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DOCUMENT AND ENTITY INFORMATION - USD ($)	12 Months Ended
DOCUMENT AND ENTITY INFORMATION - USD ($)	Sep. 30, 2018	Nov. 14, 2018	Mar. 31, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	MERITOR INC
Entity Central Index Key	0001113256
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Trading Symbol	MTOR
Entity Common Stock, Shares Outstanding		84,876,805
Document Period End Date	Sep. 30, 2018
Document Type	10-K
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018
Amendment Flag	false
Entity Well-Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1,766,433,323

CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Millions	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Sales	$ 4,178,000,000	$ 3,347,000,000	$ 3,199,000,000
Cost of sales	(3,524,000,000)	(2,863,000,000)	(2,763,000,000)
GROSS MARGIN	654,000,000	484,000,000	436,000,000
Selling, general and administrative	(317,000,000)	(264,000,000)	(213,000,000)
Restructuring costs	(6,000,000)	(6,000,000)	(16,000,000)
Goodwill impairment			15,000,000
Other operating expense, net	(14,000,000)	(7,000,000)	(3,000,000)
OPERATING INCOME (LOSS)	317,000,000	207,000,000	204,000,000
Other income (expense), net	1,000,000	2,000,000	(1,000,000)
Gain on sale of equity investment	0	243,000,000	0
Equity in earnings of affiliates	27,000,000	48,000,000	36,000,000
Interest expense, net	(67,000,000)	(119,000,000)	(84,000,000)
INCOME (LOSS) BEFORE INCOME TAXES	278,000,000	381,000,000	155,000,000
Benefit (provision) for income taxes	(149,000,000)	(52,000,000)	424,000,000
INCOME FROM CONTINUING OPERATIONS	129,000,000	329,000,000	579,000,000
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(3,000,000)	(1,000,000)	(4,000,000)
NET INCOME	126,000,000	328,000,000	575,000,000
Less: Net income attributable to noncontrolling interests	(9,000,000)	(4,000,000)	(2,000,000)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	117,000,000	324,000,000	573,000,000
NET INCOME ATTRIBUTABLE TO MERITOR, INC.
Net income from continuing operations	120,000,000	325,000,000	577,000,000
Loss from discontinued operations	(3,000,000)	(1,000,000)	(4,000,000)
Net income	$ 117,000,000	$ 324,000,000	$ 573,000,000
BASIC EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share from continuing operations (in dollars per share)	$ 1.37	$ 3.69	$ 6.40
Basic earnings (loss) per share from discontinued operations (in dollars per share)	(0.03)	(0.01)	(0.04)
Basic earnings (loss) per share (in dollars per share)	1.34	3.68	6.36
DILUTED EARNINGS (LOSS) PER SHARE
Diluted earnings (loss) per share from continuing operations (in dollars per share)	1.31	3.60	6.27
Diluted earnings (loss) per share from discontinued operations (in dollars per share)	(0.03)	(0.01)	(0.04)
Diluted earnings (loss) per share (in dollars per share)	$ 1.28	$ 3.59	$ 6.23
Basic average common shares outstanding (in shares)	87.5	88.0	90.1
Diluted average common shares outstanding (in shares)	91.2	90.2	92.0

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 126	$ 328	$ 575
Other comprehensive income:
Foreign currency translation adjustments	(51)	25	(12)
Pension and other postretirement benefit related adjustments (net of tax of $6, $147 and $33 for the year ended September 30, 2018, 2017 and 2016, respectively)	24	240	(35)
Unrealized gain (loss) on investment and foreign exchange contracts	4	(1)	4
Total comprehensive income	103	592	532
Less: Comprehensive income attributable to noncontrolling interest	(7)	(4)	(2)
Comprehensive income attributable to Meritor, Inc.	$ 96	$ 588	$ 530

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Pension and other postretirement benefit, tax	$ 6	$ 147	$ 33

CONSOLIDATED BALANCE SHEET - USD ($)
$ in Millions

Sep. 30, 2018

Sep. 30, 2017

CURRENT ASSETS:

Cash and cash equivalents

^[1]

$ 115

$ 88

Receivables, trade and other, net

^[1]

588

789

Inventories

^[1]

477

378

Other current assets

TOTAL CURRENT ASSETS

1,226

1,298

NET PROPERTY

^[1]

483

474

GOODWILL

^[1]

421

414

OTHER ASSETS

^[1]

596

TOTAL ASSETS

2,726

2,782

CURRENT LIABILITIES:

Short-term debt

288

Accounts and notes payable

^[1]

700

622

Other current liabilities

290

272

TOTAL CURRENT LIABILITIES

1,084

1,182

LONG-TERM DEBT

730

750

RETIREMENT BENEFITS

262

314

OTHER LIABILITIES

332

239

TOTAL LIABILITIES

2,408

2,485

COMMITMENTS AND CONTINGENCIES (NOTE 24)

MEZZANINE EQUITY

Convertible debt with cash settlement

EQUITY:

Common stock (September 30, 2018 and 2017, 102.2 and 101.4 shares issued and 84.9 and 88.6 shares outstanding, respectively)

102

101

Additional paid-in capital

787

765

Retained earnings

200

Treasury stock, at cost (September 30, 2018 and September 30, 2017, 17.3 and 12.8 shares, respectively)

(236)

(136)

Accumulated other comprehensive loss

(566)

(545)

Total equity attributable to Meritor, Inc.

287

268

Noncontrolling interests

^[1]

TOTAL EQUITY

317

295

TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY

2,726

2,782

Net property

Goodwill

Other assets

Reportable Legal Entities | Non- Guarantors

CURRENT ASSETS:

Cash and cash equivalents

Receivables, trade and other, net

524

493

Inventories

235

194

Other current assets

TOTAL CURRENT ASSETS

872

794

NET PROPERTY

218

226

GOODWILL

171

177

OTHER ASSETS

235

219

TOTAL ASSETS

1,496

1,416

CURRENT LIABILITIES:

Short-term debt

Accounts and notes payable

339

321

Other current liabilities

142

134

TOTAL CURRENT LIABILITIES

528

546

LONG-TERM DEBT

RETIREMENT BENEFITS

OTHER LIABILITIES

158

106

MEZZANINE EQUITY

Convertible debt with cash settlement

EQUITY:

Total equity attributable to Meritor, Inc.

440

413

Noncontrolling interests

TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY

$ 1,496

1,416

Net property

Cash and cash equivalents

Receivables, trade and other, net

Inventories

Accounts and notes payable

Noncontrolling interests

$ 2

[1]

As of September 30, 2018, Assets and Liabilities held for sale consisted of $2 million Net property. As of September 30, 2017, Assets and Liabilities held for sale consisted of (i) $1 million Cash and cash equivalents; (ii) $13 million Receivables, trade and other, net; (iii) $2 million Inventories; (iv) $3 million Net property; (v) $1 million Goodwill; (vi) $1 million Other assets; (vii) $12 million Accounts and notes payable; and (viii) $2 million Noncontrolling interests.

