Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | GTX | |
Entity Registrant Name | Garrett Motion Inc. | |
Entity Central Index Key | 0001735707 | |
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 | 74,826,329 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-38636 | |
Entity Tax Identification Number | 824873189 | |
Entity Address, Address Line One | La Pièce 16 | |
Entity Address, City or Town | Rolle | |
Entity Address, State or Province | Delaware | |
Entity Address, Country | Switzerland | |
Entity Address, Postal Zip Code | 1180 | |
City Area Code | 41 21 | |
Local Phone Number | 695 30 00 |
CONSOLIDATED AND COMBINED INTER
CONSOLIDATED AND COMBINED INTERIM STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales (Note 4) | $ 781 | $ 784 | $ 2,418 | $ 2,576 |
Cost of goods sold | 609 | 606 | 1,868 | 1,972 |
Gross profit | 172 | 178 | 550 | 604 |
Selling, general and administrative expenses | 68 | 60 | 186 | 186 |
Other expense, net (Note 6) | 18 | 51 | 54 | 132 |
Interest expense | 18 | 1 | 52 | 3 |
Non-operating expense (income) | (4) | (7) | 2 | (10) |
Income before taxes | 72 | 73 | 256 | 293 |
Tax expense (benefit) (Note 7) | 34 | (856) | 79 | (844) |
Net income | $ 38 | $ 929 | $ 177 | $ 1,137 |
Earnings per common share (Note 16) | ||||
Basic | $ 0.51 | $ 12.54 | $ 2.37 | $ 15.35 |
Diluted | $ 0.50 | $ 12.54 | $ 2.34 | $ 15.35 |
Weighted average common shares outstanding (Note 16) | ||||
Basic | 74,753,593 | 74,070,852 | 74,528,740 | 74,070,852 |
Diluted | 75,704,457 | 74,070,852 | 75,700,652 | 74,070,852 |
CONSOLIDATED AND COMBINED INT_2
CONSOLIDATED AND COMBINED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 38 | $ 929 | $ 177 | $ 1,137 |
Foreign exchange translation adjustment | 102 | (3) | 127 | (251) |
Defined benefit pension plan adjustment, net of tax (Note 15) | 1 | |||
Changes in fair value of effective cash flow hedges, net of tax (Note 14) | 8 | 5 | 10 | 24 |
Changes in currency basis reserve | (3) | (3) | ||
Total other comprehensive (loss) income, net of tax | 110 | (1) | 138 | (230) |
Comprehensive income (loss) | $ 148 | $ 928 | $ 315 | $ 907 |
CONSOLIDATED AND COMBINED INT_3
CONSOLIDATED AND COMBINED INTERIM BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 190 | $ 196 |
Accounts, notes and other receivables – net (Note 8) | 751 | 750 |
Inventories – net (Note 9) | 193 | 172 |
Other current assets | 59 | 71 |
Total current assets | 1,193 | 1,189 |
Investments and long-term receivables | 41 | 39 |
Property, plant and equipment – net | 430 | 438 |
Goodwill | 193 | 193 |
Deferred income taxes | 181 | 165 |
Other assets (Note 10) | 108 | 80 |
Total assets | 2,146 | 2,104 |
Current liabilities: | ||
Accounts payable | 897 | 916 |
Current maturities of long-term debt | 4 | 23 |
Obligations payable to Honeywell, current (Note 17) | 121 | 127 |
Accrued liabilities (Note 11) | 366 | 426 |
Total current liabilities | 1,388 | 1,492 |
Long-term debt | 1,477 | 1,569 |
Deferred income taxes | 53 | 27 |
Obligations payable to Honeywell (Note 17) | 1,254 | 1,399 |
Other liabilities (Note 12) | 238 | 210 |
Total liabilities | 4,410 | 4,697 |
COMMITMENTS AND CONTINGENCIES (Note 17) | ||
EQUITY (DEFICIT) | ||
Additional paid-in capital | 19 | 5 |
Retained earnings | (2,494) | (2,671) |
Accumulated other comprehensive income (Note 15) | 211 | 73 |
Total stockholders' deficit | (2,264) | (2,593) |
Total liabilities and stockholders' deficit | $ 2,146 | $ 2,104 |
CONSOLIDATED AND COMBINED INT_4
CONSOLIDATED AND COMBINED INTERIM BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares, issued | 74,892,306 | 74,070,852 |
Common stock, shares, outstanding | 74,809,930 | 74,019,825 |
CONSOLIDATED AND COMBINED INT_5
CONSOLIDATED AND COMBINED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 177 | $ 1,137 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Deferred income taxes | 4 | (908) |
Depreciation | 55 | 53 |
Amortization of deferred issuance costs | 5 | |
Foreign exchange loss | 32 | 10 |
Stock compensation expense | 14 | 16 |
Pension expense | 4 | 7 |
Other | 7 | 6 |
Changes in assets and liabilities: | ||
Accounts, notes and other receivables | (29) | (42) |
Receivables from related parties | 57 | |
Inventories | (33) | (7) |
Other assets | 7 | (2) |
Accounts payable | 18 | (6) |
Payables to related parties | (50) | |
Accrued liabilities | (48) | (57) |
Obligations payable to Honeywell | (84) | |
Asbestos related liabilities | 1 | |
Other liabilities | (4) | 25 |
Net cash provided by operating activities | 125 | 240 |
Cash flows from investing activities: | ||
Expenditures for property, plant and equipment | (74) | (66) |
Increase in marketable securities | (21) | |
Decrease in marketable securities | 312 | |
Other | 12 | |
Net cash (used for) provided by investing activities | (62) | 225 |
Cash flows from financing activities: | ||
Net increase (decrease) in Invested deficit | (1,493) | |
Proceeds from revolving credit facility | 550 | 1,631 |
Payments of revolving credit facility | (550) | |
Payments of long-term debt | (62) | |
Payments related to related party notes payable | (493) | |
Net change related to cash pooling and short-term notes | (201) | |
Net cash used for financing activities | (62) | (556) |
Effect of foreign exchange rate changes on cash and cash equivalents | (7) | (12) |
Net decrease in cash and cash equivalents | (6) | (103) |
Cash and cash equivalents at beginning of period | 196 | 300 |
Cash and cash equivalents at end of period | $ 190 | $ 197 |
CONSOLIDATED AND COMBINED INT_6
CONSOLIDATED AND COMBINED INTERIM STATEMENTS OF EQUITY (DEFICIT) (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Invested Deficit | Accumulated Other Comprehensive Income/(loss) |
Beginning balance at Dec. 31, 2017 | $ (2,195) | $ (2,433) | $ 238 | |||
Net income | 58 | 58 | ||||
Other comprehensive income, net of tax | (184) | (184) | ||||
Change in Invested deficit | 1,080 | 1,080 | ||||
Ending balance at Mar. 31, 2018 | (1,241) | (1,295) | 54 | |||
Beginning balance at Dec. 31, 2017 | (2,195) | (2,433) | 238 | |||
Net income | 1,137 | |||||
Other comprehensive income, net of tax | (230) | (230) | ||||
Ending balance at Sep. 30, 2018 | (2,456) | (2,464) | 8 | |||
Beginning balance at Mar. 31, 2018 | (1,241) | (1,295) | 54 | |||
Net income | 150 | 150 | ||||
Other comprehensive income, net of tax | (45) | (45) | ||||
Change in Invested deficit | (672) | (672) | ||||
Ending balance at Jun. 30, 2018 | (1,808) | (1,817) | 9 | |||
Net income | 929 | 929 | ||||
Other comprehensive income, net of tax | (1) | (1) | ||||
Change in Invested deficit | (1,576) | (1,576) | ||||
Ending balance at Sep. 30, 2018 | (2,456) | $ (2,464) | 8 | |||
Beginning balance at Dec. 31, 2018 | (2,593) | $ 5 | $ (2,671) | 73 | ||
Beginning balance, Shares at Dec. 31, 2018 | 74 | |||||
Net income | 73 | 73 | ||||
Other comprehensive income, net of tax | 63 | 63 | ||||
Stock-based compensation | 5 | 5 | ||||
Stock based compensation, Shares | 1 | |||||
Ending balance at Mar. 31, 2019 | (2,452) | 10 | (2,598) | 136 | ||
Ending balance, Shares at Mar. 31, 2019 | 75 | |||||
Beginning balance at Dec. 31, 2018 | (2,593) | 5 | (2,671) | 73 | ||
Beginning balance, Shares at Dec. 31, 2018 | 74 | |||||
Net income | 177 | |||||
Other comprehensive income, net of tax | 138 | 138 | ||||
Ending balance at Sep. 30, 2019 | (2,264) | 19 | (2,494) | 211 | ||
Ending balance, Shares at Sep. 30, 2019 | 75 | |||||
Beginning balance at Mar. 31, 2019 | (2,452) | 10 | (2,598) | 136 | ||
Beginning balance, Shares at Mar. 31, 2019 | 75 | |||||
Net income | 66 | 66 | ||||
Other comprehensive income, net of tax | (35) | (35) | ||||
Stock-based compensation | 4 | 4 | ||||
Ending balance at Jun. 30, 2019 | (2,417) | 14 | (2,532) | 101 | ||
Ending balance, Shares at Jun. 30, 2019 | 75 | |||||
Net income | 38 | 38 | ||||
Other comprehensive income, net of tax | 110 | 110 | ||||
Stock-based compensation | 5 | 5 | ||||
Ending balance at Sep. 30, 2019 | $ (2,264) | $ 19 | $ (2,494) | $ 211 | ||
Ending balance, Shares at Sep. 30, 2019 | 75 |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
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 global vehicle independent aftermarket, as well as automotive software solutions. 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. (“Former Parent” or “Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the “Spin-Off”). 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. Approximately 74 million shares of Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with the Spin-Off, Garrett´s common stock began trading “regular-way” under the ticker symbol “GTX” on the New York Stock Exchange on October 1, 2018. The Spin-Off was completed pursuant to a Separation and Distribution Agreement and other agreements with Honeywell related to the Spin-Off, including but not limited to an indemnification and reimbursement agreement (the “Indemnification and Reimbursement Agreement”) and a tax matters agreement (the “Tax Matters Agreement”). Refer to Note 17, Commitments and Contingencies for additional details related to the Indemnification and Reimbursement Agreement and Tax Matters Agreement. 