Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-12162 | |
Entity Registrant Name | BORGWARNER INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-3404508 | |
Entity Address, Address Line One | 3850 Hamlin Road, | |
Entity Address, City or Town | Auburn Hills, | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48326 | |
City Area Code | 248 | |
Local Phone Number | 754-9200 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 207,309,940 | |
Entity Central Index Key | 0000908255 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock, par value $0.01 per share [Member] | ||
Entity Information [Line Items] | ||
Title of each class | Common Stock, par value $0.01 per share | |
Trading Symbol | BWA | |
Security Exchange Name | NYSE | |
1.80% Senior Notes due 2022 [Member] | ||
Entity Information [Line Items] | ||
Title of each class | 1.80% Senior Notes due 2022 | |
Trading Symbol | BWA22 | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 901 | $ 832 |
Receivables, net | 1,735 | 1,921 |
Inventories, net | 847 | 807 |
Prepayments and other current assets | 258 | 276 |
Total current assets | 3,741 | 3,836 |
Property, plant and equipment, net | 2,839 | 2,925 |
Investments and other long-term receivables | 315 | 318 |
Goodwill | 1,818 | 1,842 |
Other intangible assets, net | 383 | 402 |
Other non-current assets | 406 | 379 |
Total assets | 9,502 | 9,702 |
LIABILITIES AND EQUITY | ||
Notes payable and other short-term debt | 286 | 286 |
Accounts payable and accrued expenses | 1,793 | 1,977 |
Income taxes payable | 45 | 66 |
Total current liabilities | 2,124 | 2,329 |
Long-term debt | 1,664 | 1,674 |
Other non-current liabilities: | ||
Retirement-related liabilities | 302 | 306 |
Other | 548 | 549 |
Total other non-current liabilities | 850 | 855 |
Common stock | 3 | 3 |
Capital in excess of par value | 1,109 | 1,145 |
Retained earnings | 6,036 | 5,942 |
Accumulated other comprehensive loss | (801) | (727) |
Common stock held in treasury, at cost | (1,623) | (1,657) |
Total BorgWarner Inc. stockholders’ equity | 4,724 | 4,706 |
Noncontrolling interest | 140 | 138 |
Total equity | 4,864 | 4,844 |
Total liabilities and equity | $ 9,502 | $ 9,702 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 2,279 | $ 2,566 |
Cost of sales | 1,832 | 2,047 |
Gross profit | 447 | 519 |
Selling, general and administrative expenses | 213 | 226 |
Other expense, net | 45 | 29 |
Operating income | 189 | 264 |
Equity in affiliates’ earnings, net of tax | (5) | (9) |
Interest income | (2) | (3) |
Interest expense | 12 | 14 |
Other postretirement income | (2) | 0 |
Earnings before income taxes and noncontrolling interest | 186 | 262 |
Provision for income taxes | 49 | 91 |
Net earnings | 137 | 171 |
Net earnings attributable to the noncontrolling interest, net of tax | 8 | 11 |
Net earnings attributable to BorgWarner Inc. | $ 129 | $ 160 |
Earnings per share — basic | $ 0.63 | $ 0.77 |
Earnings per share — diluted | $ 0.63 | $ 0.77 |
Weighted Average Number of Shares Outstanding [Abstract] | ||
Basic | 205.7 | 206.5 |
Diluted | 206.2 | 207.1 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Statement of Comprehensive Income [Abstract] | ||||
Net earnings attributable to BorgWarner Inc. | $ 129 | $ 160 | ||
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | (74) | [1] | (9) | |
Hedge instruments | (2) | [1] | 0 | |
Defined benefit postretirement plans | 2 | [1] | 8 | |
Total other comprehensive loss attributable to BorgWarner Inc. | (74) | (1) | ||
Comprehensive income attributable to BorgWarner Inc. | [1] | 55 | 159 | |
Net earnings attributable to the noncontrolling interest, net of tax | 8 | 11 | ||
Other comprehensive (loss) income attributable to the noncontrolling interest | [1] | (3) | 1 | |
Comprehensive income | $ 60 | $ 171 | ||
[1] | Net of income taxes. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
OPERATING | ||
Net earnings | $ 137 | $ 171 |
Adjustments to reconcile net earnings to net cash flows from operations: | ||
Depreciation and amortization | 112 | 107 |
Stock-based compensation expense | 10 | 8 |
Asset Impairment Charges | 9 | 0 |
Restructuring expense, net of cash paid | 2 | 7 |
Deferred income tax provision (benefit) | (5) | (2) |
Tax Reform Adjustments to Provision for Income Taxes | 0 | 22 |
Equity in affiliates’ earnings, net of dividends received, and other | (4) | 6 |
Net earnings adjusted for non-cash charges to operations | 261 | 319 |
Changes in assets and liabilities: | ||
Receivables | 152 | (95) |
Inventories | (58) | (31) |
Prepayments and other current assets | (8) | (23) |
Accounts payable and accrued expenses | (96) | (120) |
Prepaid taxes and income taxes payable | 8 | (12) |
Other assets and liabilities | 4 | 2 |
Net cash provided by operating activities | 263 | 40 |
INVESTING | ||
Capital expenditures, including tooling outlays | (117) | (117) |
Payments for business acquired | (2) | (10) |
Payments for (Proceeds from) Hedge, Investing Activities | 1 | 0 |
Proceeds from sale of business, net of cash divested | 0 | 23 |
Payments for investments in equity securities | 0 | (1) |
Proceeds from asset disposals and other, net | (2) | 1 |
Net cash used in investing activities | (120) | (104) |
FINANCING | ||
Additions to long-term debt, net of debt issuance costs | 13 | 11 |
Repayments of debt, including current portion | (14) | (26) |
Payments for purchase of treasury stock | 0 | (67) |
Payments for stock-based compensation items | (12) | (14) |
Dividends paid to BorgWarner stockholders | (35) | (35) |
Dividends paid to noncontrolling stockholders | (14) | (22) |
Net cash used in financing activities | (62) | (153) |
Effect of exchange rate changes on cash | (12) | (5) |
Net increase (decrease) in cash | 69 | (222) |
Cash and restricted cash at beginning of year | 832 | 739 |
Cash and restricted cash at end of period | 901 | 517 |
Cash paid during the period for: | ||
Interest | 29 | 26 |
Income taxes, net of refunds | $ 43 | $ 68 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of BorgWarner Inc. and Consolidated Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flow activity required by GAAP for complete financial statements. In the opinion of management, all normal recurring adjustments necessary for a fair statement of results have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 . The balance sheet as of December 31, 2019 was derived from the audited financial statements as of that date. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 . Certain prior period amounts have been reclassified to conform to current period presentation. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and accompanying notes, as well as the amounts of revenues and expenses reported during the periods covered by those financial statements and accompanying notes. Actual results could differ from these estimates. A novel strain of COVID-19/coronavirus was first identified in Wuhan, China in December 2019 and subsequently declared a pandemic by the World Health Organization on March 11, 2020. To date, COVID-19/coronavirus has surfaced in nearly all regions around the world and resulted in travel restrictions, closing of borders and business slowdowns or shutdowns in affected areas. As a result, COVID-19/coronavirus has impacted the Company's business globally. Many OEMs have announced that they have suspended manufacturing operations, particularly in North America and Europe, on a temporary basis due to market conditions and matters associated with COVID-19/coronavirus. Additionally, as a global manufacturer, the Company is responding to shelter-in-place and similar government orders in various locations around the world, including throughout the United States and Europe, resulting in the temporary closures of the Company's manufacturing and assembly facilities. The Company assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, its allowance for credit losses, the carrying value of the Company's goodwill, intangible assets, and other long-lived assets, and valuation allowances in context with the information reasonably available to the Company and the unknown future impacts of COVID-19/coronavirus as of March 31, 2020 and through the date of this report. As a result of these assessments, there were no impairments or material increases in credit allowances or valuation allowances that impacted the Company's Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2020. However, the Company's future assessment of the magnitude and duration of COVID-19/coronavirus, as well as other factors, could result in material impacts to the Consolidated Financial Statements in future reporting periods. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Standards In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-4, "Reference Rate Reform (Topic 848)." It provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. These optional expedients and exceptions allow a company to choose not to apply certain modification accounting requirements under GAAP to contracts affected by reference rate reform. A company that makes this election would present and account for a modified contract as a continuation of the existing contract. It also enables a company to continue to apply hedge accounting for hedging relationships in which the critical terms change due to rate reform. This guidance was effective March 12, 2020 and provides relief to contract modifications through December 31, 2022. The Company adopted this guidance on March 12, 2020, and there was no impact to the Condensed Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)." It requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement under the internal-use software guidance (Subtopic 350-40). This guidance was effective for interim and annual periods beginning after December 15, 2019. The Company adopted this guidance as of January 1, 2020, and the impact on its Condensed Consolidated Financial Statements was immaterial. In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820) ." It removes disclosure requirements on fair value measurements including the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. It also amends and clarifies certain disclosures and adds new disclosure requirements including the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This guidance was effective for interim and annual periods beginning after December 15, 2019. The Company adopted this guidance as of January 1, 2020, and there was no impact to the Condensed Consolidated Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326)." It replaces the current incurred loss impairment method with a new method that reflects expected credit losses. Under this new model an entity would recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost. This guidance was effective for annual periods beginning after December 15, 2019. The Company adopted this guidance as of January 1, 2020, and the impact on its Condensed Consolidated Financial Statements was immaterial. Accounting Standards Not Yet Adopted In January 2020, the FASB issued ASU No. 2020-1, " Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) ." It clarifies the interaction between the accounting for equity securities, equity method investments, and certain derivative instruments. Specifically, for the purposes of applying the ASC Topic 321 measurement alternative, a company should consider observable transactions immediately before applying or upon discontinuing the equity method. Additionally, when determining the accounting for certain forward contracts and purchased options entered into to purchase securities, a company should not consider if the underlying securities would be accounted for under the equity method (ASC Topic 323) or fair value option (ASC Topic 825). This guidance is effective for interim and annual periods beginning after December 15, 2020, and early adoption is permitted. The Company is still evaluating the impact of this guidance on its Condensed Consolidated Financial Statements. In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." It removes certain exceptions to the general principles in Accounting Standards Codification ("ASC") Topic 740 and improve consistent application of and simplify GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2020. The Company is currently evaluating the impact of this guidance on its Condensed Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)." It (i) requires the removal of disclosures that are no longer considered cost beneficial; (ii) clarifies specific requirements of certain disclosures; and (iii) adds new disclosure requirements, including the weighted average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and reasons for significant gains and losses related to changes in the benefit obligation. This guidance is effective for annual periods beginning after December 15, 2020, and early adoption is permitted. The Company does not expect this guidance to have a material impact and it will include enhanced disclosures in the Consolidated Financial Statements upon adoption. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer | Revenue from Contracts with Customers The Company manufactures and sells products, primarily to OEMs of light vehicles and, to a lesser extent, to other OEMs of commercial vehicles, off-highway vehicles, certain tier one vehicle systems suppliers and into the aftermarket. Although the Company may enter into long-term supply arrangements with its major customers, the prices and volumes are not fixed over the life of the arrangements, and a contract does not exist for purposes of applying ASC Topic 606, " Revenue from Contracts with Customers" , until volumes are contractually known. Revenue is recognized when performance obligations under the terms of a contract are satisfied, which generally occurs with the transfer of control of the Company's products. For most of the Company's products, transfer of control occurs upon shipment or delivery; however, a limited number of the Company's customer arrangements for highly customized products with no alternative use provide the Company with the right to payment during the production process. As a result, for these limited arrangements, revenue is recognized as goods are produced and control transfers to the customer using the input cost-to-cost method. The Company recorded a contract asset of $9 million and $10 million at March 31, 2020 and December 31, 2019 , respectively, for these arrangements. These amounts are reflected in Prepayments and other current assets in the Company's Condensed Consolidated Balance Sheets. Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring the goods. The Company has a limited number of arrangements with customers where the price paid by the customer is dependent on the volume of product purchased over the term of the arrangement. In other limited arrangements, the Company will provide a rebate to customers based on the volume of products purchased during the course of the arrangement. The Company estimates the volumes to be sold over the term of the arrangement and recognizes revenue based on the estimated amount of consideration to be received from these arrangements. The Company’s payment terms with customers are customary and vary by customer and geography but typically range from 30 to 90 days . The Company has evaluated the terms of its arrangements and determined that they do not contain significant financing components. The Company provides warranties on some of its products. Provisions for estimated expenses related to product warranty are made at the time products are sold. Refer to Note 9, "Product Warranty," to the Condensed Consolidated Financial Statements for more information. Shipping and handling fees billed to customers are included in sales, while costs of shipping and handling are included in cost of sales. The Company has elected to apply the accounting policy election available under ASC Topic 606 and accounts for shipping and handling activities as a fulfillment cost. In limited instances, certain customers have provided payments in advance of receiving related products, typically at the onset of an arrangement prior to the beginning of production. These contract liabilities are reflected as Accounts payable and accrued expenses and Other non-current liabilities in the Condensed Consolidated Balance Sheets and were $13 million and $9 million at March 31, 2020 and $10 million and $12 million at December 31, 2019 , respectively. These amounts are reflected as revenue over the term of the arrangement (typically 3 to 7 years) as the underlying products are shipped. The Company continually seeks business development opportunities and at times provides customer incentives for new program awards. The Company evaluates the underlying economics of each amount of consideration payable to a customer to determine the proper accounting by understanding the reasons for the payment, the rights and obligations resulting from the payment, the nature of the promise in the contract, and other relevant facts and circumstances. When the Company determines that the payments are incremental and incurred only if the new business is obtained and expects to recover these amounts from the customer over the term of the new business arrangement, the Company capitalizes these amounts. The Company recognizes a reduction to revenue, when the products that the upfront payments are related to, are transferred to the customer based on the total amount of products expected to be sold over the term of the arrangement (generally 3 to 7 years). The Company evaluates the amounts capitalized each period end for recoverability and expenses any amounts that are no longer expected to be recovered over the term of the business arrangement. The Company had $38 million and $37 million recorded in Prepayments and other current assets in the Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 , respectively. The Company had $171 million and $180 million recorded in Other non-current assets in the Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 , respectively. The Company's business is comprised of two reporting segments: Engine and Drivetrain. Refer to Note 20, "Reporting Segments," to the Condensed Consolidated Financial Statements for more information. The following table represents a disaggregation of revenue from contracts with customers by segment and region: Three Months Ended March 31, 2020 2019 (In millions) Engine Drivetrain Total Engine Drivetrain Total North America $ 387 $ 423 $ 810 $ 412 $ 445 $ 857 Europe 711 191 902 801 227 1,028 Asia 291 242 533 340 303 643 Other 30 4 34 31 7 38 Total $ 1,419 $ 860 $ 2,279 $ 1,584 $ 982 $ 2,566 |
Research and Development Expend
Research and Development Expenditures | 3 Months Ended |
Mar. 31, 2020 | |
Research and Development [Abstract] | |
Research and Development Expenditures | Research and Development Expenditures The Company's net Research & Development ("R&D") expenditures are included in Selling, general and administrative expenses of the Condensed Consolidated Statements of Operations. Customer reimbursements are netted against gross R&D expenditures as they are considered a recovery of cost. Customer reimbursements for prototypes are recorded net of prototype costs based on customer contracts, typically either when the prototype is shipped or when it is accepted by the customer. Customer reimbursements for engineering services are recorded when performance obligations are satisfied in accordance with the contract. Financial risks and rewards transfer upon shipment, acceptance of a prototype component by the customer or upon completion of the performance obligation, as stated in the respective customer agreement. The following table presents the Company’s gross and net expenditures on R&D activities: Three Months Ended March 31, (in millions) 2020 2019 Gross R&D expenditures $ 118 $ 121 Customer reimbursements (9 ) (17 ) Net R&D expenditures $ 109 $ 104 The Company has contracts with several customers at the Company's various R&D locations. None of the Company's R&D-related customer reimbursements under these contracts exceeded 5% of net R&D expenditures in any of the periods presented. |
Other Expense, Net
Other Expense, Net | 3 Months Ended |
Mar. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Other Expense, net | Other Expense, Net Items included in Other expense, net consist of: Three Months Ended March 31, (in millions) 2020 2019 Merger, acquisition and divestiture expense $ 21 $ 1 Restructuring expense 15 14 Asset impairment 9 — Unfavorable arbitration loss — 14 Other expense, net $ 45 $ 29 During the three months ended March 31, 2020 and 2019 , the Company recorded $21 million and $1 million , respectively, of merger, acquisition and divestiture expense, primarily related to professional fees. The expense for 2020 primarily related to the Company's anticipated acquisition of Delphi Technologies PLC and the expense for 2019 primarily related to divestiture activities for non-core pipe and thermostat product lines. During th e three months ended March 31, 2020 , the Company recorded restructuring expense of $15 million , primarily related to actions to reduce structural costs. During th e three months ended March 31, 2019 , the Compa ny recorded restructuring expense of $14 million . This restructuring expense primarily related to Drivetrain and Engine segment actions designed to improve future profitability and competitiveness. Refer to Note 18, "Restructuring," to the Condensed Consolidated Financial Statements for more information. During the three months ended March 31, 2020 , the Company recorded a $9 million asset impairment cost to record its investment in Romeo Systems, Inc. ("Romeo") at its fair value of $41 million at March 31, 2020. Refer to Note 21, "Recent Transactions and Events," to the Condensed Consolidated Financial Statements for more information. During the three months ended March 31, 2019 , the Company recorded $14 million of expense related to the receipt of a final unfavorable arbitration decision associated with the resolution of a matter related to a previous acquisition. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's provision for income taxes is based upon an estimated annual tax rate for the year applied to federal, state and foreign income. On a quarterly basis, the annual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. The Company's effective tax rate for the three months ended March 31, 2020 was 26% . This rate includes reductions in income tax expense of $4 million related to restructuring expense and $12 million for other one-time adjustments. The other one-time adjustments primarily relate to tax law changes in India that were enacted during the quarter and the release of certain unrecognized tax benefits due to the closure of an audit. The Company's effective tax rate for the three months ended March 31, 2019 was 34.7% . This rate includes reductions of income tax expense of $3 million related to restructuring expense and $5 million for other one-time tax adjustments. This rate also includes an increase in income tax expense of $22 million due to the U.S. Department of the Treasury's issuance of the final regulations in the first quarter of 2019 related to the calculation of the one-time transition tax associated with the Tax Cuts and Jobs Act of 2017. The annual effective tax rates differ from the U.S. statutory rate primarily due to foreign rates which differ from those in the U.S., U.S. taxes on foreign earnings, the realization of certain business tax credits, including foreign tax credits, and favorable permanent differences between book and tax treatment for certain items, including equity in affiliates' earnings. |
Inventories, net
Inventories, net | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Inventories, Net Certain U.S. inventories are measured by the last-in, first-out (“LIFO”) method at the lower of cost or market, while other U.S. and foreign operations use the first-in, first-out (“FIFO”) or average-cost methods at the lower of cost and net realizable value. Inventories, net consisted of the following: March 31, December 31, (in millions) 2020 2019 Raw material and supplies $ 536 $ 502 Work in progress 114 113 Finished goods 211 207 FIFO inventories 861 822 LIFO reserve (14 ) (15 ) Inventories, net $ 847 $ 807 |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, net | Property, Plant and Equipment, Net March 31, December 31, (in millions) 2020 2019 Land, land use rights and buildings $ 869 $ 860 Machinery and equipment 3,056 2,971 Construction in progress 334 360 Finance lease assets — 1 Total property, plant and equipment, gross 4,259 4,192 Less: accumulated depreciation (1,657 ) (1,513 ) Property, plant and equipment, net, excluding tooling 2,602 2,679 Tooling, net of amortization 237 246 Property, plant and equipment, net $ 2,839 $ 2,925 As of March 31, 2020 and December 31, 2019 , accounts payable of $55 million and $102 million , respectively, were related to property, plant and equipment purchases. Interest costs capitalized for the three months ended March 31, 2020 and 2019 were $4 million and $5 million , respectively. |
Product Warranty
Product Warranty | 3 Months Ended |
Mar. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Product Warranty | Product Warranty The Company provides warranties on some, but not all, of its products. The warranty terms are typically from one to three years. Provisions for estimated expenses related to product warranty are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and industry developments and recoveries from third parties. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty claims. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual. The following table summarizes the activity in the product warranty accrual accounts: (in millions) 2020 2019 Beginning balance, January 1 $ 116 $ 103 Provisions for current period sales 15 15 Adjustments of prior estimates 5 7 Payments (18 ) (18 ) Translation adjustment (2 ) — Ending balance, March 31 $ 116 $ 107 The product warranty liability is classified in the Condensed Consolidated Balance Sheets as follows: March 31, December 31, (in millions) 2020 2019 Accounts payable and accrued expenses $ 64 $ 63 Other non-current liabilities 52 53 Total product warranty liability $ 116 $ 116 |
Notes Payable and Long-Term Deb
Notes Payable and Long-Term Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable and Long-Term Debt | Notes Payable and Long-Term Debt As of March 31, 2020 and December 31, 2019 , the Company had short-term and long-term debt outstanding as follows: March 31, December 31, (in millions) 2020 2019 Short-term debt Short-term borrowings $ 34 $ 34 Long-term debt 4.625% Senior notes due 09/15/20 ($250 million par value) 251 251 1.80% Senior notes due 11/7/22 (€500 million par value) 549 558 3.375% Senior notes due 03/15/25 ($500 million par value) 497 497 7.125% Senior notes due 02/15/29 ($121 million par value) 119 119 4.375% Senior notes due 03/15/45 ($500 million par value) 494 494 Term loan facilities and other 6 7 Total long-term debt 1,916 1,926 Less: current portion 252 252 Long-term debt, net of current portion $ 1,664 $ 1,674 The Company may utilize uncommitted lines of credit for short-term working capital requirements. As of March 31, 2020 and December 31, 2019 , the Company had $34 million in borrowings under these facilities, which are classified in Notes payable and short-term debt on the Condensed Consolidated Balance Sheets. The weighted average interest rate on short-term borrowings outstanding as of March 31, 2020 and December 31, 2019 was 2.3% and 2.5% , respectively. The weighted average interest rate on all borrowings outstanding, including the effects of outstanding swaps, as of March 31, 2020 and December 31, 2019 was 2.8% . On March 13, 2020, the Company amended its multi-currency revolving credit facility by increasing the size of the facility from $1.2 billion to $1.5 billion and by extending the maturity until March 13, 2025. The multi-currency revolving credit agreement provides for the facility to automatically increase to $2.0 billion upon the closing of the anticipated acquisition of Delphi Technologies PLC. Additionally, the agreement allows the Company the ability to increase the facility by $1.0 billion with bank group approval. The credit agreement contains customary events of default and one key financial covenant which is a debt to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") ratio. The Company was in compliance with the financial covenant at March 31, 2020 . At March 31, 2020 and December 31, 2019 , the Company had no outstanding borrowings under this facility. The Company's commercial paper program allows the Company to issue short-term, unsecured commercial paper notes up to a maximum aggregate principal amount outstanding, which increased from $1.2 billion to $1.5 billion effective March 13, 2020. Under this program, the Company may issue notes from time to time and use the proceeds for general corporate purposes. The Company had no outstanding borrowings under this program as of March 31, 2020 and December 31, 2019. The total current combined borrowing capacity under the multi-currency revolving credit facility and commercial paper program cannot exceed $1.5 billion . As of March 31, 2020 and December 31, 2019 , the estimated fair values of the Company’s senior unsecured notes totaled $1,945 million and $2,025 million , respectively. The estimated fair values were $35 million higher than their carrying value at March 31, 2020 and $106 million higher than their carrying value at December 31, 2019 . Fair market values of the senior unsecured notes are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The carrying values of the Company's multi-currency revolving credit facility and commercial paper program approximates fair value. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets. The Company had outstanding letters of credit of $28 million at March 31, 2020 and December 31, 2019 . The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques noted in ASC Topic 820: A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business. B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models). The following tables classify assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 : Basis of fair value measurements (in millions) Balance at Quoted prices in active markets for identical items (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Valuation technique Assets: Foreign currency contracts $ 3 $ — $ 3 $ — A Interest rate swaption contracts $ 1 $ — $ 1 $ — A Net investment hedge contracts $ 30 $ — $ 30 $ — A Liabilities: Foreign currency contracts $ 4 $ — $ 4 $ — A Basis of fair value measurements (in millions) Balance at Quoted prices in active markets for identical items (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Valuation technique Assets: Net investment hedge contracts $ 3 $ — $ 3 $ — A Liabilities: Foreign currency contracts $ 1 $ — $ 1 $ — A Net investment hedge contracts $ 8 $ — $ 8 $ — A |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial Instruments The Company’s financial instruments include cash and cash equivalents, marketable securities and accounts receivable. Due to the short-term nature of these instruments, their book value approximates their fair value. The Company’s financial instruments may include long-term debt, interest rate and cross-currency swaps and options, commodity derivative contracts and foreign currency derivative contracts. All derivative contracts are placed with counterparties that have an S&P, or equivalent, investment grade credit rating at the time of the contracts’ placement. At March 31, 2020 and December 31, 2019 , the Company had no derivative contracts that contained credit risk related contingent features. The Company uses certain commodity derivative contracts to protect against commodity price changes related to forecasted raw material and component purchases. The Company primarily utilizes forward and option contracts, which are designated as cash flow hedges. At March 31, 2020 and December 31, 2019 , the following commodity derivative contracts were outstanding: Commodity derivative contracts Commodity Volume hedged March 31, 2020 Volume hedged December 31, 2019 Units of measure Duration Copper 148 203 Metric Tons Dec - 20 The Company manages its interest rate risk by balancing its exposure to fixed and variable rates while attempting to optimize its interest costs. The Company selectively uses interest rate swaps and options to reduce market value risk associated with changes in interest rates (fair value hedges and cash flow hedges). At December 31, 2019 , the Company had no outstanding interest rate swaps. On February 19, 2020, the Company executed a €750 million notional interest rate swaption contract expiring June 30, 2020, and designated this contract as a cash flow hedge, to mitigate against interest rate fluctuations on anticipated debt issuance. The premium cost for this contract is immaterial. For the three months ended March 31, 2020 , the Company recorded a deferred gain of $1 million in accumulated other comprehensive income (loss) ("AOCI") related to this swaption. The Company uses foreign currency forward and option contracts to protect against exchange rate movements for forecasted cash flows, including capital expenditures, purchases, operating expenses or sales transactions designated in currencies other than the functional currency of the operating unit. In addition, the Company uses foreign currency forward contracts to hedge exposure associated with its net investment in certain foreign operations (net investment hedges). The Company has also designated its Euro-denominated debt as a net investment hedge of the Company's investment in European subsidiaries. Foreign currency derivative contracts require the Company, at a future date, to either buy or sell foreign currency in exchange for the operating units’ local currency. At March 31, 2020 and December 31, 2019 , the following foreign currency derivative contracts were outstanding: Foreign currency derivatives (in millions) Functional currency Traded currency Notional in traded currency Notional in traded currency Ending Duration Brazilian real Euro — 1 Mar - 20 British pound Euro — 9 Mar - 20 British pound US dollar — 4 Mar - 20 Chinese renminbi US dollar 5 2 Dec - 20 Euro British pound 2 — Jan - 21 Euro Chinese renminbi 22 — Oct - 20 Euro Japanese yen 290 383 Dec - 20 Euro Polish zloty 165 — Dec - 20 Euro US dollar 11 18 Dec - 20 Indian rupee Japanese yen 78 — Jul - 20 Indian rupee US dollar 3 — May - 20 Japanese yen Chinese renminbi 26 — Jul - 20 Japanese yen Korean won 3,705 — Dec - 20 Japanese yen US dollar 1 — Jul - 20 Korean won Euro 10 13 Dec - 20 Korean won Japanese yen 530 409 Dec - 20 Korean won US dollar 38 4 Dec - 20 Swedish krona Euro — 3 Jan - 20 US dollar Euro 2 14 Dec - 20 US dollar Mexican peso 380 — Mar - 21 The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated with its net investment in certain foreign operations (net investment hedges). At March 31, 2020 and December 31, 2019 , the following cross-currency swap contracts were outstanding: Cross-Currency Swaps (in millions) Notional in USD Notional in Local Currency Duration Fixed $ to fixed € $ 500 € 450 Mar - 25 Fixed $ to fixed ¥ $ 100 ¥ 10,978 Feb - 23 At March 31, 2020 and December 31, 2019 , the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815: (in millions) Assets Liabilities Derivatives designated as hedging instruments Under 815: Location March 31, 2020 December 31, 2019 Location March 31, 2020 December 31, 2019 Foreign currency Prepayments and other current assets $ 2 $ — Accounts payable and accrued expenses $ 4 $ 1 Net investment hedges Other non-current assets $ 30 $ 3 Other non-current liabilities $ — $ 8 Commodity Prepayments and other current assets $ — $ — Accounts payable and accrued expenses $ — $ — Swaption Prepayments and other current assets $ 1 $ — Accounts payable and accrued expenses $ — $ — Derivatives not designated as hedging instruments Foreign currency Prepayments and other current assets $ 1 $ — Accounts payable and accrued expenses $ — $ — Effectiveness for cash flow hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. Gains and losses arising from these contracts that are included in the assessment of effectiveness are deferred into AOCI and reclassified into income as the underlying operating transactions are recognized. These realized gains or losses offset the hedged transaction and are recorded on the same line in the statement of operations. The initial value of any component excluded from the assessment of effectiveness will be recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in income under that systematic and rational method will be recognized in AOCI. Effectiveness for net investment hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. Gains and losses arising from these contracts that are included in the assessment of effectiveness are deferred into foreign currency translation adjustments and only released when the subsidiary being hedged is sold or substantially liquidated. The initial value of any component excluded from the assessment of effectiveness will be recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in income under that systematic and rational method will be recognized in AOCI. The table below shows deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less. The amount expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at March 31, 2020 market rates. (in millions) Deferred gain (loss) in AOCI at Gain (loss) expected to be reclassified to income in one year or less Contract Type March 31, 2020 December 31, 2019 Foreign currency $ (3 ) $ — $ (3 ) Interest rate swaption 1 — — Net investment hedges: Foreign currency 6 5 — Cross-currency swaps 51 16 — Foreign currency denominated debt (9 ) (17 ) — Total $ 46 $ 4 $ (3 ) Derivative instruments designated as cash flow hedge instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income: Three Months Ended March 31, 2020 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income(loss) Total amounts of earnings and other comprehensive income(loss) line items in which the effects of cash flow hedges are recorded $ 2,279 $ 1,832 $ 213 $ (74 ) Gain (loss) on cash flow hedging relationships: Foreign currency Gain (loss) recognized in other comprehensive income $ (3 ) Gain (loss) reclassified from AOCI to income $ — $ — $ — Three Months Ended March 31, 2019 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income(loss) Total amounts of earnings and other comprehensive income(loss) line items in which the effects of cash flow hedges are recorded $ 2,566 $ 2,047 $ 226 $ (1 ) Gain (loss) on cash flow hedging relationships: Foreign currency Gain (loss) recognized in other comprehensive income $ — Gain (loss) reclassified from AOCI to income $ (1 ) $ — $ 1 $ — The gains or losses recorded in income related to components excluded from the assessment of effectiveness for derivative instruments designated as cash flow hedges were immaterial for the periods presented. Gains and (losses) on derivative instruments designated as net investment hedges were recognized in other comprehensive income during the periods presented below. (in millions) Three Months Ended March 31, Net investment hedges 2020 2019 Foreign currency $ 1 $ — Cross-currency swaps $ 35 $ 9 Foreign currency denominated debt $ 8 $ 12 Derivatives designated as net investment hedge instruments as defined by ASC Topic 815 held during the period resulted in the following gains recorded in Interest expense and finance charges on components excluded from the assessment of effectiveness: (in millions) Three Months Ended March 31, Net investment hedges 2020 2019 Cross-currency swaps $ 4 $ 3 There were no gains or losses recorded in income related to components excluded from the assessment of effectiveness for foreign currency denominated debt designated as net investment hedges. There were no gains and losses reclassified from AOCI for net investment hedges during the periods presented. Derivatives not designated as hedging instruments are used to hedge remeasurement exposures of monetary assets and liabilities denominated in currencies other than the operating units' functional currency. These derivatives resulted in the following gains and (losses) recorded in income: (in millions) Three Months Ended March 31, Contract Type Location 2020 2019 Foreign Currency Selling, general and administrative expenses $ 3 $ (2 ) |
Retirement Benefit Plans
Retirement Benefit Plans | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Retirement Benefit Plans | Retirement Benefit Plans The Company has a number of defined benefit pension plans and other postretirement benefit plans covering eligible salaried and hourly employees and their dependents. The estimated contributions to the Company's defined benefit pension plans for 2020 range from $10 million to $20 million , of which $5 million has been contributed through the first three months of the year. The other postretirement benefit plans, which provide medical and life insurance benefits, are unfunded plans. The components of net periodic benefit cost recorded in the Condensed Consolidated Statements of Operations are as follows: Pension benefits Other postretirement employee benefits (in millions) 2020 2019 Three Months Ended March 31, US Non-US US Non-US 2020 2019 Service cost $ — $ 5 $ — $ 5 $ — $ — Interest cost 1 2 2 3 1 1 Expected return on plan assets (3 ) (6 ) (3 ) (5 ) — — Amortization of unrecognized prior service credit — — — — (1 ) (1 ) Amortization of unrecognized loss 1 3 1 2 — — Net periodic benefit (income) cost $ (1 ) $ 4 $ — $ 5 $ — $ — The components of net periodic benefit cost other than the service cost component are included in Other postretirement income in the Condensed Consolidated Statements of Operations. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company has granted restricted common stock and restricted stock units (collectively, "restricted stock") and performance share units as long-term incentive awards to employees and non-employee directors under the BorgWarner Inc. 2014 Stock Incentive Plan, as amended ("2014 Plan") and the BorgWarner Inc. 2018 Stock Incentive Plan ("2018 Plan"). The Company's Board of Directors adopted the 2018 Plan as a replacement to the 2014 Plan in February 2018, and the Company's stockholders approved the 2018 Plan at the annual meeting of stockholders on April 25, 2018. After stockholders approved the 2018 Plan, the Company could no longer make grants under the 2014 Plan. The shares that were available for issuance under the 2014 Plan were cancelled upon approval of the 2018 Plan. The 2018 Plan authorizes the issuance of a total of 7 million shares, of which approximately 5 million shares were available for future issuance as of March 31, 2020 . Restricted stock In the first three months of 2020 , the Company granted restricted stock in the amount of 766,205 shares to employees. Restricted stock granted to employees generally vests 50% after two years and the remainder after three years . The Company recognizes the value of the restricted stock, which is equal to the market value of the Company’s common stock on the date of grant, as compensation expense ratably over the restricted stock's vesting period. As of March 31, 2020 , the Company had $51 million of unrecognized compensation expense that will be recognized over a weighted average period of 2 years. The Company recorded restricted stock compensation expense of $7 million for the three months ended March 31, 2020 and 2019 . A summary of the Company’s nonvested restricted stock for the three months ended March 31, 2020 is as follows: Shares subject to restriction (thousands) Weighted average grant date fair value Nonvested at December 31, 2019 1,664 $ 44.26 Granted 766 $ 34.05 Vested (466 ) $ 46.00 Forfeited (9 ) $ 42.23 Nonvested at March 31, 2020 1,955 $ 39.87 Performance share units The Company grants performance share units to members of senior management that vest at the end of three-year periods based the following metrics: • Total Stockholder Return Units: based on the Company's total stockholder return relative to a peer group of companies. • Relative Revenue Growth Units: based on the Company's revenue growth relative to the vehicle market. • Adjusted Earnings Per Share Units: introduced in the first quarter of 2020, this performance metric is based on the Company’s earnings per share adjusted for certain one-time items and non-operating gains and losses against a 3-year defined target. A summary of the status of the Company’s nonvested performance share units for the three months ended March 31, 2020 is as follows: Total Stockholder Return Relative Revenue Growth Adjusted Earnings Per Share Number of shares (thousands) Weighted average grant date fair value Number of shares (thousands) Weighted average grant date fair value Number of shares (thousands) Weighted average grant date fair value Nonvested at December 31, 2019 240 $ 64.61 240 $ 48.52 — $ — Granted 142 $ 28.55 142 $ 34.11 115 $ 34.11 Vested — $ — — $ — — $ — Forfeited — $ — — $ — — $ — Nonvested at March 31, 2020 382 $ 48.02 382 $ 41.54 115 $ 34.11 The Company recorded compensation expense (reductions) for performance share units in the periods presented below: Three Months Ended March 31, (in millions) 2020 2019 Total Stockholder Return $ 1 $ 3 Relative Revenue Growth 2 (1 ) Total compensation expense (reduction) $ 3 $ 2 In 2018, the Company modified the vesting provisions of restricted stock and performance share unit grants made to certain retiring executive officers to allow certain of the outstanding awards, that otherwise would have been forfeited, to vest upon retirement. This resulted in net restricted stock and performance share unit compensation expense of $2 million for the three months ended March 31, 2019 . |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Statement of Financial Position [Abstract] | |
