Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 27, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 | 235,055,429 | |
Entity Central Index Key | 0000908255 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock, par value $0.01 per share | ||
Document Information [Line Items] | ||
Title of each class | Common Stock, par value $0.01 per share | |
Trading Symbol(s) | BWA | |
Name of each exchange on which registered | NYSE | |
1.00% Senior Notes due 2031 | ||
Document Information [Line Items] | ||
Title of each class | 1.00% Senior Notes due 2031 | |
Trading Symbol(s) | BWA31 | |
Name of each exchange on which registered | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash, cash equivalents and restricted cash | $ 949 | $ 1,083 |
Receivables, net | 3,351 | 2,471 |
Inventories, net | 1,328 | 1,217 |
Prepayments and other current assets | 272 | 230 |
Current assets of discontinued operations | 0 | 1,616 |
Total current assets | 5,900 | 6,617 |
Property, plant and equipment, net | 3,569 | 3,426 |
Investments and long-term receivables | 624 | 819 |
Goodwill | 2,936 | 2,978 |
Other intangible assets, net | 557 | 619 |
Other non-current assets | 518 | 489 |
Non-current assets of discontinued operations | 0 | 2,046 |
Total assets | 14,104 | 16,994 |
LIABILITIES AND EQUITY | ||
Notes payable and other short-term debt | 63 | 60 |
Accounts payable | 2,396 | 2,146 |
Other current liabilities | 1,114 | 1,084 |
Current liabilities of discontinued operations | 0 | 946 |
Total current liabilities | 3,573 | 4,236 |
Long-term debt | 3,665 | 4,140 |
Retirement-related liabilities | 129 | 129 |
Other non-current liabilities | 730 | 686 |
Non-current liabilities of discontinued operations | 0 | 295 |
Total liabilities | 8,097 | 9,486 |
Commitments and contingencies | ||
Common stock | 3 | 3 |
Capital in excess of par value | 2,680 | 2,675 |
Retained earnings | 6,010 | 7,454 |
Accumulated other comprehensive loss | (915) | (876) |
Common stock held in treasury, at cost | (2,010) | (2,032) |
Total BorgWarner Inc. stockholders’ equity | 5,768 | 7,224 |
Noncontrolling interest | 239 | 284 |
Total equity | 6,007 | 7,508 |
Total liabilities and equity | $ 14,104 | $ 16,994 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net sales | $ 3,622 | $ 3,226 | $ 10,676 | $ 9,318 |
Cost of sales | 2,970 | 2,619 | 8,767 | 7,588 |
Gross profit | 652 | 607 | 1,909 | 1,730 |
Selling, general and administrative expenses | 330 | 325 | 963 | 951 |
Restructuring expense | 56 | 5 | 68 | 42 |
Other operating (income) expense, net | (6) | 12 | (1) | (7) |
Operating income | 272 | 265 | 879 | 744 |
Equity in affiliates’ earnings, net of tax | (10) | (5) | (23) | (21) |
Realized and unrealized loss (gain) on debt and equity securities | 60 | (1) | 129 | 27 |
Interest (income) expense, net | (19) | 12 | 3 | 41 |
Other postretirement expense (income) | 3 | (1) | 8 | (2) |
Earnings from continuing operations before income taxes and noncontrolling interest | 238 | 260 | 762 | 699 |
Provision for income taxes | 133 | 68 | 230 | 177 |
Net earnings from continuing operations | 105 | 192 | 532 | 522 |
Net (loss) earnings from discontinued operations | (37) | 100 | (12) | 225 |
Net earnings | 68 | 292 | 520 | 747 |
Net earnings from continuing operations attributable to noncontrolling interest, net of tax | 18 | 19 | 49 | 58 |
Net earnings from discontinued operations attributable to noncontrolling interest, net of tax | 0 | 0 | 0 | 0 |
Net earnings attributable to BorgWarner Inc. | 50 | 273 | 471 | 689 |
Amounts attributable to BorgWarner Inc.: | ||||
Net earnings from continuing operations | $ 87 | $ 173 | $ 483 | $ 464 |
Basic earnings per share: | ||||
Earnings per share from continuing operations — basic (in dollar per share) | $ 0.37 | $ 0.74 | $ 2.07 | $ 1.96 |
Earnings per share from discontinued operations — basic (in dollar per share) | (0.16) | 0.43 | (0.05) | 0.95 |
Earnings per share attributable to BorgWarner Inc. — basic (in dollar per share) | 0.21 | 1.17 | 2.02 | 2.91 |
Diluted earnings per share: | ||||
Earnings per share from continuing operations — diluted (in dollar per share) | 0.37 | 0.73 | 2.06 | 1.95 |
Earnings per share from discontinued operations — diluted (in dollar per share) | (0.16) | 0.42 | (0.05) | 0.95 |
Earnings per share attributable to BorgWarner Inc. — diluted (in dollar per share) | $ 0.21 | $ 1.15 | $ 2.01 | $ 2.90 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 233.4 | 234.3 | 233.2 | 236.5 |
Diluted (in shares) | 235.3 | 235.6 | 234.6 | 237.5 |
Discontinued Operations | Phinia | ||||
Amounts attributable to BorgWarner Inc.: | ||||
Net (loss) earnings from discontinued operations | $ (37) | $ 100 | $ (12) | $ 225 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net earnings attributable to BorgWarner Inc. | $ 50 | $ 273 | $ 471 | $ 689 | |
Other comprehensive loss | |||||
Foreign currency translation adjustments | [1] | (16) | (274) | (72) | (554) |
Hedge instruments | [1] | (12) | 8 | 26 | 13 |
Defined benefit postretirement plans | [1] | 11 | 4 | 7 | 14 |
Total other comprehensive loss attributable to BorgWarner Inc. | (17) | (262) | (39) | (527) | |
Comprehensive income attributable to BorgWarner Inc | [1] | 33 | 11 | 432 | 162 |
Net income attributable to noncontrolling interest, net of tax | 18 | 19 | 49 | 58 | |
Other comprehensive loss attributable to noncontrolling interest | [1] | (4) | (24) | (18) | (42) |
Comprehensive income | $ 47 | $ 6 | $ 463 | $ 178 | |
[1]Net of income taxes. |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
OPERATING ACTIVITIES OF CONTINUING OPERATIONS | ||
Net cash provided by operating activities of continuing operations (see Note 23) | $ 510 | $ 552 |
INVESTING ACTIVITIES OF CONTINUING OPERATIONS | ||
Capital expenditures, including tooling outlays | (624) | (427) |
Payments for businesses acquired, net of cash acquired | (31) | (288) |
Proceeds from settlement of net investment hedges, net | 25 | 40 |
Proceeds from investments in debt and equity securities, net | 63 | 27 |
Proceeds from the sale of business, net | 0 | 25 |
Proceeds from asset disposals and other, net | 29 | 16 |
Net cash used in investing activities from continuing operations | (538) | (607) |
FINANCING ACTIVITIES OF CONTINUING OPERATIONS | ||
Net increase in notes payable | 3 | 0 |
Additions to debt | 4 | 2 |
Payments for debt issuance costs | (3) | 0 |
Repayments of debt, including current portion | (444) | (9) |
Payments for purchase of treasury stock | 0 | (240) |
Payments for stock-based compensation items | (25) | (18) |
Payments for contingent consideration | (23) | 0 |
Purchase of noncontrolling interest | (15) | (56) |
Net distribution from PHINIA | 401 | 0 |
Dividends paid to BorgWarner stockholders | (105) | (121) |
Dividends paid to noncontrolling stockholders | (71) | (48) |
Net cash used in financing activities from continuing operations | (278) | (490) |
CASH FLOWS FROM DISCONTINUED OPERATIONS | ||
Operating activities of discontinued operations | (66) | 127 |
Investing activities of discontinued operations | (86) | (79) |
Financing activities of discontinued operations | 84 | (3) |
Net cash (used in) provided by discontinued operations | (68) | 45 |
Effect of exchange rate changes on cash | (15) | (103) |
Net decrease in cash, cash equivalents and restricted cash | (389) | (603) |
Cash, cash equivalents and restricted cash at beginning of year | 1,338 | 1,844 |
Cash, cash equivalents and restricted cash at end of period | 949 | 1,241 |
Less: Cash, cash equivalents and restricted cash of discontinued operations at end of period | 0 | 172 |
Cash, cash equivalents and restricted cash of continuing operations at end of period | $ 949 | $ 1,069 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
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. Certain prior period amounts have been reclassified to conform to the current period presentation. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet as of December 31, 2022 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, 2022. 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. On July 3, 2023, BorgWarner completed the previously announced spin-off (“Spin-Off”) of its Fuel Systems and Aftermarket segments in a transaction intended to qualify as tax free to the Company’s stockholders for U.S. federal income tax purposes, which was accomplished by the distribution of 100% of the outstanding common stock of PHINIA, Inc. (“PHINIA”) to holders of record of common stock of the Company on a pro-rata basis. Each holder of record of common stock of the Company received one share of PHINIA common stock for every five shares of common stock of the Company held on June 23, 2023, the record date for the distribution (“Distribution Date”). In lieu of fractional shares of PHINIA, shareholders of the Company received cash. PHINIA is an independent public company trading under the symbol “PHIN” on the New York Stock Exchange. The historical results of operations and the financial position of PHINIA for periods prior to the Spin-Off are presented as discontinued operations in these Condensed Consolidated Financial Statements. Refer to Note 24, “Discontinued Operations,” to the Condensed Consolidated Financial Statements for more information. In connection with the Spin-Off, the Company entered into several agreements with PHINIA on or prior to the Distribution Date that, among other things, provide a framework for the Company’s relationship with PHINIA after the Spin-Off, including a separation and distribution agreement, an employee matters agreement, a tax matters agreement, an intellectual property cross-license agreement and a transition services agreement through which the Company and PHINIA will continue to provide certain services to each other following the Spin-Off. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTSIn October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” It requires entities to apply ASC Topic 606, “Revenue from Contracts with Customers,” to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. This guidance is effective for interim and annual reporting periods beginning after December 15, 2022. The Company adopted this guidance prospectively as of January 1, 2023, and there was no impact in the Condensed Consolidated Financial Statements. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS In accordance with ASC Topic 805, “Business Combinations,” acquisitions are recorded using the acquisition method of accounting. The Company recognizes and measures the acquisition date fair value of the identifiable assets acquired, liabilities assumed, and any non-controlling interest using a range of methodologies as indicated by generally accepted valuation practices. Various valuation techniques are used to determine the fair value of intangible assets, with the primary techniques being forms of the income approach, specifically the relief-from-royalty and multi-period excess earnings valuation methods. Under these valuation approaches, the Company is required to make estimates and assumptions from a market participant perspective and may include revenue growth rates, estimated earnings, royalty rates, obsolescence factors, contributory asset charges, customer attrition and discount rates. Due to the insignificant size of the 2023 and 2022 acquisitions, both individually and in the aggregate, relative to the Company, supplemental pro forma financial information for the current and prior reporting periods is not provided. Eldor Corporation’s Electric Hybrid Systems Business On June 19, 2023, the Company announced that it had entered into a share purchase agreement to acquire the Electric Hybrid Systems business segment of Eldor Corporation (“Eldor”), which is headquartered in Italy. The purchase price due at closing is €75 million ($79 million), with up to €175 million ($185 million) in contingent payments that could be paid over the two years following closing. The Company expects the acquisition to complement its existing ePropulsion product portfolio by enhancing the Company’s engineering capabilities in power electronics. The transaction is subject to satisfaction of customary closing conditions and is expected to close in the fourth quarter of 2023. Hubei Surpass Sun Electric Charging Business On March 1, 2023, the Company completed its acquisition of 100% of the electric vehicle solution, smart grid and smart energy businesses (“SSE”) of Hubei Surpass Sun Electric, pursuant to an Equity Transfer Agreement. The acquisition complements the Company’s existing European and North American charging footprint by adding a presence in China. The total consideration was ¥288 million ($42 million), including ¥268 million ($39 million) of base purchase price and ¥20 million ($3 million) of estimated earn-out payments. The Company paid ¥217 million ($31 million) of base purchase price in the nine months ended September 30, 2023. Of the remaining ¥51 million ($8 million) of base purchase price, ¥31 million ($5 million) is payable by April 30, 2024 and is recorded in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2023. The remaining ¥20 million ($3 million) of base purchase price is payable before April 30, 2025 and is recorded in Other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2023. Pursuant to the agreement, the Company’s obligation to remit up to ¥103 million ($15 million) of earn-out payments is contingent upon the achievement of certain revenue and pre-tax profit margin targets in 2023 and 2024 as well as the retention of key employees during the same time period. As of September 30, 2023, the Company’s estimate of the earn-out payments was approximately ¥20 million ($3 million), of which half is recorded in Other current liabilities and half is recorded in Other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet. The purchase price was allocated on a provisional basis as of March 1, 2023, and all assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable. The Company subsequently finalized its valuation of the assets and liabilities of the SSE acquisition during the third quarter of 2023, and the estimated fair values of assets acquired and liabilities assumed amounted to total assets of $50 million, including goodwill and intangibles of $5 million, and total liabilities of $8 million. These final amounts were not materially different than the estimated values recorded on March 1, 2023. Any excess of the purchase price over the estimated fair value of net assets was recognized as goodwill. Goodwill of $2 million was recorded within the Company’s Air Management segment. The goodwill consists of the Company’s expected future economic benefits that will be realized from expanding the Company’s electric vehicle portfolio as electric vehicle production continues to increase. The goodwill is not deductible for tax purposes in China. In connection with the acquisition, the Company recorded $3 million for intangible assets, primarily for customer relationships and developed technology. Identifiable intangible assets were valued using the income approach The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Developed technology 5 years $ 2 Customer relationships 6 years 1 Total other intangible assets $ 3 The impact of the SSE acquisition on net sales and net earnings was immaterial for the three and nine months ended September 30, 2023. Drivetek AG On December 1, 2022, the Company completed its acquisition of 100% of Drivetek AG (“Drivetek”), an engineering and product development company located in Switzerland. This acquisition strengthens the Company’s power electronics capabilities in auxiliary inverters, which the Company expects will help to accelerate the growth of its High Voltage eFan business. The Company paid ₣27 million ($29 million) at closing, and up to ₣10 million ($10 million) could be paid in the form of contingent earn-out payments over the three years following closing. The earn-out payments are contingent upon achievement of estimated future sales targets associated with newly awarded business and future turnover rate targets. As of September 30, 2023, the Company’s estimate of the earn-out payments was approximately ₣10 million ($11 million), which is recorded in Other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet. The purchase price was allocated on a preliminary basis as of December 1, 2022. Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable. The Company subsequently finalized its valuation of the assets and liabilities of the Drivetek acquisition during the third quarter of 2023, and the estimated fair values of assets acquired and liabilities assumed amounted to total assets of $49 million, including goodwill and intangibles of $40 million, and liabilities of $10 million. These final amounts were not materially different than the estimated values recorded on December 1, 2022. Any excess of the purchase price over the estimated fair value of net assets was recognized as goodwill. Goodwill of $22 million was recorded within the Company’s Air Management segment. The goodwill consists of the Company’s expected future economic benefits that will be realized from expanding the Company’s electric vehicle portfolio as electric vehicle production continues to increase. The goodwill is not expected to be deductible for tax purposes in Switzerland. The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Developed technology 8 years $ 11 Customer relationships 12 years 7 Total other intangible assets $ 18 Identifiable intangible assets were valued using the market approach. The impact of the Drivetek acquisition on net sales and net earnings was immaterial for the three and nine months ended September 30, 2023. Rhombus Energy Solutions On July 29, 2022, the Company completed its acquisition of 100% of Rhombus Energy Solutions (“Rhombus”), a provider of charging solutions in the North American market, pursuant to the terms of an Agreement and Plan of Merger (the “Agreement”). The acquisition complements the Company’s existing European charging footprint to accelerate organic growth and adds North American regional presence to its charging business. The Company paid $131 million at closing. Pursuant to the Agreement, the Company is obligated to remit up to $30 million of earn-out payments, payable in 2025, contingent upon achievement of certain sales dollars, sales volume, and gross margin targets. The Company’s current estimates indicate that the minimum thresholds for these earn-out targets will not be achieved; thus, no amount for the earn-out payments has been included in the purchase consideration or in the Company’s Condensed Consolidated Balance Sheet. Additionally, pursuant to the Agreement, the Company is obligated to remit up to $25 million over the three years following closing in key employee retention-related payments, which include certain performance targets. The amounts will be accounted for as post-combination expense. The Company finalized its valuation of the assets and liabilities for the Rhombus acquisition during the second quarter of 2023. Any excess of the purchase price over the estimated fair value of net assets was recognized as goodwill. Goodwill of $104 million was recorded within the Company’s Air Management segment. The goodwill consists of the Company’s expected future economic benefits that will be realized from expanding the Company’s electric vehicle portfolio as electric vehicle production continues to increase. The goodwill is not expected to be deductible for tax purposes. The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Developed technology 13 years $ 22 Customer relationships 8 years 5 Total other intangible assets $ 27 Identifiable intangible assets were valued using the income approach. The impact of the Rhombus acquisition on net sales and net earnings was immaterial for the three and nine months ended September 30, 2023. Santroll Automotive Components On March 31, 2022, the Company completed its acquisition of 100% of Santroll Automotive Components (“Santroll”), a carve-out of Santroll Electric Auto’s eMotor business, pursuant to the terms of an Equity Transfer Agreement (“ETA”). The acquisition is expected to strengthen the Company’s vertical integration, scale and portfolio breadth in light vehicle eMotors while allowing for increased speed to market. The total final consideration was $192 million, including approximately ¥1.0 billion ($152 million) of base purchase price and ¥0.25 billion ($40 million) of originally estimated earn-out payments. The Company paid approximately ¥1.0 billion ($157 million) of base purchase price in the year ended December 31, 2022 and no longer expects to recapture a previously anticipated $5 million of post-closing adjustments, which has been recorded in Other operating expense, net. Pursuant to the ETA, the obligation of the Company to remit up to ¥0.3 billion (approximately $47 million) of earn-out payments was contingent upon achievement of certain sales volume targets and certain estimated future volume targets associated with newly awarded business. During the nine months ended September 30, 2023, the Company paid approximately ¥0.2 billion ($24 million) to settle the remaining earn-out liability and related adjustments. The Company finalized its valuation of the assets and liabilities of the Santroll acquisition during the first quarter of 2023. Any excess of the purchase price over the estimated fair value of net assets was recognized as goodwill. Goodwill of $112 million was recorded within the Company’s ePropulsion segment. The goodwill consists of the Company’s expected future economic benefits that will arise from future product sales and the added capabilities from vertical integration of eMotors. The goodwill is not expected to be deductible for tax purposes in China. The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Customer relationships 12 years $ 62 Manufacturing processes (know-how) 10 years 25 Total other intangible assets $ 87 Identifiable intangible assets were valued using the income approach. The impact of the Santroll acquisition on net sales and net earnings was immaterial for the three and nine months ended September 30, 2023. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 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 and off-highway vehicles, to certain tier one vehicle systems suppliers and into the aftermarket. The Company’s payment terms are based on customary business practices and vary by customer type and products offered. The Company evaluated the terms of its arrangements and determined that they do not contain significant financing components. Generally, revenue is recognized upon shipment or delivery; however, a limited number of the Company’s customer arrangements for its 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 $16 million and $14 million at September 30, 2023 and December 31, 2022, respectively, for these arrangements. These amounts are reflected in Prepayments and other current assets in the Company’s Condensed Consolidated Balance Sheets. 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 Other current liabilities in the Condensed Consolidated Balance Sheets and were $11 million at September 30, 2023 and $14 million at December 31, 2022. These amounts are reflected as revenue over the term of the arrangement (typically 3 to 7 years) as the underlying products are shipped and represent the Company’s remaining performance obligations as of the end of the period. The Company continually seeks business development opportunities and, at times, provides customer incentives for new program awards. 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. As of September 30, 2023 and December 31, 2022, the Company recorded customer incentive payments of $27 million and $34 million, respectively, in Prepayments and other current assets, and $75 million and $99 million, respectively, in Other non-current assets in the Condensed Consolidated Balance Sheets. The following tables represent a disaggregation of revenue from contracts with customers by reportable segment and region. The balances for the three and nine months ended September 30, 2022 have been recast for a change in reportable segments that was made during the first quarter of 2023. Refer to Note 22, “Reportable Segments And Related Information,” to the Condensed Consolidated Financial Statements for more information. Three Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 542 $ 405 $ 118 $ 1,065 Europe 819 329 95 1,243 Asia 511 408 343 1,262 Other 50 2 — 52 Total $ 1,922 $ 1,144 $ 556 $ 3,622 Three Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 526 $ 376 $ 109 $ 1,011 Europe 729 226 49 1,004 Asia 522 352 297 1,171 Other 50 — (10) 40 Total $ 1,827 $ 954 $ 445 $ 3,226 Nine Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 1,622 $ 1,190 $ 388 $ 3,200 Europe 2,577 980 227 3,784 Asia 1,531 1,041 953 3,525 Other 158 5 4 167 Total $ 5,888 $ 3,216 $ 1,572 $ 10,676 Nine Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 1,497 $ 1,020 $ 375 $ 2,892 Europe 2,156 724 148 3,028 Asia 1,490 1,001 762 3,253 Other 140 — 5 145 Total $ 5,283 $ 2,745 $ 1,290 $ 9,318 |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING The Company’s restructuring activities are undertaken, as necessary, to execute management’s strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve net cost reductions. Restructuring activities include efforts to integrate and rationalize the Company’s business and to relocate operations to best-cost locations. The Company’s restructuring expenses consist primarily of employee termination benefits (principally severance and/or termination benefits) and other costs, which are primarily professional fees and costs related to facility closures and exits. The balances for the three and nine months ended September 30, 2022 have been recast for a change in reportable segments that was made during the first quarter of 2023. Refer to Note 22, “Reportable Segments And Related Information,” to the Condensed Consolidated Financial Statements for more information. Three Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 53 $ 1 $ — $ — $ 54 Other 1 1 — — 2 Total restructuring expense $ 54 $ 2 $ — $ — $ 56 Three Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 5 $ — $ — $ — $ 5 Other — — — — — Total restructuring expense $ 5 $ — $ — $ — $ 5 Nine Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 62 $ 1 $ — $ — $ 63 Other 4 1 — — 5 Total restructuring expense $ 66 $ 2 $ — $ — $ 68 Nine Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 19 $ 14 $ — $ (1) $ 32 Other — 9 1 — 10 Total restructuring expense $ 19 $ 23 $ 1 $ (1) $ 42 The following tables display a roll forward of the restructuring liability recorded within the Company’s Condensed Consolidated Balance Sheets and the related cash flow activity: (in millions) Employee Termination Benefits Other Total Balance at January 1, 2023 $ 39 $ 9 $ 48 Restructuring expense, net 63 5 68 Cash payments (32) (9) (41) Foreign currency translation adjustment and other (1) 2 1 Balance at September 30, 2023 69 7 76 Less: Non-current restructuring liability 7 — 7 Current restructuring liability at September 30, 2023 $ 62 $ 7 $ 69 (in millions) Employee Termination Benefits Other Total Balance at January 1, 2022 $ 66 $ 13 $ 79 Restructuring expense, net 32 10 42 Cash payments (39) (17) (56) Foreign currency translation adjustment and other (12) 2 (10) Balance at September 30, 2022 47 8 55 Less: Non-current restructuring liability 13 1 14 Current restructuring liability at September 30, 2022 $ 34 $ 7 $ 41 2023 Structural Costs Plan In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs in its Foundational products businesses. Foundational products include all products utilized on internal combustion engines plus those same products and components that are also included in hybrid powertrains. During the three and nine months ended September 30, 2023, the Company recorded $56 million and $68 million, respectively, of restructuring costs related to this plan. 2020 Structural Costs Plan In 2020, the Company announced a $300 million restructuring plan to address structural costs. The actions under this plan are complete. The following provides details of restructuring expense incurred by the Company’s reportable segments during the three and nine months ended September 30, 2023, and 2022, related to the plans and actions discussed above: Air Management 2023 Structural Costs Plan • During the three and nine months ended September 30, 2023, the segment recorded $54 million and $66 million, respectively, of restructuring costs under this plan, primarily related to employee termination benefits associated with the announced closure of a facility in Europe affecting approximately 200 employees. 2020 Structural Costs Plan • During the three and nine months ended September 30, 2022, the segment recorded $5 million and $19 million, respectively, of restructuring costs under this plan. This primarily related to $11 million during the nine months ended September 30, 2022, for a voluntary termination program pursuant to which approximately 47 employees accepted termination packages in 2022. Drivetrain & Battery Systems 2023 Structural Costs Plan • During the three and nine months ended September 30, 2023, the segment recorded $2 million of restructuring costs under this plan, primarily related to employee termination benefits and equipment moves. 2020 Structural Costs Plan • During the nine months ended September 30, 2022, the segment recorded $9 million of restructuring costs primarily related to contractual settlements and professional fees. Separate from the 2020 Structural Costs Plan, during the nine months ended September 30, 2022, the segment recorded $14 million of restructuring costs, primarily related to severance costs associated with the announced closure of a technical center in Europe affecting approximately 80 employees. 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 continues to evaluate different options across its operations to reduce existing structural costs over the next few years. The Company will recognize restructuring expense associated with any future actions at the time they are approved and become probable or are incurred. Any future actions could result in significant restructuring expense. |
RESEARCH AND DEVELOPMENT COSTS
RESEARCH AND DEVELOPMENT COSTS | 9 Months Ended |
Sep. 30, 2023 | |
Research and Development [Abstract] | |
RESEARCH AND DEVELOPMENT COSTS | RESEARCH AND DEVELOPMENT COSTS 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 Company has contracts with several customers relating to R&D activities that the Company performs at the Company’s various R&D locations. The following table presents the Company’s gross and net expenditures on R&D activities: Three Months Ended September 30, Nine Months Ended September 30, ( in millions ) 2023 2022 2023 2022 Gross R&D expenditures $ 215 $ 190 $ 625 $ 566 Customer reimbursements (23) (12) (84) (32) Net R&D expenditures $ 192 $ 178 $ 541 $ 534 |
OTHER OPERATING (INCOME) EXPENS
OTHER OPERATING (INCOME) EXPENSE, NET | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
OTHER OPERATING (INCOME) EXPENSE, NET | OTHER OPERATING (INCOME) EXPENSE, NET Items included in Other operating expense, net consist of: Three Months Ended September 30, Nine Months Ended September 30, ( in millions ) 2023 2022 2023 2022 Merger and acquisition expense, net $ 2 $ 5 $ 18 $ 13 Service and lease agreement termination — — 9 — Asset impairments 2 — 2 — Loss (gain) on sale of business — 9 (5) (15) Gain on sale of assets (7) — (13) — Other (income) expense, net (3) (2) (12) (5) Other operating (income) expense, net $ (6) $ 12 $ (1) $ (7) Merger and acquisition expense, net: During the three and nine months ended September 30, 2023, the Company recorded merger and acquisition expense, net of $2 million and $18 million, respectively, primarily related to professional fees for specific acquisition initiatives. During the three and nine months ended September 30, 2022, the Company recorded merger and acquisition expense, net of $5 million and $13 million, respectively, primarily related to professional fees associated with specific acquisition initiatives. Loss (gain) on sale of business: During the three months ended September 30, 2022, the Company updated its estimate of the expected earn-out related to a previous divestiture resulting in a $9 million loss in the period. During the nine months ended September 30, 2022, the Company recorded a pre-tax gain of $24 million in connection with the sale of its interest in BorgWarner Romeo Power LLC, in which the Company owned a 60% interest. Gain on sale of assets: During the three months ended September 30, 2023, the Company recorded a $7 million gain related to the sale of a European manufacturing facility. The sale of the facility was pursuant to a formal restructuring plan. During the nine months ended September 30, 2023, the Company recorded a $13 million gain, primarily related to the sale of the European manufacturing facility and other fixed assets. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 and 2022 was 56% and 26%, respectively. During the three months ended September 30, 2023, a discrete tax benefit of approximately $31 million was recorded in relation to various changes in filling positions for prior years, a discrete tax benefit of approximately $12 million was recorded in relation to the Spin-Off, and a discrete tax expense of approximately $87 million was recorded in relation to changes in judgement related to the realization of deferred tax assets, primarily due to the impact of the Spin-Off on the allocation of the Company’s profits across jurisdictions for tax purposes as well as various tax structuring actions and strategies. During the three months ended September 30, 2022, a discrete tax benefit of $1 million was recorded relating to other tax adjustments. The Company’s effective tax rate for the nine months ended September 30, 2023 and 2022 was 30% and 25%, respectively. During the nine months ended September 30, 2023, a discrete tax benefit of approximately $14 million was recorded related to the resolution of tax audits, a discrete tax benefit of approximately $41 million was recorded in relation to the Spin-Off, a discrete tax benefit of approximately $39 million was recorded in relation to various changes in filling positions for prior years, a discrete tax expense of approximately $9 million was recorded for the impact of enacted tax law changes, and a discrete tax expense of approximately $85 million was recorded in relation to changes in judgement related to the recovery of deferred tax assets, primarily due to the impact of the Spin-Off on the allocation of the Company’s profits across jurisdictions for tax purposes as well as various tax structuring actions and strategies. During the nine months ended September 30, 2022, a discrete tax benefit of $8 million was recorded relating to other tax adjustments. The annual effective tax rates differ from the U.S. statutory rate primarily due to foreign rates that vary from those in the U.S., jurisdictions with pretax losses for which no tax benefit could be realized, U.S. taxes on foreign earnings, the realization of certain business tax credits (including foreign tax credits), and permanent differences between book and tax treatment for certain items (including the Foreign-Derived Intangible Income (“FDII”) deduction and the enhanced deduction of research and development expenses in certain jurisdictions). The Company estimates that it is reasonably possible there could be a decrease of approximately $97 million in unrecognized tax benefits and interest in the next 12 months related to the conclusion of tax audits and the lapse of statutes of limitations subsequent to the reporting period in certain taxing jurisdictions. |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET A summary of Inventories, net is presented below: September 30, December 31, (in millions) 2023 2022 Raw material and supplies $ 1,005 $ 919 Work in progress 154 136 Finished goods 202 187 FIFO inventories 1,361 1,242 LIFO reserve (33) (25) Inventories, net $ 1,328 $ 1,217 |
OTHER CURRENT AND NON-CURRENT A
OTHER CURRENT AND NON-CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER CURRENT AND NON-CURRENT ASSETS | OTHER CURRENT AND NON-CURRENT ASSETS Additional detail related to assets is presented below: September 30, December 31, ( in millions ) 2023 2022 Prepayments and other current assets: Prepaid tooling $ 99 $ 77 Prepaid taxes 40 33 Derivative instruments 34 12 Customer incentive payments (Note 4) 27 34 Contract assets (Note 4) 16 14 Other 56 60 Total prepayments and other current assets $ 272 $ 230 Investments and long-term receivables: Investment in debt securities $ 262 $ 455 Investment in equity affiliates 232 235 Equity securities 73 73 Long-term receivables 57 56 Total investments and long-term receivables $ 624 $ 819 Other non-current assets: Deferred income taxes $ 193 $ 179 Operating leases 128 106 Derivative instruments 83 68 Customer incentive payments (Note 4) 75 99 Other 39 37 Total other non-current assets $ 518 $ 489 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES During the fourth quarter of each year, the Company assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. In addition, the Company may test goodwill in between annual test dates if an event occurs or circumstances change that could more-likely-than-not reduce the fair value of a reporting unit below its carrying value. No events or circumstances were noted in the nine months ended September 30, 2023 requiring additional assessment or testing. Future changes in the judgments, assumptions and estimates from those used in acquisition-related valuations and goodwill impairment testing, including discount rates or future operating results and related cash flow projections, could result in significantly different estimates of the fair values in the future. An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect the Company’s financial statements in any given year. A summary of the changes in the carrying amount of goodwill are as follows: (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total Gross goodwill balance, December 31, 2022 $ 1,566 $ 1,434 $ 480 $ 3,480 Accumulated impairment losses, December 31, 2022 (502) — — (502) Net goodwill balance, December 31, 2022* $ 1,064 $ 1,434 $ 480 $ 2,978 Goodwill during the period: Acquisitions 2 — — 2 Other, primarily translation adjustment (6) (10) (28) (44) Ending balance, September 30, 2023 $ 1,060 $ 1,424 $ 452 $ 2,936 __________________________________ * The December 31, 2022 balances have been recast for a change in reportable segments that was made during the first quarter of 2023. Refer to Note 22, “Reportable Segments And Related Information” for more information. The Company’s other intangible assets, primarily from acquisitions, consist of the following: September 30, 2023 December 31, 2022 (in millions) Estimated useful lives (years) Gross Accumulated Net Gross Accumulated Net Amortized intangible assets: Patented and unpatented technology 5 - 15 $ 349 $ 134 $ 215 $ 349 $ 111 $ 238 Customer relationships 6 - 15 620 287 333 639 267 372 Miscellaneous 2 - 5 9 6 3 9 6 3 Total amortized intangible assets 978 427 551 997 384 613 Unamortized trade names 6 — 6 6 — 6 Total other intangible assets $ 984 $ 427 $ 557 $ 1,003 $ 384 $ 619 |
PRODUCT WARRANTY