CONSOLIDATED BALANCE SHEET (Parenthetical) - shares shares in Millions	Sep. 30, 2018	Sep. 30, 2017
Statement of Financial Position [Abstract]
Common stock issued (in shares)	102.2	101.4
Common stock outstanding (in shares)	84.9	88.6
Treasury stock, at cost (in shares)	17.3	12.8

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
$ in Millions

12 Months Ended

Sep. 30, 2018

Sep. 30, 2017

Sep. 30, 2016

OPERATING ACTIVITIES

CASH PROVIDED BY OPERATING ACTIVITIES (see Note 27)

$ 251

$ 176

$ 204

INVESTING ACTIVITIES

Capital expenditures

(104)

(95)

(93)

Proceeds from prior year sale of equity method investment

250

Cash paid for investment in Transportation Power, Inc.

(6)

Proceeds from sale of a business

Proceeds from sale of assets

Cash paid for acquisitions

(35)

(34)

Other investing activities

Net investing cash flows provided by (used for) continuing operations

111

(129)

(90)

Net investing cash flows provided by discontinued operations

CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES

111

(127)

(86)

FINANCING ACTIVITIES

Borrowings and securitization

(43)

Proceeds from debt issuances

325

Redemption of notes

(181)

(103)

Repayment of notes and term loan

(408)

(55)

Debt issuance costs

(12)

Other financing activities

(5)

(13)

(16)

Net change in debt

(229)

(122)

(71)

Repurchase of common stock

(100)

(81)

CASH USED FOR FINANCING ACTIVITIES

(329)

(122)

(152)

EFFECT OF CHANGES IN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

(6)

CHANGE IN CASH AND CASH EQUIVALENTS

(72)

(33)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

^[1]

160

193

CASH AND CASH EQUIVALENTS AT END OF YEAR

115

^[1]

160

AA Gear & Manufacturing, Inc.

INVESTING ACTIVITIES

Cash paid for acquisitions

(35)

Fabco Holdings, Inc.

INVESTING ACTIVITIES

Cash paid for acquisitions

$ 0

$ (34)

$ 0

[1]

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - USD ($) $ in Millions	Total	Total Equity (Deficit) Attributable to Meritor, Inc.	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Treasury Stock	Accumulated Other Comprehensive Loss	Non-controlling Interests
Beginning balance at Sep. 30, 2015	$ (646)	$ (671)	$ 99	$ 865	$ (814)	$ (55)	$ (766)	$ 25
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	532	530			573		(43)	2
Equity based compensation expense	9	9		9
Repurchase of common stock	(81)	(81)				(81)
Non-controlling interest dividends	(2)							(2)
Other	2	2		2
Ending Balance at Sep. 30, 2016	(186)	(211)	99	876	(241)	(136)	(809)	25
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	592	588			324		264	4
Vesting of restricted stock	0		2	(2)
Repurchase of convertible notes	(156)	(156)		(156)
Issuance of convertible notes	41	41		41
Equity based compensation expense	19	19		19
Debt issuance costs	(1)	(1)		(1)
Stock option exercises	2	2		2
Convertible securities with cash settlement	(2)	(2)		(2)
Non-controlling interest dividends	(2)							(2)
Other	(12)	(12)		(12)
Ending Balance at Sep. 30, 2017	295	268	101	765	83	(136)	(545)	27
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	103	96			117		(21)	7
Vesting of restricted stock	0		1	(1)
Equity based compensation expense	20	20		20
Repurchase of common stock	(100)	(100)				(100)
Convertible securities with cash settlement	1	1		1
Non-controlling interest dividends	(2)							(2)
Other	0	2		2				(2)
Ending Balance at Sep. 30, 2018	$ 317	$ 287	$ 102	$ 787	$ 200	$ (236)	$ (566)	$ 30

BASIS OF PRESENTATION	12 Months Ended
BASIS OF PRESENTATION	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION Meritor, Inc. (the "company" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems, modules and components to original equipment manufacturers ("OEMs") and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The consolidated financial statements are those of the company and its consolidated subsidiaries. Certain businesses are reported in discontinued operations in the consolidated statement of operations, consolidated statement of cash flows and related notes for all periods presented. Additional information regarding discontinued operations is discussed in Note 3. The company’s fiscal year ends on the Sunday nearest September 30. The 2018, 2017 and 2016 fiscal years ended on September 30, 2018, October 1, 2017 and October 2, 2016, respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 is used consistently throughout this report to represent the fiscal year end.

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2018

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 (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 5 and 12), costs associated with the company’s restructuring actions (see Note 6), product warranty liabilities (see Note 15), long-term incentive compensation plan obligations (see Note 20), retiree medical and pension obligations (see Notes 21 and 22), income taxes (see Note 23), and contingencies including asbestos (see Note 24).

Concentration of Credit Risk

In the normal course of business, the company provides credit to customers. The company limits its credit risk by performing ongoing credit evaluations of its customers and maintaining reserves for potential credit losses and through accounts receivable factoring programs. The company’s accounts receivables are generally due from medium- and heavy-duty truck OEMs, specialty vehicle manufacturers, aftermarket customers, and trailer producers. The company’s ten largest customers accounted for 75 percent , 74 percent and 73 percent of sales in fiscal years 2018, 2017 and 2016, respectively. Sales to the company's top three customers were 52 percent, 49 percent and 50 percent of total sales in fiscal years 2018, 2017 and 2016, respectively. At September 30, 2018 and 2017, 23 percent of the company's trade accounts receivable were 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 are reported using the equity method of accounting (see Note 14).

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 disposal represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The results of discontinued operations are aggregated and presented separately in the consolidated statement of operations and consolidated statement of cash flows (see Note 3).

Revenue Recognition

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

Allowance for Doubtful Accounts

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

Earnings per Share

Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share units, 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,
	2018	2017	2016
Basic average common shares outstanding	87.5	88.0	90.1
Impact of restricted shares, restricted share units and performance share units	2.8	1.7	1.9
Impact of convertible notes	0.9	0.5	—
Diluted average common shares outstanding	91.2	90.2	92.0

In November 2017, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $24.79, which was the company’s share price on the grant date of December 1, 2017. The Board of Directors also approved a grant of 0.3 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $24.79, which was the company's share price on the grant date of December 1, 2017.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2017 to September 30, 2020, measured at the end of the performance period. The number of performance share units that vest will depend on adjusted EBITDA margin and adjusted diluted earnings per share from continuing operations at the following weights: 50% associated with achieving an adjusted EBITDA margin target and 50% associated with achieving an adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.3 million performance share units.

In November 2016, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $12.77, which was the company’s share price on the grant date of December 1, 2016. The Board of Directors also approved a grant of 0.5 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $12.77, which was the company's share price on the grant date of December 1, 2016.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established M2019 goals for the three-year performance period of October 1, 2016 to September 30, 2019, measured at the end of the performance period. The number of performance share units that vest will depend on meeting the established M2019 goals at the following weights: 50% associated with achieving an Adjusted diluted earnings per share from continuing operations target, 25% associated with achieving a target for revenue growth above market and 25% associated with achieving a Net debt to Adjusted EBITDA target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.6 million performance share units.