Stockholders' Equity Note Disclosure | Stockholders' Equity The changes of the Stockholders' Equity items during the three months ended March 31, 2020 and 2019 , are as follows: BorgWarner Inc. stockholders' equity (in millions) Issued common stock Capital in excess of par value Treasury stock Retained earnings Accumulated other comprehensive income (loss) Noncontrolling interests Balance, December 31, 2019 $ 3 $ 1,145 $ (1,657 ) $ 5,942 $ (727 ) $ 138 Dividends declared ($0.17 per share*) — — — (35 ) — (3 ) Net issuance for executive stock plan — (16 ) 12 — — — Net issuance of restricted stock — (20 ) 22 — — — Net earnings — — — 129 — 8 Other comprehensive loss — — — — (74 ) (3 ) Balance, March 31, 2020 $ 3 $ 1,109 $ (1,623 ) $ 6,036 $ (801 ) $ 140 BorgWarner Inc. stockholders' equity (in millions) Issued common stock Capital in excess of par value Treasury stock Retained earnings Accumulated other comprehensive income (loss) Noncontrolling interests Balance, December 31, 2018 $ 3 $ 1,146 $ (1,585 ) $ 5,336 $ (674 ) $ 119 Dividends declared ($0.17 per share*) — — — (35 ) — (20 ) Net issuance for executive stock plan — (10 ) 7 — — — Net issuance of restricted stock — (25 ) 21 — — — Purchase of treasury stock — — (69 ) — — — Net earnings — — — 160 — 11 Other comprehensive income (loss) — — — — (1 ) 1 Balance, March 31, 2019 $ 3 $ 1,111 $ (1,626 ) $ 5,461 $ (675 ) $ 111 ____________________________________ * The dividends declared relate to BorgWarner common stock. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following tables summarize the activity within Accumulated other comprehensive loss during the three months ended March 31, 2020 and 2019 : (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Other Total Beginning balance, December 31, 2019 $ (497 ) $ — $ (230 ) $ — $ (727 ) Comprehensive (loss) income before reclassifications (64 ) (2 ) 6 — (60 ) Income taxes associated with comprehensive (loss) income before reclassifications (10 ) — (2 ) — (12 ) Reclassification from accumulated other comprehensive loss — — (3 ) — (3 ) Income taxes reclassified into net earnings — — 1 — 1 Ending balance, March 31, 2020 $ (571 ) $ (2 ) $ (228 ) $ — $ (801 ) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Other Total Beginning balance, December 31, 2018 $ (441 ) $ — $ (235 ) $ 2 $ (674 ) Comprehensive (loss) income before reclassifications (5 ) — 3 — (2 ) Income taxes associated with comprehensive (loss) income before reclassifications (4 ) — 3 — (1 ) Reclassification from accumulated other comprehensive loss — — 3 — 3 Income taxes reclassified into net earnings — — (1 ) — (1 ) Ending balance, March 31, 2019 $ (450 ) $ — $ (227 ) $ 2 $ (675 ) |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies In the normal course of business, the Company is party to various commercial and legal claims, actions and complaints, including matters involving warranty claims, intellectual property claims, general liability and various other risks. It is not possible to predict with certainty whether or not the Company will ultimately be successful in any of these commercial and legal matters or, if not, what the impact might be. The Company's environmental contingencies are discussed below. The Company's management does not expect that an adverse outcome in any of these other commercial and legal claims, actions and complaints will have a material adverse effect on the Company's results of operations, financial position or cash flows, although such adverse outcome could be material to the results of operations in a particular quarter. Environmental The Company and certain of its current and former direct and indirect corporate predecessors, subsidiaries and divisions have been identified by the United States Environmental Protection Agency and certain state environmental agencies and private parties as potentially responsible parties (“PRPs”) at various hazardous waste disposal sites under the Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) and equivalent state laws and, as such, may presently be liable for the cost of clean-up and other remedial activities at 14 such sites as of March 31, 2020 and December 31, 2019. Responsibility for clean-up and other remedial activities at a Superfund site is typically shared among PRPs based on an allocation formula. The Company believes that none of these matters, individually or in the aggregate, will have a material adverse effect on its results of operations, financial position or cash flows. Generally, this is because either the estimates of the maximum potential liability at a site are not material or the liability will be shared with other PRPs, although no assurance can be given with respect to the ultimate outcome of any such matter. The Company had an accrual for environmental liabilities of $3 million as of March 31, 2020 and December 31, 2019 . This accrual is based on information available to the Company (which in most cases includes: an estimate of allocation of liability among PRPs; the probability that other PRPs, many of whom are large, solvent public companies, will fully pay the cost apportioned to them; currently available information from PRPs and/or federal or state environmental agencies concerning the scope of contamination and estimated remediation and consulting costs; and remediation alternatives). Securities and Exchange Commission ("SEC") I nvestigation On July 31, 2018, the Division of Enforcement of the SEC informed the Company that it is conducting an investigation related to the Company's historical accounting for asbestos-related claims not yet asserted. The Company is fully cooperating with the SEC in connection with its investigation. |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring The Company has initiated a comprehensive plan to reduce existing structural costs. During the three months ended March 31, 2020 , the Company recorded $5 million and $2 million in the Engine and Drivetrain segments, respectively, primarily related to severance costs, for actions associated with this plan. Additionally, the Company continues a voluntary termination program in the Engine segment that resulted in restructuring expense of $8 million and $4 million during the three months ended March 31, 2020 and 2019 , respectively. During the three months ended March 31, 2019 , the Company recorded restructuring expense of $7 million , primarily related to professional fees and employee termination benefits , as a continuation of actions within the Engine segment to improve future profitability and competitiveness and explore strategic options for non-core product lines. The Company also recorded restructuring expense of $3 million during the three months ended March 31, 2019 , related to Corporate restructuring activities. Estimates of restructuring expense are based on information available at the time such charges are recorded. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially recorded. Accordingly, the Company may record revisions of previous estimates by adjusting previously established accruals. The Company is evaluating numerous options across its operations and plans to take additional restructuring actions to reduce existing structural costs over the next few years. These actions are expected to result in significant restructuring expense. The following tables display a rollforward of the severance accruals recorded within the Company's Condensed Consolidated Balance Sheet and the related cash flow activity for the three months ended March 31, 2020 and 2019 : Severance Accruals (in millions) Drivetrain Engine Total Balance at December 31, 2019 $ 4 $ 30 $ 34 Provision 1 11 12 Cash payments — (13 ) (13 ) Balance at March 31, 2020 $ 5 $ 28 $ 33 Severance Accruals (in millions) Drivetrain Engine Total Balance at December 31, 2018 $ 4 $ 21 $ 25 Provision — 7 7 Cash payments — (20 ) (20 ) Balance at March 31, 2019 $ 4 $ 8 $ 12 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company presents both basic and diluted earnings per share of common stock (“EPS”). Basic EPS is calculated by dividing net earnings attributable to the Company by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to the Company by the weighted average shares of common stock and common equivalent stock outstanding during the reporting period. The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the assumed proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. The dilutive effects of performance-based stock awards described in the Note 14, "Stock-Based Compensation," to the Condensed Consolidated Financial Statements are included in the computation of diluted earnings per share at the level the related performance criteria are met through the respective balance sheet date. The 114,720 of adjusted earnings per share performance share units granted in 2020 were excluded from the computation of the diluted earnings per share for the three months ended March 31, 2020 because the related performance criteria had not been met as of the balance sheet date. The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock: Three Months Ended March 31, (in millions, except per share amounts) 2020 2019 Basic earnings per share: Net earnings attributable to BorgWarner Inc. $ 129 $ 160 Weighted average shares of common stock outstanding 205.7 206.5 Basic earnings per share of common stock $ 0.63 $ 0.77 Diluted earnings per share: Net earnings attributable to BorgWarner Inc. $ 129 $ 160 Weighted average shares of common stock outstanding 205.7 206.5 Effect of stock-based compensation 0.5 0.6 Weighted average shares of common stock outstanding including dilutive shares 206.2 207.1 Diluted earnings per share of common stock $ 0.63 $ 0.77 Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share: — 0.5 |
Reporting Segments
Reporting Segments | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Reporting Segments | Reporting Segments The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems. The Company allocates resources to each segment based upon the projected after-tax return on invested capital ("ROIC") of its business initiatives. Adjusted EBIT is comprised of earnings before interest, income taxes and noncontrolling interest (“EBIT") adjusted for restructuring, goodwill impairment charges, affiliates' earnings and other items not reflective of on-going operating income or loss ("Adjusted EBIT"). ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required. Adjusted EBIT is the measure of segment income or loss used by the Company. The Company believes Adjusted EBIT is most reflective of the operational profitability or loss of its reporting segments. The following tables show segment information and Adjusted EBIT for the Company's reporting segments. Net Sales by Reporting Segment Three Months Ended (in millions) 2020 2019 Engine $ 1,434 $ 1,598 Drivetrain 860 982 Inter-segment eliminations (15 ) (14 ) Net sales $ 2,279 $ 2,566 Adjusted EBIT Three Months Ended (in millions) 2020 2019 Engine $ 208 $ 241 Drivetrain 63 105 Adjusted EBIT 271 346 Merger, acquisition and divestiture expense 21 1 Restructuring expense 15 14 Asset impairment 9 — Unfavorable arbitration loss — 14 Officer stock awards modification — 2 Corporate, including stock-based compensation 37 51 Equity in affiliates' earnings, net of tax (5 ) (9 ) Interest income (2 ) (3 ) Interest expense 12 14 Other postretirement income (2 ) — Earnings before income taxes and noncontrolling interest 186 262 Provision for income taxes 49 91 Net earnings 137 171 Net earnings attributable to the noncontrolling interest, net of tax 8 11 Net earnings attributable to BorgWarner Inc. $ 129 $ 160 Total Assets March 31, December 31, (in millions) 2020 2019 Engine $ 4,388 $ 4,536 Drivetrain 3,887 4,075 Total 8,275 8,611 Corporate * 1,227 1,091 Total assets $ 9,502 $ 9,702 ____________________________________ * Corporate assets include cash and cash equivalents, investments and other long-term receivables, and certain deferred income taxes. |
Recent Transactions and Events
