JHY

meritor, inc. (mtor)

by:JHY     2019-12-09
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 September 30, 2018-
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 []
Indicate by check mark whether the registrant has electronically submitted each Interactive Data File as required under S-regulation 405th
Twelve months before T (
Or within a shorter period of time when the registrant is required to submit such documents). Yes [X ]No []
If the declaration of arrears is disclosed under S-regulation 405th, please indicate by check mark
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
If an emerging growth company, the smaller reporting company is the emerging growth company. Indicate by check mark whether the registrant chooses not to use the extended transition period to comply with any new or revised financial accounting standards provided under section 13 (a)
The Trading Act. []
Indicate whether the registrant is a shell company by check mark (
Defined in Rule 12b-
2 parts of the transaction law). Yes []No [X ]
Total market value of the registrant\'s vote and non-vote
Voting Ordinary Shares held by non-shareholders
Affiliates of registered persons onMarch31, 2018 (
The last business day of the recently completed second quarter)
About $1,766,433,323, 84,876,805 shares of the registrant\'s common stock, with a face value of $1 per share, were outstanding at november14, 2018.
Certain information contained in the final proxy statement of the registrant annual general meeting held on January 24, 2019 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 schedule 16 to the financial statements. Form 10-
Part IItem 1. 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 2018 are approximately $4. 2 billion.
Our ten big customers account for nearly 75 of the continued fiscal year 2018 sales.
Sales in business units outside North America accounted for approximately 38 of the total sales of ongoing business for the fiscal year 2018.
Our continued operations are also involved in our unincorporated joint ventures, which we accounted for under equity law accounting and generated revenue of about $1.
The fiscal year 2018 was 1 billion per cent.
Our fiscal year ends on Sunday, the closest to September 30.
The fiscal year 2018 ended on September 30, 2018, the fiscal year 2017 ended on October 1, 2017, and the fiscal year 2016 ended on October 2, 2016.
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 report section is as follows: the commercial trucks and trailers section mainly provides transmission systems and components for medium trucks and trailers, including axles, transmission systems and brake and suspension systemsand heavy-
Trucks and other applications in North America, South America, Europe and Asia Pacific.
It also offers a variety of Chassis products and systems for trailer applications in North America.
The department also includes the company\'s after-sales service in Asia Pacific and South America.
The after-sales market and industrial sector provides axle, brake, transmission system, suspension parts and other replacement parts to commercial vehicle and industrial After-sales market customers mainly in North America and Europe.
In addition, this area provides power systems and certain components for military, construction, buses and buses, including axles, transmission systems, brakes and suspension systems, fires and emergencies in North America and Europe and other applications.
Business strategy 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 handle some 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.
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, environmental and other legal proceedings
The long-term solvency of our insurance company and the higher potentialthan-
Expected costs incurred by environmental liabilities, including those related to on-site remediation;
Pension costs;
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. 2M2019 Growth-
We look forward to completing the final year of the M2019 plan, and we have made significant progress towards our goal in the fiscal year 2018.
The financial goals we set for the plan are as follows: the cumulative increase in revenue is 20%, higher than the market level. Starting from the end of the fiscal year of 2015, the adjusted diluted earnings per share that continue to operate will increase by US $1.
25. Starting from the fiscal year 2015, the ratio of net debt to adjusted EBITDA was reduced to less than 1. 5(see Non-
GAAP Financial indicators item 7)
To achieve these goals, we remain focused on three main priorities:
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 of 2018, Daimler Trucks North America awarded the Quality Award to four Meritor production plants.
The other three facilities received the PACCAR\'s 10 PPM Quality Award, which awarded 10 or more defective parts per 1 million parts shipped to the customer
We want to continue to demonstrate excellent delivery performance at over 99%.
This year, we are proud to receive the 100% delivery award from Hino Automobile manufacturing. S. A. , Inc. for perfect on-
Time delivery of dress drive and steering axle.
Meritor built drive and front steering shaft for all medium vehicles in Hino
Traditional taxi models in North America. On-
Delivery time is critical because the axle is one of the first parts on the manufacturer\'s truck assembly line.
In addition to our customers\' recognition of superior quality and delivery, we have also won the new product development Gold Award from Ashok Leyland, India, which aims to design a unique slippers suspension for transport trucks, and help truck manufacturers move to new emission standards.