In November 2015, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $10.51, which was the company’s share price on the grant date of December 1, 2015. The Board of Directors also approved a grant of 0.5 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $10.51, which was the company's share price on the grant date of December 1, 2015.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2015 to September 30, 2018, measured at the end of the performance period. The number of performance share units that vest will depend on Adjusted EBITDA margin and Adjusted diluted earnings per share from continuing operations at the following weights: 50% associated with achieving an Adjusted EBITDA margin target and 50% associated with achieving an Adjusted diluted earnings per share from continuing operations target. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.7 million performance share units.

For the years ended September 30, 2018, 2017 and 2016, the dilutive impact of previously issued restricted shares, restricted share units, and performance share units was 2.8 million, 1.7 million and 1.9 million, respectively. For the years ended September 30, 2018, 2017 and 2016, compensation cost related to restricted shares, restricted share units, performance share units and stock options was $20 million, $19 million and $9 million, respectively.

For the fiscal years ended 2018 and 2017, 0.9 million and 0.5 million shares were included in the computation of diluted earnings per share because the average stock price exceeded the conversion price for the 7.875 percent convertible notes due 2026. For the year ended September 30, 2016, the company's convertible senior unsecured notes were excluded from the computation of diluted earnings per share, as the company's average stock price during this period was less than the conversion price for the 7.875 percent convertible notes due 2026.

Other

Other significant accounting policies are included in the related notes, specifically, goodwill (Note 5), inventories (Note 10), property and depreciation (Note 12), capitalized software (Note 13), product warranties (Note 15), financial instruments (Note 18), equity based compensation (Note 20), retirement medical plans (Note 21), retirement pension plans (Note 22), income taxes (Note 23) and environmental and asbestos-related liabilities (Note 24).

Accounting standards implemented during fiscal year 2018

In July 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-09, Codification Improvements. The amendments in this ASU result from the FASB’s standing project to address suggestions on the Accounting Standards Codification ("ASC") and to make other incremental improvements to GAAP. The amendments include changes to clarify the ASC or correct unintended application of guidance that is not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.

Some of the amendments in this ASU were effective upon issuance. Others have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. And some are conforming amendments that have been made to recently issued guidance that is not yet effective that may require application of the transition and effective date guidance in the original ASU.

The amendments that were effective upon issuance did not have a material impact on the company's consolidated financial statements. The company plans to implement the remaining amendments beginning October 1, 2019 and is currently evaluating the potential impact on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendment changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and presenting all items that affect earnings in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting components excluded from the assessment of hedge effectiveness. Changes to income statement classification and financial statement disclosures will be applied prospectively from the date of adoption. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance eliminates the need to determine the fair value of individual assets and liabilities of a reporting unit to measure a goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The revised guidance will be applied prospectively, and is effective for calendar year-end SEC filers in 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The company adopted this standard in the fourth quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity ("VIE") held through an entity under common control. Under the ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU intends to simplify how share-based payments are accounted for, including accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The company adopted this standard in the first quarter of fiscal year 2018. Following adoption of this standard, all excess tax benefits and all tax deficiencies generated in the current and future periods will be prospectively recorded as income tax benefit or expense in the company’s consolidated statement of operations in the reporting period in which they occur. An income tax benefit of approximately $1 million was recognized in the quarterly period ended December 31, 2017 as a result of the adoption of ASU 2016-09 and a corresponding $1 million increase in income from continuing operations and net income was recognized during such quarter.

In March 2016, the FASB issued ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting. The ASU eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments. The ASU clarifies that an exercise contingency itself does not need to be evaluated to determine whether it is in an embedded derivative, just the underlying option. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The update clarifies that a change in a counterparty to a derivative instrument designated as a hedging instrument would not require the entity to dedesignate the hedging relationship and discontinue the application of hedge accounting. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires entities that measure inventory using first-in, first-out ("FIFO") or average cost to measure inventory at the lower of cost and net realizable value. The company adopted this standard in the first quarter of fiscal year 2018. This guidance did not have a material impact on the consolidated financial statements.

Accounting standards to be implemented

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). This ASU requires that implementation costs incurred by customers in a cloud computing arrangement be deferred and recognized over the term of the arrangement, if those costs would have been capitalized in a software licensing arrangement under the internal-use software guidance under ASC 350-40. For public business entities, amendments in this update are effective for fiscal years ending after December 15, 2020. Early adoption is permitted, including adoption in any interim period, for all entities. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this ASU amend ASC 715-20 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. For public business entities, amendments in this update are effective for fiscal years ending after December 15, 2020. Early adoption is permitted for all entities. An entity should apply the amendments in this update on a retrospective basis to all periods presented. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU add, modify, and eliminate certain disclosure requirements on fair value measurements in Topic 820. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain amendments should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. Others should be applied retrospectively. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. The amendments in this ASU affect the guidance issued in ASU 2016-02, Leases (Topic 842), which is not yet effective. The amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The effective date for this ASU is the same as that for ASU 2016-02 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 in connection with its planned implementation of ASU 2016-02 and is currently assessing the impact of this new transition method on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-10, Codification Improvements to (Topic 842). The amendments in this ASU affect narrow aspects of the guidance issued in ASU 2016-02, Leases (Topic 842), which is not yet effective. The effective date and transition requirements for this ASU are the same as those for ASU 2016-02 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 in connection with its planned implementation of ASU 2016-02 and is currently assessing the potential impact of this new guidance on its accounting policies and its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 ("U.S. tax reform") from accumulated other comprehensive income into retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 amends the scope of modification accounting for share-based payment arrangements and provides guidance on when an entity would be required to apply modification accounting. This standard is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied prospectively. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 affects entities who own investments in callable debt securities and aligns the amortization period of premiums on callable debt securities to expectations incorporated in market pricing on the underlying securities. This standard is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effective adjustment directly to retained earnings at the beginning of the adoption period. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance.

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance requires entities to only include the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, are to be included in a separate line item(s) outside of any sub-total of operating income. ASU 2017-07 also provides guidance that only the service cost component of net benefit cost is eligible for capitalization. This standard is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The revisions in this amendment are to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 provides guidance which defines an "in substance nonfinancial asset"; unifies guidance related to partial sales of nonfinancial assets; eliminates rules specifically addressing sales of real estate; removes exceptions to the financial asset derecognition model; and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The effective date and the transition requirements for the amendments in ASU 2017-05 are the same as the effective date and transition requirements in Topic 606, described below. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU provides clarification on the definition of a business and adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. To be considered a business under the new guidance, it must include an input and a substantive process that together significantly contribute to the ability to create output. The amendment removes the evaluation of whether a market participant could replace missing elements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and will be applied prospectively. The potential impact of this new guidance will be assessed for future acquisitions or dispositions, but it is not expected to have a material impact on the company's consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU was issued to remove the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted; however, the guidance can only be adopted in the first interim period of a fiscal year. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force). The ASU was issued to reduce differences in practice with respect to how specific transactions are classified in the statement of cash flows. The update provides guidance on the following eight types of transactions: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The company is currently evaluating the potential impact of this new guidance on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including accounts receivable. The ASU also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The amendments in this update are required to be adopted by public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The company is currently evaluating the potential impact of this new guidance on its accounting policies and its consolidated financial statements.