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 Prior to the Spin-Off on October 1, 2018, our historical financial statements were prepared on a stand-alone combined basis and were derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October 1, 2018, our financial statements are presented on a combined basis and for the periods subsequent to October 1, 2018 are presented on a consolidated basis (collectively, the historical financial statements for all periods presented are referred to as “Consolidated and Combined Interim Financial Statements”). The Consolidated and Combined Interim Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Asbestos-related expenses, net of probable insurance recoveries, are presented within Other expense, net in the Consolidated and Combined Interim Statement 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. For the periods prior to the Spin-Off, these Consolidated and Combined Interim Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the legacy Bendix business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, this recognition model differs from the recognition model applied subsequent to the Spin-Off, with the difference recognized through equity as of the Spin-Off date. In periods subsequent to the Spin-Off, the accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of 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. The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. The Consolidated and 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 Consolidated and Combined Interim Financial Statements should be read in conjunction with the audited annual Consolidated and Combined Financial Statements for the year ended December 31, 2018 included in our Annual Report on Form 10-K, as filed with the SEC on March 1, 2019 (our “2018 Form 10-K”). The results of operations 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. For differences in actual closing dates that are material to year-over-year comparisons of quarterly or year-to-date results, such differences have been adjusted for the three months ended September 30, 2019. Our actual closing dates for the three months ended September 30, 2019 and 2018 were September 28, 2019 and September 29, 2018, respectively. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies The accounting policies of the Company are set forth in Note 2 to the audited annual Consolidated and Combined Financial Statements for the year ended December 31, 2018 included in our 2018 Form 10-K. We include herein certain updates to those policies. Leases - Lessee accounting policy For the periods beginning January 1, 2019, right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of a lease (the “commencement date”) based on the present value of lease payments over the lease term. We determine if an arrangement is a lease at inception. Operating leases are included in Other assets, Accrued liabilities, and Other liabilities in our Consolidated and Combined Balance Sheets. No finance leases have been recognized. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed in the period in which they occur. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For machinery and equipment, we account for the lease and non-lease components as a single lease component. We account for short-term leases by recognizing lease payments in net income on a straight-line basis over the lease term and will not recognize any ROU assets and lease liabilities on the Consolidated and Combined Balance Sheet. For the periods prior to January 1, 2019, we accounted for leases in accordance with ASC 840. Recently Adopted Accounting Pronouncements Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date while electing not to recast comparative periods in the transition. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. In adopting the new leases standard, the Company has applied the practical expedients as per ASC 842-10-65-1(f) and (g). Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of $34 million as of January 1, 2019. The adoption of this standard did not have a material impact related to existing leases and as a result, a cumulative-effect adjustment was not recorded. 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 The Tax Cuts and Jobs Act (“Tax Act”) to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018. Upon adoption, the Company did not elect to reclassify the stranded income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held and enhances disclosures regarding significant estimates used in estimating credit losses. ASU 2016-13 will be effective for us in our first quarter of fiscal 2020, and earlier adoption is permitted beginning in the first quarter of fiscal 2019. We are currently developing the model to estimate our expected credit losses to evaluate the impact of the guidance on our Consolidated and Combined Financial Statements. |
Related Party Transactions with
Related Party Transactions with Honeywell | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions with Honeywell | Note 3. Related Party Transactions with Honeywell Subsequent to Spin-Off Following the Spin-Off, Honeywell is no longer considered a related party. Prior to Spin-Off Prior to the Spin-Off, the Consolidated and Combined Interim Financial Statements were prepared on a stand-alone basis and are derived from the Consolidated Interim Financial Statements and accounting records of Honeywell. 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, the Business was allocated $26 million and $87 million, respectively, of general corporate expenses incurred by Honeywell, and such amounts are included within Selling, general and administrative expenses in the Consolidated and Combined Interim Statements of Operations. As certain expenses reflected in the Consolidated and Combined Interim Financial Statements for the three and nine months ended September 30, 2018 include allocations of corporate expenses from Honeywell, these statements could differ from those that would have been prepared had the Business operated on a stand-alone basis. The Company received interest income for related party notes receivables of $0 million and $1 million for the three and nine months ended September 30, 2018. Additionally, the Company incurred interest expense for related party notes payable of $0 million and $1 million for the three and nine months ended September 30, 2018, respectively. Net transfers to and from Honeywell are included within Invested deficit on the Consolidated and Combined Interim Statements of Equity. The components of the net transfers to Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 General financing activities $ 30 $ 1,761 Distribution to Former Parent (1,628 ) (2,994 ) Unbilled corporate allocations 15 41 Stock compensation expense and other compensation awards 5 17 Pension expense 2 7 Total net decrease in Invested deficit $ (1,576 ) $ (1,168 ) |
Revenue Recognition and Contrac
Revenue Recognition and Contracts with Customers | 9 Months Ended |
Sep. 30, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition and Contracts with Customers | Note 4. Revenue Recognition and Contracts with Customers Disaggregated Revenue Sales by region (determined based on country of shipment) and channel are as follows: Three months Ended September 30, 2019 OEM Aftermarket Other Total United States $ 72 $ 45 $ 2 $ 119 Europe 388 34 9 431 Asia 202 13 7 222 Other International 4 5 — 9 $ 666 $ 97 $ 18 $ 781 Nine months Ended September 30, 2019 OEM Aftermarket Other Total United States $ 232 $ 139 $ 5 $ 376 Europe 1,233 102 29 1,364 Asia 591 39 21 651 Other International 12 15 — 27 $ 2,068 $ 295 $ 55 $ 2,418 Three months Ended September 30, 2018 (1) OEM Aftermarket Other Total United States $ 83 $ 44 $ 2 $ 129 Europe 381 37 12 430 Asia 196 12 6 214 Other International 6 5 — 11 $ 666 $ 98 $ 20 $ 784 Nine months Ended September 30, 2018 (1) OEM Aftermarket Other Total United States $ 257 $ 132 $ 4 $ 393 Europe 1,277 118 42 1,437 Asia 655 38 20 713 Other International 17 16 — 33 $ 2,206 $ 304 $ 66 $ 2,576 (1) The revenue information was previously disaggregated between OEM and Aftermarket and is now disaggregated between OEM, Aftermarket, and Other. As a result, the prior period presented was recast to conform to the current year presentation. Contract Balances The following table summarizes our contract assets and liabilities balances: 2019 Contract assets—January 1 $ 5 Contract assets—September 30 9 Change in contract assets—Increase/(Decrease) $ 4 Contract liabilities—January 1 $ (2 ) Contract liabilities—September 30 (1 ) Change in contract liabilities—(Increase)/Decrease $ 1 |
Research, Development & Enginee
Research, Development & Engineering | 9 Months Ended |
Sep. 30, 2019 | |
Research And Development [Abstract] | |
Research, Development & Engineering | Note 5. Research, Development & Engineering Garrett conducts research, development and engineering (“RD&E”) activities, which consist primarily of the development of new products and product applications. RD&E costs are charged to expense as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Customer reimbursements are netted against gross RD&E expenditures as they are considered a recovery of cost. Such costs are included in Cost of goods sold as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Research and development costs $ 31 $ 28 $ 92 $ 96 Engineering-related expenses 4 — 8 7 $ 35 $ 28 $ 100 $ 103 |
Other Expense, Net
Other Expense, Net | 9 Months Ended |
Sep. 30, 2019 | |
Other Income And Expenses [Abstract] | |
