---

---

---

---

---

---

---

---

Meritor, Inc. (the "company" or "Meritor"), headquartered in Troy, Michigan, is a premier global supplier of a broad range of integrated systems, modules and components to original equipment manufacturers ("OEMs") and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction and other industrial OEMs and certain aftermarkets. The Condensed Consolidated Financial Statements are those of the company and its consolidated subsidiaries.

In the opinion of the company, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited Consolidated Financial Statements and notes thereto included in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2019. The Condensed Consolidated Balance Sheet data as of September 30, 2019 was derived from audited financial statements but does not include all annual disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and six months ended March 31, 2020 are not necessarily indicative of the results for the full year.

The company’s fiscal year ends on the Sunday nearest September 30, and its fiscal quarters generally end on the Sundays nearest December 31, March 31 and June 30. The second quarter of fiscal years 2020 and 2019 ended on March 29, 2020 and March 31, 2019, respectively. Fiscal year 2019 ended on September 29, 2019. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and March 31 are used consistently throughout this report to represent the fiscal year end and second fiscal quarter end, respectively.

COVID-19 Pandemic Update

In March 2020 the World Health Organization declared a global health pandemic related to the recent outbreak of a novel coronavirus. The COVID-19 pandemic adversely affected the company's financial performance in the second quarter of fiscal year 2020 and will continue to have an adverse impact for at least the remainder of fiscal year 2020.  In response to the COVID-19 pandemic, government health officials have recommended and mandated precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar measures. As a result, the company and certain of the company's customers and suppliers have temporarily closed select manufacturing locations beginning late in the second quarter of fiscal year 2020, continuing into the third quarter of fiscal year 2020. The company’s salaried employees are working remotely until further notice. There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company's operations, supply chain and demand for its products. As a result, the ultimate impact on the company's business, financial condition or operating results cannot be reasonably estimated at this time.

Basic earnings (loss) per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings (loss) per share calculation includes the impact of dilutive common stock options, restricted shares, restricted share units, performance share unit awards and convertible securities, if applicable.

A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions):

	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019
Basic average common shares outstanding	73.4			83.3			75.8			84.0
Impact of restricted shares, restricted share units and performance share units	1.1			1.5			1.3			1.9
Impact of convertible notes	0.8			0.8			0.9			0.7
Diluted average common shares outstanding	75.3			85.6			78.0			86.6

In November 2019, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash

---

equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $25.25, which was the company’s share price on the grant date of December 1, 2019. The Board of Directors also approved a grant of 0.3 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $25.25, which was the company's share price on the grant date of December 1, 2019.

Accounting standards implemented during fiscal year 2020

On October 1, 2019, the company implemented Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). The company elected the practical expedient package which allowed the company to not reassess whether existing contracts contain a lease and to not reassess classification of existing leases. The company also adopted ASU 2018-11 Leases (Topic 842) Targeted Improvements, electing to not separate lease and non-lease components in contracts that contain both and electing to not restate comparative periods when adopting ASU 2016-02. As a result, the company recognized a right-of-use asset and lease liability as a lessee for substantially all existing operating leases and has included new and expanded disclosures. (See Note 5)

Accounting standards to be implemented

The following represent the standards that may result in a significant change in practice and/or have a significant financial impact on the company.

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

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

Disaggregation of revenue

In the following tables, revenue is disaggregated for each of our operating segments by primary geographical market for the three and six months ended March 31, 2020 and 2019 (in millions).

---

		Three Months Ended March 31, 2020
Primary Geographical Market		Commercial Truck				Aftermarket, Industrial and Trailer				Total
U.S.		$	269			$	248			$	517
Canada		—				15				15
Mexico		36				9				45
Total North America		305				272				577
Sweden		63				—				63
Italy		46				3				49
United Kingdom		30				3				33
Other Europe		1				36				37
Total Europe		140				42				182
Brazil		50				—				50
China		26				—				26
India		22				—				22
Other Asia-Pacific		14				—				14
Total sales		$	557			$	314			$	871

		Three Months Ended March 31, 2019
Primary Geographical Market		Commercial Truck				Aftermarket, Industrial and Trailer				Total
U.S.		$	413			$	263			$	676
Canada		—				17				17
Mexico		50				13				63
Total North America		463				293				756
Sweden		74				—				74
Italy		59				5				64
United Kingdom		45				2				47
Other Europe		3				19				22
Total Europe		181				26				207
Brazil		63				—				63
China		44				—				44
India		62				—				62
Other Asia-Pacific		24				—				24
Total sales		$	837			$	319			$	1,156

---

		Six Months Ended March 31, 2020
Primary Geographical Market		Commercial Truck				Aftermarket, Industrial and Trailer				Total
U.S.		$	561			$	491			$	1,052
Canada		—				29				29
Mexico		70				18				88
Total North America		631				538				1,169
Sweden		125				—				125
Italy		91				7				98
United Kingdom		63				5				68
Other Europe		2				73				75
Total Europe		281				85				366
Brazil		103				1				104
China		60				—				60
India		44				1				45
Other Asia-Pacific		28				—				28
Total sales		$	1,147			$	625			$	1,772

		Six Months Ended March 31, 2019
Primary Geographical Market		Commercial Truck				Aftermarket, Industrial and Trailer				Total
U.S.		$	763			$	503			$	1,266
Canada		—				35				35
Mexico		97				23				120
Total North America		860				561				1,421
Sweden		148				—				148
Italy		116				9				125
United Kingdom		86				5				91
Other Europe		6				38				44
Total Europe		356				52				408
Brazil		113				—				113
China		85				—				85
India		119				—				119
Other Asia-Pacific		48				—				48
Total sales		$	1,581			$	613			$	2,194

Contract balances

As of March 31, 2020 and September 30, 2019, Trade receivables, net, which are included in Receivables, trade and other, net, on the Condensed Consolidated Balance Sheet, were $435 million and $517 million, respectively.

---

The company’s lease portfolio is comprised of leases of real estate, including manufacturing and office facilities, and leases of personal property, including machinery and equipment and IT equipment. Operating leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheet and related lease expense is recognized on a straight-line basis over the lease term. Short-term lease costs and variable lease costs were insignificant in the three and six months ended March 31, 2020.

For all asset classes, the company has elected to adopt the practical expedient under ASC 842 to not separate lease and non-lease components in contracts that contain both. These lease agreements are accounted for as a single lease component for all classes of underlying assets. The company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the discount rate implicit in the lease is typically unknown, the discount rate used to determine the lease liability for the majority of our leases is the collateralized incremental borrowing rate in the applicable geographic area for a similar term and amount as the lease agreement.

Components of lease expense (in millions)

	Three Months Ended March 31, 2020				Six Months Ended March 31, 2020
Finance lease costs	$	—			$	1
Operating lease costs	5				10
Total lease costs	$	5			$	11

The following table provides a summary of the location and amounts related to finance leases recognized in the Condensed Consolidated Balance Sheet (in millions).

	Classification		March 31, 2020
Finance lease right-of-use assets	Net Property		$	6
Finance lease liabilities	Short-term debt		2
Finance lease liabilities	Long-term debt		4

The following table provides a summary of the location and amounts related to operating leases recognized in the Condensed Consolidated Balance Sheet (in millions).

	Classification		March 31, 2020
Operating lease right-of-use assets	Other assets		$	77
Operating lease liabilities	Other current liabilities		14
Operating lease liabilities	Other liabilities		63

---

The following tables summarize additional information related to our lease agreements.

Supplemental cash flow information related to leases (in millions)

	Six Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9
Operating cash flows from finance leases	—
Financing cash flows from finance leases	1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	6
Finance leases	2

Supplemental balance sheet information related to leases

	March 31, 2020
Weighted-average remaining lease term (years):
Operating leases	8.6
Finance leases	2.6
Weighted-average discount rate:
Operating leases	4.5	%
Finance leases	5.2	%

Maturities (in millions)

	Operating Leases				Finance Leases
Remainder of 2020	$	9			$	1
2021	16				3
2022	12				2
2023	12				1
2024	9				—
Thereafter	39				—
Total lease payments	97				7
Less: Impact of discounting future lease payments	(20		)		(1		)
Present value of lease liabilities	$	77			$	6

Disclosures related to periods prior to adoption of ASU 2016-02

Cash obligations under future minimum rental commitments under operating leases as of September 30, 2019 are shown in the table below (in millions).

