JHY

meritor, inc. (mtor)

by:JHY     2019-12-05
Washington, D. C. Securities and Exchange CommissionC. 20549FORM 10-
Annual Report submitted under Section 13 or 15 (d)
Filing Number of the Securities and Exchange Law Commission for the fiscal year 19-34 ended October 1, 2017-
15983______________________________MERITOR INC. (
The exact name of the registrant specified in the articles of association)Indiana38-3354643(
State or other jurisdiction of company or organization)(I. R. S.
Employee Identification Number)
Michigan48084 2135 Troy, West Maple Road-7186(
Main executive office address)(Zip Code)
The registrant\'s telephone number, including the area code :(248)435-
1000 securities registered under article 12 (b)
Part of the act: title of each class name of each exchange registered for common stock, New York Stock Exchange registered under section 12th at the face value of $1g)
Key points of the act: no one indicates whether the registrant is healthy by a check mark
Well-known experienced issuers as defined in Rule 405 of the Securities Act. Yes [X ]No []
Indicate by check mark whether the registrant does not need to submit a report under Section 13 or section 15 (d)of the Act. Yes []No [X ]
Indicate by check mark whether the registrant (1)
All reports requested by Article 13 or 15 have been submitted (d)
Securities Trading Act of 1934 within the first 12 months (
Or a short period of time required for the registrant to submit such reports), and (2)
This filing requirement has been bound for the last 90 days. Yes [X ]No []
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Or in such a short time that the registrant is required to submit and publish these documents). Yes [X ]No []
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To the knowledge of the registrant, K is not included in the final proxy or information statement referenced in Part 3 of this Form 10 and will not be included in it
K or any amendments to this form 10K. []
Indicate by check mark whether the registrant is a large accelerated file manager, a non-accelerated file manager
A smaller reporting company, or an emerging growth company.
See the definitions of \"accelerated reporting companies\", \"large accelerated reporting companies\", \"Small reporting companies\" and \"emerging growth companies\" in rule 12b
2 of the Trading Act.
Non-accelerated files for large accelerated files
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Do not check if there are smaller reporting companies)
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Total market value of the registrant\'s vote and non-vote
Voting Ordinary Shares held by non-shareholders
Affiliates of registered persons onMarch31, 2017 (
The last business day of the recently completed second quarter)
About $1,487,830,039, 88,583,473 shares of the registrant\'s common stock, with a face value of $1 per share, were outstanding at november14, 2017.
Certain information contained in the final proxy statement of the registrant annual general meeting held on January 24, 2018 by reference is incorporated into Part III by reference. PageNo. PART I. Item 1. Business 1A.
Risk factor 1B.
Unresolved employee reviews 2.
Property item month.
4 Legal procedures for mine safety disclosure 4A.
Administrative personnel in the second part. Item 5.
Registrant\'s common stock, related shareholder matters and the market for issuance and purchase of equity securities
Selected Financial Data Items 7.
Management Discussion and Analysis of operational financial status and results
Quantitative and qualitative disclosure of market risks
Financial statements and supplementary data items 9.
Changes and disagreements with accountants on accounting and financial disclosure project 9A.
Control and procedure 9B.
Part Three. Item 10.
Project 11. Director, executive officer and corporate governance.
Item 12 of administrative compensation.
Secured ownership of certain beneficial owners, management and related shareholders.
Relationship with directors and related transactions.
The fourth part is the main accounting expenses and services. Item 15.
Annex and part IItem 1 of the schedule to the financial statements. Business.
Overview of Meritor, Inc. (
\"We\", \"we\" or \"our \")
Headquartered in Troy, Michigan, it is a leading global supplier of integrated systems, modules and components for OEMs (\"OEMs\")
As well as the after-sales market of commercial vehicles, transportation and industrial sectors.
We offer services to commercial trucks, trailers, military, bus and coach, construction and other manufacturers of industrial original equipment and certain aftermarket.
Our main products are axle, chassis, transmission system and brake.
Meritor was incorporated in Indiana in 2000 in connection with the merger of Meritor Motor Company
And Arvin Industries.
As used in this Annual Report on Form 10
K, the terms \"Company\", \"Meritor\", \"we\" and \"we\" include Meritor, its consolidated subsidiary and its predecessor, unless otherwise stated in the context.
Meritor provides services to many customers around the world, including China-and heavy-
Manufacturer of truck original equipment, manufacturer of special vehicles, certain after-sales market and trailer manufacturer.
Our total sales for ongoing operations for the fiscal year 2017 are approximately $3. 3 billion.
Our ten big customers account for about 74 of the continued operating fiscal year 2017 sales.
Business sales from outside the United States (U. S. )
Accounting for nearly 47 of the total sales of continued operations in the fiscal year of 2017.
Our ongoing operations have also been involved in five unincorporated joint ventures, which we accounted for under equity law accounting and generated revenue of about $1.
The fiscal year 2017 was 2 billion per cent.
Our fiscal year ends on Sunday, the closest to September 30.
The fiscal year 2017 ended on October 1, 2017, the fiscal year 2016 ended on October 2, 2016, and the fiscal year 2015 ended on September 27, 2015.
Annual and Quarterly references are related to our fiscal year and fiscal quarter unless otherwise stated.
For ease of presentation, September 30 is always used in this report to indicate the end of the fiscal year.
Whenever items in this Annual Report on Form 10-
K refers to the information under a specific title in Item 7.
Management Discussion and Analysis of financial position and results of operations or Project 8.
Financial statements and supplementary data incorporate this information into the project through reference.
References for Form 10 of this year\'s report-
We believe that we are the leading supplier or the world\'s leading supplier, and other similar statements about our relative market position are mainly based on the calculations we make.
These calculations are based on the information we collect, including company and industry sales data obtained from internal and available external sources, as well as our estimates.