Other Expense, Net | Note 6. Other Expense, Net Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Indemnification related — post Spin-Off $ 18 $ — $ 54 $ — Asbestos related, net of probable insurance recoveries — 51 — 130 Environmental remediation, non-active sites — — — 2 $ 18 $ 51 $ 54 $ 132 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7. Income Taxes For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Tax expense (benefit) $ 34 $ (856 ) $ 79 $ (844 ) Effective tax rate 47 % (1,173 )% 31 % (288 )% The effective tax rate increased for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, 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 to withholding taxes on undistributed foreign earnings recorded during the three months ended September 30, 2018. The effective tax rate increased for the nine months ended September 30, 2019, as compared to the nine months ended September 30, 2018, 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 to withholding taxes on undistributed foreign earnings recorded during the nine months ended September 30, 2018. The effective tax rates for the three months and nine months ended September 30, 2019 were higher than the U.S. federal statutory rate of 21% primarily from non-deductible indemnity expenses, the impacts of U.S. international tax provisions and accruals of withholding taxes on current year earnings, partially offset by non-U.S. earnings taxed at lower rates and tax adjustments from completed statutory filings. The effective tax rates for the three months and nine months ended September 30, 2018 were 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 reduced withholding taxes on undistributed foreign earnings and non-U.S. earnings taxed at lower rates. The effective tax rate can vary from quarter to quarter due to changes in the Company’s global mix of earnings, the resolution of income tax audits, changes in tax laws (including updated guidance on U.S. tax reform), deductions related to employee share-based payments, internal restructurings and pension mark-to-market adjustments. As of September 30, 2019, there is pending tax legislation that is expected to be enacted before the end of 2019 that will increase the Company’s income tax rate in Switzerland effective January 1, 2020. Upon enactment, the Company will be required to remeasure its deferred tax assets and liabilities to reflect the new tax rate. Such remeasurement will likely result in a material tax benefit that will be recorded through the income statement in the quarter in which enactment occurs. |
Accounts, Notes and Other Recei
Accounts, Notes and Other Receivables—Net | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Accounts, Notes and Other Receivables—Net | Note 8. Accounts, Notes and Other Receivables—Net September 30, 2019 December 31, 2018 Trade receivables $ 606 $ 593 Notes receivables 82 93 Other receivables 68 67 $ 756 $ 753 Less—Allowance for doubtful accounts (5 ) (3 ) $ 751 $ 750 Trade receivables include $18 million and $5 million of unbilled balances as of September 30, 2019 and December 31, 2018, respectively. These amounts are billed in accordance with the terms of customer contracts to which they relate. Unbilled receivables include $9 million and $5 million of contract assets as of September 30, 2019 and December 31, 2018, respectively. See Note 4, Revenue Recognition and Contracts with Customers. |
Inventories-Net
Inventories-Net | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories-Net | Note 9. Inventories—Net September 30, 2019 December 31, 2018 Raw materials $ 125 $ 112 Work in process 21 19 Finished products 69 64 $ 215 $ 195 Less—Reserves (22 ) (23 ) $ 193 $ 172 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Other Assets | Note 10. Other Assets September 30, December 31, 2019 2018 Advanced discounts to customers, non-current $ 55 $ 56 Operating right-of-use assets (Note 13) 36 — Undesignated cross-currency swap at fair value 9 16 Other 8 8 $ 108 $ 80 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities Current [Abstract] | |
Accrued Liabilities | Note 11. Accrued Liabilities September 30, 2019 December 31, 2018 Customer pricing reserve $ 112 $ 107 Compensation, benefit and other employee related 58 71 Repositioning 4 15 Product warranties and performance guarantees 32 32 Taxes 61 113 Advanced discounts from suppliers, current 19 17 Customer advances and deferred income (a) 13 14 Accrued interest 9 6 Short-term lease liability (Note 13) 8 — Other (primarily operating expenses) 50 51 $ 366 $ 426 (a) Customer advances and deferred income include $1 million and $2 million 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 Consolidated and Combined Interim Statements of Operations. 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 Severance Costs Exit Costs Total Balance at December 31, 2018 $ 13 $ 2 $ 15 Charges 3 — 3 Usage—cash (7 ) (2 ) (9 ) Adjustments and reclassifications (6 ) 1 (5 ) Foreign currency translation — — — Balance at September 30, 2019 $ 3 $ 1 $ 4 |
Other Liabilities
Other Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Note 12. Other Liabilities September 30, December 31, 2019 2018 Pension and other employee related $ 68 $ 71 Advanced discounts from suppliers 50 63 Uncertain tax positions 67 59 Long-term lease liability (Note 13) 28 — Other 25 17 $ 238 $ 210 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Note 13. Leases We have operating leases that primarily consist of real estate and machinery and equipment. Our leases have remaining lease terms of up to 11 years, some of which include options to extend the leases for up to two years, and some of which include options to terminate the leases within the year. The components of lease expense are as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 4 $ 10 Supplemental cash flow information related to operating leases is follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 3 $ 9 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 2 $ 10 Supplemental balance sheet information related to operating leases is follows: September 30, 2019 Other assets $ 36 Accrued liabilities 8 Other liabilities 28 September 30, 2019 Weighted-average lease term (in years) 6.31 Weighted-average discount rate 6.37 Maturities of operating lease liabilities were as follows: September 30, 2019 2019 $ 3 2020 9 2021 7 2022 6 2023 5 Thereafter 14 Total lease payments 44 Less imputed interest (8 ) $ 36 As of December 31, 2018, in accordance with the previous lease standard, ASC 840, future minimum December 31, 2018 2019 $ 12 2020 8 2021 5 2022 4 2023 4 Thereafter 15 $ 48 |
Financial Instruments and Fair
Financial Instruments and Fair Value Measures | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Financial Instruments and Fair Value Measures | Note 14. Financial Instruments and Fair Value Measures Our credit, market and foreign currency risk management policies are described in Note 16, Financial Instruments and Fair Value Measures, of the notes to the audited annual Consolidated and Combined Financial Statements for the year ended December 31, 2018 included in our 2018 Form 10-K. At September 30, 2019 and December 31, 2018, we had contracts with aggregate gross notional amounts of $1,964 million and $838 million, respectively, to exchange foreign currencies, principally the U.S. Dollar, Swiss Franc, British Pound, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Czech Crown, Australian Dollar and Korean Won, and to limit interest rate risk. 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, 2019 and December 31, 2018: Fair Value Notional Amounts Assets Liabilities September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Designated forward currency exchange contracts $ 358 $ — $ 11 $ — (a) $ 1 $ — (b) Undesignated instruments: Undesignated cross-currency swap 421 425 9 16 (c) — — Undesignated interest rate swap 547 — — — 2 — (d) Undesignated forward currency exchange contracts 638 413 10 4 (a) 3 1 (b) $ 1,964 $ 838 $ 30 $ 20 $ 6 $ 1 ( a ) Recorded within Other current assets in the Company’s Consolidated and Combined Balance Sheets ( b ) Recorded within Accrued liabilities in the Company’s Consolidated and Combined Balance Sheets (c) Recorded within Other assets in the Company’s Consolidated and Combined Balance Sheets (d) Recorded within Other liabilities in the Company´s Consolidated and Combined Balance Sheets On June 7, 2019, the Company entered into an interest rate swap contract to limit its exposure to interest rate risk by converting the interest payments on variable rate debt to fixed rate payments. These interest rate swaps have not been designated as hedging instruments for accounting purposes. The Company initiated a cash flow hedging program in the first quarter of 2019 and has since then entered into forward currency exchange contracts to mitigate exposure to foreign currency exchange rate volatility and the associated impact on earnings related to forecasted foreign currency commitments. These forward currency exchange contracts are assessed as highly effective and are designated as cash flow hedges. Gains and losses on derivatives qualifying as cash flow hedges are recorded in Accumulated other comprehensive income (loss) until the underlying transactions are recognized in earnings. 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 which will mature on September 27, 2025. The gain or loss on this derivative instrument is recognized in earnings and included in Non-operating expense (income). For the three and nine months ended September 30, 2019, gains recorded in Non-operating expense (income) under the cross-currency swap contract were $17 million and $12 The foreign currency exchange, interest rate swap 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, Account receivables, notes and other receivables, and Account payables contained in the Consolidated and Combined Balance Sheets approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value: September 30, 2019 Carrying Value Fair Value Long-term debt and related current maturities $ 1,481 $ 1,492 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. On May 23, 2019, the Company made a prepayment of the Euro-equivalent of $9 million related to the mandatory amortizations of its Term Loan A Facility due in the third and fourth quarters of 2019. On September 27, 2019, the Company made a prepayment of the Euro-equivalent of $41 million related to the mandatory amortizations of its Term Loan A Facility due through the first half of 2021. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2019 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 15. 