.

The impairment review is highly judgmental and involves the use of significant estimates and assumptions. These estimates and assumptions have a significant impact on the amount of any impairment charge recorded. Discounted cash flow methods are dependent upon assumptions of future sales trends, market conditions and cash flows of each reporting unit over several years. Actual cash flows in the future may differ significantly from those previously forecasted. Other significant assumptions include growth rates and the discount rate applicable to future cash flows. For fiscal years 2013, 2012 and 2011, the fair value of the company’s reporting units exceeded their carrying values.

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



	Commercial Truck & Industrial		Aftermarket & Trailer			Commercial Truck			Industrial			Total
Balance at September 30, 2011	$	—	$	172		$	150		$	109		$	431
Foreign currency translation	—		(1		)	3			—			2
Balance at September 30, 2012	—		171			153			109			433
Segment reorganization	262		—			(153		)	(109		)	—
Foreign currency translation	—		1			—			—			1
Balance at September 30, 2013	$	262	$	172		$	—		$	—		$	434

RESTRUCTURING COSTS

12 Months Ended

Sep. 30, 2013

Restructuring and Related Activities [Abstract]

RESTRUCTURING COSTS

At September 30, 2013 and 2012, $12 million and $15 million, respectively, of restructuring reserves primarily related to unpaid employee termination benefits remained in the consolidated balance sheet. Asset impairment charges relate to manufacturing facilities that have been sold and machinery and equipment that became idle and obsolete as a result of these actions.

The following table summarizes changes in restructuring reserves (in millions):



	Employee Termination Benefits			Asset Impairment			Plant Shutdown & Other			Total
Balance at September 30, 2010	$	11		$	—		$	—		$	11
Activity during the period:
Charges to continuing operations	19			2			1			22
Charges to discontinued operations, net of reversals of $1⁽¹⁾	7			—			2			9
Asset write-offs	—			(2		)	—			(2		)
Cash payments – continuing operations	(12		)	—			(1		)	(13		)
Cash payments – discontinued operations	(6		)	—			(2		)	(8		)
Balance at September 30, 2011	19			—			—			19
Activity during the period:
Charges to continuing operations	18			19			2			39
Charges to discontinued operations ⁽¹⁾	—			—			1			1
Asset write-offs	—			(19		)	—			(19		)
Cash payments – continuing operations	(20		)	—			(2		)	(22		)
Cash payments – discontinued operations	(2		)	—			(1		)	(3		)
Balance at September 30, 2012	15			—			—			15
Activity during the period:
Charges to continuing operations	21			1			4			26
Asset write-offs	—			(1		)	—			(1		)
Cash payments – continuing operations	(22		)	—			(4		)	(26		)
Other	(2		)	—			—			(2		)
Total restructuring reserves, end of year	12			—			—			12
Less: non-current restructuring reserves	(3		)	—			—			(3		)
Restructuring reserves – current, at September 30, 2013	$	9		$	—		$	—		$	9

____________________


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

Restructuring costs included in the company’s business segment results during fiscal years 2013, 2012 and 2011 are as follows (in millions):



	Commercial Truck & Industrial		Aftermarket & Trailer		Total⁽¹⁾
Fiscal year 2013:
Variable labor reductions	$	5	$	—	5
Remanufacturing consolidation	—		3		3
Segment reorganization and Asia Pacific realignment	10		3		13
M2016 footprint actions	2		—		2
Total restructuring costs	$	17	$	6	$	23
Fiscal year 2012:
Performance Plus actions	$	24	$	—	$	24
Fiscal Year 2012 European action	7		—		7
Variable labor reductions	5		—		5
Other	—		2		2
Total restructuring costs	$	36	$	2	$	38
Fiscal year 2011:
Performance Plus actions	16		—		16
Total restructuring costs	$	16	$	—	$	16

____________________


(1)	Total segment restructuring costs do not include those recorded at the company's corporate locations. These costs were $3 million , $1 million and $6 million in fiscal years 2013 , 2012 and 2011, respectively, primarily related to employee termination benefits.

Variable Labor Reductions: During the fourth quarter of fiscal year 2012, the company initiated a global variable labor headcount reduction plan intended to reduce labor and other costs in response to market conditions. In response to further deterioration in the global markets, the company approved further headcount reductions under this action during the fourth quarter of fiscal year 2013. As part of this action, the company will eliminate approximately 600 hourly and 120 salaried positions and incurred $10 million of restructuring costs, primarily severance benefits, in the Commercial Truck & Industrial segment of which $5 million was recognized in fiscal year 2013 and $5 million was recognized in fiscal year 2012. Restructuring actions associated with the variable labor reductions are substantially complete as of September 30, 2013.

Remanufacturing Consolidation: During the first quarter of fiscal year 2013, the company announced the planned consolidation of its remanufacturing operations in the Aftermarket & Trailer segment resulting in the closure of one remanufacturing plant in Canada. The closure resulted in the elimination of 85 hourly positions including approximately 65 positions which were transferred to the company's facility in Indiana. The company recorded restructuring charges of $3 million, during fiscal year 2013, primarily associated with employee severance charges. Restructuring actions associated with the remanufacturing consolidation are substantially complete as of September 30, 2013.