Recent Transactions and Events | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | Recent Transactions and Events Proposed Acquisition of Delphi Technologies PLC On January 28, 2020, the Company entered into a definitive agreement (the "Transaction Agreement") to acquire Delphi Technologies PLC (“Delphi Technologies”) in an all-stock transaction. The transaction, which is expected to close in the second half of 2020, is subject to approval by Delphi Technologies' stockholders, receipt of regulatory approvals and satisfaction or waiver of other closing conditions. On March 30, 2020, Delphi Technologies provided notice to the lenders pursuant to its credit agreement, dated September 7, 2017, as amended, to draw the full available amount under the revolving facility thereunder (the “Revolver Draw”), resulting in a total of $500 million outstanding under the revolving facility. Following the Revolver Draw, on March 30, 2020, the Company sent a written notice to Delphi Technologies asserting that Delphi Technologies materially breached the Transaction Agreement as a result of Delphi Technologies effecting the Revolver Draw without the Company’s prior written consent and asserting that, if such breach was not cured within 30 days , the Company had the right to terminate the Transaction Agreement. The Company received a response letter from Delphi Technologies on that date disputing the Company’s breach assertion on the basis that the Company unreasonably withheld and conditioned its consent to the Revolver Draw, in material breach of the Transaction Agreement. On May 6, 2020, the Company and Delphi Technologies entered into an Amendment and Consent Agreement (the “Amendment”) pursuant to which, among other things, the Company consented to the Revolver Draw subject to the terms and conditions contained in the Amendment. The Amendment also amends the Transaction Agreement to include the following additional conditions to the Company's obligations to close the transaction (the “Closing”): (a) as of 11:59 p.m. (New York time) on the date immediately prior to the Closing, (i) the net amount of the revolver borrowings outstanding under the credit agreement (net of cash balances) does not exceed $115 million , and (ii) the total amount of revolver borrowings outstanding under the credit agreement does not exceed $225 million , and (b) Delphi Technologies has satisfied a specified net-debt-to-adjusted EBITDA ratio. In addition, the Company and Delphi Technologies have agreed to reduce the exchange ratio such that, pursuant to the terms of the Transaction Agreement, the Company will issue, in exchange for each Delphi Technologies share, 0.4307 shares of BorgWarner common stock. Other than as set forth in the Amendment, no additional changes or waivers with respect to the Transaction Agreement and the obligations thereunder were made, granted or consented to by the Company and Delphi Technologies and the Transaction Agreement remains in full force and effect in all respects. Upon closing of the transaction, current BorgWarner stockholders are expected to own approximately 85% of the combined company, while current Delphi Technologies shareholders are expected to own approximately 15% . BorgWarner Morse TEC LLC Like many other industrial companies that have historically operated in the United States, the Company, or parties that the Company was obligated to indemnify, had been named as one of many defendants in asbestos-related personal injury actions. On October 30, 2019, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with Enstar Holdings (US) LLC ("Enstar"). Pursuant to the Purchase Agreement, the Company transferred 100% of the equity interests of BorgWarner Morse TEC LLC ("Morse TEC") to Enstar. As Morse TEC was the obligor for the Company's asbestos-related liabilities and policyholder of the related insurance assets, the rights and obligations related to these items transferred upon the sale, and pursuant to the Purchase Agreement, Morse TEC indemnifies the Company and its affiliates for asbestos-related liabilities as more specifically described in the Purchase Agreement. This indemnification obligation with respect to Asbestos-Related Liabilities (as such term is defined in the Purchase Agreement) is not subject to any cap or time limitation. Following the completion of this transfer, the Company has no obligation with respect to previously recorded asbestos-related liabilities. In accordance with ASC Topic 810, "Consolidation," this subsidiary was derecognized as the Company ceased to control the entity, and the Company removed the associated assets and liabilities from the consolidated balance sheet. Romeo Systems, Inc. In May 2019, the Company invested $50 million in exchange for a 20% equity interest in Romeo, a technology-leading battery module and pack supplier. The Company accounts for this investment in Series A-1 Preferred Stock of Romeo under the measurement alternative in ASC Topic 321, " Investments - Equity Securities " for equity investments without a readily determinable fair value. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. During the three months ended March 31, 2020, after completing a qualitative assessment which indicated the Company's equity investment in Romeo may have been impaired, the Company recorded a $9 million asset impairment cost to record this investment at its fair value of $41 million at March 31, 2020. The estimated fair value of Romeo was determined using unobservable inputs including quantitative information from lower valuations in recently completed or proposed financings and the liquidation preferences included in the Romeo stock agreements. These unobservable inputs are considered Level 3. In September 2019, the Company and Romeo contributed total equity of $10 million and formed a new joint venture, BorgWarner Romeo Power LLC (the "Romeo JV"), in which the Company owns 60% interest. Rinehart Motion Systems LLC and AM Racing LLC On January 2, 2019 , the Company acquired Rinehart Motion Systems LLC and AM Racing LLC, two established companies in the specialty electric and hybrid propulsion market, for approximately $15 million , of which $10 million was paid in the first quarter of 2019, $2 million was paid in the first quarter of 2020 and the remaining $3 million will be paid upon satisfaction of certain conditions. The Company created Cascadia Motion LLC ("Cascadia Motion") to combine assets and operations of these two acquired companies. Based in Oregon, Cascadia Motion specializes in design, development and production of hybrid and electric propulsion solutions for prototype and low-volume production applications. It allows the Company to offer design, development and production of full electric and hybrid propulsion systems for niche and low-volume manufacturing applications. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | (22) Subsequent Events On April 13, 2020, a tornado struck the Company’s facility in Seneca, South Carolina (the "Seneca Plant"), causing damage to the Company’s assets. The Seneca Plant, which is one of the Company's largest drivetrain plants, was not in operation at the time.The Company is still assessing the full impact of the damage; however, the Company's insurance policies (less applicable deductibles) are expected to cover the repair or replacement of the Company’s assets that incurred loss or damage. In addition, the Company's insurance policies are expected to provide coverage for interruption to its business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses sustained. The Seneca Plant resumed limited production on May 2, 2020; however the time to resume full operations cannot be estimated. The Company has not yet determined the full impact to its financial position, results of operations, or cash flows, including the timing of those impacts. On April 29, 2020, the Company entered into a $750 million delayed-draw term loan that matures 364 days after the closing date of the facility. The facility expires or must be mandatorily prepaid upon the termination of the agreement related to the anticipated acquisition of Delphi Technologies, the receipt of proceeds from certain capital markets transactions, or the receipt of proceeds from certain asset sales outside the ordinary course of business. The Company has not drawn any amounts under this facility. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | The accompanying unaudited Condensed Consolidated Financial Statements of BorgWarner Inc. and Consolidated Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flow activity required by GAAP for complete financial statements. In the opinion of management, all normal recurring adjustments necessary for a fair statement of results have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 . The balance sheet as of December 31, 2019 was derived from the audited financial statements as of that date. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 |
Use of Estimates, Policy [Policy Text Block] | Certain prior period amounts have been reclassified to conform to current period presentation. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and accompanying notes, as well as the amounts of revenues and expenses reported during the periods covered by those financial statements and accompanying notes. Actual results could differ from these estimates. A novel strain of COVID-19/coronavirus was first identified in Wuhan, China in December 2019 and subsequently declared a pandemic by the World Health Organization on March 11, 2020. To date, COVID-19/coronavirus has surfaced in nearly all regions around the world and resulted in travel restrictions, closing of borders and business slowdowns or shutdowns in affected areas. As a result, COVID-19/coronavirus has impacted the Company's business globally. Many OEMs have announced that they have suspended manufacturing operations, particularly in North America and Europe, on a temporary basis due to market conditions and matters associated with COVID-19/coronavirus. Additionally, as a global manufacturer, the Company is responding to shelter-in-place and similar government orders in various locations around the world, including throughout the United States and Europe, resulting in the temporary closures of the Company's manufacturing and assembly facilities. The Company assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, its allowance for credit losses, the carrying value of the Company's goodwill, intangible assets, and other long-lived assets, and valuation allowances in context with the information reasonably available to the Company and the unknown future impacts of COVID-19/coronavirus as of March 31, 2020 and through the date of this report. As a result of these assessments, there were no impairments or material increases in credit allowances or valuation allowances that impacted the Company's Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2020. However, the Company's future assessment of the magnitude and duration of COVID-19/coronavirus, as well as other factors, could result in material impacts to the Consolidated Financial Statements in future reporting periods. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Three Months Ended March 31, 2020 2019 (In millions) Engine Drivetrain Total Engine Drivetrain Total North America $ 387 $ 423 $ 810 $ 412 $ 445 $ 857 Europe 711 191 902 801 227 1,028 Asia 291 242 533 340 303 643 Other 30 4 34 31 7 38 Total $ 1,419 $ 860 $ 2,279 $ 1,584 $ 982 $ 2,566 |
Research and Development Expe_2
Research and Development Expenditures (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Research and Development [Abstract] | |
Gross and net expenditures on research and development ("R&D") activities | Three Months Ended March 31, (in millions) 2020 2019 Gross R&D expenditures $ 118 $ 121 Customer reimbursements (9 ) (17 ) Net R&D expenditures $ 109 $ 104 |
Other Expense, Net (Tables)
Other Expense, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of other expense | Three Months Ended March 31, (in millions) 2020 2019 Merger, acquisition and divestiture expense $ 21 $ 1 Restructuring expense 15 14 Asset impairment 9 — Unfavorable arbitration loss — 14 Other expense, net $ 45 $ 29 |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | March 31, December 31, (in millions) 2020 2019 Raw material and supplies $ 536 $ 502 Work in progress 114 113 Finished goods 211 207 FIFO inventories 861 822 LIFO reserve (14 ) (15 ) Inventories, net $ 847 $ 807 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Disclosure of Property, Plant and Equipment | March 31, December 31, (in millions) 2020 2019 Land, land use rights and buildings $ 869 $ 860 Machinery and equipment 3,056 2,971 Construction in progress 334 360 Finance lease assets — 1 Total property, plant and equipment, gross 4,259 4,192 Less: accumulated depreciation (1,657 ) (1,513 ) Property, plant and equipment, net, excluding tooling 2,602 2,679 Tooling, net of amortization 237 246 Property, plant and equipment, net $ 2,839 $ 2,925 |
Product Warranty (Tables)
Product Warranty (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability | March 31, December 31, (in millions) 2020 2019 Accounts payable and accrued expenses $ 64 $ 63 Other non-current liabilities 52 53 Total product warranty liability $ 116 $ 116 (in millions) 2020 2019 Beginning balance, January 1 $ 116 $ 103 Provisions for current period sales 15 15 Adjustments of prior estimates 5 7 Payments (18 ) (18 ) Translation adjustment (2 ) — Ending balance, March 31 $ 116 $ 107 |
Notes Payable and Long-Term D_2
Notes Payable and Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | March 31, December 31, (in millions) 2020 2019 Short-term debt Short-term borrowings $ 34 $ 34 Long-term debt 4.625% Senior notes due 09/15/20 ($250 million par value) 251 251 1.80% Senior notes due 11/7/22 (€500 million par value) 549 558 3.375% Senior notes due 03/15/25 ($500 million par value) 497 497 7.125% Senior notes due 02/15/29 ($121 million par value) 119 119 4.375% Senior notes due 03/15/45 ($500 million par value) 494 494 Term loan facilities and other 6 7 Total long-term debt 1,916 1,926 Less: current portion 252 252 Long-term debt, net of current portion $ 1,664 $ 1,674 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value | Basis of fair value measurements (in millions) Balance at Quoted prices in active markets for identical items (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Valuation technique Assets: Foreign currency contracts $ 3 $ — $ 3 $ — A Interest rate swaption contracts $ 1 $ — $ 1 $ — A Net investment hedge contracts $ 30 $ — $ 30 $ — A Liabilities: Foreign currency contracts $ 4 $ — $ 4 $ — A Basis of fair value measurements (in millions) Balance at Quoted prices in active markets for identical items (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Valuation technique Assets: Net investment hedge contracts $ 3 $ — $ 3 $ — A Liabilities: Foreign currency contracts $ 1 $ — $ 1 $ — A Net investment hedge contracts $ 8 $ — $ 8 $ — A |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Schedule of Price Risk Derivatives | Commodity derivative contracts Commodity Volume hedged March 31, 2020 Volume hedged December 31, 2019 Units of measure Duration Copper 148 203 Metric Tons Dec - 20 |
Notional Amounts of Outstanding Derivative Positions | Foreign currency derivatives (in millions) Functional currency Traded currency Notional in traded currency Notional in traded currency Ending Duration Brazilian real Euro — 1 Mar - 20 British pound Euro — 9 Mar - 20 British pound US dollar — 4 Mar - 20 Chinese renminbi US dollar 5 2 Dec - 20 Euro British pound 2 — Jan - 21 Euro Chinese renminbi 22 — Oct - 20 Euro Japanese yen 290 383 Dec - 20 Euro Polish zloty 165 — Dec - 20 Euro US dollar 11 18 Dec - 20 Indian rupee Japanese yen 78 — Jul - 20 Indian rupee US dollar 3 — May - 20 Japanese yen Chinese renminbi 26 — Jul - 20 Japanese yen Korean won 3,705 — Dec - 20 Japanese yen US dollar 1 — Jul - 20 Korean won Euro 10 13 Dec - 20 Korean won Japanese yen 530 409 Dec - 20 Korean won US dollar 38 4 Dec - 20 Swedish krona Euro — 3 Jan - 20 US dollar Euro 2 14 Dec - 20 US dollar Mexican peso 380 — Mar - 21 |
Schedule of Foreign Exchange Contracts, Statement of Financial Position | Cross-Currency Swaps (in millions) Notional in USD Notional in Local Currency Duration Fixed $ to fixed € $ 500 € 450 Mar - 25 Fixed $ to fixed ¥ $ 100 ¥ 10,978 Feb - 23 |