In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The ASU clarifies the assessment of the likelihood that revenue will be collected from a contract, the guidance for presenting sales taxes and similar taxes, and the timing for measuring customer payments that are not in cash. The ASU also establishes a practical expedient for contract modifications at the transition. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-12 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. Please see discussion of ASU 2014-09 below.

In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update). The ASU was issued to remove from the ASC certain SEC staff guidance that the SEC staff stated would be rescinded: Revenue and Expense Recognition for Freight Services in Process; Accounting for Shipping and Handling Fees and Costs; and Accounting for Consideration Given by a Vendor to a Customer (including a Reseller of the Vendor’s Products). The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-11 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. Please see discussion of ASU 2014-09 below.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. The ASU provides guidance regarding the identification of performance and licensing obligations. The amendments in this update affect the guidance in ASU 2014-09, which is not effective yet. The effective date and the transition requirements for the amendments in ASU 2016-10 are the same as the effective date and transition requirements in ASU 2014-09 as described below. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. Please see discussion of ASU 2014-09 below.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. Therefore, the company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 in connection with its planned implementation of ASU 2014-09. Please see discussion of ASU 2014-09 below.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update will require lessees to recognize a right-of-use asset and lease liability for substantially all leases. The standard is required to be adopted by public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2019 and is currently assessing the potential impact of this new guidance on its accounting policies and its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service and requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 was originally effective for fiscal periods beginning after December 15, 2016, including interim periods within those fiscal periods. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year making it effective for fiscal periods beginning after December 15, 2017, including interim periods within those fiscal periods, while also providing for early adoption but not before the original effective date. The company plans to implement this standard in the first quarter of the fiscal year beginning October 1, 2018 using the modified-retrospective transition method. The company is concluding the assessment phase of its implementation of this standard. The company does not expect a material impact on its consolidated financial statements from adoption of this guidance. Disclosure requirements under this standard have been significantly expanded in comparison to the disclosure requirements under current GAAP. The company has completed its assessment of the new disclosure requirements and is in the process of drafting its disclosures for both interim and annual periods under Topic 606, and the company has determined that it will further disaggregate revenue by presenting revenue by geographic region for each of its reportable segments.

DISCONTINUED OPERATIONS

12 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

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



	Year Ended September 30,
	2018			2017			2016
Sales	$	—		$	—		$	—
Litigation settlement	(2		)	—			(3		)
Other, net	(2		)	(1		)	(4		)
Loss before income taxes	(4		)	(1		)	(7		)
Benefit from income taxes	1			—			3
Loss from discontinued operations attributable to Meritor, Inc.	$	(3	)	$	(1	)	$	(4	)

Loss from discontinued operations attributable to the company for the twelve months ended September 30, 2018 was primarily related to changes in estimates related to legal costs incurred in connection with a previously divested business.

Prior Period Divestiture

MSSC

In October 2009, the company closed on the sale of its 57 percent interest in MSSC, a joint venture that manufactured and supplied automotive coil springs, torsion bars and stabilizer bars in North America, to the joint venture partner, a subsidiary of Mitsubishi Steel Mfg. Co., LTD (MSM). In connection with the sale of its interest in MSSC, the company agreed to indemnify 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, 2017 was approximately $1 million. During the fourth quarter of fiscal year 2018, the company determined with confirmation from MSSC that the obligation was no longer probable and therefore the company released the accrual. Adjustments to amounts previously reported in discontinued operations that are related to the disposal of the company’s MSSC business are reflected in discontinued operations for all periods presented.

ASSETS AND LIABILITIES HELD FOR SALE	12 Months Ended
ASSETS AND LIABILITIES HELD FOR SALE	Sep. 30, 2018
Assets And Liabilities Held-For-Sale [Abstract]
ASSETS AND LIABILITIES HELD FOR SALE	ASSETS AND LIABILITIES HELD FOR SALE In fiscal year 2018, management approved plans to sell $2 million of property in various locations, of which $1 million was within the Aftermarket & Industrial reporting segment and $1 million was within corporate locations. The company expects to sell the assets within one year from management's approval of the plans. The assets met the criteria for presentation as held for sale as of September 30, 2018. Meritor Huayang Vehicle Braking Company Ltd. During the first quarter of fiscal year 2017, management approved a plan to sell Meritor Huayang Vehicle Braking Company Ltd. within the Commercial Truck & Trailer reporting segment. The company expected to sell the business within one year from management's approval of the plan. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of September 30, 2017. Assets and liabilities held for sale are measured at the lower of the carrying value or fair value less costs to sell. Upon meeting the held for sale criteria, the company determined the carrying value of the business exceeded the fair value less costs to sell. As a result, an impairment charge of $3 million was recorded within other operating expense, net in the company’s consolidated statement of operations during fiscal year 2017. On February 7, 2018, Meritor completed the sale of its equity interest in Meritor Huayang Vehicle Braking Company Ltd. All assets and liabilities of the business were transferred at closing.

GOODWILL

12 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

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

Annual Impairment Analysis

ASC Topic 350 allows entities to perform an initial qualitative evaluation to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform the quantitative impairment test. As allowed by the revised guidance, the company has elected to bypass the qualitative assessment for fiscal year 2018 and proceed directly to the quantitative impairment test.

Excluding the qualitative evaluation discussed above, the quantitative goodwill impairment review is a comparison of the fair value of a reporting unit with its carrying amount. 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, an impairment charge based on that difference will be recorded. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

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.

For fiscal year 2018, the fair value of all of the company’s reporting units exceeded their carrying values.

Realignment of Reporting Units

As discussed in Note 25, the company realigned its operations in the second quarter of fiscal year 2018, resulting in a change to its reportable segments. As a result of the change in reportable segments, the company's reporting units changed. The Commercial Truck & Trailer segment contains two reporting units. The Aftermarket & Industrial segment contains three reporting units. Goodwill was reassigned to the new reporting units using a relative fair value allocation.

Acquisition of AA Gear & Manufacturing, Inc. Business

On April 30, 2018, the company acquired substantially all of the assets of AA Gear & Manufacturing, Inc. and its subsidiaries ("AAG") for a cash purchase price of approximately $35 million and the assumption of certain liabilities. The AAG acquisition was accounted for as a business combination. The company recorded provisional goodwill in the amount of $9 million for the excess of consideration paid over the fair value of the individual assets acquired and liabilities assumed, excluding identifiable intangible assets. This recorded goodwill consists largely of the synergies and economies of scale expected from combining the operations of the company and AAG. All of the goodwill was assigned to the Commercial Truck & Trailer reportable segment. All goodwill recognized is expected to be deductible for income tax purposes over the next 15 years.