Segment Reorganization and Asia Pacific Realignment: On November 12, 2012, the company announced a revised management reporting structure resulting in two business segments to drive efficiencies. On January 8, 2013, the company announced restructuring actions related to the business segment rationalization. On March 26, 2013, the company announced plans to consolidate its operations in China by transferring manufacturing operations to the company's majority owned off-highway joint venture facility and closing its facility in Wuxi, China.

During fiscal year 2013, the company recorded employee severance charges and other exit costs associated with the elimination of approximately 200 salaried positions (including contract employees) and 50 hourly positions of $8 million and $3 million in the Commercial Truck & Industrial and Aftermarket & Trailer segments, respectively, as well as $3 million at a corporate location. The company also recognized $2 million within the Commercial Truck & Industrial segment related to a lease termination. Restructuring actions associated with this program are substantially complete as of September 30, 2013.

M2016 Footprint Actions: As part of the company's recently announced M2016 Strategy, a three-year plan to achieve sustainable financial strength, the company approved a North American footprint realignment action and a European Shared Services Reorganization, which will be executed over the next twelve months. As part of these actions, the company expects to eliminate 74 hourly and 27 salaried positions and incur approximately $2 million of restructuring costs in the Commercial Truck & Industrial segment. The company has recognized costs of approximately $2 million within the Commercial Truck & Industrial segment, primarily related to severance benefits, during the fiscal year 2013.

Performance Plus: During fiscal year 2007, the company launched a long-term profit improvement and cost reduction initiative called “Performance Plus.” As part of this program, the company identified significant restructuring actions which would eliminate up to 2,800 positions in North America and Europe and consolidate and combine certain global facilities. The company’s continuing operations recognized restructuring costs in its Commercial Truck & Industrial segment of $24 million and $16 million in fiscal years 2012 and 2011, respectively, related to Performance Plus. Fiscal year 2012 Performance Plus costs include $19 million of non-cash charges, including an impairment charge of $17 million for assets held for sale at December 31, 2011. In connection with the then-planned sale of St. Priest, France manufacturing facility to Renault Trucks SAS, the company classified certain assets and associated liabilities as held for sale (collectively the “Disposal Group”) at December 31, 2011. Upon comparing the carrying value of the Disposal Group to its fair value less cost to sell, an impairment was identified. The sale of Disposal Group was completed on January 2, 2012. In addition, other restructuring charges of approximately $5 million associated with employee headcount reduction and plant rationalization costs were recognized in connection with the sale of St. Priest facility. Performance Plus costs recognized in fiscal years 2011 and 2010 were also related to employee headcount reductions, asset write-downs and facility rationalization at the company's St. Priest location.

Restructuring actions associated with Performance Plus were complete as of September 30, 2012. Cumulative restructuring costs recorded for this program as of September 30, 2012 were $186 million, including $93 million reported in discontinued operations in the consolidated statement of operations. These costs primarily related to employee severance and related costs of $117 million, asset impairment charges of $41 million and $28 million primarily associated with pension termination benefits. The company’s Commercial Truck & Industrial segment has recognized cumulative restructuring costs associated with Performance Plus of $82 million. Cumulative restructuring costs of $11 million were recognized by corporate locations and the company’s Aftermarket & Trailer segment.

Fiscal Year 2012 European Action: During the second quarter of fiscal year 2012, the company approved a European headcount reduction plan in response to the ongoing economic weakness and uncertainty in that region. The company recognized approximately $7 million of restructuring costs associated with this plan in its Commercial Truck & Industrial segment. Restructuring actions associated with this plan were substantially complete as of September 30, 2012.

Other Actions: The remaining restructuring costs incurred during the fiscal year 2012 were primarily associated with the company’s previously announced executive headcount reduction.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details

ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION	12 Months Ended
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION	Sep. 30, 2013
Accounts Receivable Securitization and Factoring Disclosure [Abstract]
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION	ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION Off-balance sheet arrangements Swedish Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo through one of its European subsidiaries. Under this arrangement, which was renewed on June 10, 2013, and which now terminates on June 28, 2014, the company can sell up to, at any point in time, €150 million ($202 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €148 million ($199 million) and €119 million ($154 million) of this accounts receivable factoring facility as of September 30, 2013 and 2012, respectively. U.S. Factoring Facility: The company has an arrangement to sell trade receivables due from AB Volvo and its subsidiaries. Under this arrangement, which was renewed on October 29, 2013, and which now terminates on October 29, 2014, the company can sell up to, at any point in time, €65 million ($88 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €48 million ($65 million) and €51 million ($66 million) of this accounts receivable factoring facility as of September 30, 2013 and 2012, respectively. The above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through October 2014. The commitments are subject to standard terms and conditions for these types of arrangements. United Kingdom Factoring Facility: The company entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement, which was renewed on January 24, 2013 and now expires in February 2018, the company can sell up to, at any point in time, €25 million ($34 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €7 million ($9 million) and €9 million ($12 million) of this accounts receivable factoring facility as of September 30, 2013 and 2012, respectively. The commitment is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program. Italy Factoring Facility: The company entered into an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement, which expires in June 2017, the company can sell up to, at any point in time, €30 million ($40 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €10 million ($14 million) and €13 million ($16 million) of this accounts receivable factoring facility as of September 30, 2013 and 2012, respectively. The commitment is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program. In addition, several of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the consolidated balance sheet. The amount of factored receivables excluded from accounts receivable was $18 million and $7 million at September 30, 2013 and 2012, respectively. Total costs associated with these off-balance sheet arrangements were $6 million, $9 million and $10 million in fiscal years 2013, 2012 and 2011, respectively, and are included in selling, general and administrative expenses in the consolidated statement of operations. On-balance sheet arrangements The company has a $100 million U.S. accounts receivables securitization facility. On June 21, 2013, the company entered into a one-year extension of the facility expiration date to June 18, 2016. On October 11, 2013 the company entered into an amendment whereby Market Street Funding, LLC assigned its purchase commitment to PNC Bank, National Association (PNC). This program is provided by PNC, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents from time to time (participating lenders), which are party to the agreement. Under this program, the company has the ability to sell an undivided percentage ownership interest in substantially all of its trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. Factoring Facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for the company's U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. At September 30, 2013 and 2012, no amounts, including letters of credit, were outstanding under this program. This program contains a financial covenant related to the company's priority-debt-to-EBITDA ratio, which is the same as the corresponding covenant in the company's revolving credit facility as it exists on the date of the agreement and a cross-default to the revolving credit facility. At September 30, 2013, the company was in compliance with all covenants under its credit agreement (see Note 15).

GAIN ON SALE OF PROPERTY, OTHER OPERATING EXPENSE, NET AND OTHER INCOME, NET	12 Months Ended
	Sep. 30, 2013
Other Income and Expenses [Abstract]
GAIN ON SALE OF PROPERTY, OTHER OPERATING EXPENSE, NET AND OTHER INCOME, NET	GAIN ON SALE OF PROPERTY, OTHER OPERATING EXPENSE, NET AND OTHER INCOME, NET The company recognized a gain on sale of property of $16 million during fiscal year 2012. This gain is associated with the sale of excess land at the company's facility at Cwmbran, Wales. Other operating expense, net for fiscal years 2013, 2012 and 2011 primarily relates to environmental remediation costs incurred by the company (see Note 22). Other income, net for fiscal year 2012 includes a $3 million non-operating gain related to the sale of the company’s remaining ownership interest in Gabriel India, Ltd during the first quarter of fiscal year 2012. The company’s ownership interest in Gabriel India, Ltd was a legacy investment accounted for under the cost method that the company deemed non-core upon the completion of the sale of its light vehicle businesses. Other income, net for fiscal year 2011 includes a $5 million non-operating gain on the collection of a note receivable related to a previously divested business and a $5 million non-operating gain on the termination of certain foreign currency option contracts.

INVENTORIES

12 Months Ended

Sep. 30, 2013

Inventory Disclosure [Abstract]

INVENTORIES

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



	September 30,
	2013		2012
Finished goods	$	184	$	185
Work in process	32		48
Raw materials, parts and supplies	198		205
Total	$	414	$	438

OTHER CURRENT ASSETS

12 Months Ended

Sep. 30, 2013

Other Current Assets Disclosure [Abstract]

OTHER CURRENT ASSETS

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



	September 30,
	2013		2012
Current deferred income tax assets (see Note 21)	$	23	$	27
Asbestos-related recoveries (see Note 22)	12		11
Deposits and collateral	4		4
Prepaid and other	17		19
Other current assets	$	56	$	61

NET PROPERTY

12 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

NET PROPERTY

Property is stated at cost. Depreciation of property is based on estimated useful lives, generally using the straight-line method. Estimated useful lives for buildings and improvements range from 10 to 50 years and estimated useful lives for machinery and equipment range from 3 to 20 years. Significant improvements are capitalized, and disposed or replaced property is written off. Maintenance and repairs are charged to expense in the period they are incurred. Company-owned tooling is classified as property and depreciated over the shorter of its expected life or the life of the related vehicle platform, generally not to exceed three years.

In accordance with the FASB guidance on property, plant and equipment, the company reviews the carrying value of long-lived assets, excluding goodwill, to be held and used, for impairment whenever events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value.

