| Business Segment Information |
Business Segment Information The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company’s Chief Operating Decision Maker (CODM) is the Chief Executive Officer. The company has two reportable segments at March 31, 2015, as follows: | | • | The Commercial Truck & Industrial segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks, military, construction, bus and coach, fire and emergency and other applications in North America, South America, Europe and Asia Pacific. This segment also includes the company's aftermarket businesses in Asia Pacific and South America; and |
| | • | The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers. This segment also supplies a wide variety of undercarriage products and systems for trailer applications in North America. |
Segment EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring expense and asset impairment charges. The company uses Segment EBITDA as the primary basis for the CODM to evaluate the performance of each of its reportable segments. The accounting policies of the segments are the same as those applied in the Consolidated Financial Statements, except for the use of Segment EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the Segments’ EBITDA. Amounts related to prior quarters have been recast to reflect Mascot in discontinued operations (see Note 4). Segment information is summarized as follows (in millions): | | | | | | | | | | | | | | | | | | Commercial Truck & Industrial | | Aftermarket & Trailer | | Eliminations | | Total | Three Months Ended March 31, 2015 | | | | | | | | External Sales | $ | 660 |
| | $ | 204 |
| | $ | — |
| | $ | 864 |
| Intersegment Sales | 21 |
| | 8 |
| | (29 | ) | | — |
| Total Sales | $ | 681 |
| | $ | 212 |
| | $ | (29 | ) | | $ | 864 |
| Three Months Ended March 31, 2014 | | | | | | | | External Sales | $ | 736 |
| | $ | 218 |
| | $ | — |
| | $ | 954 |
| Intersegment Sales | 27 |
| | 7 |
| | (34 | ) | | — |
| Total Sales | $ | 763 |
| | $ | 225 |
| | $ | (34 | ) | | $ | 954 |
| | | | | | | | | | Commercial Truck
& Industrial | | Aftermarket
& Trailer | | Eliminations | | Total | Six Months Ended March 31, 2015 | | | | | | | | External Sales | $ | 1,338 |
| | $ | 405 |
| | $ | — |
| | $ | 1,743 |
| Intersegment Sales | 46 |
| | 15 |
| | (61 | ) | | — |
| Total Sales | $ | 1,384 |
| | $ | 420 |
| | $ | (61 | ) | | $ | 1,743 |
| Six Months Ended March 31, 2014 | | | | | | | | External Sales | $ | 1,439 |
| | $ | 415 |
| | $ | — |
| | $ | 1,854 |
| Intersegment Sales | 51 |
| | 12 |
| | (63 | ) | | — |
| Total Sales | $ | 1,490 |
| | $ | 427 |
| | $ | (63 | ) | | $ | 1,854 |
|
| | | | | | | | | | | | | | | | | | Three Months Ended March 31, | | Six Months Ended March 31, | | 2015 | | 2014 (2) | | 2015 | | 2014 (2) | Segment EBITDA: | | | | | | | | Commercial Truck & Industrial | $ | 57 |
| | $ | 57 |
| | $ | 113 |
| | $ | 110 |
| Aftermarket & Trailer | 30 |
| | 24 |
| | 55 |
| | 45 |
| Segment EBITDA | 87 |
|
| 81 |
|
| 168 |
| | 155 |
| Unallocated legacy and corporate costs, net (1) | — |
| | (1 | ) | | (2 | ) | | (3 | ) | Interest expense, net | (21 | ) | | (48 | ) | | (40 | ) | | (75 | ) | Provision for income taxes | (6 | ) | | (8 | ) | | (13 | ) | | (19 | ) | Depreciation and amortization | (17 | ) | | (17 | ) | | (32 | ) | | (33 | ) | Noncontrolling interests | — |
| | (2 | ) | | (1 | ) | | (4 | ) | Loss on sale of receivables | (1 | ) | | (2 | ) | | (3 | ) | | (5 | ) | Restructuring costs | (3 | ) | | (2 | ) | | (6 | ) | | (3 | ) | Income from continuing operations attributable to Meritor, Inc. | $ | 39 |
|
| $ | 1 |
|
| $ | 71 |
| | $ | 13 |
|
| | (1) | Unallocated legacy and corporate costs, net represents items that are not directly related to the company's business segments. These costs primarily include asbestos-related charges, pension and retiree medical costs associated with sold businesses and other legacy costs for environmental and product liability. |
(2) Amounts for prior periods have been recast for discontinued operations.
| | | | | | | | | Segment Assets: | March 31,
2015 | | September 30,
2014 | Commercial Truck & Industrial | $ | 1,657 |
| | $ | 1,755 |
| Aftermarket & Trailer | 441 |
| | 458 |
| Total segment assets | 2,098 |
| | 2,213 |
| Corporate (1) | 473 |
| | 533 |
| Less: Accounts receivable sold under off-balance sheet factoring programs (2) | (254 | ) | | (244 | ) | Total assets | $ | 2,317 |
| | $ | 2,502 |
|
| | (1) | Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs. |
| | (2) | At March 31, 2015 and September 30, 2014, segment assets include $254 million and $244 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 8). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances. |
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