Acquisition of Fabco Holdings, Inc. Business

On August 31, 2017, the company acquired certain assets of Fabco, including its product portfolio and related technologies, for a cash purchase price of $34 million and the assumption of certain liabilities. The Fabco acquisition was accounted for as a business combination. As a result, we recorded goodwill in the amount of $20 million for the excess of consideration paid over the fair value of the individual assets acquired and liabilities assumed, excluding identifiable intangible assets. This recorded goodwill consists largely of the synergies and economies of scale expected from combining the operations of the company and Fabco. All of the goodwill was assigned to the Aftermarket & Industrial reportable segment.

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



	Commercial Truck & Trailer			Aftermarket & Industrial			Total
Goodwill ⁽¹⁾	$	280		$	125		$	405
Accumulated impairment losses ⁽¹⁾	—			(15		)	(15		)
Balance at September 30, 2016 ⁽¹⁾	280			110			390
Goodwill acquired from acquisition ⁽¹⁾	—			19			19
Foreign currency translation⁽¹⁾	3			2			5
Balance at September 30, 2017⁽¹⁾	283			131			414
Adjustment due to sale of a business (see Note 7)	(1		)	—			(1		)
Fabco measurement period adjustment (see Note 7)	—			1			1
Goodwill acquired from acquisition (see Note 7)	9			—			9
Foreign currency translation	(2		)	—			(2		)
Balance at September 30, 2018	$	289		$	132		$	421

⁽¹⁾ Amounts have been recast to reflect reportable segment changes (see Note 25).

RESTRUCTURING COSTS

12 Months Ended

Sep. 30, 2018

Restructuring and Related Activities [Abstract]

RESTRUCTURING COSTS

At September 30, 2018 and 2017, $4 million and $6 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, 2015	$	10		$	—	$	—		$	10
Activity during the period:
Charges to continuing operations	15			—		1			16
Cash payments – continuing operations	(11		)	—		—			(11		)
Other	1			—		—			1
Balance at September 30, 2016	15			—		1			16
Activity during the period:
Charges to continuing operations	5			—		1			6
Cash payments – continuing operations	(14		)	—		(1		)	(15		)
Other	(1		)	—		—			(1		)
Balance at September 30, 2017	5			—		1			6
Activity during the period:
Charges to continuing operations	6			—		—			6
Cash payments – continuing operations	(7		)	—		(1		)	(8		)
Total restructuring reserves, end of year	4			—		—			4
Less: non-current restructuring reserves	(1		)	—		—			(1		)
Restructuring reserves – current, at September 30, 2018	$	3		$	—	$	—		$	3

Restructuring costs attributable to the company’s business segments during fiscal years 2018, 2017 and 2016 are as follows (in millions):



	Commercial Truck & Trailer		Aftermarket & Industrial		Corporate		Total
Fiscal year 2018:
Segment Realignment Program	$	—	$	3	$	—	$	3
Other	1		1		1		3
Total restructuring costs	$	1	$	4	$	1	$	6
Fiscal year 2017 ⁽¹⁾:
Aftermarket actions	—		4		—		4
Other	2		—		—		2
Total restructuring costs	$	2	$	4	$	—	$	6
Fiscal year 2016 ⁽¹⁾:
Market related actions	$	5	$	1	$	2	$	8
Aftermarket actions	—		5		—		5
Other	1		2		—		3
Total restructuring costs	$	6	$	8	$	2	$	16


⁽¹⁾	Fiscal year 2017 and 2016 have been recast to reflect reportable segment changes.

Segment Realignment Program: On March 12, 2018, the company announced a realignment of operations to further drive long-term strategic objectives while also assigning new responsibilities as part of its commitment to leadership development. As a part of this program, the company approved various labor restructuring actions in the Aftermarket & Industrial segment. The company recorded $3 million of restructuring costs during fiscal year 2018, in connection with this program. These actions were substantially complete as of fiscal year 2018.

Other Restructuring Actions: During fiscal year 2018, the company recorded restructuring costs of $3 million primarily associated with labor reduction programs in the Commercial Truck & Trailer segment and Aftermarket & Industrial segment.

Fiscals 2017 & 2016 Aftermarket Actions: During the third quarter of fiscal year 2016, the company approved various restructuring plans in the North American and European Aftermarket businesses. The company recorded $5 million of restructuring costs during the third quarter of fiscal year 2016 and $4 million of restructuring costs during fiscal year 2017. Restructuring actions associated with these plans were substantially complete as of September 30, 2017.

Fiscal 2016 Market Related Actions: In response to the decline in revenue in North America and South America, during the fourth quarter of fiscal year 2016, the company approved various headcount reduction plans targeting different areas of the business. During the fourth quarter of fiscal year 2016, the company incurred a total of $5 million in restructuring costs in the Commercial Truck & Trailer segment, $1 million in Aftermarket & Industrial segments and $2 million in its corporate locations. Restructuring actions with these plans were substantially complete as of September 30, 2017.

Other Fiscal 2016 Actions: During the first half of fiscal year 2016, the company recorded restructuring costs of $3 million primarily associated with a labor reduction program in China in the Commercial Truck & Trailer segment and a labor reduction program in the Aftermarket & Industrial segment. Restructuring actions with these plans were substantially complete as of September 30, 2016.

ACQUISITIONS AND DIVESTITURE

12 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

ACQUISITIONS AND DIVESTITURE

Acquisition of AAG Business

On April 30, 2018, the company acquired substantially all of the assets of AAG for a cash purchase price of approximately $35 million and the assumption of certain liabilities. AAG provides low-to-medium volume batch manufacturing for complex gear and shaft applications, as well as quick-turnaround prototyping solutions and emergency plant support. The AAG acquisition was accounted for as a business combination.

Since completion of initial estimates in the third quarter of fiscal year 2018, the company recorded measurement period adjustments to decrease the purchase price and decrease the provisional fair value of identifiable net assets acquired and liabilities assumed in the AAG transaction, which had a net zero impact to goodwill. This adjustment was made to reflect additional available information and updated preliminary valuation results. The measurement period remains open to finalize the working capital adjustment and the value of intangible assets and to obtain more information on an open warranty claim. The company is reviewing and may record other additional measurement period adjustments in fiscal year 2019. All goodwill resulting from the acquisition of AAG was assigned to the Commercial Truck & Trailer reportable segment (see Note 5).



		Estimated Fair Value
		As of June 30, 2018		Measurement Period Adjustments			As of September 30, 2018
Purchase price		$	36	$	(1	)	$	35

Acquired assets and liabilities
	Accounts Receivable and Accounts Payable, net	2		—			2
	Inventory	5		—			5
	Fixed Assets	5		(1		)	4
	Intangible Assets	15		—			15
Total identifiable net assets acquired		27		(1		)	26

Goodwill resulting from the acquisition of AAG		9		—			9
		$	36	$	(1	)	$	35

Acquisition of Fabco Business

On August 31, 2017, the company acquired certain assets of Fabco, including the product portfolio and related technologies, for a cash purchase price of $34 million and the assumption of certain liabilities. The Fabco acquisition was accounted for as a business combination.