In addition to these quantitative data, our presentation is based on other competitive factors such as our technical capabilities, engineering, R & D efforts, innovative solutions, and the quality of our products and services, in each case, relative to our competitors in the market.
Our business our reporting section is as follows: the commercial truck and industrial sector is medium-size-and heavy-
Truck off work
Highways, military, construction, bus and coach, fire and emergency as well as other applications in North America, South America, Europe and Asia Pacific.
The department also includes the company\'s after-sales service in Asia Pacific and South America;
After-sales market and trailer sector commercial vehicle after-sales market customers in North America and Europe provide axle, brake and brake systems, drive systems, suspension components and other replacement and re-manufactured components.
The department also offers a variety of Chassis products and systems for trailer applications in North America.
See Note 25 to the consolidated financial statements under Item 8.
Financial statements and supplementary data for financial information for the continuous operation of each of the last three financial years, including sales and asset information by geographical region.
The title \"products\" below includes certain product sales information for each of the last three fiscal years.
Business Strategy 1 we are currently the world\'s leading supplier of extensive integration of systems, modules and components for oem and commercial vehicle, transportation and industrial sector aftermarket, we believe we have a market
Leading in many markets we serve.
We are working hard to advance our leadership and take advantage of our existing customers, products and geography.
For other market-related discussions, see the trends and uncertainties section in Item 7.
Our business will continue to address a range of challenging industries.
Including the following broad issues: Uncertainty in the outlook for the global market;
Fluctuations in prices and supply of steel, parts and other commodities;
The possibility of disruption in financial markets and its impact on credit supply and costs;
Fluctuations in energy and transport costs;
The impact of currency exchange rate fluctuations;
Integration and globalization of Oem and its suppliers;
And huge pension costs.
Other important factors that may affect our results and liquidity include: significant contract award or loss of existing contracts, or failure to negotiate acceptable terms in contract renewal;
Be able to successfully launch a large number of new products, including potential product quality issues, and obtain new business;
After the United Kingdom has decided to withdraw from the European Union, it has the ability to manage the possible adverse effects on our European operations or related financing arrangements, or in the event that one or more other countries withdraw from the European Monetary Union;
Ability to further implement plan productivity, cost reduction and other profit improvement plans;
Ability to successfully implement and implement the strategic plan;
Able to work with customers to manage fast-changing output;
Ability and recovery time to recover steel price and other cost increases from our customers;
Any unplanned extended downtime or production disruption by us, our customers or our suppliers;
Economic activity in the main markets we operate has deteriorated or slowed significantly;
Provide competitive price reduction service for our customers;
Potential price increases for our suppliers;
Additional restructuring actions and timing and confirmation of restructuring costs, including any actions related to the long-term weakness of the market in which we operate; Higher-than-
Planned warranty costs, including the results of known or potential recall activities;
Uncertainties in asbestos claims and other proceedings, including the outcome of the proceedings with the insurance company regarding the scope of Asbestos insurance, and the long term
Regular solvency of insurance companies in China
Restricting government behavior (
Such as capital transfer restrictions and trade protection measures, including import and export tariffs, quotas and tariffs.
Our specific business strategy is influenced by these industry factors and global trends and is focused on continuing to develop and produce competitive products using our resources.
We are confident that the following strategy will enable us to maintain a balanced mix of commercial truck, industrial and after-sales service businesses covering major global markets. See Item 1A.
The following risk factors are information about certain risks that may affect our business, financial position or operational results in the future. M2019 Growth-
With the smooth progress of our M2019 program, we have made significant progress towards our goal in the fiscal year 2017.
The financial goals we set for the program are as follows: to increase revenue by 20%, above market levels. Increase the adjusted diluted earnings per share by $1 from ongoing operations.
25 reduce the ratio of net debt to adjusted EBITDA to less than 1. 5(see Non-
GAAP Financial indicators item 7)
In order to achieve these goals, we focus on three main priorities: transforming beyond the expectations of our customers into growth --
Over the past 100 years, our products have been continuously developed to meet the changing needs of customers in major regions of the world.
As technology advances, the products we design are more fuel-efficient, lighter, safer, more durable, and more reliable.
The Meritor brand is well established worldwide, reflecting a broad and growing high
Quality products for various applications.
Over the past few years, we have worked hard to become innovative partners for our customers.
From concept to release, we work closely together to ensure that we are designing reliable and high-quality products that meet or exceed their expectations, both now and in the future.
In addition to technical and product collaboration, we also meet with our customers on a regular basis to review our performance in many other areas such as quality, delivery and cost.
In our M2019 program, we set an overall quality target of 25 out of millions (\"PPM\").
We believe that this will further differentiate us from the commercial vehicle industry.
In the fiscal year 2017, multiple strategic customers including PACCAR and Hino Automobile Manufacturing CompanyS. A.
Daimler Trucks North America has recognized Meritor\'s several manufacturing facilities with excellent quality.
We want to continue to demonstrate excellent delivery performance at over 99%.
We are proud to receive the first one this year.
Gold Award from Ashok Leyland
Delivery time performance.
Meritor\'s manufacturing plant in Mysore, India, provides nearly 65% of the axles and half of the brakes for the major commercial vehicle manufacturer.
We are also honored to be the top 2% Navistar suppliers in the fiscal year 2017.
Due to this performance, we have won the Navistar diamond supplier award for helping to improve the customer\'s uptime and exceed expectations in terms of quality, delivery, technology and cost.
XCMG is another important customer of Meritor and our main joint venture partner in China.
XCMG awarded us the Outstanding Supplier Award this year, which recognizes the top suppliers in terms of delivery, quality and product performance.
These recognition is a key factor in maintaining customer relationships worldwide and will continue to be an area of great concern to us.
We will continue to focus on reducing operating costs through material costs
Goal 1 reduction and improvement of labor and burden.
