Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Garrett Motion Inc. | |
Entity Central Index Key | 1,735,707 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 74,016,963 |
COMBINED INTERIM STATEMENTS OF
COMBINED INTERIM STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net sales (Note 4) | $ 784 | $ 745 | $ 2,576 | $ 2,292 |
Cost of goods sold | 606 | 568 | 1,972 | 1,730 |
Gross profit | 178 | 177 | 604 | 562 |
Selling, general and administrative expenses | 60 | 61 | 186 | 180 |
Other expense, net | 51 | 43 | 132 | 129 |
Interest expense | 1 | 2 | 3 | 5 |
Non-operating (income) expense | (7) | (3) | (10) | (14) |
Income before taxes | 73 | 74 | 293 | 262 |
Tax expense (benefit) (Note 5) | (856) | 17 | (844) | 25 |
Net income | $ 929 | $ 57 | $ 1,137 | $ 237 |
COMBINED INTERIM STATEMENTS O_2
COMBINED INTERIM STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 929 | $ 57 | $ 1,137 | $ 237 |
Foreign exchange translation adjustment | (3) | 1 | (251) | 46 |
Changes in fair value of effective cash flow hedges, net of tax (Note 10) | 5 | (14) | 24 | (65) |
Changes in currency basis reserve (Note 10) | (3) | (3) | ||
Total other comprehensive (loss) income, net of tax | (1) | (13) | (230) | (19) |
Comprehensive (loss) income | $ 928 | $ 44 | $ 907 | $ 218 |
COMBINED INTERIM BALANCE SHEETS
COMBINED INTERIM BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 197 | $ 300 |
Accounts, notes and other receivables – net (Note 6) | 762 | 745 |
Inventories – net (Note 7) | 183 | 188 |
Due from related parties, current (Note 3) | 530 | |
Other current assets | 43 | 321 |
Total current assets | 1,185 | 2,084 |
Due from related parties, non-current (Note 3) | 23 | |
Investments and long-term receivables | 37 | 38 |
Property, plant and equipment – net | 422 | 442 |
Goodwill | 193 | 193 |
Insurance recoveries for asbestos related liabilities (Note 12) | 162 | 174 |
Deferred income taxes (Note 5) | 228 | 41 |
Other assets | 63 | 2 |
Total assets | 2,290 | 2,997 |
Current liabilities: | ||
Accounts payable | 828 | 860 |
Due to related parties, current (Note 3) | 98 | 1,117 |
Current maturities of long-term debt (Note 9) | 28 | |
Accrued liabilities (Note 8) | 504 | 571 |
Total current liabilities | 1,458 | 2,548 |
Long-term debt (Note 9) | 1,577 | |
Deferred income taxes (Note 5) | 22 | 956 |
Asbestos related liabilities (Note 12) | 1,516 | 1,527 |
Other liabilities | 173 | 161 |
Total liabilities | 4,746 | 5,192 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
EQUITY (DEFICIT) | ||
Invested deficit | (2,464) | (2,433) |
Accumulated other comprehensive income (Note 11) | 8 | 238 |
Total deficit | (2,456) | (2,195) |
Total liabilities and deficit | $ 2,290 | $ 2,997 |
COMBINED INTERIM STATEMENTS O_3
COMBINED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 1,137 | $ 237 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Deferred income taxes | (908) | |
Depreciation | 53 | 47 |
Foreign exchange (gain) loss | 10 | (21) |
Stock compensation expense | 16 | 12 |
Pension expense | 7 | 7 |
Other | 6 | (2) |
Changes in assets and liabilities: | ||
Accounts, notes and other receivables | (42) | (34) |
Receivables from related parties | 57 | 3 |
Inventories | (7) | (37) |
Other assets | (2) | |
Accounts payable | (6) | (8) |
Payables to related parties | (50) | (6) |
Accrued liabilities | (57) | 42 |
Asbestos related liabilities | 1 | (5) |
Other liabilities | 25 | (1) |
Net cash provided by (used for) operating activities | 240 | 234 |
Cash flows from investing activities: | ||
Expenditures for property, plant and equipment | (66) | (56) |
Proceeds from related party notes receivables | 67 | |
Increase in marketable securities | (21) | (540) |
Decrease in marketable securities | 312 | 531 |
Other | 3 | |
Net cash provided by (used for) investing activities | 225 | 5 |
Cash flows from financing activities: | ||
Net increase (decrease) in Invested deficit | (1,493) | (251) |
Proceeds from issuance of long-term debt | 1,631 | |
Proceeds related to related party notes payable | 327 | |
Payments related to related party notes payable | (493) | (326) |
Net change related to cash pooling and short-term notes | (201) | 69 |
Net cash provided by (used for) financing activities | (556) | (181) |
Effect of foreign exchange rate changes on cash and cash equivalents | (12) | 10 |
Net increase (decrease) in cash and cash equivalents | (103) | 68 |
Cash and cash equivalents at beginning of period | 300 | 119 |
Cash and cash equivalents at end of period | $ 197 | $ 187 |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Background and Basis of Presentation | Note 1. Background and Basis of Presentation Background Garrett Motion Inc. (the “Company” or “Garrett”) designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (“OEMs”) and the aftermarket. We are a global technology leader with significant expertise in delivering products across gasoline and diesel propulsion systems and hybrid and fuel cell powertrains. On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Parent” or “Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the “Spin-Off”). Unless the context otherwise requires, references to “Garrett,” “we,” “us,” “our,” and “the Company” refer to (i) Honeywell’s Transportation Systems Business (the “Transportation Systems Business” or the “Business”) prior to the Spin-Off and (ii) Garrett Motion Inc. and its subsidiaries following the Spin-Off, as applicable. Basis of Presentation The accompanying Combined Interim Financial Statements were derived from the consolidated financial statements and accounting records of Honeywell. These Combined Asbestos-related expenses, net of probable insurance recoveries, are presented within Other expense, net in the Combined Statements of Operations. Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. These Combined Interim Financial Statements, prepared for the period during which the Business was still a part of Honeywell, reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities related to these businesses, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, we note that this recognition model in the accompanying Combined Interim Financial Statements will differ from the recognition model to be presented in future financial statements as a standalone company which will reflect the terms of the Indemnification and Reimbursement Agreement (the “Indemnification and Reimbursement Agreement”) with Honeywell entered into on September 12, 2018, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. For additional information, see Note 14 Subsequent Events. The Combined Interim Financial Statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The Combined Interim Financial Statements should be read in conjunction with the audited annual Combined Financial Statements for the year ended December 31, 2017 of the Transportation Systems Business included in our Form 10, as amended and filed with the Securities and Exchange Commission (“SEC”) on September 5, 2018 (our “Form 10”). The results of operations for the three and nine months ended September 30, 2018 and cash flows for the nine months ended September 30, 2018 should not necessarily be taken as indicative of the entire year. We report our quarterly financial information using a calendar convention: the first, second and third quarters are consistently reported as ending on March 31, June 30 and September 30. It has been our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide appropriate disclosures. Our actual closing dates for the three and nine months ended September 30, 2018 and September 30, 2017 were September 29, 2018 and September 30, 2017. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies The accounting policies of the Business are set forth in Note 2 to the audited annual Combined Financial Statements for the year ended December 31, 2017 of the Transportation Systems Business included in our Form 10. We include herein certain updates to those policies. Sales Recognition —On January 1, 2018, we adopted the FASB´s updated guidance on revenue from contracts with customers, Accounting Standards Codification (“ASC”) 606 Revenue from Contracts With Customers (“ASC 606”), using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. Product sales are recognized when we transfer control of the promised goods to our customer, which is based on shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the promised goods. In the sale of products in the OEM channel, the transaction price for these goods is equal to the agreed price of each unit and represents the standalone selling price for the unit. In the sale of products in the aftermarket channel, the terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, discounts and bonuses. We estimate variable consideration at the most likely amount we will receive from customers and reduce revenues recognized accordingly. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. Pension Benefits —On January 1, 2018, we retrospectively adopted the new accounting guidance contained in Accounting Standards Update (“ASU”) 2017-07 which amends the presentation of net periodic pension costs. That guidance requires that we disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Combined Statement of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other non-service components of net benefit costs are required to be presented separately from the service cost component. Following the adoption of this guidance, we continue to record the service cost component of Pension ongoing (income) expense in Cost of goods sold. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are now recorded in Non-operating (income) expense. We will continue to recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (MTM Adjustment). The MTM Adjustment will also be reported in Non-operating (income) expense. Derivative Financial Instruments — On September 27, On September 27, 2018, the Company entered into a cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt as described in Note 10, Financial Instruments and Fair Value Measures. The contract is designated as a fair value hedge for accounting purposes. On adoption of ASU 2017-12, the Company has elected to account for the portion of the change in fair value of the cross-currency swap attributable to the cross-currency basis spread separately within Currency basis reserve as a component of Other Comprehensive Income (“OCI”). In relation to the Company’s foreign currency exchange forward and option contracts (foreign currency exchange contracts), adoption of ASU 2017-12 had no impact on Garrett Motion Inc.’s combined balance sheets or results of operations. Such contracts will continue to be accounted for in the same manner as outlined in Note 2 to the audited annual Combined Financial Statements for the year ended December 31, 2017 of the Transportation Systems Business included in our Form 10. Recent Accounting Pronouncements — We consider the applicability and impact of all recent accounting standards updates (“ASU’s”) issued by the Financial Accounting Standards Board (FASB). ASU’s not listed below were assessed and determined to be either not applicable or are expected to have immaterial impact on the combined financial position or results of operations. In February 2016, the FASB issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases that will be effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We expect to adopt the requirements of the new standard effective January 1, 2019. The guidance requires the use of a modified retrospective approach. We are currently evaluating our lease portfolio to assess the impact to the Combined Interim Financial Statements as well as planning for adoption and implementation of this standard, which includes assessing the impact on information systems and internal controls. In February 2018, the FASB issued guidance that allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. tax reform to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. We are currently evaluating the impact of this standard on our Combined Interim Financial Statements and whether we will make the allowed election. |