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 Changes 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 Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2018 $ 86 $ — $ (13 ) $ 73 Other comprehensive income (loss) before reclassifications 127 9 — 136 Amounts reclassified from accumulated other comprehensive income (loss) — 1 1 2 Net current period other comprehensive income (loss) 127 10 1 138 Balance at September 30, 2019 $ 213 $ 10 $ (12 ) $ 211 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 16. Earnings Per Share On October 1, 2018, the date of consummation of the Spin-Off, 74,070,852 shares of the Company’s common stock were distributed to Honeywell stockholders of record as of September 18, 2018 who held their shares through the Distribution Date. Basic and Diluted EPS for all historical periods prior to the Spin-Off reflect the number of distributed shares, or 74,070,852 shares. The details of the earnings per share calculations for the three and nine months ended September 30, 2019 and 2018 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Basic Net Income $ 38 $ 929 $ 177 $ 1,137 Weighted average common shares outstanding 74,753,593 74,070,852 74,528,740 74,070,852 EPS – Basic $ 0.51 $ 12.54 $ 2.37 $ 15.35 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Diluted Net Income $ 38 $ 929 $ 177 $ 1,137 Weighted average common shares outstanding – Basic 74,753,593 74,070,852 74,528,740 74,070,852 Dilutive effect of unvested RSUs and other contingently issuable shares 950,864 — 1,171,912 — Weighted average common shares outstanding – Diluted 75,704,457 74,070,852 75,700,652 74,070,852 EPS – Diluted $ 0.50 $ 12.54 $ 2.34 $ 15.35 Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the period. The diluted earnings per share calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period. For the three and nine months ended September 30, 2019, the weighted number of stock options excluded from the computations was 483,408 and 371,852 respectively. These stock options were outstanding at September 30, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 17. Commitments and Contingencies Obligations payable to Honeywell 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 linings 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. Certain operations that were part of the Bendix business were transferred to Garrett. In connection with the Spin-Off, we 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. The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. During the three and nine months ended September 30, 2019, we paid Honeywell the Euro-equivalent of $37 million and $113 million, respectively, in connection with the Indemnification and Reimbursement Agreement. 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. Following the Spin-Off in October of 2018, we paid our first annual installment in that month. Subsequently, our annual installments will be paid in April of each year. On April 1, 2019, we paid our second annual installment of the Euro-equivalent of $18 million. 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. The following table summarizes our Obligation payable to Honeywell related to these agreements: Nine Months Ended September 30, 2019 Asbestos and environmental Tax Matters Total Beginning of year $ 1,244 $ 282 $ 1,526 Accrual for update to estimated liability — 3 3 Legal fees expensed 46 — 46 Payments to Honeywell (113 ) (18 ) (131 ) Currency translation adjustment (57 ) (12 ) (69 ) End of period $ 1,120 $ 255 $ 1,375 Current 103 18 121 Non-current 1,017 237 1,254 Total $ 1,120 $ 255 $ 1,375 Asbestos Matters For the periods prior to the Spin-Off, these Consolidated and Combined Interim Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, this recognition model differs from the recognition model applied subsequent to the Spin-Off as outlined above. In periods subsequent to the Spin-Off, the accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of 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. The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. The following tables present information regarding Bendix related asbestos claims activity: Nine Months Ended September 30, Year Ended December 31, Claims Activity 2019 2018 Claims Unresolved at the beginning of the period 6,209 6,280 Claims Filed 1,996 2,430 Claims Resolved (1,744 ) (2,501 ) Claims Unresolved at the end of the period 6,461 6,209 Nine Months Ended September 30, Years Ended December 31, Disease Distribution of Unresolved Claims 2019 2018 Mesothelioma and Other Cancer Claims 3,323 2,949 Nonmalignant Claims 3,138 3,260 Total Claims 6,461 6,209 Honeywell has experienced average resolutions per claim excluding legal costs as follows: Years Ended December 31, 2018 2017 2016 2015 2014 (in whole dollars) Malignant claims $ 55,300 $ 56,000 $ 44,000 $ 44,000 $ 53,500 Nonmalignant claims $ 4,700 $ 2,800 $ 4,485 $ 100 $ 120 It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize in the future. 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 Consolidated and Combined Interim Statements of Operations. |
Pension Benefits
Pension Benefits | 9 Months Ended |
Sep. 30, 2019 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension Benefits | Note 18. Pension Benefits Following the Spin-Off, we sponsor several funded U.S. and non-U.S. defined benefit pension plans. Significant plans outside of the U.S. are in Switzerland and Ireland. Other pension plans outside of the U.S. are not material to the Company either individually or in the aggregate. Our general funding policy for qualified defined benefit pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. We are not required to make any contributions to our U.S. pension plan in 2019. We expect to make contributions of cash and/or marketable securities of approximately $6 million to our non-U.S. pension plans to satisfy regulatory funding standards in 2019, of which $5 million has been contributed through the first nine months of the year. For periods prior to the Spin-Off, we only accounted for our pension plan in Ireland as a defined benefit pension plan. Our other pension plans were accounted for as multiemployer plans as further described below. Net periodic benefit costs for our significant defined benefit plans include the following components: Three Months Ended September 30, Nine Months Ended September 30, U.S. Plans Non-U.S. Plan, U.S. Plans Non-U.S. Plan, 2019 2019 2018 (1) 2019 2019 2018 (1) Service cost $ — $ 1 $ 1 — $ 3 $ 2 Interest cost — — — 1 1 1 Expected return on plan assets (1 ) (1 ) (1 ) (2 ) (2 ) (2 ) Amortization of prior service (credit) — — — — — — $ (1 ) — — $ (1 ) $ 2 $ 1 (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. For our U.S. defined benefit pension plan from the date of the Spin-Off, we estimate the service and interest cost components of net period benefit (income) cost by utilizing a full yield curve approach in the estimation of these cost components by applying the specific spot rates along the yield curve used in the determination of the pension benefit obligation to their underlying projected cash flows. This approach provides a more precise measurement of service and interest costs by improving the correlation between projected cash flows and their corresponding spot rates. For our Switzerland and Ireland defined benefit pension plans until 2019, we estimated such cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure the pension benefit obligation. In 2019, we updated the approach for estimating the service and interest cost components of net period benefit (income) cost for the Switzerland and Ireland plans to the full yield curve approach. 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 was $1 million and $5 million, respectively. |
China Variable Interest Entity
China Variable Interest Entity | 9 Months Ended |
Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
China Variable Interest Entity | Note 19. China Variable Interest Entity On September 20, 2018 in preparation of the Spin-Off, we entered into an agreement by and between Honeywell International Inc. and Garrett Motion Inc. (the “China Purchase Agreement”) in which Honeywell agreed to sell to Garrett 100% of the equity interests of Honeywell Transportation Investment (China) Co., Ltd. (“Garrett China”) consisting of our primary operations in China, in exchange for upfront consideration of 8,444,077 shares of our common stock. No further consideration from Garrett is due. The China Purchase Agreement has been amended to extend the date of the transfer of the equity interests in Garrett China from September 20, 2019 to June 30, 2020. Garrett China is considered a variable interest entity for which Garrett is the primary beneficiary because the China Purchase Agreement provides Garrett, prior to the transfer of the equity interests, control to direct the management and operation of Garrett China as well as all economic benefits and losses. The intent of the agreement is to place Garrett in the same position as if it already owned 100% of the equity interests of Garrett China. As the agreement was effective prior to the Spin-Off date while the Company and Garrett China were under common control of Honeywell, the assets and liabilities of Garrett China are recognized at their carrying amounts. Additionally, the related operations of Garrett China were included in our Consolidated and Combined Statements of Operations for the nine months ended September 30, 2018 which were prepared on a carve-out basis. The following table summarizes the consolidated assets and liabilities of Garrett China: September 30, December 31, 2019 2018 (Dollars in millions) ASSETS Current assets: Cash and cash equivalents $ 88 $ 70 Accounts, notes and other receivables—net 236 224 Inventories—net 24 19 Other current assets 1 — Total current assets 349 313 Property, plant and equipment—net 73 67 Deferred income taxes 20 20 Other assets 2 1 Total assets $ 444 $ 401 LIABILITIES Current liabilities: Accounts payable $ 265 $ 261 Accrued liabilities 80 77 Total current liabilities 345 338 Other liabilities 10 13 Total liabilities $ 355 $ 351 Net sales from Garrett China were $123 million and $105 million, and $352 million and $361 million for the three and nine months ended September 30, 2019 and 2018, respectively. Related expenses primarily consisted of Costs of Goods Sold of $88 million million million million million million million million, million million million million, |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Leases - Lessee Accounting Policy | Leases - Lessee accounting policy For the periods beginning January 1, 2019, right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of a lease (the “commencement date”) based on the present value of lease payments over the lease term. We determine if an arrangement is a lease at inception. Operating leases are included in Other assets, Accrued liabilities, and Other liabilities in our Consolidated and Combined Balance Sheets. No finance leases have been recognized. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed in the period in which they occur. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For machinery and equipment, we account for the lease and non-lease components as a single lease component. We account for short-term leases by recognizing lease payments in net income on a straight-line basis over the lease term and will not recognize any ROU assets and lease liabilities on the Consolidated and Combined Balance Sheet. For the periods prior to January 1, 2019, we accounted for leases in accordance with ASC 840. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date while electing not to recast comparative periods in the transition. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. In adopting the new leases standard, the Company has applied the practical expedients as per ASC 842-10-65-1(f) and (g). Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of $34 million as of January 1, 2019. The adoption of this standard did not have a material impact related to existing leases and as a result, a cumulative-effect adjustment was not recorded. 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 The Tax Cuts and Jobs Act (“Tax Act”) to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018. Upon adoption, the Company did not elect to reclassify the stranded income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held and enhances disclosures regarding significant estimates used in estimating credit losses. ASU 2016-13 will be effective for us in our first quarter of fiscal 2020, and earlier adoption is permitted beginning in the first quarter of fiscal 2019. We are currently developing the model to estimate our expected credit losses to evaluate the impact of the guidance on our Consolidated and Combined Financial Statements. |
Related Party Transactions wi_2
Related Party Transactions with Honeywell (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Summary of Components of Net Transfers to and from Honeywell | The components of the net transfers to Three Months Ended September 30, Nine Months Ended September 30, 2018 2018 General financing activities $ 30 $ 1,761 Distribution to Former Parent (1,628 ) (2,994 ) Unbilled corporate allocations 15 41 Stock compensation expense and other compensation awards 5 17 Pension expense 2 7 Total net decrease in Invested deficit $ (1,576 ) $ (1,168 ) |
Revenue Recognition and Contr_2
Revenue Recognition and Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Disaggregation of Revenue | Sales by region (determined based on country of shipment) and channel are as follows: Three months Ended September 30, 2019 OEM Aftermarket Other Total United States $ 72 $ 45 $ 2 $ 119 Europe 388 34 9 431 Asia 202 13 7 222 Other International 4 5 — 9 $ 666 $ 97 $ 18 $ 781 Nine months Ended September 30, 2019 OEM Aftermarket Other Total United States $ 232 $ 139 $ 5 $ 376 Europe 1,233 102 29 1,364 Asia 591 39 21 651 Other International 12 15 — 27 $ 2,068 $ 295 $ 55 $ 2,418 Three months Ended September 30, 2018 (1) OEM Aftermarket Other Total United States $ 83 $ 44 $ 2 $ 129 Europe 381 37 12 430 Asia 196 12 6 214 Other International 6 5 — 11 $ 666 $ 98 $ 20 $ 784 Nine months Ended September 30, 2018 (1) OEM Aftermarket Other Total United States $ 257 $ 132 $ 4 $ 393 Europe 1,277 118 42 1,437 Asia 655 38 20 713 Other International 17 16 — 33 $ 2,206 $ 304 $ 66 $ 2,576 (1) The revenue information was previously disaggregated between OEM and Aftermarket and is now disaggregated between OEM, Aftermarket, and Other. As a result, the prior period presented was recast to conform to the current year presentation. |
Summary of Contract Assets and Liabilities | The following table summarizes our contract assets and liabilities balances: 2019 Contract assets—January 1 $ 5 Contract assets—September 30 9 Change in contract assets—Increase/(Decrease) $ 4 Contract liabilities—January 1 $ (2 ) Contract liabilities—September 30 (1 ) Change in contract liabilities—(Increase)/Decrease $ 1 |
Research, Development & Engin_2
Research, Development & Engineering (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Research And Development [Abstract] | |
Summary of Research, Development & Engineering Activities | Garrett conducts research, development and engineering (“RD&E”) activities, which consist primarily of the development of new products and product applications. RD&E costs are charged to expense as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Customer reimbursements are netted against gross RD&E expenditures as they are considered a recovery of cost. Such costs are included in Cost of goods sold as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Research and development costs $ 31 $ 28 $ 92 $ 96 Engineering-related expenses 4 — 8 7 $ 35 $ 28 $ 100 $ 103 |
Other Expenses, Net (Tables)
Other Expenses, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Income And Expenses [Abstract] | |
Schedule of Other Operating Cost and Expense | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Indemnification related — post Spin-Off $ 18 $ — $ 54 $ — Asbestos related, net of probable insurance recoveries — 51 — 130 Environmental remediation, non-active sites — — — 2 $ 18 $ 51 $ 54 $ 132 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Tax Expense (Benefit) and Effective Tax Rate | For the Three Months Ended September 30, For the Nine Months Ended September 30, 2019 2018 2019 2018 (Dollars in millions) Tax expense (benefit) $ 34 $ (856 ) $ 79 $ (844 ) Effective tax rate 47 % (1,173 )% 31 % (288 )% |
Accounts, Notes and Other Rec_2
Accounts, Notes and Other Receivables—Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes and Other Receivables Net | September 30, 2019 December 31, 2018 Trade receivables $ 606 $ 593 Notes receivables 82 93 Other receivables 68 67 $ 756 $ 753 Less—Allowance for doubtful accounts (5 ) (3 ) $ 751 $ 750 |
Inventories-Net (Tables)
Inventories-Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | September 30, 2019 December 31, 2018 Raw materials $ 125 $ 112 Work in process 21 19 Finished products 69 64 $ 215 $ 195 Less—Reserves (22 ) (23 ) $ 193 $ 172 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | September 30, December 31, 2019 2018 Advanced discounts to customers, non-current $ 55 $ 56 Operating right-of-use assets (Note 13) 36 — Undesignated cross-currency swap at fair value 9 16 Other 8 8 $ 108 $ 80 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities Current [Abstract] | |
Summary of Accrued Liabilities | September 30, 2019 December 31, 2018 Customer pricing reserve $ 112 $ 107 Compensation, benefit and other employee related 58 71 Repositioning 4 15 Product warranties and performance guarantees 32 32 Taxes 61 113 Advanced discounts from suppliers, current 19 17 Customer advances and deferred income (a) 13 14 Accrued interest 9 6 Short-term lease liability (Note 13) 8 — Other (primarily operating expenses) 50 51 $ 366 $ 426 (a) Customer advances and deferred income include $1 million and $2 million |
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 Consolidated and Combined Interim Statements of Operations. 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 Severance Costs Exit Costs Total Balance at December 31, 2018 $ 13 $ 2 $ 15 Charges 3 — 3 Usage—cash (7 ) (2 ) (9 ) Adjustments and reclassifications (6 ) 1 (5 ) Foreign currency translation — — — Balance at September 30, 2019 $ 3 $ 1 $ 4 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | September 30, December 31, 2019 2018 Pension and other employee related $ 68 $ 71 Advanced discounts from suppliers 50 63 Uncertain tax positions 67 59 Long-term lease liability (Note 13) 28 — Other 25 17 $ 238 $ 210 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The components of lease expense are as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 4 $ 10 |
Summary of Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to operating leases is follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 3 $ 9 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 2 $ 10 |
Summary of Supplemental Balance Sheet Information Related to Operating Leases | Supplemental balance sheet information related to operating leases is follows: September 30, 2019 Other assets $ 36 Accrued liabilities 8 Other liabilities 28 September 30, 2019 Weighted-average lease term (in years) 6.31 Weighted-average discount rate 6.37 |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities were as follows: September 30, 2019 2019 $ 3 2020 9 2021 7 2022 6 2023 5 Thereafter 14 Total lease payments 44 Less imputed interest (8 ) $ 36 |