Net property at September 30, 2013 and 2012 is summarized as follows (in millions):



	September 30,
	2013			2012
Property at cost:
Land and land improvements	$	35		$	39
Buildings	239			253
Machinery and equipment	915			909
Company-owned tooling	152			156
Construction in progress	48			65
Total	1,389			1,422
Less accumulated depreciation	(972		)	(1,005		)
Net property	$	417		$	417

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

OTHER ASSETS

12 Months Ended

Sep. 30, 2013

Other Assets, Noncurrent [Abstract]

OTHER ASSETS

Other assets are summarized as follows (in millions):



	September 30,
	2013		2012
Investments in non-consolidated joint ventures (see Note 12)	$	102	$	169
Asbestos-related recoveries (see Note 22)	59		63
Unamortized debt issuance costs (see Note 15)	32		29
Capitalized software costs, net	28		29
Non-current deferred income tax assets (see Note 21)	13		12
Assets for uncertain tax positions (see Note 21)	5		5
Prepaid pension costs (see Note 20)	55		11
Other	41		35
Other assets	$	335	$	353

In accordance with FASB ASC Topic 350-40, costs relating to internally developed or purchased software in the preliminary project stage and the post-implementation stage are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software.

INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES

12 Months Ended

Sep. 30, 2013

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES

The company’s non-consolidated joint ventures and related direct ownership interest are as follows:



	September 30,
	2013		2012		2011
Meritor WABCO Vehicle Control Systems (Commercial Truck)	50	%	50	%	50	%
Master Sistemas Automotivos Ltda. (Commercial Truck)	49	%	49	%	49	%
Suspensys Sistemas Automotivos Ltda. ⁽¹⁾ (Aftermarket & Trailer)	—	%	24	%	24	%
Sistemas Automotrices de Mexico S.A. de C.V. (Commercial Truck)	50	%	50	%	50	%
Ege Fren Sanayii ve Ticaret A.S. (Commercial Truck)	49	%	49	%	49	%
Automotive Axles Limited (Industrial)	36	%	36	%	36	%

____________________

⁽¹⁾ Total direct and indirect ownership interest in fiscal year 2012 and 2011 of 50 percent.

On July 30, 2013, subsidiaries of Meritor completed the sale of the company's overall 50 percent ownership equity interest in Suspensys Sistemas Automotivos LTDA (the “Suspensys JV”) to the company's joint venture partner, Randon S.A. Implementos E Participações (“Randon”). The Suspensys JV was formed in 2002 and is primarily engaged in the manufacture and sale of air and mechanical suspension systems for trucks, buses and trailers, trailer axles, third axles, hubs and drums for trucks, buses and trailers. The purchase price for the sale was $195 million, which was composed of $190 million in cash (approximately $4 million of which was in the form of a pre-closing cash dividend) and $5 million in lease abatements for a facility in Brazil leased to the company from the Suspensys JV. The sale was completed pursuant to a Purchase and Sale Agreement dated as of April 29, 2013. The company recognized a $125 million pre-tax ($92 million, after-tax) gain associated with this sale.

The company’s investments in non-consolidated joint ventures are as follows (in millions):



	September 30,
	2013		2012
Commercial Truck & Industrial	$	102	$	141
Aftermarket & Trailer	—		28
Total investments in non-consolidated joint ventures	$	102	$	169

The company’s equity in earnings of non-consolidated joint ventures is as follows (in millions):



	Year Ended September 30,
	2013		2012		2011
Commercial Truck & Industrial	$	36	$	45	$	56
Aftermarket & Trailer	6		7		14
Total equity in earnings of affiliates	$	42	$	52	$	70

The summarized financial information presented below represents the combined accounts of the company’s non-consolidated joint ventures related to its continuing operations (in millions):



	September 30,
	2013		2012
Current assets	$	382	$	510
Non-current assets	150		292
Total assets	$	532	$	802
Current liabilities	$	219	$	266
Non-current liabilities	118		146
Total liabilities	$	337	$	412



	Year Ended September 30,
	2013		2012		2011
Sales	$	1,552	$	1,787	$	1,977
Gross profit	201		215		274
Net income	96		123		177

Dividends received from the company’s non-consolidated joint ventures were $30 million in fiscal year 2013, $47 million in fiscal year 2012 and $45 million in fiscal year 2011.

The company had sales to its non-consolidated joint ventures of approximately $11 million, $6 million and $8 million in fiscal years 2013, 2012 and 2011, respectively. These sales exclude sales of $151 million, $165 million and $182 million in fiscal years 2013, 2012 and 2011, respectively, to a joint venture in the company’s Commercial Truck & Industrial segment, which are eliminated as the company purchases these components back after value add provided by the joint venture. The company had purchases from its non-consolidated joint ventures of approximately $885 million, $973 million and $1,161 million in fiscal years 2013, 2012 and 2011, respectively. Additionally, the company leases space and provides certain administrative and technical services to various non-consolidated joint ventures. The company collected $8 million, $3 million and $1 million for such leases and services during fiscal years 2013, 2012 and 2011, respectively.

Amounts due from the company’s non-consolidated joint ventures were $38 million and $18 million at September 30, 2013 and 2012, respectively, and are included in Receivables, trade and other, net in the consolidated balance sheet. Amounts due to the company’s non-consolidated joint ventures were $94 million and $83 million at September 30, 2013 and 2012, respectively and are included in Accounts payable in the consolidated balance sheet.