Related Party Transactions with
Related Party Transactions with Honeywell | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions with Honeywell | Note 3. Related Party Transactions with Honeywell The Combined Interim Financial Statements have been prepared on a stand-alone basis and are derived from the Consolidated Interim Financial Statements and accounting records of Honeywell. Prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. The Business and Honeywell consider the allocations to be a reasonable reflection of the benefits received by the Business. During the three and nine months ended September 30, 2018 and 2017, Garrett was allocated $26 million and $87 million, and $31 million and $92 million, respectively, of general corporate expenses incurred by Honeywell, and such amounts are included within Selling, general and administrative expenses in the Combined Statements of Operations. As certain expenses reflected in the Combined Interim Financial Statements include allocations of corporate expenses from Honeywell, these statements could differ from those that would have been prepared had Garrett operated on a stand-alone basis. Honeywell uses a centralized approach for the purpose of cash management and financing of its operations. Prior to the Spin-Off, the Business’ cash was historically transferred to Honeywell daily, and Honeywell funded its operating and investing activities as needed. The Company has operated a centralized non-interest-bearing cash pool in U.S. and regional interest-bearing cash pools outside of U.S. As of September 30, 2018 and December 31, 2017, the Company had non-interest-bearing cash pooling balances of $0 million and $51 million, respectively, which are presented in Invested deficit within the Combined Balance Sheets. The Company received interest income for related party notes receivables of $0 million and $1 million, and $0 million and $0 million, for the three and nine months ended September 30, 2018 and 2017, respectively. Additionally, the Company incurred interest expense for related party notes payable of $0 million and $1 million, and $2 million and $5 million, for the three and nine months ended September 30, 2018 and 2017, respectively. Due from related parties, current consists of the following: September 30, 2018 December 31, 2017 Cash pooling and short-term notes receivables $ — $ 495 Other tax receivables from Parent — 26 Receivables from related parties — 8 Related party notes receivables, current — 1 Foreign currency exchange contracts — — $ — $ 530 Due from related parties, non-current consists of the following: September 30, 2018 December 31, 2017 Other tax receivables from Parent $ — $ 23 $ — $ 23 Due to related parties, current consists of the following: September 30, 2018 December 31, 2017 Cash pooling and short-term notes payables $ 98 $ 545 Related party notes payables, current — 484 Payables to related parties — 51 Foreign currency exchange contracts — 37 $ 98 $ 1,117 Net transfers to and from Honeywell are included within Invested deficit on the Combined Balance Sheet. The components of the net transfers to and from Honeywell for the three and nine months ended September 30, 2018 and 2017 are as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 General financing activities $ 30 $ (111 ) $ 1,761 $ (243 ) Distribution to Parent (1,628 ) (69 ) (2,994 ) (69 ) Unbilled corporate allocations 15 31 41 64 Stock compensation expense and other compensation awards 5 5 17 14 Pension expense 2 2 7 7 Total net decrease in Invested deficit $ (1,576 ) $ (142 ) $ (1,168 ) $ (227 ) |
Revenue Recognition and Contrac
Revenue Recognition and Contracts with Customers | 9 Months Ended |
Sep. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition and Contracts with Customers | Note 4. Revenue Recognition and Contracts with Customers The Company generates revenue through the sale of products to customers in the OEM and aftermarket channels. OEM and aftermarket contracts generally include scheduling agreements that stipulate the pricing and delivery terms that identify the quantity and timing of the product to be transferred. Revenue recognition will be generally consistent with the previous standard, with the exception of how we account for payments made to customers in conjunction with future business. Historically these payments were recognized as a reduction of revenue at the time the payments were made. Under ASC 606, these payments result in deferred reductions to revenue that are subsequently recognized when the products are delivered to the customer. The Company evaluates the amounts capitalized each period end for recoverability and expenses any amounts that are no longer expected to be recovered over the term of the business arrangement. These payments are recorded in Other current assets and Other assets in our Combined Balance Sheet. Upon adoption the cumulative impact of this change is as follows: December 31, 2017 As reported Adjustments As adjusted Combined Balance Sheet Assets Current assets: Other current assets $ 321 $ 7 $ 328 Other assets 2 53 55 Liabilities Non-current liabilities: Deferred income taxes 956 6 962 Equity (Deficit) Invested deficit (2,433 ) 54 (2,379 ) Under the modified retrospective method of adoption, we are required to disclose the impact to revenues had we continued to follow our accounting policies under the previous revenue recognition guidance. We estimate the impact to revenues for the three and nine months ended September 30, 2018 was a decrease of $1 million and $4 million, respectively. As of September 30, 2018, deferred payments to customers recorded in Other current assets and Other assets in our Combined Balance Sheet were $9 million and $45 million, respectively. Refer to Note 2, Summary of Significant Accounting Policies for a summary of our significant policies for revenue recognition. Disaggregated Revenue Sales by region (determined based on country of shipment) and channel are as follows: For the Three Months Ended September 30, 2018 OEM Aftermarket Total United States $ 89 $ 40 $ 129 Europe 394 36 430 Asia 201 13 214 Other International 6 5 11 $ 690 $ 94 $ 784 For the Nine Months Ended September 30, 2018 OEM Aftermarket Total United States $ 276 $ 120 $ 396 Europe 1,321 114 1,435 Asia 673 38 711 Other International 18 16 34 $ 2,288 $ 288 $ 2,576 We recognize virtually all of our revenues arising from performance obligations at a point in time. Less than 1% of our revenue is satisfied over time. Contract Balances The timing of revenue recognition, billings and cash collections results in unbilled receivables (contract assets) and billed accounts receivable, reported in Accounts, notes and other receivables – net, and customer advances and deposits (contract liabilities), reported in Accrued Liabilities, on the Combined Balance Sheet. Contract assets arise when the timing of cash collected from customers differs from the timing of revenue recognition. Contract assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized once invoiced in accordance with the terms of the contract. Contract liabilities are recorded in scenarios where we enter into arrangements where customers are contractually obligated to remit cash payments in advance of us satisfying performance obligations and recognizing revenue. Contract liabilities are generally derecognized when revenue is recognized. These assets and liabilities are reported on the Combined Balance Sheet on a contract-by-contract basis at the end of each reporting period. The following table summarizes our contract assets and liabilities balances: 2018 Contract assets—January 1 $ 5 Contract assets—September 30 6 Change in contract assets—Increase/(Decrease) $ 1 Contract liabilities—January 1 $ (7 ) Contract liabilities—September 30 (3 ) Change in contract liabilities—(Increase)/Decrease $ 4 Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For product sales, typically each product sold to a customer represents a distinct performance obligation. Virtually all of our performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. All performance obligations are expected to be satisfied within one year, with substantially all performance obligations being satisfied within a month. The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment, with cash advances (contract liabilities) and unbilled receivables (contract assets) being settled within 3 months. For some contracts, we may be entitled to receive an advance payment. We have applied the practical expedient to not disclose the value of remaining performance obligations for contracts with an original expected term of one year or less. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5. Income Taxes The effective tax rate decreased for the three months ended September 30, 2018, as compared to the three months ended September 30, 2017, primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $870 million reduction in tax expense and increased tax benefits attributable to currency impacts for withholding taxes on undistributed foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform. The effective tax rate decreased for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $880 million reduction in tax expense and increased tax benefits attributable to currency impacts for withholding taxes on undistributed foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform. The effective tax rate for the three and nine months ended September 30, 2018 was lower than the U.S. federal statutory rate of 21% primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $870 million and $880 million reduction in tax expense, respectively and tax benefits related to the currency impacts on withholding taxes on undistributed foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform and non-deductible expenses. The effective tax rate for the three and nine months ended September 30, 2017 was lower than the U.S. federal statutory rate of 35% from non-U.S. earnings taxed at lower rates, partially offset by non-deductible expenses. In addition, the effective tax rate for the nine months ended September 30, 2017 was further reduced as a result of the resolution of tax matters with certain jurisdictions. On December 22, 2017, the U.S. government enacted tax legislation that included changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The tax legislation also included a permanent reduction in the corporate tax rate to 21%, repeal of the corporate alternative minimum tax, expensing of capital investment, and limitation of the deduction for interest expense. Furthermore, as part of the transition to the new tax system, a one-time transition tax was imposed on a U.S. shareholder’s historical undistributed earnings of foreign affiliates. As described in our Combined Financial Statements for the year ended December 31, 2017, |