	2020				2021				2022				2023				2024				Thereafter				Total
Lease commitments	$	18			$	15			$	14			$	13			$	13			$	25			$	98

---

In accordance with ASC Topic 350-20, "Intangibles—Goodwill and Other," goodwill is reviewed for impairment annually during the fourth quarter of the fiscal year or more frequently if certain indicators arise. If business conditions or other factors cause the operating results and cash flows of a reporting unit to decline, the company may be required to record impairment charges for goodwill at that time.

The company tests goodwill for impairment at a level of reporting referred to as a reporting unit, which is an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. When two or more components of an operating segment have similar economic characteristics, the components are aggregated and deemed a single reporting unit. An operating segment is deemed to be a reporting unit if all of its components are similar, if none of its components are a reporting unit, or if the segment comprises only a single component.

A summary of the changes in the carrying value of goodwill by the company’s two reportable segments are presented below (in millions):

	Commercial Truck				Aftermarket, Industrial and Trailer				Total
Goodwill	$	261			$	232			$	493
Accumulated impairment losses	—				(15		)		(15		)
Beginning Balance at September 30, 2019	261				217				478
AxleTech measurement period adjustment (see Note 9)	—				1				1
Goodwill acquired from acquisition (see Note 9)	22				—				22
Foreign currency translation	—				(1		)		(1		)
Ending Balance at March 31, 2020	$	283			$	217			$	500

---

Restructuring reserves, primarily related to unpaid employee termination benefits, were $7 million at March 31, 2020 and $8 million at September 30, 2019. Restructuring costs are recorded within Other operating expense, net within the Condensed Consolidated Statement of Operations. The changes in restructuring reserves for the six months ended March 31, 2020 and 2019 are as follows (in millions):

	Total
Beginning Balance at September 30, 2019	$	8
Activity during the period:
Charges to continuing operations	15
Cash payments – continuing operations	(15		)
Other	(1		)
Total restructuring reserves at March 31, 2020	7
Less: non-current restructuring reserves	—
Restructuring reserves – current, at March 31, 2020	$	7
Balance at September 30, 2018	$	4
Activity during the period:
Charges to continuing operations	(1		)
Cash payments – continuing operations	(1		)
Total restructuring reserves at March 31, 2019	2
Less: non-current restructuring reserves	—
Restructuring reserves – current, at March 31, 2019	$	2

Global Restructuring Programs: On September 27, 2019, the company approved and began executing a restructuring plan to reduce salaried and hourly headcount globally. This restructuring plan is intended to reduce labor costs in response to an anticipated decline in most global truck and trailer market volumes. With this restructuring plan, the company expects to incur approximately $20 million in employee severance costs in the aggregate across both of its reportable segments. During the second quarter of fiscal year 2020, the cost of this plan increased by $6 million. During the second quarter of fiscal year 2020, the company incurred $8 million in restructuring costs in the Commercial Truck segment. The total severance costs incurred for this plan are $19 million as of the end of the second quarter for fiscal year 2020. Restructuring actions associated with this plan are expected to be substantially complete by the end of fiscal year 2020.

For each interim reporting period, the company makes an estimate of the effective tax rate expected to be applicable for the full fiscal year pursuant to FASB ASC Topic 740-270, "Accounting for Income Taxes in Interim Periods." The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

Income tax expense (benefit) is allocated among continuing operations, discontinued operations and other comprehensive income ("OCI"). Such allocation is applied by tax jurisdiction, and in periods in which there is a pre-tax loss from continuing operations and pre-tax income in another category, such as discontinued operations or OCI, income tax expense is allocated to the other sources of income, with a related benefit recorded in continuing operations.

In evaluating the ability to recover its net deferred tax assets, the company utilizes a consistent approach which considers its historical operating results, including an assessment of the degree to which any gains or losses are driven by items that are unusual

---

in nature, and tax planning strategies. In addition, the company reviews changes in near-term market conditions and other factors that impact future operating results. As of March 31, 2020, the company continues to maintain the valuation allowances in France, Germany, the U.K., and certain other jurisdictions, as the company believes the negative evidence that it will be able to recover these net deferred tax assets continues to outweigh the positive evidence. If, in the future, the company generates taxable income on a sustained basis, its conclusion regarding the need for valuation allowances in these jurisdictions could change.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act, which includes various income and payroll tax provisions, was signed into law by the U.S. government. In addition, various other coronavirus tax relief initiatives have been implemented around the world. As of the second quarter of fiscal year 2020, these tax initiatives did not have a material impact on the Condensed Consolidated Financial Statements.

For the three months ended March 31, 2020 and 2019, the company had approximately $2 million of net pre-tax income in tax jurisdictions in which tax expense (benefit) is not recorded. For the six months ended March 31, 2020, the company had approximately $5 million of net pre-tax income compared to $8 million of net pre-tax income in the same period in fiscal year 2019 in tax jurisdictions in which tax expense (benefit) is not recorded.

Acquisition of AxleTech Business

On July 26, 2019, the company acquired 100 percent of the voting equity interest of the AxleTech group companies for approximately $179 million in cash, subject to certain purchase price adjustments. The company funded the acquisition with the term loan under the revolving credit agreement (see Note 17). The acquisition of AxleTech enhances Meritor’s growth platform with the addition of a complementary product portfolio that includes a full line of independent suspensions, axles, braking solutions and drivetrain components across the off-highway, defense, specialty and aftermarket markets. AxleTech operates within Meritor’s Aftermarket, Industrial and Trailer segment.

Since completion of initial estimates in the fourth quarter of fiscal year 2019, the company has recorded $1 million in measurement period adjustments to decrease the provisional fair value of receivables, inventory and other assets acquired in the AxleTech transaction, resulting in a corresponding $1 million increase in goodwill. This adjustment was made to reflect additional available information. The measurement period remains open to finalize the value of tangible and intangible assets. The company is reviewing and may record other additional measurement period adjustments in fiscal year 2020. All goodwill resulting from the acquisition of AxleTech was assigned to the Aftermarket, Industrial and Trailer reportable segment (see Note 6).

Acquisition of TransPower Business

On January 16, 2020, Meritor acquired 100 percent of the voting equity interest of Transportation Power, Inc. ("TransPower") for a cash purchase price of approximately $15 million, subject to certain purchase price adjustments. Prior to the acquisition, the fair value of the company’s investment in TransPower was $12 million. The TransPower acquisition was accounted for as a business combination. With the addition of TransPower's product portfolio, Meritor advances its strategic priorities through increased investment in next-generation technologies.

Pro forma financial information of the company is presented in the following table for the three and six months ended March 31, 2020 and 2019 as if the TransPower acquisition had occurred on October 1, 2018. The pro forma financial information is unaudited and is provided for informational purposes only and does not purport to be indicative of the results which would have actually been attained had the acquisition occurred on October 1, 2018 (in millions).

	Three Months Ended March 31,								Six Months Ended March 31,
	2020				2019				2020				2019
Sales	$	872			$	1,158			$	1,773			$	2,196
Net income attributable to Meritor, Inc.	240				69				279				159

The purchase price was allocated on a provisional basis as of January 16, 2020. Assets acquired and liabilities assumed were recorded at estimated fair values based on management's estimates, available information, and reasonable and supportable assumptions. Additionally, the company is utilizing a third-party to assist with certain estimates of fair values. The provisional purchase price allocation, which is subject to change and may be subsequently adjusted to reflect final valuation results and other

---

adjustments, is shown below (in millions). The company is reviewing and may record other additional measurement period adjustments in fiscal year 2020. All goodwill resulting from the acquisition of TransPower was assigned to the Commercial Truck reportable segment (see Note 6).