This new suspension features a unique patented design that includes a lighter
Weight design compared to traditional suspension, due to the higher efficiency of shaft alignment, significantly reduced usage time and maintenance costs, and less tire wear.
In Australia, we received the annual Penske Supplier Award with excellent sales, customer service and marketing support and maintained a continuous high fill rate of 95%.
These approvals reflect our focus on maintaining good customer relationships worldwide and will continue to be areas 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 environment, it is important for us to create a profitable top-line 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 have accelerated the pace of product introduction, a key component of revenue growth.
Before our M2016 program, we launch about three major projects each year.
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 2018, we launched the following six products:
By reducing the maintenance time and cost, the gear is synchronized Double-
The piston is designed to provide uniform force on the brake pads at the same time, resulting in better performance and uniform brake pads wear.
79000 series 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.
Axle of loader-
Designed for off-site people
China Road construction market, specifically for loaders. MT-
610 hub deceleration shaft-
DAF Trucks, a subsidiary of PACCAR, has already been the next-
Generation, heavy
The European squadhaul and off-
Road applications with hubs
The deceleration series axis developed by Meritor.
The shaft is faster than designed for extreme applications, allowing the engine to operate at a lower rpm, improving the final fuel efficiencyusers.
Duomo 156 axis
It is specially designed for the Chinese bus market, with low noise and high design efficiency. MTC-
3203 transfer box-
Designed for medium-size-duty all-
Launched with Navistar and Chevrolet.
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 extended it last year.
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.
We also support Volvo in Thailand and India.
During the fiscal year 2018, we conducted strong business execution with key customers in major markets, winning new businesses and increasing market share.
Meritor received important new contracts with customers around the world, including the front and rear axle of MAN\'s new delivery truck, the axle business with Mercedes and Iveco of the South American school bus, with Tata, Kenworth and Ashok Leyland\'s axle and suspension business in the Asia Pacific region, several new awards have been awarded worldwide for Meritor\'s hub reduction shaft.
In our Defense business, we entered into a new contract with Mack Defense to provide rear beams and front drive steering shafts for about 700 trucks, as well as power systems and transfer boxes.
In the field of electric vehicles, Meritor currently has 22 active projects around the world, including school buses, yard tractors, medium trucks, urban buses and junk trucks.
In addition to supporting these procedures with core Meritor content, including front and rear suspension, wheel ends, drum and disc brakes, and gear boxes, due to our strategic alliance with TransPower, meritor also offers its 4 proprietary eAxle and other products that are now part of its portfolio.
In the fiscal year of 2018, we worked with Daimler trucks in North America (DTNA)
With its innovative fleet and Thomas Built Bus, a subsidiary of DTNA, Ashok Leyland, Kalmar and Peterbilt.
For Peter Bildt, we will provide all-
Electric drive system for two vehicle platforms, including 12
8 days cab tractor and 3 garbage trucks.
In the process of our efforts to develop the after-sales market business, we have taken various actions this year to better serve our customers, includes the launch of North American licensed 14X TM and 145 products for drive shaft operators including our 160.
We work with outstanding rebuilders to help the fleet maximize the uptime of the Coastto-coast, 24-
Hours guaranteed delivery of highly reliable rebuild operators that meet original performance specifications, this year we launched a comprehensive portfolio designed to deliver the right parts, performance and price of trucks, trailers and buses at each stage of life.
For example, the MachTM parts brand is looking for high
Value, providing comprehensive quality
Produce parts that increase uptime at an affordable price, while Meritor®Euclidean®Top brands available
More affordable quality after-sales parts.
Meritor real brand is designed for new cars that are still under warranty or customers who want to maintain their original performance and maximize uptime through OEM production parts.
Meritor is one of the few suppliers who produce or approve the sale of life cycle after-sales parts including support and availability.
While most of the growth we plan for Meritor is organic, we expect to allocate capital for targeted acquisitions, which may be a catalyst for our growth trajectory.
To this end, we acquired the full assets of AA Gear & Manufacturing, Inc. this year.
And its subsidiaries.
This transaction provides a set of process engineering and production capabilities for gear and shaft components for our component business, enabling us to deliver new products and applications.
On August, we announced a new five.
Contract for nearly a year
Meritor will produce more than 3 million pieces of net forged parts.