As of September, 30, 2018, the company finalized all measurement period adjustments related to the Fabco acquisition. Since completion of initial estimates in the fourth quarter of fiscal year 2017, the company recorded a net $1 million measurement period adjustment to decrease the fair value of identifiable net assets acquired in the Fabco transaction, resulting in a corresponding $1 million increase to goodwill. These adjustment were made to reflect additional available information and updated valuation results, which included valuation of trademarks, technology and customer relationships. All goodwill resulting from the Fabco acquisition was assigned to the Aftermarket and Industrial reportable segment (see Note 5).



		Estimated Fair Value
		As of September 30, 2017			Measurement Period Adjustments			As of September 30, 2018
Purchase price		$	34		$	—		$	34

Assets acquired and liabilities assumed
	Receivables	5			—			5
	Inventories	13			(1		)	12
	Property, plant and equipment	9			(2		)	7
	Intangible assets	—			3			3
	Accounts payable	(6		)	—			(6		)
	Other current liabilities	(6		)	(1		)	(7		)
Total identifiable net assets acquired		15			(1		)	14

Goodwill resulting from the acquisition of Fabco		19			1			20
		$	34		$	—		$	34

Divestiture of Meritor Huayang Vehicle Braking Company Ltd.

On February 7, 2018, Meritor completed the sale of its equity interest in Meritor Huayang Vehicle Braking Company Ltd. All assets and liabilities of the business were transferred at closing. As a result of the divestiture and prior period held for sale classification, a pretax impairment charge of $3 million was previously recorded within other operating expense, net in the company’s consolidated statement of operations for fiscal year 2017.

ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION	12 Months Ended
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION	Sep. 30, 2018
Accounts Receivable Factoring And Securitization [Abstract]
ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION	ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION Off-balance sheet arrangements Swedish Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo through one of its European subsidiaries. Under this arrangement with Nordea Bank, which expires in March 2020, the company can sell up to, at any point in time, €155 million ($181 million) of eligible trade receivables. The amount of eligible receivables sold may exceed Nordea Bank's commitment at Nordea Bank's discretion. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €136 million ($158 million) and €139 million ($164 million) of this accounts receivable factoring facility as of September 30, 2018 and 2017, respectively. The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through February 12, 2019. The commitment is subject to standard terms and conditions for this type of arrangement. U.S. Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its U.S. subsidiaries through one of its U.S. subsidiaries. Under this arrangement with Nordea Bank, which expires in February 2019, the company can sell up to, at any point in time, €80 million ($93 million) of eligible trade receivables. The amount of eligible receivables sold may exceed Nordea Bank’s commitment at Nordea Bank’s discretion. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €45 million ($53 million) and €37 million ($43 million) of this accounts receivable factoring facility as of September 30, 2018 and 2017, respectively. United Kingdom Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its United Kingdom subsidiaries. Under this arrangement with Nordea Bank, which expires in February 2022, the company can sell up to, at any point in time, €25 million ($29 million) of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the consolidated balance sheet. The company had utilized €8 million ($9 million) and €7 million ($9 million) of this accounts receivable factoring facility as of September 30, 2018 and 2017, respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program. Italy Factoring Facility: The company has an arrangement to sell trade receivables from AB Volvo and its European subsidiaries through one of its Italian subsidiaries. Under this arrangement with Nordea Bank, which expires in June 2022, the company can sell up to, at any point in time, €30 million ($35 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 €24 million ($28 million) and €22 million ($26 million) of this accounts receivable factoring facility as of September 30, 2018 and 2017, respectively. The agreement is subject to standard terms and conditions for these types of arrangements including a sole discretion clause whereby the bank retains the right to not purchase receivables, which has not been invoked since the inception of the program. In addition to the above facilities, a number of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable in the consolidated balance sheet. The amount of factored receivables excluded from accounts receivable under these arrangements were $12 million and $19 million at September 30, 2018 and 2017, respectively. Total costs associated with all of the off-balance sheet arrangements described above were $5 million in fiscal years 2018, 2017 and 2016, respectively, and are included in selling, general and administrative expenses in the consolidated statement of operations. On-balance sheet arrangements As of September 30, 2018, the U.S. accounts receivables securitization facility with PNC bank had a facility size of $100 million. On October 4, 2018, the company entered into an amendment that increased the size of the facility to $110 million and extended its expiration date to December 2021. The maximum permitted priority debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility is 2.25 to 1.00. This program is provided by PNC Bank, National Association, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents party to the agreement from time to time (participating lenders). Under this program, the company has the ability to sell an undivided percentage ownership interest in substantially all of its trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. accounts receivable factoring facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation ("ARC"), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for the company’s U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. As of September 30, 2018, $46 million was outstanding under this program, and $11 million was outstanding under related letters of credit. As of September 30, 2017, $89 million was outstanding under this program, and no amounts were outstanding under related letters of credit. This securitization program contains a cross-default to the revolving credit facility. At certain times during any given month, the company may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, the company would then typically utilize the cash received from customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, the company may borrow under this program in amounts exceeding the amounts shown as outstanding at fiscal year ends.

OTHER OPERATING EXPENSE, NET	12 Months Ended
OTHER OPERATING EXPENSE, NET	Sep. 30, 2018
Other Income and Expenses [Abstract]
OTHER OPERATING EXPENSE, NET	OTHER OPERATING EXPENSE, NET Other operating expense, net for fiscal years 2018, 2017 and 2016 primarily relates to environmental remediation costs incurred by the company (see Note 24).

INVENTORIES

12 Months Ended

Sep. 30, 2018

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,
	2018		2017
Finished goods	$	170	$	139
Work in process	41		34
Raw materials, parts and supplies	266		205
Total	$	477	$	378

OTHER CURRENT ASSETS

12 Months Ended

Sep. 30, 2018

Other Current Assets Disclosure [Abstract]

OTHER CURRENT ASSETS

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



	September 30,
	2018		2017
Asbestos-related recoveries (see Note 24)	$	16	$	14
Prepaid and other	30		29
Other current assets	$	46	$	43

NET PROPERTY

12 Months Ended

Sep. 30, 2018

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 production contract, generally not to exceed three years.