	January 16, 2020
Purchase price	$	15
Investments in TransPower	12
Assets acquired and liabilities assumed:
Cash	2
Receivables, net	5
Inventories, net	8
PP&E	10
Accounts payable	(3		)
Other current liabilities	(17		)
Total identifiable net assets acquired	5
Goodwill and other intangible assets resulting from the acquisition of TransPower	22
	$	27

---

The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows:

		Current Expiration		Total Facility Size as of 3/31/20								Utilized as of 3/31/20								Utilized as of 9/30/19
				EUR				USD				EUR				USD				EUR				USD
On-balance sheet arrangement
Committed U.S. accounts receivable securitization (1)		December 2022		N/A				$	115			N/A				$	108			N/A				$	13
Total on-balance sheet arrangement: (1)				N/A				$	115			N/A				$	108			N/A				$	13
Off-balance sheet arrangements
Committed Swedish factoring facility (2)(3)		March 2024		€	155			$	171			€	133			$	147			€	109			$	119
Committed U.S. factoring facility (2)		February 2023		N/A				75				N/A				48				N/A				58
Uncommitted U.K. factoring facility		February 2022		25				28				5				5				6				6
Uncommitted Italy factoring facility		June 2022		30				33				22				25				21				23
Other uncommitted factoring facilities (4)		None		N/A				N/A				17				19				18				20
Total off-balance sheet arrangements				€	210			$	307			€	177			$	244			€	154			$	226

⁽¹⁾ Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $4 million of letters of credit as of March 31, 2020 and September 30, 2019.

⁽²⁾ Actual amounts may exceed the bank's commitment at the bank's discretion.

⁽³⁾ The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2020.

⁽⁴⁾ There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion.

Off-balance sheet arrangements 

Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):

	March 31, 2020				September 30, 2019
Finished goods	$	139			$	153
Work in process	46				39
Raw materials, parts and supplies	344				334
Total	$	529			$	526

---

     Net property is summarized as follows (in millions):

	March 31, 2020				September 30, 2019
Property at cost:
Land and land improvements	$	31			$	31
Buildings	223				224
Machinery and equipment	960				935
Company-owned tooling	141				136
Construction in progress	52				74
Total	1,407				1,400
Less: accumulated depreciation	(898		)		(885		)
Net property	$	509			$	515

     In the fourth quarter of fiscal year 2017, Meritor, Inc. closed on the sale of its interest in Meritor WABCO Vehicle Control Systems (the “Meritor WABCO JV”) to a subsidiary of its joint venture partner, WABCO Holdings Inc ("WABCO").  The company remained the exclusive distributor of a certain range of WABCO’s aftermarket products in the United States and Canada and the non-exclusive distributor in Mexico for a period of 10 years following the completion of the transaction, and the purchase agreement included provisions regarding certain future options of the parties to terminate, at certain points during the first three and a half years, these distribution arrangements at an exercise price of between $225 million and $265 million based on the earnings of the business.

     On March 13, 2020, the company exercised the option to terminate its aftermarket distribution arrangement with WABCO. The company received $265 million from WABCO in connection with the termination of the arrangement.

     Other assets are summarized as follows (in millions):

	March 31, 2020				September 30, 2019
Investments in non-consolidated joint ventures	$	116			$	110
Deferred income tax assets, net	139				122
Prepaid pension costs	161				149
Other	262				225
Other assets	$	678			$	606

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

	March 31, 2020				September 30, 2019
Compensation and benefits	$	87			$	125
Product warranties	16				18
Other	154				142
Other current liabilities	$	257			$	285

---

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

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

	Six Months Ended March 31,
	2020				2019
Total product warranties – beginning of period	$	50			$	54
Accruals for product warranties	7				15
Payments	(10		)		(9		)
Change in estimates and other	(2		)		(3		)
Total product warranties – end of period	45				57
Less: Non-current product warranties	(29		)		(37		)
Product warranties – current	$	16			$	20

Other liabilities are summarized as follows (in millions):

	March 31, 2020				September 30, 2019
Asbestos-related liabilities (see Note 20)	$	78			$	82
Liabilities for uncertain tax positions	112				46
Product warranties (see Note 15)	29				32
Other	128				66
Other liabilities	$	347			$	226

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

	March 31, 2020				September 30, 2019
3.25 percent convertible notes due 2037	$	319			$	319
7.875 percent convertible notes due 2026	23				23
Term loan due 2024	171				175
6.25 percent notes due 2024	445				444
Financing lease obligation	6				7
Borrowings and securitization	408				9
Unamortized discount on convertible notes	(31		)		(34		)
Subtotal	1,341				943
Less: current maturities	(138		)		(41		)
Long-term debt	$	1,203			$	902

Current Classification of 7.875 Percent Convertible Notes

The 7.875 percent senior convertible notes due 2026 (the "7.875 Percent Convertible Notes") were classified as current as of March 31, 2020 as the holders are entitled to convert all or a portion of their 7.875 Percent Convertible Notes at any time beginning April 1, 2020 and prior to the close of business on June 30, 2020 at a rate of 83.3333 shares of common stock per $1,000 principal amount at maturity of the 7.875 Percent Convertible Notes (representing a conversion price of approximately $12.00 per share). The 7.875 Percent Convertible Notes are convertible as the closing price of shares of the company's common stock for at least 20 trading days during the 30 consecutive trading-day period ending on March 31, 2020 was greater than 120 percent of the $12.00

---

conversion price associated with the 7.875 Percent Convertible Notes. The 7.875 Percent Convertible Notes were also classified as current as of September 30, 2019.

The 7.875 Percent Convertible Notes surrendered for conversion, if any, would be settled in cash up to the principal amount at maturity of the 7.875 Percent Convertible Notes and cash, stock or a combination of cash and stock, at the company’s election, for the remainder of the conversion value of the 7.875 Percent Convertible Notes in excess of the principal amount at maturity and cash in lieu of any fractional shares, subject to and in accordance with the provisions of the indenture that governs the 7.875 Percent Convertible Notes.

Revolving Credit Facility

On June 7, 2019, the company amended and restated its revolving credit facility. Pursuant to the revolving credit agreement as amended, the company has a $625 million revolving credit facility and a $175 million term loan facility, which was utilized for the company's acquisition of AxleTech, that mature in June 2024 (with a springing maturity in November 2023 if the outstanding amount of the 6.25 percent notes due 2024 is greater than $75 million at that time). The availability under the revolving credit facility is dependent upon various factors, including performance against certain financial covenants as highlighted below.

The availability under the revolving credit facility is subject to certain financial covenants based on the ratio of the company’s priority debt (consisting principally of amounts outstanding under the revolving credit facility, the U.S. accounts receivable securitization and factoring programs, and third-party non-working capital foreign debt) to EBITDA. The company is required to maintain a total priority debt-to-EBITDA ratio, as defined in the revolving credit agreement, of 2.25 to 1.00 or less as of the last day of each fiscal quarter throughout the term of the agreement.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin and a commitment fee on undrawn amounts, both of which are based upon either the company’s current corporate credit rating or its total leverage ratio, as defined in the revolving credit agreement. At March 31, 2020, the margin over LIBOR rate was 200 basis points and the commitment fee was 30 basis points. Overnight revolving credit loans are at the prime rate plus a margin of 100 basis points.

Certain of the company’s subsidiaries, as defined in the revolving credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly held notes outstanding under the company’s indentures (see Note 23).

At March 31, 2020, there were $304 million in borrowings outstanding under the revolving credit facility. At September 30, 2019, there were no borrowings outstanding under the revolving credit facility. The amended and extended revolving credit facility includes $100 million of availability for the issuance of letters of credit. At March 31, 2020 and September 30, 2019, there were no letters of credit outstanding under the revolving credit facility.