Production began 2020.
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 2018, the overall case rate was 0.
72 people were injured every 200,000 hours.
Our security rate for the fiscal year 2018 was slightly negative for the fiscal year 2017.
This is largely due to 15-
Due to the peak of the North American market and the high production demand worldwide, the percentage of working hours of our production facilities increased this year.
Even if the number of hours increased significantly, 16 of our 40 measuring facilities did not have documented events 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.
In order to continuously improve our safety rate, we will maintain our diligence through training and education of our employees, reducing certain behaviors that are known to cause safety problems, and continue to maximize risk identification and risk assessment.
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 various development and training programs to help our staff grow as we grow.
This year, we continue to develop leadership development plans for managers, directors and senior leaders around the world.
For managers, we offer e-learning modules and courses covering important areas such as accountability, empowerment, and providing and receiving feedback.
Certain directors-
Our second annual leadership advantage isa 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.
For some senior students
We continue to host the summit, provide guidance to executives, have the opportunity to attend specific executive training courses tailored to each person\'s background and career goals, and participate in 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 2017 of consolidated revenue in any of the fiscal years of 2018, 2016 and 10% for product sales information.
The narrative description of our main products is as follows.
Product sales: 74% 73% 73% brakes and brakes for axle, chassis and transmission systems, financial year-
Related components 24% 25% 25% other 2% 2% 2% Total100 % 100% 100% axle, chassis and power system 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 can be used with our wide range of suspension modules and brake products, drum brakes and disc brakes are included.
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, 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; and 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 2018, our ten largest customers accounted for nearly 75 of total sales.
Sales to our three largest customers AB Volvo, Daimler AG and PACCAR accounted for 23 percentage points, 17% percentage points and 12 percentage points of our 2018 fiscal year sales, respectively.
In the fiscal year 2018, no other customer accounted for 10 or more of our total sales.
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.
At the same time, our regional field manager then called on the fleet and OEM dealers to \"pull-
Through \"our components in specific truck purchases.
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 have been negotiated over a long period of time.
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, Oshkosh, MAN, CNH industry, 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 on the market --
There is no need to purchase a minimum number of products based on the price.
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 make\" strategy.
Our regional field manager calls on our OEM, OEM dealers, fleet customers and independent customers to regularly market our full product line capabilities to ensure we meet the needs of our customers.
The products sold by our after-sales business are in the following brands: Coach Euclidean, Trucktechnic 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.
The emerging competitors of the axle include the Detroit Axle of DTNA, the ZF fridges shafen of Europe and Hande, Fuwa and Ankai of China.
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 Fuwa, Hendrickson and SAF-Holland.
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 targets, 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.
Significant future fluctuations in the commodity market or deterioration of product demand may require us to pursue customer price increases 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 fiscal year 2018, we completed our $6 million strategic investment in transportation power companies. (\"TransPower\")(
See Note 13 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below).
In the third quarter of the fiscal year 2018, we completed the acquisition of almost all assets of AA Gear & Manufacturing, Inc. (
See Note 7 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below).
In the second quarter of 2018, we completed the sale of the equity of meichi Huayang Vehicle brake Co. , Ltd. (
See Note 7 to the consolidated financial statements under Item 8.
Financial statements and supplementary data below).
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).
Restructuring Action department restructuring plan: On March 12, 2018, we announced the re-adjustment of operations to further promote the long-term
As part of our commitment to leadership development, we set long-term strategic goals while identifying new duties.
As part of the program, we have approved various labor restructuring actions in the aftermarket and industrial sectors.
In the fiscal year 2018, we recorded the restructuring costs of $3 million associated with the plan.
These operations had been substantially completed as of September 30, 2018.
Other restructuring actions: during the fiscal year 2018, we recorded restructuring costs of $3 million primarily related to the commercial truck and trailer sector and the labor reduction program in the aftermarket and industrial sectors.
Fiscals 2017 and 2016 after-sales 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.
Market-related action for fiscal 2016: In response to declining revenue in North America and South America, in the fourth quarter of fiscal 2016, 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 trailer sector, and $1 million in the aftermarket and industrial sectors, $2 million related to the location of the company.
As of September 30, 2017, restructuring operations related to 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 trailer sector in China and the labor reduction plan in the after-sales market and industrial sector.
