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Share Name | Share Symbol | Market | Type |
---|---|---|---|
BorgWarner Inc | NYSE:BWA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 33.18 | 0 | 09:00:10 |
(Mark One)
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þ
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended
March 31, 2019
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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|
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For the transition period from
to
|
Delaware
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|
13-3404508
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State or other jurisdiction of
|
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(I.R.S. Employer
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Incorporation or organization
|
|
Identification No.)
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|
|
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3850 Hamlin Road, Auburn Hills, Michigan
|
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48326
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(Address of principal executive offices)
|
|
(Zip Code)
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Large accelerated filer
|
þ
|
Accelerated filer
|
o
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Non-accelerated filer
|
o
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Smaller reporting company
|
o
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Emerging growth company
|
o
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Page No.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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(in millions)
|
March 31,
2019
|
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Cash
|
$
|
494
|
|
|
$
|
739
|
|
Restricted cash
|
23
|
|
|
—
|
|
||
Receivables, net
|
2,065
|
|
|
1,988
|
|
||
Inventories, net
|
807
|
|
|
781
|
|
||
Prepayments and other current assets
|
280
|
|
|
250
|
|
||
Assets held for sale
|
50
|
|
|
47
|
|
||
Total current assets
|
3,719
|
|
|
3,805
|
|
||
|
|
|
|
|
|
||
Property, plant and equipment, net
|
2,895
|
|
|
2,904
|
|
||
Investments and other long-term receivables
|
617
|
|
|
592
|
|
||
Goodwill
|
1,848
|
|
|
1,853
|
|
||
Other intangible assets, net
|
433
|
|
|
439
|
|
||
Other non-current assets
|
592
|
|
|
502
|
|
||
Total assets
|
$
|
10,104
|
|
|
$
|
10,095
|
|
|
|
|
|
|
|
||
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Notes payable and other short-term debt
|
$
|
164
|
|
|
$
|
173
|
|
Accounts payable and accrued expenses
|
2,056
|
|
|
2,144
|
|
||
Income taxes payable
|
57
|
|
|
59
|
|
||
Liabilities held for sale
|
22
|
|
|
23
|
|
||
Total current liabilities
|
2,299
|
|
|
2,399
|
|
||
|
|
|
|
|
|
||
Long-term debt
|
1,923
|
|
|
1,941
|
|
||
|
|
|
|
||||
Other non-current liabilities:
|
|
|
|
||||
Asbestos-related liabilities
|
746
|
|
|
755
|
|
||
Retirement-related liabilities
|
292
|
|
|
298
|
|
||
Other
|
459
|
|
|
357
|
|
||
Total other non-current liabilities
|
1,497
|
|
|
1,410
|
|
||
|
|
|
|
|
|
||
Common stock
|
3
|
|
|
3
|
|
||
Capital in excess of par value
|
1,111
|
|
|
1,146
|
|
||
Retained earnings
|
5,461
|
|
|
5,336
|
|
||
Accumulated other comprehensive loss
|
(675
|
)
|
|
(674
|
)
|
||
Common stock held in treasury
|
(1,626
|
)
|
|
(1,585
|
)
|
||
Total BorgWarner Inc. stockholders’ equity
|
4,274
|
|
|
4,226
|
|
||
Noncontrolling interest
|
111
|
|
|
119
|
|
||
Total equity
|
4,385
|
|
|
4,345
|
|
||
Total liabilities and equity
|
$
|
10,104
|
|
|
$
|
10,095
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions, except share and per share amounts)
|
2019
|
|
2018
|
||||
Net sales
|
$
|
2,566
|
|
|
$
|
2,784
|
|
Cost of sales
|
2,047
|
|
|
2,193
|
|
||
Gross profit
|
519
|
|
|
591
|
|
||
|
|
|
|
|
|||
Selling, general and administrative expenses
|
226
|
|
|
253
|
|
||
Other expense, net
|
29
|
|
|
5
|
|
||
Operating income
|
264
|
|
|
333
|
|
||
|
|
|
|
|
|||
Equity in affiliates’ earnings, net of tax
|
(9
|
)
|
|
(10
|
)
|
||
Interest income
|
(3
|
)
|
|
(2
|
)
|
||
Interest expense
|
14
|
|
|
16
|
|
||
Other postretirement income
|
—
|
|
|
(3
|
)
|
||
Earnings before income taxes and noncontrolling interest
|
262
|
|
|
332
|
|
||
|
|
|
|
|
|||
Provision for income taxes
|
91
|
|
|
95
|
|
||
Net earnings
|
171
|
|
|
237
|
|
||
Net earnings attributable to the noncontrolling interest, net of tax
|
11
|
|
|
12
|
|
||
Net earnings attributable to BorgWarner Inc.