Other

---

Fair values of financial instruments are summarized as follows (in millions):

	March 31, 2020								September 30, 2019
	Carrying Value				Fair Value				Carrying Value				Fair Value
Cash and cash equivalents	$	508			$	508			$	108			$	108
Short-term debt	138				144				41				60
Long-term debt	1,203				1,179				902				953
Foreign exchange forward contracts (other assets)	1				1				—				—
Foreign exchange forward contracts (other liabilities)	3				3				—				—
Cross-currency swaps (other assets)	—				—				10				10
Cross-currency swaps (other liabilities)	—				—				5				5

The following table reflects the offsetting of derivative assets and liabilities (in millions):

	March 31, 2020									September 30, 2019
	Gross Amounts Recognized			Gross Amounts Offset			Net Amounts Reported			Gross Amounts Recognized			Gross Amounts Offset			Net Amounts Reported
Derivative Assets
Foreign exchange forward contracts	2			(1	)		1			—			—			—
Cross-currency swaps	—			—			—			10			—			10
Derivative Liabilities
Foreign exchange forward contracts	4			(1	)		3			—			—			—
Cross-currency swaps	—			—			—			5			—			5

Fair Value

FASB guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical instruments (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

•	Level 1 inputs use quoted prices in active markets for identical instruments.

 

•	Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar instruments in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

•	Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related instrument.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest priority level input that is significant to the valuation. The company's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

---

Fair value of financial instruments by the valuation hierarchy at March 31, 2020 is as follows (in millions):

	Level 1				Level 2				Level 3
Cash and cash equivalents	$	508			$	—			$	—
Short-term debt	—				133				11
Long-term debt	—				709				470
Foreign exchange forward contracts (other assets)	—				1				—
Foreign exchange forward contracts (other liabilities)	—				3				—

Fair value of financial instruments by the valuation hierarchy at September 30, 2019 is as follows (in millions):

	Level 1				Level 2				Level 3
Cash and cash equivalents	$	108			$	—			$	—
Short-term debt	—				49				11
Long-term debt	—				782				171
Cross-currency swaps (other assets)	—				10				—
Cross-currency swaps (other liabilities)	—				5				—

No transfers of assets between any of the Levels occurred during the three and six months ended March 31, 2020 and 2019.

Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments.

     Short- and long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with terms of 18 months or less to hedge its exposure to changes in foreign currency exchange rates. As of March 31, 2020 and September 30, 2019, the notional amount of the company's foreign exchange contracts outstanding under its foreign currency cash flow hedging program was $69 million and $110 million, respectively. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. For derivative instruments that are designated and qualify as cash flow hedges, changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Income (Loss) in the statement of shareholders’ equity and is recognized in operating income when the underlying forecasted transaction impacts earnings.

Foreign currency option contracts — The company uses option contracts to mitigate foreign exchange exposure on expected future foreign currency-denominated purchases. As of March 31, 2020 and September 30, 2019, the notional amount of the company's foreign exchange contracts outstanding was $68 million and $139 million, respectively. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the Condensed Consolidated Statement of Operations.

The company uses option contracts to mitigate the risk of volatility in the translation of foreign currency earnings to U.S. dollars. As of March 31, 2020, there were no option contracts outstanding. As of September 30, 2019, the notional amount of the company's option contracts outstanding was $28 million. These option contracts did not qualify for a hedge accounting election. Changes in fair value associated with these contracts are recorded in the Condensed Consolidated Statement of Operations in other income, net.

The fair value of foreign currency option contracts is based on third-party proprietary models, which incorporate inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates and time utilizing market instruments with similar quality and maturity characteristics.

Cross-currency swap contracts — The company uses cross-currency swap contracts to hedge a portion of its net investment in a foreign subsidiary against volatility in foreign exchange rates. These derivative instruments are designated and qualify as hedges of net investments in foreign operations using the spot method to assess effectiveness. Changes in fair values of the instruments are recognized in foreign currency translation adjustments, a component of other comprehensive income (loss) in the

---

Condensed Consolidated Statement of Comprehensive Income (Loss), to offset the changes in the values of the net investments being hedged.

In the third quarter of fiscal year 2019, the company entered into multiple cross-currency swaps with a combined notional amount of $225 million and maturities in October 2022. As of September 30, 2019, the notional amount of the company's cross-currency swap contracts outstanding was $225 million. These swaps hedged a portion of the net investment in a certain European subsidiary against volatility in the euro/U.S. dollar foreign exchange rate. In the second quarter of fiscal year 2020, the company settled these cross-currency swap contracts and received proceeds of $11 million, $1 million of which related to net accrued interest receivable.

The fair value of cross-currency swap contracts is based on a model which incorporates observable inputs, including quoted spot rates, forward exchange rates and discounted future expected cash flows, utilizing market interest rates with similar quality and maturity characteristics.

---

Retirement benefit liabilities consisted of the following (in millions):

	March 31, 2020				September 30, 2019
Retiree medical liability	$	63			$	67
Pension liability	255				271
Other	14				14
Subtotal	332				352
Less: current portion (included in compensation and benefits, Note 15)	(17		)		(16		)
Retirement benefits	$	315			$	336

The components of net periodic pension and retiree medical income included in continuing operations for the three months ended March 31 are as follows (in millions):

	2020								2019
	Pension				Retiree Medical				Pension				Retiree Medical
Interest cost	$	10			$	1			$	14			$	—
Assumed return on plan assets	(24		)		—				(25		)		—
Amortization of prior service benefit	—				(9		)		—				(8		)
Recognized actuarial loss	8				3				5				4
Total income	$	(6	)		$	(5	)		$	(6	)		$	(4	)

The components of net periodic pension and retiree medical income included in continuing operations for the six months ended March 31 are as follows (in millions):

	2020								2019
	Pension				Retiree Medical				Pension				Retiree Medical
Interest cost	$	21			$	1			$	27			$	1
Assumed return on plan assets	(48		)		—				(49		)		—
Amortization of prior service benefit	—				(18		)		—				(17		)
Recognized actuarial loss	16				7				11				8
Total income	$	(11	)		$	(10	)		$	(11	)		$	(8	)

---

Environmental

    Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The company records liabilities for environmental issues in the accounting period in which they are considered to be probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which Meritor is the only potentially responsible

party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties.

     The company has been designated as a potentially responsible party at ten Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s liability has been finally determined. Superfund is a United States federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants. Management estimates the total reasonably possible costs the company could incur for the remediation of the ten Superfund sites at March 31, 2020 to be approximately $23 million, of which $9 million is probable and recorded as a liability. Included in reasonably possible amounts are estimates for certain remediation actions that may be required if current actions are deemed inadequate by the regulators.

     In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at March 31, 2020 to be approximately $13 million, of which $4 million is probable and recorded as a liability.

     Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using discount rates in the range of 1.50 to 2.25 percent and is approximately $13 million at March 31, 2020. The undiscounted estimate of these costs is approximately $15 million.

     The following are the components of the Superfund and non-Superfund environmental reserves (in millions):

	Superfund Sites				Non-Superfund Sites				Total
Beginning Balance at September 30, 2019	$	11			$	4			$	15
Payments and other	(3		)		(1		)		(4		)
Accruals	1				1				2
Ending Balance at March 31, 2020	$	9			$	4			$	13

Environmental reserves are included in Other Current Liabilities (see Note 15) and Other Liabilities (see Note 16) in the Condensed Consolidated Balance Sheet.

     The actual amount of costs or damages for which the company may be held responsible could materially exceed the foregoing estimates because of uncertainties, including the financial condition of other potentially responsible parties, the success of the remediation, discovery of new contamination and other factors that make it difficult to predict actual costs accurately. However, based on management’s assessment, after consulting with outside advisors that specialize in environmental matters, and subject to the difficulties inherent in estimating these future costs, the company believes that its expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on the company’s business, financial condition or results of operations. In addition, in future periods, new laws and regulations, changes in remediation plans, advances in technology and additional information about the ultimate clean-up remedies could significantly change the company’s estimates. Management cannot assess the possible effect of compliance with future requirements.

