Defined Benefit Plan, Benefit Obligation, Business Combination

[Table of Contents](#ib75a44f638b042a5a7472d3f3be80b22_7)NOTE 3. RUSSIAN OPERATIONS On March 17, 2022, the Board of Directors (the Board) decided to indefinitely suspend our operations in Russia due to the ongoing conflict in Ukraine. At the time of suspension, our Russian operations included a wholly-owned distributor in Russia, an unconsolidated joint venture (the Unconsolidated JV) with KAMAZ Publicly Traded Company (KAMAZ), a Russian truck manufacturer, and direct sales into Russia from our other business segments. As a result of the suspension of operations, we evaluated the recoverability of assets in Russia and assessed other potential liabilities. We experienced and expect to continue to experience an inability to collect customer receivables and may be the subject of litigation as a consequence of our suspension of commercial operations in Russia. We recorded a charge of $158 million in the first quarter related to these actions. In the second quarter, we recovered certain inventory and other expense amounts reserved in the first quarter and incurred some small additional charges resulting in a net recovery of $47 million. In the third quarter, we incurred $4 million of additional contract termination charges, and we recovered certain bad debt expenses and inventory amounts reserved in the first quarter for a net charge of $1 million. As of September 30, 2022, we had approximately $13 million of inventory and $15 million of receivables in Russia, all of which are fully reserved. In addition, we have cash balances of $71 million, some of which will be used to fund ongoing employee, tax and contract settlement obligations. The following summarizes the costs (recoveries) associated with the suspension of our Russian operations in our Condensed Consolidated Statements of Net Income:

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|  |  | Three months ended |  | Nine months ended |  |  |
| In millions |  | September 30,2022 |  | September 30,2022 |  | Statement of Net Income Location |
| Inventory write-downs |  | $ | (2) |  |  | $ | 17  |  |  | Cost of sales |
| Accounts receivable reserves |  | (1) |  |  | 42  |  |  | Other operating expense, net |
| Impairment and other joint venture costs |  | —  |  |  | 31  |  |  | Equity, royalty and interest income from investees |
|  |  |  |  |  |  |  |
| Other |  | 4  |  |  | 22  |  |  | Other operating expense, net |
| Total |  | $ | 1  |  |  | $ | 112  |  |  |   |
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We will continue to evaluate the situation as conditions evolve and may take additional actions as deemed necessary in future periods. NOTE 4. PENSIONS AND OTHER POSTRETIREMENT BENEFITS We sponsor funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit (OPEB) plans. Prior to the acquisition, Meritor provided a range of benefits to its employees and retirees, including pension benefits and postretirement healthcare benefits. As part of the acquisition, we assumed the assets and liabilities associated with these plans. Accordingly, on August 3, 2022, we recorded assets of $147 million and liabilities of $105 million on our Condensed Consolidated Balance Sheets related to Meritor's postretirement benefit plans.Contributions to these plans were as follows:

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|   |  | Three months ended |  | Nine months ended |
| In millions |  | September 30,2022 |  | October 3,2021 |  | September 30,2022 |  | October 3,2021 |
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| Defined benefit pension contributions |  | $ | 7  |  |  | $ | 13  |  |  | $ | 46  |  |  | $ | 67  |  |
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| OPEB payments, net |  | 9  |  |  | 5  |  |  | 25  |  |  | 19  |  |
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| Defined contribution pension plans |  | 26  |  |  | 20  |  |  | 82  |  |  | 72  |  |
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We anticipate making additional defined benefit pension contributions during the remainder of 2022 of $7 million for our U.S. and U.K. qualified and non-qualified pension plans. These contributions may be made from trusts or company funds either to increase pension assets or to make direct benefit payments to plan participants. We expect our 2022 annual net periodic pension cost to approximate $20 million.13
