mtor-20220102
false00011132569/302022Q1http://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate202006Member00011132562021-10-012021-12-3100011132562022-02-02xbrli:sharesiso4217:USD00011132562020-10-012020-12-31iso4217:USDxbrli:shares00011132562021-12-3100011132562021-09-3000011132562020-09-3000011132562020-12-310001113256us-gaap:CommonStockMember2021-09-300001113256us-gaap:AdditionalPaidInCapitalMember2021-09-300001113256us-gaap:RetainedEarningsMember2021-09-300001113256us-gaap:TreasuryStockMember2021-09-300001113256us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001113256us-gaap:ParentMember2021-09-300001113256us-gaap:NoncontrollingInterestMember2021-09-300001113256us-gaap:RetainedEarningsMember2021-10-012021-12-310001113256us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310001113256us-gaap:ParentMember2021-10-012021-12-310001113256us-gaap:NoncontrollingInterestMember2021-10-012021-12-310001113256us-gaap:CommonStockMember2021-10-012021-12-310001113256us-gaap:AdditionalPaidInCapitalMember2021-10-012021-12-3100011132562020-10-012021-09-300001113256us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-09-300001113256srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2021-09-300001113256srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:ParentMember2021-09-300001113256srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-09-300001113256us-gaap:CommonStockMember2021-12-310001113256us-gaap:AdditionalPaidInCapitalMember2021-12-310001113256us-gaap:RetainedEarningsMember2021-12-310001113256us-gaap:TreasuryStockMember2021-12-310001113256us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001113256us-gaap:ParentMember2021-12-310001113256us-gaap:NoncontrollingInterestMember2021-12-310001113256us-gaap:CommonStockMember2020-09-300001113256us-gaap:AdditionalPaidInCapitalMember2020-09-300001113256us-gaap:RetainedEarningsMember2020-09-300001113256us-gaap:TreasuryStockMember2020-09-300001113256us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001113256us-gaap:ParentMember2020-09-300001113256us-gaap:NoncontrollingInterestMember2020-09-300001113256us-gaap:RetainedEarningsMember2020-10-012020-12-310001113256us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001113256us-gaap:ParentMember2020-10-012020-12-310001113256us-gaap:NoncontrollingInterestMember2020-10-012020-12-310001113256us-gaap:CommonStockMember2020-10-012020-12-310001113256us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310001113256us-gaap:CommonStockMember2020-12-310001113256us-gaap:AdditionalPaidInCapitalMember2020-12-310001113256us-gaap:RetainedEarningsMember2020-12-310001113256us-gaap:TreasuryStockMember2020-12-310001113256us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001113256us-gaap:ParentMember2020-12-310001113256us-gaap:NoncontrollingInterestMember2020-12-310001113256srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-11-300001113256srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2021-12-012021-12-010001113256srt:ExecutiveOfficerMemberus-gaap:RestrictedStockUnitsRSUMember2021-12-010001113256srt:ExecutiveOfficerMemberus-gaap:RestrictedStockUnitsRSUMember2021-12-012021-12-010001113256srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMember2020-12-012020-12-010001113256srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-12-012020-12-01xbrli:pure0001113256srt:ExecutiveOfficerMemberus-gaap:PerformanceSharesMembersrt:MinimumMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-12-012020-12-010001113256srt:ExecutiveOfficerMembersrt:MaximumMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-12-012020-12-010001113256us-gaap:AccountingStandardsUpdate202006Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-09-300001113256srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-10-010001113256us-gaap:ConvertibleNotesPayableMembermtor:ThreeAndOneQuarterPercentConvertibleNotesDue2037Member2021-10-010001113256country:USmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:USmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:US2021-10-012021-12-310001113256country:CAmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:CAmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:CA2021-10-012021-12-310001113256country:MXmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:MXmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:MX2021-10-012021-12-310001113256srt:NorthAmericaMembermtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256srt:NorthAmericaMembermtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256srt:NorthAmericaMember2021-10-012021-12-310001113256mtor:CommercialTruckSegmentMembercountry:SE2021-10-012021-12-310001113256mtor:AftermarketAndIndustrialSegmentMembercountry:SE2021-10-012021-12-310001113256country:SE2021-10-012021-12-310001113256country:ITmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:ITmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:IT2021-10-012021-12-310001113256country:GBmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:GBmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:GB2021-10-012021-12-310001113256mtor:EuropeOtherMembermtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256mtor:EuropeOtherMembermtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256