---

In April 2016, the company was served with several complaints filed against the company and other defendants in the United States District Court for the Northern District of Mississippi. The complaints were amended in July 2016. These complaints allege damages, including diminution of property value, concealment/fraud and emotional distress resulting from alleged environmental pollution in and around a neighborhood in Grenada, Mississippi. Rockwell owned and operated a facility near the neighborhood from 1965 to 1985. The company filed answers to the complaints in July 2016. In May 2017, the company was served with a complaint filed against the company and other defendants by the Mississippi Attorney General in the Chancery Court of Grenada County, Mississippi. The complaint alleges that operations at the above-referenced Grenada facility caused contamination of off-site groundwater and surface waters. Subsequently, the company removed this action to the United States District Court for the Northern District of Mississippi. However, plaintiffs’ motion to remand the case to the Chancery Court was granted in March 2018. In April, May and July 2018, the company was served with additional property damage, personal injury and wrongful death lawsuits naming the company and others as defendants, which were brought by current and former residents of the same neighborhood. The company entered into settlement negotiations with plaintiffs and recorded an accrual in the second quarter of fiscal year 2019.

Asbestos

     Maremont Corporation ("Maremont"), a subsidiary of Meritor, manufactured friction products containing asbestos from 1953 through 1977, when it sold its friction product business. Arvin Industries, Inc., a predecessor of the company, acquired Maremont in 1986.

In the first quarter of fiscal year 2019, Maremont and its three wholly-owned subsidiaries, Maremont Exhaust Products, Inc., AVM, Inc., and Former Ride Control Operating Company, Inc., began to solicit votes from asbestos claimants in favor of a Joint Pre-Packaged Plan of Reorganization (the "Plan"). On January 18, 2019, the Plan was approved by voting asbestos claimants and, on January 22, 2019, Maremont and its subsidiaries voluntarily filed cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") seeking to implement the Plan through the Chapter 11 cases. Among other things, the Plan was intended to permanently resolve all current and future asbestos claims related to Maremont's historical asbestos-related activities through the creation of a trust pursuant to Section 524(g) of the U.S. Bankruptcy Code (the "524(g) Trust"). Meritor determined that the net amount of $51 million Maremont would be required to contribute to the 524(g) Trust according to the Plan represented Meritor's best estimate of Maremont's net asbestos liability. As a result, Meritor recognized $31 million of income related to remeasuring the Maremont net asbestos liability based on the terms of the Plan.

As of January 22, 2019, Maremont and its subsidiaries were deconsolidated from the Condensed Consolidated Balance Sheet and the results of Maremont's operations were eliminated from the Condensed Consolidated Statement of Operations as Maremont became subject to the control of a court. Deconsolidation had an insignificant impact on the Condensed Consolidated Statement of Operations.

The Plan was confirmed by the Bankruptcy Court on May 17, 2019 and approved by the United States District Court for the District of Delaware on June 27, 2019. On July 9, 2019, the company contributed cash and repaid a loan to Maremont and Maremont funded the 524(g) Trust with such cash and its other assets, including its existing insurance policies. As a result, all current and future asbestos claims related to Maremont’s historical asbestos-related activities have been channeled to the 524(g) Trust, which will process and satisfy all such claims going forward pursuant to its resolution and payment procedures.

     Rockwell International Corporation ("Rockwell") — ArvinMeritor, Inc. ("AM"), a predecessor of Meritor, along with many other companies, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred at the time of the spin-off of the automotive business from Rockwell in 1997. There were approximately 1,400 pending active asbestos claims in lawsuits that name AM, together with many other companies, as defendants at March 31, 2020 and September 30, 2019.

A significant portion of the claims do not identify any Rockwell products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell products, and past experience has shown that the vast majority of the claimants will likely never identify any of Rockwell products. Historically, AM has been dismissed from the vast majority of similar claims filed in the past with no payment to claimants. For those claimants who do show that they worked with Rockwell products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved and the lack of any impairing medical condition on the part of many claimants.

Pending and Future Claims: The company engaged a third-party advisor with extensive experience in assessing asbestos-related liabilities to conduct a study to estimate its potential undiscounted liability for pending and future asbestos-related claims as of September 30, 2019. Management continuously monitors the underlying claims data and experience for the purpose of assessing the appropriateness of the assumptions used to estimate the liability.

---

As of September 30, 2019, the estimated probable range of equally likely possibilities of the company’s obligation for asbestos-related claims over the next 40 years is $91 million to $181 million. Based on the information contained in the actuarial study, and all other available information considered, management concluded that no amount within the range of potential liability was more likely than any other and, therefore, recorded a liability at the low end of the range. The company recognized a liability for pending and future claims over the next 40 years of $87 million as of March 31, 2020 and $91 million as of September 30, 2019.

Recoveries: AM has insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for a significant portion of these claims. The insurance receivables for Rockwell asbestos-related liabilities totaled $60 million and $61 million as of March 31, 2020 and September 30, 2019, respectively.

The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Rockwell could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Rockwell in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; the company’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the estimation period, the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Rockwell asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations.

Indemnification

The company has provided indemnities in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos and employment-related matters, and the periods of indemnification vary in duration.

   The company is not aware of any claims or other information that would give rise to material payments under such indemnification obligations.

Other

There were no dividends declared or paid in the first or second quarter of fiscal years 2020 and 2019. The payment of cash dividends and the amount of any dividend are subject to review and change at the discretion of the company's Board of Directors.

Common Stock and Debt Repurchase Authorizations

On November 7, 2019, the Board of Directors authorized the repurchase of up to $325 million of the company's common stock, which was an increase from the prior $250 million authorization approved on July 26, 2019. Repurchases can be made from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. During fiscal year 2019, the company repurchased 1.3 million shares of common stock for $25 million (including commission costs) pursuant to this common stock repurchase authorization. During the first quarter of fiscal year 2020, the company repurchased 4.9 million shares of common stock for $100 million (including commission costs) pursuant to this authorization. During the second quarter of fiscal year 2020, the company repurchased 5.6 million shares of common stock for $141 million (including commission costs) pursuant to this authorization. As of March 31, 2020, the amount remaining available for repurchases under this common stock repurchase authorization was $59 million. On March 25, 2020, the company suspended activity under its share repurchase program as a result of uncertainties in the global economy due to the COVID-19 pandemic.

---

On November 2, 2018, the Board of Directors authorized the repurchase of up to $200 million of the company's common stock and up to $100 million aggregate principal amount of any of the company's debt securities (including convertible debt securities), in each case from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company's debt covenants. The remaining authority under the common stock repurchase authorization was superseded by the July 2019 authorization described above. As of March 31, 2020 and September 30, 2019, the amount remaining available for repurchase under this debt repurchase authorization was $76 million.

Accumulated Other Comprehensive Loss ("AOCL")

The components of AOCL and the changes in AOCL by components, net of tax, for the three months ended March 31, 2020 and 2019 are as follows (in millions):

	Foreign Currency Translation				Employee Benefit Related Adjustments				Unrealized Income (Loss) on cash flow hedges				Total
Balance at December 31, 2019	$	(86	)		$	(569	)		$	—			$	(655	)
Other comprehensive income before reclassification	(56		)		—				(3		)		(59		)
Amounts reclassified from accumulated other comprehensive loss	—				2				(2		)		—
Net current-period other comprehensive income	(56		)		2				(5		)		(59		)
Balance at March 31, 2020	$	(142	)		$	(567	)		$	(5	)		$	(714	)

	Details about Accumulated Other Comprehensive Income Components		Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Consolidated Statement of Operations
	Employee Benefit Related Adjustment
	Prior service benefit		$	(9	)		(a)
	Actuarial losses		11				(a)
			2				Total before tax
			—				Tax benefit
	Total reclassifications for the period		$	2			Net of tax
	(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 19 for additional details), which is recorded in other income (expense), net.