|
$
|
160
|
|
|
$
|
225
|
|
|
|
|
|
||||
Earnings per share — basic
|
$
|
0.77
|
|
|
$
|
1.07
|
|
|
|
|
|
||||
Earnings per share — diluted
|
$
|
0.77
|
|
|
$
|
1.07
|
|
|
|
|
|
||||
Weighted average shares outstanding (millions):
|
|
|
|
||||
Basic
|
206.5
|
|
|
209.5
|
|
||
Diluted
|
207.1
|
|
|
210.8
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Net earnings attributable to BorgWarner Inc.
|
$
|
160
|
|
|
$
|
225
|
|
|
|
|
|
||||
Other comprehensive income (loss)
|
|
|
|
||||
Foreign currency translation adjustments*
|
(9
|
)
|
|
65
|
|
||
Hedge instruments*
|
—
|
|
|
(3
|
)
|
||
Defined benefit postretirement plans*
|
8
|
|
|
(2
|
)
|
||
Total other comprehensive (loss) income attributable to BorgWarner Inc.
|
(1
|
)
|
|
60
|
|
||
|
|
|
|
||||
Comprehensive income attributable to BorgWarner Inc.*
|
159
|
|
|
285
|
|
||
|
|
|
|
||||
Net earnings attributable to noncontrolling interest, net of tax
|
11
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|
|
12
|
|
||
Other comprehensive income attributable to the noncontrolling interest*
|
1
|
|
|
2
|
|
||
Comprehensive income
|
$
|
171
|
|
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$
|
299
|
|
*
|
Net of income taxes.
|
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Three Months Ended
March 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
OPERATING
|
|
|
|
||||
Net earnings
|
$
|
171
|
|
|
$
|
237
|
|
Adjustments to reconcile net earnings to net cash flows from operations:
|
|
|
|
||||
Depreciation and amortization
|
107
|
|
|
109
|
|
||
Stock-based compensation expense
|
8
|
|
|
15
|
|
||
Restructuring expense, net of cash paid
|
7
|
|
|
7
|
|
||
Deferred income tax (benefit) provision
|
(2
|
)
|
|
8
|
|
||
Tax reform adjustments to provision for income taxes
|
22
|
|
|
—
|
|
||
Equity in affiliates’ earnings, net of dividends received, and other
|
6
|
|
|
(11
|
)
|
||
Net earnings adjusted for non-cash charges to operations
|
319
|
|
|
365
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
||
Receivables
|
(95
|
)
|
|
(187
|
)
|
||
Inventories
|
(31
|
)
|
|
(27
|
)
|
||
Prepayments and other current assets
|
(23
|
)
|
|
(14
|
)
|
||
Accounts payable and accrued expenses
|
(120
|
)
|
|
(109
|
)
|
||
Prepaid taxes and Income taxes payable
|
(12
|
)
|
|
3
|
|
||
Other assets and liabilities
|
2
|
|
|
4
|
|
||
Net cash provided by operating activities
|
40
|
|
|
35
|
|
||
|
|
|
|
|
|
||
INVESTING
|
|
|
|
|
|
||
Capital expenditures, including tooling outlays
|
(117
|
)
|
|
(160
|
)
|
||
Payments for business acquired
|
(10
|
)
|
|
—
|
|
||
Proceeds from sale of business
|
23
|
|
|
—
|
|
||
Payments for venture capital investment
|
(1
|
)
|
|
(1
|
)
|
||
Proceeds from asset disposals and other
|
1
|
|
|
—
|
|
||
Net cash used in investing activities
|
(104
|
)
|
|
(161
|
)
|
||
|
|
|
|
|
|
||
FINANCING
|
|
|
|
|
|
||
Net increase in notes payable
|
—
|
|
|
118
|
|
||
Additions to long-term debt, net of debt issuance costs
|
11
|
|
|
12
|
|
||
Repayments of long-term debt, including current portion
|
(26
|
)
|
|
(10
|
)
|
||
Payments for purchase of treasury stock
|
(67
|
)
|
|
(55
|
)
|
||
Payments for stock-based compensation items
|
(14
|
)
|
|
(14
|
)
|
||
Dividends paid to BorgWarner stockholders
|
(35
|
)
|
|
(36
|
)
|
||
Dividends paid to noncontrolling stockholders
|
(22
|
)
|
|
(18
|
)
|
||
Net cash used in financing activities
|
(153
|
)
|
|
(3
|
)
|
||
Effect of exchange rate changes on cash
|
(5
|
)
|
|
(6
|
)
|
||
Net decrease in cash
|
(222
|
)
|
|
(135
|
)
|
||
Cash and restricted cash at beginning of year
|
739
|
|
|
545
|
|
||
Cash and restricted cash at end of period