The fair value of the company’s investment in its Automotive Axles Limited joint venture was approximately $18 million and $42 million at September 30, 2013 and 2012, respectively, based on quoted market prices as this joint venture is listed and publicly traded on the Bombay Stock Exchange in India.

The company holds a variable interest in a joint venture accounted for under the equity method of accounting. The joint venture manufactures components for commercial vehicle applications primarily on behalf of the company. The variable interest relates to a supply arrangement between the company and the joint venture whereby the company supplies certain components to the joint venture on a cost-plus basis. The company is not the primary beneficiary of the joint venture, as the joint venture partner has shared or absolute control over key manufacturing operations, labor relationships, financing activities and certain other functions of the joint venture. Therefore, the company does not consolidate the joint venture. At September 30, 2013, the company’s investment in the joint venture was $35 million representing the company’s maximum exposure to loss. This amount is included in investments in non-consolidated joint ventures (see Note 11).

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References + Details

OTHER CURRENT LIABILITIES

12 Months Ended

Sep. 30, 2013

Other Current Liabilities Disclosure [Abstract]

OTHER CURRENT LIABILITIES

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



	September 30,
	2013		2012
Compensation and benefits	$	141	$	136
Income taxes	8		15
Taxes other than income taxes	47		41
Product warranties	20		16
Restructuring (see Note 5)	9		11
Asbestos-related liabilities (see Note 22)	18		19
Accrued interest	16		5
Indemnity obligations (see Note 22)	12		12
Other	68		58
Other current liabilities	$	339	$	313

The company records estimated product warranty costs at the time of shipment of products to customers. Warranty reserves are primarily based on factors that include past claims experience, sales history, product manufacturing and engineering changes and industry developments. Liabilities for product recall campaigns are recorded at the time the company’s obligation is known and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability.

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



	2013			2012			2011
Total product warranties – beginning of year	$	44		$	48		$	54
Accruals for product warranties ⁽¹⁾	31			22			23
Payments	(20		)	(18		)	(22		)
Change in estimates and other	2			(8		)	(7		)
Total product warranties – end of year	57			44			48
Less: non-current product warranties (see Note 14)	(37		)	(28		)	(29		)
Product warranties – current	$	20		$	16		$	19

⁽¹⁾ Includes an accrual of $12 million for a specific warranty contingency related to a non-safety, product performance issue recognized during fiscal year 2013 (See Note 22).

OTHER LIABILITIES

12 Months Ended

Sep. 30, 2013

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES

Other liabilities are summarized as follows (in millions):



	September 30,
	2013		2012
Asbestos-related liabilities (see Note 22)	$	96	$	93
Restructuring (see Note 5)	3		4
Non-current deferred income tax liabilities (see Note 21)	100		101
Liabilities for uncertain tax positions (see Note 21)	17		27
Product warranties (see Note 13)	37		28
Environmental (see Note 22)	11		10
Indemnity obligations (see Note 22)	26		32
Other	45		43
Other liabilities	$	335	$	338

LONG-TERM DEBT

12 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

LONG-TERM DEBT

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



	September 30,
	2013			2012
8.125 percent notes due 2015	84			250
10.625 percent notes due 2018 (net of issuance discount of $3) ⁽¹⁾	247			247
4.625 percent convertible notes due 2026 ⁽²⁾	55			300
4.0 percent convertible notes due 2027 ⁽²⁾	200			200
7.875 percent convertible notes due 2026 (net of issuance discount of $23) ⁽²⁾	227			—
6.75 percent notes due 2021 ⁽¹⁾	275			—
Term loan	45			98
Capital lease obligation	28			6
Lines of credit and other borrowings	18			7
Unamortized gain on interest rate swap termination	2			10
Unamortized discount on convertible notes	(43		)	(58		)
Subtotal	1,138			1,060
Less: current maturities	(13		)	(18		)
Long-term debt	$	1,125		$	1,042


⁽¹⁾	The 6.75 percent and 10.625 percent notes contain a call option, which allows for early redemption.


⁽²⁾	The 4.625 percent, 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016, 2019 and 2020, respectively.

Revolving Credit Facility

On April 23, 2012, the company amended and restated its revolving credit facility. Pursuant to the revolving credit facility agreement as amended, the company has a $429 million revolving credit facility, $14 million of which matures in January 2014 for a bank not electing to extend its commitments under the revolving credit facility existing at March 31, 2012 and the remaining $415 million of which matures in April 2017. The availability under this facility is dependent upon various factors, including principally performance against certain financial covenants as highlighted below.