	Foreign Currency Translation				Employee Benefit Related Adjustments				Unrealized Income (Loss) on cash flow hedges				Total
Balance at December 31, 2018	$	(94	)		$	(476	)		$	1			$	(569	)
Other comprehensive income before reclassification	7				—				—				7
Amounts reclassified from accumulated other comprehensive loss	—				1				(1		)		—
Net current-period other comprehensive income	$	7			$	1			$	(1	)		$	7
Balance at March 31, 2019	$	(87	)		$	(475	)		$	—			$	(562	)

---

	Details about Accumulated Other Comprehensive Income Components		Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Consolidated Statement of Operations
	Employee Benefit Related Adjustment
	Prior service benefit		$	(8	)		(b)
	Actuarial losses		9				(b)
			1				Total before tax
			—				Tax benefit
	Total reclassifications for the period		$	1			Net of tax
	(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 19 for additional details), which is recorded in other income (expense), net.

The components of AOCL and the changes in AOCL by components, net of tax, for the six months ended March 31, 2020 and 2019 are as follows (in millions):

	Foreign Currency Translation				Employee Benefit Related Adjustments				Unrealized Income (Loss) on cash flow hedges				Total
Balance at September 30, 2019	$	(107	)		$	(572	)		$	(2	)		$	(681	)
Other comprehensive income before reclassification	(35		)		—				(3		)		(38		)
Amounts reclassified from accumulated other comprehensive loss	—				5				—				5
Net current-period other comprehensive income	(35		)		5				(3		)		(33		)
Balance at March 31, 2020	$	(142	)		$	(567	)		$	(5	)		$	(714	)

	Details about Accumulated Other Comprehensive Income Components		Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Consolidated Statement of Operations
	Employee Benefit Related Adjustment
	Prior service benefit		$	(18	)		(a)
	Actuarial losses		23				(a)
			5				Total before tax
			—				Tax benefit
	Total reclassifications for the period		$	5			Net of tax
	(a)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 19 for additional details), which is recorded in other income (expense), net.

	Foreign Currency Translation				Employee Benefit Related Adjustments				Unrealized Income (Loss) on cash flow hedges				Total
Balance at September 30, 2018	$	(90	)		$	(476	)		$	—			$	(566	)
Other comprehensive income before reclassification	3				(1		)		—				2
Amounts reclassified from accumulated other comprehensive loss	—				2				—				2
Net current-period other comprehensive income	$	3			$	1			$	—			$	4
Balance at March 31, 2019	$	(87	)		$	(475	)		$	—			$	(562	)

---

	Details about Accumulated Other Comprehensive Income Components		Amount Reclassified from Accumulated Other Comprehensive Income				Affected Line Item in the Consolidated Statement of Operations
	Employee Benefit Related Adjustment
	Prior service benefit		$	(17	)		(b)
	Actuarial losses		19				(b)
			2				Total before tax
			—				Tax benefit
	Total reclassifications for the period		$	2			Net of tax
	(b)  These accumulated other comprehensive income components are included in the computation of net periodic pension and retiree medical expense (see Note 19 for additional details), which is recorded in other income (expense), net.

The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company’s Chief Operating Decision Maker ("CODM") is the Chief Executive Officer.

      The company has two reportable segments at March 31, 2020, as follows:

•	The Commercial Truck segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, primarily for medium- and heavy-duty trucks and other applications in North America, South America, Europe and Asia Pacific. This segment also includes the company's aftermarket businesses in Asia Pacific and South America.

•

The Aftermarket, Industrial and Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers, primarily in North America and Europe. In addition, this segment supplies drivetrain systems and certain components, including axles, drivelines, brakes and suspension systems for military, construction, bus and coach, fire and emergency and other applications in North America and Europe. It also supplies a variety of undercarriage products and systems for trailer applications in North America.

     Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization, non-controlling interests in consolidated joint ventures, loss on sale of receivables, restructuring expense, asset impairment charges and other special items as determined by management. Segment adjusted EBITDA excludes unallocated legacy and corporate income (expense), net. The company uses segment adjusted EBITDA as the primary basis for the CODM to evaluate the performance of each of its reportable segments.

     The accounting policies of the segments are the same as those applied in the Condensed Consolidated Financial Statements, except for the use of segment adjusted EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the segment.

---

     Segment information is summarized as follows (in millions):

	Commercial Truck				Aftermarket, Industrial and Trailer				Eliminations				Total
Three Months Ended March 31, 2020
External Sales	$	557			$	314			$	—			$	871
Intersegment Sales	31				5				(36		)		—
Total Sales	$	588			$	319			$	(36	)		$	871
Three Months Ended March 31, 2019
External Sales	$	837			$	319			$	—			$	1,156
Intersegment Sales	39				10				(49		)		—
Total Sales	$	876			$	329			$	(49	)		$	1,156

	Commercial Truck				Aftermarket,  Industrial and Trailer				Eliminations				Total
Six Months Ended March 31, 2020
External Sales	$	1,147			$	625			$	—			$	1,772
Intersegment Sales	63				11				(74		)		—
Total Sales	$	1,210			$	636			$	(74	)		$	1,772
Six Months Ended March 31, 2019
External Sales	$	1,581			$	613			$	—			$	2,194
Intersegment Sales	74				19				(93		)		—
Total Sales	$	1,655			$	632			$	(93	)		$	2,194

---

	Three Months Ended March 31,								Six Months Ended March 31,
	2020				2019				2020				2019
Segment adjusted EBITDA:
Commercial Truck	$	55			$	88			$	111			$	165
Aftermarket, Industrial and Trailer	49				52				89				92
Segment adjusted EBITDA	104				140				200				257
Unallocated legacy and corporate expense, net (1)	3				(1		)		5				1
Interest expense, net	(16		)		(15		)		(30		)		(29		)
Provision for income taxes	(73		)		(27		)		(86		)		(48		)
Depreciation and amortization	(26		)		(21		)		(50		)		(43		)
Noncontrolling interests	(1		)		(2		)		(3		)		(4		)
Loss on sale of receivables	(1		)		(2		)		(2		)		(3		)
Restructuring	(10		)		1				(15		)		1
Transaction costs	(5		)		—				(5		)		—
Income from WABCO distribution termination	265				—				265				—
Asbestos related liability remeasurement (2)	—				—				—				31
Income from continuing operations attributable to Meritor, Inc.	$	240			$	73			$	279			$	163

(1)	Unallocated legacy and corporate income (expense), net represents items that are not directly related to the company's business segments. These items primarily include asbestos-related charges and settlements, pension and retiree medical costs associated with sold businesses, and other legacy costs for environmental and product liability.

(2)	The six months ended March 31, 2019 includes $31 million related to the remeasurement of the Maremont asbestos liability based on the Maremont prepackaged plan of reorganization.

	March 31, 2020				September 30, 2019
Segment Assets:
Commercial Truck	$	1,682			$	1,659
Aftermarket, Industrial and Trailer	810				815
Total segment assets	2,492				2,474
Corporate (1)	977				567
Less: Accounts receivable sold under off-balance sheet factoring programs (2)	(244		)		(226		)
Total assets	$	3,225			$	2,815

(1)	Corporate assets consist primarily of cash, deferred income taxes and prepaid pension costs.

(2)	At March 31, 2020 and September 30, 2019, segment assets include $244 million and $226 million, respectively, of accounts receivable sold under off-balance sheet accounts receivable factoring programs (see Note 10). These sold receivables are included in segment assets as the CODM reviews segment assets inclusive of these balances.

---

Rule 3-10 of Regulation S-X requires that separate financial information for issuers and guarantors of registered securities be filed in certain circumstances. Certain of the company's 100-percent-owned subsidiaries, as defined in the credit agreement (the "Guarantors"), irrevocably and unconditionally guarantee amounts outstanding under the senior secured revolving credit facility on a joint and several basis. Similar subsidiary guarantees were provided for the benefit of the holders of the notes outstanding under the company's indentures (see Note 17).