PRODUCT WARRANTY | 9 Months Ended |
Sep. 30, 2023 | |
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 The following table summarizes the activity in the product warranty accrual accounts: (in millions) 2023 2022 Beginning balance, January 1 $ 185 $ 168 Provisions for current period sales 68 40 Adjustments of prior estimates — (6) Payments (53) (34) Other, primarily translation adjustment (6) (20) Ending balance, September 30 $ 194 $ 148 The product warranty liability is classified in the Condensed Consolidated Balance Sheets as follows: September 30, December 31, (in millions) 2023 2022 Other current liabilities $ 99 $ 110 Other non-current liabilities 95 75 Total product warranty liability $ 194 $ 185 |
NOTES PAYABLE AND DEBT
NOTES PAYABLE AND DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND DEBT | NOTES PAYABLE AND DEBT As of September 30, 2023 and December 31, 2022, the Company had debt outstanding as follows: September 30, December 31, ( in millions ) 2023 2022 Short-term borrowings $ 60 $ 58 Long-term debt 3.375% Senior notes due 03/15/25 ($500 million par value) 384 499 5.000% Senior notes due 10/01/25 ($800 million par value)* 481 840 2.650% Senior notes due 07/01/27 ($1,100 million par value) 1,093 1,092 7.125% Senior notes due 02/15/29 ($121 million par value) 120 120 1.000% Senior Notes due 05/19/31 (€1,000 million par value) 1,041 1,051 4.375% Senior notes due 03/15/45 ($500 million par value) 495 495 Term loan facilities, finance leases and other 54 45 Total long-term debt 3,668 4,142 Less: current portion 3 2 Long-term debt, net of current portion $ 3,665 $ 4,140 _____________________________ *These notes include the fair value step-up from the Delphi Technologies acquisition. The fair value step-up was calculated based on observable market data and is amortized as a reduction to interest expense over the remaining life of the instrument using the effective interest method. In September 2023, the Company purchased and extinguished $438 million of senior notes due in 2025, comprised of $115 million and $323 million face value of its 3.375% and 5.000% Senior Notes, respectively. Total cash consideration paid was $430 million. The Company recorded a gain of approximately $28 million during the three months ended September 30, 2023, consisting of an $8 million gain related to a cash settlement below the face value of the 2025 notes and $20 million related to the write-off of the unamortized premium and discount that was recorded at the time of note issuance. The gain was recorded to Interest (income) expense, net, in the Statements of Operations. The Company may utilize uncommitted lines of credit for short-term working capital requirements. As of September 30, 2023 and December 31, 2022, the Company had $60 million and $58 million, respectively, in borrowings under these facilities, which are classified in Notes payable and other short-term debt in the Condensed Consolidated Balance Sheets. The short-term borrowings primarily relate to a European money market loan with an interest rate of Euribor plus 1.75% that is callable upon immediate notice by either party. The following table provides details on Interest expense, net included in the Condensed Consolidated Statements of Operations: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Interest expense $ 21 $ 16 $ 57 $ 53 Gain on debt extinguishment (28) — (28) — Interest income (12) (4) (26) (12) Interest expense, net $ (19) $ 12 $ 3 $ 41 The Company has a $2 billion multi-currency revolving credit facility that allows the Company to increase the facility by $1 billion with bank group approval. This facility was renewed in September 2023 and now matures in September 2028. The credit agreement contains customary events of default and one key financial covenant which is a debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio. The Company was in compliance with the financial covenant at September 30, 2023. At September 30, 2023 and December 31, 2022, the Company had no outstanding borrowings under this facility. The Company’s commercial paper program allows the Company to issue up to $2 billion of short-term, unsecured commercial paper notes under the limits of its multi-currency revolving credit facility. 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 September 30, 2023 and December 31, 2022. The total current combined borrowing capacity under the multi-currency revolving credit facility and commercial paper program cannot exceed $2 billion. As of September 30, 2023 and December 31, 2022, the estimated fair values of the Company’s senior unsecured notes totaled $3,099 million and $3,530 million, respectively. The estimated fair values were $515 million lower than their carrying value at September 30, 2023 and $567 million lower than their carrying value at December 31, 2022. 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, commercial paper program and other debt facilities approximate 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 $35 million and $31 million at September 30, 2023 and December 31, 2022, respectively. The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions. |
OTHER CURRENT AND NON-CURRENT L
OTHER CURRENT AND NON-CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT AND NON-CURRENT LIABILITIES | OTHER CURRENT AND NON-CURRENT LIABILITIES Additional detail related to liabilities is presented in the table below: September 30, December 31, ( in millions ) 2023 2022 Other current liabilities: Payroll and employee related $ 268 $ 314 Customer related 161 108 Indirect taxes 119 115 Income taxes payable 72 107 Product warranties (Note 12) 99 110 Employee termination benefits (Note 5) 62 20 Operating leases 41 22 Accrued freight 38 30 Interest 22 22 Supplier related 17 15 Insurance 17 18 Deferred engineering reimbursements 14 23 Other non-income taxes 14 12 Dividends payable 11 21 Contract liabilities (Note 4) 11 14 Retirement related 11 11 Earn-out liability (Note 3) 2 16 Other 135 106 Total other current liabilities $ 1,114 $ 1,084 Other non-current liabilities: Other income tax liabilities $ 222 $ 242 Deferred income taxes 179 143 Product warranties (Note 12) 95 75 Operating leases 91 85 Deferred income 69 59 Earn-out liability (Note 3) 12 10 Employee termination benefits (Note 5) 7 17 Other 55 55 Total other non-current liabilities $ 730 $ 686 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
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 for 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 September 30, 2023 and December 31, 2022: Basis of fair value measurements (in millions) Balance at September 30, 2023 Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation technique Assets measured at NAV 1 Assets: Investment in debt securities $ 262 $ — $ 262 $ — A $ — Investment in equity securities $ 28 $ — $ — $ — — $ 28 Foreign currency contracts $ 39 $ — $ 39 $ — A $ — Net investment hedge contracts $ 78 $ — $ 78 $ — A $ — Liabilities: Current earn-out liabilities $ 2 $ — $ — $ 2 C $ — Non-current earn-out liabilities $ 12 $ — $ — $ 12 C $ — Foreign currency contracts $ 2 $ — $ 2 $ — A $ — Basis of fair value measurements (in millions) Balance at Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation Assets measured at NAV 1 Assets: Current earn-out receivable $ 9 $ — $ — $ 9 C $ — Investment in debt securities $ 455 $ — $ 455 $ — A $ — Investment in equity securities $ 29 $ — $ — $ — — $ 29 Foreign currency contracts $ 12 $ — $ 12 $ — A $ — Net investment hedge contracts $ 68 $ — $ 68 $ — A $ — Liabilities: Current earn-out liability $ 21 $ — $ — $ 21 C $ — Non-current earn-out liability $ 10 $ — $ — $ 10 C $ — Foreign currency contracts $ 9 $ — $ 9 $ — A $ — Net investment hedge contracts $ 1 $ — $ 1 $ — A $ — |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
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 also include long-term debt, investments in equity securities, interest rate and cross-currency swaps, 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. An adjustment for non-performance risk is considered in the estimate of fair value in derivative assets based on the counterparty credit default swap (“CDS”) rate. When the Company is in a net derivative liability position, the non-performance risk adjustment is based on its CDS rate. At September 30, 2023 and December 31, 2022, the Company had no derivative contracts that contained credit-risk-related contingent features. The Company, at times, uses certain commodity derivative contracts to protect against commodity price changes related to forecasted raw material and component purchases. At September 30, 2023 and December 31, 2022, the Company had no material commodity derivative contracts. 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, at times, 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 September 30, 2023 and December 31, 2022, the Company had no outstanding interest rate swaps or options. 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). 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 September 30, 2023 and December 31, 2022, the following foreign currency derivative contracts were outstanding and mature through the ending duration noted below: Foreign currency derivatives (in millions)* Functional Currency Traded Currency Notional in traded currency Notional in traded currency Ending Duration British Pound Euro 47 10 Dec - 24 Chinese Renminbi US Dollar 225 276 Dec - 24 Euro Hungarian Forint 7,033 — Dec - 24 Euro Korean Won 20,225 9,138 Mar - 24 Euro Polish Zloty 456 440 Dec - 24 Euro US Dollar 136 120 Dec - 24 US Dollar Chinese Renminbi 582 1,402 Dec - 23 US Dollar Euro 42 45 Oct - 23 US Dollar Korean Won 67,200 51,786 Nov - 24 US Dollar Mexican Peso 2,295 2,474 Dec - 24 US Dollar Thailand Baht 1,550 — Jun - 24 *Table above excludes non-significant traded currency pairings with total notional amounts less than $10 million U.S. dollar equivalent as of September 30, 2023 and December 31, 2022. 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 September 30, 2023 and December 31, 2022, the following cross-currency swap contracts were outstanding: Cross-currency swaps (in millions) September 30, 2023 December 31, 2022 Ending duration US dollar to Euro: Fixed receiving notional $ 1,100 $ 1,100 Jul - 27 Fixed paying notional € 976 € 976 Jul - 27 US dollar to Euro: Fixed receiving notional $ 500 $ 500 Mar - 25 Fixed paying notional € 450 € 450 Mar - 25 US dollar to Japanese yen: Fixed receiving notional $ 100 $ 100 Feb - 29 Fixed paying notional ¥ 12,724 ¥ 12,724 Feb - 29 At September 30, 2023 and December 31, 2022, the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815, “Derivatives and Hedging”: (in millions) Assets Liabilities Derivatives designated as hedging instruments Under 815: Location September 30, 2023 December 31, 2022 Location September 30, 2023 December 31, 2022 Foreign currency Prepayments and other current assets $ 31 $ 9 Other current liabilities $ 1 $ 8 Foreign currency Other non-current assets $ 5 $ — Other non-current liabilities $ — $ 1 Net investment hedges Other non-current assets $ 78 $ 68 Other non-current liabilities $ — $ 1 Derivatives not designated as hedging instruments: Foreign currency Prepayments and other current assets $ 3 $ 3 Other current liabilities $ 1 $ — 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 accumulated other comprehensive income (loss) (“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 is 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 is 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 is 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 is 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 for designated net investment hedges. 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 September 30, 2023 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 September 30, 2023 December 31, 2022 Net investment hedges: Foreign currency $ — $ (4) $ — Cross-currency swaps 78 67 — Foreign currency-denominated debt 146 133 — Total $ 224 $ 196 $ — Derivative instruments designated as hedging instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income: Three Months Ended September 30, 2023 (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 $ 3,622 $ 2,970 $ 330 $ (17) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ (11) Nine Months Ended September 30, 2023 (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 $ 10,676 $ 8,767 $ 963 $ (39) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ 27 Three Months Ended September 30, 2022 (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 $ 3,226 $ 2,619 $ 325 $ (262) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ 8 Nine Months Ended September 30, 2022 (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 $ 9,318 $ 7,588 $ 951 $ (527) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ 12 Gain (loss) reclassified from AOCI to income $ — $ (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 (loss) during the periods presented below. (in millions) Three Months Ended September 30, Nine Months Ended September 30, Net investment hedges 2023 2022 2023 2022 Foreign currency $ — $ 3 $ — $ 6 Cross-currency swaps $ 40 $ 94 $ 11 $ 229 Foreign currency-denominated debt $ 34 $ 67 $ 13 $ 156 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 on components excluded from the assessment of effectiveness: (in millions) Three Months Ended September 30, Nine Months Ended September 30, Net investment hedges 2023 2022 2023 2022 Cross-currency swaps $ 6 $ 7 $ 19 $ 20 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 (losses) recorded in income: (in millions) Three Months Ended September 30, Nine Months Ended September 30, Contract Type Location 2023 2022 2023 2022 Foreign Currency Selling, general and administrative expenses $ 16 $ 13 $ 8 $ 22 |
RETIREMENT BENEFIT PLANS
RETIREMENT BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
RETIREMENT BENEFIT PLANS | RETIREMENT BENEFIT PLANSThe Company has a number of defined benefit pension plans and other postemployment benefit plans covering eligible salaried and hourly employees and their dependents. The estimated contributions to the Company’s defined benefit pension plans for 2023 range from $15 million to $20 million, of which $14 million has been contributed through the nine months ended September 30, 2023. The other postemployment benefit plans, which provide medical and life insurance benefits, are funded on a pay-as-you-go basis. The components of net periodic benefit income and expense recorded in the Condensed Consolidated Statements of Operations are as follows: Pension benefits Other postemployment benefits (in millions) 2023 2022 Three Months Ended September 30, US Non-US US Non-US 2023 2022 Service cost $ — $ 4 $ — $ 4 $ — $ — Interest cost 2 26 1 3 — 1 Expected return on plan assets (1) (25) (3) (5) — — Amortization of unrecognized prior service credit — — (1) — (1) (1) Amortization of unrecognized loss 1 1 2 2 — — Net periodic benefit expense (income) $ 2 $ 6 $ (1) $ 4 $ (1) $ — Pension benefits Other postemployment benefits (in millions) 2023 2022 Nine Months Ended September 30, US Non-US US Non-US 2023 2022 Service cost $ — $ 11 $ — $ 14 $ — $ — Interest cost 5 37 3 10 1 1 Expected return on plan assets (4) (33) (6) (16) — — Amortization of unrecognized prior service credit — — (1) — (2) (2) Amortization of unrecognized loss 2 2 3 6 — — Net periodic benefit expense (income) $ 3 $ 17 $ (1) $ 14 $ (1) $ (1) The components of net periodic benefit income other than the service cost component are included in Other postretirement income in the Condensed Consolidated Statements of Operations. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY The changes of the Stockholders’ Equity items during the three and nine months ended September 30, 2023 and 2022, 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 Total Balance, June 30, 2023 $ 3 $ 2,657 $ (2,007) $ 7,796 $ (898) $ 230 $ 7,781 Dividends declared ($0.11 per share*) — — — (26) — (5) (31) Net issuance for executive stock plan — 10 — — — — 10 Net issuance of restricted stock — 13 (3) — — — 10 Net earnings — — — 50 — 18 68 Other comprehensive loss — — — — (1) (4) (5) Spin-Off of PHINIA — — — (1,810) (16) — (1,826) Balance, September 30, 2023 $ 3 $ 2,680 $ (2,010) $ 6,010 $ (915) $ 239 $ 6,007 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 Total Balance, June 30, 2022 $ 3 $ 2,633 $ (1,936) $ 7,005 $ (816) $ 282 $ 7,171 Dividends declared ($0.17 per share*) — — — (39) — (15) (54) Net issuance for executive stock plan — 6 (1) — — — 5 Net issuance of restricted stock — 11 (2) — — — 9 Purchase of treasury stock — — (100) — — — (100) Net earnings — — — 273 — 19 292 Other comprehensive loss — — — — (262) (24) (286) Balance, September 30, 2022 $ 3 $ 2,650 $ (2,039) $ 7,239 $ (1,078) $ 262 $ 7,037 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 Total Balance, December 31, 2022 $ 3 $ 2,675 $ (2,032) $ 7,454 $ (876) $ 284 $ 7,508 Dividends declared ($0.45 per share*) — — — (105) — (63) (168) Net issuance for executive stock plan — 10 5 — — — 15 Net issuance of restricted stock — (3) 17 — — — 14 Purchase of noncontrolling interest — (2) — — — (13) (15) Net earnings — — — 471 — 49 520 Other comprehensive loss — — — — (23) (18) (41) Spin-Off of PHINIA — — — (1,810) (16) — (1,826) Balance, September 30, 2023 $ 3 $ 2,680 $ (2,010) $ 6,010 $ (915) $ 239 $ 6,007 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 Total Balance, December 31, 2021 $ 3 $ 2,637 $ (1,812) $ 6,671 $ (551) $ 314 $ 7,262 Dividends declared ($0.51 per share*) — — — (121) — (64) (185) Net issuance for executive stock plan — 6 4 — — — 10 Net issuance of restricted stock — 6 9 — — — 15 Purchase/sale of noncontrolling interest — 1 — — — (4) (3) Purchase of treasury stock — — (240) — — — (240) Net earnings — — — 689 — 58 747 Other comprehensive loss — — — — (527) (42) (569) Balance, September 30, 2022 $ 3 $ 2,650 $ (2,039) $ 7,239 $ (1,078) $ 262 $ 7,037 __________________________________ * Per share dividends amount declared relate to BorgWarner common stock. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables summarize the activity within accumulated other comprehensive loss during the three and nine months ended September 30, 2023 and 2022: (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, June 30, 2023 $ (806) $ 42 $ (134) $ (898) Comprehensive income (loss) before reclassifications 17 (11) 5 11 Income taxes associated with comprehensive (loss) income before reclassifications (13) — 1 (12) Reclassification from accumulated other comprehensive loss — — 1 1 Income taxes reclassified into net earnings — — (1) (1) Spin-Off of PHINIA (20) (1) 5 (16) Ending balance, September 30, 2023 $ (822) $ 30 $ (123) $ (915) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, June 30, 2022 $ (703) $ 5 $ (118) $ (816) Comprehensive (loss) income before reclassifications (240) 8 3 (229) Income taxes associated with comprehensive (loss) income before reclassifications (34) — — (34) Reclassification from accumulated other comprehensive loss — — 2 2 Income taxes reclassified into net earnings — — (1) (1) Ending balance, September 30, 2022 $ (977) $ 13 $ (114) $ (1,078) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, December 31, 2022 $ (750) $ 4 $ (130) $ (876) Comprehensive (loss) income before reclassifications (51) 27 1 (23) Income taxes associated with comprehensive (loss) income before reclassifications (1) — — (1) Reclassification from accumulated other comprehensive loss — — 2 2 Income taxes reclassified into net earnings — — (1) (1) Spin-Off of PHINIA (20) (1) 5 (16) Ending balance, September 30, 2023 $ (822) $ 30 $ (123) $ (915) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, December 31, 2021 $ (423) $ — $ (128) $ (551) Comprehensive (loss) income before reclassifications (474) 12 9 (453) Income taxes associated with comprehensive (loss) income before reclassifications (80) — 1 (79) Reclassification from accumulated other comprehensive loss — 1 6 7 Income taxes reclassified into net earnings — — (2) (2) Ending balance, September 30, 2022 $ (977) $ 13 $ (114) $ (1,078) |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