Derivatives Instruments in Statements of Financial Position | (in millions) Assets Liabilities Derivatives designated as hedging instruments Under 815: Location March 31, 2020 December 31, 2019 Location March 31, 2020 December 31, 2019 Foreign currency Prepayments and other current assets $ 2 $ — Accounts payable and accrued expenses $ 4 $ 1 Net investment hedges Other non-current assets $ 30 $ 3 Other non-current liabilities $ — $ 8 Commodity Prepayments and other current assets $ — $ — Accounts payable and accrued expenses $ — $ — Swaption Prepayments and other current assets $ 1 $ — Accounts payable and accrued expenses $ — $ — Derivatives not designated as hedging instruments Foreign currency Prepayments and other current assets $ 1 $ — Accounts payable and accrued expenses $ — $ — |
Deferred Losses Reported In Accumulated Other Comprehensive Income Loss | (in millions) Deferred gain (loss) in AOCI at Gain (loss) expected to be reclassified to income in one year or less Contract Type March 31, 2020 December 31, 2019 Foreign currency $ (3 ) $ — $ (3 ) Interest rate swaption 1 — — Net investment hedges: Foreign currency 6 5 — Cross-currency swaps 51 16 — Foreign currency denominated debt (9 ) (17 ) — Total $ 46 $ 4 $ (3 ) |
Schedule of Derivative Instruments | Three Months Ended March 31, 2020 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income(loss) Total amounts of earnings and other comprehensive income(loss) line items in which the effects of cash flow hedges are recorded $ 2,279 $ 1,832 $ 213 $ (74 ) Gain (loss) on cash flow hedging relationships: Foreign currency Gain (loss) recognized in other comprehensive income $ (3 ) Gain (loss) reclassified from AOCI to income $ — $ — $ — Three Months Ended March 31, 2019 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income(loss) Total amounts of earnings and other comprehensive income(loss) line items in which the effects of cash flow hedges are recorded $ 2,566 $ 2,047 $ 226 $ (1 ) Gain (loss) on cash flow hedging relationships: Foreign currency Gain (loss) recognized in other comprehensive income $ — Gain (loss) reclassified from AOCI to income $ (1 ) $ — $ 1 $ — |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | (in millions) Three Months Ended March 31, Net investment hedges 2020 2019 Foreign currency $ 1 $ — Cross-currency swaps $ 35 $ 9 Foreign currency denominated debt $ 8 $ 12 |
Derivative Instruments, Gain (Loss) | (in millions) Three Months Ended March 31, Net investment hedges 2020 2019 Cross-currency swaps $ 4 $ 3 |
Derivatives Not Designated as Hedging Instruments | (in millions) Three Months Ended March 31, Contract Type Location 2020 2019 Foreign Currency Selling, general and administrative expenses $ 3 $ (2 ) |
Retirement Benefit Plans (Table
Retirement Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit Costs | Pension benefits Other postretirement employee benefits (in millions) 2020 2019 Three Months Ended March 31, US Non-US US Non-US 2020 2019 Service cost $ — $ 5 $ — $ 5 $ — $ — Interest cost 1 2 2 3 1 1 Expected return on plan assets (3 ) (6 ) (3 ) (5 ) — — Amortization of unrecognized prior service credit — — — — (1 ) (1 ) Amortization of unrecognized loss 1 3 1 2 — — Net periodic benefit (income) cost $ (1 ) $ 4 $ — $ 5 $ — $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | Shares subject to restriction (thousands) Weighted average grant date fair value Nonvested at December 31, 2019 1,664 $ 44.26 Granted 766 $ 34.05 Vested (466 ) $ 46.00 Forfeited (9 ) $ 42.23 Nonvested at March 31, 2020 1,955 $ 39.87 |
Schedule of Share-based Compensation, Performance Shares Award Unvested Activity | A summary of the status of the Company’s nonvested performance share units for the three months ended March 31, 2020 is as follows: Total Stockholder Return Relative Revenue Growth Adjusted Earnings Per Share Number of shares (thousands) Weighted average grant date fair value Number of shares (thousands) Weighted average grant date fair value Number of shares (thousands) Weighted average grant date fair value Nonvested at December 31, 2019 240 $ 64.61 240 $ 48.52 — $ — Granted 142 $ 28.55 142 $ 34.11 115 $ 34.11 Vested — $ — — $ — — $ — Forfeited — $ — — $ — — $ — Nonvested at March 31, 2020 382 $ 48.02 382 $ 41.54 115 $ 34.11 The Company recorded compensation expense (reductions) for performance share units in the periods presented below: Three Months Ended March 31, (in millions) 2020 2019 Total Stockholder Return $ 1 $ 3 Relative Revenue Growth 2 (1 ) Total compensation expense (reduction) $ 3 $ 2 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Statement of Financial Position [Abstract] | |
Schedule of Stockholders Equity | BorgWarner Inc. stockholders' equity (in millions) Issued common stock Capital in excess of par value Treasury stock Retained earnings Accumulated other comprehensive income (loss) Noncontrolling interests Balance, December 31, 2019 $ 3 $ 1,145 $ (1,657 ) $ 5,942 $ (727 ) $ 138 Dividends declared ($0.17 per share*) — — — (35 ) — (3 ) Net issuance for executive stock plan — (16 ) 12 — — — Net issuance of restricted stock — (20 ) 22 — — — Net earnings — — — 129 — 8 Other comprehensive loss — — — — (74 ) (3 ) Balance, March 31, 2020 $ 3 $ 1,109 $ (1,623 ) $ 6,036 $ (801 ) $ 140 BorgWarner Inc. stockholders' equity (in millions) Issued common stock Capital in excess of par value Treasury stock Retained earnings Accumulated other comprehensive income (loss) Noncontrolling interests Balance, December 31, 2018 $ 3 $ 1,146 $ (1,585 ) $ 5,336 $ (674 ) $ 119 Dividends declared ($0.17 per share*) — — — (35 ) — (20 ) Net issuance for executive stock plan — (10 ) 7 — — — Net issuance of restricted stock — (25 ) 21 — — — Purchase of treasury stock — — (69 ) — — — Net earnings — — — 160 — 11 Other comprehensive income (loss) — — — — (1 ) 1 Balance, March 31, 2019 $ 3 $ 1,111 $ (1,626 ) $ 5,461 $ (675 ) $ 111 ____________________________________ * The dividends declared relate to BorgWarner common stock. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Other Total Beginning balance, December 31, 2019 $ (497 ) $ — $ (230 ) $ — $ (727 ) Comprehensive (loss) income before reclassifications (64 ) (2 ) 6 — (60 ) Income taxes associated with comprehensive (loss) income before reclassifications (10 ) — (2 ) — (12 ) Reclassification from accumulated other comprehensive loss — — (3 ) — (3 ) Income taxes reclassified into net earnings — — 1 — 1 Ending balance, March 31, 2020 $ (571 ) $ (2 ) $ (228 ) $ — $ (801 ) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Other Total Beginning balance, December 31, 2018 $ (441 ) $ — $ (235 ) $ 2 $ (674 ) Comprehensive (loss) income before reclassifications (5 ) — 3 — (2 ) Income taxes associated with comprehensive (loss) income before reclassifications (4 ) — 3 — (1 ) Reclassification from accumulated other comprehensive loss — — 3 — 3 Income taxes reclassified into net earnings — — (1 ) — (1 ) Ending balance, March 31, 2019 $ (450 ) $ — $ (227 ) $ 2 $ (675 ) |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of employee related and other restructuring accruals | Severance Accruals (in millions) Drivetrain Engine Total Balance at December 31, 2019 $ 4 $ 30 $ 34 Provision 1 11 12 Cash payments — (13 ) (13 ) Balance at March 31, 2020 $ 5 $ 28 $ 33 Severance Accruals (in millions) Drivetrain Engine Total Balance at December 31, 2018 $ 4 $ 21 $ 25 Provision — 7 7 Cash payments — (20 ) (20 ) Balance at March 31, 2019 $ 4 $ 8 $ 12 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Reconciliation | Three Months Ended March 31, (in millions, except per share amounts) 2020 2019 Basic earnings per share: Net earnings attributable to BorgWarner Inc. $ 129 $ 160 Weighted average shares of common stock outstanding 205.7 206.5 Basic earnings per share of common stock $ 0.63 $ 0.77 Diluted earnings per share: Net earnings attributable to BorgWarner Inc. $ 129 $ 160 Weighted average shares of common stock outstanding 205.7 206.5 Effect of stock-based compensation 0.5 0.6 Weighted average shares of common stock outstanding including dilutive shares 206.2 207.1 Diluted earnings per share of common stock $ 0.63 $ 0.77 Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share: — 0.5 |
Reporting Segments (Tables)
Reporting Segments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Net Sales by Reporting Segment | Three Months Ended (in millions) 2020 2019 Engine $ 1,434 $ 1,598 Drivetrain 860 982 Inter-segment eliminations (15 ) (14 ) Net sales $ 2,279 $ 2,566 |
Segment Earnings Before Interest and Income Taxes | Three Months Ended (in millions) 2020 2019 Engine $ 208 $ 241 Drivetrain 63 105 Adjusted EBIT 271 346 Merger, acquisition and divestiture expense 21 1 Restructuring expense 15 14 Asset impairment 9 — Unfavorable arbitration loss — 14 Officer stock awards modification — 2 Corporate, including stock-based compensation 37 51 Equity in affiliates' earnings, net of tax (5 ) (9 ) Interest income (2 ) (3 ) Interest expense 12 14 Other postretirement income (2 ) — Earnings before income taxes and noncontrolling interest 186 262 Provision for income taxes 49 91 Net earnings 137 171 Net earnings attributable to the noncontrolling interest, net of tax 8 11 Net earnings attributable to BorgWarner Inc. $ 129 $ 160 |
Segment assets | March 31, December 31, (in millions) 2020 2019 Engine $ 4,388 $ 4,536 Drivetrain 3,887 4,075 Total 8,275 8,611 Corporate * 1,227 1,091 Total assets $ 9,502 $ 9,702 ____________________________________ * Corporate assets include cash and cash equivalents, investments and other long-term receivables, and certain deferred income taxes. |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Net sales | $ 2,279 | $ 2,566 | |
Contract with Customer, Liability, Current | 13 | $ 10 | |
Contract with Customer, Liability, Noncurrent | $ 9 | 12 | |
Number of reportable segments | segment | 2 | ||
Revenue, Performance Obligation, Description of Payment Terms | 30 to 90 days | ||
Contract with Customer, Asset, after Allowance for Credit Loss | $ 9 | 10 | |
Document Period End Date | Mar. 31, 2020 | ||
Consolidated Entities [Member] | |||
Net sales | $ 2,279 | 2,566 | |
Engine [Member] | |||
Net sales | 1,434 | 1,598 | |
Drivetrain [Member] | |||
Net sales | 860 | 982 | |
North America [Member] | Consolidated Entities [Member] | |||
Net sales | 810 | 857 | |
North America [Member] | Engine [Member] | |||
Net sales | 387 | 412 | |
North America [Member] | Drivetrain [Member] | |||
Net sales | 423 | 445 | |
Europe [Member] | Consolidated Entities [Member] | |||
Net sales | 902 | 1,028 | |
Europe [Member] | Engine [Member] | |||
Net sales | 711 | 801 | |
Europe [Member] | Drivetrain [Member] | |||
Net sales | 191 | 227 | |
Asia [Member] | Consolidated Entities [Member] | |||
Net sales | 533 | 643 | |
Asia [Member] | Engine [Member] | |||
Net sales | 291 | 340 | |
Asia [Member] | Drivetrain [Member] | |||
Net sales | 242 | 303 | |
Other Foreign [Member] | Consolidated Entities [Member] | |||
Net sales | 34 | 38 | |
Other Foreign [Member] | Engine [Member] | |||
Net sales | 30 | 31 | |
Other Foreign [Member] | Drivetrain [Member] | |||
Net sales | 4 | 7 | |
Prepaid Expenses and Other Current Assets [Member] | |||
Contract with Customer, Asset, after Allowance for Credit Loss | 38 | 37 | |
Other Noncurrent Assets [Member] | |||
Contract with Customer, Asset, after Allowance for Credit Loss | $ 171 | $ 180 | |
Minimum [Member] | |||
Capitalized contract costs, amortization period | 3 years | ||
Maximum [Member] | |||
Capitalized contract costs, amortization period | 7 years | ||
Reportable Geographical Components [Member] | Engine [Member] | |||
Net sales | $ 1,419 | 1,584 | |
Reportable Geographical Components [Member] | Drivetrain [Member] | |||
Net sales | $ 860 | $ 982 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Performance Obligations (Details) | Mar. 31, 2020 |
Minimum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 years |
Maximum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 7 years |
Research and Development Expe_3
Research and Development Expenditures (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Research and Development | ||
Gross R&D expenditures | $ 118 | $ 121 |
Customer reimbursements | (9) | (17) |
Net R&D expenditures | $ 109 | $ 104 |
Maximum value of R&D contract | 5.00% | 5.00% |
Other Expense, Net (Details)
Other Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring expense | $ 15 | $ 14 |
Asset impairment cost | 9 | 0 |
Unfavorable arbitration loss | 0 | 14 |
Merger, acquisition and divestiture expense | 21 | 1 |
Other expense, net | 45 | $ 29 |
Romeo Systems, Inc. | ||
Asset impairment cost | 9 | |
Cost method investment fair value | $ 41 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate, continuing operations | 26.00% | 34.70% |
Tax benefits related to restructuring expense | $ 4 | $ 3 |
Tax benefits related to Tax Act | 22 | |
Tax benefits related to other one-time adjustments | $ 12 | $ 5 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw material and supplies | $ 536 | $ 502 |
Work in progress | 114 | 113 |
Finished goods | 211 | 207 |
FIFO inventories | 861 | 822 |
LIFO reserve | (14) | (15) |
Inventories, net | $ 847 | $ 807 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property Plant and Equipment | |||
Total property, plant and equipment, gross | $ 4,259 | $ 4,192 | |
Less: accumulated depreciation | (1,657) | (1,513) | |
Property, plant and equipment, net, excluding tooling | 2,602 | 2,679 | |
Tooling, net of amortization | 237 | 246 | |
Property, plant and equipment, net | 2,839 | 2,925 | |
Capital Expenditures Incurred but Not yet Paid | 55 | 102 | |
Capitalized interest costs | 4 | $ 5 | |
Land, land use rights and buildings [Member] | |||
Property Plant and Equipment | |||
Total property, plant and equipment, gross | 869 | 860 | |
Machinery and equipment [Member] | |||
Property Plant and Equipment | |||
Total property, plant and equipment, gross | 3,056 | 2,971 | |
Capital leases [Member] | |||
Property Plant and Equipment | |||
Total property, plant and equipment, gross | 0 | 1 | |
Construction in progress [Member] | |||
Property Plant and Equipment | |||
Total property, plant and equipment, gross | $ 334 | $ 360 |
Product Warranty (Details)
Product Warranty (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Product warranty rollforward | ||||
Beginning balance, January 1 | $ 116 | $ 103 | ||
Provision for current period sales | 15 | 15 | ||
Adjustments of prior estimates | 5 | 7 | ||
Payments | (18) | (18) | ||
Translation adjustment | (2) | 0 | ||
Ending balance, March 31 | 116 | 107 | ||
Accounts payable and accrued expenses | $ 64 | $ 63 | ||
Other non-current liabilities | 52 | 53 | ||
Total product warranty liability | $ 116 | $ 107 | $ 116 | $ 116 |
Notes Payable and Long-Term D_3
Notes Payable and Long-Term Debt (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019EUR (€) | |
Debt Instrument [Line Items] | ||||
Document Period End Date | Mar. 31, 2020 | |||
Long-term debt | ||||
Long-term Debt | $ 1,916,000,000 | $ 1,926,000,000 | ||