---

	Three Months Ended March 31, 2020
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Sales
External	$	—			$	515			$	356			$	—			$	871
Subsidiaries	—				21				27				(48		)		—
Total sales	—				536				383				(48		)		871
Cost of sales	(11		)		(461		)		(333		)		48				(757		)
GROSS PROFIT	(11		)		75				50				—				114
Selling, general and administrative	(9		)		(33		)		(17		)		—				(59		)
Income from WABCO distribution termination	265				—				—				—				265
Other operating expense, net	(1		)		(6		)		(3		)		—				(10		)
OPERATING INCOME	244				36				30				—				310
Other income (expense), net	44				(9		)		(21		)		—				14
Equity in earnings of affiliates	—				5				1				—				6
Interest income (expense), net	(31		)		9				6				—				(16		)
INCOME BEFORE INCOME TAXES	257				41				16				—				314
Provision for income taxes	(58		)		(11		)		(4		)		—				(73		)
Equity income from continuing operations of subsidiaries	41				2				—				(43		)		—
INCOME FROM CONTINUING OPERATIONS	240				32				12				(43		)		241
INCOME FROM DISCONTINUED OPERATIONS, net of tax	1				1				1				(2		)		1
NET INCOME	241				33				13				(45		)		242
Less: Net income attributable to noncontrolling interests	—				—				(1		)		—				(1		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	241			$	33			$	12			$	(45	)		$	241

---

	Three Months Ended March 31, 2020
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Net income	$	241			$	33			$	13			$	(45	)		$	242
Other comprehensive loss, net of tax	(59		)		(70		)		(71		)		141				(59		)
Total comprehensive income (loss)	182				(37		)		(58		)		96				183
Less: Comprehensive income attributable to noncontrolling interests	—				—				(1		)		—				(1		)
Comprehensive income (loss) attributable to Meritor, Inc.	$	182			$	(37	)		$	(59	)		$	96			$	182

---

	Three Months Ended March 31, 2019
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Sales
External	$	—			$	677			$	479			$	—			$	1,156
Subsidiaries	—				28				51				(79		)		—
Total sales	—				705				530				(79		)		1,156
Cost of sales	(16		)		(590		)		(455		)		79				(982		)
GROSS PROFIT	(16		)		115				75				—				174
Selling, general and administrative	(28		)		(30		)		(15		)		—				(73		)
Other operating income, net	—				—				1				—				1
OPERATING INCOME (LOSS)	(44		)		85				61				—				102
Other income (expense), net	50				(14		)		(27		)		—				9
Equity in earnings of affiliates	—				3				3				—				6
Interest income (expense), net	(33		)		12				6				—				(15		)
INCOME (LOSS) BEFORE INCOME TAXES	(27		)		86				43				—				102
Benefit (provision) for income taxes	20				(22		)		(25		)		—				(27		)
Equity income from continuing operations of subsidiaries	80				9				—				(89		)		—
INCOME FROM CONTINUING OPERATIONS	73				73				18				(89		)		75
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(1		)		—				—				—				(1		)
NET INCOME	72				73				18				(89		)		74
Less: Net income attributable to noncontrolling interests	—				—				(2		)		—				(2		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	72			$	73			$	16			$	(89	)		$	72

---

	Three Months Ended March 31, 2019
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Net income	$	72			$	73			$	18			$	(89	)		$	74
Other comprehensive income, net of tax	7				1				1				(2		)		7
Total comprehensive income	79				74				19				(91		)		81
Less: Comprehensive income attributable to noncontrolling interests	—				—				(2		)		—				(2		)
Comprehensive income attributable to Meritor, Inc.	$	79			$	74			$	17			$	(91	)		$	79

---

	Six Months Ended March 31, 2020
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Sales
External	$	—			$	1,050			$	722			$	—			$	1,772
Subsidiaries	—				44				62				(106		)		—
Total sales	—				1,094				784				(106		)		1,772
Cost of sales	(27		)		(930		)		(680		)		106				(1,531		)
GROSS PROFIT	(27		)		164				104				—				241
Selling, general and administrative	(33		)		(62		)		(34		)		—				(129		)
Income from WABCO distribution termination	265				—				—				—				265
Other operating expense, net	(1		)		(6		)		(8		)		—				(15		)
OPERATING INCOME	204				96				62				—				362
Other income (expense), net	44				(2		)		(18		)		—				24
Equity in earnings of affiliates	—				9				3				—				12
Interest income (expense), net	(62		)		20				12				—				(30		)
INCOME BEFORE INCOME TAXES	186				123				59				—				368
Provision for income taxes	(46		)		(26		)		(14		)		—				(86		)
Equity income from continuing operations of subsidiaries	139				30				—				(169		)		—
INCOME FROM CONTINUING OPERATIONS	279				127				45				(169		)		282
INCOME FROM DISCONTINUED OPERATIONS, net of tax	1				1				1				(2		)		1
NET INCOME	280				128				46				(171		)		283
Less: Net income attributable to noncontrolling interests	—				—				(3		)		—				(3		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	280			$	128			$	43			$	(171	)		$	280

---

	Six Months Ended March 31, 2020
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Net income	$	280			$	128			$	46			$	(171	)		$	283
Other comprehensive loss, net of tax	(33		)		(40		)		(39		)		79				(33		)
Total comprehensive income	247				88				7				(92		)		250
Less: Comprehensive income attributable to noncontrolling interests	—				—				(3		)		—				(3		)
Comprehensive income attributable to Meritor, Inc.	$	247			$	88			$	4			$	(92	)		$	247

---

	Six Months Ended March 31, 2019
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Sales
External	$	—			$	1,266			$	928			$	—			$	2,194
Subsidiaries	—				60				108				(168		)		—
Total sales	—				1,326				1,036				(168		)		2,194
Cost of sales	(31		)		(1,124		)		(892		)		168				(1,879		)
GROSS PROFIT	(31		)		202				144				—				315
Selling, general and administrative	(53		)		(57		)		3				—				(107		)
Other operating income, net	—				—				1				—				1
OPERATING INCOME (LOSS)	(84		)		145				148				—				209
Other income (expense), net	50				(9		)		(21		)		—				20
Equity in earnings of affiliates	—				10				5				—				15
Interest income (expense), net	(65		)		24				12				—				(29		)
INCOME (LOSS) BEFORE INCOME TAXES	(99		)		170				144				—				215
Benefit (provision) for income taxes	31				(34		)		(45		)		—				(48		)
Equity income from continuing operations of subsidiaries	231				49				—				(280		)		—
INCOME FROM CONTINUING OPERATIONS	163				185				99				(280		)		167
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(1		)		—				—				—				(1		)
NET INCOME	162				185				99				(280		)		166
Less: Net income attributable to noncontrolling interests	—				—				(4		)		—				(4		)
NET INCOME ATTRIBUTABLE TO MERITOR, INC.	$	162			$	185			$	95			$	(280	)		$	162

---

	Six Months Ended March 31, 2019
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
Net income	$	162			$	185			$	99			$	(280	)		$	166
Other comprehensive income (loss), net of tax	4				(7		)		(8		)		16				5
Total comprehensive income	166				178				91				(264		)		171
Less: Comprehensive income attributable to noncontrolling interests	—				—				(5		)		—				(5		)
Comprehensive income attributable to Meritor, Inc.	$	166			$	178			$	86			$	(264	)		$	166

---

	March 31, 2020
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	351			$	4			$	153			$	—			$	508
Receivables trade and other, net	—				78				388				—				466
Inventories	—				297				232				—				529
Other current assets	6				10				19				—				35
TOTAL CURRENT ASSETS	357				389				792				—				1,538
NET PROPERTY	21				265				223				—				509
GOODWILL	—				360				140				—				500
OTHER ASSETS	177				239				262				—				678
INVESTMENTS IN SUBSIDIARIES	4,531				888				—				(5,419		)		—
TOTAL ASSETS	$	5,086			$	2,141			$	1,417			$	(5,419	)		$	3,225
CURRENT LIABILITIES:
Short-term debt	$	33			$	—			$	105			$	—			$	138
Accounts and notes payable	50				226				265				—				541
Other current liabilities	68				90				99				—				257
TOTAL CURRENT LIABILITIES	151				316				469				—				936
LONG-TERM DEBT	1,200				—				3				—				1,203
RETIREMENT BENEFITS	291				1				23				—				315
INTERCOMPANY PAYABLE (RECEIVABLE)	2,932				(3,030		)		98				—				—
OTHER LIABILITIES	120				124				103				—				347
EQUITY ATTRIBUTABLE TO MERITOR, INC.	392				4,730				689				(5,419		)		392
NONCONTROLLING INTERESTS	—				—				32				—				32
TOTAL LIABILITIES AND EQUITY	$	5,086			$	2,141			$	1,417			$	(5,419	)		$	3,225