Schedule of Future Minimum Lease Payments Under Operating Leases in Accordance with ASC 840 | As of December 31, 2018, in accordance with the previous lease standard, ASC 840, future minimum December 31, 2018 2019 $ 12 2020 8 2021 5 2022 4 2023 4 Thereafter 15 $ 48 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measures (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 and December 31, 2018: Fair Value Notional Amounts Assets Liabilities September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 September 30, 2019 December 31, 2018 Designated forward currency exchange contracts $ 358 $ — $ 11 $ — (a) $ 1 $ — (b) Undesignated instruments: Undesignated cross-currency swap 421 425 9 16 (c) — — Undesignated interest rate swap 547 — — — 2 — (d) Undesignated forward currency exchange contracts 638 413 10 4 (a) 3 1 (b) $ 1,964 $ 838 $ 30 $ 20 $ 6 $ 1 ( a ) Recorded within Other current assets in the Company’s Consolidated and Combined Balance Sheets ( b ) Recorded within Accrued liabilities in the Company’s Consolidated and Combined Balance Sheets (c) Recorded within Other assets in the Company’s Consolidated and Combined Balance Sheets (d) Recorded within Other liabilities in the Company´s Consolidated and Combined Balance Sheets |
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, 2019 Carrying Value Fair Value Long-term debt and related current maturities $ 1,481 $ 1,492 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 Changes 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 Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2018 $ 86 $ — $ (13 ) $ 73 Other comprehensive income (loss) before reclassifications 127 9 — 136 Amounts reclassified from accumulated other comprehensive income (loss) — 1 1 2 Net current period other comprehensive income (loss) 127 10 1 138 Balance at September 30, 2019 $ 213 $ 10 $ (12 ) $ 211 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | The details of the earnings per share calculations for the three and nine months ended September 30, 2019 and 2018 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Basic Net Income $ 38 $ 929 $ 177 $ 1,137 Weighted average common shares outstanding 74,753,593 74,070,852 74,528,740 74,070,852 EPS – Basic $ 0.51 $ 12.54 $ 2.37 $ 15.35 Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Diluted Net Income $ 38 $ 929 $ 177 $ 1,137 Weighted average common shares outstanding – Basic 74,753,593 74,070,852 74,528,740 74,070,852 Dilutive effect of unvested RSUs and other contingently issuable shares 950,864 — 1,171,912 — Weighted average common shares outstanding – Diluted 75,704,457 74,070,852 75,700,652 74,070,852 EPS – Diluted $ 0.50 $ 12.54 $ 2.34 $ 15.35 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Obligation Payable to Honeywell | The following table summarizes our Obligation payable to Honeywell related to these agreements: Nine Months Ended September 30, 2019 Asbestos and environmental Tax Matters Total Beginning of year $ 1,244 $ 282 $ 1,526 Accrual for update to estimated liability — 3 3 Legal fees expensed 46 — 46 Payments to Honeywell (113 ) (18 ) (131 ) Currency translation adjustment (57 ) (12 ) (69 ) End of period $ 1,120 $ 255 $ 1,375 Current 103 18 121 Non-current 1,017 237 1,254 Total $ 1,120 $ 255 $ 1,375 |
Summary of Asbestos Claim Activity | The following tables present information regarding Bendix related asbestos claims activity: Nine Months Ended September 30, Year Ended December 31, Claims Activity 2019 2018 Claims Unresolved at the beginning of the period 6,209 6,280 Claims Filed 1,996 2,430 Claims Resolved (1,744 ) (2,501 ) Claims Unresolved at the end of the period 6,461 6,209 Nine Months Ended September 30, Years Ended December 31, Disease Distribution of Unresolved Claims 2019 2018 Mesothelioma and Other Cancer Claims 3,323 2,949 Nonmalignant Claims 3,138 3,260 Total Claims 6,461 6,209 |
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, 2018 2017 2016 2015 2014 (in whole dollars) Malignant claims $ 55,300 $ 56,000 $ 44,000 $ 44,000 $ 53,500 Nonmalignant claims $ 4,700 $ 2,800 $ 4,485 $ 100 $ 120 |
Pension Benefits (Tables)
Pension Benefits (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Compensation And Retirement Disclosure [Abstract] | |
Summary of Net Periodic Benefit Cost | Net periodic benefit costs for our significant defined benefit plans include the following components: Three Months Ended September 30, Nine Months Ended September 30, U.S. Plans Non-U.S. Plan, U.S. Plans Non-U.S. Plan, 2019 2019 2018 (1) 2019 2019 2018 (1) Service cost $ — $ 1 $ 1 — $ 3 $ 2 Interest cost — — — 1 1 1 Expected return on plan assets (1 ) (1 ) (1 ) (2 ) (2 ) (2 ) Amortization of prior service (credit) — — — — — — $ (1 ) — — $ (1 ) $ 2 $ 1 (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. |
China Variable Interest Entity
China Variable Interest Entity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Schedule of Consolidated Assets and Liabilities | The following table summarizes the consolidated assets and liabilities of Garrett China: September 30, December 31, 2019 2018 (Dollars in millions) ASSETS Current assets: Cash and cash equivalents $ 88 $ 70 Accounts, notes and other receivables—net 236 224 Inventories—net 24 19 Other current assets 1 — Total current assets 349 313 Property, plant and equipment—net 73 67 Deferred income taxes 20 20 Other assets 2 1 Total assets $ 444 $ 401 LIABILITIES Current liabilities: Accounts payable $ 265 $ 261 Accrued liabilities 80 77 Total current liabilities 345 338 Other liabilities 10 13 Total liabilities $ 355 $ 351 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) shares in Millions | Oct. 01, 2018shares | Sep. 12, 2018USD ($) | Sep. 30, 2019 |
Indemnification and Reimbursement Agreement | |||
Basis Of Presentation [Line Items] | |||
Agreement termination date | Dec. 31, 2048 | ||
Agreement termination description | The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | |
Bendix | |||
Basis Of Presentation [Line Items] | |||
Percentage of asbestos and environmental liabilities liable to pay | 100.00% | 100.00% | |
Honeywell | |||
Basis Of Presentation [Line Items] | |||
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 | shares | 74 | ||
Honeywell | Indemnification and Reimbursement Agreement | |||
Basis Of Presentation [Line Items] | |||
Percentage of net insurance receipts | 90.00% | ||
Honeywell | Indemnification and Reimbursement Agreement | Maximum | |||
Basis Of Presentation [Line Items] | |||
Liability for asbestos and environmental claims maximum amount converted into euros | $ | $ 25,000,000 | ||
Honeywell | Bendix | Indemnification and Reimbursement Agreement | |||
Basis Of Presentation [Line Items] | |||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | ||
Garrett Motion Inc. | Honeywell | |||
Basis Of Presentation [Line Items] | |||
Pro rata distribution of outstanding shares, percentage | 100.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 |
Significant Accounting Policies [Line Items] | ||
Operating lease right-of-use assets | $ 36 | |
Operating lease, liabilities | $ 36 | |
ASU 2016-02 | ||
Significant Accounting Policies [Line Items] | ||
Operating lease right-of-use assets | $ 34 | |
Operating lease, liabilities | $ 34 |
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, 2018 | |
Notes Receivables | Maximum | ||
Related Party Transaction [Line Items] | ||
Interest income received for related party | $ 0 | $ 1 |
Notes Payable | ||
Related Party Transaction [Line Items] | ||
Interest expense incurred for related party | 0 | 1 |
Selling, General and Administrative Expenses | ||
Related Party Transaction [Line Items] | ||
General corporate expenses included within selling, general and administrative expenses | $ 26 | $ 87 |
Related Party Transactions wi_4
Related Party Transactions with Honeywell - Summary of Components of Net Transfers to and from Honeywell (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | |
Related Party Transaction [Line Items] | ||||
Total net decrease in Invested deficit | $ (1,576) | $ (672) | $ 1,080 | |
Honeywell International Inc | ||||
Related Party Transaction [Line Items] | ||||
General financing activities | 30 | $ 1,761 | ||
Distribution to Former Parent | (1,628) | (2,994) | ||
Unbilled corporate allocations | 15 | 41 | ||
Stock compensation expense and other compensation awards | 5 | 17 | ||
Pension expense | 2 | 7 | ||
Total net decrease in Invested deficit | $ (1,576) | $ (1,168) |
Revenue Recognition and Contr_3
Revenue Recognition and Contracts with Customers - Summary of Net Sales by Region and Channel (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 781 | $ 784 | $ 2,418 | $ 2,576 |
OEM | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 666 | 666 | 2,068 | 2,206 |
Aftermarket | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 97 | 98 | 295 | 304 |
Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 18 | 20 | 55 | 66 |
United States | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 119 | 129 | 376 | 393 |
United States | OEM | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 72 | 83 | 232 | 257 |
United States | Aftermarket | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 45 | 44 | 139 | 132 |
United States | Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 2 | 2 | 5 | 4 |
Europe | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 431 | 430 | 1,364 | 1,437 |
Europe | OEM | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 388 | 381 | 1,233 | 1,277 |
Europe | Aftermarket | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 34 | 37 | 102 | 118 |
Europe | Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 9 | 12 | 29 | 42 |
Asia | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 222 | 214 | 651 | 713 |
Asia | OEM | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 202 | 196 | 591 | 655 |
Asia | Aftermarket | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 13 | 12 | 39 | 38 |
Asia | Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 7 | 6 | 21 | 20 |