|
$
|
517
|
|
|
$
|
410
|
|
|
|
|
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|||
Cash paid during the period for:
|
|
|
|
|
|||
Interest
|
$
|
26
|
|
|
$
|
31
|
|
Income taxes, net of refunds
|
$
|
68
|
|
|
$
|
80
|
|
(in millions)
|
Balance at December 31, 2018
|
|
Adjustments due to ASC 842
|
|
Balance at January 1, 2019
|
||||||
Other non-current assets
|
$
|
502
|
|
|
$
|
104
|
|
|
$
|
606
|
|
Accounts payable and accrued expenses
|
$
|
2,144
|
|
|
$
|
23
|
|
|
$
|
2,167
|
|
Other non-current liabilities
|
$
|
357
|
|
|
$
|
80
|
|
|
$
|
437
|
|
|
|
Three months ended March 31, 2019
|
|
Three months ended March 31, 2018
|
||||||||||||||||||||
(In millions)
|
|
Engine
|
|
Drivetrain
|
|
Total
|
|
Engine
|
|
Drivetrain
|
|
Total
|
||||||||||||
North America
|
|
$
|
412
|
|
|
$
|
445
|
|
|
$
|
857
|
|
|
$
|
402
|
|
|
$
|
448
|
|
|
$
|
850
|
|
Europe
|
|
801
|
|
|
227
|
|
|
1,028
|
|
|
846
|
|
|
291
|
|
|
1,137
|
|
||||||
Asia
|
|
340
|
|
|
303
|
|
|
643
|
|
|
422
|
|
|
337
|
|
|
759
|
|
||||||
Other
|
|
31
|
|
|
7
|
|
|
38
|
|
|
31
|
|
|
7
|
|
|
38
|
|
||||||
Total
|
|
$
|
1,584
|
|
|
$
|
982
|
|
|
$
|
2,566
|
|
|
$
|
1,701
|
|
|
$
|
1,083
|
|
|
$
|
2,784
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Gross R&D expenditures
|
$
|
121
|
|
|
$
|
130
|
|
Customer reimbursements
|
(17
|
)
|
|
(13
|
)
|
||
Net R&D expenditures
|
$
|
104
|
|
|
$
|
117
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Restructuring expense
|
$
|
14
|
|
|
$
|
8
|
|
Merger, acquisition and divestiture expense
|
1
|
|
|
2
|
|
||
Other expense (income)
|
14
|
|
|
(5
|
)
|
||
Other expense, net
|
$
|
29
|
|
|
$
|
5
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Raw material and supplies
|
$
|
496
|
|
|
$
|
485
|
|
Work in progress
|
116
|
|
|
114
|
|
||
Finished goods
|
213
|
|
|
199
|
|
||
FIFO inventories
|
825
|
|
|
798
|
|
||
LIFO reserve
|
(18
|
)
|
|
(17
|
)
|
||
Inventories, net
|
$
|
807
|
|
|
$
|
781
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Land, land use rights and buildings
|
$
|
879
|
|
|
$
|
871
|
|
Machinery and equipment
|
2,889
|
|
|
2,851
|
|
||
Finance lease assets
|
2
|
|
|
2
|
|
||
Construction in progress
|
395
|
|
|
426
|
|
||
Total property, plant and equipment, gross
|
4,165
|
|
|
4,150
|
|
||
Less: accumulated depreciation
|
(1,500
|
)
|
|
(1,473
|
)
|
||
Property, plant and equipment, net, excluding tooling
|
2,665
|
|
|
2,677
|
|
||
Tooling, net of amortization
|
230
|
|
|
227
|
|
||
Property, plant and equipment, net
|
$
|
2,895
|
|
|
$
|
2,904
|
|
(in millions)
|
2019
|
|
2018
|
||||
Beginning balance, January 1
|
$
|
103
|
|
|
$
|
112
|
|
Provisions for current period sales
|
15
|
|
|
13
|
|
||
Adjustments of prior estimates
|
7
|
|
|
1
|
|
||
Payments
|
(18
|
)
|
|
(10
|
)
|
||
Translation adjustment
|
—
|
|
|
2
|
|
||
Ending balance, March 31
|
$
|
107
|
|
|
$
|
118
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Accounts payable and accrued expenses
|
$
|
61
|
|
|
$
|
56
|
|
Other non-current liabilities
|
46
|
|
|
47
|
|
||
Total product warranty liability
|
$
|
107
|
|
|
$
|
103
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Short-term debt
|
|
|
|
|
|
||
Short-term borrowings
|
$
|
24
|
|
|
$
|
33
|
|
|
|
|
|
|
|
||
Long-term debt
|
|
|
|
|
|
||
8.00% Senior notes due 10/01/19 ($134 million par value)
|
135
|
|
|
135
|
|
||
4.625% Senior notes due 09/15/20 ($250 million par value)
|
251
|
|
|
251
|
|
||
1.80% Senior notes due 11/7/22 (€500 million par value)
|
558
|
|
|
570
|
|
||
3.375% Senior notes due 03/15/25 ($500 million par value)
|
497
|
|
|
497
|
|
||
7.125% Senior notes due 02/15/29 ($121 million par value)