Current portion of long-term debt | 252,000,000 | 252,000,000 | ||
Long-term debt, net of current portion | $ 1,664,000,000 | $ 1,674,000,000 | ||
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 2.30% | 2.50% | 2.30% | 2.50% |
Debt weighted average interest rate | 2.80% | 2.80% | ||
Current borrowing capacity | $ 1,500,000,000 | |||
Maximum borrowing capacity | 1,500,000,000 | |||
Line of credit facility, automatic increase | 2,000,000,000 | |||
Line of Credit Facility, Increase (Decrease), Net | 1,000,000,000 | |||
Estimated fair value of senior unsecured notes | 1,945,000,000 | $ 2,025,000,000 | ||
Debt, difference between fair value and carrying value | 35,000,000 | 106,000,000 | ||
Letters of Credit Outstanding, Amount | 28,000,000 | |||
Short Term Borrowings [Member] | ||||
Short-term debt | ||||
Short-term borrowings | 34,000,000 | 34,000,000 | ||
4.625% Senior Notes [Member] | ||||
Long-term debt | ||||
Long-term Debt | 251,000,000 | 251,000,000 | ||
Debt instrument par value | $ 250,000,000 | $ 250,000,000 | ||
Debt instrument stated interest rate | 4.625% | 4.625% | 4.625% | 4.625% |
Debt instrument maturity date | Sep. 15, 2020 | Sep. 15, 2020 | ||
1.80% Senior Notes [Member] | ||||
Long-term debt | ||||
Long-term Debt | $ 549,000,000 | $ 558,000,000 | ||
Debt instrument par value | € | € 500,000,000 | € 500,000,000 | ||
Debt instrument stated interest rate | 1.80% | 1.80% | 1.80% | 1.80% |
Debt instrument maturity date | Nov. 7, 2022 | Nov. 7, 2022 | ||
3.375% Senior Notes [Member] | ||||
Long-term debt | ||||
Long-term Debt | $ 497,000,000 | $ 497,000,000 | ||
Debt instrument par value | $ 500,000,000 | $ 500,000,000 | ||
Debt instrument stated interest rate | 3.375% | 3.375% | 3.375% | 3.375% |
Debt instrument maturity date | Mar. 15, 2025 | Mar. 15, 2025 | ||
7.125% Senior Notes [Member] | ||||
Long-term debt | ||||
Long-term Debt | $ 119,000,000 | $ 119,000,000 | ||
Debt instrument par value | $ 121,000,000 | $ 121,000,000 | ||
Debt instrument stated interest rate | 7.125% | 7.125% | 7.125% | 7.125% |
Debt instrument maturity date | Feb. 15, 2029 | Feb. 15, 2029 | ||
4.375% Senior Notes [Member] | ||||
Long-term debt | ||||
Long-term Debt | $ 494,000,000 | $ 494,000,000 | ||
Debt instrument par value | $ 500,000,000 | $ 500,000,000 | ||
Debt instrument stated interest rate | 4.375% | 4.375% | 4.375% | 4.375% |
Debt instrument maturity date | Mar. 15, 2045 | Mar. 15, 2045 | ||
Term Loan Facilities And Other [Member] | ||||
Long-term debt | ||||
Long-term Debt | $ 6,000,000 | $ 7,000,000 | ||
Revolving Credit Facility [Member] | ||||
Long-term debt | ||||
Current borrowing capacity | 1,200,000,000 | |||
Commercial Paper [Member] | ||||
Long-term debt | ||||
Current borrowing capacity | $ 1,200,000,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Valuation, Market Approach [Member] - Fair Value, Recurring [Member] - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Foreign currency contracts | $ 3 | |
Interest rate swaption contracts | 1 | |
Net investment hedge contracts | 30 | $ 3 |
Liabilities: | ||
Foreign currency contracts | 4 | 1 |
Net investment hedge contracts | 8 | |
Fair Value, Inputs, Level 1 [Member] | ||
Assets: | ||
Foreign currency contracts | 0 | |
Interest rate swaption contracts | 0 | |
Net investment hedge contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | 0 | 0 |
Net investment hedge contracts | 0 | |
Fair Value, Inputs, Level 2 [Member] | ||
Assets: | ||
Foreign currency contracts | 3 | |
Interest rate swaption contracts | 1 | |
Net investment hedge contracts | 30 | 3 |
Liabilities: | ||
Foreign currency contracts | 4 | 1 |
Net investment hedge contracts | 8 | |
Fair Value, Inputs, Level 3 [Member] | ||
Assets: | ||
Foreign currency contracts | 0 | |
Interest rate swaption contracts | 0 | |
Net investment hedge contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | $ 0 | 0 |
Net investment hedge contracts | $ 0 |
Financial Instruments - Derivat
Financial Instruments - Derivatives (Details) € in Millions, ₩ in Millions, ¥ in Millions, ¥ in Millions, £ in Millions, kr in Millions, $ in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||||
Mar. 31, 2020KRW (₩)t | Dec. 31, 2019KRW (₩)t | Mar. 31, 2020USD ($) | Mar. 31, 2020JPY (¥) | Mar. 31, 2020MXN ($) | Mar. 31, 2020CNY (¥) | Mar. 31, 2020SEK (kr) | Mar. 31, 2020EUR (€) | Mar. 31, 2020GBP (£) | Dec. 31, 2019USD ($) | Dec. 31, 2019JPY (¥) | Dec. 31, 2019MXN ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019SEK (kr) | Dec. 31, 2019EUR (€) | Dec. 31, 2019GBP (£) | |
Derivative [Line Items] | ||||||||||||||||
Swaption contract notional amount | $ 750 | |||||||||||||||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 46 | $ 4 | ||||||||||||||
Swaption | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 1 | 0 | ||||||||||||||
Foreign currency | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | (3) | 0 | ||||||||||||||
Commodity contracts | Maturity July 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Copper notional amount (mass) | t | 148 | 203 | ||||||||||||||
Brazil, Brazil Real | Foreign currency | Maturity March 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | € | € 0 | € 1 | ||||||||||||||
United Kingdom, Pounds | Foreign currency | Maturity March 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 0 | 0 | 4 | 9 | ||||||||||||
China, Yuan Renminbi | Foreign currency | Maturity December 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 5 | 2 | ||||||||||||||
Euro Member Countries, Euro | Cross currency interest rate contract | Maturity March 2025 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | € | 450 | |||||||||||||||
Euro Member Countries, Euro | Foreign currency | Maturity October 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | ¥ | ¥ 22 | ¥ 0 | ||||||||||||||
Euro Member Countries, Euro | Foreign currency | Maturity December 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 11 | ¥ 290 | kr 165 | 18 | ¥ 383 | kr 0 | ||||||||||
Euro Member Countries, Euro | Foreign currency | Maturity January 2021 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | £ | £ 2 | £ 0 | ||||||||||||||
India, Rupees | Foreign currency | Maturity May 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 3 | 0 | ||||||||||||||
India, Rupees | Foreign currency | Maturity July 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 78 | 0 | ||||||||||||||
Japan, Yen | Cross currency interest rate contract | Maturity February 2023 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | ¥ | 10,978 | |||||||||||||||
Japan, Yen | Foreign currency | Maturity July 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 1 | ¥ 26 | 0 | ¥ 0 | ||||||||||||
Japan, Yen | Foreign currency | Maturity December 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | ₩ | ₩ 3,705 | ₩ 0 | ||||||||||||||
Korea (South), Won | Foreign currency | Maturity December 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 38 | ¥ 530 | 10 | 4 | ¥ 409 | 13 | ||||||||||
Sweden, Krona | Foreign currency | Maturity January 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | € | 0 | 3 | ||||||||||||||
United States of America, Dollars | Cross currency interest rate contract | Maturity February 2023 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 100 | |||||||||||||||
United States of America, Dollars | Cross currency interest rate contract | Maturity March 2025 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | 500 | |||||||||||||||
United States of America, Dollars | Foreign currency | Maturity December 2020 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | € | € 2 | € 14 | ||||||||||||||
United States of America, Dollars | Foreign currency | Maturity March 2021 | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Foreign currency notional amount | $ 380 | $ 0 | ||||||||||||||
Net investment hedge | Cross currency interest rate contract | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 51 | 16 | ||||||||||||||
Net investment hedge | Foreign currency | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | $ 6 | $ 5 |
Financial Instruments - Balance
Financial Instruments - Balance Sheet (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Derivatives, Fair Value [Line Items] | ||
Document Period End Date | Mar. 31, 2020 | |
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | $ 46 | $ 4 |
Gain (loss) expected to be reclassified in one year or less | (3) | |
Foreign currency | ||
Derivatives, Fair Value [Line Items] | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | (3) | 0 |
Gain (loss) expected to be reclassified in one year or less | (3) | |
Swaption | ||
Derivatives, Fair Value [Line Items] | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 1 | 0 |
Gain (loss) expected to be reclassified in one year or less | 0 | |
Designated as Hedging Instrument [Member] | Foreign currency | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 2 | 0 |
Designated as Hedging Instrument [Member] | Foreign currency | Accounts Payable and Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 4 | 1 |
Designated as Hedging Instrument [Member] | Foreign currency | Other Noncurrent Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 30 | 3 |
Designated as Hedging Instrument [Member] | Foreign currency | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 0 | 8 |
Designated as Hedging Instrument [Member] | Commodity contracts | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 0 | 0 |
Designated as Hedging Instrument [Member] | Commodity contracts | Accounts Payable and Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 0 | 0 |
Designated as Hedging Instrument [Member] | Swaption | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 1 | 0 |
Designated as Hedging Instrument [Member] | Swaption | Accounts Payable and Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 0 | 0 |
Not Designated as Hedging Instrument [Member] | Foreign currency | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 1 | 0 |
Not Designated as Hedging Instrument [Member] | Foreign currency | Accounts Payable and Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | 0 | 0 |
Net investment hedge | Foreign currency | ||
Derivatives, Fair Value [Line Items] | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 6 | 5 |
Gain (loss) expected to be reclassified in one year or less | 0 | |
Net investment hedge | Cross currency interest rate contract | ||
Derivatives, Fair Value [Line Items] | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 51 | 16 |
Gain (loss) expected to be reclassified in one year or less | 0 | |
Net investment hedge | Foreign currency denominated debt designated as a net investment hedge [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | (9) | $ (17) |
Gain (loss) expected to be reclassified in one year or less | $ 0 |
Financial Instruments - Income
Financial Instruments - Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivatives, Fair Value [Line Items] | ||
Net sales | $ 2,279 | $ 2,566 |
Cost of sales | 1,832 | 2,047 |
Selling, general and administrative expenses | 213 | 226 |
Other Comprehensive Income (Loss) | (74) | (1) |
Cash Flow Hedging [Member] | Foreign currency | Net sales | ||
Derivatives Designated As Net Investment Hedges Under Topic 815 Abstract | ||
Gain (loss) reclassified from accumulated OCI into net income, effective portion, net | 0 | (1) |
Cash Flow Hedging [Member] | Foreign currency | Cost of goods sold | ||
Derivatives Designated As Net Investment Hedges Under Topic 815 Abstract | ||
Gain (loss) reclassified from accumulated OCI into net income, effective portion, net | 0 | 0 |
Cash Flow Hedging [Member] | Foreign currency | SG&A expense | ||
Derivatives Designated As Net Investment Hedges Under Topic 815 Abstract | ||
Gain (loss) reclassified from accumulated OCI into net income, effective portion, net | 0 | 1 |
Net investment hedge | Cross currency interest rate contract | Interest expense and finance charges | ||
Derivatives Designated As Net Investment Hedges Under Topic 815 Abstract | ||
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net | 4 | 3 |
Not Designated as Hedging Instrument [Member] | Foreign currency | SG&A expense | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Gain (Loss) on Derivative, Net | 3 | (2) |
Other Comprehensive Income (Loss) [Member] | Cash Flow Hedging [Member] | Foreign currency | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Gain (Loss) on Derivative, Net | (3) | 0 |
Other Comprehensive Income (Loss) [Member] | Net investment hedge | Foreign currency | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Gain (Loss) on Derivative, Net | 1 | 0 |
Other Comprehensive Income (Loss) [Member] | Net investment hedge | Cross currency interest rate contract | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Gain (Loss) on Derivative, Net | 35 | 9 |
Other Comprehensive Income (Loss) [Member] | Net investment hedge | Foreign currency denominated debt designated as a net investment hedge [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Gain (Loss) on Derivative, Net | $ 8 | $ 12 |
Retirement Benefit Plans (Detai
Retirement Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Actual contribution to defined benefit pension plans | $ 5 | |
Minimum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year | 10 | |
Maximum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year | 20 | |
Other Postretirement Benefits Plan [Member] | ||
Components of net periodic benefit cost: | ||
Service cost | 0 | $ 0 |
Interest cost | 1 | 1 |
Expected return on plan assets | 0 | 0 |
Amortization of unrecognized prior service credit | (1) | (1) |
Amortization of unrecognized loss | 0 | 0 |
Net periodic benefit (income) cost | 0 | 0 |
United States | Pension Plan [Member] | ||
Components of net periodic benefit cost: | ||
Service cost | 0 | 0 |
Interest cost | 1 | 2 |
Expected return on plan assets | (3) | (3) |
Amortization of unrecognized prior service credit | 0 | 0 |
Amortization of unrecognized loss | 1 | 1 |
Net periodic benefit (income) cost | (1) | 0 |
Non-US | Pension Plan [Member] | ||
Components of net periodic benefit cost: | ||
Service cost | 5 | 5 |
Interest cost | 2 | 3 |
Expected return on plan assets | (6) | (5) |
Amortization of unrecognized prior service credit | 0 | 0 |
Amortization of unrecognized loss | 3 | 2 |
Net periodic benefit (income) cost | $ 4 | $ 5 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Payment Arrangement, Plan Modification, Incremental Cost | $ 2 | |
Document Period End Date | Mar. 31, 2020 | |
Status of nonvested restricted stock | ||
Performance share compensation expense | $ 3 | $ 2 |
Net impact due to stock awards modification | 0 | 2 |
Restricted Stock [Member] | ||
Restricted stock compensation expense | ||
Restricted stock compensation expense | 7 | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 51 | |
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years | |
Status of nonvested restricted stock | ||