Other International | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 9 | 11 | 27 | 33 |
Other International | OEM | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 4 | 6 | 12 | 17 |
Other International | Aftermarket | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 5 | $ 5 | $ 15 | $ 16 |
Revenue Recognition and Contr_4
Revenue Recognition and Contracts with Customers - Summary of Contract Assets and Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Contract With Customer Asset And Liability [Abstract] | |
Contract assets—January 1 | $ 5 |
Contract assets—September 30 | 9 |
Change in contract assets—Increase/(Decrease) | 4 |
Contract liabilities—January 1 | (2) |
Contract liabilities—September 30 | (1) |
Change in contract liabilities—(Increase)/Decrease | $ 1 |
Research, Development & Engin_3
Research, Development & Engineering - Summary of Research, Development & Engineering Activities (Details) - Cost of Goods Sold - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Research And Development Arrangement Contract To Perform For Others [Line Items] | ||||
Research, development & engineering expense, total | $ 35 | $ 28 | $ 100 | $ 103 |
Research and Development Costs | ||||
Research And Development Arrangement Contract To Perform For Others [Line Items] | ||||
Research, development & engineering expense, total | 31 | $ 28 | 92 | 96 |
Engineering-Related Expenses | ||||
Research And Development Arrangement Contract To Perform For Others [Line Items] | ||||
Research, development & engineering expense, total | $ 4 | $ 8 | $ 7 |
Other Expense, Net - Schedule o
Other Expense, Net - Schedule of Other Operating Cost and Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other Income And Expenses [Abstract] | ||||
Indemnification related — post Spin-Off | $ 18 | $ 54 | ||
Asbestos related, net of probable insurance recoveries | $ 51 | $ 130 | ||
Environmental remediation, non-active sites | 2 | |||
Other operating income (expense), net | $ 18 | $ 51 | $ 54 | $ 132 |
Income Taxes - Tax Expense (Ben
Income Taxes - Tax Expense (Benefit) and Effective Tax Rate (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Tax expense (benefit) | $ 34 | $ (856) | $ 79 | $ (844) |
Effective tax rate | 47.00% | (1173.00%) | 31.00% | (288.00%) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate reduction in tax expense due to spin-off | $ 870 | $ 880 | ||
U.S. federal statutory income tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
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, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Trade receivables | $ 606 | $ 593 |
Notes receivables | 82 | 93 |
Other receivables | 68 | 67 |
Accounts, notes and other receivables, gross | 756 | 753 |
Less—Allowance for doubtful accounts | (5) | (3) |
Accounts, notes and other receivables, net | $ 751 | $ 750 |
Accounts, Notes and Other Rec_4
Accounts, Notes and Other Receivables Net - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Unbilled balances | $ 18 | $ 5 |
Unbilled contracts assets | $ 9 | $ 5 |
Inventories-Net - Summary of In
Inventories-Net - Summary of Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Combining Work In Process And Raw Materials Alternative Gross [Abstract] | ||
Raw materials | $ 125 | $ 112 |
Work in process | 21 | 19 |
Finished products | 69 | 64 |
Inventory, gross | 215 | 195 |
Less—Reserves | (22) | (23) |
Inventories | $ 193 | $ 172 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Other Assets [Line Items] | ||
Advanced discounts to customers, non-current | $ 55 | $ 56 |
Operating right-of-use assets (Note 13) | $ 36 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Other | $ 8 | $ 8 |
Total | 108 | 80 |
Undesignated as Hedging [Member] | Cross-currency Swap [Member] | ||
Other Assets [Line Items] | ||
Undesignated cross-currency swap at fair value | $ 9 | $ 16 |
Accrued Liabilities - Summary o
Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities Current [Abstract] | ||
Customer pricing reserve | $ 112 | $ 107 |
Compensation, benefit and other employee related | 58 | 71 |
Repositioning | 4 | 15 |
Product warranties and performance guarantees | 32 | 32 |
Taxes | 61 | 113 |
Advanced discounts from suppliers, current | 19 | 17 |
Customer advances and deferred income | 13 | 14 |
Accrued interest | 9 | 6 |
Short-term lease liability (Note 13) | 8 | |
Other (primarily operating expenses) | 50 | 51 |
Accrued Liabilities | $ 366 | $ 426 |
Accrued Liabilities - Summary_2
Accrued Liabilities - Summary of Accrued Liabilities (Parenthetical) (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities Current [Abstract] | ||
Contract liabilities | $ 1 | $ 2 |
Accrued Liabilities - Summary_3
Accrued Liabilities - Summary of Expenses Related to the Repositioning Accruals (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | $ 15 | $ 60 |
Charges | 3 | 2 |
Usage—cash | (9) | (43) |
Adjustments and reclassifications | (5) | |
Balance at end of period | 4 | 19 |
Severance Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 13 | 53 |
Charges | 3 | 2 |
Usage—cash | (7) | (39) |
Adjustments and reclassifications | (6) | |
Balance at end of period | 3 | 16 |
Exit Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 2 | 7 |
Usage—cash | (2) | (4) |
Adjustments and reclassifications | 1 | |
Balance at end of period | $ 1 | $ 3 |
Other Liabilities - Schedule of
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Pension and other employee related | $ 68 | $ 71 |
Advanced discounts from suppliers | 50 | 63 |
Uncertain tax positions | 67 | 59 |
Long-term lease liability (Note 13) | 28 | |
Other | 25 | 17 |
Other Liabilities | $ 238 | $ 210 |
Leases - Additional Information
Leases - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Lessee Lease Description [Line Items] | |
Operating lease, option to extend | true |
Operating lease, option to extend, description | some of which include options to extend the leases for up to two years |
Operating lease, option to terminate | true |
Operating lease, option to terminate, description | some of which include options to terminate the leases within the year |
Maximum | |
Lessee Lease Description [Line Items] | |
Operating lease, remaining lease terms | 11 years |
Operating lease, options to extend, years | 2 years |
Leases - Summary of Components
Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 4 | $ 10 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 3 | $ 9 |
Right-of-use assets obtained in exchange for lease obligations, operating leases | $ 2 | $ 10 |
Leases - Summary of Supplemen_2
Leases - Summary of Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Other assets | $ 36 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Accrued liabilities | $ 8 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | |
Other liabilities | $ 28 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | |
Weighted-average lease term (in years) | 6 years 3 months 21 days | |
Weighted-average discount rate | 6.37% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Millions | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 3 |
2020 | 9 |
2021 | 7 |
2022 | 6 |
2023 | 5 |
Thereafter | 14 |
Total lease payments | 44 |
Less imputed interest | (8) |
Operating lease, liabilities | $ 36 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Under Operating Leases in Accordance with ASC 840 (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 12 |
2020 | 8 |
2021 | 5 |
2022 | 4 |
2023 | 4 |
Thereafter | 15 |
Total | $ 48 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measures - Additional Information (Details) - USD ($) | Sep. 27, 2019 | May 23, 2019 | May 31, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||||||
Derivative, aggregate gross notional amount | $ 1,964,000,000 | $ 1,964,000,000 | $ 838,000,000 | |||
Cross-currency Swap Contract | ||||||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||||||
Floating cross-currency swap contract entered date | Sep. 27, 2018 | |||||
Floating cross-currency swap contract maturity date | Sep. 27, 2025 | |||||
Derivative cash settlement from counterparties | $ 19,000,000 | |||||
Cross-currency Swap Contract | Nonoperating Expense (Income) | ||||||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||||||
Gains on derivative instrument | $ 17,000,000 | $ 12,000,000 | ||||
Term Loan A [Member] | ||||||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||||||
Prepayment related to mandatory amortizations | $ 41,000,000 | $ 9,000,000 |
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, 2019 | Dec. 31, 2018 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | $ 1,964,000,000 | $ 838,000,000 |
Undesignated as Hedging [Member] | Cross-currency Swap [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Vale, Assets | 9,000,000 | 16,000,000 |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 1,964,000,000 | 838,000,000 |
Fair Vale, Assets | 30,000,000 | 20,000,000 |
Fair Value, Liabilities | 6,000,000 | 1,000,000 |
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 | 358,000,000 | |
Fair Vale, Assets | 11,000,000 | |
Fair Value, Liabilities | 1,000,000 | |
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 | 638,000,000 | 413,000,000 |
Fair Vale, Assets | 10,000,000 | 4,000,000 |
Fair Value, Liabilities | 3,000,000 | 1,000,000 |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Undesignated as Hedging [Member] | Cross-currency Swap [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 421,000,000 | 425,000,000 |
Fair Vale, Assets | 9,000,000 | $ 16,000,000 |
Fair Value Measurements Recurring [Member] | Significant Observable Inputs (Level 2) [Member] | Undesignated as Hedging [Member] | Interest Rate Swap [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 547,000,000 | |
Fair Value, Liabilities | $ 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, 2019USD ($) |