Increase by 5% per year.
We continue to drive material performance through three different approaches: business negotiation, best-cost-
National procurement and technological innovation.
In addition, we are improving the labor force and burden by addressing several areas at the same time, including better equipment utilization, shortening conversion time, eliminating waste, improving shift and asset utilization, and investing in equipment, to increase cycle time and flexibility and engagement of employees.
3 We believe that we can effectively manage the complexity of low capacity and support the needs of our customers during peak hours.
Quality, durability and on-
The timely delivery of our products has earned us a strong position in the market we support.
While we seek to expand our business with existing customers and build relationships with new customers, our goal is to ensure that the recognized benefits of our products and services, as well as the strong brand assets we have in the market, are fairly valued.
Transition to growth-
We know that despite the changes and fluctuations in the global market situation, we mustline growth.
We have designed the M2019 program to enable us to achieve the growth we are targeting in cyclical industries that are heavily influenced by economic and political factors.
We are increasing market share with key customers and updating the long term
In all of our regions around the world, in our two areas where we can report, sign regular contracts and win new business.
We quickly accelerated the pace of product introduction, a key component of revenue growth.
Before our M2016 program, we launch about three projects a year.
During M2019, we expect to launch seven or more projects each year in our portfolio and geographic area.
We are working with our customers to develop these products for their future product projects, and we have a clear understanding of the revenue stream for each product.
In the fiscal year 2017, we launched the following eight products: 1. 14X HE (High-Efficiency)
Series drive shaft-
This axis shows up to 1 efficiency improvement.
5%, but also 30 pounds less weight than the previous industry
Leading 14X design for line transport applications.
The use of laser welding to manufacture components helps to improve efficiency.
It is also equipped with high standards
High-efficiency bearing, meichi lubricant management system and precision-
Complete the transmission. 2. 13X Medium-
Working drive shaft-
Designed for a variety of media-
Duty Application including selection
Delivery, drinks, utilities, school buses, buildings and ambulances, single, rear
Drive 13X leverages the best technology of Meritor\'s mature 14X platform. 3.
PACCAR 40 series shaft-An ultra-
An efficient tandem shaft developed as a proprietary product solution for key strategic customers. 4.
MFS™Steering shaft-
Thanks to a new goose neck beam design and a bias joint with an integrated torque plate and tie rod, the front of the MFS saves up to 85 pounds from previous productsrod arms.
This product was shipped by heavy truck (HDT)
The magazine\'s 2017 Top 20 product awards are one of the most innovative and important new products to solve industry problems and help the straight line transport fleet increase profits. 5. Two Off-
Highway planetary axle
The two new devices were built to operate under extreme conditions.
The highway axle is designed for a higher level of durability and reliability. Both off-
The road axles introduced this year can be used in various applications in the fields of construction, mining and oil and gas. 6. MX-25-
810 front drive steering shaft-Reliable, cost-
Efficient front drive steering shaft
For construction, serious-
Services and utilities.
Design improvements include new housing and new wheel ends.
This axis was originally designed for the defense of mines.
Protection against ambush (\"MRAP\")
Segmented, there are now three different enclosures to choose from, with disc and drum brakes to choose from. 7. MTec6™ -
This is the lightest trailer axle in the industry, saving weight and reducing total cost of ownership. This 6-inch, large-
Diameter shaft 36 pounds lighter than industrystandard 5-inch axle.
The lighter axle reduces the total weight of the trailer, thus improving fuel economy and payload.
Also in the fiscal year 2017, we announced the following new products, which will begin production in the fiscal year 2018.
Optimized EX air disc brake
The gear is designed to maximize productivity by reducing maintenance time and cost
Double sync
The piston design provides uniform force on the brake pads at the same time, resulting in better performance and uniform brake pads wear for tractors and trailers. 79000 Axle -
Designed to help municipal transport fleets meet federal and industry durability guidelines.
By increasing the durability of previous products more than double, the fleet may only need to replace the carrier of the axle once, rather than multiple times during the service life of the vehicle at this heavy-duty stop-point --and-go segment.
4ProTec series 50 beam shaft-
Expanding Meritor\'s heritage of the conservation lineup, the axle optimized for the military-
New beam design and utilization of theater for specific applications-
Mature technology to complete the task at hand.
By applying mature technology, Meritor also shortens delivery.
We hope to continue to expand our relationship with global strategic customers, win the business of new customers, increase the after-sales market share in the core product field, and use our time to expand our component business
Mature core capabilities for forging, machining, and gear manufacturing, and enter adjacent markets and products that we believe match our core capabilities.
Volvo is coach\'s largest global customer in Europe.
We have recently extended our
By 2024, a three-year long-term agreement was signed with Volvo.
Under the terms of this agreement, Meritor will design and deliver a new heavy duty single minus rear bridge series for Volvo and Renault brands.
These newly designed products will have improved fuel efficiency, faster ratios and a higher total weight rating, enabling more payload per truck.
In the current fiscal year, Volvo launched a new UD Quon truck in Japan, which uses Meritor\'s global shaft and air disc brake platform.
We also support Volvo in Thailand and India.
This year, we have entered into important new contracts with key strategic customers in North America and Europe to supply various lines for transportation and heavy duty axles, as well as new businesses in China and India with companies such as Jac, Qingling and Tata Motors.
And we will continue to grow.
The highway, the winning professional and defense business includes a new contract to provide our P600 tandem shaft for heavy customer Kenworth in the Middle East, and provide Navistar recovery vehicle plan for Israeli army HET and MaxxPro.
In our professional business, we have announced a new standard supplier agreement with REV Group in North America.
According to three terms-
Under the annual agreement, REV Group will be equipped with Meritor\'s full set of shaft components for its buses, fire and specialty vehicles.
While we strive to develop our after-sales market business, we have taken various actions this year to better serve our customers.