Nonvested shares subject to restriction, Beginning Balance | 1,664,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 44.26 | |
Restricted shares granted to employees | 766,205 | |
Granted shares subject to restriction, weighted average exercise price | $ 34.05 | |
Shares subject to restriction, Vested | (466,000) | |
Vested shares subject to restriction, weighted average exercise price | $ 46 | |
Shares subject to restriction, Forfeited | (9,000) | |
Forfeited shares subject to restriction, weighted average exercise price | $ 42.23 | |
Nonvested shares subject to restriction, Ending Balance | 1,955,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 39.87 | |
Performance Shares [Member] | ||
Status of nonvested restricted stock | ||
Nonvested shares subject to restriction, Beginning Balance | 240,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 64.61 | |
Restricted shares granted to employees | 142,000 | |
Granted shares subject to restriction, weighted average exercise price | $ 28.55 | |
Shares subject to restriction, Vested | 0 | |
Vested shares subject to restriction, weighted average exercise price | $ 0 | |
Shares subject to restriction, Forfeited | 0 | |
Forfeited shares subject to restriction, weighted average exercise price | $ 0 | |
Nonvested shares subject to restriction, Ending Balance | 382,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 48.02 | |
Performance share compensation expense | $ 1 | 3 |
Adjusted Earnings Per Share Performance Share Plan [Domain] | ||
Status of nonvested restricted stock | ||
Nonvested shares subject to restriction, Beginning Balance | 0 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 0 | |
Restricted shares granted to employees | 115,000 | |
Granted shares subject to restriction, weighted average exercise price | $ 34.11 | |
Shares subject to restriction, Vested | 0 | |
Vested shares subject to restriction, weighted average exercise price | $ 0 | |
Shares subject to restriction, Forfeited | 0 | |
Forfeited shares subject to restriction, weighted average exercise price | $ 0 | |
Nonvested shares subject to restriction, Ending Balance | 115,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 34.11 | |
Relative Revenue Growth Performance Share Plans [Member] | ||
Status of nonvested restricted stock | ||
Nonvested shares subject to restriction, Beginning Balance | 240,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 48.52 | |
Restricted shares granted to employees | 142,000 | |
Granted shares subject to restriction, weighted average exercise price | $ 34.11 | |
Shares subject to restriction, Vested | 0 | |
Vested shares subject to restriction, weighted average exercise price | $ 0 | |
Shares subject to restriction, Forfeited | 0 | |
Forfeited shares subject to restriction, weighted average exercise price | $ 0 | |
Nonvested shares subject to restriction, Ending Balance | 382,000 | |
Nonvested shares subject to restriction, weighted average exercise price | $ 41.54 | |
Performance share compensation expense | $ 2 | $ (1) |
2018 Stock Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 7,000,000 | |
Number of shares available for grant | 5,000,000 | |
First Half Vested | Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percent of awards vested | 50.00% | |
Vesting period | 2 years | |
Second Half Vested | Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Common Stock, Dividends, Per Share, Declared | $ 0.17 | $ 0.17 | |||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 4,864 | $ 4,844 | |||
Net earnings attributable to BorgWarner Inc. | 129 | $ 160 | |||
Net earnings attributable to the noncontrolling interest, net of tax | 8 | 11 | |||
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (74) | (1) | |||
Other comprehensive (loss) income attributable to the noncontrolling interest | [1] | (3) | 1 | ||
Common Stock [Member] | |||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 3 | 3 | 3 | $ 3 | |
Additional Paid-in Capital [Member] | |||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 1,109 | 1,111 | 1,145 | 1,146 | |
Treasury Stock [Member] | |||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (1,623) | (1,626) | (1,657) | (1,585) | |
Treasury Stock, Value, Acquired, Cost Method | (69) | ||||
Retained Earnings [Member] | |||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 6,036 | 5,461 | 5,942 | 5,336 | |
Dividends, Common Stock, Cash | (35) | (35) | |||
Net earnings attributable to BorgWarner Inc. | 129 | 160 | |||
AOCI Attributable to Parent [Member] | |||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (801) | (675) | (727) | (674) | |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent | (74) | (1) | |||
Noncontrolling Interest [Member] | |||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 140 | 111 | $ 138 | $ 119 | |
Dividends, Common Stock, Cash | (3) | (20) | |||
Net earnings attributable to the noncontrolling interest, net of tax | 8 | 11 | |||
Other comprehensive (loss) income attributable to the noncontrolling interest | (3) | 1 | |||
Performance Shares [Member] | Additional Paid-in Capital [Member] | |||||
APIC, Share-based Payment Arrangement, Recognition and Exercise | (16) | (10) | |||
Performance Shares [Member] | Treasury Stock [Member] | |||||
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture | 12 | 7 | |||
Restricted Stock [Member] | Additional Paid-in Capital [Member] | |||||
APIC, Share-based Payment Arrangement, Recognition and Exercise | (20) | (25) | |||
Restricted Stock [Member] | Treasury Stock [Member] | |||||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | $ 22 | $ 21 | |||
[1] | Net of income taxes. |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Foreign currency translation adjustments | ||||
Beginning Balance | $ (497) | $ (441) | ||
Comprehensive income (loss) before reclassifications | (64) | (5) | ||
Income taxes associated with comprehensive income (loss) before reclassifications | (10) | (4) | ||
Reclassification from accumulated other comprehensive income (loss) | 0 | 0 | ||
Income taxes reclassified into net earnings | 0 | 0 | ||
Ending Balance | (571) | (450) | ||
Hedge instruments | ||||
Beginning Balance | 0 | 0 | ||
Comprehensive income (loss) before reclassifications | (2) | 0 | ||
Income taxes associated with comprehensive income (loss) before reclassifications | 0 | 0 | ||
Reclassification from accumulated other comprehensive income (loss) | 0 | 0 | ||
Income taxes reclassified into net earnings | 0 | 0 | ||
Ending Balance | (2) | 0 | ||
Defined benefit postretirement plans | ||||
Beginning Balance | (230) | (235) | ||
Comprehensive income (loss) before reclassifications | 6 | 3 | ||
Income taxes associated with comprehensive income (loss) before reclassifications | (2) | 3 | ||
Reclassification from accumulated other comprehensive income (loss) | (3) | 3 | ||
Income taxes reclassified into net earnings | 1 | (1) | ||
Ending Balance | (228) | (227) | ||
Other | ||||
Beginning Balance | 0 | 2 | ||
Comprehensive income (loss) before reclassifications | 0 | 0 | ||
Income taxes associated with comprehensive income (loss) before reclassifications | 0 | 0 | ||
Reclassification from accumulated other comprehensive income (loss) | 0 | 0 | ||
Income taxes reclassified into net earnings | 0 | 0 | ||
Ending Balance | 0 | 2 | ||
Total | ||||
Beginning Balance | (727) | (674) | ||
Comprehensive income (loss) before reclassifications | (60) | (2) | ||
Income taxes associated with comprehensive income (loss) before reclassifications | (12) | (1) | ||
Reclassification from accumulated other comprehensive income (loss) | (3) | 3 | ||
Income taxes reclassified into net earnings | 1 | (1) | ||
Ending Balance | $ (727) | $ (674) | $ (801) | $ (675) |
Contingencies (Details)
Contingencies (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($)site | |
Commitments and Contingencies Disclosure [Abstract] | |
Waste disposal sites with potential liability under the Comprehensive Environmental Response, Compensation and Liability Act | site | 14 |
Accrual for indicated environmental liabilities | $ | $ 3 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Reserve [Roll Forward] | ||
Provision | $ 15 | $ 14 |
Employee Severance [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 34 | 25 |
Provision | 12 | 7 |
Cash payments | (13) | (20) |
Ending Balance | 33 | 12 |
Employee Severance [Member] | Drivetrain [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 4 | 4 |
Provision | 1 | 0 |
Cash payments | 0 | 0 |
Ending Balance | 5 | 4 |
Employee Severance [Member] | Engine [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 30 | 21 |
Provision | 11 | 7 |
Cash payments | (13) | (20) |
Ending Balance | 28 | 8 |
Corporate Restructuring Activities [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Provision | 3 | |
Emissions [Member] | Engine [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Provision | 7 | |
Structural costs reduction actions [Member] | Drivetrain [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Provision | 2 | |
Structural costs reduction actions [Member] | Engine [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Provision | 5 | |
Voluntary termination [Member] | Employee Severance [Member] | Engine [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Provision | $ 8 | $ 4 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Performance shares excluded from diluted earnings per share | 114,720 | |
Antidilutive securities excluded from computation of earnings per share amount | 0 | 500,000 |
Basic earnings per share: | ||
Net earnings attributable to BorgWarner Inc. | $ 129 | $ 160 |
Weighted average shares of common stock outstanding | 205,700,000 | 206,500,000 |
Basic earnings per share of common stock | $ 0.63 | $ 0.77 |
Diluted earnings per share: | ||
Net earnings attributable to BorgWarner Inc. | $ 129 | $ 160 |
Weighted average shares of common stock outstanding | 205,700,000 | 206,500,000 |
Effect of stock-based compensation | 500,000 | 600,000 |
Weighted average shares of common stock outstanding including dilutive shares | 206,200,000 | 207,100,000 |
Diluted earnings per share of common stock | $ 0.63 | $ 0.77 |
Reporting Segments (Details)
Reporting Segments (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | ||
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 2 | |||
Net Sales by Reporting Segment | ||||
Net sales | $ 2,279 | $ 2,566 | ||
Adjusted earnings before interest, income taxes and noncontrolling interest | ||||
Adjusted EBIT | 271 | 346 | ||
Merger, acquisition and divestiture expense | 21 | 1 | ||
Restructuring expense | 15 | 14 | ||
Asset impairment cost | 9 | 0 | ||
Other expense (income), net | 0 | 14 | ||
Officer stock awards modification | 0 | 2 | ||
Corporate, including stock-based compensation | 37 | 51 | ||
Equity in affiliates’ earnings, net of tax | (5) | (9) | ||
Interest income | (2) | (3) | ||
Interest expense | 12 | 14 | ||
Other postretirement income | (2) | 0 | ||
Earnings before income taxes and noncontrolling interest | 186 | 262 | ||
Provision for income taxes | 49 | 91 | ||
Net earnings | 137 | 171 | ||
Net earnings attributable to the noncontrolling interest, net of tax | 8 | 11 | ||
Net earnings attributable to BorgWarner Inc. | 129 | 160 | ||
Segment Reporting Information - Assets | ||||
Total assets | 9,502 | $ 9,702 | ||
Operating Segments [Member] | ||||
Segment Reporting Information - Assets | ||||
Total assets | 8,275 | 8,611 | ||
Engine [Member] | ||||
Net Sales by Reporting Segment | ||||
Net sales | 1,434 | 1,598 | ||
Adjusted earnings before interest, income taxes and noncontrolling interest | ||||
Adjusted EBIT | 208 | 241 | ||
Segment Reporting Information - Assets | ||||
Total assets | 4,388 | 4,536 | ||
Drivetrain [Member] | ||||
Net Sales by Reporting Segment | ||||
Net sales | 860 | 982 | ||
Adjusted earnings before interest, income taxes and noncontrolling interest | ||||
Adjusted EBIT | 63 | 105 | ||
Segment Reporting Information - Assets | ||||
Total assets | 3,887 | 4,075 | ||
Intersegment Eliminations [Member] | ||||
Net Sales by Reporting Segment | ||||
Net sales | (15) | $ (14) | ||
Corporate, Non-Segment [Member] | ||||
Segment Reporting Information - Assets | ||||
Total assets | [1] | $ 1,227 | $ 1,091 | |
[1] | Corporate assets include cash and cash equivalents, investments and other long-term receivables, and certain deferred income taxes. |
Recent Transactions and Events
Recent Transactions and Events (Details) $ in Millions | May 06, 2020USD ($) | Jan. 02, 2019 | Apr. 29, 2020 | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 30, 2020USD ($) | Oct. 30, 2019 | May 31, 2019USD ($) |
Business Acquisition [Line Items] | ||||||||
Asset impairment cost | $ 9 | $ 0 | ||||||
Payments for business acquired | 2 | 10 | ||||||
Delphi Technologies PLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Delphi Technologies' draw on credit facility | $ 500 | |||||||
Romeo Systems, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments for investments in equity securities | $ 50 | |||||||
Rinehart Motion Systems LLC and AM Racing LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Business Acquisition, Effective Date of Acquisition | Jan. 2, 2019 | |||||||
Business Combination, Consideration Transferred | 15 | |||||||
Payments for business acquired | 2 | $ 10 | ||||||
Business Combination, Contingent Consideration, Liability | $ 3 | |||||||
Romeo Systems, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Ownership Percentage in Investee | 20.00% | |||||||
Asset impairment cost | $ 9 | |||||||
Cost method investment fair value | 41 | |||||||
BorgWarner Romeo Power LLC [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Total equity from shareholders' initial capital contribution | $ 10 | |||||||
BorgWarner Romeo Power LLC [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Noncontrolling Interest, Ownership Percentage by Parent | 60.00% | |||||||
Subsequent Event [Member] | Delphi Technologies PLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Material breach cure period | 30 days | |||||||
Subsequent Event [Member] | Forecast [Member] | Delphi Technologies PLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Delphi Technologies revised exchange ratio | 0.4307 | |||||||
Maximum amount of line of credit facility outstanding, net of cash balances | $ 115 | |||||||
Line of credit facility, maximum amount outstanding | $ 225 | |||||||
Ownership percentage of combined company | 85.00% | |||||||
Subsequent Event [Member] | Forecast [Member] | Delphi Technologies PLC | Delphi Technologies PLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 15.00% | |||||||
BorgWarner Morse TEC LLC [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Ownership percentage transferred | 100.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2020 | Apr. 29, 2020 | |
Subsequent Event [Line Items] | ||
Delayed Term Loan Amount | $ 750 | |
Delayed Term Loan Maturity | 364 days |