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

Net property is summarized as follows (in millions):



	September 30,
	2018			2017
Property at cost:
Land and land improvements	$	29		$	30
Buildings	228			240
Machinery and equipment	914			892
Company-owned tooling	130			126
Construction in progress	81			69
Total	1,382			1,357
Less: accumulated depreciation	(899		)	(883		)
Net property	$	483		$	474

OTHER ASSETS

12 Months Ended

Sep. 30, 2018

Other Assets, Noncurrent [Abstract]

OTHER ASSETS

Other assets are summarized as follows (in millions):



	September 30,
	2018		2017
Investments in non-consolidated joint ventures (see Note 14)	$	102	$	101
Asbestos-related recoveries (see Note 24)	76		32
Unamortized revolver debt issuance costs (see Note 17)	7		8
Capitalized software costs, net ⁽¹⁾	26		27
Deferred income tax assets (see Note 23)	140		229
Assets for uncertain tax positions (see Note 23)	53		48
Prepaid pension costs (see Note 22)	152		135
Intangible assets ⁽²⁾	18		1
Other ⁽³⁾	22		15
Other assets	$	596	$	596


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


(2)	Primarily relates to customer relationships. As of September 30, 2018, the gross carrying value was $22 million and the accumulated amortization was $4 million. As of September 30, 2017, the gross carrying value was 1 million and the accumulated amortization was insignificant. The weighted average amortization periods for customer relationships is approximately 19 years.


(3)	As of September 30, 2017, includes reserves for Rockwell insurance policies in dispute.

The company holds a variable interest in a joint venture that is a variable interest entity ("VIE") accounted for under the equity method of accounting. The joint venture manufactures components for commercial vehicle applications primarily on behalf of the company. The variable interest relates to a supply arrangement between the company and the joint venture whereby the company supplies certain components to the joint venture on a cost-plus basis. The company is not the primary beneficiary of the joint venture, as the joint venture partner has shared or absolute control over key manufacturing operations, labor relationships, financing activities and certain other functions of the joint venture. Therefore, the company does not consolidate the joint venture. At September 30, 2018 and September 30, 2017, the company’s investment in the joint venture was $63 million and $54 million, respectively.

TransPower

Meritor completed $3 million strategic investments in Transportation Power, Inc. ("TransPower") in each of the first and third quarters of fiscal year 2018. The company holds a variable interest in TransPower, a VIE. TransPower develops electrical drive solutions and supplies integrated drive systems, full electric truck solutions and energy-storage subsystems to major manufacturers of trucks, school buses, refuse vehicles and terminal tractors. The company is not the primary beneficiary of TransPower, as other owners have control over the significant activities of TransPower, including the development of intellectual property and manufacturing. Therefore, the company does not consolidate TransPower. At September 30, 2018, the company’s investment in TransPower was $6 million, representing the company’s maximum exposure to loss.

INVESTMENTS IN NON-CONSOLIDATED JOINT VENTURES

12 Months Ended

Sep. 30, 2018

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,
	2018		2017		2016
Meritor WABCO Vehicle Control Systems (Commercial Truck & Trailer)	—	%	—	%	50	%
Master Sistemas Automotivos Ltda. (Commercial Truck & Trailer)	49	%	49	%	49	%
Sistemas Automotrices de Mexico S.A. de C.V. (Commercial Truck & Trailer)	50	%	50	%	50	%
Ege Fren Sanayii ve Ticaret A.S. (Commercial Truck & Trailer)	49	%	49	%	49	%
Automotive Axles Limited (Commercial Truck & Trailer)	36	%	36	%	36	%

In the fourth quarter of fiscal year 2017, Meritor, Inc. closed on the sale of its interest in Meritor WABCO Vehicle Control Systems ("Meritor WABCO") to a subsidiary of its joint venture partner, WABCO Holdings Inc. The total purchase price for the sale was $250 million, which was recorded as a receivable as of September 30, 2017. The Company also received a final partnership distribution of $8 million in the fourth quarter of fiscal year 2017, immediately prior to closing.

The Company will remain the exclusive distributor of a certain range of WABCO Holdings Inc.’s aftermarket products in the United States and Canada and the non-exclusive distributor in Mexico for a period of 10 years following the completion of the transaction, and the purchase agreement includes provisions regarding certain future options of the parties to terminate, at certain points during the first three and a half years, these distribution arrangements at an exercise price of between $225 million and $265 million based on the earnings of the business.

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



	September 30,
	2018		2017 ⁽¹⁾
Commercial Truck & Trailer	$	102	$	101
Aftermarket & Industrial	—		—
Total investments in non-consolidated joint ventures	$	102	$	101

⁽¹⁾ Amounts for the year ended September 30, 2017 have been recast to reflect reportable segment changes.

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



	Year Ended September 30,
	2018		2017⁽¹⁾		2016 ⁽¹⁾
Commercial Truck & Trailer	$	27	$	48	$	36
Aftermarket & Industrial	—		—		—
Total equity in earnings of affiliates	$	27	$	48	$	36

⁽¹⁾ Amounts for the years ended September 30, 2017 and September 30, 2016 have been recast to reflect reportable segment changes.

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,
	2018		2017 ⁽¹⁾
Current assets	$	390	$	326
Non-current assets	163		151
Total assets	$	553	$	477

Current liabilities	$	282	$	183
Non-current liabilities	66		98
Total liabilities	$	348	$	281

⁽¹⁾ Does not include Meritor WABCO Vehicle Control Systems.



	Year Ended September 30,
	2018		2017		2016
Sales	$	1,101	$	1,156	$	1,101
Gross profit	154		200		165
Net income	59		101		73

Dividends received from the company’s non-consolidated joint ventures were $17 million in fiscal year 2018, $44 million in fiscal year 2017 and $37 million in fiscal year 2016. Dividends from Meritor WABCO were $36 million in fiscal year 2017, which includes a $8 million final partnership distribution received immediately prior to closing of the sale transaction on October 1, 2017, and $33 million in fiscal year 2016.

The company had sales to its non-consolidated joint ventures of approximately $7 million, $2 million and $9 million in fiscal years 2018, 2017 and 2016, respectively. These sales exclude sales of $196 million, $138 million and $124 million in fiscal years 2018, 2017 and 2016, respectively, to a joint venture in the company’s Commercial Truck & Trailer 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 $843 million, $787 million and $753 million in fiscal years 2018, 2017 and 2016, respectively. Additionally, the company leases space and provides certain administrative and technical services to various non-consolidated joint ventures. The company collected $11 million, $6 million and $12 million for such leases and services during fiscal years 2018, 2017 and 2016, respectively.

Amounts due from the company’s non-consolidated joint ventures were $43 million and $36 million at September 30, 2018 and 2017, 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 $110 million and $99 million at September 30, 2018 and 2017, 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 $91 million and $72 million at September 30, 2018 and 2017, 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 had 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, 2018 and 2017, the company’s investment in the joint venture was $63 million and $54 million, respectively, representing the company’s maximum exposure to loss. This amount is included in investments in non-consolidated joint ventures (see Note 13).