The availability under the revolving credit facility is subject to certain financial covenants based on (i) the ratio of the company's priority debt (consisting principally of amounts outstanding under the revolving credit facility, U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA and (ii) the amount of annual capital expenditures. The company is required to maintain a total priority-debt-to-EBITDA ratio, as defined in the agreement, of (i) 2.50 to 1.00 as of the last day of the fiscal quarter commencing with the fiscal quarter ending on or about March 31, 2012 through and including the fiscal quarter ending on or about September 30, 2012, (ii) 2.25 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending on or about December 31, 2012 through and including the fiscal quarter ending on or about September 30, 2013, and (iii) 2.00 to 1.00 as of the last day of each fiscal quarter thereafter. At September 30, 2013, the company was in compliance with all covenants under its credit agreement with a ratio of approximately 0.51x for the priority debt-to-EBITDA covenant.

Availability under the amended and extended revolving credit facility is also subject to a collateral test, pursuant to which borrowings on the revolving credit facility cannot exceed 1.0x the collateral test value. The collateral test is performed on a quarterly basis. At September 30, 2013, the revolving credit facility was collateralized by approximately $607 million of the company's assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and the company's investment in all or a portion of certain of its wholly-owned subsidiaries.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin and a commitment fee on undrawn amounts, both of which are based upon the company's current corporate credit rating for senior secured facilities. At September 30, 2013, the margin over LIBOR rate was 425 basis points, and the commitment fee was 50 basis points. Although a majority of our revolving credit loans are LIBOR based, overnight revolving credit loans are at the prime rate plus a margin of 325 basis points.

Certain of the company's subsidiaries, as defined in the credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly-held notes outstanding under the company's indentures (see Note 26).

No borrowings were outstanding under the revolving credit facility at September 30, 2013 and September 30, 2012. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At September 30, 2013, there were no of letters of credit outstanding under the revolving credit facility, while $1 million in letters of credit were outstanding on September 30, 2012.

Term Loan

As part of the amendment and restatement of the revolving credit facility, on April 23, 2012 the company entered into a $100 million term loan agreement with a maturity date of April 23, 2017. On September 27, 2013, the company made a payment of $45 million on the principal of the term loan. The remaining term loan balance will amortize over the next three years in annual payments of $5 million with a $30 million principal payment due in fiscal year 2017. Principal payments will be made on a quarterly basis for the duration of the term loan. As of September 30, 2013, the margin over LIBOR rate was 425 basis points. The company may prepay the term loan at any time without penalty or premium. At September 30, 2013, the outstanding balance on the term loan was $45 million.

Debt Securities

In February 2012, we filed a shelf registration statement with the Securities and Exchange Commission, which was amended in November 2012, registering up to $750 million of debt and/or equity securities that we may offer in one or more series on terms to be determined at the time of sale.

Issuance of Debt Securities

On May 31, 2013, the company completed an offering of debt securities consisting of the issuance of $275 million of 8-year, 6.75 percent notes due June 15, 2021 (the "2021 Notes"). The offering and sale were made pursuant to the shelf registration referenced above. The 2021 Notes were issued at 100 percent of their principal amount. The proceeds from the sale of the 2021 Notes were $275 million and were primarily used to complete a cash tender offer for $167 million of the company’s previously outstanding $250 million 8.125 percent notes due 2015.

The 2021 Notes mature on June 15, 2021 and bear interest at a fixed rate of 6.75 percent per annum. The company pays interest on the 2021 Notes semi-annually, in arrears, on June 15 and December 15 of each year. The 2021 Notes constitute senior unsecured obligations of the company and rank equally in right of payment with existing and future senior unsecured indebtedness, and effectively junior to existing and future secured indebtedness to the extent of the security therefor. The 2021 Notes are guaranteed on a senior unsecured basis by each of the company's subsidiaries from time to time guaranteeing its senior secured credit facility. The guarantees rank equally with existing and future senior unsecured indebtedness of the guarantors and will be effectively subordinated to all of the existing and future secured indebtedness of the guarantors, to the extent of the value of the assets securing such indebtedness.

Prior to June 15, 2016, the company may redeem, at its option, from time to time, the 2021 Notes, in whole or in part, at a redemption price equal to the 100 percent of the principal amount of the 2021 Notes to be redeemed plus an applicable premium (as defined in the indenture under which the 2021 Notes were issued) and any accrued and unpaid interest. On or after June 15, 2016, the company may redeem, at its option, from time to time, the 2021 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the 2021 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, if redeemed during the 12-month period beginning on June 15 of the years indicated below:



Year		Redemption Price
2016		105.063%
2017		103.375%
2018		101.688%
2019 and thereafter		100.000%

Prior to June 15, 2016, the company also may redeem, at its option, from time to time, up to 35 percent of the aggregate principal amount of the 2021 Notes with the net cash proceeds of one or more public sales of the company's common stock at a redemption price equal to 106.75 percent of the principal amount, plus accrued and unpaid interest, if any, so long as at least 65 percent of the aggregate principal amount of 2021 Notes originally issued remains outstanding after each such redemption and notice of any such redemption is mailed within 90 days of any such sale of common stock.