We announced a new value brand, Mach. ™With all features-
Manufacture products including suspension, steering, braking and transmission system components at affordable prices for second and third owners, and design and manufacture to industry standards. End-
Users looking for lower prices from verified Tier 1 suppliers can now expect Mach-
Brand products.
We have also taken steps to reduce the lead time for West Coast customers in the United States, announcing the establishment of a West Coast after-sales service distribution center in Santa Fe Springs, California.
Through this center, we will complete after-sales orders from warehouse dealers and dealers in 13 states, and strive to get our customers back on the road faster.
The facility provides customers in the western United States with a complete Meritor aftermarket brand portfolioS.
While we plan that most of our growth is organic, we expect to allocate capital for targeted acquisitions, which may be a catalyst in our growth trajectory.
To this end, Meritor acquired the product portfolio and related technologies of Fabco Holdings, Inc. this year.
And its subsidiaries.
With the addition of The Fabco product suite, Meritor now has an expanded portfolio of complementary products, including transmission boxes, professional gear boxes, auxiliary transmission devices, and media power-off devices, heavy and overweight vehicles for on-and off-
Industrial applications such as roads, buildings, national defense, railways, etc.
These products are available to both original equipment and after-sales market customers.
This transaction enables us to provide a wider range of capabilities and more complementary product portfolios to our global customers.
The acquisition is also expected to help us diversify our customer base and expand to the rail and oil and gas industries that Meritor currently does not serve.
As industry trends continue to drive demand for equipment that meets environmental and safety requirements --
Relevant regulatory regulations, oem not only choose suppliers according to the cost and quality of the products, but also they have the ability to meet strict environmental and safety requirements, and provide service and support to customers after sales.
We use our technology and market expertise to develop and design products that address mobility, security, regulatory and environmental issues.
We are committed to designing and manufacturing brake solutions for the commercial vehicle market, which allows North America to have more commercial vehicles than any other brake manufacturer.
We believe Meritor\'s front air disc brake is one of the best performing brakes on the market.
In Europe, where air discs are widely used, we have sold more than 6 million ELSA air discs.
The quality, reliability and performance of this brake platform are proved.
We believe in the quality of our core product line, our ability to serve our products through after-sales service capabilities, and our sales and service support team give us a competitive advantage.
An important factor in becoming a preferred supplier is the ability to deliver services throughout the life cycle of the product.
In addition, as our industry becomes more international, our manufacturing footprint around the world and our ability to provide regional services to our customers --
Tailor-made product solutions are becoming more and more important.
The safety of our employees is our top priority.
The total case rate is a measure of the work injury that can be recorded for every 100 employees per year.
Our goal for M2019 is to reach a rate below 0. 65.
In the financial year of 2017, the overall case rate was 0.
48 people are injured every 200,000 hours, and we think this is world class for industrial companies like Meritor, below our m20:9 target.
Of our 39 measurement facilities, 18 have not been documented throughout the financial year.
We attribute this to the diligence of our employees and the safety plans and equipment we have developed to protect them during our global operations.
We will also continue to drive the close collaboration between our global Meritor team and m209.
This adjustment is a key driver of our success in our previous M2016 strategic plan.
We believe that the strength of our competition in the global market depends on the participation of every Meritor employee, and
The executive team is critical to the level of performance we want to achieve.
We have a strong and experienced leadership team and a loyal team, both of which are committed to maintaining the solid foundation we have built in M2016 and achieving our M2019 performance
We will also continue to diversify our workforce as we recognize the value of different opinions and backgrounds as Meritor\'s global company.
We have established a variety of development and training programs to help our staff grow as we grow.
This year, we have implemented leadership development programs for managers, directors and senior leaders around the world.
We started the management.
The learning module and two new courses cover important areas of advancement such as accountability, empowerment, and the provision and acceptance of feedback. For director-
We developed a leading edge-a 10-
The goal is to develop senior leadership skills and prepare a monthly plan for senior leadership skills
Potential leaders in senior positions and enhanced business intelligence. And for senior-
Level leadership, we started the summit, which provides executive guidance with the opportunity to attend specific executive training courses tailored to everyone\'s background and career goals for MBA-
If required, open a Level 1 finance course and participate in the mentoring opportunity with members of the Meritor board of directors.
To ensure that we provide our employees with a wealth of experience, we will continue to measure the engagement of our employees to enhance our ability to be critical to our future.
Meritor designs, develops, manufactures, sells, serves and supports a wide range of products used in the transport and industrial sectors.
In addition to selling original equipment systems and components, we also provide original equipment, after-sales market and remanufactured products to automotive OEMs and their distributors (
Who in turn sells to car operators and commercial vehicle users of all sizes)
Independent distributors and other terminals
Users of certain after-sales markets.
The chart below lists more than 2016 of consolidated revenue in any of the fiscal years of 2017, 2015 and 10% for product sales information.
The narrative description of our main products is as follows.
Product sales: 2015 73% 73% brakes and brakes for financial year EndedSeptember 30,2015 74% axle, chassis and transmission system-
Related components 25% 25% 25% other 2% 2% 1% Total100 % 100% 100% axle, chassis and drive system 6 we believe we are one of the world\'s leading independent suppliers of medium vehicle shaftsand heavy-
Duty Commercial Vehicle, leading market position in axle manufacturing in North America, South America and Europe, is one of the major axle manufacturers in AsiaPacific region.
Our extensive product line of truck axles includes a wide range of front steering shafts and rear drive shafts.
Our front steering and rear drive shafts can be equipped with our Cam, wedge or air disc brakes, automatic slack regulators, and complete wheels-
Terminal equipment such as hub, rotor and drum. We supply heavily.
Working axles in certain global regions for many non-
Road vehicle applications including construction, material handling and mining.