mtor:EuropeOtherMember2021-10-012021-12-310001113256mtor:CommercialTruckSegmentMembersrt:EuropeMember2021-10-012021-12-310001113256mtor:AftermarketAndIndustrialSegmentMembersrt:EuropeMember2021-10-012021-12-310001113256srt:EuropeMember2021-10-012021-12-310001113256mtor:CommercialTruckSegmentMembercountry:BR2021-10-012021-12-310001113256mtor:AftermarketAndIndustrialSegmentMembercountry:BR2021-10-012021-12-310001113256country:BR2021-10-012021-12-310001113256country:CNmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:CNmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:CN2021-10-012021-12-310001113256country:INmtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256country:INmtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:IN2021-10-012021-12-310001113256mtor:AsiaPacificOtherMembermtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256mtor:AsiaPacificOtherMembermtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256mtor:AsiaPacificOtherMember2021-10-012021-12-310001113256mtor:CommercialTruckSegmentMember2021-10-012021-12-310001113256mtor:AftermarketAndIndustrialSegmentMember2021-10-012021-12-310001113256country:USmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:USmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:US2020-10-012020-12-310001113256country:CAmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:CAmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:CA2020-10-012020-12-310001113256country:MXmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:MXmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:MX2020-10-012020-12-310001113256srt:NorthAmericaMembermtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256srt:NorthAmericaMembermtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256srt:NorthAmericaMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMembercountry:SE2020-10-012020-12-310001113256mtor:AftermarketAndIndustrialSegmentMembercountry:SE2020-10-012020-12-310001113256country:SE2020-10-012020-12-310001113256country:ITmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:ITmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:IT2020-10-012020-12-310001113256country:GBmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:GBmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:GB2020-10-012020-12-310001113256mtor:EuropeOtherMembermtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256mtor:EuropeOtherMembermtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256mtor:EuropeOtherMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMembersrt:EuropeMember2020-10-012020-12-310001113256mtor:AftermarketAndIndustrialSegmentMembersrt:EuropeMember2020-10-012020-12-310001113256srt:EuropeMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMembercountry:BR2020-10-012020-12-310001113256mtor:AftermarketAndIndustrialSegmentMembercountry:BR2020-10-012020-12-310001113256country:BR2020-10-012020-12-310001113256country:CNmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:CNmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:CN2020-10-012020-12-310001113256country:INmtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256country:INmtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256country:IN2020-10-012020-12-310001113256mtor:AsiaPacificOtherMembermtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256mtor:AsiaPacificOtherMembermtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256mtor:AsiaPacificOtherMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMember2020-10-012020-12-310001113256mtor:AftermarketAndIndustrialSegmentMember2020-10-012020-12-310001113256us-gaap:EmployeeSeveranceMember2021-09-300001113256mtor:PlantShutDownAndOtherMember2021-09-300001113256us-gaap:EmployeeSeveranceMember2021-10-012021-12-310001113256mtor:PlantShutDownAndOtherMember2021-10-012021-12-310001113256us-gaap:EmployeeSeveranceMember2021-12-310001113256mtor:PlantShutDownAndOtherMember2021-12-310001113256us-gaap:EmployeeSeveranceMember2020-09-300001113256mtor:PlantShutDownAndOtherMember2020-09-300001113256us-gaap:EmployeeSeveranceMember2020-10-012020-12-310001113256mtor:PlantShutDownAndOtherMember2020-10-012020-12-310001113256us-gaap:EmployeeSeveranceMember2020-12-310001113256mtor:PlantShutDownAndOtherMember2020-12-310001113256country:USmtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-11-11mtor:plant0001113256mtor:AftermarketAndIndustrialSegmentMembersrt:EuropeMembermtor:GlobalRestructuringPrograms2021Member2020-11-11mtor:office0001113256mtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-11-112020-11-11mtor:position0001113256mtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-11-110001113256mtor:AssetImpairmentMembermtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-11-110001113256us-gaap:EmployeeSeveranceMembermtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-11-110001113256us-gaap:OtherRestructuringMembermtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-11-110001113256mtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2020-10-012021-09-300001113256mtor:AftermarketAndIndustrialSegmentMembermtor:GlobalRestructuringPrograms2021Member2021-10-012021-12-310001113256mtor:USSecuritizationFinancingFacilityMember2021-12-310001113256mtor:USSecuritizationFinancingFacilityMember2021-09-300001113256mtor:SwedishFactoringFacilityMember2021-12-31iso4217:EUR0001113256mtor:SwedishFactoringFacilityMember2021-09-300001113256mtor:USFactoringFacilityMember2021-12-310001113256mtor:USFactoringFacilityMember2021-09-300001113256mtor:UnitedKingdomFactoringFacilityMember2021-12-310001113256mtor:UnitedKingdomFactoringFacilityMember2021-09-300001113256mtor:ItalyFactoringFacilityMember2021-12-310001113256mtor:ItalyFactoringFacilityMember2021-09-300001113256mtor:OtherFactoringFacilityMember2021-12-310001113256mtor:OtherFactoringFacilityMember2021-09-300001113256us-gaap:LetterOfCreditMembermtor:USSecuritizationFinancingFacilityMember2021-12-310001113256us-gaap:LetterOfCreditMembermtor:USSecuritizationFinancingFacilityMember2021-09-300001113256mtor:SwedishFactoringFacilityMember2021-10-012021-12-310001113256us-gaap:LandAndLandImprovementsMember2021-12-310001113256us-gaap:LandAndLandImprovementsMember2021-09-300001113256us-gaap:BuildingMember2021-12-310001113256us-gaap:BuildingMember2021-09-300001113256us-gaap:MachineryAndEquipmentMember2021-12-310001113256us-gaap:MachineryAndEquipmentMember2021-09-300001113256us-gaap:ToolsDiesAndMoldsMember2021-12-310001113256us-gaap:ToolsDiesAndMoldsMember2021-09-300001113256us-gaap:ConstructionInProgressMember2021-12-310001113256us-gaap:ConstructionInProgressMember2021-09-300001113256us-gaap:ConvertibleNotesPayableMembermtor:ThreeAndOneQuarterPercentConvertibleNotesDue2037Member2021-12-310001113256us-gaap:ConvertibleNotesPayableMembermtor:ThreeAndOneQuarterPercentConvertibleNotesDue2037Member2021-09-300001113256us-gaap:SeniorNotesMembermtor:FourAndOneHalfPercentNotesDue2028Member2021-12-310001113256us-gaap:SeniorNotesMembermtor:FourAndOneHalfPercentNotesDue2028Member2021-09-300001113256mtor:SixAndOneQuartersPercentNotesDue2025Memberus-gaap:SeniorNotesMember2021-12-310001113256mtor:SixAndOneQuartersPercentNotesDue2025Memberus-gaap:SeniorNotesMember2021-09-300001113256us-gaap:LoansPayableMembermtor:TermLoanDue2024Member2021-12-310001113256us-gaap:LoansPayableMembermtor:TermLoanDue2024Member2021-09-300001113256us-gaap:ConvertibleNotesPayableMember2021-12-310001113256us-gaap:ConvertibleNotesPayableMember2021-09-300001113256us-gaap:RevolvingCreditFacilityMembermtor:AmendedRevolvingCreditFacilityMember2021-12-310001113256us-gaap:RevolvingCreditFacilityMember2021-12-310001113256us-gaap:RevolvingCreditFacilityMember2021-09-300001113256country:CNmtor:OtherExportFinancingArrangementsMemberus-gaap:NotesPayableToBanksMember2021-12-310001113256country:CNmtor:OtherExportFinancingArrangementsMemberus-gaap:NotesPayableToBanksMember2021-09-300001113256us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001113256us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001113256us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300001113256us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-09-300001113256us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:ForeignExchangeForwardMember2021-12-310001113256us-gaap:ForeignExchangeForwardMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001113256us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:ForeignExchangeForwardMember2021-09-300001113256us-gaap:ForeignExchangeForwardMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-09-300001113256us-gaap:ForeignExchangeForwardMember2021-12-310001113256us-gaap:ForeignExchangeForwardMember2021-09-300001113256us-gaap:FairValueInputsLevel1Member2021-12-310001113256us-gaap:FairValueInputsLevel2Member2021-12-310001113256us-gaap:FairValueInputsLevel3Member2021-12-310001113256us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeForwardMember2021-12-310001113256us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeForwardMember2021-12-310001113256us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignExchangeForwardMember2021-12-310001113256us-gaap:FairValueInputsLevel1Member2021-09-300001113256us-gaap:FairValueInputsLevel2Member2021-09-300001113256us-gaap:FairValueInputsLevel3Member2021-09-300001113256us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeForwardMember2021-09-300001113256us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeForwardMember2021-09-300001113256us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignExchangeForwardMember2021-09-300001113256us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001113256us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-09-300001113256mtor:ForeignExchangeOptionPurchaseRIskMember2021-12-310001113256mtor:ForeignExchangeOptionPurchaseRIskMember2021-09-300001113256mtor:ForeignExchangeOptionTranslationRiskMember2021-09-300001113256mtor:ForeignExchangeOptionTranslationRiskMember2021-12-310001113256us-gaap:PensionPlansDefinedBenefitMember2021-10-012021-12-310001113256us-gaap:DefinedBenefitPostretirementHealthCoverageMember2021-10-012021-12-310001113256us-gaap:PensionPlansDefinedBenefitMember2020-10-012020-12-310001113256us-gaap:DefinedBenefitPostretirementHealthCoverageMember2020-10-012020-12-310001113256mtor:SuperFundMember2021-12-31mtor:site0001113256mtor:NonSuperFundMember2021-12-310001113256srt:MinimumMember2021-12-310001113256srt:MaximumMember2021-12-310001113256mtor:SuperFundMember2021-09-300001113256mtor:NonSuperFundMember2021-09