Accounts, Notes and Other Recei
Accounts, Notes and Other Receivables—Net | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Accounts, Notes and Other Receivables—Net | Note 6. Accounts, Notes and Other Receivables—Net September 30, 2018 December 31, 2017 Trade receivables $ 596 $ 592 Notes receivables 112 83 Other receivables 56 73 $ 764 $ 748 Less—Allowance for doubtful accounts (2 ) (3 ) $ 762 $ 745 Trade Receivables include $13 million and $6 million of unbilled balances as of September 30, 2018 and December 31, 2017, respectively. These amounts are billed in accordance with the terms of customer contracts to which they relate. Unbilled receivables include $6 million and $5 million of contract assets as of September 30, 2018 and December 31, 2017, respectively. See Note 4 Revenue Recognition and Contracts with Customers. |
Inventories-Net
Inventories-Net | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories-Net | Note 7. Inventories—Net September 30, 2018 December 31, 2017 Raw materials $ 117 $ 118 Work in process 21 20 Finished products 67 73 $ 205 $ 211 Less—Reserves (22 ) (23 ) $ 183 $ 188 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Accrued Liabilities Current [Abstract] | |
Accrued Liabilities | Note 8. Accrued Liabilities September 30, 2018 December 31, 2017 Asbestos-related liabilities $ 185 $ 185 Customer pricing reserve 119 114 Compensation, benefit and other employee related 69 65 Repositioning 19 60 Product warranties and performance guarantees 26 28 Other taxes 5 22 Customer advances and deferred income (a) 11 21 Other (primarily operating expenses) 70 76 $ 504 $ 571 (a) Customer advances and deferred income include $3 million and $7 million of contract liabilities as of September 30, 2018 and December 31, 2017, respectively. See Note 4 Revenue Recognition and Contracts with Customers. The Company accrued repositioning costs related to projects to optimize our product costs and to right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Combined Statement of Operations. Severance Costs Exit Costs Total Balance at December 31, 2016 $ 35 $ 8 $ 43 Charges 13 — 13 Usage—cash (5 ) (2 ) (7 ) Foreign currency translation 4 — 4 Balance at September 30, 2017 $ 47 $ 6 $ 53 Severance Costs Exit Costs Total Balance at December 31, 2017 $ 53 $ 7 $ 60 Charges 2 — 2 Usage—cash (39 ) (4 ) (43 ) Foreign currency translation — — — Balance at September 30, 2018 $ 16 $ 3 $ 19 |
Long-term Debt and Credit Agree
Long-term Debt and Credit Agreements | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt and Credit Agreements | Note 9: Long-term Debt and Credit Agreements The amounts outstanding on long-term debt are as follows: September 30, 2018 Term Loan A $ 382 Term Loan B 859 Senior Notes 406 1,647 Less: current portion (28 ) $ 1,619 On September 27, 2018, we entered into a Credit Agreement, by and among us, Garrett LX I S.à r.l., Garrett LX II S.à r.l. (“Lux Guarantor”), Garrett LX III S.à r.l. (“Lux Borrower”), Garrett Borrowing LLC (in such capacity, the “US Co-Borrower”), and Honeywell Technologies Sàrl (“Swiss Borrower” and, together with Lux Borrower and US Co-Borrower, the “Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement provides for senior secured financing of approximately the Euro equivalent of $1,254 million, consisting of (i) a seven-year senior secured first-lien term B loan facility, which consists of a tranche denominated in Euro of €375 million and a tranche denominated in U.S. Dollars of $425 million (the “Term B Facility”), (ii) five-year senior secured first-lien term A loan facility in an aggregate principal amount of €330 million (the “Term A Facility” and, together with the Term B Facility, the “Term Loan Facilities”) and (iii) a five-year senior secured first-lien revolving credit facility in an aggregate principal amount of €430 million with revolving loans to Swiss Borrower, to be made available in a number of currencies including Australian Dollars, Euros, Pounds Sterling, Swiss Francs, U.S. Dollars and Yen (the “Revolving Facility” and, together with the Term Loan Facilities, the “Senior Credit Facilities”). Each of the Revolving Facility and the Term A Facility matures five years after the effective date of the Credit Agreement, in each case with certain extension rights in the discretion of each lender. The Term B Facility matures seven years after the effective date of the Credit Agreement, with certain extension rights in the discretion of each lender. The Senior Credit Facilities are subject to an interest rate, at our option, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. The applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for LIBOR loans) and 1.50% per annum (for ABR loans) while that for the Euro tranche of the Term B Facility is currently 2.75% per annum (for EURIBOR loans). The applicable margin for each of the Term A Facility and the Revolving Credit Facility varies based on our leverage ratio. Accordingly, the interest rates for the Senior Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our leverage ratio. Interest payments with respect to the Term Loan Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for LIBOR and EURIBOR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. We are obligated to make quarterly principal payments throughout the term of the Term Loan Facilities according to the amortization provisions in the Credit Agreement. Borrowings under the Credit Agreement are prepayable at our option without premium or penalty, subject to a 1.00% prepayment premium in connection with any repricing transaction with respect to the Term B Facility in the first six months after the effective date of the Credit Agreement. We may request to extend the maturity date of all or a portion of the Senior Credit Facilities subject to certain conditions customary for financings of this type. The Credit Agreement also contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness or receive net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, in each case subject to terms and conditions customary for financings of this type. The schedule of principal payments on long-term debt is as follows: September 30, 2018 2018 (remaining) $ 7 2019 28 2020 32 2021 52 2022 71 Thereafter 1,457 $ 1,647 Less: current portion (28 ) $ 1,619 The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/ repurchases, in respect of the our and our subsidiaries’ equity interests, to engage in transactions with affiliates, amend certain material documents or to permit the International Financial Reporting Standards equity amount of Lux Borrower to decrease below a certain amount. The Credit Agreement also contains financial covenants requiring the maintenance of a consolidated total leverage ratio of not greater than 4.25 to 1.00 (with step-downs to (i) 4.00 to 1.00 in approximately 2019, (ii) 3.75 to 1.00 in approximately 2020 and (iii) 3.50 to 1.00 in approximately 2021), and a consolidated interest coverage ratio of not less than 2.75 to 1.00. On September 27, 2018, we completed the offering of €350 million (approximately $400 million) in aggregate principal amount of 5.125% senior notes due 2026 (the “Senior Notes”). The Senior Notes bear interest at a fixed annual interest rate of 5.125% and mature on October 15, 2026. The Senior Notes were issued pursuant to an Indenture, dated September 27, 2018 (the “Indenture”), which, among other things and subject to certain limitations and exceptions, limits our ability and the ability of our restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue certain disqualified equity interests and preferred shares, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales or transfers, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens on assets to secure debt unless the Senior Notes are secured equally and ratably (vii) restrict dividends and other payments by certain of their subsidiaries and (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our or our restricted subsidiaries’ assets. All debt issuance costs, except for those associated to the Revolving Credit Facility, are deferred and recognized as a direct deduction to the related debt liability and are amortized to interest expense over the debt term. The company paid approximately $37 million of debt issuance costs in connection with the Term A Facility, Term B Facility, and Senior Notes. The unutilized portion of the Revolving Credit Facility is subject to an annual commitment fee of 0.40% to 0.50% depending on the Company’s consolidated leverage ratio. Debt issuance costs associated with the Revolving Credit Facility were capitalized in Other assets and are amortized to interest expense over the debt term. Approximately, $6 million of debt issuance costs were paid in connection with the Revolving Credit Facility. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measures | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Financial Instruments and Fair Value Measures | Note 10. Financial Instruments and Fair Value Measures Our credit, market and foreign currency risk management policies are described in Note 14, Financial Instruments and Fair Value Measures, of the notes to the audited annual Combined Financial Statements for the year ended December 31, 2017 of the Transportation Systems Business included in our Form 10. At September 30, 2018 and December 31, 2017, we had contracts with aggregate gross notional amounts of $812 million and $928 million, respectively, to exchange foreign currencies, principally the U.S. Dollar, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Australian Dollar and Korean Won. Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2018 and December 31, 2017: Fair Value Notional Amounts Assets Liabilities September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Designated forward currency exchange contracts $ — $ 556 $ — $ — $ — $ 35 (d) Cross-currency swap designated as fair value hedge 425 — 10 (a) — — — $ 425 $ 556 $ 10 $ — $ — $ 35 Undesignated forward currency exchange contracts 387 372 2 (b) — 1 (c) 2 (d) $ 812 $ 928 $ 12 $ — $ 1 $ 37 ( a ) Recorded within Other assets in the Company’s combined balance sheet ( b ) Recorded within Other current assets in the Company’s combined balance sheet (c) Recorded within Accrued liabilities in the Company’s combined balance sheet ( d ) Recorded within Due to related parties in the Company’s combined balance sheet On September 27, 2018, the Company entered into a floating-floating cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt. The contract is designated as a foreign currency fair value hedge for accounting purposes and will mature on September 27, 2025. Accordingly, the gain or loss on this derivative instrument is recognized in earnings and included in Non-operating (income) expense. The change in fair value of the cross-currency swap attributable to the cross-currency basis spread are excluded from the fair value hedge effectiveness assessment and are recorded separately within Currency Basis Reserve as a component of Accumulated Other Comprehensive Income. For the three and nine months ended September 30, 2018, gains recorded in Non-operating (income) expense, under the cross-currency swap contract were $13 million. Gains and losses attributable to the cross-currency basis spread of $3 million were deferred to Other Comprehensive Income for the period ended September 30, 2018. The balance of the cross-currency basis spread of $3 million is included in the carrying value of the cross-currency swap contract of $10 million - the application of fair value hedge accounting had no effect on the carrying value of the hedged liability. The foreign currency exchange and cross-currency swap contracts are valued using market observable inputs. As such, these derivative instruments are classified within Level 2. The assumptions used in measuring fair value of the cross-currency swap are considered level 2 inputs, which are based upon market observable interest rate curves, cross currency basis curves, credit default swap curves, and foreign exchange rates. The carrying value of Cash and cash equivalents, Marketable securities (Level 2), Account receivables, notes and other receivables, Due from related parties, Account payables, and Due to related parties contained in the Combined Balance Sheet approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value: September 30, 2018 Carrying Value Fair Value Long-term debt and related current maturities $ 1,605 $ 1,647 The Company determined the fair value of certain of its long-term debt and related current maturities utilizing transactions in the listed markets for similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered level 2. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 11. Accumulated Other Comprehensive Income (Loss) Changes in Accumulated Other Comprehensive Income (Loss) by Component Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Change in Currency Basis Reserve Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2016 $ 212 $ 42 $ — $ (11 ) $ 243 Other comprehensive income (loss) before reclassifications 46 (52 ) — — (6 ) Amounts reclassified from accumulated other comprehensive income (loss) — (13 ) — — (13 ) Net current period other comprehensive income (loss) 46 (65 ) — — (19 ) Balance at September 30, 2017 $ 258 $ (23 ) $ — $ (11 ) $ 224 Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Change in Currency Basis Reserve Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ 284 $ (35 ) $ — $ (11 ) $ 238 Other comprehensive income (loss) before reclassifications (251 ) 3 (3 ) — (251 ) Amounts reclassified from accumulated other comprehensive income (loss) — 21 — — 21 Net current period other comprehensive income (loss) (251 ) 24 (3 ) — (230 ) Balance at September 30, 2018 $ 33 $ (11 ) $ (3 ) $ (11 ) $ 8 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies Asbestos Matters Honeywell is a defendant in asbestos related personal injury actions mainly related to its legacy Bendix Friction Materials (“Bendix”) business. The Bendix business, manufactured automotive brake parts that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements. In conjunction with Garrett’s separation from Honeywell, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, was transferred to Garrett. As discussed in Note 1, these Combined Interim Financial Statements, prepared for the period during which the Business was still a part of Honeywell, reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities related to these businesses, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, we note that this recognition model in the Combined Interim Financial Statements will differ from the recognition model to be presented in future financials as a standalone company which will reflect the terms of the Indemnification and Reimbursement Agreement with Honeywell signed on September 12, 2018, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. For additional information, see Note 14 Subsequent Events. The following tables summarize information concerning both Bendix and other asbestos related balances. Other represents asbestos liabilities related to claimants outside the United States. Asbestos Related Liabilities Nine Months Ended September 30, 2018 Bendix Other Total Beginning of the period $ 1,703 $ 9 $ 1,712 Accrual for update to estimated liabilities 141 — 141 Asbestos related liability payments (151 ) (1 ) (152 ) End of the period $ 1,693 $ 8 $ 1,701 Insurance Recoveries for Asbestos Related Liabilities Nine Months Ended September 30, 2018 Bendix Beginning of the period $ 191 Probable insurance recoveries related to estimated liability 10 Insurance receipts for asbestos related liabilities (24 ) Insurance receivables settlements 1 End of the period $ 178 Asbestos balances are included in the following balance sheet accounts: September 30, 2018 December 31, 2017 Other current assets $ 16 $ 17 Insurance recoveries for asbestos related liabilities 162 174 $ 178 $ 191 Accrued liabilities $ 185 $ 185 Asbestos related liabilities 1,516 1,527 $ 1,701 $ 1,712 The following tables present information regarding Bendix related asbestos claims activity: Nine Months Ended September 30, Years Ended December 31, Claims Activity 2018 2017 2016 Claims Unresolved at the beginning of the period 6,280 7,724 7,779 Claims Filed 1,895 2,645 2,830 Claims Resolved (2,088 ) (4,089 ) (2,885 ) Claims Unresolved at the end of the period 6,087 6,280 7,724 Nine Months Ended September 30, Years Ended December 31, Disease Distribution of Unresolved Claims 2018 2017 2016 Mesothelioma and Other Cancer Claims 2,868 3,062 3,490 Nonmalignant Claims 3,219 3,218 4,234 Total Claims 6,087 6,280 7,724 Honeywell has experienced average resolutions per claim excluding legal costs as follows: Years Ended December 31, 2017 2016 2015 2014 2013 (in whole dollars) Malignant claims $ 56,000 $ 44,000 $ 44,000 $ 53,500 $ 51,000 Nonmalignant claims $ 2,800 $ 4,485 $ 100 $ 120 $ 850 It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize in the future. Our Combined Interim Financial Statements reflect an estimated liability for resolution of pending and unasserted Bendix-related asbestos claims. We have valued pending and unasserted Bendix-related asbestos claims using average resolution values for the previous five years. We update the resolution values used to estimate the cost of pending and unasserted Bendix-related asbestos claims during the fourth quarter each year. Such estimated cost of unasserted Bendix-related asbestos claims is based on historic claims filing experience and dismissal rates, disease classifications, and resolution values in the tort system for the previous five years. Asbestos costs and insurance recoveries are recorded in Other expense, net. Our insurance receivable corresponding to the liability for settlement of pending and unasserted Bendix asbestos claims reflects coverage which is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Based on our ongoing analysis of the probable insurance recovery, insurance receivables are recorded in the Combined Interim Financial Statements simultaneous with the recording of the estimated liability for the underlying asbestos claims. This determination is based on our analysis of the underlying insurance policies, our historical experience with our insurers, our ongoing review of the solvency of our insurers, judicial determinations relevant to our insurance programs, and our consideration of the impacts of any settlements reached with our insurers. Other Matters We are subject to other lawsuits, investigations and disputes arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employee benefit plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. To date, no such matters are material to the Combined Statements of Operations. |
Pension Benefits
Pension Benefits | 9 Months Ended |
Sep. 30, 2018 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension Benefits | Note 13. Pension Benefits Prior to the completion of the Spin-Off, certain Garrett employees participated in defined benefit pension plans (the “Shared Plans”) sponsored by Honeywell which includes participants of other Honeywell subsidiaries and operations. We accounted for our participation in the Shared Plans as multiemployer benefit plans. Accordingly, we did not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense was based on annual service cost of active Garrett participants and reported within Cost of goods sold in the Combined Statements of Operations. The pension expense specifically identified for the active Garrett participants in the Shared Plans for the three and nine months ended September 30, 2018 and 2017 was $1 million and $5 million, and $1 million and $5 million, respectively. Additionally, we sponsored a funded defined benefit pension plan covering the majority of our employees and retirees in Ireland (the “Ireland Plan”). Other pension plans sponsored by the Company outside of Ireland are not material to the Company either individually or in the aggregate. Net periodic pension benefit costs for the Ireland Plan was $0 million, and $1 million and $0 million, and $1 million for the three and nine months ended September 30, 2018 and 2017, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14. Subsequent Events The Company evaluated subsequent events for recognition or disclosure through November 6, 2018, the date the Combined Interim Financial Statements were available to be issued. On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell of 100% of the outstanding shares of Garrett to Honeywell’s stockholders. For additional details, refer to Note 1 Background and Basis of Presentation. In connection with the Spin-Off, we also entered into an Indemnification and Reimbursement Agreement with Honeywell on September 12, 2018. As of the Spin-Off date of October 1, 2018, we are obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) equivalent of $175 million in respect of such liabilities arising in any given calendar year. The payments that we are required to make to Honeywell pursuant to the terms of this agreement will not be deductible for U.S. federal income tax purposes. On September 12, 2018, we also entered into a Tax Matters Agreement with Honeywell (the “Tax Matters Agreement”), which governs the respective rights, responsibilities and obligations of Honeywell and us after the Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests). The Tax Matters Agreement generally provides that, following the Spin-Off date of October 1, 2018, we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, VAT and payroll taxes, relating to Garrett for all periods, including periods prior to the completion date of the Spin-Off. Among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, one of our subsidiaries is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to us, as determined by Honeywell. We currently estimate that our aggregate payments to Honeywell with respect to the mandatory transition tax will be $240 million. Under the terms of the Tax Matters Agreement, we are required to pay this amount in Euros, without interest, in five annual installments, each equal to 8% of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively. In addition, the Tax Matters Agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to effectuate the Spin-Off. The Tax Matters Agreement also provides that we are required to indemnify Honeywell for certain taxes (and reasonable expenses) resulting from the failure of the Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law. Further, the Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve the tax-free nature of the Spin-Off. We also entered into several additional agreements with Honeywell that govern the future relationship between us and Honeywell and impose certain obligations on us following the Spin-Off, and which may cause us to incur new costs, including the following: • a Separation and Distribution Agreement; • a Transition Services Agreement; • an Employee Matters Agreement; • an Intellectual Property Agreement; and • a Trademark License Agreement. A description of each of these agreements is included in a Current Report on Form 8-K filed with the SEC on October 1, 2018. On October 19, 2018, Honeywell disclosed in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (the “Honeywell Form 10-Q”) that the Division of Enforcement of the SEC has opened an investigation into Honeywell’s prior accounting for liability for unasserted Bendix-related asbestos claims. In addition, Honeywell noted that it revised certain previously-issued financial statements to correct the time period associated with the determination of appropriate accruals for legacy Bendix asbestos-related liability for unasserted claims. Our restated carve-out financial statements included in our Form 10 already contemplate these revisions, consistent with Honeywell’s previous disclosure in its Form 8-K filed with the SEC on August 23, 2018. The Indemnification and Reimbursement Agreement has not been amended and otherwise remains unchanged. Prior to the filing of the Honeywell Form 10-Q with the SEC, our management was not aware of the SEC’s investigation into Honeywell’s prior accounting. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Sales Recognition | Sales Recognition — On January 1, 2018, we adopted the FASB´s updated guidance on revenue from contracts with customers, Accounting Standards Codification (“ASC”) 606 Revenue from Contracts With Customers (“ASC 606”), using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. Product sales are recognized when we transfer control of the promised goods to our customer, which is based on shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the promised goods. In the sale of products in the OEM channel, the transaction price for these goods is equal to the agreed price of each unit and represents the standalone selling price for the unit. In the sale of products in the aftermarket channel, the terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, discounts and bonuses. We estimate variable consideration at the most likely amount we will receive from customers and reduce revenues recognized accordingly. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. |
Pension Benefits | Pension Benefits —On January 1, 2018, we retrospectively adopted the new accounting guidance contained in Accounting Standards Update (“ASU”) 2017-07 which amends the presentation of net periodic pension costs. That guidance requires that we disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Combined Statement of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other non-service components of net benefit costs are required to be presented separately from the service cost component. Following the adoption of this guidance, we continue to record the service cost component of Pension ongoing (income) expense in Cost of goods sold. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are now recorded in Non-operating (income) expense. We will continue to recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (MTM Adjustment). The MTM Adjustment will also be reported in Non-operating (income) expense. |
Derivative Financial Instruments | Derivative Financial Instruments — On September 27, On September 27, 2018, the Company entered into a cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt as described in Note 10, Financial Instruments and Fair Value Measures. The contract is designated as a fair value hedge for accounting purposes. On adoption of ASU 2017-12, the Company has elected to account for the portion of the change in fair value of the cross-currency swap attributable to the cross-currency basis spread separately within Currency basis reserve as a component of Other Comprehensive Income (“OCI”). In relation to the Company’s foreign currency exchange forward and option contracts (foreign currency exchange contracts), adoption of ASU 2017-12 had no impact on Garrett Motion Inc.’s combined balance sheets or results of operations. Such contracts will continue to be accounted for in the same manner as outlined in Note 2 to the audited annual Combined Financial Statements for the year ended December 31, 2017 of the Transportation Systems Business included in our Form 10. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements — We consider the applicability and impact of all recent accounting standards updates (“ASU’s”) issued by the Financial Accounting Standards Board (FASB). ASU’s not listed below were assessed and determined to be either not applicable or are expected to have immaterial impact on the combined financial position or results of operations. In February 2016, the FASB issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases that will be effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We expect to adopt the requirements of the new standard effective January 1, 2019. The guidance requires the use of a modified retrospective approach. We are currently evaluating our lease portfolio to assess the impact to the Combined Interim Financial Statements as well as planning for adoption and implementation of this standard, which includes assessing the impact on information systems and internal controls. In February 2018, the FASB issued guidance that allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. tax reform to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. We are currently evaluating the impact of this standard on our Combined Interim Financial Statements and whether we will make the allowed election. |
Related Party Transactions wi_2
Related Party Transactions with Honeywell (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Due from related parties, current consists of the following: September 30, 2018 December 31, 2017 Cash pooling and short-term notes receivables $ — $ 495 Other tax receivables from Parent — 26 Receivables from related parties — 8 Related party notes receivables, current — 1 Foreign currency exchange contracts — — $ — $ 530 Due from related parties, non-current consists of the following: September 30, 2018 December 31, 2017 Other tax receivables from Parent $ — $ 23 $ — $ 23 Due to related parties, current consists of the following: September 30, 2018 December 31, 2017 Cash pooling and short-term notes payables $ 98 $ 545 Related party notes payables, current — 484 Payables to related parties — 51 Foreign currency exchange contracts — 37 $ 98 $ 1,117 |
Summary of Components of Net Transfers to and from Honeywell | The components of the net transfers to and from Honeywell for the three and nine months ended September 30, 2018 and 2017 are as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2018 2017 2018 2017 General financing activities $ 30 $ (111 ) $ 1,761 $ (243 ) Distribution to Parent (1,628 ) (69 ) (2,994 ) (69 ) Unbilled corporate allocations 15 31 41 64 Stock compensation expense and other compensation awards 5 5 17 14 Pension expense 2 2 7 7 Total net decrease in Invested deficit $ (1,576 ) $ (142 ) $ (1,168 ) $ (227 ) |
Revenue Recognition and Contr_2
Revenue Recognition and Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Cumulative Impact of New Accounting Pronouncements and Changes in Accounting on Combined Balance Sheet | Upon adoption the cumulative impact of this change is as follows: December 31, 2017 As reported Adjustments As adjusted Combined Balance Sheet Assets Current assets: Other current assets $ 321 $ 7 $ 328 Other assets 2 53 55 Liabilities Non-current liabilities: Deferred income taxes 956 6 962 Equity (Deficit) Invested deficit (2,433 ) 54 (2,379 ) |
Disaggregation of Revenue | Sales by region (determined based on country of shipment) and channel are as follows: For the Three Months Ended September 30, 2018 OEM Aftermarket Total United States $ 89 $ 40 $ 129 Europe 394 36 430 Asia 201 13 214 Other International 6 5 11 $ 690 $ 94 $ 784 For the Nine Months Ended September 30, 2018 OEM Aftermarket Total United States $ 276 $ 120 $ 396 Europe 1,321 114 1,435 Asia 673 38 711 Other International 18 16 34 $ 2,288 $ 288 $ 2,576 |
Summary of Contract Assets and Liabilities | The following table summarizes our contract assets and liabilities balances: 2018 Contract assets—January 1 $ 5 Contract assets—September 30 6 Change in contract assets—Increase/(Decrease) $ 1 Contract liabilities—January 1 $ (7 ) Contract liabilities—September 30 (3 ) Change in contract liabilities—(Increase)/Decrease $ 4 |
Accounts, Notes and Other Rec_2
Accounts, Notes and Other Receivables—Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes and Other Receivables Net | September 30, 2018 December 31, 2017 Trade receivables $ 596 $ 592 Notes receivables 112 83 Other receivables 56 73 $ 764 $ 748 Less—Allowance for doubtful accounts (2 ) (3 ) $ 762 $ 745 |
Inventories-Net (Tables)