|
119
|
|
|
119
|
|
||
4.375% Senior notes due 03/15/45 ($500 million par value)
|
494
|
|
|
494
|
|
||
Term loan facilities and other
|
9
|
|
|
15
|
|
||
Total long-term debt
|
2,063
|
|
|
2,081
|
|
||
Less: current portion
|
140
|
|
|
140
|
|
||
Long-term debt, net of current portion
|
$
|
1,923
|
|
|
$
|
1,941
|
|
Level 1:
|
Observable inputs such as quoted prices for identical assets or liabilities in active markets;
|
Level 2:
|
Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
Level 3:
|
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
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).
|
|
|
|
Basis of fair value measurements
|
|
|
||||||||||||
(in millions)
|
Balance at
March 31, 2019
|
|
Quoted prices in active markets for identical items
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
|
Valuation technique
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
A
|
Other long-term receivables (insurance settlement agreement note receivable)
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
C
|
Net investment hedge contracts
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
A
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
A
|
|
|
|
Basis of fair value measurements
|
|
|
||||||||||||
(in millions)
|
Balance at
December 31, 2018
|
|
Quoted prices in active markets for identical items
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
|
Valuation
technique
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
A
|
Other long-term receivables (insurance settlement agreement note receivable)
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
C
|
Net investment hedge contracts
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
A
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
A
|
|
|
Commodity derivative contracts
|
|||||||
Commodity
|
|
Volume hedged March 31, 2019
|
Volume hedged December 31, 2018
|
|
Units of measure
|
|
Duration
|
||
Copper
|
|
188
|
|
257
|
|
|
Metric Tons
|
|
Dec - 19
|
(in millions)
|
|
Assets
|
|
Liabilities
|
||||||||||||||||
Derivatives designated as hedging instruments Under Topic 815:
|
|
Location
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Location
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||
Foreign currency
|
|
Prepayments and other current assets
|
|
$
|
3
|
|
|
$
|
2
|
|
|
Accounts payable and accrued expenses
|
|
$
|
3
|
|
|
$
|
2
|
|
Net investment hedges
|
|
Other non-current assets
|
|
$
|
21
|
|
|
$
|
12
|
|
|
Other non-current liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency
|
|
Prepayments and other current assets
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1
|
|
|
$
|
—
|
|
(in millions)
|
|
Deferred gain (loss) in AOCI at
|
|
Gain (loss) expected to be reclassified to income in one year or less
|
||||||||
Contract Type
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|||||||
Net investment hedges:
|
|
|
|
|
|
|
||||||
Foreign currency
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Cross-currency swaps
|
|
21
|
|
|
12
|
|
|
—
|
|
|||
Foreign currency denominated debt
|
|
(18
|
)
|
|
(30
|
)
|
|
—
|
|
|||
Total
|
|
$
|
7
|
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||
(in millions)
|
|
Net sales
|
|
Cost of sales
|
|
Selling, general and administrative expenses
|
|
Other comprehensive income
|
||||||||
Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded
|
|
$
|
2,566
|
|
|
$
|
2,047
|
|
|
$
|
226
|
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) reclassified from AOCI to income
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
(in millions)
|
|
Net sales
|
|
Cost of sales
|
|