If a Change of Control (as defined in the indenture under which the 2021 Notes were issued) occurs, unless the company has exercised its right to redeem the 2021 Notes, each holder of 2021 Notes may require the company to repurchase some or all of such holder's 2021 Notes at a purchase price equal to 101 percent of the principal amount of the 2021 Notes to be repurchased, plus accrued and unpaid interest, if any.

Repurchase of Debt Securities

On June 5, 2013, the company completed a cash tender offer for its 8.125 percent notes due September 15, 2015. The notes were repurchased at approximately 114 percent of their principal amount. The repurchase of $167 million of 8.125 percent notes was accounted for as an extinguishment of debt and, accordingly, the company recognized a $24 million loss primarily associated with the premium paid to repurchase the notes net of a $5 million gain related to recognition of the pro-rata portion of the unamortized gain on interest rate swap termination. This net loss on debt extinguishment of $19 million is included in interest expense, net in the consolidated statement of operations.

2013 Convertible Senior Unsecured Notes

In December 2012, the company issued $250 million of 7.875 percent convertible senior unsecured notes due 2026 (the “2013 Convertible Notes”). The 2013 Convertible Notes were sold by the company to qualified institutional buyers in a private placement exempt from the registration requirements of the Securities Act of 1933. The 2013 Convertible Notes have an initial principal amount of $900 per note and will accrete to $1,000 per note on December 1, 2020 at an effective interest rate of 10.9 percent. Net proceeds received by the company, after issuance costs and discounts, were approximately $220 million.

The company pays 7.875 percent cash interest on the principal amount at maturity of the 2013 Convertible Notes semi-annually in arrears on June 1 and December 1 of each year to holders of record at the close of business on the preceding May 15 and November 15, respectively, and at maturity to the holders that present the 2013 Convertible Notes for payment. Interest accrues on the principal amount at maturity thereof from and including the date the 2013 Convertible Notes are issued or from, and including, the last date in respect of which interest has been paid or provided for, as the case may be, to, but excluding, the next interest payment date.

The 2013 Convertible Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of the company's subsidiaries. The 2013 Convertible Notes are senior unsecured obligations and rank equally in right of payment with all of the company's existing and future senior unsecured indebtedness and are junior to any of the company existing and future secured indebtedness.

The 2013 Convertible Notes will be convertible in certain circumstances into cash up to the principal amount at maturity of the 2013 Convertible Note surrendered for conversion and, if applicable, shares of the company's common stock (subject to a conversion share cap as described below), based on an initial conversion rate, subject to adjustment, equivalent to 83.3333 shares per $1,000 principal amount at maturity of 2013 Convertible Notes (which represents an initial conversion price of $12.00 per share), only under the following circumstances:

(1) Prior to June 1, 2025, during any calendar quarter after the calendar quarter ending December 31, 2012, if the closing sale price of the Company's common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120 percent of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter;

(2) Prior to June 1, 2025, during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount at maturity of Notes was equal to or less than 97 percent of the conversion value of the Notes on each trading day during such five consecutive trading day period;

(3) Prior to June 1, 2025, if the company has called the Notes for redemption;

(4) Prior to June 1, 2025, upon the occurrence of specified corporate transactions; or

(5) At any time on or after June 1, 2025.

On or after December 1, 2020, the company may redeem the Notes at its option, in whole or in part, at a redemption price in cash equal to 100 percent of the principal amount at maturity of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Further, holders may require the company to purchase all or a portion of their Notes at a purchase price in cash equal to 100 percent of the principal amount at maturity of the Notes to be purchased, plus accrued and unpaid interest, on December 1, 2020 or upon certain fundamental changes. The maximum number of shares of common stock those Notes are convertible into is 19,208,404 shares.

The company used the net proceeds of approximately $220 million from the offering of the Notes (after discounts and issuance costs) and additional cash to acquire a portion of its outstanding 4.625 percent convertible senior notes due 2026 (the “4.625 percent notes”) in transactions that settled concurrently with the closing of the 7.875 percent note offering. Approximately $245 million of $300 million principal amount of the 4.625 percent notes were acquired for an aggregate purchase price of approximately $236 million (including accrued interest). The company recognized a loss on debt extinguishment of $5 million.

Accounting guidance requires that cash-settled convertible debt, such as the company's 7.875 percent convertible senior unsecured notes due 2026, be separated into debt and equity components at issuance and a value be assigned to each. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, is recorded as a debt discount. The company measures the debt component at fair value by utilizing a discounted cash flow model. This model utilizes observable inputs such as contractual repayment terms, benchmark forward yield curves, and yield curves and quoted market prices of its own nonconvertible debt. The yield curves are acquired from an independent source that is widely used in the financial industry and reviewed internally by personnel with appropriate expertise in valuation methodologies. The estimated fair value of the debt component of the Notes was $216 million (Level 2). The amount of the equity component recognized was $9 million.