-300001113256mtor:SuperFundMember2021-10-012021-12-310001113256mtor:NonSuperFundMember2021-10-012021-12-310001113256mtor:RockwellAsbestosMember2021-12-31mtor:claim0001113256mtor:RockwellAsbestosMember2021-09-300001113256mtor:RockwellAsbestosMember2021-04-012021-06-300001113256mtor:RockwellAsbestosMember2020-10-012021-09-300001113256mtor:RockwellAsbestosMembersrt:MinimumMember2021-09-300001113256mtor:RockwellAsbestosMember2021-10-012021-12-310001113256mtor:RepurchaseProgramJuly2021Memberus-gaap:CommonStockMember2021-07-280001113256mtor:RepurchaseProgramJuly2021Memberus-gaap:CommonStockMember2021-12-310001113256mtor:RepurchaseProgramJuly2021Memberus-gaap:CommonStockMember2021-09-300001113256mtor:RepurchaseProgamNovember2019Memberus-gaap:CommonStockMember2019-11-070001113256mtor:RepurchaseProgramJulyAndNovember2019Memberus-gaap:CommonStockMember2020-10-012021-09-300001113256mtor:RepurchaseProgramJulyAndNovember2019Memberus-gaap:CommonStockMember2021-09-300001113256mtor:RepurchaseProgramNovember2018Memberus-gaap:DebtSecuritiesMember2018-11-020001113256mtor:RepurchaseProgramNovember2018Member2021-12-310001113256mtor:RepurchaseProgramNovember2018Member2021-09-300001113256us-gaap:AccumulatedTranslationAdjustmentMember2021-09-300001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-09-300001113256us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-09-300001113256us-gaap:AccumulatedTranslationAdjustmentMember2021-10-012021-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-10-012021-12-310001113256us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-10-012021-12-310001113256us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310001113256us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310001113256us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310001113256us-gaap:AccumulatedTranslationAdjustmentMember2020-09-300001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-09-300001113256us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-09-300001113256us-gaap:AccumulatedTranslationAdjustmentMember2020-10-012020-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-10-012020-12-310001113256us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-10-012020-12-310001113256us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310001113256us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001113256us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001113256us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMembermtor:ExternalSalesMemberus-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256mtor:ExternalSalesMembermtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256us-gaap:IntersegmentEliminationMembermtor:ExternalSalesMember2021-10-012021-12-310001113256mtor:ExternalSalesMember2021-10-012021-12-310001113256mtor:IntersegmentSalesMembermtor:CommercialTruckSegmentMemberus-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256mtor:IntersegmentSalesMembermtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256mtor:IntersegmentSalesMemberus-gaap:IntersegmentEliminationMember2021-10-012021-12-310001113256mtor:IntersegmentSalesMember2021-10-012021-12-310001113256mtor:CommercialTruckSegmentMemberus-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256mtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256us-gaap:IntersegmentEliminationMember2021-10-012021-12-310001113256mtor:CommercialTruckSegmentMembermtor:ExternalSalesMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256mtor:ExternalSalesMembermtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256us-gaap:IntersegmentEliminationMembermtor:ExternalSalesMember2020-10-012020-12-310001113256mtor:ExternalSalesMember2020-10-012020-12-310001113256mtor:IntersegmentSalesMembermtor:CommercialTruckSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256mtor:IntersegmentSalesMembermtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256mtor:IntersegmentSalesMemberus-gaap:IntersegmentEliminationMember2020-10-012020-12-310001113256mtor:IntersegmentSalesMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256mtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256us-gaap:IntersegmentEliminationMember2020-10-012020-12-310001113256us-gaap:OperatingSegmentsMember2021-10-012021-12-310001113256us-gaap:OperatingSegmentsMember2020-10-012020-12-310001113256us-gaap:MaterialReconcilingItemsMember2021-10-012021-12-310001113256us-gaap:MaterialReconcilingItemsMember2020-10-012020-12-310001113256mtor:CommercialTruckSegmentMemberus-gaap:OperatingSegmentsMember2021-12-310001113256mtor:CommercialTruckSegmentMemberus-gaap:OperatingSegmentsMember2021-09-300001113256mtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2021-12-310001113256mtor:AftermarketAndIndustrialSegmentMemberus-gaap:OperatingSegmentsMember2021-09-300001113256us-gaap:OperatingSegmentsMember2021-12-310001113256us-gaap:OperatingSegmentsMember2021-09-300001113256us-gaap:CorporateNonSegmentMember2021-12-310001113256us-gaap:CorporateNonSegmentMember2021-09-300001113256us-gaap:MaterialReconcilingItemsMember2021-12-310001113256us-gaap:MaterialReconcilingItemsMember2021-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended January 2, 2022
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to ________

