Financial Overview

(in million USD)

	FY ended Sep. 30, 2013	FY ended Sep. 30, 2012	Rate of change(%)	Factors
Overall
Sales	3,701	4,418	(16.2)	-
Operating Income	126	173	(27.2)	-
EBITDA	276	351	(21.4)	-
Commercial Truck & Industrial
Sales	2,920	3,613	(19.2)	1)
EBITDA	192	270	(28.9)	-

Factors
1) Commercial Truck & Industrial
-In 2013, sales in the Commercial Truck & Industrial segment dropped 19.2% to USD 2,920 million due to lower global commercial truck production. In particular, 2013 production volumes in North America and Europe fell 18 and 8 percent respectively compared to 2012 levels.

Contracts

-The Company announced that Vantage Trailers selected its trailer components as standard equipment on all Vantage products. Components now available on Vantage Trailers include MTA Top-Mount and MTA Low-Mount suspensions, lift kits, Meritor Tire Inflation Systems by PSI, automatic slack adjusters and wheel-end components. (From a press release on June 19, 2013)

-The Company announced that Wabash National has selected its trailer axles to be standard equipment on all Wabash trailers. As part of the agreement, Wabash National models will also feature other Meritor's components including air suspensions, Meritor Tire Inflation Systems by PSI, automatic slack adjusters and wheel-end components. (From a press release on October 17, 2012)

Divestitures

-In April 2013, the Company announced that it had signed a purchase and sale agreement to sell its 50 percent ownership interest in its Brazilian joint venture Suspensys Sistemas Automotivos LTDA to its partner Randon S.A. Implementos E Participacoes. The sale was completed in July 2013 for USD 195 million in cash. (From a press release on July 30, 2013)

Recent Developments in the US

-In 2013, the Company initiated a three-year plan called M2016 as a guide to improve itself and achieve specific financial goals. The plan revolves around four areas: driving operational excellence, focusing on customer value, reducing product cost, and investing in a high-performing workforce. By emphasizing these areas, the company plans to use M2016 to achieve three financial goals by the end of the fiscal year ending September 2016:

• Achieve 10% adjusted EBITDA margin
• Reduce net debt, including retirement benefit liabilities, by USD 400 million to less than USD 1.5 billion
• Have incremental booked revenue of USD 500 million per year (at run-rate)

-The Company announced that it manufactured its 10 millionth North American-made trailer axle at its Frankfort, Kentucky, manufacturing facility. The Company has more than 50 different axles for use in a broad range of trailer applications. (From a press release on January 30, 2013)

Awards

-The Company earned its fourth consecutive Quality Achievement Award from PACCAR, Inc. This award recognizes suppliers that have achieve a defect rate of less than 50 PPM over a year. The Company's four manufacturing facilities which received PACCAR's 2012 Quality Achievement Award were located in Forest City, NC, USA; Frankfort, KY, USA; Cienega, Mexico; and Monterrey, Mexico. The Company supplies axles, braking systems and other drivetrain components for PACCAR's Kenworth, Peterbilt and DAF commercial trucks. (From a press release on July 17, 2013)

-Meritor WABCO, a joint venture between the Company and WABCO, received the 2012 Excellence in Quality Award from Hino Motors Manufacturing U.S.A., Inc. Meritor WABCO has been recognized for this award three times in the past five years. The award recognizes Meritor WABCO achieving a perfect 0 parts per million (PPM) defect rate during the entire calendar year 2012. Meritor WABCO supplies Hino with pneumatic and hydraulic anti-lock braking (ABS) systems for vehicles built in Williamstown, West Virginia, and Woodstock, Ontario, Canada. (From a press release on June 7, 2013)

-Meritor WABCO, a joint venture between the Company and WABCO, won the 2012 Platinum Supplier Award from Wabash National Corp. This marked the fifth consecutive year that Meritor WABCO has received this award. (From a press release on November 12, 2012)

R&D Expenditure

(in million USD)

	FY ended Sep. 30, 2013	FY ended Sep. 30, 2012	FY ended Sep. 30, 2011
Overall	71	73	73

R&D Facilities

Name	Location
Technical Center	Troy, Michigan, USA Cameri, Italy Cwmbran, UK Bangalore, India
Engineering Center	Cienega de Flores, Nuevo Leon, Mexico Osasco and Resende, Brazil Shanghai and Xuzhou, China Mysore, India

Product Development

Collision Mitigation System
-Meritor WABCO, a joint venture between the Company and WABCO, announced the immediate availability of its next generation OnGuard collision mitigation system. The new system began production at two major OEM nameplates with two more OEMs entering production in the second quarter of 2013. (From a press release on March 7, 2013)

Trailer Stability Control System
-Meritor WABCO, a joint venture between the Company and WABCO, combined comprehensive features including auto lift axle control and tire inflation data management into its new Rollover Stability Support (RSS) 1M trailer stability control system, a two-sensor, one-modulator system. These features provide additional benefits by controlling and monitoring ancillary trailer components while also providing trailer rollover mitigation functionality. (From a press release on March 7, 2013)

Capital Expenditure

(in million USD)

	FY ended Sep. 30, 2013	FY ended Sep. 30, 2012	FY ended Sep. 30, 2011
Overall	54	89	105
-Commercial Truck & Industrial	46	79	97