Inventories-Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | September 30, 2018 December 31, 2017 Raw materials $ 117 $ 118 Work in process 21 20 Finished products 67 73 $ 205 $ 211 Less—Reserves (22 ) (23 ) $ 183 $ 188 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accrued Liabilities Current [Abstract] | |
Summary of Accrued Liabilities | September 30, 2018 December 31, 2017 Asbestos-related liabilities $ 185 $ 185 Customer pricing reserve 119 114 Compensation, benefit and other employee related 69 65 Repositioning 19 60 Product warranties and performance guarantees 26 28 Other taxes 5 22 Customer advances and deferred income (a) 11 21 Other (primarily operating expenses) 70 76 $ 504 $ 571 (a) Customer advances and deferred income include $3 million and $7 million of contract liabilities as of September 30, 2018 and December 31, 2017, respectively. See Note 4 Revenue Recognition and Contracts with Customers. |
Summary of Expenses Related to the Repositioning Accruals | The Company accrued repositioning costs related to projects to optimize our product costs and to right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Combined Statement of Operations. Severance Costs Exit Costs Total Balance at December 31, 2016 $ 35 $ 8 $ 43 Charges 13 — 13 Usage—cash (5 ) (2 ) (7 ) Foreign currency translation 4 — 4 Balance at September 30, 2017 $ 47 $ 6 $ 53 Severance Costs Exit Costs Total Balance at December 31, 2017 $ 53 $ 7 $ 60 Charges 2 — 2 Usage—cash (39 ) (4 ) (43 ) Foreign currency translation — — — Balance at September 30, 2018 $ 16 $ 3 $ 19 |
Long-term Debt and Credit Agr_2
Long-term Debt and Credit Agreements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Summary of Amounts Outstanding on Long-term Debt | The amounts outstanding on long-term debt are as follows: September 30, 2018 Term Loan A $ 382 Term Loan B 859 Senior Notes 406 1,647 Less: current portion (28 ) $ 1,619 |
Schedule of Principal Payments on Long-term Debt | The schedule of principal payments on long-term debt is as follows: September 30, 2018 2018 (remaining) $ 7 2019 28 2020 32 2021 52 2022 71 Thereafter 1,457 $ 1,647 Less: current portion (28 ) $ 1,619 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measures (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Financial Assets and Liabilities Accounted for at Fair Value on Recurring Basis | The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2018 and December 31, 2017: Fair Value Notional Amounts Assets Liabilities September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Designated forward currency exchange contracts $ — $ 556 $ — $ — $ — $ 35 (d) Cross-currency swap designated as fair value hedge 425 — 10 (a) — — — $ 425 $ 556 $ 10 $ — $ — $ 35 Undesignated forward currency exchange contracts 387 372 2 (b) — 1 (c) 2 (d) $ 812 $ 928 $ 12 $ — $ 1 $ 37 ( a ) Recorded within Other assets in the Company’s combined balance sheet ( b ) Recorded within Other current assets in the Company’s combined balance sheet (c) Recorded within Accrued liabilities in the Company’s combined balance sheet ( d ) Recorded within Due to related parties in the Company’s combined balance sheet |
Summary of Financial Assets and Liabilities Not Carried at Fair Value | The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value: September 30, 2018 Carrying Value Fair Value Long-term debt and related current maturities $ 1,605 $ 1,647 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component | Changes in Accumulated Other Comprehensive Income (Loss) by Component Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Change in Currency Basis Reserve Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2016 $ 212 $ 42 $ — $ (11 ) $ 243 Other comprehensive income (loss) before reclassifications 46 (52 ) — — (6 ) Amounts reclassified from accumulated other comprehensive income (loss) — (13 ) — — (13 ) Net current period other comprehensive income (loss) 46 (65 ) — — (19 ) Balance at September 30, 2017 $ 258 $ (23 ) $ — $ (11 ) $ 224 Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Change in Currency Basis Reserve Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ 284 $ (35 ) $ — $ (11 ) $ 238 Other comprehensive income (loss) before reclassifications (251 ) 3 (3 ) — (251 ) Amounts reclassified from accumulated other comprehensive income (loss) — 21 — — 21 Net current period other comprehensive income (loss) (251 ) 24 (3 ) — (230 ) Balance at September 30, 2018 $ 33 $ (11 ) $ (3 ) $ (11 ) $ 8 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Asbestos Related Liabilities and Insurance Recoveries | The following tables summarize information concerning both Bendix and other asbestos related balances. Other represents asbestos liabilities related to claimants outside the United States. Asbestos Related Liabilities Nine Months Ended September 30, 2018 Bendix Other Total Beginning of the period $ 1,703 $ 9 $ 1,712 Accrual for update to estimated liabilities 141 — 141 Asbestos related liability payments (151 ) (1 ) (152 ) End of the period $ 1,693 $ 8 $ 1,701 Insurance Recoveries for Asbestos Related Liabilities Nine Months Ended September 30, 2018 Bendix Beginning of the period $ 191 Probable insurance recoveries related to estimated liability 10 Insurance receipts for asbestos related liabilities (24 ) Insurance receivables settlements 1 End of the period $ 178 |
Summary of Asbestos Balances Included in Balance Sheet Accounts | Asbestos balances are included in the following balance sheet accounts: September 30, 2018 December 31, 2017 Other current assets $ 16 $ 17 Insurance recoveries for asbestos related liabilities 162 174 $ 178 $ 191 Accrued liabilities $ 185 $ 185 Asbestos related liabilities 1,516 1,527 $ 1,701 $ 1,712 |
Summary of Asbestos Claim Activity | The following tables present information regarding Bendix related asbestos claims activity: Nine Months Ended September 30, Years Ended December 31, Claims Activity 2018 2017 2016 Claims Unresolved at the beginning of the period 6,280 7,724 7,779 Claims Filed 1,895 2,645 2,830 Claims Resolved (2,088 ) (4,089 ) (2,885 ) Claims Unresolved at the end of the period 6,087 6,280 7,724 Nine Months Ended September 30, Years Ended December 31, Disease Distribution of Unresolved Claims 2018 2017 2016 Mesothelioma and Other Cancer Claims 2,868 3,062 3,490 Nonmalignant Claims 3,219 3,218 4,234 Total Claims 6,087 6,280 7,724 |
Summary of Average Resolutions Per Claim Excluding Legal Costs | Honeywell has experienced average resolutions per claim excluding legal costs as follows: Years Ended December 31, 2017 2016 2015 2014 2013 (in whole dollars) Malignant claims $ 56,000 $ 44,000 $ 44,000 $ 53,500 $ 51,000 Nonmalignant claims $ 2,800 $ 4,485 $ 100 $ 120 $ 850 |
Background and Basis of Prese_2
Background and Basis of Presentation - Additional Information (Details) shares in Millions | Oct. 01, 2018shares | Sep. 12, 2018 | Sep. 30, 2018 |
Bendix | |||
Background And Basis Of Presentation [Line Items] | |||
Percentage of asbestos and environmental liabilities liable to pay | 100.00% | 100.00% | |
Honeywell | Indemnification and Reimbursement Agreement | |||
Background And Basis Of Presentation [Line Items] | |||
Percentage of net insurance receipts | 90.00% | ||
Honeywell | Bendix | Indemnification and Reimbursement Agreement | |||
Background And Basis Of Presentation [Line Items] | |||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | ||
Honeywell | Subsequent Event | |||
Background And Basis Of Presentation [Line Items] | |||
Interest ownership percentage by parent | 100.00% | ||
Conversion common stock shareowner received ratio | 0.1 | ||
Description of conversion common stock shareowner received ratio | Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. | ||
Shares of Garrett common stock distributed | 74 | ||
Honeywell | Subsequent Event | Indemnification and Reimbursement Agreement | |||
Background And Basis Of Presentation [Line Items] | |||
Percentage of net insurance receipts | 90.00% | ||
Honeywell | Subsequent Event | Bendix | Indemnification and Reimbursement Agreement | |||
Background And Basis Of Presentation [Line Items] | |||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% |
Related Party Transactions wi_3
Related Party Transactions with Honeywell - Additional Information (Details) - Honeywell International Inc - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Notes Receivables | |||||
Related Party Transaction [Line Items] | |||||
Interest income received for related party | $ 0 | $ 0 | $ 1 | $ 0 | |
Notes Payable | |||||
Related Party Transaction [Line Items] | |||||
Interest expense incurred for related party | 0 | 2 | 1 | 5 | |
Invested Deficit | |||||
Related Party Transaction [Line Items] | |||||
Non-interest-bearing cash pooling balances | 0 | 0 | $ 51 | ||
Selling, General and Administrative Expenses | |||||
Related Party Transaction [Line Items] | |||||
General corporate expenses included within selling, general and administrative expenses | $ 26 | $ 31 | $ 87 | $ 92 |
Related Party Transactions wi_4
Related Party Transactions with Honeywell - Summary of Due from Related Parties, Current (Details) $ in Millions | Dec. 31, 2017USD ($) |
Related Party Transaction [Line Items] | |
Due from related parties, current | $ 530 |
Honeywell International Inc | |
Related Party Transaction [Line Items] | |
Cash pooling and short-term notes receivables | 495 |
Other tax receivables from Parent | 26 |
Receivables from related parties | 8 |
Related party notes receivables, current | 1 |
Due from related parties, current | $ 530 |
Related Party Transactions wi_5
Related Party Transactions with Honeywell - Summary of Due from Related Parties, Non-Current (Details) $ in Millions | Dec. 31, 2017USD ($) |
Related Party Transaction [Line Items] | |
Due from related parties, non-current | $ 23 |
Honeywell International Inc | |
Related Party Transaction [Line Items] | |
Other tax receivables from Parent | 23 |
Due from related parties, non-current | $ 23 |
Related Party Transactions wi_6
Related Party Transactions with Honeywell - Summary of Due to Related Parties, Current (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | ||
Due to related parties, current | $ 98 | $ 1,117 |
Honeywell International Inc | ||
Related Party Transaction [Line Items] | ||
Cash pooling and short-term notes payables | 98 | 545 |
Related party notes payables, current | 484 | |
Payables to related parties | 51 | |
Foreign currency exchange contracts | 37 | |
Due to related parties, current | $ 98 | $ 1,117 |
Related Party Transactions wi_7
Related Party Transactions with Honeywell - Summary of Components of Net Transfers to and from Honeywell (Details) - Honeywell International Inc - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
General financing activities | $ 30 | $ (111) | $ 1,761 | $ (243) |
Distribution to Parent | (1,628) | (69) | (2,994) | (69) |
Unbilled corporate allocations | 15 | 31 | 41 | 64 |
Stock compensation expense and other compensation awards | 5 | 5 | 17 | 14 |