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, governmental investigations and related proceedings, general liability and 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 management does not believe that adverse outcomes in any of these commercial and legal claims, actions and complaints are reasonably likely to have a material adverse effect on the Company’s results of operations, financial position or cash flows. An adverse outcome could, nonetheless, be material to the results of operations or cash flows. 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 be presently liable for the cost of clean-up and other remedial activities at 17 and 22 such sites as of September 30, 2023 and December 31, 2022, respectively. 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 $6 million as of both September 30, 2023 and December 31, 2022, included in Other current and Other non-current liabilities in the Condensed Consolidated Balance Sheets. As of September 30, 2023, this accrual, which relates to six of the sites, 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 which 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). Clean-up and other remedial activities are complete or nearing completion at the other 11 sites, for which there was no accrual as of September 30, 2023. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The Company presents both basic and diluted earnings per share of common stock (“EPS”) amounts. Basic EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock and common stock equivalents 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 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. There were 0.8 million and 0.9 million performance share units excluded from the computation of the diluted earnings for both the three months ended September 30, 2023 and 2022, respectively. There were 0.7 million and 0.9 million performance share units excluded from the computation of the diluted earnings for the nine months ended September 30, 2023 and 2022, respectively. These units were excluded because the related performance criteria had not been met as of the balance sheet dates. The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock: Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per share amounts) 2023 2022 2023 2022 Basic earnings per share: Net earnings from continuing operations $ 87 $ 173 $ 483 $ 464 Weighted average shares of common stock outstanding 233.4 234.3 233.2 236.5 Basic earnings per share of common stock $ 0.37 $ 0.74 $ 2.07 $ 1.96 Diluted earnings per share: Net earnings from continuing operations $ 87 $ 173 $ 483 $ 464 Weighted average shares of common stock outstanding 233.4 234.3 233.2 236.5 Effect of stock-based compensation 1.9 1.3 1.4 1.0 Weighted average shares of common stock outstanding including dilutive shares 235.3 235.6 234.6 237.5 Diluted earnings per share of common stock $ 0.37 $ 0.73 $ 2.06 $ 1.95 |
REPORTABLE SEGMENTS AND RELATED
REPORTABLE SEGMENTS AND RELATED INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
REPORTABLE SEGMENTS AND RELATED INFORMATION | REPORTABLE SEGMENTS AND RELATED INFORMATION The Company’s business is aggregated into three reportable segments: Air Management, Drivetrain & Battery Systems, and ePropulsion. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems. In previous quarters, the Company presented two additional segments, Fuel Systems and Aftermarket, for a total of five reportable segments. As a result of the Spin-Off, Fuel Systems and Aftermarket are no longer reportable segments. In the first quarter of 2023, the Company elected to disaggregate the former e-Propulsion & Drivetrain reportable segment into two separate reportable segments of Drivetrain & Battery Systems and ePropulsion. The Drivetrain & Battery Systems segment’s technologies include battery management systems and control modules, software, friction and mechanical products for automatic transmissions and torque-management products. The ePropulsion segment primarily includes rotating electrical components, power electronics, electronic control units, inverters and electric motors. In the first quarter of 2022, the Company announced that the Americas starter and alternator business, previously reported in its former e-Propulsion & Drivetrain segment, would transition to the Aftermarket segment. The Company also announced in 2022 that the canisters and fuel delivery modules business, previously reported in its Air Management segment, would transition to the Fuel Systems segment. Both of these transitions were completed during the second quarter of 2022. Additionally, in the fourth quarter of 2022, the Company moved its battery systems business, previously reported in its Air Management segment, to the former e-Propulsion & Drivetrain segment. The reportable segment disclosures have been updated accordingly, including recasting prior period information for the new reporting structures and to reflect the discontinued operations related to the Spin-Off. Segment Adjusted Operating Income (Loss) is the measure of segment income or loss used by the Company. Segment Adjusted Operating Income (Loss) is comprised of operating income adjusted for restructuring, merger, acquisition and divestiture expense, intangible asset amortization expense, impairment charges and other items not reflective of ongoing operating income or loss. The Company believes Segment Adjusted Operating Income (Loss) is most reflective of the operational profitability or loss of our reportable segments. The following tables show segment information and Segment Adjusted Operating Income (Loss) for the Company’s reportable segments: Net Sales by Reportable Segment Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 (in millions) Customers Inter-segment Net Customers Inter-segment Net Air Management $ 1,922 $ 23 $ 1,945 $ 5,888 $ 63 $ 5,951 Drivetrain & Battery Systems 1,144 1 1,145 3,216 2 3,218 ePropulsion 556 15 571 1,572 52 1,624 Inter-segment eliminations — (39) (39) — (117) (117) Net sales $ 3,622 $ — $ 3,622 $ 10,676 $ — $ 10,676 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 (in millions) Customers Inter-segment Net Customers Inter-segment Net Air Management $ 1,827 $ 16 $ 1,843 $ 5,283 $ 45 $ 5,328 Drivetrain & Battery Systems 954 — 954 2,745 — 2,745 ePropulsion 445 44 489 1,290 71 1,361 Inter-segment eliminations — (60) (60) — (116) (116) Net sales $ 3,226 $ — $ 3,226 $ 9,318 $ — $ 9,318 Total Assets of Continuing Operations by Reportable Segment (in millions) September 30, 2023 December 31, 2022 Air Management $ 5,559 $ 5,329 Drivetrain & Battery Systems 3,954 3,963 ePropulsion 2,847 2,349 Total 12,360 11,641 Corporate 1,744 1,691 Consolidated $ 14,104 $ 13,332 Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Air Management $ 294 $ 291 $ 884 $ 793 Drivetrain & Battery Systems 147 103 400 330 ePropulsion (20) (33) (74) (89) Segment Adjusted Operating Income 421 361 1,210 1,034 Corporate, including stock-based compensation 72 61 194 198 Restructuring expense (Note 5) 56 5 68 42 Intangible asset amortization expense 17 16 51 52 Merger and acquisition expense, net 3 5 22 13 Service and lease agreement termination — — 9 — Loss (gain) on sale of business — 9 (5) (15) Gain on sale of assets (7) — (13) — Other non-comparable items 8 — 5 — Equity in affiliates’ earnings, net of tax (10) (5) (23) (21) Realized and unrealized loss (gain) on debt and equity securities 60 (1) 129 27 Interest (income) expense, net (19) 12 3 41 Other postretirement expense (income) 3 (1) 8 (2) Earnings from continuing operations before income taxes and noncontrolling interest 238 260 762 699 Provision for income taxes 133 68 230 177 Net earnings from continuing operations $ 105 $ 192 $ 532 $ 522 |
OPERATING CASH FLOWS AND OTHER
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION | OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION Nine Months Ended September 30, (in millions) 2023 2022 OPERATING ACTIVITIES OF CONTINUING OPERATIONS Net earnings $ 520 $ 747 Net (loss) earnings from discontinued operations (12) 225 Net earnings from continuing operations 532 522 Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations: Depreciation and tooling amortization 376 360 Intangible asset amortization 51 52 Restructuring expense, net of cash paid 61 39 Stock-based compensation expense 50 36 Gain on debt extinguishment (28) — Gain on sale of business (5) (17) Deferred income tax expense (benefit) 19 (14) Realized and unrealized loss on debt and equity securities 129 27 Other non-cash adjustments (80) (1) Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations 1,105 1,004 Retirement plan contributions (13) (18) Changes in assets and liabilities, excluding effects of acquisitions, divestitures and foreign currency translation adjustments: Receivables (767) (544) Inventories (126) (187) Prepayments and other current assets (16) 11 Accounts payable and accrued expenses 301 274 Prepaid taxes and income taxes payable (44) 14 Other assets and liabilities 70 (2) Net cash provided by operating activities from continuing operations $ 510 $ 552 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest $ 105 $ 95 Income taxes, net of refunds $ 284 $ 204 Balance as of: Non-cash investing transactions: September 30, December 31, Period end accounts payable related to property, plant and equipment purchases $ 124 $ 165 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONSThe historical results of operations and the financial position of PHINIA for periods prior to the Spin-Off are presented as discontinued operations in these Condensed Consolidated Financial Statements. The following table summarizes the assets and liabilities from discontinued operations of PHINIA. ( in millions ) December 31, 2022 ASSETS Cash, cash equivalents and restricted cash $ 255 Receivables, net 852 Inventories, net 470 Prepayments and other current assets 39 Total current assets of discontinued operations $ 1,616 Property, plant and equipment, net 939 Investments and long-term receivables 77 Goodwill 419 Other intangible assets, net 432 Other non-current assets 179 Total non-current assets of discontinued operations $ 2,046 LIABILITIES Notes payable and other short-term debt $ 2 Accounts payable 538 Other current liabilities 406 Total current liabilities of discontinued operations $ 946 Long-term debt 26 Retirement-related liabilities 94 Other non-current liabilities 175 Total non-current liabilities of discontinued operations $ 295 The following table summarizes the financial results from discontinued operations of PHINIA. ( in millions ) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net sales $ — $ 857 $ 1,723 $ 2,496 Cost of sales — 658 1,362 1,958 Gross profit — 199 361 538 Selling, general and administrative expenses — 72 173 228 Restructuring expense — 3 7 8 Other operating expense, net 52 — 117 33 Operating (loss) income (52) 124 64 269 Equity in affiliates’ earnings, net of tax — (5) (5) (8) Interest expense, net — — — 1 Other postretirement expense (income) — (7) — (24) Earnings from discontinued operations before income taxes (52) 136 69 300 Provision for income taxes (15) 36 81 75 Net (loss) earnings from discontinued operations attributable to PHINIA $ (37) $ 100 $ (12) $ 225 In connection with the Spin-Off, the Company entered into a transition services agreement through which the Company and PHINIA will continue to provide certain services to each other following the Spin-Off. These services include IT, HR, finance, facilities, procurement, sales, IP & engineering costs. The combined impact of these services is reported in results of continuing operations in the Condensed Consolidated Financial Statements. The Company provided $7 million to PHINIA, and PHINIA provided $2 million to the Company, for these services during the three months ended September 30, 2023. The Company incurred $52 million and $117 million of costs relating to the Spin-Off during the three and nine months ended September 30, 2023, respectively, that are reflected within Net (loss) earnings from discontinued operations in our Condensed Consolidated Statements of Operations. Spin-Off costs are primarily comprised of professional fees and costs to separate certain operational activities. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 50 | $ 273 | $ 471 | $ 689 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | 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. Certain prior period amounts have been reclassified to conform to the current period presentation. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet as of December 31, 2022 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, 2022. |
Use of Estimates | 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. |
New Accounting Pronouncements | In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” It requires entities to apply ASC Topic 606, “Revenue from Contracts with Customers,” to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. This guidance is effective for interim and annual reporting periods beginning after December 15, 2022. The Company adopted this guidance prospectively as of January 1, 2023, and there was no impact in the Condensed Consolidated Financial Statements. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Other Intangible Assets Acquired | The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Developed technology 5 years $ 2 Customer relationships 6 years 1 Total other intangible assets $ 3 The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Developed technology 8 years $ 11 Customer relationships 12 years 7 Total other intangible assets $ 18 The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Developed technology 13 years $ 22 Customer relationships 8 years 5 Total other intangible assets $ 27 The following table summarizes the other intangible assets acquired: (in millions) Estimated Life Estimated Fair Value Customer relationships 12 years $ 62 Manufacturing processes (know-how) 10 years 25 Total other intangible assets $ 87 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following tables represent a disaggregation of revenue from contracts with customers by reportable segment and region. The balances for the three and nine months ended September 30, 2022 have been recast for a change in reportable segments that was made during the first quarter of 2023. Refer to Note 22, “Reportable Segments And Related Information,” to the Condensed Consolidated Financial Statements for more information. Three Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 542 $ 405 $ 118 $ 1,065 Europe 819 329 95 1,243 Asia 511 408 343 1,262 Other 50 2 — 52 Total $ 1,922 $ 1,144 $ 556 $ 3,622 Three Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 526 $ 376 $ 109 $ 1,011 Europe 729 226 49 1,004 Asia 522 352 297 1,171 Other 50 — (10) 40 Total $ 1,827 $ 954 $ 445 $ 3,226 Nine Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 1,622 $ 1,190 $ 388 $ 3,200 Europe 2,577 980 227 3,784 Asia 1,531 1,041 953 3,525 Other 158 5 4 167 Total $ 5,888 $ 3,216 $ 1,572 $ 10,676 Nine Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total North America $ 1,497 $ 1,020 $ 375 $ 2,892 Europe 2,156 724 148 3,028 Asia 1,490 1,001 762 3,253 Other 140 — 5 145 Total $ 5,283 $ 2,745 $ 1,290 $ 9,318 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | The Company’s restructuring expenses consist primarily of employee termination benefits (principally severance and/or termination benefits) and other costs, which are primarily professional fees and costs related to facility closures and exits. The balances for the three and nine months ended September 30, 2022 have been recast for a change in reportable segments that was made during the first quarter of 2023. Refer to Note 22, “Reportable Segments And Related Information,” to the Condensed Consolidated Financial Statements for more information. Three Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 53 $ 1 $ — $ — $ 54 Other 1 1 — — 2 Total restructuring expense $ 54 $ 2 $ — $ — $ 56 Three Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 5 $ — $ — $ — $ 5 Other — — — — — Total restructuring expense $ 5 $ — $ — $ — $ 5 Nine Months Ended September 30, 2023 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 62 $ 1 $ — $ — $ 63 Other 4 1 — — 5 Total restructuring expense $ 66 $ 2 $ — $ — $ 68 Nine Months Ended September 30, 2022 (in millions) Air Management Drivetrain & Battery Systems ePropulsion Corporate Total Employee termination benefits $ 19 $ 14 $ — $ (1) $ 32 Other — 9 1 — 10 Total restructuring expense $ 19 $ 23 $ 1 $ (1) $ 42 |
Schedule of Restructuring Reserve of Roll Forward of the Restructuring Liability | The following tables display a roll forward of the restructuring liability recorded within the Company’s Condensed Consolidated Balance Sheets and the related cash flow activity: (in millions) Employee Termination Benefits Other Total Balance at January 1, 2023 $ 39 $ 9 $ 48 Restructuring expense, net 63 5 68 Cash payments (32) (9) (41) Foreign currency translation adjustment and other (1) 2 1 Balance at September 30, 2023 69 7 76 Less: Non-current restructuring liability 7 — 7 Current restructuring liability at September 30, 2023 $ 62 $ 7 $ 69 (in millions) Employee Termination Benefits Other Total Balance at January 1, 2022 $ 66 $ 13 $ 79 Restructuring expense, net 32 10 42 Cash payments (39) (17) (56) Foreign currency translation adjustment and other (12) 2 (10) Balance at September 30, 2022 47 8 55 Less: Non-current restructuring liability 13 1 14 Current restructuring liability at September 30, 2022 $ 34 $ 7 $ 41 |
RESEARCH AND DEVELOPMENT COSTS
RESEARCH AND DEVELOPMENT COSTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Research and Development [Abstract] | |
Schedule of Research and Development Costs | The following table presents the Company’s gross and net expenditures on R&D activities: Three Months Ended September 30, Nine Months Ended September 30, ( in millions ) 2023 2022 2023 2022 Gross R&D expenditures $ 215 $ 190 $ 625 $ 566 Customer reimbursements (23) (12) (84) (32) Net R&D expenditures $ 192 $ 178 $ 541 $ 534 |
OTHER OPERATING (INCOME) EXPE_2
OTHER OPERATING (INCOME) EXPENSE, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Expense (Income), Net | Items included in Other operating expense, net consist of: Three Months Ended September 30, Nine Months Ended September 30, ( in millions ) 2023 2022 2023 2022 Merger and acquisition expense, net $ 2 $ 5 $ 18 $ 13 Service and lease agreement termination — — 9 — Asset impairments 2 — 2 — Loss (gain) on sale of business — 9 (5) (15) Gain on sale of assets (7) — (13) — Other (income) expense, net (3) (2) (12) (5) Other operating (income) expense, net $ (6) $ 12 $ (1) $ (7) |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | A summary of Inventories, net is presented below: September 30, December 31, (in millions) 2023 2022 Raw material and supplies $ 1,005 $ 919 Work in progress 154 136 Finished goods 202 187 FIFO inventories 1,361 1,242 LIFO reserve (33) (25) Inventories, net $ 1,328 $ 1,217 |
OTHER CURRENT AND NON-CURRENT_2