Commission File No. 1-15983

MERITOR, INC.

(Exact name of registrant as specified in its charter)

Indiana38-3354643
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
2135 West Maple Road, Troy, Michigan
48084-7186
(Address of principal executive offices)(Zip Code)
(248) 435-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1 Par ValueMTORNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesNo
70,774,834 shares of Common Stock, $1.00 par value, of Meritor, Inc. were outstanding on February 2, 2022.



INDEX
Page
No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2


MERITOR, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share amounts)
Three Months Ended December 31,
20212020
(Unaudited)
Sales$984 $889 
Cost of sales(857)(774)
GROSS PROFIT127 115 
Selling, general and administrative(62)(65)
Other operating expense, net(3)(7)
OPERATING INCOME62 43 
Other income, net14 14 
Equity in earnings of affiliates7 11 
Interest expense, net(13)(28)
INCOME BEFORE INCOME TAXES70 40 
Provision for income taxes(12)(7)
INCOME FROM CONTINUING OPERATIONS58 33 
INCOME FROM DISCONTINUED OPERATIONS, net of tax  
NET INCOME58 33 
Less: Net income attributable to noncontrolling interests(4)(1)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.$54 $32 
NET INCOME ATTRIBUTABLE TO MERITOR, INC.
Net income from continuing operations$54 $32 
Income from discontinued operations  
Net income$54 $32 
BASIC EARNINGS PER SHARE
Continuing operations$0.77 $0.44 
Discontinued operations  
Basic earnings per share$0.77 $0.44 
DILUTED EARNINGS PER SHARE
Continuing operations$0.76 $0.44 
Discontinued operations  
Diluted earnings per share$0.76 $0.44 
Basic average common shares outstanding70.2 72.2 
Diluted average common shares outstanding71.2 73.2 
See Notes to Condensed Consolidated Financial Statements.

3


MERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions)

Three Months Ended December 31,
20212020
(Unaudited)
Net income$58 $33 
Other comprehensive income (loss):
Foreign currency translation adjustments:
Attributable to Meritor, Inc.(14)55 
Attributable to noncontrolling interests 1 
Pension and other postretirement benefit related adjustments1 3 
Unrealized gain on cash flow hedges1 1 
Other comprehensive income (loss), net of tax(12)60 
Total comprehensive income46 93 
Less: Comprehensive income attributable to noncontrolling interests(4)(2)
Comprehensive income attributable to Meritor, Inc.$42 $91 
See Notes to Condensed Consolidated Financial Statements.
4


MERITOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
2021
September 30, 2021
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$113 $101 
Receivables, trade and other, net555 534 
Inventories667 601 
Other current assets69 50 
TOTAL CURRENT ASSETS1,404 1,286 
NET PROPERTY 508 517 
GOODWILL507 507 
OTHER ASSETS628 628 
TOTAL ASSETS$3,047 $2,938 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term debt$74 $19 
Accounts and notes payable 635 573 
Other current liabilities270 308 
TOTAL CURRENT LIABILITIES979 900 
LONG-TERM DEBT1,027 1,008 
RETIREMENT BENEFITS183 191 
OTHER LIABILITIES220 224 
TOTAL LIABILITIES2,409 2,323 
COMMITMENTS AND CONTINGENCIES (See Note 16)
EQUITY:
Common stock (December 31, 2021 and September 30, 2021, 104.7 and 104.0 shares issued and 70.8 and 70.1 shares outstanding, respectively)
106 105 
Additional paid-in capital761 798 
Retained earnings1,006 935 
Treasury stock, at cost (December 31, 2021 and September 30, 2021, 33.9 and 33.9 shares, respectively)
(632)(632)
Accumulated other comprehensive loss(644)(632)
Total equity attributable to Meritor, Inc.597 574 
Noncontrolling interests41 41 
TOTAL EQUITY638 615 
TOTAL LIABILITIES AND EQUITY$3,047 $2,938 
See Notes to Condensed Consolidated Financial Statements.
5


MERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Three Months Ended December 31,
20212020
(Unaudited)
OPERATING ACTIVITIES
Net income$58 $33 
Less: Income from discontinued operations, net of tax  
Income from continuing operations58 33 
Adjustments to income from continuing operations to arrive at cash provided by operating activities:
Depreciation and amortization25 27 
Deferred income tax expense 1 1 
Restructuring costs4 6 
Stock compensation expense4 6 
Equity in earnings of affiliates(7)(11)
Pension and retiree medical income(13)(13)
Loss on debt extinguishment 8 
Dividends received from equity method investments4 1 
Pension and retiree medical contributions(2)(3)
Restructuring payments(4)(4)
Changes in off-balance sheet accounts receivable securitization and factoring programs153 85 
Changes in receivables, inventories and accounts payable(181)(77)
Changes in other current assets and liabilities(58)(22)
Changes in other assets and liabilities(5)7 
Operating cash flows provided by (used for) continuing operations(21)44 
Operating cash flows used for discontinued operations  
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES(21)44 
INVESTING ACTIVITIES
Capital expenditures(18)(10)
Other investing activities2 (3)
CASH USED FOR INVESTING ACTIVITIES(16)(13)
FINANCING ACTIVITIES
Borrowing and securitization55  
Redemption of notes (281)
Proceeds from debt issuances 275 
Redemption of convertible notes (53)
Debt issuance costs (4)
Term loan payments(5)(4)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES50 (67)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS
(1)4 
CHANGE IN CASH AND CASH EQUIVALENTS12 (32)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD101 315 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$113 $283 
See Notes to Condensed Consolidated Financial Statements.
6


MERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(in millions)
(Unaudited)

Three months ended December 31, 2021
Common
Stock
Additional
Paid-in
Capital
Retained EarningsTreasury StockAccumulated
Other
Comprehensive
Loss
Total Equity Attributable to
Meritor, Inc.
Noncontrolling
Interests
Total
Beginning Balance at September 30, 2021
$105 $798 $935 $(632)$(632)$574 $41 $615 
Comprehensive income (loss)— — 54 — (12)42 4 46 
Vesting of equity based awards1 (1)— — — — —  
Adjustments upon adoption of ASU 2020-06— (40)17 — — (23)— (23)
Equity based compensation expense— 4 — — 4 — 4 
Noncontrolling interest dividends— — — — — — (4)(4)
Ending Balance at December 31, 2021
$106 $761 $1,006 $(632)$(644)$597 $41 $638 
Three months ended December 31, 2020
Common
Stock
Additional
Paid-in
Capital
Retained EarningsTreasury StockAccumulated
Other
Comprehensive
Loss
Total Equity Attributable to
Meritor, Inc.
Noncontrolling
Interests
Total
Beginning Balance at September 30, 2020
$105 $808 $736 $(573)$(614)$462 $33 $495 
Comprehensive income— — 32 — 59 91 2 93 
Vesting of equity based awards1 (1)— — — — —  
Repurchase of convertible notes— (30)— — — (30)— (30)
Equity based compensation expense— 6 — — — 6 — 6 
Other equity adjustments— 1 — — — 1 — 1 
Ending Balance at December 31, 2020
$106 $784 $768 $(573)$(555)$530 $35 $565 
See Notes to Condensed Consolidated Financial Statements.

7


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Basis of Presentation
Meritor, Inc. (the "company" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated products, systems, modules and components to original equipment manufacturers ("OEMs") and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The Condensed Consolidated Financial Statements are those of the company and its consolidated subsidiaries.
In the opinion of the company, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited Consolidated Financial Statements and notes thereto included in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021. The Condensed Consolidated Balance Sheet data as of September 30, 2021 was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three months ended December 31, 2021 are not necessarily indicative of the results for the full year.
The company’s fiscal year ends on the Sunday nearest September 30, and its fiscal quarters generally end on the Sundays nearest December 31, March 31 and June 30. The first quarter of fiscal years 2022 and 2021 ended on January 2, 2022 and January 3, 2021, respectively. Fiscal year 2021 ended on October 3, 2021. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and December 31 are used consistently throughout this report to represent the fiscal year end and first fiscal quarter end, respectively.
COVID-19 Pandemic Update
The COVID-19 pandemic adversely affected our financial performance during the beginning of fiscal year 2021, however the direct adverse impacts of the pandemic on our operations and financial performance started to dissipate over the course of the third fiscal quarter of fiscal year 2021. All of our facilities have been fully operational since the end of fiscal year 2020 and our salaried employees have returned to work on a hybrid in person basis consistent with local, regional and business requirements, in each case under enhanced safety guidelines. Although we are optimistic that the worst of the pandemic is behind us, the progression of the pandemic, and its direct and indirect impacts on our markets, operations and financial performance, have been unpredictable. As a result of this continued uncertainty, there may still be impacts on our industry, operations, workforce, supply chains, distribution systems and demand for our products in the future which cannot be reasonably estimated at this time.