Pension expense | 2 | 2 | 7 | 7 |
Total net decrease in Invested deficit | $ (1,576) | $ (142) | $ (1,168) | $ (227) |
Revenue Recognition and Contr_3
Revenue Recognition and Contracts with Customers -Summary of Cumulative Impact of New Accounting Pronouncements and Changes in Accounting on Combined Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Other current assets | $ 43 | $ 321 |
Other assets | 63 | 2 |
Non-current liabilities: | ||
Deferred income taxes (Note 5) | 22 | 956 |
EQUITY (DEFICIT) | ||
Invested deficit | $ (2,464) | (2,433) |
Adjustments | ||
Current assets: | ||
Other current assets | 7 | |
Other assets | 53 | |
Non-current liabilities: | ||
Deferred income taxes (Note 5) | 6 | |
EQUITY (DEFICIT) | ||
Invested deficit | 54 | |
As Adjusted | ||
Current assets: | ||
Other current assets | 328 | |
Other assets | 55 | |
Non-current liabilities: | ||
Deferred income taxes (Note 5) | 962 | |
EQUITY (DEFICIT) | ||
Invested deficit | $ (2,379) |
Revenue Recognition and Contr_4
Revenue Recognition and Contracts with Customers - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Revenue Recognition And Contracts With Customers [Line Items] | |||
Decrease in revenues | $ 1 | $ 4 | |
Deferred payments to customers | $ 3 | $ 3 | $ 7 |
Performance obligation expected to be satisfied, period | 1 year | 1 year | |
Revenue performance obligation, description of timing | The timing of satisfying the performance obligation is typically indicated by the terms of the contract. All performance obligations are expected to be satisfied within one year, with substantially all performance obligations being satisfied within a month. | ||
Contract with customer cash advances and unbilled receivables settlement period | 3 months | ||
Revenue performance obligation, description of payment terms | The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment, with cash advances (contract liabilities) and unbilled receivables (contract assets) being settled within 3 months. For some contracts, we may be entitled to receive an advance payment. | ||
Revenue, Practical Expedient, Initial Application and Transition, Nondisclosure of Transaction Price Allocation to Remaining Performance Obligation [true false] | true | ||
Maximum | |||
Revenue Recognition And Contracts With Customers [Line Items] | |||
Revenue performance obligation satisfied over time percentage | 1.00% | 1.00% | |
Other Current Assets | |||
Revenue Recognition And Contracts With Customers [Line Items] | |||
Deferred payments to customers | $ 9 | $ 9 | |
Other Assets | |||
Revenue Recognition And Contracts With Customers [Line Items] | |||
Deferred payments to customers | $ 45 | $ 45 |
Revenue Recognition and Contr_5
Revenue Recognition and Contracts with Customers - Schedule of Disaggregated Revenue Sales by Region (Determined Based on Country of Shipment) and Channel (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||
Net sales | $ 784 | $ 2,576 |
OEM | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 690 | 2,288 |
Aftermarket | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 94 | 288 |
United States | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 129 | 396 |
United States | OEM | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 89 | 276 |
United States | Aftermarket | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 40 | 120 |
Europe | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 430 | 1,435 |
Europe | OEM | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 394 | 1,321 |
Europe | Aftermarket | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 36 | 114 |
Asia | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 214 | 711 |
Asia | OEM | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 201 | 673 |
Asia | Aftermarket | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 13 | 38 |
Other International | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 11 | 34 |
Other International | OEM | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 6 | 18 |
Other International | Aftermarket | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | $ 5 | $ 16 |
Revenue Recognition and Contr_6
Revenue Recognition and Contracts with Customers - Summary of Contract Assets and Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Contract With Customer Asset And Liability [Abstract] | |
Contract assets—January 1 | $ 5 |
Contract assets—September 30 | 6 |
Change in contract assets—Increase/(Decrease) | 1 |
Contract liabilities—January 1 | (7) |
Contract liabilities—September 30 | (3) |
Change in contract liabilities—(Increase)/Decrease | $ 4 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate reduction in tax expense due to spin-off | $ 870 | $ 880 | ||
U.S. federal statutory rate | 21.00% | 35.00% | 21.00% | 35.00% |
Provisional tax amount related to deemed repatriation transition tax | $ 13 | |||
Provisional tax amount related to taxes on undistributed earnings | (8) | |||
Increase to the effective tax rate, amount | $ 5 | |||
Increase to the effective tax rate, percentage | 1.70% |
Accounts, Notes and Other Rec_3
Accounts, Notes and Other Receivables Net - Schedule of Accounts, Notes and Other Receivables Net (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Trade receivables | $ 596 | $ 592 |
Notes receivables | 112 | 83 |
Other receivables | 56 | 73 |
Accounts, notes and other receivables, gross | 764 | 748 |
Less—Allowance for doubtful accounts | (2) | (3) |
Accounts, notes and other receivables, net | $ 762 | $ 745 |
Accounts, Notes and Other Rec_4
Accounts, Notes and Other Receivables Net - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Unbilled balances | $ 13 | $ 6 |
Unbilled contracts assets | $ 6 | $ 5 |
Inventories-Net - Summary of In
Inventories-Net - Summary of Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Combining Work In Process And Raw Materials Alternative Gross [Abstract] | ||
Raw materials | $ 117 | $ 118 |
Work in process | 21 | 20 |
Finished products | 67 | 73 |
Inventory, gross | 205 | 211 |
Less—Reserves | (22) | (23) |
Inventories | $ 183 | $ 188 |
Accrued Liabilities - Summary o
Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Accrued Liabilities Current [Abstract] | ||
Asbestos-related liabilities | $ 185 | $ 185 |
Customer pricing reserve | 119 | 114 |
Compensation, benefit and other employee related | 69 | 65 |
Repositioning | 19 | 60 |
Product warranties and performance guarantees | 26 | 28 |
Other taxes | 5 | 22 |
Customer advances and deferred income | 11 | 21 |
Other (primarily operating expenses) | 70 | 76 |
Accrued Liabilities | $ 504 | $ 571 |
Accrued Liabilities - Summary_2
Accrued Liabilities - Summary of Accrued Liabilities (Parenthetical) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Accrued Liabilities Current [Abstract] | ||
Contract liabilities | $ 3 | $ 7 |
Accrued Liabilities - Summary_3
Accrued Liabilities - Summary of Expenses Related to the Repositioning Accruals (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | $ 60 | $ 43 |
Charges | 2 | 13 |
Usage—cash | (43) | (7) |
Foreign currency translation | 0 | 4 |
Balance at end of period | 19 | 53 |
Severance Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 53 | 35 |
Charges | 2 | 13 |
Usage—cash | (39) | (5) |
Foreign currency translation | 0 | 4 |
Balance at end of period | 16 | 47 |
Exit Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 7 | 8 |
Charges | 0 | |
Usage—cash | (4) | (2) |
Foreign currency translation | 0 | |
Balance at end of period | $ 3 | $ 6 |
Long-term Debt and Credit Agr_3
Long-term Debt and Credit Agreements - Summary of Amounts Outstanding on Long-term Debt (Details) $ in Millions | Sep. 30, 2018USD ($) |
Debt Instrument [Line Items] | |
Long-term debt | $ 1,647 |
Less: current portion | (28) |
Debt face amount | 1,619 |
Term Loan A | |
Debt Instrument [Line Items] | |
Long-term debt | 382 |
Term Loan B | |
Debt Instrument [Line Items] | |
Long-term debt | 859 |
Senior Notes | |
Debt Instrument [Line Items] | |
Long-term debt | $ 406 |
Long-term Debt and Credit Agr_4
Long-term Debt and Credit Agreements - Additional Information (Details) | Sep. 27, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 27, 2018EUR (€) |
Debt Instrument [Line Items] | |||
Line of credit, interest rate terms | Senior Credit Facilities are subject to an interest rate, at our option, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. | ||
Line of credit, frequency of interest payment description | Interest payments with respect to the Term Loan Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for LIBOR and EURIBOR loans) or, if the duration of the applicable interest period exceeds three months, then every three months | ||
Line of credit, frequency of principal payments | quarterly | ||
Payment of debt issuance costs | $ 37,000,000 | ||
Maximum | |||
Debt Instrument [Line Items] | |||
Consolidated total leverage ratio | 425.00% | ||
Consolidated total leverage ratio in 2019 | 400.00% | ||
Consolidated total leverage ratio in 2020 | 375.00% | ||
Consolidated total leverage ratio in 2021 | 350.00% | ||
Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Consolidated interest coverage ratio | 275.00% | ||
Term B Facility | |||
Debt Instrument [Line Items] | |||
Percentage of prepayment premium | 1.00% | ||
Term B Facility | LIBOR Loans | |||
Debt Instrument [Line Items] | |||
Debt instrument applicale margin rate | 2.50% | ||
Term B Facility | ABR Loans | |||
Debt Instrument [Line Items] | |||
Debt instrument applicale margin rate | 1.50% | ||
Term B Facility | EURIBOR Loans | |||
Debt Instrument [Line Items] | |||
Debt instrument applicale margin rate | 2.75% | ||
5.125% Senior Notes Due 2026 | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 400,000,000 | € 350,000,000 | |
Debt instrument, annual fixed interest rate | 5.125% | 5.125% | |
Debt instrument maturity date | Oct. 15, 2026 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Payment of debt issuance costs | $ 6,000,000 | ||
Revolving Credit Facility | Maximum | |||
Debt Instrument [Line Items] | |||
Percentage of annual commitment fee | 0.50% | ||
Revolving Credit Facility | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Percentage of annual commitment fee | 0.40% | ||
Credit Agreement | Euro Equivalent Senior Secured Financing | |||
Debt Instrument [Line Items] | |||
Line of credit, maximum borrowing capacity | $ 1,254,000,000 | ||
Credit Agreement | Term B Facility | |||
Debt Instrument [Line Items] | |||
Line of credit, maximum borrowing capacity | $ 425,000,000 | € 375,000,000 | |
Line of credit, term | 7 years | ||
Credit Agreement | Term A Facility | |||
Debt Instrument [Line Items] | |||
Line of credit, maximum borrowing capacity | € | 330,000,000 | ||
Line of credit, term | 5 years | ||
Credit Agreement | Revolving Facility | |||
Debt Instrument [Line Items] | |||
Line of credit, maximum borrowing capacity | € | € 430,000,000 | ||
Line of credit, term | 5 years |
Long-term Debt and Credit Agr_5