OTHER CURRENT AND NON-CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Additional Related Assets | Additional detail related to assets is presented below: September 30, December 31, ( in millions ) 2023 2022 Prepayments and other current assets: Prepaid tooling $ 99 $ 77 Prepaid taxes 40 33 Derivative instruments 34 12 Customer incentive payments (Note 4) 27 34 Contract assets (Note 4) 16 14 Other 56 60 Total prepayments and other current assets $ 272 $ 230 Investments and long-term receivables: Investment in debt securities $ 262 $ 455 Investment in equity affiliates 232 235 Equity securities 73 73 Long-term receivables 57 56 Total investments and long-term receivables $ 624 $ 819 Other non-current assets: Deferred income taxes $ 193 $ 179 Operating leases 128 106 Derivative instruments 83 68 Customer incentive payments (Note 4) 75 99 Other 39 37 Total other non-current assets $ 518 $ 489 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A summary of the changes in the carrying amount of goodwill are as follows: (in millions) Air Management Drivetrain & Battery Systems ePropulsion Total Gross goodwill balance, December 31, 2022 $ 1,566 $ 1,434 $ 480 $ 3,480 Accumulated impairment losses, December 31, 2022 (502) — — (502) Net goodwill balance, December 31, 2022* $ 1,064 $ 1,434 $ 480 $ 2,978 Goodwill during the period: Acquisitions 2 — — 2 Other, primarily translation adjustment (6) (10) (28) (44) Ending balance, September 30, 2023 $ 1,060 $ 1,424 $ 452 $ 2,936 __________________________________ * The December 31, 2022 balances have been recast for a change in reportable segments that was made during the first quarter of 2023. Refer to Note 22, “Reportable Segments And Related Information” for more information. |
Schedule of Finite-Lived Intangible Assets | The Company’s other intangible assets, primarily from acquisitions, consist of the following: September 30, 2023 December 31, 2022 (in millions) Estimated useful lives (years) Gross Accumulated Net Gross Accumulated Net Amortized intangible assets: Patented and unpatented technology 5 - 15 $ 349 $ 134 $ 215 $ 349 $ 111 $ 238 Customer relationships 6 - 15 620 287 333 639 267 372 Miscellaneous 2 - 5 9 6 3 9 6 3 Total amortized intangible assets 978 427 551 997 384 613 Unamortized trade names 6 — 6 6 — 6 Total other intangible assets $ 984 $ 427 $ 557 $ 1,003 $ 384 $ 619 |
Schedule of Indefinite-Lived Intangible Assets | The Company’s other intangible assets, primarily from acquisitions, consist of the following: September 30, 2023 December 31, 2022 (in millions) Estimated useful lives (years) Gross Accumulated Net Gross Accumulated Net Amortized intangible assets: Patented and unpatented technology 5 - 15 $ 349 $ 134 $ 215 $ 349 $ 111 $ 238 Customer relationships 6 - 15 620 287 333 639 267 372 Miscellaneous 2 - 5 9 6 3 9 6 3 Total amortized intangible assets 978 427 551 997 384 613 Unamortized trade names 6 — 6 6 — 6 Total other intangible assets $ 984 $ 427 $ 557 $ 1,003 $ 384 $ 619 |
PRODUCT WARRANTY (Tables)
PRODUCT WARRANTY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability | The following table summarizes the activity in the product warranty accrual accounts: (in millions) 2023 2022 Beginning balance, January 1 $ 185 $ 168 Provisions for current period sales 68 40 Adjustments of prior estimates — (6) Payments (53) (34) Other, primarily translation adjustment (6) (20) Ending balance, September 30 $ 194 $ 148 The product warranty liability is classified in the Condensed Consolidated Balance Sheets as follows: September 30, December 31, (in millions) 2023 2022 Other current liabilities $ 99 $ 110 Other non-current liabilities 95 75 Total product warranty liability $ 194 $ 185 |
NOTES PAYABLE AND DEBT (Tables)
NOTES PAYABLE AND DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | As of September 30, 2023 and December 31, 2022, the Company had debt outstanding as follows: September 30, December 31, ( in millions ) 2023 2022 Short-term borrowings $ 60 $ 58 Long-term debt 3.375% Senior notes due 03/15/25 ($500 million par value) 384 499 5.000% Senior notes due 10/01/25 ($800 million par value)* 481 840 2.650% Senior notes due 07/01/27 ($1,100 million par value) 1,093 1,092 7.125% Senior notes due 02/15/29 ($121 million par value) 120 120 1.000% Senior Notes due 05/19/31 (€1,000 million par value) 1,041 1,051 4.375% Senior notes due 03/15/45 ($500 million par value) 495 495 Term loan facilities, finance leases and other 54 45 Total long-term debt 3,668 4,142 Less: current portion 3 2 Long-term debt, net of current portion $ 3,665 $ 4,140 _____________________________ *These notes include the fair value step-up from the Delphi Technologies acquisition. The fair value step-up was calculated based on observable market data and is amortized as a reduction to interest expense over the remaining life of the instrument using the effective interest method. |
Schedule of Consolidated Statements of Operations | The following table provides details on Interest expense, net included in the Condensed Consolidated Statements of Operations: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Interest expense $ 21 $ 16 $ 57 $ 53 Gain on debt extinguishment (28) — (28) — Interest income (12) (4) (26) (12) Interest expense, net $ (19) $ 12 $ 3 $ 41 |
OTHER CURRENT AND NON-CURRENT_3
OTHER CURRENT AND NON-CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Additional Details Related to Other Liabilities | Additional detail related to liabilities is presented in the table below: September 30, December 31, ( in millions ) 2023 2022 Other current liabilities: Payroll and employee related $ 268 $ 314 Customer related 161 108 Indirect taxes 119 115 Income taxes payable 72 107 Product warranties (Note 12) 99 110 Employee termination benefits (Note 5) 62 20 Operating leases 41 22 Accrued freight 38 30 Interest 22 22 Supplier related 17 15 Insurance 17 18 Deferred engineering reimbursements 14 23 Other non-income taxes 14 12 Dividends payable 11 21 Contract liabilities (Note 4) 11 14 Retirement related 11 11 Earn-out liability (Note 3) 2 16 Other 135 106 Total other current liabilities $ 1,114 $ 1,084 Other non-current liabilities: Other income tax liabilities $ 222 $ 242 Deferred income taxes 179 143 Product warranties (Note 12) 95 75 Operating leases 91 85 Deferred income 69 59 Earn-out liability (Note 3) 12 10 Employee termination benefits (Note 5) 7 17 Other 55 55 Total other non-current liabilities $ 730 $ 686 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value | The following tables classify assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022: Basis of fair value measurements (in millions) Balance at September 30, 2023 Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation technique Assets measured at NAV 1 Assets: Investment in debt securities $ 262 $ — $ 262 $ — A $ — Investment in equity securities $ 28 $ — $ — $ — — $ 28 Foreign currency contracts $ 39 $ — $ 39 $ — A $ — Net investment hedge contracts $ 78 $ — $ 78 $ — A $ — Liabilities: Current earn-out liabilities $ 2 $ — $ — $ 2 C $ — Non-current earn-out liabilities $ 12 $ — $ — $ 12 C $ — Foreign currency contracts $ 2 $ — $ 2 $ — A $ — Basis of fair value measurements (in millions) Balance at Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation Assets measured at NAV 1 Assets: Current earn-out receivable $ 9 $ — $ — $ 9 C $ — Investment in debt securities $ 455 $ — $ 455 $ — A $ — Investment in equity securities $ 29 $ — $ — $ — — $ 29 Foreign currency contracts $ 12 $ — $ 12 $ — A $ — Net investment hedge contracts $ 68 $ — $ 68 $ — A $ — Liabilities: Current earn-out liability $ 21 $ — $ — $ 21 C $ — Non-current earn-out liability $ 10 $ — $ — $ 10 C $ — Foreign currency contracts $ 9 $ — $ 9 $ — A $ — Net investment hedge contracts $ 1 $ — $ 1 $ — A $ — |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Foreign Exchange Derivative Contracts Outstanding | At September 30, 2023 and December 31, 2022, the following foreign currency derivative contracts were outstanding and mature through the ending duration noted below: Foreign currency derivatives (in millions)* Functional Currency Traded Currency Notional in traded currency Notional in traded currency Ending Duration British Pound Euro 47 10 Dec - 24 Chinese Renminbi US Dollar 225 276 Dec - 24 Euro Hungarian Forint 7,033 — Dec - 24 Euro Korean Won 20,225 9,138 Mar - 24 Euro Polish Zloty 456 440 Dec - 24 Euro US Dollar 136 120 Dec - 24 US Dollar Chinese Renminbi 582 1,402 Dec - 23 US Dollar Euro 42 45 Oct - 23 US Dollar Korean Won 67,200 51,786 Nov - 24 US Dollar Mexican Peso 2,295 2,474 Dec - 24 US Dollar Thailand Baht 1,550 — Jun - 24 *Table above excludes non-significant traded currency pairings with total notional amounts less than $10 million U.S. dollar equivalent as of September 30, 2023 and December 31, 2022. |
Schedule of Foreign Exchange Contracts, Statement of Financial Position | At September 30, 2023 and December 31, 2022, the following cross-currency swap contracts were outstanding: Cross-currency swaps (in millions) September 30, 2023 December 31, 2022 Ending duration US dollar to Euro: Fixed receiving notional $ 1,100 $ 1,100 Jul - 27 Fixed paying notional € 976 € 976 Jul - 27 US dollar to Euro: Fixed receiving notional $ 500 $ 500 Mar - 25 Fixed paying notional € 450 € 450 Mar - 25 US dollar to Japanese yen: Fixed receiving notional $ 100 $ 100 Feb - 29 Fixed paying notional ¥ 12,724 ¥ 12,724 Feb - 29 |
Schedule of Derivatives Instruments in Statements of Financial Position | At September 30, 2023 and December 31, 2022, the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815, “Derivatives and Hedging”: (in millions) Assets Liabilities Derivatives designated as hedging instruments Under 815: Location September 30, 2023 December 31, 2022 Location September 30, 2023 December 31, 2022 Foreign currency Prepayments and other current assets $ 31 $ 9 Other current liabilities $ 1 $ 8 Foreign currency Other non-current assets $ 5 $ — Other non-current liabilities $ — $ 1 Net investment hedges Other non-current assets $ 78 $ 68 Other non-current liabilities $ — $ 1 Derivatives not designated as hedging instruments: Foreign currency Prepayments and other current assets $ 3 $ 3 Other current liabilities $ 1 $ — |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | 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 for designated net investment hedges. 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 September 30, 2023 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 September 30, 2023 December 31, 2022 Net investment hedges: Foreign currency $ — $ (4) $ — Cross-currency swaps 78 67 — Foreign currency-denominated debt 146 133 — Total $ 224 $ 196 $ — Gains and losses on derivative instruments designated as net investment hedges were recognized in other comprehensive income (loss) during the periods presented below. (in millions) Three Months Ended September 30, Nine Months Ended September 30, Net investment hedges 2023 2022 2023 2022 Foreign currency $ — $ 3 $ — $ 6 Cross-currency swaps $ 40 $ 94 $ 11 $ 229 Foreign currency-denominated debt $ 34 $ 67 $ 13 $ 156 |
Schedule of Derivative Instruments | Derivative instruments designated as hedging instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income: Three Months Ended September 30, 2023 (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 $ 3,622 $ 2,970 $ 330 $ (17) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ (11) Nine Months Ended September 30, 2023 (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 $ 10,676 $ 8,767 $ 963 $ (39) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ 27 Three Months Ended September 30, 2022 (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 $ 3,226 $ 2,619 $ 325 $ (262) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ 8 Nine Months Ended September 30, 2022 (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 $ 9,318 $ 7,588 $ 951 $ (527) Gain (loss) on cash flow hedging relationships: Foreign currency: Gain (loss) recognized in other comprehensive income $ 12 Gain (loss) reclassified from AOCI to income $ — $ (1) $ — |
Schedule of Derivative Instruments, Gain (Loss) | 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 on components excluded from the assessment of effectiveness: (in millions) Three Months Ended September 30, Nine Months Ended September 30, Net investment hedges 2023 2022 2023 2022 Cross-currency swaps $ 6 $ 7 $ 19 $ 20 |
Schedule of Derivatives Not Designated as Hedging Instruments | 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 (losses) recorded in income: (in millions) Three Months Ended September 30, Nine Months Ended September 30, Contract Type Location 2023 2022 2023 2022 Foreign Currency Selling, general and administrative expenses $ 16 $ 13 $ 8 $ 22 |
RETIREMENT BENEFIT PLANS (Table
RETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit (Income) Costs | The components of net periodic benefit income and expense recorded in the Condensed Consolidated Statements of Operations are as follows: Pension benefits Other postemployment benefits (in millions) 2023 2022 Three Months Ended September 30, US Non-US US Non-US 2023 2022 Service cost $ — $ 4 $ — $ 4 $ — $ — Interest cost 2 26 1 3 — 1 Expected return on plan assets (1) (25) (3) (5) — — Amortization of unrecognized prior service credit — — (1) — (1) (1) Amortization of unrecognized loss 1 1 2 2 — — Net periodic benefit expense (income) $ 2 $ 6 $ (1) $ 4 $ (1) $ — Pension benefits Other postemployment benefits (in millions) 2023 2022 Nine Months Ended September 30, US Non-US US Non-US 2023 2022 Service cost $ — $ 11 $ — $ 14 $ — $ — Interest cost 5 37 3 10 1 1 Expected return on plan assets (4) (33) (6) (16) — — Amortization of unrecognized prior service credit — — (1) — (2) (2) Amortization of unrecognized loss 2 2 3 6 — — Net periodic benefit expense (income) $ 3 $ 17 $ (1) $ 14 $ (1) $ (1) |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | The changes of the Stockholders’ Equity items during the three and nine months ended September 30, 2023 and 2022, 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 Total Balance, June 30, 2023 $ 3 $ 2,657 $ (2,007) $ 7,796 $ (898) $ 230 $ 7,781 Dividends declared ($0.11 per share*) — — — (26) — (5) (31) Net issuance for executive stock plan — 10 — — — — 10 Net issuance of restricted stock — 13 (3) — — — 10 Net earnings — — — 50 — 18 68 Other comprehensive loss — — — — (1) (4) (5) Spin-Off of PHINIA — — — (1,810) (16) — (1,826) Balance, September 30, 2023 $ 3 $ 2,680 $ (2,010) $ 6,010 $ (915) $ 239 $ 6,007 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 Total Balance, June 30, 2022 $ 3 $ 2,633 $ (1,936) $ 7,005 $ (816) $ 282 $ 7,171 Dividends declared ($0.17 per share*) — — — (39) — (15) (54) Net issuance for executive stock plan — 6 (1) — — — 5 Net issuance of restricted stock — 11 (2) — — — 9 Purchase of treasury stock — — (100) — — — (100) Net earnings — — — 273 — 19 292 Other comprehensive loss — — — — (262) (24) (286) Balance, September 30, 2022 $ 3 $ 2,650 $ (2,039) $ 7,239 $ (1,078) $ 262 $ 7,037 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 Total Balance, December 31, 2022 $ 3 $ 2,675 $ (2,032) $ 7,454 $ (876) $ 284 $ 7,508 Dividends declared ($0.45 per share*) — — — (105) — (63) (168) Net issuance for executive stock plan — 10 5 — — — 15 Net issuance of restricted stock — (3) 17 — — — 14 Purchase of noncontrolling interest — (2) — — — (13) (15) Net earnings — — — 471 — 49 520 Other comprehensive loss — — — — (23) (18) (41) Spin-Off of PHINIA — — — (1,810) (16) — (1,826) Balance, September 30, 2023 $ 3 $ 2,680 $ (2,010) $ 6,010 $ (915) $ 239 $ 6,007 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 Total Balance, December 31, 2021 $ 3 $ 2,637 $ (1,812) $ 6,671 $ (551) $ 314 $ 7,262 Dividends declared ($0.51 per share*) — — — (121) — (64) (185) Net issuance for executive stock plan — 6 4 — — — 10 Net issuance of restricted stock — 6 9 — — — 15 Purchase/sale of noncontrolling interest — 1 — — — (4) (3) Purchase of treasury stock — — (240) — — — (240) Net earnings — — — 689 — 58 747 Other comprehensive loss — — — — (527) (42) (569) Balance, September 30, 2022 $ 3 $ 2,650 $ (2,039) $ 7,239 $ (1,078) $ 262 $ 7,037 __________________________________ * Per share dividends amount declared relate to BorgWarner common stock. |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following tables summarize the activity within accumulated other comprehensive loss during the three and nine months ended September 30, 2023 and 2022: (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, June 30, 2023 $ (806) $ 42 $ (134) $ (898) Comprehensive income (loss) before reclassifications 17 (11) 5 11 Income taxes associated with comprehensive (loss) income before reclassifications (13) — 1 (12) Reclassification from accumulated other comprehensive loss — — 1 1 Income taxes reclassified into net earnings — — (1) (1) Spin-Off of PHINIA (20) (1) 5 (16) Ending balance, September 30, 2023 $ (822) $ 30 $ (123) $ (915) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, June 30, 2022 $ (703) $ 5 $ (118) $ (816) Comprehensive (loss) income before reclassifications (240) 8 3 (229) Income taxes associated with comprehensive (loss) income before reclassifications (34) — — (34) Reclassification from accumulated other comprehensive loss — — 2 2 Income taxes reclassified into net earnings — — (1) (1) Ending balance, September 30, 2022 $ (977) $ 13 $ (114) $ (1,078) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, December 31, 2022 $ (750) $ 4 $ (130) $ (876) Comprehensive (loss) income before reclassifications (51) 27 1 (23) Income taxes associated with comprehensive (loss) income before reclassifications (1) — — (1) Reclassification from accumulated other comprehensive loss — — 2 2 Income taxes reclassified into net earnings — — (1) (1) Spin-Off of PHINIA (20) (1) 5 (16) Ending balance, September 30, 2023 $ (822) $ 30 $ (123) $ (915) (in millions) Foreign currency translation adjustments Hedge instruments Defined benefit retirement plans Total Beginning balance, December 31, 2021 $ (423) $ — $ (128) $ (551) Comprehensive (loss) income before reclassifications (474) 12 9 (453) Income taxes associated with comprehensive (loss) income before reclassifications (80) — 1 (79) Reclassification from accumulated other comprehensive loss — 1 6 7 Income taxes reclassified into net earnings — — (2) (2) Ending balance, September 30, 2022 $ (977) $ 13 $ (114) $ (1,078) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Reconciliation | The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock: Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per share amounts) 2023 2022 2023 2022 Basic earnings per share: Net earnings from continuing operations $ 87 $ 173 $ 483 $ 464 Weighted average shares of common stock outstanding 233.4 234.3 233.2 236.5 Basic earnings per share of common stock $ 0.37 $ 0.74 $ 2.07 $ 1.96 Diluted earnings per share: Net earnings from continuing operations $ 87 $ 173 $ 483 $ 464 Weighted average shares of common stock outstanding 233.4 234.3 233.2 236.5 Effect of stock-based compensation 1.9 1.3 1.4 1.0 Weighted average shares of common stock outstanding including dilutive shares 235.3 235.6 234.6 237.5 Diluted earnings per share of common stock $ 0.37 $ 0.73 $ 2.06 $ 1.95 |
REPORTABLE SEGMENTS AND RELAT_2