We also offer axles for military tactical wheeled vehicles, mainly in North America.
These products are able to withstand high tonnage and operate under extreme conditions.
And we have other
Road vehicle products currently being developed for certain other areas.
We also provide axles for buses, buses and leisure vehicles, fire engines and other specialty vehicles in North America, Asia Pacific and Europe, and we believe we are a leading supplier of North American bus and coach axles.
We are one of the major manufacturers of heavy vehicles.
Heavy trailer axle in North America.
Our trailer axles are available in more than 40 models with capacity ranging from 20,000 to 30,000 pounds and are suitable for almost all heavy trailer applications and offer our wide range of suspension modules and brake products including drum brakes and disc brakes.
We offer universal joint and transmission system components including our Permalube™Universal joint and RPL Permalube™This is a maintenance free, permanent lubrication design, often used for high mileagehighway market.
We supply transmission systems in North America for many on-
Application of highway vehicles.
We offer transfer boxes and drive units for military tactical wheeled vehicles, mainly in North America.
We also provide transfer boxes for special vehicles in North America.
In addition, we also offer trailer air suspension systems and products with increasing market share in North America.
We also offer advanced suspension modules for lighting, medium-and heavy-
Military tactical wheeled vehicles mainly on duty in North America.
Brakes and brakes
We believe we are one of the leading independent suppliers of air brakesand heavy-
Commercial vehicle manufacturers in North America and Europe.
In Brazil, we believe 49%-
Joint venture with Randon S. A.
Implementos e participant AES is a leading supplier of brakes and brakes
Related products.
Through manufacturing plants in North America, Asia Pacific and Europe, we have manufactured a wide range of basic air brakes, as well as automatic slack regulators for brake systems.
Our base air brake products include Cam drum brakes that increase lining life and interchange of tractors/trailers;
Wedge drum brake, light weight, automatic adjustment of internal wear;
Air disc brake, providing enhanced stop distance and improved fading resistance for demanding applications; and wheel-
Terminal components such as hub, drum and rotor.
Our brake and brake system components are also used in military tactical wheeled vehicles, mainly in North America.
We also offer brakes for buses, buses and leisure vehicles, fire engines and other specialty vehicles in North America and Europe, and we believe we are a leading supplier of brakes for buses and long-distance vehicles in North America.
We also provide brakes for commercial vehicles, buses and buses in the Asia Pacific region.
In addition to the products discussed above, we also sell other complementary products, including the third
Party and private label products are available through our aftermarket distribution channels.
These products are usually sold under a master distribution or similar agreement with an external supplier, including brake shoes and friction materials;
Automatic slack regulator;
Yokes and shaft; wheel-
End the hub and drum;
ABS and stability control system;
Shock absorbers and air springs; air brakes. Customers;
We have many customers around the world and have been developing for a long time.
Maintain business relationships with many of these customers.
In the fiscal year 2017, our ten largest customers accounted for about 74 of total sales.
Sales to our three largest customers AB Volvo, Daimler AG and PACCAR accounted for nearly 17% of our 2017 fiscal year sales, and 10 per cent, respectively.
In the fiscal year 2017, no other customer accounted for 10 or more of our total sales.
7 Original Equipment Manufacturer (OEMs)
In North America, we design, market and sell products mainly for OEMs, distributors and distributors.
While our North American sales are often directed directly to OEMs, our end-end commercial truck customers include trucking and shipping fleets.
Fleet customers can specify our components and integrated systems for installation in vehicles they purchase from the original equipment manufacturer.
We use what we call \"push-
Marketing strategy.
We \"push\" to be the standard product for OEM.
In the meantime, our regional field manager then called on the fleet and OEM dealers to \"pull
Purchase components through \"our specific trucks.
For all other markets, we design, market and sell products specifically for original equipment manufacturers
Specific requirements or product specifications.
For some large OEM customers, our supply arrangements are usually reached through long-term negotiations.
Regular contract basis for multiple projects
It may be necessary for us to provide the original equipment manufacturer with the year of annual cost reduction through price reduction or other cost advantages.
If we cannot generate sufficient cost savings in the future to offset this reduction, our gross profit margin will be adversely affected.
Sales to other OEMs are usually made through public order releases or purchase orders on the market --
The base price for a minimum quantity of products is not required.
Customers usually have the right to cancel or delay these orders with reasonable notice.
We usually either compete to keep the business or try to win a new business from the original equipment manufacturer
Expiration of term contract
We have built a leading position in many markets and we are a global supplier of a wide range of drive systems, brakes and components.
Based on existing industry data and internal company estimates, our market
Main positions include independent truck drive shafts (i. e.
By an independent, non-
Supplier)
Operating in North America, Europe, South America and India through joint ventures;
Truck drive system in North America
Truck air brakes in North America and South America (
Through joint ventures);
Transmission systems, suspension and brakes for military wheeled vehicles in North America.
Our global customer portfolio includes AB Volvo, Daimler, PACCAR, Navistar International Corporation, Oshkosh, MAN, CNH Industrial, Ashok Leyland, Scania
We sell trucks, trailers after sale
The road and other products are mainly aimed at OEMs, their parts marketing business, dealers and other independent dealers and service garages within the after-sales market industry, and serve these products.
Our products are sold through the long term
Enter into regular agreements with some of our OEM customers and make distribution agreements and sales to independent distributors and distributors.
Sales to other OEMs are usually made through public order releases or purchase orders based on market prices, which do not require the purchase of a minimum number of products.
Customers usually have the right to cancel or delay these orders with reasonable notice.
Our products enable us to serve all stages of the customer\'s vehicle ownership lifecycle.
In North America, we store and distribute thousands of parts from top national brands to our customers or what we call the \"all manufacturing\" strategy.
Our regional field manager calls on our OEM and independent customers to regularly market our full product line capabilities to ensure we meet the needs of our customers.