As of September 30, 2016, restructuring operations related to these plans had been substantially completed.
The industries we operate have 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, 2018, 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
Consolidated joint ventures for the fiscal year 2018 were $1. 101 billion, $1. 156 billion and $1. 101 billion, respectively, at 2017 and 2016.
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 $73 million in the fiscal year 2018, $69 million in the fiscal year 2017 and $68 million in the fiscal year 2016.
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, management does not believe 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 8,600 employees in September 30, 2018. Time staff (
Joint venture including merger).
At that time, the collective bargaining agreement covered 23 employees in the United States.
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 the potential responsible party for the Superfund website, excluding the website where our records do not disclose participation, and the website that ultimately determines our responsibility.
These sites include a location in Grenada, Mississippi, designated as the super fund website in the United States. S.
EPA from September to 2018.
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, 2018, and changes in environmental Accrued projects for the fiscal year 2018.
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 chief legal officer and external consultants 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. 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.
Trends and uncertainties in Project 7.
Management discusses and analyzes the estimated production of commercial trucks in selected original equipment markets based on existing sources and management estimates.
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\")
Available free of charge on our 11 website (www. Meritor. com)
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, \"Will\" 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 negative aspects of 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 quantities in 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 AA gear Mfg. , Inc.
Future results of these acquisitions, including revenue generation and growth;
Demand for commercial and special vehicles that we supply products;
Whether the decline in automobile production will affect our liquidity 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 existing and future legal proceedings, including any legal proceedings or related legal liabilities relating to the environment, asbestos-
Related or other matters;
Possible changes in accounting rules;
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
K, any of these can lead to significant differences in our actual results from recent results or expected future results.
Any of these risks may have a significant adverse effect on our business, financial position and operational results.
If multiple risks occur, the impact may be more serious.
We may not be able to carry out our M209 plan.
At the beginning of fiscal 2016, we announced our M2019 plan.
An annual plan to drive growth and increase shareholder value.
In connection with the plan, we have set certain financial targets related to revenue growth, profit improvement and capital allocation.
The M2019 plan is based on our current planning assumptions, and the implementation of the plan will face some risks.
Our plans include assuming that we can successfully launch new products, ensure new business wins, expand our current customer relationships, reduce debt and reduce costs, any increase in raw material prices is offset by the customer recovery mechanism.
If our assumptions are incorrect, if management is unable to execute the plan, or if our business is subject to any additional risks as set out in this agreement, we may not be able to achieve the financial objectives we have announced for the M2019 plan.
12 we rely on large OEM customers whose sales losses or failure to negotiate acceptable terms in contract renewal negotiations or failure to obtain new customers may adversely affect our business
We rely on large OEM customers with considerable bargaining power in terms of prices and other commercial terms.
Besides, we have
Regular contracts with some of these customers who need to renegotiate and renew from time to time.
Any of our high volume customers lost all or most of their sales for any reason (
Including, but not limited to, contract losses or failure to negotiate acceptable terms in contract renewal negotiations, loss of market share for these customers, bankruptcy of these customers, reduction or delay in customer requirements, factory stoppages, strikes or other stoppages that affect the production of such customers)
The continued decline in prices of these customers, or the failure to obtain new customers, may have a significant adverse impact on our financial results.
There is no guarantee that we will not lose all or part of our sales to our big customers, or that we will be able to offset these customers\' price declines by reducing costs or acquiring new customers.
In the fiscal year of 2018, AB Volvo, Daimler and PACCAR\'s three largest customers had sales of about 17%, and 12, respectively.
In the fiscal year 2018, no other customer accounted for 10 or more of our total sales.
Our level of sales to large OEM customers, including the level of achieving future sales from the business awarded or acquiring new business or customers, is essentially affected by some risks and uncertainties, includes the number of vehicles actually produced and sold by these OEM customers.
Major union contracts for several of our key clients are due on a regular basis and need to be renegotiated.
In the process, any strike or other behavior that affects the production of the customer will also affect our sales.
In addition, if the financial position of any of our largest clients, including bankruptcy or deterioration of market share, or continued decline in sales, our financial position and operating results may be adversely affected.
In addition, in some cases, our customers usually have the right to replace us with another supplier.
Therefore, in fact, we may not be able to achieve all future sales represented by the business we acquire.
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