Carrying Value [Member] | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |
Long-term debt and related current maturities | $ 1,481 |
Fair Value [Member] | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |
Long-term debt and related current maturities | $ 1,492 |
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, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning balance | $ (2,417) | $ (2,452) | $ (2,593) | $ (1,808) | $ (1,241) | $ (2,195) | $ (2,593) | $ (2,195) |
Total other comprehensive (loss) income, net of tax | 110 | (35) | 63 | (1) | (45) | (184) | 138 | (230) |
Ending balance | (2,264) | (2,417) | (2,452) | (2,456) | (1,808) | (1,241) | (2,264) | (2,456) |
Foreign Exchange Translation Adjustment | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning balance | 86 | 284 | 86 | 284 | ||||
Other comprehensive income (loss) before reclassifications | 127 | (251) | ||||||
Total other comprehensive (loss) income, net of tax | 127 | (251) | ||||||
Ending balance | 213 | 33 | 213 | 33 | ||||
Changes in Fair Value of Effective Cash Flow Hedges | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning balance | (35) | (35) | ||||||
Other comprehensive income (loss) before reclassifications | 9 | 3 | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 1 | 21 | ||||||
Total other comprehensive (loss) income, net of tax | 10 | 24 | ||||||
Ending balance | 10 | (11) | 10 | (11) | ||||
Changes 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) | |||||||
Ending balance | (3) | (3) | ||||||
Pension Adjustments | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning balance | (13) | (11) | (13) | (11) | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | 1 | |||||||
Total other comprehensive (loss) income, net of tax | 1 | |||||||
Ending balance | (12) | (11) | (12) | (11) | ||||
Total Accumulated Other Comprehensive Income (Loss) | ||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||||||
Beginning balance | 101 | 136 | 73 | 9 | 54 | 238 | 73 | 238 |
Other comprehensive income (loss) before reclassifications | 136 | (251) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 2 | 21 | ||||||
Total other comprehensive (loss) income, net of tax | 110 | (35) | 63 | (1) | (45) | (184) | 138 | (230) |
Ending balance | $ 211 | $ 101 | $ 136 | $ 8 | $ 9 | $ 54 | $ 211 | $ 8 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Oct. 01, 2018 | |
Shares of common stock distributed | 74,892,306 | 74,892,306 | 74,070,852 | ||
Basic and diluted shares | 74,070,852 | ||||
Antidilutive shares excluded from computation of diluted EPS | 483,408 | 371,852 | |||
Honeywell | Exit Costs | |||||
Shares of common stock distributed | 74,070,852 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic | ||||||||
Net income | $ 38 | $ 66 | $ 73 | $ 929 | $ 150 | $ 58 | $ 177 | $ 1,137 |
Weighted average common shares outstanding – Basic | 74,753,593 | 74,070,852 | 74,528,740 | 74,070,852 | ||||
EPS – Basic | $ 0.51 | $ 12.54 | $ 2.37 | $ 15.35 | ||||
Diluted | ||||||||
Net income | $ 38 | $ 66 | $ 73 | $ 929 | $ 150 | $ 58 | $ 177 | $ 1,137 |
Weighted average common shares outstanding – Basic | 74,753,593 | 74,070,852 | 74,528,740 | 74,070,852 | ||||
Dilutive effect of unvested RSUs and other contingently issuable shares | 950,864 | 1,171,912 | ||||||
Weighted average common shares outstanding – Diluted | 75,704,457 | 74,070,852 | 75,700,652 | 74,070,852 | ||||
EPS – Diluted | $ 0.50 | $ 12.54 | $ 2.34 | $ 15.35 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | Apr. 01, 2019USD ($) | Oct. 01, 2018USD ($)Installment | Sep. 12, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) |
Indemnification and Reimbursement Agreement | |||||
Loss Contingencies [Line Items] | |||||
Loss contingency payable | $ 175 | ||||
Minimum amount agreed to maintain for termination | $ 25 | ||||
Agreement termination description | The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | The Indemnification and Reimbursement Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | |||
Honeywell | Tax Matters Agreement | |||||
Loss Contingencies [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% | ||||
Payment to Honeywell | $ 18 | ||||
Honeywell | Indemnification and Reimbursement Agreement | |||||
Loss Contingencies [Line Items] | |||||
Percentage of net insurance receipts | 90.00% | ||||
Payment made in connection with the Indemnification and Reimbursement Agreement | $ 37 | $ 113 | |||
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 $175 million in respect of such liabilities arising in any given calendar year. | ||||
Bendix | |||||
Loss Contingencies [Line Items] | |||||
Percentage of asbestos and environmental liabilities liable to pay | 100.00% | 100.00% | |||
Bendix | Honeywell | Indemnification and Reimbursement Agreement | |||||
Loss Contingencies [Line Items] | |||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Obligation Payable to Honeywell (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Loss Contingencies [Line Items] | ||
Current | $ 121 | $ 127 |
Non-current | 1,254 | $ 1,399 |
Honeywell | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 1,526 | |
Accrual for update to estimated liability | 3 | |
Legal fees expensed | 46 | |
Payments to Honeywell | (131) | |
Currency translation adjustment | (69) | |
End of period | 1,375 | |
Current | 121 | |
Non-current | 1,254 | |
Total | 1,375 | |
Honeywell | Asbestos and Environmental | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 1,244 | |
Legal fees expensed | 46 | |
Payments to Honeywell | (113) | |
Currency translation adjustment | (57) | |
End of period | 1,120 | |
Current | 103 | |
Non-current | 1,017 | |
Total | 1,120 | |
Honeywell | Tax Matters Agreement | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 282 | |
Accrual for update to estimated liability | 3 | |
Payments to Honeywell | (18) | |
Currency translation adjustment | (12) | |
End of period | 255 | |
Current | 18 | |
Non-current | 237 | |
Total | $ 255 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Asbestos Claims Activity (Details) - Bendix - Claim | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Claims Activity | ||
Claims Unresolved at the beginning of the period | 6,209 | 6,280 |
Claims Filed | 1,996 | 2,430 |
Claims Resolved | (1,744) | (2,501) |
Claims Unresolved at the end of the period | 6,461 | 6,209 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Asbestos Disease Distribution of Unresolved Claims (Details) - Bendix - Claim | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Disease Distribution of Unresolved Claims | |||
Mesothelioma and Other Cancer Claims | 3,323 | 2,949 | |
Nonmalignant Claims | 3,138 | 3,260 | |
Total Claims | 6,461 | 6,209 | 6,280 |
Commitments and Contingencies_5
Commitments and Contingencies - Summary of Average Resolutions Per Claim Excluding Legal Costs (Details) - $ / Claim | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments And Contingencies Disclosure [Abstract] | |||||
Malignant claims | 55,300 | 56,000 | 44,000 | 44,000 | 53,500 |
Nonmalignant claims | 4,700 | 2,800 | 4,485 | 100 | 120 |
Pension Benefits - Additional I
Pension Benefits - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Pension Benefits | Non-U.S. Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Expected pension contribution in the next fiscal year | $ 6 | ||
Pension contribution | $ 5 | ||
Shared Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Pension expense | $ 1 | $ 5 |
Pension Benefits - Summary of N
Pension Benefits - Summary of Net Periodic Benefit Cost (Details) - Pension Benefits - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | $ 1 | |||
Expected return on plan assets | $ (1) | (2) | ||
Net periodic benefit costs | (1) | (1) | ||
Non-U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | $ 1 | 3 | $ 2 |
Interest cost | 1 | 1 | ||
Expected return on plan assets | $ (1) | $ (1) | (2) | (2) |
Net periodic benefit costs | $ 2 | $ 1 |
China Variable Interest Entit_2
China Variable Interest Entity - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Variable Interest Entity [Line Items] | |||||
Net sales | $ 781 | $ 784 | $ 2,418 | $ 2,576 | |
Cost of goods sold | 609 | 606 | 1,868 | 1,972 | |
Selling, general and administrative expenses | 68 | 60 | 186 | 186 | |
Income tax expense | 34 | (856) | 79 | (844) | |
Garrett China | Variable Interest Entity, Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Variable interest ownership percentage | 100.00% | ||||
Equity interests in exchange for shares of common stock issued | 8,444,077 | ||||
Net sales | 123 | 105 | 352 | 361 | |
Cost of goods sold | 88 | 82 | 240 | 264 | |
Selling, general and administrative expenses | 2 | 5 | 8 | 15 | |
Income tax expense | $ 6 | $ 6 | $ 20 | $ 20 |
China Variable Interest Entit_3
China Variable Interest Entity - Schedule of Consolidated Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 190 | $ 196 |
Accounts, notes and other receivables—net | 751 | 750 |
Inventories—net | 193 | 172 |
Other current assets | 59 | 71 |
Property, plant and equipment—net | 430 | 438 |
Deferred income taxes | 181 | 165 |
Other assets | 108 | 80 |
Current liabilities: | ||
Accounts payable | 897 | 916 |
Accrued liabilities | 366 | 426 |
Other liabilities | 238 | 210 |
Variable Interest Entity, Primary Beneficiary | Garrett China | ||
Current assets: | ||
Cash and cash equivalents | 88 | 70 |
Accounts, notes and other receivables—net | 236 | 224 |
Inventories—net | 24 | 19 |
Other current assets | 1 | |
Total current assets | 349 | 313 |
Property, plant and equipment—net | 73 | 67 |
Deferred income taxes | 20 | 20 |
Other assets | 2 | 1 |
Total assets | 444 | 401 |
Current liabilities: | ||
Accounts payable | 265 | 261 |
Accrued liabilities | 80 | 77 |
Total current liabilities | 345 | 338 |
Other liabilities | 10 | 13 |
Total liabilities | $ 355 | $ 351 |