REPORTABLE SEGMENTS AND RELATED INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales and Total Assets by Reporting Segment | The following tables show segment information and Segment Adjusted Operating Income (Loss) for the Company’s reportable segments: Net Sales by Reportable Segment Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 (in millions) Customers Inter-segment Net Customers Inter-segment Net Air Management $ 1,922 $ 23 $ 1,945 $ 5,888 $ 63 $ 5,951 Drivetrain & Battery Systems 1,144 1 1,145 3,216 2 3,218 ePropulsion 556 15 571 1,572 52 1,624 Inter-segment eliminations — (39) (39) — (117) (117) Net sales $ 3,622 $ — $ 3,622 $ 10,676 $ — $ 10,676 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 (in millions) Customers Inter-segment Net Customers Inter-segment Net Air Management $ 1,827 $ 16 $ 1,843 $ 5,283 $ 45 $ 5,328 Drivetrain & Battery Systems 954 — 954 2,745 — 2,745 ePropulsion 445 44 489 1,290 71 1,361 Inter-segment eliminations — (60) (60) — (116) (116) Net sales $ 3,226 $ — $ 3,226 $ 9,318 $ — $ 9,318 Total Assets of Continuing Operations by Reportable Segment (in millions) September 30, 2023 December 31, 2022 Air Management $ 5,559 $ 5,329 Drivetrain & Battery Systems 3,954 3,963 ePropulsion 2,847 2,349 Total 12,360 11,641 Corporate 1,744 1,691 Consolidated $ 14,104 $ 13,332 |
Schedule of Segment Earnings Before Interest and Income Taxes | Segment Adjusted Operating Income (Loss) Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Air Management $ 294 $ 291 $ 884 $ 793 Drivetrain & Battery Systems 147 103 400 330 ePropulsion (20) (33) (74) (89) Segment Adjusted Operating Income 421 361 1,210 1,034 Corporate, including stock-based compensation 72 61 194 198 Restructuring expense (Note 5) 56 5 68 42 Intangible asset amortization expense 17 16 51 52 Merger and acquisition expense, net 3 5 22 13 Service and lease agreement termination — — 9 — Loss (gain) on sale of business — 9 (5) (15) Gain on sale of assets (7) — (13) — Other non-comparable items 8 — 5 — Equity in affiliates’ earnings, net of tax (10) (5) (23) (21) Realized and unrealized loss (gain) on debt and equity securities 60 (1) 129 27 Interest (income) expense, net (19) 12 3 41 Other postretirement expense (income) 3 (1) 8 (2) Earnings from continuing operations before income taxes and noncontrolling interest 238 260 762 699 Provision for income taxes 133 68 230 177 Net earnings from continuing operations $ 105 $ 192 $ 532 $ 522 |
OPERATING CASH FLOWS AND OTHE_2
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Nine Months Ended September 30, (in millions) 2023 2022 OPERATING ACTIVITIES OF CONTINUING OPERATIONS Net earnings $ 520 $ 747 Net (loss) earnings from discontinued operations (12) 225 Net earnings from continuing operations 532 522 Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations: Depreciation and tooling amortization 376 360 Intangible asset amortization 51 52 Restructuring expense, net of cash paid 61 39 Stock-based compensation expense 50 36 Gain on debt extinguishment (28) — Gain on sale of business (5) (17) Deferred income tax expense (benefit) 19 (14) Realized and unrealized loss on debt and equity securities 129 27 Other non-cash adjustments (80) (1) Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations 1,105 1,004 Retirement plan contributions (13) (18) Changes in assets and liabilities, excluding effects of acquisitions, divestitures and foreign currency translation adjustments: Receivables (767) (544) Inventories (126) (187) Prepayments and other current assets (16) 11 Accounts payable and accrued expenses 301 274 Prepaid taxes and income taxes payable (44) 14 Other assets and liabilities 70 (2) Net cash provided by operating activities from continuing operations $ 510 $ 552 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest $ 105 $ 95 Income taxes, net of refunds $ 284 $ 204 Balance as of: Non-cash investing transactions: September 30, December 31, Period end accounts payable related to property, plant and equipment purchases $ 124 $ 165 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations | The following table summarizes the assets and liabilities from discontinued operations of PHINIA. ( in millions ) December 31, 2022 ASSETS Cash, cash equivalents and restricted cash $ 255 Receivables, net 852 Inventories, net 470 Prepayments and other current assets 39 Total current assets of discontinued operations $ 1,616 Property, plant and equipment, net 939 Investments and long-term receivables 77 Goodwill 419 Other intangible assets, net 432 Other non-current assets 179 Total non-current assets of discontinued operations $ 2,046 LIABILITIES Notes payable and other short-term debt $ 2 Accounts payable 538 Other current liabilities 406 Total current liabilities of discontinued operations $ 946 Long-term debt 26 Retirement-related liabilities 94 Other non-current liabilities 175 Total non-current liabilities of discontinued operations $ 295 The following table summarizes the financial results from discontinued operations of PHINIA. ( in millions ) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net sales $ — $ 857 $ 1,723 $ 2,496 Cost of sales — 658 1,362 1,958 Gross profit — 199 361 538 Selling, general and administrative expenses — 72 173 228 Restructuring expense — 3 7 8 Other operating expense, net 52 — 117 33 Operating (loss) income (52) 124 64 269 Equity in affiliates’ earnings, net of tax — (5) (5) (8) Interest expense, net — — — 1 Other postretirement expense (income) — (7) — (24) Earnings from discontinued operations before income taxes (52) 136 69 300 Provision for income taxes (15) 36 81 75 Net (loss) earnings from discontinued operations attributable to PHINIA $ (37) $ 100 $ (12) $ 225 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | Jul. 03, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Distribution of outstanding common stock percentage | 100% |
Conversion ratio of common stock distribution | 0.2 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) € in Millions, ¥ in Millions, SFr in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | |||||||||||||||||
Mar. 01, 2023 USD ($) | Mar. 01, 2023 CNY (¥) | Dec. 01, 2022 USD ($) | Dec. 01, 2022 CHF (SFr) | Jul. 29, 2022 USD ($) | Mar. 31, 2022 USD ($) | Mar. 31, 2022 CNY (¥) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Sep. 30, 2023 CNY (¥) | Sep. 30, 2023 CHF (SFr) | Jun. 19, 2023 USD ($) | Jun. 19, 2023 EUR (€) | Mar. 31, 2023 USD ($) | Mar. 01, 2023 CNY (¥) | Dec. 01, 2022 CHF (SFr) | Mar. 31, 2022 CNY (¥) | |
Business Acquisition [Line Items] | |||||||||||||||||||
Goodwill | $ 2,936 | $ 2,978 | |||||||||||||||||
ePropulsion | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Goodwill | 452 | 480 | |||||||||||||||||
Eldor Corporation’s Electric Hybrid Systems Business | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Earn out payment liability | $ 79 | € 75 | |||||||||||||||||
Contractual earn-out payments | $ 185 | € 175 | |||||||||||||||||
Retention payment payable period | 2 years | 2 years | |||||||||||||||||
Hubei Surpass Sun Electric Charging Business | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Contractual earn-out payments | $ 15 | ¥ 103 | |||||||||||||||||
Business acquisition, percentage of voting interests acquired | 100% | 100% | |||||||||||||||||
Business consideration | $ 42 | ¥ 288 | |||||||||||||||||
Base purchase price | 39 | 268 | |||||||||||||||||
Payments to acquire businesses | 31 | ¥ 217 | |||||||||||||||||
Remaining consideration payable | 8 | ¥ 51 | |||||||||||||||||
Estimated fair values of assets acquired and liabilities assumed, assets | 50 | ||||||||||||||||||
Estimated fair value of goodwill and intangibles | 5 | ||||||||||||||||||
Estimated fair values of assets acquired and liabilities assumed, liabilities | 8 | $ 3 | |||||||||||||||||
Goodwill | $ 2 | ||||||||||||||||||
Hubei Surpass Sun Electric Charging Business | Other current liabilities | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Consideration payable in next two years | 3 | 20 | |||||||||||||||||
Consideration payable in next three months | 5 | ¥ 31 | |||||||||||||||||
Drivetek AG | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Contractual earn-out payments | $ 10 | SFr 10 | |||||||||||||||||
Retention payment payable period | 3 years | 3 years | |||||||||||||||||
Business acquisition, percentage of voting interests acquired | 100% | 100% | |||||||||||||||||
Payments to acquire businesses | $ 29 | SFr 27 | |||||||||||||||||
Estimated fair values of assets acquired and liabilities assumed, assets | 49 | ||||||||||||||||||
Estimated fair value of goodwill and intangibles | 40 | ||||||||||||||||||
Estimated fair values of assets acquired and liabilities assumed, liabilities | 10 | ||||||||||||||||||
Goodwill | $ 22 | ||||||||||||||||||
Other non-current liability | 11 | SFr 10 | |||||||||||||||||
Rhombus Energy Solutions | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Contractual earn-out payments | $ 30 | ||||||||||||||||||
Business acquisition, percentage of voting interests acquired | 100% | ||||||||||||||||||
Payments to acquire businesses | $ 131 | ||||||||||||||||||
Goodwill | 104 | ||||||||||||||||||
Rhombus Energy Solutions | Employee Retention Payment | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Contractual earn-out payments | $ 25 | ||||||||||||||||||
Retention payment payable period | 3 years | ||||||||||||||||||
Santroll Automotive Components | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Earn out payment liability | $ 40 | 24 | ¥ 200 | ¥ 250 | |||||||||||||||
Contractual earn-out payments | $ 47 | ¥ 300 | |||||||||||||||||
Business acquisition, percentage of voting interests acquired | 100% | 100% | |||||||||||||||||
Business consideration | $ 192 | ||||||||||||||||||
Base purchase price | $ 152 | ¥ 1,000 | |||||||||||||||||
Payments to acquire businesses | 157 | ¥ 1,000 | |||||||||||||||||
Business combination, other operating expense | $ 5 | ||||||||||||||||||
Santroll Automotive Components | ePropulsion | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Goodwill | $ 112 |
ACQUISITIONS - Schedule of Othe
ACQUISITIONS - Schedule of Other Intangible Assets Acquired (Details) - USD ($) $ in Millions | Mar. 01, 2023 | Dec. 01, 2022 | Jul. 29, 2022 | Mar. 31, 2022 |
Hubei Surpass Sun Electric Charging Business | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Fair Value | $ 3 | |||
Hubei Surpass Sun Electric Charging Business | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 5 years | |||
Estimated Fair Value | $ 2 | |||
Hubei Surpass Sun Electric Charging Business | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 6 years | |||
Estimated Fair Value | $ 1 | |||
Drivetek AG | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Fair Value | $ 18 | |||
Drivetek AG | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 8 years | |||
Estimated Fair Value | $ 11 | |||
Drivetek AG | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 12 years | |||
Estimated Fair Value | $ 7 | |||
Rhombus Energy Solutions | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Fair Value | $ 27 | |||
Rhombus Energy Solutions | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 13 years | |||
Estimated Fair Value | $ 22 | |||
Rhombus Energy Solutions | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 8 years | |||
Estimated Fair Value | $ 5 | |||
Santroll Automotive Components | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Fair Value | $ 87 | |||
Santroll Automotive Components | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 12 years | |||
Estimated Fair Value | $ 62 | |||
Santroll Automotive Components | Manufacturing processes (know-how) | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Life | 10 years | |||
Estimated Fair Value | $ 25 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Allowance for credit loss | $ 16 | $ 14 |
Contract liabilities - current | 11 | 14 |
Customer incentive payments | 27 | 34 |
Customer incentive payments, noncurrent | $ 75 | 99 |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, remaining performance obligation, expected timing of satisfaction (in years) | 3 years | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, remaining performance obligation, expected timing of satisfaction (in years) | 7 years | |
Other current liabilities | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities - current | $ 11 | 14 |
Prepayments and other current assets | ||
Disaggregation of Revenue [Line Items] | ||
Customer incentive payments | 27 | 34 |
Other non-current assets | ||
Disaggregation of Revenue [Line Items] | ||
Customer incentive payments, noncurrent | $ 75 | $ 99 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 3,622 | $ 3,226 | $ 10,676 | $ 9,318 |
Air Management | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,922 | 1,827 | 5,888 | 5,283 |
Drivetrain & Battery Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,144 | 954 | 3,216 | 2,745 |
ePropulsion | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 556 | 445 | 1,572 | 1,290 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,065 | 1,011 | 3,200 | 2,892 |
North America | Air Management | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 542 | 526 | 1,622 | 1,497 |
North America | Drivetrain & Battery Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 405 | 376 | 1,190 | 1,020 |
North America | ePropulsion | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 118 | 109 | 388 | 375 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,243 | 1,004 | 3,784 | 3,028 |
Europe | Air Management | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 819 | 729 | 2,577 | 2,156 |
Europe | Drivetrain & Battery Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 329 | 226 | 980 | 724 |
Europe | ePropulsion | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 95 | 49 | 227 | 148 |
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,262 | 1,171 | 3,525 | 3,253 |
Asia | Air Management | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 511 | 522 | 1,531 | 1,490 |
Asia | Drivetrain & Battery Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 408 | 352 | 1,041 | 1,001 |
Asia | ePropulsion | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 343 | 297 | 953 | 762 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 52 | 40 | 167 | 145 |
Other | Air Management | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 50 | 50 | 158 | 140 |
Other | Drivetrain & Battery Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2 | 0 | 5 | 0 |
Other | ePropulsion | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 0 | $ (10) | $ 4 | $ 5 |
RESTRUCTURING - Reserve by Type
RESTRUCTURING - Reserve by Type of Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | $ 61 | $ 39 | ||
Restructuring expense | $ 56 | $ 5 | 68 | 42 |
Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | (1) |
Air Management | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 54 | 5 | 66 | 19 |
Drivetrain & Battery Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 2 | 0 | 2 | 23 |
ePropulsion | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | 1 |
Employee termination benefits | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense | 54 | 5 | 63 | 32 |
Employee termination benefits | Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | (1) |
Employee termination benefits | Air Management | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 53 | 5 | 62 | 19 |
Employee termination benefits | Drivetrain & Battery Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 1 | 0 | 1 | 14 |
Employee termination benefits | ePropulsion | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | 0 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense | 2 | 0 | 5 | 10 |
Other | Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | 0 |
Other | Air Management | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 1 | 0 | 4 | 0 |
Other | Drivetrain & Battery Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | 1 | 0 | 1 | 9 |
Other | ePropulsion | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net of cash paid | $ 0 | $ 0 | $ 0 | $ 1 |
RESTRUCTURING - Roll Forward of
RESTRUCTURING - Roll Forward of Restructuring Liability (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | $ 48 | $ 79 | ||
Restructuring expense, net | $ 56 | $ 5 | 68 | 42 |
Cash payments | (41) | (56) | ||
Foreign currency translation adjustment and other | 1 | (10) | ||
Restructuring reserve, ending balance | 76 | 55 | 76 | 55 |
Less: Non-current restructuring liability | 7 | 14 | 7 | 14 |
Current restructuring liability | 69 | 41 | 69 | 41 |
Employee Termination Benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 39 | 66 | ||
Restructuring expense, net | 54 | 5 | 63 | 32 |
Cash payments | (32) | (39) | ||
Foreign currency translation adjustment and other | (1) | (12) | ||
Restructuring reserve, ending balance | 69 | 47 | 69 | 47 |
Less: Non-current restructuring liability | 7 | 13 | 7 | 13 |
Current restructuring liability | 62 | 34 | 62 | 34 |
Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 9 | 13 | ||
Restructuring expense, net | 2 | 0 | 5 | 10 |
Cash payments | (9) | (17) | ||
Foreign currency translation adjustment and other | 2 | 2 | ||
Restructuring reserve, ending balance | 7 | 8 | 7 | 8 |
Less: Non-current restructuring liability | 0 | 1 | 0 | 1 |
Current restructuring liability | $ 7 | $ 7 | $ 7 | $ 7 |
RESTRUCTURING - Narrative (Deta
RESTRUCTURING - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) employee | Sep. 30, 2022 USD ($) employee | Dec. 31, 2020 USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net | $ 56 | $ 5 | $ 68 | $ 42 | |
Restructuring expense, net of cash paid | 61 | 39 | |||
Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net | 54 | 5 | 63 | 32 | |
Air Management | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 54 | 5 | 66 | 19 | |
Air Management | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 53 | 5 | 62 | 19 | |
Drivetrain & Battery Systems | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 2 | 0 | 2 | 23 | |
Drivetrain & Battery Systems | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 1 | 0 | 1 | 14 | |
ePropulsion | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | 1 | |
ePropulsion | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 0 | 0 | 0 | 0 | |
2023 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net | 56 | 68 | |||
2023 Restructuring Plan | Minimum | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related plan | 130 | 130 | |||
2023 Restructuring Plan | Maximum | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related plan | 150 | 150 | |||
2023 Restructuring Plan | Air Management | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | 54 | $ 66 | |||
2023 Restructuring Plan | Air Management | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Number of positions eliminated (in employees) | employee | 200 | ||||
2023 Restructuring Plan | Drivetrain & Battery Systems | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | $ 2 | $ 2 | |||
2020 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related plan | $ 300 | ||||
2020 Restructuring Plan | Air Management | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | $ 5 | 19 | |||
2020 Restructuring Plan | Air Management | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | $ 11 | ||||
Number of positions eliminated (in employees) | employee | 47 | ||||
2020 Restructuring Plan | Drivetrain & Battery Systems | Employee termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | $ 14 | ||||
Number of positions eliminated (in employees) | employee | 80 | ||||
2020 Restructuring Plan | Drivetrain & Battery Systems | Contractual settlements and professional fees | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense, net of cash paid | $ 9 |
RESEARCH AND DEVELOPMENT COST_2
RESEARCH AND DEVELOPMENT COSTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Research and Development [Abstract] | ||||
Gross R&D expenditures | $ 215 | $ 190 | $ 625 | $ 566 |
Customer reimbursements | (23) | (12) | (84) | (32) |
Net R&D expenditures | $ 192 | $ 178 | $ 541 | $ 534 |
OTHER OPERATING (INCOME) EXPE_3
OTHER OPERATING (INCOME) EXPENSE, NET - Other Operating Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | ||||
Merger and acquisition expense, net | $ 2 | $ 5 | $ 18 | $ 13 |
Service and lease agreement termination | 0 | 0 | 9 | 0 |