Our aftermarket business sells products under the following brands: Meritor; Euclid; Trucktechnic; Meritor Green;
Merrito all fit and Mach
Based on existing industry data and company internal estimates, we believe that our North American aftermarket business has an overall market lead in the portfolio we offer.
Compete we compete globally with some North American and international component and system providers, some of which are owned or related by some of our customers.
Price, quality, service, product performance, design and engineering capabilities, new product innovation and timely delivery are the main competitive factors.
Certain OEMs produce their own components that compete with the types of products we offer.
The main competitor of our axle is Dana inincorporated, and in some markets, the original equipment manufacturer that makes the axle for its own products.
Emerging rivals for the axle include the North American Detroit Axle of Daimler Trucks, the European ZF fridges shafen, and China, handd, Fuwa and Ankai.
The main competitors of our brakes are Bendix/Knorr Bremse, WABCO, and the original equipment manufacturers that manufacture brakes in certain markets for their own products.
Our main competitors in industrial applications are MAN, AxleTech International, Oshkosh, AM General, Marmon-
Herrington, Dana, Knoll, Kessler
Carraro, NAF, Sisu and original equipment manufacturers that manufacture industrial products for their own vehicles in certain markets.
The main competitors of our trailer application are Hendrickson and SAF-Holland.
8 raw materials and supplier purchases for raw materials and parts are concentrated on a limited number of suppliers.
We rely on the supplier\'s ability to meet cost performance, quality specifications and delivery schedules.
The supplier\'s inability to meet these requirements, the loss of important suppliers or the shutdown may adversely affect our ability to meet customer delivery requirements.
The cost of our core products is vulnerable to changes in the price of the overall steel product, including the composition used for various grades of steel.
We usually organize major steel suppliers and customer contracts to absorb and pass the normal index-
Related market fluctuations in steel prices.
Although we have developed steel price adjustment plans with most major OEMs, price adjustment plans tend to lag behind changes in steel costs, often without consideration
The Steel Index rose.
The future volatility of the commodity market or the deterioration of product demand may require us to pursue customer growth through surcharges or other pricing arrangements.
Also, if the supplier is not able to meet our needs, or if the prices remain at the current level or rise, we are not able to pass on those prices to our customer base or otherwise reduce costs, the results of our operations may be adversely affected further.
We constantly strive to meet these competitive challenges by reducing costs and restructuring operations as needed.
We conduct regular evaluation of all major suppliers and high-risk suppliers.
On an ongoing basis, we monitor third
Party\'s financial statements were investigated through supplier questionnaires and visited on site.
We have developed a supplier improvement process in which we identify and develop actions to address ongoing financial, quality and delivery issues to further reduce potential risks.
To avoid supply disruptions, we proactively manage supplier relationships.
Our processes employ a dual source and resource trigger point, which allows us to take positive action and then closely monitor progress.
As mentioned above, our business strategy focuses on improving our market position by constantly assessing the competitive differences in our portfolio, focusing on our strengths and core competencies, and develop the business that provides the most attractive return.
The implementation of these strategies involves various types of strategic initiatives.
As part of our M2019 program, we are evaluating strategic acquisition opportunities that are in line with our core competencies and growth plans, and regularly reviewing the prospects for our existing business, to determine whether any of them should be modified or reorganized, sold or discontinued.
In the fourth quarter of the fiscal year 2017, we ended selling our interest in Meritor WABCO Vehicle control systems to a subsidiary of our joint venture partner WABCO Holdings Inc. (
See Note 14 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below).
In the fourth quarter of the fiscal year 2017, we also completed the acquisition of Fabco Holdings, Inc. product portfolio and related technologies(
See Note 7 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below).
In the fourth quarter of 2015, we completed the acquisition of most of Sypris Solutions, Inc. \'s assets.
Morgan ton trailer, shaft beam and vehicle manufacturing plant, North Carolina (
See Note 7 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below).
Restructuring action market action: in the third quarter of the fiscal year 2016, we approved various restructuring plans for the after-sales market business in North America and Europe.
We recorded $5 million in restructuring costs in the third quarter of fiscal 2016 and $4 million in restructuring costs in fiscal 2017.
As of September 30, 2017, restructuring operations related to these plans had been substantially completed.
Fourth Quarter 2016 market-related action: in response to the decline in revenue in North and South America, in the fourth quarter of the 2016 fiscal year, we approved various redundancy plans for different business areas.
In the fourth quarter of the 2016 fiscal year, we spent a total of $5 million in restructuring costs in the commercial truck and industrial sector, with the after-sales market and trailer market valued at $1 million, the location of the company is worth $2 million.
As of September 30, 2017, the restructuring of these plans had been substantially completed.
Other actions for fiscal 2016: In the first half of 2016, we recorded a restructuring cost of $3 million, mainly related to the labor reduction plan in the commercial truck and industrial sector in China and the labor reduction plan in the after-sales and trailer sectors.
As of September 30, 2016, the restructuring of these plans had been substantially completed.
M2016 footprint action: as part of our M2016 strategy, in the fiscal year 2013, we announced the restructuring of the North American footprint and the restructuring of shared services in Europe.
We eliminated approximately hourly and paid positions in total and generated approximately $7 million in associated restructuring costs, mainly in the commercial truck and industrial sectors, related to the integration of certain gear and machining operations in North America and the closure of manufacturing facilities in North America.
As of September 30, 2015, restructuring operations related to these projects had been substantially completed.
South American layoff: In fiscal 2014 and 2015, we completed a South American layoff program designed to reduce labor costs in response to the softening of the region\'s economic situation.
In response to the decline in production in South America, we canceled about 20 hours per hour and 40 salaried positions, and took on $13 million in restructuring costs in the commercial truck and industrial sectors, mainly dispatch
The plan had been substantially completed as of September 30, 2015.