2. Earnings per Share
Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share unit awards and convertible securities, if applicable.
A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):
Three Months Ended December 31,
20212020
Basic average common shares outstanding70.2 72.2 
Impact of restricted shares, restricted share units and performance share units1.0 1.0 
Diluted average common shares outstanding71.2 73.2 

In November 2021, the Board of Directors approved a grant of 0.4 million performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $25.65, which was the company’s share price on the grant date of December 1, 2021. The Board of
8


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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 $25.65, which was the company's share price on the grant date of December 1, 2021.
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, 2021 to September 30, 2024, measured at the end of the performance period. The number of performance share units that vest will depend on adjusted EBITDA margin and adjusted diluted earnings per share from continuing operations which are each weighted at 50%. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.4 million performance share units.
On December 1, 2020, in response to retention and attrition concerns resulting from the COVID-19 pandemic’s impact on the company’s incentive compensation plans, and to continue to incentivize executive performance in a difficult and uncertain environment, the Compensation Committee of the Board of Directors adjusted the threshold level of the performance metrics required to be achieved for payout for the fiscal 2019-2021 performance cycle. The target and maximum levels were not modified. The impact of this adjustment did not have a material impact on the company's Condensed Consolidated Financial Statements.

3. New Accounting Standards
Accounting standards implemented during fiscal year 2022
On October 1, 2021, the company adopted Accounting Standards Update ("ASU") 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (Subtopic 815-40). As a result of adopting this ASU, entities are no longer required to separately present in equity an embedded conversion feature in such debt and instead should account for a convertible debt instrument wholly as debt. ASU 2020-06 also amended the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

The company elected to adopt the ASU using the modified retrospective method. The cumulative effect of the changes following implementation on October 1, 2021 was as follows:
Balance at
September 30, 2021
Adjustments Upon Adoption of ASU 2020-06Balance at
October 1, 2021
Liabilities
Long-Term debt$1,008 $23 $1,031 
Equity
Additional paid-in capital$798 $(40)$758 
Retained earnings$935 $17 $952 

The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for that period. Interest expense recognized in future periods will be reduced as a result of the derecognition of the unamortized debt discount on the 3.25 Percent Convertible Notes (see Note 13), which will no longer be amortized to interest expense. The reduction in interest expense will have a favorable impact on both basic and diluted earnings per share.



9


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

4. Revenue
Disaggregation of revenue

In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three months ended December 31, 2021 and 2020 (in millions).
Three Months Ended December 31, 2021
Primary Geographical MarketCommercial TruckAftermarket & IndustrialTotal
U.S.$348 $177 $525 
Canada 12 12 
Mexico43 6 49 
Total North America391 195 586 
Sweden76  76 
Italy54 4 58 
United Kingdom38 2 40 
Other Europe1 35 36 
Total Europe169 41 210 
Brazil89  89 
China26  26 
India44  44 
Other Asia-Pacific29  29 
Total sales$748 $236 $984 

Three Months Ended December 31, 2020
Primary Geographical MarketCommercial TruckAftermarket & IndustrialTotal
U.S.$310 $170 $480 
Canada 12 12 
Mexico36 5 41 
Total North America346 187 533 
Sweden77  77 
Italy53 5 58 
United Kingdom41 2 43 
Other Europe2 35 37 
Total Europe173 42 215 
Brazil56  56 
China30  30 
India33  33 
Other Asia-Pacific22  22 
Total sales$660 $229 $889 

As of December 31, 2021 and September 30, 2021, Trade receivables, net, which are included in Receivables, trade and other, net, on the Condensed Consolidated Balance Sheet, were $493 million and $471 million, respectively.
For the three months ended December 31, 2021 and 2020, the company had no material bad-debt expense. There were no material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet as of December 31, 2021 and September 30, 2021.
10


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

5. Restructuring Costs
Restructuring reserves were $5 million at December 31, 2021 and $6 million at September 30, 2021. Restructuring costs are recorded within Other operating expense, net within the Condensed Consolidated Statement of Operations. The changes in restructuring reserves for the three months ended December 31, 2021 and 2020 are as follows (in millions):
Employee Termination BenefitsPlant
 Shutdown
 & Other
Total
Balance at September 30, 2021
$5 $1 $6 
Activity during the period:
Charges1 3 4 
Cash payments (4) (4)
Other (1)(1)
Total restructuring reserves at December 31, 2021
2 3 5 
Less: non-current restructuring reserves(1) (1)
Restructuring reserves – current, at December 31, 2021
$1 $3 $4 
Balance at September 30, 2020
$10 $ $10 
Activity during the period:
Charges 5 1 6 
Cash payments (4) (4)
Other(1)(1)(2)
Total restructuring reserves at December 31, 2020
10  10 
Less: non-current restructuring reserves   
Restructuring reserves – current, at December 31, 2020
$10 $ $10 