Asset impairments | 2 | 0 | 2 | 0 |
Loss (gain) on sale of business | 0 | (9) | 5 | 15 |
Gain on sale of assets | (7) | 0 | (13) | 0 |
Other (income) expense, net | (3) | (2) | (12) | (5) |
Other operating (income) expense, net | $ (6) | $ 12 | $ (1) | $ (7) |
OTHER OPERATING (INCOME) EXPE_4
OTHER OPERATING (INCOME) EXPENSE, NET - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Merger and acquisition expense, net | $ 2 | $ 5 | $ 18 | $ 13 |
Gain on sale of business | 0 | (9) | 5 | 15 |
Gain on sale of assets | $ 7 | $ 0 | $ 13 | 0 |
BorgWarner Romeo Power LLC | ||||
Business Acquisition [Line Items] | ||||
Gain on sale of business | $ (24) | |||
Percent of ownership interest disposal | 60% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Contingency [Line Items] | ||||
Effective income tax rate reconciliation (as percent) | 56% | 26% | 30% | 25% |
Discrete tax expense (benefit) | $ (31) | $ (1) | $ (14) | $ (8) |
Tax law changes, expense (benefit) | (87) | (9) | $ 39 | |
Decrease in unrecognized tax benefits | 97 | |||
Spinoff | ||||
Income Tax Contingency [Line Items] | ||||
Discrete tax expense (benefit) | $ (12) | 85 | ||
Tax law changes, expense (benefit) | $ 41 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw material and supplies | $ 1,005 | $ 919 |
Work in progress | 154 | 136 |
Finished goods | 202 | 187 |
FIFO inventories | 1,361 | 1,242 |
LIFO reserve | (33) | (25) |
Inventories, net | $ 1,328 | $ 1,217 |
OTHER CURRENT AND NON-CURRENT_4
OTHER CURRENT AND NON-CURRENT ASSETS (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Prepayments and other current assets: | ||
Prepaid tooling | $ 99 | $ 77 |
Derivative instruments | 34 | 12 |
Prepaid taxes | 40 | 33 |
Customer incentive payments (Note 4) | 27 | 34 |
Contract assets (Note 4) | 16 | 14 |
Other | 56 | 60 |
Total prepayments and other current assets | 272 | 230 |
Investments and long-term receivables: | ||
Investment in debt securities | 262 | 455 |
Investment in equity affiliates | 232 | 235 |
Long-term receivables | 57 | 56 |
Equity securities | 73 | 73 |
Total investments and long-term receivables | 624 | 819 |
Other non-current assets: | ||
Operating leases | 128 | 106 |
Deferred income taxes | 193 | 179 |
Customer incentive payments (Note 4) | 75 | 99 |
Derivative instruments | 83 | 68 |
Other | 39 | 37 |
Total other non-current assets | $ 518 | $ 489 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES - Goodwill (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||
Gross goodwill balance, December 31, 2022 | $ 3,480 | |
Accumulated impairment losses, December 31, 2022 | $ (502) | |
Beginning balance, December 31, 2022 | 2,978 | |
Acquisitions | 2 | |
Other, primarily translation adjustment | (44) | |
Ending balance, September 30, 2023 | 2,936 | |
Air Management | ||
Goodwill [Roll Forward] | ||
Gross goodwill balance, December 31, 2022 | 1,566 | |
Accumulated impairment losses, December 31, 2022 | (502) | |
Beginning balance, December 31, 2022 | 1,064 | |
Acquisitions | 2 | |
Other, primarily translation adjustment | (6) | |
Ending balance, September 30, 2023 | 1,060 | |
Drivetrain & Battery Systems | ||
Goodwill [Roll Forward] | ||
Gross goodwill balance, December 31, 2022 | 1,434 | |
Accumulated impairment losses, December 31, 2022 | 0 | |
Beginning balance, December 31, 2022 | 1,434 | |
Acquisitions | 0 | |
Other, primarily translation adjustment | (10) | |
Ending balance, September 30, 2023 | 1,424 | |
ePropulsion | ||
Goodwill [Roll Forward] | ||
Gross goodwill balance, December 31, 2022 | 480 | |
Accumulated impairment losses, December 31, 2022 | $ 0 | |
Beginning balance, December 31, 2022 | 480 | |
Acquisitions | 0 | |
Other, primarily translation adjustment | (28) | |
Ending balance, September 30, 2023 | $ 452 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES - Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | $ 978 | $ 997 |
Amortized intangible assets, accumulated amortization | 427 | 384 |
Amortized intangible assets, net carrying amount | 551 | 613 |
Intangible assets, gross (excluding goodwill) | 984 | 1,003 |
Other intangible assets, net | 557 | 619 |
Unamortized trade names | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Unamortized trade names | 6 | 6 |
Patented and unpatented technology | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | 349 | 349 |
Amortized intangible assets, accumulated amortization | 134 | 111 |
Amortized intangible assets, net carrying amount | 215 | 238 |
Customer relationships | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | 620 | 639 |
Amortized intangible assets, accumulated amortization | 287 | 267 |
Amortized intangible assets, net carrying amount | 333 | 372 |
Miscellaneous | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | 9 | 9 |
Amortized intangible assets, accumulated amortization | 6 | 6 |
Amortized intangible assets, net carrying amount | $ 3 | $ 3 |
Minimum | Patented and unpatented technology | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 5 years | |
Minimum | Customer relationships | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 6 years | |
Minimum | Miscellaneous | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 2 years | |
Maximum | Patented and unpatented technology | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 15 years | |
Maximum | Customer relationships | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 15 years | |
Maximum | Miscellaneous | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 5 years |
PRODUCT WARRANTY - Narrative (D
PRODUCT WARRANTY - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Minimum | |
Guarantor Obligations [Line Items] | |
Product warranty term | 1 year |
Maximum | |
Guarantor Obligations [Line Items] | |
Product warranty term | 3 years |
PRODUCT WARRANTY - Product Warr
PRODUCT WARRANTY - Product Warranty Accrual Accounts (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Product warranty rollforward | |||
Beginning balance, January 1 | $ 185 | $ 168 | |
Provisions for current period sales | 68 | 40 | |
Adjustments of prior estimates | 0 | (6) | |
Payments | (53) | (34) | |
Other, primarily translation adjustment | (6) | (20) | |
Ending balance, September 30 | 194 | 148 | |
Other current liabilities | 99 | $ 110 | |
Other non-current liabilities | 95 | 75 | |
Total product warranty liability | $ 194 | $ 148 | $ 185 |
NOTES PAYABLE AND DEBT - Debt O
NOTES PAYABLE AND DEBT - Debt Outstanding (Details) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 EUR (€) | Dec. 31, 2022 USD ($) |
Long-term debt | |||
Total long-term debt | $ 3,668,000,000 | $ 4,142,000,000 | |
Less: current portion | 3,000,000 | 2,000,000 | |
Long-term debt, net of current portion | 3,665,000,000 | 4,140,000,000 | |
Senior notes | 3.375% Senior notes due 03/15/25 ($500 million par value) | |||
Long-term debt | |||
Long-term debt | $ 384,000,000 | 499,000,000 | |
Debt instrument stated interest rate | 3.375% | 3.375% | |
Debt instrument face value | $ 500,000,000 | ||
Senior notes | 5.000% Senior notes due 10/01/25 ($800 million par value) | |||
Long-term debt | |||
Long-term debt | $ 481,000,000 | 840,000,000 | |
Debt instrument stated interest rate | 5% | 5% | |
Debt instrument face value | $ 800,000,000 | ||
Senior notes | 2.650% Senior notes due 07/01/27 ($1,100 million par value) | |||
Long-term debt | |||
Long-term debt | $ 1,093,000,000 | 1,092,000,000 | |
Debt instrument stated interest rate | 2.65% | 2.65% | |
Debt instrument face value | $ 1,100,000,000 | ||
Senior notes | 7.125% Senior notes due 02/15/29 ($121 million par value) | |||
Long-term debt | |||
Long-term debt | $ 120,000,000 | 120,000,000 | |
Debt instrument stated interest rate | 7.125% | 7.125% | |
Debt instrument face value | $ 121,000,000 | ||
Senior notes | 1.000% Senior Notes due 05/19/31 (€1,000 million par value) | |||
Long-term debt | |||
Long-term debt | $ 1,041,000,000 | 1,051,000,000 | |
Debt instrument stated interest rate | 1% | 1% | |
Debt instrument face value | € | € 1,000,000,000 | ||
Senior notes | 4.375% Senior notes due 03/15/45 ($500 million par value) | |||
Long-term debt | |||
Long-term debt | $ 495,000,000 | 495,000,000 | |
Debt instrument stated interest rate | 4.375% | 4.375% | |
Debt instrument face value | $ 500,000,000 | ||
Term Loan | Term loan facilities, finance leases and other | |||
Long-term debt | |||
Long-term debt | $ 54,000,000 | $ 45,000,000 |
NOTES PAYABLE AND DEBT - Narrat
NOTES PAYABLE AND DEBT - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Oct. 01, 2020 | Mar. 13, 2020 | |
Line of Credit Facility | ||||||||
Cash consideration paid on debt extinguishment | $ 430,000,000 | |||||||
Gain on debt extinguishment | $ 28,000,000 | $ 0 | $ 28,000,000 | $ 0 | ||||
Unamortized Premium and debt issuance costs | 20,000,000 | 20,000,000 | 20,000,000 | |||||
Potential additional increase to credit facility | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | |||||
Estimated fair value of senior unsecured notes | 3,099,000,000 | 3,099,000,000 | 3,099,000,000 | $ 3,530,000,000 | ||||
Debt, difference between fair value and carrying value | (515,000,000) | (515,000,000) | (515,000,000) | (567,000,000) | ||||
Letters of credit outstanding, amount | 35,000,000 | 35,000,000 | 35,000,000 | 31,000,000 | ||||
Senior notes | ||||||||
Line of Credit Facility | ||||||||
Extinguishment of debt, amount | 438,000,000 | |||||||
Short Term Borrowings | ||||||||
Line of Credit Facility | ||||||||
Short-term borrowings | 60,000,000 | 60,000,000 | $ 60,000,000 | 58,000,000 | ||||
Short Term Borrowings | Euribor | ||||||||
Line of Credit Facility | ||||||||
Basis spread on variable rate | 1.75% | |||||||
Revolving Credit Facility | ||||||||
Line of Credit Facility | ||||||||
Maximum borrowing capacity | $ 2,000,000,000 | |||||||
Potential additional increase to credit facility | $ 1,000,000,000 | |||||||
Line of credit outstanding | 0 | 0 | $ 0 | 0 | ||||
Commercial Paper | ||||||||
Line of Credit Facility | ||||||||
Current borrowing capacity | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | |||||
Short-term, Unsecured Commercial Paper Notes | ||||||||
Line of Credit Facility | ||||||||
Line of credit outstanding | 0 | $ 0 | $ 0 | $ 0 | ||||
3.375% Senior notes due 03/15/25 ($500 million par value) | Senior notes | ||||||||
Line of Credit Facility | ||||||||
Extinguishment of debt, amount | $ 115,000,000 | |||||||
Debt instrument stated interest rate | 3.375% | 3.375% | 3.375% | |||||
5.000% Senior notes due 10/01/25 ($800 million par value) | Senior notes | ||||||||
Line of Credit Facility | ||||||||
Extinguishment of debt, amount | $ 323,000,000 | |||||||
Debt instrument stated interest rate | 5% | 5% | 5% | |||||
Cash Settlement | Senior notes | ||||||||
Line of Credit Facility | ||||||||
Gain on debt extinguishment | $ (8,000,000) |
NOTES PAYABLE AND DEBT - Schedu
NOTES PAYABLE AND DEBT - Schedule of Consolidated Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Disclosure [Abstract] | ||||
Interest expense | $ 21 | $ 16 | $ 57 | $ 53 |
Gain on debt extinguishment | (28) | 0 | (28) | 0 |
Interest income | (12) | (4) | (26) | (12) |
Interest expense, net | $ (19) | $ 12 | $ 3 | $ 41 |
OTHER CURRENT AND NON-CURRENT_5
OTHER CURRENT AND NON-CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Other current liabilities: | ||
Payroll and employee related | $ 268 | $ 314 |
Customer related | 161 | 108 |
Indirect taxes | 119 | 115 |
Income taxes payable | 72 | 107 |
Product warranties (Note 12) | 99 | 110 |
Employee termination benefits (Note 5) | 62 | 20 |
Operating leases | 41 | 22 |
Accrued freight | 38 | 30 |
Interest | 22 | 22 |
Supplier related | 17 | 15 |
Insurance | 17 | 18 |
Deferred engineering reimbursements | 14 | 23 |
Other non-income taxes | 14 | 12 |
Dividends payable | 11 | 21 |
Contract liabilities (Note 4) | 11 | 14 |
Retirement related | 11 | 11 |
Earn-out liability (Note 3) | 2 | 16 |
Other | 135 | 106 |
Total other current liabilities | 1,114 | 1,084 |
Other non-current liabilities: | ||
Other income tax liabilities | 222 | 242 |
Deferred income taxes | 179 | 143 |
Product warranties (Note 12) | 95 | 75 |
Operating leases | 91 | 85 |
Deferred income | 69 | 59 |
Earn-out liability (Note 3) | 12 | 10 |
Employee termination benefits (Note 5) | 7 | 17 |
Other | 55 | 55 |
Total other non-current liabilities | $ 730 | $ 686 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Fair value, recurring - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Income approach | ||
Assets: | ||
Current earn-out receivable | $ 9 | |
Liabilities: | ||
Current earn-out liabilities | $ 2 | 21 |
Non-current earn-out liability | 12 | 10 |
Income approach | Quoted prices in active markets for identical items (Level 1) | ||
Assets: | ||
Current earn-out receivable | 0 | |
Liabilities: | ||
Current earn-out liabilities | 0 | 0 |
Non-current earn-out liability | 0 | 0 |
Income approach | Significant other observable inputs (Level 2) | ||
Assets: | ||
Current earn-out receivable | 0 | |
Liabilities: | ||
Current earn-out liabilities | 0 | 0 |
Non-current earn-out liability | 0 | 0 |
Income approach | Significant unobservable inputs (Level 3) | ||
Assets: | ||
Current earn-out receivable | 9 | |
Liabilities: | ||
Current earn-out liabilities | 2 | 21 |
Non-current earn-out liability | 12 | 10 |
Income approach | Assets Measured at NAV | ||
Assets: | ||
Current earn-out receivable | 0 | |
Liabilities: | ||
Current earn-out liabilities | 0 | 0 |
Non-current earn-out liability | 0 | 0 |
Market approach | ||
Assets: | ||
Investment in debt securities | 262 | 455 |
Investment in equity securities | 28 | 29 |
Foreign currency contracts | 39 | 12 |
Net investment hedge contracts | 78 | 68 |
Liabilities: | ||
Foreign currency contracts | 2 | 9 |
Net investment hedge contracts | 1 | |
Market approach | Quoted prices in active markets for identical items (Level 1) | ||
Assets: | ||
Investment in debt securities | 0 | 0 |
Investment in equity securities | 0 | 0 |
Foreign currency contracts | 0 | 0 |
Net investment hedge contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | 0 | 0 |
Net investment hedge contracts | 0 | |
Market approach | Significant other observable inputs (Level 2) | ||
Assets: | ||
Investment in debt securities | 262 | 455 |
Investment in equity securities | 0 | 0 |
Foreign currency contracts | 39 | 12 |
Net investment hedge contracts | 78 | 68 |
Liabilities: | ||
Foreign currency contracts | 2 | 9 |
Net investment hedge contracts | 1 | |
Market approach | Significant unobservable inputs (Level 3) | ||
Assets: | ||
Investment in debt securities | 0 | 0 |
Investment in equity securities | 0 | 0 |
Foreign currency contracts | 0 | 0 |
Net investment hedge contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | 0 | 0 |
Net investment hedge contracts | 0 | |
Market approach | Assets Measured at NAV | ||
Assets: | ||
Investment in debt securities | 0 | 0 |
Investment in equity securities | 28 | 29 |
Foreign currency contracts | 0 | 0 |
Net investment hedge contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | $ 0 | 0 |
Net investment hedge contracts | $ 0 |
FINANCIAL INSTRUMENTS - Foreign
FINANCIAL INSTRUMENTS - Foreign Currency Derivative Contract (Details) € in Millions, ₩ in Millions, ฿ in Millions, ¥ in Millions, zł in Millions, Ft in Millions, $ in Millions, $ in Millions | Sep. 30, 2023 EUR (€) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 HUF (Ft) | Sep. 30, 2023 KRW (₩) | Sep. 30, 2023 PLN (zł) | Sep. 30, 2023 CNY (¥) | Sep. 30, 2023 MXN ($) | Sep. 30, 2023 THB (฿) | Dec. 31, 2022 EUR (€) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 HUF (Ft) | Dec. 31, 2022 KRW (₩) | Dec. 31, 2022 PLN (zł) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 MXN ($) | Dec. 31, 2022 THB (฿) |
British Pound | Foreign currency | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | € | € 47 | € 10 | ||||||||||||||
Chinese Renminbi | Foreign currency | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | $ 225 | $ 276 | ||||||||||||||
Euro | Foreign currency | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | 136 | Ft 7,033 | ₩ 20,225 | zł 456 | 120 | Ft 0 | ₩ 9,138 | zł 440 | ||||||||
US Dollar | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | $ 10 | $ 10 | ||||||||||||||
US Dollar | Foreign currency | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | € 42 | ₩ 67,200 | ¥ 582 | $ 2,295 | ฿ 1,550 | € 45 | ₩ 51,786 | ¥ 1,402 | $ 2,474 | ฿ 0 |
FINANCIAL INSTRUMENTS - Cross-C
FINANCIAL INSTRUMENTS - Cross-Currency Swap Contract (Details) € in Millions, ¥ in Millions, $ in Millions | Sep. 30, 2023 EUR (€) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 JPY (¥) | Dec. 31, 2022 EUR (€) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 JPY (¥) |
US Dollar | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | $ 10 | $ 10 | ||||
Cross-currency swaps | US Dollar | Maturity period July 2027 | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | 1,100 | 1,100 | ||||
Cross-currency swaps | US Dollar | Maturity period March 2025 | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | 500 | 500 | ||||
Cross-currency swaps | US Dollar | Maturity period Feb 2029 | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | $ 100 | $ 100 | ||||
Cross-currency swaps | Euro | Maturity period July 2027 | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | € | € 976 | € 976 | ||||
Cross-currency swaps | Euro | Maturity period March 2025 | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | € | € 450 | € 450 | ||||
Cross-currency swaps | Japanese Yen | Maturity period Feb 2029 | ||||||
Derivative [Line Items] | ||||||
Derivative, notional amount | ¥ | ¥ 12,724 | ¥ 12,724 |
FINANCIAL INSTRUMENTS - Balance
FINANCIAL INSTRUMENTS - Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Designated as hedging instrument | Foreign currency | Prepayments and other current assets | ||
Derivatives, Fair Value | ||
Derivative assets | $ 31 | $ 9 |
Designated as hedging instrument | Foreign currency | Other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liability | 1 | 8 |
Designated as hedging instrument | Foreign currency | Other non-current assets | ||
Derivatives, Fair Value | ||
Derivative assets | 5 | 0 |
Designated as hedging instrument | Foreign currency | Other non-current liabilities | ||
Derivatives, Fair Value | ||
Derivative liability | 0 | 1 |
Designated as hedging instrument | Cross-currency swaps | Other non-current assets | Net investment hedging | ||
Derivatives, Fair Value | ||
Derivative assets | 78 | 68 |
Designated as hedging instrument | Cross-currency swaps | Other non-current liabilities | Net investment hedging | ||
Derivatives, Fair Value | ||
Derivative liability | 0 | 1 |
Not designated as hedging instrument | Foreign currency | Prepayments and other current assets | ||
Derivatives, Fair Value | ||
Derivative assets | 3 | 3 |
Not designated as hedging instrument | Foreign currency | Other current liabilities | ||
Derivatives, Fair Value | ||
Derivative liability | $ 1 | $ 0 |
FINANCIAL INSTRUMENTS - AOCI (D
FINANCIAL INSTRUMENTS - AOCI (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Derivatives, Fair Value | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | $ 224 | $ 196 |
Gain (loss) expected to be reclassified to income in one year or less | 0 | |
Foreign currency | Net investment hedging | ||
Derivatives, Fair Value | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 0 | (4) |
Gain (loss) expected to be reclassified to income in one year or less | 0 | |
Cross-currency swaps | Net investment hedging | ||
Derivatives, Fair Value | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 78 | 67 |
Gain (loss) expected to be reclassified to income in one year or less | 0 | |
Foreign currency-denominated debt | Net investment hedging | ||