Closure of corporate engineering facilities: in the second quarter of the fiscal year 2015, we informed about 30 salaried and contract employees that their positions were being canceled due to the planned closure of a corporate engineering facility.
We recorded the $2 million severance pay associated with the plan.
As of September 30, 2015, restructuring operations related to the plan had been substantially completed.
Reduced labor in Europe: in the second quarter of the fiscal year 2015, we launched a European redundancy program aimed at reducing labor costs in response to continued weakness in the region\'s markets.
We canceled about 20 hours and 20 salaried positions and recorded the expected severance pay of $2 million in the commercial truck and industrial sector for the fiscal year 2015.
As of June 30, 2015, restructuring operations related to the plan had been substantially completed.
The industry we operate in has become more global, and joint ventures and other cooperative arrangements have become an important part of our business strategy.
These strategic alliances support sales, product design, development and manufacturing of certain products and geographic areas.
As of September 30, 2017, our ongoing business has participated in the following
Combined Joint Venture: main products of Mexico S. A. de C. V.
Axle, power system and Mexican Railway CompanyS.
In the fourth quarter of 2017, brake systems, rear bridges and brake systems we ended selling our interest in Meritor WABCO Vehicle control systems to a subsidiary of our joint venture partner WABCO Holdings Inc.
Our total non-sales
The combined joint ventures, including the Meritor WABCO Vehicle control system, were US $1. 156 billion, US $1. 101 billion and US $1. 288 billion respectively for the fiscal year 2017, 2016 and 2015 respectively.
According to the generally accepted accounting principles in the United States, our consolidated financial statements include the financial status and operating results of those joint ventures that we control.
For more information on our unincorporated joint ventures and their percentage of ownership, see Note 14 to consolidated financial statements under Item 8.
The following are the financial statements and supplementary data.
We have strong R & D, engineering and product design capabilities.
We spent $69 million in the fiscal year 2017, $68 million in the fiscal year 2016 and $69 million in the fiscal year 2015.
Sponsored research, development and engineering.
We employ professional engineers and scientists worldwide and arrange them at low levels through contractscost countries.
We also have advanced technology centers in North America, South America, Europe and Asia Pacific (
Mainly in India and China).
In our engineering and manufacturing operations and other activities, we may have many US and foreign patent and patent applications.
While, in general, these patents and licenses are considered important for the operation of our business and management does not consider them so important, so that the loss or termination of any of them will have a significant impact on the entire business unit or Meritor.
The trademark we registered for Meritor®The design of the bulls is important to our business.
Other important trademarks we have include the Euclid®Truck Technology®After-sales products.
Basically all of us in AmericaS. -
The intellectual property held by the first
Priority improves the security interest and ensures our obligations to lenders under our credit mechanism.
See note 17 to the consolidated financial statements under Item 8.
The following are the financial statements and supplementary data.
We have about 8,200 employees in September 30, 2017. Time staff (
Joint venture including merger).
At that time, the collective bargaining agreement covered 18 employees in the United States and Canada.
We have unions in most facilities outside the United States and Canada.
We strive to build and maintain positive relationships with hourly paid employees.
Federal, state and local environmental requirements for the discharge of substances to the environment, the disposal of hazardous wastes and other activities that affect the environment have been and will continue to exist and have an impact on our operations.
We record liabilities for environmental issues during the accounting period, during which these liabilities are considered possible and costs can be reasonably estimated.
In the environmental premises where more than one potential responsible party has been identified, we document the responsibility for the share of the distributable expenses associated with our participation in the premises, and the share of distributable expenses related to the bankrupt party or the unconfirmed shares.
In the environmental premises where we are the sole potential responsible party, and before considering taking back from the insurance company or other third parties, we have recorded the liability to remedy the total estimated cost.
We are designated as potential responsible parties to nine Superfund sites, excluding websites where our records do not disclose participation, and websites that ultimately determine our responsibility.
In addition to the Superfund website, various other lawsuits, claims and lawsuits have been filed against US alleging violations of federal, state and local environmental protection requirements, or seeking to remedy so-called environmental damage, mainly disposed of before. of properties.
When these liabilities are considered possible and reasonably estimated, we have established reserves for them.
See note 24 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below to understand our estimate of the total amount of reasonable costs that we may incur and the amount recorded as liabilities as of September 30, 2017, and changes in environmental Accrued projects for the fiscal year 2017.
The process of estimating environmental liabilities is complex and depends on the physical and scientific data on the site, the uncertainty of remedies and technologies, and the results of discussions with regulators.
Due to uncertainty, including the financial position of other potential responsible parties, the actual costs or damages that we may be responsible for may be substantially greater than our current estimates, the success of remediation and other factors make it difficult to predict the actual cost accurately.
However, based on management\'s assessment, after consultation with Meritor\'s general counsel and external counsel specializing in environmental matters, there are inherent difficulties in estimating these future costs, which we believe, the environmental capital investment and Remediation expenditures required by us to comply with the current environmental protection regulations and other expenditures to resolve environmental claims will not have a significant adverse impact on our business, the financial position or outcome of the operation.
In addition, in the coming period, new laws and regulations, changes in remediation plans, advances in technology, and additional information on final cleaning --
Remedial measures may change our estimates significantly.
Management is unable to assess the possible impact of compliance with future requirements.
We believe that our international business provides us with geographic diversity and helps us cope with the cyclical nature of our business.
As of September 30, 2017, about 46 percentage points of our total assets and 47 percentage points of 2017 fiscal year sales for ongoing operations were not in the United StatesS.
See Note 25 to the consolidated financial statements under Item 8.
The following are the financial statements and supplementary data for the three financial years ended September 30, 2017, with financial information broken down by geographical region.
Our international business faces some risks inherent in operating abroad (see Item 1A.