OTHER CURRENT LIABILITIES

12 Months Ended

Sep. 30, 2018

Other Current Liabilities Disclosure [Abstract]

OTHER CURRENT LIABILITIES

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



	September 30,
	2018		2017
Compensation and benefits	$	122	$	117
Income taxes	27		11
Taxes other than income taxes	25		34
Accrued interest	11		9
Product warranties	19		18
Environmental reserves (see Note 24)	8		5
Restructuring (see Note 6)	3		5
Asbestos-related liabilities (see Note 24)	18		19
Indemnity obligations (see Note 24)	1		2
Other	56		52
Other current liabilities	$	290	$	272

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

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



	September 30,
	2018			2017			2016
Total product warranties – beginning of year	$	45		$	44		$	48
Accruals for product warranties	22			14			10
Payments	(16		)	(17		)	(14		)
Change in estimates and other	3			4			—
Total product warranties – end of year	54			45			44
Less: non-current product warranties (see Note 16)	(35		)	(27		)	(26		)
Product warranties – current	$	19		$	18		$	18

OTHER LIABILITIES

12 Months Ended

Sep. 30, 2018

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES

Other liabilities are summarized as follows (in millions):



	September 30,
	2018		2017
Asbestos-related liabilities (see Note 24)	$	193	$	124
Restructuring (see Note 6)	1		1
Deferred income tax liabilities (see Note 23)	16		12
Liabilities for uncertain tax positions (see Note 23)	48		32
Product warranties (see Note 15)	35		27
Environmental (see Note 24)	9		4
Indemnity obligations (see Note 24)	9		10
Other	21		29
Other liabilities	$	332	$	239

LONG-TERM DEBT

12 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

LONG-TERM DEBT

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



	September 30,
	2018			2017
3.25 percent convertible notes due 2037 ⁽¹⁾⁽³⁾	$	318		$	317
4.0 percent convertible notes due 2027⁽¹⁾⁽⁴⁾	24			24
7.875 percent convertible notes due 2026⁽¹⁾⁽⁵⁾	22			22
6.75 percent notes due 2021⁽²⁾⁽⁶⁾	—			173
6.25 percent notes due 2024⁽²⁾⁽⁷⁾	444			443
Capital lease obligation	7			12
Borrowings and securitization	46			89
Unamortized discount on convertible notes ⁽⁸⁾	(37		)	(42		)
Subtotal	824			1,038
Less: current maturities	(94		)	(288		)
Long-term debt	$	730		$	750

⁽¹⁾ The 3.25 percent, 4.0 percent and 7.875 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2025, 2019 and 2020, respectively.

⁽²⁾The 6.75 percent and 6.25 percent notes contain a call option, which allows for early redemption by the issuer.

⁽³⁾The 3.25 percent convertible notes due 2037 are presented net of $7 million and $8 million unamortized issuance costs as of September 30, 2018 and September 30, 2017, respectively.

⁽⁴⁾The 4.0 percent convertible notes due 2027 are presented net of unamortized issuance costs of an insignificant amount as of September 30, 2018 and September 30, 2017.

⁽⁵⁾ The 7.875 percent convertible notes due 2026 are presented net of unamortized issuance costs of an insignificant amount as of September 30, 2018 and September 30, 2017, and $1 million original issuance discount as of September 30, 2018 and September 30, 2017.

⁽⁶⁾The 6.75 percent notes due 2021 are presented net of $2 million unamortized issuance costs as of September 30, 2017.

⁽⁷⁾The 6.25 percent notes due 2024 are presented net of $6 million and $7 million unamortized issuance costs as of September 30, 2018 and September 30, 2017, respectively.

⁽⁸⁾The carrying amount of the equity component related to convertible debt.

Repurchase of Debt Securities

On September 28, 2017, the company redeemed $100 million of the $275 million aggregate principal amount outstanding of the company's 6.75 percent notes due 2021 (the "6.75 Percent Notes") at a price of $1,033.75 per $1,000 of principal amount, plus accrued and unpaid interest. As a result, a loss on debt extinguishment of $5 million was recorded in the company's consolidated statement of operations within Interest expense, net. The redemption was made under the company's July 2016 debt repurchase authorization (see Note 19). On November 2, 2017, the company redeemed the remaining $175 million aggregate principal amount outstanding of the company's 6.75 Percent Notes at a price of $1,033.75 per $1,000 of principal amount, plus accrued and unpaid interest. The redemption resulted in a loss on debt extinguishment of approximately $8 million. The loss on debt extinguishment is included in Interest expense, net in the consolidated statement of operations. The redemption was made pursuant to a special authorization from the Board of Directors in connection with the sale of the company's interest in Meritor WABCO in the fourth quarter of fiscal year 2017.

The company used the net proceeds, after issuance costs and discounts, of approximately $317 million from the offering of the 3.25 percent senior convertible notes due 2037 (the "3.25 Percent Convertible Notes") to acquire portions of its outstanding 7.875 percent senior convertible notes due 2026 (the "7.875 Percent Convertible Notes") and its 4.0 percent senior convertible notes due 2027 (the "4.0 Percent Convertible Notes") in transactions that settled concurrently with the closing of the 3.25 Percent Convertible Note offering on September 22, 2017. In total, the company repurchased $117 million of the $140 million principal amount of its 7.875 Percent Convertible Notes and $119 million of the $143 million principal amount of its 4.0 Percent Convertible Notes. The 7.875 Percent Convertible Notes and 4.0 Percent Convertible Notes were repurchased at premiums equal to 130 percent and 16 percent, respectively, above their principal amount. These repurchases were accounted for as extinguishments of debt, and accordingly the company recognized a loss on debt extinguishment of $31 million in the aggregate ($23 million with respect to the 7.875 Percent Convertible Notes and $8 million with respect to the 4.0 Percent Convertible Notes). The loss on extinguishment was recorded in the consolidated statement of operations within Interest expense, net during fiscal year 2017.

On March 1, 2016, substantially all $55 million principal amount outstanding of the company's 4.625 percent convertible notes due 2026 (the "4.625 Percent Convertible Notes") were repurchased at 100 percent of their face value. On April 15, 2016, the remaining 4.625 Percent Convertible Notes were redeemed at 100 percent of the face value. As of September 30, 2016, none of the 4.625 Percent Convertible Notes were outstanding. The repurchases were made under the company's equity and equity linked repurchase authorization (see Note 19). The repurchase program under this authorization was complete as of September 30, 2016.

Current Classification of 4.0 Percent Convertible Notes

The 4.0 Percent Convertible Notes were classified as current as of September 30, 2018 as the securities are redeemable at the option of the holder on February 15, 2019, at a repurchase price in cash equal to 100 percent of the accreted principal amount of the securities to be repurchased plus accrued and unpaid interest. The 4.0 Percent Convertible Notes were classified as noncurrent as of September 30, 2017.

Current Classification of 6.75 Percent Notes

As of September 30, 2017, the company announced its intention to redeem all of the remaining $175 million aggregate principal amount then outstanding of the company's 6.75 Percent Notes. On November 2, 2017, all of the $175 million aggregate principal amount outstanding of the company's 6.75 Percent Notes was redeemed at a price of $1,033.75 per $1,000 of principal amount, plus accrued and unpaid interest. As a result, the 6.75 Percent Notes were classified as current as of September 30, 2017.

Current Classification of 7.875 Percent Convertible Notes

The 7.875 Percent Convertible Notes were classified as current as of September 30, 2018 as the holders are entitled to convert all or a portion of their 7.875 Percent Convertible Notes at any time beginning October 1, 2018 and prior to the close of business on December 31, 2018 at a rate of 83.3333