---

	September 30, 2019
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
CURRENT ASSETS:
Cash and cash equivalents	$	4			$	4			$	100			$	—			$	108
Receivables trade and other, net	3				92				456				—				551
Inventories	—				292				234				—				526
Other current assets	6				10				15				—				31
TOTAL CURRENT ASSETS	13				398				805				—				1,216
NET PROPERTY	21				260				234				—				515
GOODWILL	—				337				141				—				478
OTHER ASSETS	170				225				211				—				606
INVESTMENTS IN SUBSIDIARIES	4,432				899				—				(5,331		)		—
TOTAL ASSETS	$	4,636			$	2,119			$	1,391			$	(5,331	)		$	2,815
CURRENT LIABILITIES:
Short-term debt	$	32			$	—			$	9			$	—			$	41
Accounts and notes payable	53				283				274				—				610
Other current liabilities	77				109				99				—				285
TOTAL CURRENT LIABILITIES	162				392				382				—				936
LONG-TERM DEBT	898				—				4				—				902
RETIREMENT BENEFITS	312				1				23				—				336
INTERCOMPANY PAYABLE (RECEIVABLE)	2,833				(3,005		)		172				—				—
OTHER LIABILITIES	46				112				68				—				226
EQUITY ATTRIBUTABLE TO MERITOR, INC.	385				4,619				712				(5,331		)		385
NONCONTROLLING INTERESTS	—				—				30				—				30
TOTAL LIABILITIES AND EQUITY	$	4,636			$	2,119			$	1,391			$	(5,331	)		$	2,815

---

	Six Months Ended March 31, 2020
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	$	370			$	17			$	(97	)		$	—			$	290
INVESTING ACTIVITIES
Capital expenditures	(1		)		(17		)		(15		)		—				(33		)
Cash paid for acquisition of TransPower, net of cash acquired	(13		)		—				—				—				(13		)
Other investing activities	9				—				—								9
CASH USED FOR INVESTING ACTIVITIES	(5		)		(17		)		(15		)		—				(37		)
FINANCING ACTIVITIES
Securitization	—				—				96				—				96
Borrowings against revolving line of credit	304				—				—				—				304
Term loan payments	(4		)		—				—				—				(4		)
Repurchase of common stock	(241		)		—				—				—				(241		)
Intercompany advances	(76		)		—				76				—				—
Other financing activities	(1		)		—				—				—				(1		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(18		)		—				172				—				154
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—				—				(7		)		—				(7		)
CHANGE IN CASH AND CASH EQUIVALENTS	347				—				53				—				400
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	4				4				100				—				108
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	351			$	4			$	153			$	—			$	508

---

	Six Months Ended March 31, 2019
	Parent				Guarantors				Non- Guarantors				Elims				Consolidated
CASH PROVIDED BY (USED FOR)        OPERATING ACTIVITIES	$	32			$	23			$	(4	)		$	—			$	51
INVESTING ACTIVITIES
Capital expenditures	(2		)		(23		)		(19		)		—				(44		)
Cash paid for investment in TransPower	(3		)		—				—				—				(3		)
CASH USED FOR INVESTING ACTIVITIES	(5		)		(23		)		(19		)		—				(47		)
FINANCING ACTIVITIES
Securitization	—				—				48				—				48
Redemption of notes	(19		)		—				—				—				(19		)
Repurchase of common stock	(50		)		—				—				—				(50		)
Intercompany advances	29				—				(29		)		—				—
Other financing activities	—				(1		)		—				—				(1		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(40		)		(1		)		19				—				(22		)
EFFECT OF CHANGES IN FOREIGN CURRENCY        EXCHANGE RATES ON CASH AND CASH        EQUIVALENTS	—				—				1				—				1
CHANGE IN CASH AND CASH EQUIVALENTS	(13		)		(1		)		(3		)		—				(17		)
CASH AND CASH EQUIVALENTS AT BEGINNING        OF PERIOD	24				6				85				—				115
CASH AND CASH EQUIVALENTS AT END OF        PERIOD	$	11			$	5			$	82			$	—			$	98

Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. As of March 31, 2020 and September 30, 2019, Parent-only obligations included $295 million and $315 million of pension and retiree medical benefits, respectively (see Note 19). All debt is debt of the Parent other than $108 million and $13 million at March 31, 2020 and September 30, 2019, respectively (see Note 17), which is primarily related to U.S. accounts receivable securitization and financing lease obligations. There were $23 million cash dividends paid to the Parent by subsidiaries and investments accounted for by the equity method for the six months ended March 31, 2020. There were $29 million of cash dividends paid to the Parent by subsidiaries and investments accounted for by the equity method for the six months ended March 31, 2019.

---

---

---

•	Uncertainty regarding the duration and severity of the COVID-19 pandemic and its effects on public health, the global economy, financial markets and operations, including additional expense related to enhancing safety measures for our employees;

•	Uncertainty around the global economic outlook;

•	Volatility in price and availability of steel, components, transportation costs and other commodities, including energy;

•	Potential for disruptions in the financial markets and their impact on the availability and cost of credit;

•	Impact of currency exchange rate volatility; and

•	Consolidation and globalization of OEMs and their suppliers.

•	Significant contract awards or losses of existing contracts or failure to negotiate acceptable terms in contract renewals;

•	Ability to successfully execute and implement strategic initiatives, including the ability to launch a significant number of new products, potential product quality issues, and obtain new business;

•	Ability to manage possible adverse effects on European markets or our European operations, or financing arrangements related thereto, following the United Kingdom's decision to exit the European Union, or in the event one or more other countries exit the European monetary union;

•	Ability to further implement planned productivity, cost reduction and other margin improvement initiatives;

•	Ability to work with our customers to manage rapidly changing production volumes, including in the event of production interruptions affecting us, our customers or our suppliers;

•	Competitively driven price reductions to our customers or potential price increases from our suppliers;

•	Additional restructuring actions and the timing and recognition of restructuring charges, including any actions associated with prolonged softness in markets in which we operate;

•	Higher-than-planned warranty expenses, including the outcome of known or potential recall campaigns;

•	Uncertainties of asbestos claim, environmental and other legal proceedings, the long-term solvency of our insurance carriers and the potential for higher-than-anticipated costs resulting from environmental liabilities, including those related to site remediation;

•	Significant pension costs; and

•	Restrictive government actions (such as restrictions on transfer of funds and trade protection measures, including import and export duties, quotas and customs duties and tariffs).

---

---

---

---

---

---

---

---

---

---

---

---

(1)	The availability under the revolving credit facility is subject to a priority debt-to-EBITDA ratio covenant. The facility will expire in November 2023 if the outstanding amount of the 6.25 percent notes due 2024 is greater than $75 million at that time.

(2)	Availability subject to adequate eligible accounts receivable available for sale.

(3)	Actual amounts may exceed the bank's commitment at the bank's discretion.

(4)	The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through June 22, 2020.

(5)	There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion.

---

---

---

---

---

(1)

On July 26, 2019, the Board of Directors authorized the repurchase of up to $250 million of the company’s common stock from time to time through open market purchases, privately negotiated transactions or otherwise, subject to compliance with legal and regulatory requirements and the company’s debt covenants. This authorization superseded the remaining authority under the prior November 2018 equity repurchase authorization. On November 7, 2019, the Board of Directors increased the amount of the repurchase authorization to $325 million.

---

---

---

---