Risk factors are as follows).
There is no guarantee that these risks will not have a significant adverse effect on our ability to increase or maintain foreign sales or on our financial position or operational results.
Our business also faces global market risks, including foreign currency exchange rate risks associated with our transactions denominated in currencies other than the United StatesS. dollar.
We have a foreign currency cash flow hedging program to help reduce the risks that companies face due to exchange rate changes.
We use foreign currency forward contracts and options to manage the company\'s exposure to foreign exchange risks.
The profit and loss of the underlying foreign currency risk exposure is partially offset by the profit and loss of the foreign currency forward contract.
Our policy is not to enter derivative financial instruments for speculative purposes, so we do not hold derivative instruments for trading purposes. See Item 7A.
Quantitative and qualitative disclosure of market risks and note 18 to consolidated financial statements under Item 8.
The following are the financial statements and supplementary data. Seasonality;
In the case of fluctuations in the production of OEM vehicles, we may experience seasonal changes in product demand.
Historically, most of our business needs have declined in the quarter ended September 30 and December 31, when the OEM plant may be closed during the summer shutdown and holidays, or when the number of sales days in the quarter is reduced.
In the quarter ended March 31 and June 30, our after-sales market operations, as well as our operations in India and China, often experience higher seasonal demand.
In addition, the history of the industry we operate is characterized by periodic fluctuations in the overall demand of trucks, trailers and other special vehicles for which we supply products, resulting in corresponding fluctuations in our product demand.
The production and sale of vehicles for which we supply products usually depends on economic conditions and a variety of other factors beyond our control, including freight tonnage, customer expenditures and preferences, Age of vehicle, labor relations, regulatory requirements. See Item 1A.
The risk factors are as follows.
The cycle of major automotive industry markets in North America and Europe is not necessarily simultaneous or related.
Continuing to seek to expand our business globally to help mitigate the effects of cyclical fluctuations in demand in the automotive industry in one or more specific countries is part of our strategy.
See trends and uncertainties in Item 7.
Management discusses and analyzes the estimated production of commercial trucks in selected original equipment markets based on existing sources and management estimates.
Available information we provide free of charge through our website (www. Meritor. com)
Our Annual Report on Form 10
Quarterly Report on table 10
Q: Current Report of Form 8
K. All amendments to these reports and other documents we submit to the Securities and Exchange Commission (“SEC”)
After submission, reasonable and feasible as soon as possible.
The information contained on the company\'s website is not included in the annual report of Form10 and is not included in the report by referenceK.
This annual report on Form 10
K contains statements related to the company\'s future performance (
Including some forecasts and business trends)
This is \"forward-
The \"outlook statement\" as defined in the Private Securities Litigation Reform Act of 1995 \". Forward-
Finding statements are usually identified by words or phrases such as \"believe\", \"expect\", \"expect\", \"estimate\", \"should\", \"possible\", and similar expressions.
Due to certain risks and uncertainties, the actual results may differ greatly from the predicted results, including, but not limited to, reliance on major OEM customers and possible negatives arising from contract negotiations with our major customers include failure to negotiate acceptable terms in contract renewal negotiations, and our ability to acquire new customers;
Results of actual and potential product liability, warranty and recall claims;
We are able to successfully manage the rapidly changing volume of the commercial truck market and work with our customers to manage demand expectations in the event of rapid changes in production levels;
Cycle and conditions of the global economy and market;
The supply of raw materials, including steel, and the soaring costs, and our ability to manage or recover these costs;
After the United Kingdom has decided to withdraw from the EU, our ability to manage the possible adverse effects on our European operations or related financing arrangements, or, if one or more other countries withdraw from the European Monetary Union;
Inherent risks of overseas operations (
Including foreign exchange rates, government restrictive actions in trade, effects of foreign regulations related to pensions and possible disruption of production and supply due to terrorist attacks or acts of aggression);
Risks related to our joint venture;
Rising cost of pension benefits;
Capacity to achieve the expected benefits of strategic initiatives and structural adjustment actions;
Our ability to successfully integrate FABCO Holdings, Inc. products and technologies
And the results of future acquisitions, including revenue generation and value-added;
Demand for commercial and special vehicles that we supply products;
Whether our liquidity will be affected by the decline in automobile production in the future;
Delay of OEM program;
Demand and market acceptance for new and existing products;
Successful development and release of new products;
Labor relations of our company, our suppliers and customers, including parts supply or demand for our products that may be interrupted by shutdown of our facilities;
Financial status of our suppliers and customers, including potential bankruptcy;
The possible adverse effects of the suspension of normal trade credit terms by our suppliers in the future;
Long-term potential damage
Living assets including goodwill;
Potential adjustment of value of deferred tax assets;
Competitive products and pricing pressures;
The amount of our debt;
Our ability to continue to comply with the covenants in the financing agreement;
Our ability to enter the capital market;
Credit rating of our debt;
Results of any existing and future legal proceedings, including any proceedings relating to the environment, asbestos
Related or other matters;
Whether the ban in relation to our Cole proceedings will continue to be lifted or will not be restored, and whether the plaintiff applied to the Supreme Court of the United States for an order of removal, which occurred on September 15, 2017, the actual impact of the company\'s modifications to certain benefits of former union employees retirees on the company\'s balance sheet, income and cash payment amount;
Possible changes in accounting rules;
Weak internal control;
As well as other substantial costs, risks and uncertainties, including but not limited to the costs, risks and uncertainties detailed in this agreement, and other documents submitted by the company to the SEC from time to time. These forward-
The outlook statement is issued only on the date of this agreement and the company is not obliged to update or amend the forward
Forward-looking statements, whether for new information, future events or other reasons, unless otherwise required by law. Item 1A.
Risk factors business, financial position and results of operations may be affected by a number of risks, including the rest of the 10-year report below and in the form
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