2006 and 2007 Convertible Notes

In February 2007, the company issued $200 million of 4.00 percent convertible senior unsecured notes due 2027 (the 2007 convertible notes). In March 2006, the company issued $300 million of 4.625 percent convertible senior unsecured notes due 2026 (the 2006 convertible notes). In December 2012, the company acquired approximately $245 million of $300 million principal amount of the 4.625 percent notes. The 2007 convertible notes bear cash interest at a rate of 4.00 percent per annum from the date of issuance through February 15, 2019, payable semi-annually in arrears on February 15 and August 15 of each year. After February 15, 2019, the principal amount of the notes will be subject to accretion at a rate that provides holders with an aggregate annual yield to maturity of 4.00 percent. The 2006 convertible notes bear cash interest at a rate of 4.625 percent per annum from the date of issuance through March 1, 2016, payable semi-annually in arrears on March 1 and September 1 of each year. After March 1, 2016, the principal amount of the notes will be subject to accretion at a rate that provides holders with an aggregate annual yield to maturity of 4.625 percent.

The 2007 convertible notes are convertible into shares of the company’s common stock at an initial conversion rate, subject to adjustment, equivalent to 37.4111 shares of common stock per $1,000 initial principal amount of notes, which represents an initial conversion price of approximately $26.73 per share. If converted, the accreted principal amount will be settled in cash and the remainder of the company’s conversion obligation, if any, in excess of such accreted principal amount will be settled in cash, shares of common stock, or a combination thereof, at the company’s election. Holders may convert their notes at any time on or after February 15, 2025. The maximum number of shares of common stock the 2007 convertible notes are convertible into is approximately 7 million.

The 2006 convertible notes are convertible into shares of the company’s common stock at an initial conversion rate, subject to adjustment, equivalent to 47.6667 shares of common stock per $1,000 initial principal amount of notes, which represents an initial conversion price of approximately $20.98 per share. If converted, the accreted principal amount will be settled in cash and the remainder of the company’s conversion obligation, if any, in excess of such accreted principal amount will be settled in cash, shares of common stock, or a combination thereof, at the company’s election. Holders may convert their notes at any time on or after March 1, 2024. The maximum number of shares of common stock the 2006 convertible notes are convertible into is approximately 3 million.

Prior to February 15, 2025 (2007 convertible notes) and March 1, 2024 (2006 convertible notes), holders may convert their notes only under the following circumstances:


•	during any calendar quarter, if the closing price of the company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120 percent of the applicable conversion price;


•	during the five business day period after any five consecutive trading day period in which the average trading price per $1,000 initial principal amount of notes is equal to or less than 97 percent of the average conversion value of the notes during such five consecutive trading day period;


•	upon the occurrence of specified corporate transactions; or


•	if the notes are called by the company for redemption.

On or after February 15, 2019, the company may redeem the 2007 convertible notes, in whole or in part, for cash at a redemption price equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. On each of February 15, 2019 and 2022, or upon certain fundamental changes, holders may require the company to purchase all or a portion of their 2007 convertible notes at a purchase price in cash equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. On or after March 1, 2016, the company may redeem the 2006 convertible notes, in whole or in part, for cash at a redemption price equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. On each of March 1, 2016, 2018, 2020, 2022 and 2024, or upon certain fundamental changes, holders may require the company to purchase all or a portion of their 2006 convertible notes at a purchase price in cash equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest.

The 2007 and 2006 convertible notes are fully and unconditionally guaranteed by certain subsidiaries of the company that currently guarantee the company’s obligations under its senior secured credit facility and other publicly-held notes (see Revolving Credit Facility above).

The estimated fair value of the equity component of the 2006 and 2007 convertible notes of $108 million was recognized in additional paid-in capital upon adoption of the accounting guidance for cash-settled convertible debt mentioned above. In addition, the company allocated $4 million of unamortized debt issuance costs to the equity component and recognized this amount as a reduction to additional paid-in capital. The company also recognized a discount on convertible notes of $108 million, which is being amortized as non-cash interest expense over periods of ten and twelve years for the 2006 convertible notes and 2007 convertible notes, respectively. Upon recognition of the equity component of the convertible notes, the company also recognized a deferred tax liability of $39 million as the tax effect of the basis difference between carrying and notional values of the convertible notes. The carrying value of this deferred tax liability was offset with certain net deferred tax assets in the first quarter of fiscal year 2009 for determining valuation allowances against those deferred tax assets (see Note 21).

The following table summarizes the principal amounts and related unamortized discount on all convertible notes (in millions):



	September 30, 2013			September 30, 2012
Principal amount of convertible notes	$	505		$	500
Unamortized discount on convertible notes	(66		)	(58		)
Net carrying value	$	439		$	442

The following table summarizes other information related to the convertible notes:



	2006 Convertible Notes		2007 Convertible Notes		2013 Convertible Notes
Total amortization period for debt discount (in years):	10		12		8
Remaining amortization period for debt discount (in years):	3		6		7
Effective interest rates on convertible notes:	7.0	%	7.7	%	5.5	%

The following table summarizes interest costs recognized on convertible notes (in millions):



	Year Ended September 30,
	2013		2012		2011
Contractual interest coupon	$	29	$	22	$