Derivatives, Fair Value | ||
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from hedges, before tax | 146 | $ 133 |
Gain (loss) expected to be reclassified to income in one year or less | $ 0 |
FINANCIAL INSTRUMENTS - Income
FINANCIAL INSTRUMENTS - Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments, Gain (Loss) | ||||
Net sales | $ 3,622 | $ 3,226 | $ 10,676 | $ 9,318 |
Cost of sales | 2,970 | 2,619 | 8,767 | 7,588 |
Selling, general and administrative expenses | 330 | 325 | 963 | 951 |
Other comprehensive income (loss) | (17) | (262) | (39) | (527) |
Gain (loss) on cash flow hedging relationships: | ||||
Gain (loss) recognized in other comprehensive income | $ (11) | $ 8 | $ 27 | 12 |
Foreign currency | Cash flow hedging | Gain (loss) reclassified from AOCI to income | ||||
Derivative Instruments, Gain (Loss) | ||||
Net sales | 0 | |||
Cost of sales | (1) | |||
Selling, general and administrative expenses | $ 0 |
FINANCIAL INSTRUMENTS - Other C
FINANCIAL INSTRUMENTS - Other Comprehensive Income (Loss) (Details) - Net investment hedging - Other comprehensive income (loss) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Foreign currency | ||||
Derivative Instruments, Gain (Loss) | ||||
Gains and (losses) on derivative instruments | $ 0 | $ 3 | $ 0 | $ 6 |
Cross-currency swaps | ||||
Derivative Instruments, Gain (Loss) | ||||
Gains and (losses) on derivative instruments | 40 | 94 | 11 | 229 |
Foreign currency-denominated debt | ||||
Derivative Instruments, Gain (Loss) | ||||
Gains and (losses) on derivative instruments | $ 34 | $ 67 | $ 13 | $ 156 |
FINANCIAL INSTRUMENTS - Derivat
FINANCIAL INSTRUMENTS - Derivative Instruments Gain (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Cross-currency swaps | ||||
Derivative Instruments, Gain (Loss) | ||||
Net investment hedges | $ 6 | $ 7 | $ 19 | $ 20 |
FINANCIAL INSTRUMENTS - Deriv_2
FINANCIAL INSTRUMENTS - Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative [Line Items] | ||||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, general and administrative expenses | Selling, general and administrative expenses | Selling, general and administrative expenses | Selling, general and administrative expenses |
Foreign currency | Not designated as hedging instrument | ||||
Derivative [Line Items] | ||||
Gain (loss) on derivatives not designated as hedges | $ 16 | $ 13 | $ 8 | $ 22 |
RETIREMENT BENEFIT PLANS - Narr
RETIREMENT BENEFIT PLANS - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Actual contribution to defined benefit pension plans | $ 14 |
Minimum | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, expected future employer contributions, current fiscal year | 15 |
Maximum | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, expected future employer contributions, current fiscal year | $ 20 |
RETIREMENT BENEFIT PLANS - Net
RETIREMENT BENEFIT PLANS - Net Benefit Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pension benefits | US | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 2 | 1 | 5 | 3 |
Expected return on plan assets | (1) | (3) | (4) | (6) |
Amortization of unrecognized prior service credit | 0 | (1) | 0 | (1) |
Amortization of unrecognized loss | 1 | 2 | 2 | 3 |
Net periodic benefit expense (income) | 2 | (1) | 3 | (1) |
Pension benefits | Non-US | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 4 | 4 | 11 | 14 |
Interest cost | 26 | 3 | 37 | 10 |
Expected return on plan assets | (25) | (5) | (33) | (16) |
Amortization of unrecognized prior service credit | 0 | 0 | 0 | 0 |
Amortization of unrecognized loss | 1 | 2 | 2 | 6 |
Net periodic benefit expense (income) | 6 | 4 | 17 | 14 |
Other postemployment benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 0 | 1 | 1 | 1 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of unrecognized prior service credit | (1) | (1) | (2) | (2) |
Amortization of unrecognized loss | 0 | 0 | 0 | 0 |
Net periodic benefit expense (income) | $ (1) | $ 0 | $ (1) | $ (1) |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 7,508 | |||
Net earnings | $ 68 | $ 292 | 520 | $ 747 |
Other comprehensive loss | 47 | $ 6 | 463 | $ 178 |
Ending balance | $ 6,007 | $ 6,007 | ||
Dividends declared (in dollar per share) | $ 0.11 | $ 0.17 | $ 0.45 | $ 0.51 |
Total | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 7,781 | $ 7,171 | $ 7,508 | $ 7,262 |
Dividends declared | (31) | (54) | (168) | (185) |
Net issuance for executive stock plan | 10 | 5 | 15 | 10 |
Net issuance of restricted stock | 10 | 9 | 14 | 15 |
Purchase/sale of noncontrolling interest | (15) | (3) | ||
Purchase of treasury stock | (100) | (240) | ||
Net earnings | 68 | 292 | 520 | 747 |
Other comprehensive loss | (5) | (286) | (41) | (569) |
Spin-Off of PHINIA | (1,826) | (1,826) | ||
Ending balance | 6,007 | 7,037 | 6,007 | 7,037 |
Issued common stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 3 | 3 | 3 | 3 |
Ending balance | 3 | 3 | 3 | 3 |
Capital in excess of par value | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 2,657 | 2,633 | 2,675 | 2,637 |
Net issuance for executive stock plan | 10 | 6 | 10 | 6 |
Net issuance of restricted stock | 13 | 11 | (3) | 6 |
Purchase/sale of noncontrolling interest | (2) | 1 | ||
Ending balance | 2,680 | 2,650 | 2,680 | 2,650 |
Treasury stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (2,007) | (1,936) | (2,032) | (1,812) |
Net issuance for executive stock plan | (1) | 5 | 4 | |
Net issuance of restricted stock | (3) | (2) | 17 | 9 |
Purchase of treasury stock | (100) | (240) | ||
Ending balance | (2,010) | (2,039) | (2,010) | (2,039) |
Retained earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 7,796 | 7,005 | 7,454 | 6,671 |
Dividends declared | (26) | (39) | (105) | (121) |
Net earnings | 50 | 273 | 471 | 689 |
Spin-Off of PHINIA | (1,810) | (1,810) | ||
Ending balance | 6,010 | 7,239 | 6,010 | 7,239 |
Accumulated other comprehensive income (loss) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (898) | (816) | (876) | (551) |
Other comprehensive loss | (1) | (262) | (23) | (527) |
Spin-Off of PHINIA | (16) | (16) | ||
Ending balance | (915) | (1,078) | (915) | (1,078) |
Noncontrolling interests | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 230 | 282 | 284 | 314 |
Dividends declared | (5) | (15) | (63) | (64) |
Purchase/sale of noncontrolling interest | (13) | (4) | ||
Net earnings | 18 | 19 | 49 | 58 |
Other comprehensive loss | (4) | (24) | (18) | (42) |
Ending balance | $ 239 | $ 262 | $ 239 | $ 262 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 7,508 | |||
Comprehensive (loss) income before reclassifications | $ 11 | $ (229) | (23) | $ (453) |
Income taxes associated with comprehensive (loss) income before reclassifications | (12) | (34) | (1) | (79) |
Reclassification from accumulated other comprehensive loss | 1 | 2 | 2 | 7 |
Income taxes reclassified into net earnings | (133) | (68) | (230) | (177) |
Spin-Off of PHINIA | (16) | (16) | ||
Ending balance | 6,007 | 6,007 | ||
Gain (loss) reclassified from AOCI to income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Income taxes reclassified into net earnings | (1) | (1) | (1) | (2) |
Accumulated other comprehensive income (loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (898) | (816) | (876) | (551) |
Ending balance | (915) | (1,078) | (915) | (1,078) |
Foreign currency translation adjustments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (806) | (703) | (750) | (423) |
Comprehensive (loss) income before reclassifications | 17 | (240) | (51) | (474) |
Income taxes associated with comprehensive (loss) income before reclassifications | (13) | (34) | (1) | (80) |
Reclassification from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Spin-Off of PHINIA | (20) | (20) | ||
Ending balance | (822) | (977) | (822) | (977) |
Foreign currency translation adjustments | Gain (loss) reclassified from AOCI to income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Income taxes reclassified into net earnings | 0 | 0 | 0 | 0 |
Hedge instruments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 42 | 5 | 4 | 0 |
Comprehensive (loss) income before reclassifications | (11) | 8 | 27 | 12 |
Income taxes associated with comprehensive (loss) income before reclassifications | 0 | 0 | 0 | 0 |
Reclassification from accumulated other comprehensive loss | 0 | 0 | 0 | 1 |
Spin-Off of PHINIA | (1) | (1) | ||
Ending balance | 30 | 13 | 30 | 13 |
Hedge instruments | Gain (loss) reclassified from AOCI to income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Income taxes reclassified into net earnings | 0 | 0 | 0 | 0 |
Defined benefit retirement plans | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (134) | (118) | (130) | (128) |
Comprehensive (loss) income before reclassifications | 5 | 3 | 1 | 9 |
Income taxes associated with comprehensive (loss) income before reclassifications | 1 | 0 | 0 | 1 |
Reclassification from accumulated other comprehensive loss | 1 | 2 | 2 | 6 |
Spin-Off of PHINIA | 5 | 5 | ||
Ending balance | (123) | (114) | (123) | (114) |
Defined benefit retirement plans | Gain (loss) reclassified from AOCI to income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Income taxes reclassified into net earnings | $ (1) | $ (1) | $ (1) | $ (2) |
CONTINGENCIES (Details)
CONTINGENCIES (Details) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 USD ($) site | Dec. 31, 2022 USD ($) site | |
Commitments and Contingencies Disclosure [Abstract] | ||
Waste disposal sites | 17 | 22 |
Accrual for environmental loss contingencies | $ | $ 6 | $ 6 |
Number of sites with accrual | 6 | |
Completed or near completed clean up activities | 11 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Performance shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.8 | 0.9 | 0.7 | 0.9 |
EARNINGS PER SHARE - Basic and
EARNINGS PER SHARE - Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Basic earnings per share: | ||||
Net earnings from continuing operations | $ 87 | $ 173 | $ 483 | $ 464 |
Weighted average shares of common stock outstanding (in shares) | 233.4 | 234.3 | 233.2 | 236.5 |
Basic earnings per share of common stock (in dollars per share) | $ 0.37 | $ 0.74 | $ 2.07 | $ 1.96 |
Diluted earnings per share: | ||||
Net earnings from continuing operations | $ 87 | $ 173 | $ 483 | $ 464 |
Weighted average shares of common stock outstanding (in shares) | 233.4 | 234.3 | 233.2 | 236.5 |
Effect of stock-based compensation (in shares) | 1.9 | 1.3 | 1.4 | 1 |
Weighted average shares of common stock outstanding including dilutive shares (in shares) | 235.3 | 235.6 | 234.6 | 237.5 |
Diluted earnings per share of common stock (in dollars per share) | $ 0.37 | $ 0.73 | $ 2.06 | $ 1.95 |
REPORTABLE SEGMENTS AND RELAT_3
REPORTABLE SEGMENTS AND RELATED INFORMATION - Narrative (Details) - segment | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2023 | |
Segment Reporting [Abstract] | |||
Number of reportable segments (segments) | 5 | 3 | |
Number of newly disaggregated segments (segments) | 2 | ||
Number of additional reportable segments (segments) | 2 |
REPORTABLE SEGMENTS AND RELAT_4
REPORTABLE SEGMENTS AND RELATED INFORMATION - Net sales and total assets by reporting segments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information | |||||
Net sales | $ 3,622 | $ 3,226 | $ 10,676 | $ 9,318 | |
Total assets | 14,104 | 14,104 | $ 13,332 | ||
Customers | |||||
Segment Reporting Information | |||||
Net sales | 3,622 | 3,226 | 10,676 | 9,318 | |
Inter-segment | |||||
Segment Reporting Information | |||||
Net sales | 0 | 0 | 0 | 0 | |
Operating segments | |||||
Segment Reporting Information | |||||
Total assets | 12,360 | 12,360 | 11,641 | ||
Inter-segment eliminations | |||||
Segment Reporting Information | |||||
Net sales | (39) | (60) | (117) | (116) | |
Inter-segment eliminations | Customers | |||||
Segment Reporting Information | |||||
Net sales | 0 | 0 | 0 | 0 | |
Inter-segment eliminations | Inter-segment | |||||
Segment Reporting Information | |||||
Net sales | (39) | (60) | (117) | (116) | |
Corporate | |||||
Segment Reporting Information | |||||
Total assets | 1,744 | 1,744 | 1,691 | ||
Air Management | |||||
Segment Reporting Information | |||||
Net sales | 1,922 | 1,827 | 5,888 | 5,283 | |
Air Management | Operating segments | |||||
Segment Reporting Information | |||||
Net sales | 1,945 | 1,843 | 5,951 | 5,328 | |
Total assets | 5,559 | 5,559 | 5,329 | ||
Air Management | Operating segments | Customers | |||||
Segment Reporting Information | |||||
Net sales | 1,922 | 1,827 | 5,888 | 5,283 | |
Air Management | Operating segments | Inter-segment | |||||
Segment Reporting Information | |||||
Net sales | 23 | 16 | 63 | 45 | |
Drivetrain & Battery Systems | |||||
Segment Reporting Information | |||||
Net sales | 1,144 | 954 | 3,216 | 2,745 | |
Drivetrain & Battery Systems | Operating segments | |||||
Segment Reporting Information | |||||
Net sales | 1,145 | 954 | 3,218 | 2,745 | |
Total assets | 3,954 | 3,954 | 3,963 | ||
Drivetrain & Battery Systems | Operating segments | Customers | |||||
Segment Reporting Information | |||||
Net sales | 1,144 | 954 | 3,216 | 2,745 | |
Drivetrain & Battery Systems | Operating segments | Inter-segment | |||||
Segment Reporting Information | |||||
Net sales | 1 | 0 | 2 | 0 | |
ePropulsion | |||||
Segment Reporting Information | |||||
Net sales | 556 | 445 | 1,572 | 1,290 | |
ePropulsion | Operating segments | |||||
Segment Reporting Information | |||||
Net sales | 571 | 489 | 1,624 | 1,361 | |
Total assets | 2,847 | 2,847 | $ 2,349 | ||
ePropulsion | Operating segments | Customers | |||||
Segment Reporting Information | |||||
Net sales | 556 | 445 | 1,572 | 1,290 | |
ePropulsion | Operating segments | Inter-segment | |||||
Segment Reporting Information | |||||
Net sales | $ 15 | $ 44 | $ 52 | $ 71 |
REPORTABLE SEGMENTS AND RELAT_5
REPORTABLE SEGMENTS AND RELATED INFORMATION - Earnings before interest and income taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information | ||||
Segment Adjusted Operating Income | $ 421 | $ 361 | $ 1,210 | $ 1,034 |
Corporate, including stock-based compensation | 72 | 61 | 194 | 198 |
Restructuring expense | 56 | 5 | 68 | 42 |
Intangible asset amortization expense | 17 | 16 | 51 | 52 |
Merger and acquisition expense, net | 3 | 5 | 22 | 13 |
Service and lease agreement termination | 0 | 0 | 9 | 0 |
Loss (gain) on sale of business | 0 | (9) | 5 | 15 |
Gain on sale of assets | (7) | 0 | (13) | 0 |
Other non-comparable items | 8 | 0 | 5 | 0 |
Equity in affiliates’ earnings, net of tax | (10) | (5) | (23) | (21) |
Realized and unrealized loss (gain) on debt and equity securities | 60 | (1) | 129 | 27 |
Interest (income) expense, net | (19) | 12 | 3 | 41 |
Other postretirement expense (income) | 3 | (1) | 8 | (2) |
Earnings from continuing operations before income taxes and noncontrolling interest | 238 | 260 | 762 | 699 |
Provision for income taxes | 133 | 68 | 230 | 177 |
Net earnings from continuing operations | 105 | 192 | 532 | 522 |
Air Management | ||||
Segment Reporting Information | ||||
Segment Adjusted Operating Income | 294 | 291 | 884 | 793 |
Drivetrain & Battery Systems | ||||
Segment Reporting Information | ||||
Segment Adjusted Operating Income | 147 | 103 | 400 | 330 |
ePropulsion | ||||
Segment Reporting Information | ||||
Segment Adjusted Operating Income | $ (20) | $ (33) | $ (74) | $ (89) |
OPERATING CASH FLOWS AND OTHE_3
OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |||||
Net earnings | $ 68 | $ 292 | $ 520 | $ 747 | |
Net (loss) earnings from discontinued operations | (37) | 100 | (12) | 225 | |
Net earnings from continuing operations | 105 | 192 | 532 | 522 | |
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations: | |||||
Depreciation and tooling amortization | 376 | 360 | |||
Intangible asset amortization | 17 | 16 | 51 | 52 | |
Restructuring expense, net of cash paid | 61 | 39 | |||
Stock-based compensation expense | 50 | 36 | |||
Gain on debt extinguishment | (28) | 0 | (28) | 0 | |
Gain on sale of business | (5) | (17) | |||
Deferred income tax expense (benefit) | 19 | (14) | |||
Realized and unrealized loss (gain) on debt and equity securities | $ 60 | $ (1) | 129 | 27 | |
Other non-cash adjustments | (80) | (1) | |||
Adjustments to reconcile net earnings from continuing operations to net cash provided by operating activities from continuing operations | 1,105 | 1,004 | |||
Retirement plan contributions | (13) | (18) | |||
Changes in assets and liabilities, excluding effects of acquisitions, divestitures and foreign currency translation adjustments: | |||||
Receivables | (767) | (544) | |||
Inventories | (126) | (187) | |||
Prepayments and other current assets | (16) | 11 | |||
Accounts payable and accrued expenses | 301 | 274 | |||
Prepaid taxes and income taxes payable | (44) | 14 | |||
Other assets and liabilities | 70 | (2) | |||
Net cash provided by operating activities from continuing operations | 510 | 552 | |||
Cash paid during the period for: | |||||
Interest | 105 | 95 | |||
Income taxes, net of refunds | 284 | $ 204 | |||
Non-cash investing transactions: | |||||
Period end accounts payable related to property, plant and equipment purchases | $ 124 | $ 165 |
DISCONTINUED OPERATIONS - Narra
DISCONTINUED OPERATIONS - Narrative (Details) - Phinia - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Discontinued operation, services | $ 7 | |||
Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Other operating expense, net | $ 52 | $ 0 | $ 117 | $ 33 |
Services | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Discontinued operation, services | $ 2 |
DISCONTINUED OPERATIONS - Asset
DISCONTINUED OPERATIONS - Assets and Liabilities from Discontinued Operations (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Current assets of discontinued operations | $ 0 | $ 1,616 |
Total non-current assets of discontinued operations | 0 | 2,046 |
LIABILITIES | ||
Total non-current liabilities of discontinued operations | $ 0 | 295 |
Phinia | Discontinued Operations | ||
ASSETS | ||
Cash, cash equivalents and restricted cash | 255 | |
Receivables, net | 852 | |
Inventories, net | 470 | |
Prepayments and other current assets | 39 | |
Current assets of discontinued operations | 1,616 | |
Property, plant and equipment, net | 939 | |
Investments and long-term receivables | 77 | |
Goodwill | 419 | |
Other intangible assets, net | 432 | |
Other non-current assets | 179 | |
Total non-current assets of discontinued operations | 2,046 | |
LIABILITIES | ||
Notes payable and other short-term debt | 2 | |
Accounts payable | 538 | |
Other current liabilities | 406 | |
Total current liabilities of discontinued operations | 946 | |
Long-term debt | 26 | |
Retirement-related liabilities | 94 | |
Other non-current liabilities | 175 | |
Total non-current liabilities of discontinued operations | $ 295 |
DISCONTINUED OPERATIONS - Finan
DISCONTINUED OPERATIONS - Financial Results from Discontinued Operations (Details) - Phinia - Discontinued Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net sales | $ 0 | $ 857 | $ 1,723 | $ 2,496 |
Cost of sales | 0 | 658 | 1,362 | 1,958 |
Gross profit | 0 | 199 | 361 | 538 |
Selling, general and administrative expenses | 0 | 72 | 173 | 228 |
Restructuring expense | 0 | 3 | 7 | 8 |
Other operating expense, net | 52 | 0 | 117 | 33 |
Operating (loss) income | (52) | 124 | 64 | 269 |
Equity in affiliates’ earnings, net of tax | 0 | (5) | (5) | (8) |
Interest expense, net | 0 | 0 | 0 | 1 |
Other postretirement expense (income) | 0 | (7) | 0 | (24) |
Earnings from discontinued operations before income taxes | (52) | 136 | 69 | 300 |
Provision for income taxes | (15) | 36 | 81 | 75 |
Net (loss) earnings from discontinued operations attributable to PHINIA | $ (37) | $ 100 | $ (12) | $ 225 |