Global Restructuring Programs Fiscal Year 2021: On November 11, 2020, the company approved a restructuring plan to close three U.S. manufacturing plants and one European administration office in its Aftermarket & Industrial segment and consolidate their operations into existing facilities. The site closures include:

Chicago, Illinois
Livermore, California
Livonia, Michigan
Zurich, Switzerland

The closures impacted approximately 150 hourly and salaried workers. These restructuring plans were intended to optimize the company’s manufacturing footprint, reduce costs and increase efficiencies. With this restructuring plan, the company incurred approximately $13 million in restructuring charges in the Aftermarket & Industrial segment, consisting of an impact on long-lived assets of $3 million, severance related costs of $5 million and other associated costs of $5 million. During fiscal year 2021, the company incurred $10 million in restructuring costs related to this plan. During the first quarter of fiscal year 2022, the company incurred $3 million in restructuring costs related to this plan. Restructuring actions associated with this plan are substantially complete.

6. Income Taxes
For the three months ended December 31, 2021 and 2020, the company recognized tax expense of $12 million and $7 million, respectively. This resulted in effective tax rates of 17% and 18%, respectively.


11


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

7. Accounts Receivable Factoring and Securitization
The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows:
Current ExpirationTotal Facility Size as of 12/31/21Utilized as of 12/31/21Utilized as of 9/30/21
EURUSDEURUSDEURUSD
On-balance sheet arrangement
Committed U.S. accounts receivable securitization (1)
March 2024N/A$110 N/A$57 N/A$3 
Total on-balance sheet arrangement: (1)
N/A$110 N/A$57 N/A$3 
Off-balance sheet arrangements
Committed Swedish factoring facility (2)(3)
March 2024155 $176 162 $184 75 $88 
Committed U.S. factoring facility (2)
February 2023N/A75 N/A85 N/A49 
Uncommitted U.K. factoring facilityApril 202225 28 5 6 2 2 
Uncommitted Italy factoring facilityJune 202230 34 25 28 14 17 
Other uncommitted factoring facilities (4)
NoneN/AN/A15 17 15 17 
Total off-balance sheet arrangements210 $313 207 $320 106 $173 
(1) Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $2 million of letters of credit as of December 31, 2021 and $3 million as of September 30, 2021.
(2) Actual amounts may exceed the bank's commitment at the bank's discretion.
(3) The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2022.
(4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion.

Off-balance sheet arrangements
Total costs associated with all of the off-balance sheet arrangements described above were $1 million for each of the three months ended December 31, 2021 and 2020.

8. Inventories
Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):
December 31,
2021
September 30,
2021
Finished goods$148 $137 
Work in process52 47 
Raw materials, parts and supplies467 417 
Total$667 $601 
12


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Net Property
Net property is summarized as follows (in millions):
December 31,
2021
September 30,
2021
Property at cost:
Land and land improvements$42 $41 
Buildings230 231 
Machinery and equipment1,049 1,051 
Company-owned tooling166 164 
Construction in progress61 63 
Total1,548 1,550 
Less: accumulated depreciation(1,040)(1,033)
Net property$508 $517 

10. Other Assets
Other assets are summarized as follows (in millions):
December 31,
2021
September 30,
2021
Prepaid pension costs$199 $191 
Deferred income tax assets41 42 
Investments in non-consolidated joint ventures 129 132 
Other259 263 
Other assets$628 $628 

11. Other Current Liabilities
Other current liabilities are summarized as follows (in millions):
December 31,
2021
September 30,
2021
Compensation and benefits$78 $125 
Income taxes27 17 
Product warranties 17 15 
Other148 151 
Other current liabilities$270 $308 

Compensation and benefits includes the current portion of pension and retiree medical liability, accrued incentive compensation, salary and wages and accrued vacation, holiday and sick leave pay.
13


MERITOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A summary of the changes in product warranties is as follows (in millions):
Three Months Ended December 31,
20212020
Total product warranties – beginning of period$43 $54 
Accruals for product warranties6 6 
Payments(5)(4)
Change in estimates and other (1)1 
Total product warranties – end of period43 57 
Less: non-current product warranties(26)(37)
Product warranties – current$17 $20 

12. Other Liabilities
Other liabilities are summarized as follows (in millions):
December 31,
2021
September 30,
2021
Asbestos-related liabilities (see Note 16)
$51 $52 
Liabilities for uncertain tax positions52 52 
Product warranties (see Note 11)
26 28 
Other91 92 
Other liabilities$220 $224 

13. Long-Term Debt
Long-Term debt, net of discounts where applicable, is summarized as follows (in millions):
December 31,
2021
September 30,
2021
3.25 percent convertible notes due 2037 (1)
$321 $