Long-term Debt and Credit Agreements - Schedule of Principal Payments on Long-term Debt (Details) $ in Millions | Sep. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
2018 (remaining) | $ 7 |
2,019 | 28 |
2,020 | 32 |
2,021 | 52 |
2,022 | 71 |
Thereafter | 1,457 |
Long-term debt | 1,647 |
Less: current portion | (28) |
Debt face amount | $ 1,619 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measures -Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments And Hedging Activities Disclosures [Line Items] | |||
Derivative, aggregate gross notional amount | $ 812,000,000 | $ 812,000,000 | $ 928,000,000 |
Cross-currency Swap Contract | |||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | |||
Foreign currency fair value hedge contract entered date | Sep. 27, 2018 | ||
Foreign currency fair value hedge contract maturity date | Sep. 27, 2025 | ||
Cross-currency basis spread included in the carrying value of debt instrument | 3,000,000 | $ 3,000,000 | |
Carrying value of derivative instrument | 10,000,000 | 10,000,000 | |
Cross-currency Swap Contract | Nonoperating (Income) Expense | |||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | |||
Gains on derivative instrument | $ 13,000,000 | 13,000,000 | |
Cross-currency Swap Contract | Other Comprehensive Income | |||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | |||
Gains and losses attributable to cross-currency basis spread | $ 3,000,000 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measures - Summary of Financial Assets and Liabilities Accounted for at Fair Value on Recurring Basis (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | $ 812,000,000 | $ 928,000,000 |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Designated as Hedging [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 425,000,000 | 556,000,000 |
Fair Vale, Assets | 10,000,000 | |
Fair Value, Liabilities | 35,000,000 | |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Designated as Hedging [Member] | Forward Currency Exchange Contracts [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 556,000,000 | |
Fair Value, Liabilities | 35,000,000 | |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Designated as Hedging [Member] | Cross-currency Swap Designated as Fair Value Hedge [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 425,000,000 | |
Fair Vale, Assets | 10,000,000 | |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Undesignated as Hedging [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 812,000,000 | 928,000,000 |
Fair Vale, Assets | 12,000,000 | |
Fair Value, Liabilities | 1,000,000 | 37,000,000 |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Undesignated as Hedging [Member] | Forward Currency Exchange Contracts [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 387,000,000 | 372,000,000 |
Fair Vale, Assets | 2,000,000 | |
Fair Value, Liabilities | $ 1,000,000 | $ 2,000,000 |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measures - Summary of Financial Assets and Liabilities Not Carried at Fair Value (Details) $ in Millions | Sep. 30, 2018USD ($) |
Carrying Value [Member] | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |
Long-term debt and related current maturities | $ 1,605 |
Fair Value [Member] | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |
Long-term debt and related current maturities | $ 1,647 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Balance beginning of period | $ (2,195) | |||
Total other comprehensive (loss) income, net of tax | $ (1) | $ (13) | (230) | $ (19) |
Balance end of period | (2,456) | (2,456) | ||
Foreign Exchange Translation Adjustment | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Balance beginning of period | 284 | 212 | ||
Other comprehensive income (loss) before reclassifications | (251) | 46 | ||
Total other comprehensive (loss) income, net of tax | (251) | 46 | ||
Balance end of period | 33 | 258 | 33 | 258 |
Changes in Fair Value of Effective Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Balance beginning of period | (35) | 42 | ||
Other comprehensive income (loss) before reclassifications | 3 | (52) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 21 | (13) | ||
Total other comprehensive (loss) income, net of tax | 24 | (65) | ||
Balance end of period | (11) | (23) | (11) | (23) |
Change in Currency Basis Reserve | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Other comprehensive income (loss) before reclassifications | (3) | |||
Total other comprehensive (loss) income, net of tax | (3) | |||
Balance end of period | (3) | (3) | ||
Pension Adjustments | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Balance beginning of period | (11) | (11) | ||
Balance end of period | (11) | (11) | (11) | (11) |
Total Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Balance beginning of period | 238 | 243 | ||
Other comprehensive income (loss) before reclassifications | (251) | (6) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 21 | (13) | ||
Total other comprehensive (loss) income, net of tax | (230) | (19) | ||
Balance end of period | $ 8 | $ 224 | $ 8 | $ 224 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Sep. 12, 2018 | Sep. 30, 2018 |
Honeywell | Indemnification and Reimbursement Agreement | ||
Loss Contingencies [Line Items] | ||
Percentage of net insurance receipts | 90.00% | |
Bendix | ||
Loss Contingencies [Line Items] | ||
Percentage of asbestos and environmental liabilities liable to pay | 100.00% | 100.00% |
Bendix | Honeywell | Indemnification and Reimbursement Agreement | ||
Loss Contingencies [Line Items] | ||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Asbestos Related Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Loss Contingencies [Line Items] | |
Beginning of the period | $ 1,712 |
Accrual for update to estimated liabilities | 141 |
Asbestos related liability payments | (152) |
End of the period | 1,701 |
Bendix | |
Loss Contingencies [Line Items] | |
Beginning of the period | 1,703 |
Accrual for update to estimated liabilities | 141 |
Asbestos related liability payments | (151) |
End of the period | 1,693 |
Other | |
Loss Contingencies [Line Items] | |
Beginning of the period | 9 |
Asbestos related liability payments | (1) |
End of the period | $ 8 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Insurance Recoveries for Asbestos Related Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Loss Contingencies [Line Items] | |
Beginning of the period | $ 191 |
End of the period | 178 |
Bendix | |
Loss Contingencies [Line Items] | |
Beginning of the period | 191 |
Probable insurance recoveries related to estimated liability | 10 |
Insurance receipts for asbestos related liabilities | (24) |
Insurance receivables settlements | 1 |
End of the period | $ 178 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Asbestos Balances Included in Balance Sheet Accounts (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Commitments And Contingencies Disclosure [Abstract] | ||
Other current assets | $ 16 | $ 17 |
Insurance recoveries for asbestos related liabilities (Note 12) | 162 | 174 |
Total Assets | 178 | 191 |
Accrued liabilities | 185 | 185 |
Asbestos related liabilities (Note 12) | 1,516 | 1,527 |
Total Liabilities | $ 1,701 | $ 1,712 |
Commitments and Contingencies_5
Commitments and Contingencies - Summary of Asbestos Claims Activity (Details) - Bendix - Claim | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Claims Activity | |||
Claims Unresolved at the beginning of the period | 6,280 | 7,724 | 7,779 |
Claims Filed | 1,895 | 2,645 | 2,830 |
Claims Resolved | (2,088) | (4,089) | (2,885) |
Claims Unresolved at the end of the period | 6,087 | 6,280 | 7,724 |
Commitments and Contingencies_6
Commitments and Contingencies - Summary of Asbestos Disease Distribution of Unresolved Claims (Details) - Bendix - Claim | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Disease Distribution of Unresolved Claims | ||||
Mesothelioma and Other Cancer Claims | 2,868 | 3,062 | 3,490 | |
Nonmalignant Claims | 3,219 | 3,218 | 4,234 | |
Total Claims | 6,087 | 6,280 | 7,724 | 7,779 |
Commitments and Contingencies_7
Commitments and Contingencies - Summary of Average Resolutions Per Claim Excluding Legal Costs (Details) - $ / Claim | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments And Contingencies Disclosure [Abstract] | |||||
Malignant claims | 56,000 | 44,000 | 44,000 | 53,500 | 51,000 |
Nonmalignant claims | 2,800 | 4,485 | 100 | 120 | 850 |
Pension Benefits - Additional I
Pension Benefits - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Shared Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Pension expense | $ 1 | $ 1 | $ 5 | $ 5 |
Ireland Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Net periodic pension benefit costs | $ 0 | $ 0 | $ 1 | $ 1 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) $ in Millions | Oct. 01, 2018USD ($)DayInstallment | Sep. 12, 2018 | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Subsequent Event [Line Items] | ||||
Loss contingency, receivable | $ 178 | $ 191 | ||
Bendix | ||||
Subsequent Event [Line Items] | ||||
Percentage of asbestos and environmental liabilities liable to pay | 100.00% | 100.00% | ||
Loss contingency, receivable | $ 178 | $ 191 | ||
Honeywell | Indemnification and Reimbursement Agreement | ||||
Subsequent Event [Line Items] | ||||
Description of indemnification agreement | As of the Spin-Off date of October 1, 2018, we are obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) equivalent of $175 million in respect of such liabilities arising in any given calendar year. | |||
Percentage of net insurance receipts | 90.00% | |||
Spinoff activities completion date | Oct. 1, 2018 | |||
Honeywell | Bendix | Indemnification and Reimbursement Agreement | ||||
Subsequent Event [Line Items] | ||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | |||
Honeywell | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Interest ownership percentage by parent | 100.00% | |||
Honeywell | Subsequent Event | Tax Matters Agreement | ||||
Subsequent Event [Line Items] | ||||
Aggregate payments connection with mandatory transition tax | $ 240 | |||
Number of annual installments | Installment | 5 | |||
Mandatory transition tax rate first installment | 8.00% | |||
Mandatory transition tax rate second installment | 8.00% | |||
Mandatory transition tax rate third installment | 15.00% | |||
Mandatory transition tax rate fourth installment | 20.00% | |||
Mandatory transition tax rate fifth installment | 25.00% | |||
Honeywell | Subsequent Event | Indemnification and Reimbursement Agreement | ||||
Subsequent Event [Line Items] | ||||
Percentage of net insurance receipts | 90.00% | |||
Number of business days | Day | 2 | |||
Loss contingency, receivable | $ 175 | |||
Honeywell | Subsequent Event | Bendix | Indemnification and Reimbursement Agreement | ||||
Subsequent Event [Line Items] | ||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% |