Selling, general and administrative expenses
|
|
Other comprehensive income
|
||||||||
Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded
|
|
$
|
2,784
|
|
|
$
|
2,193
|
|
|
$
|
253
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in other comprehensive income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
Gain (loss) reclassified from AOCI to income
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
(in millions)
|
|
Three months ended
|
||||||
Net investment hedges
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Cross-currency swaps
|
|
$
|
9
|
|
|
$
|
(7
|
)
|
Foreign currency denominated debt
|
|
$
|
12
|
|
|
$
|
(16
|
)
|
(in millions)
|
|
Three months ended
|
||||||
Net investment hedges
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Cross-currency swaps
|
|
$
|
3
|
|
|
$
|
1
|
|
|
|
Pension benefits
|
|
Other postretirement
employee benefits
|
||||||||||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
|||||||||||||||||||
Three Months Ended March 31,
|
|
US
|
|
Non-US
|
|
US
|
|
Non-US
|
|
2019
|
|
2018
|
||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
|
2
|
|
|
3
|
|
|
2
|
|
|
3
|
|
|
1
|
|
|
1
|
|
||||||
Expected return on plan assets
|
|
(3
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortization of unrecognized prior service credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Amortization of unrecognized loss
|
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (income)
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Shares subject to restriction
(thousands)
|
|
Weighted average grant date fair value
|
|||
Nonvested at December 31, 2018
|
1,516
|
|
|
$
|
42.97
|
|
Granted
|
930
|
|
|
$
|
41.92
|
|
Vested
|
(665
|
)
|
|
$
|
35.94
|
|
Forfeited
|
(6
|
)
|
|
$
|
45.41
|
|
Nonvested at March 31, 2019
|
1,775
|
|
|
$
|
44.77
|
|
|
Number of shares
(thousands)
|
|
Weighted average grant date fair value
|
|||
Nonvested at December 31, 2018
|
297
|
|
|
$
|
60.35
|
|
Granted
|
190
|
|
|
$
|
51.52
|
|
Forfeited
|
(9
|
)
|
|
$
|
55.30
|
|
Nonvested at March 31, 2019
|
478
|
|
|
$
|
56.93
|
|
|
Number of shares (thousands)
|
|
Weighted average grant date fair value
|
|||
Nonvested at December 31, 2018
|
297
|
|
|
$
|
47.03
|
|
Granted
|
190
|
|
|
$
|
41.90
|
|
Forfeited
|
(9
|
)
|
|
$
|
44.12
|
|
Nonvested at March 31, 2019
|
478
|
|
|
$
|
45.04
|
|
|
BorgWarner Inc. stockholder's equity
|
|
|
||||||||||||||||||||
(in millions of dollars)
|
Issued common stock
|
|
Capital in excess of par value
|
|
Treasury stock
|
|
Retained earnings
|
|
Accumulated other comprehensive income (loss)
|
|
Noncontrolling interests
|
||||||||||||
Balance, December 31, 2018
|
$
|
3
|
|
|
$
|
1,146
|
|
|
$
|
(1,585
|
)
|
|
$
|
5,336
|
|
|
$
|
(674
|
)
|
|
$
|
119
|
|
Dividends declared ($0.17 per share) *
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
|
(20
|
)
|
||||||
Net issuance for executive stock plan
|
—
|
|
|
(10
|
)
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net issuance of restricted stock
|
—
|
|
|
(25
|
)
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
11
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
||||||
Balance, March 31, 2019
|
$
|
3
|
|
|
$
|
1,111
|
|
|
$
|
(1,626
|
)
|
|
$
|
5,461
|
|
|
$
|
(675
|
)
|
|
$
|
111
|
|
|
BorgWarner Inc. stockholder's equity
|
|
|
||||||||||||||||||||
(in millions of dollars)
|
Issued common stock
|
|
Capital in excess of par value
|
|
Treasury stock
|
|
Retained earnings
|
|
Accumulated other comprehensive income (loss)
|
|
Noncontrolling interests
|
||||||||||||
Balance, December 31, 2017
|
$
|
3
|
|
|
$
|
1,118
|
|
|
$
|
(1,445
|
)
|
|
$
|
4,531
|
|
|
$
|
(490
|
)
|
|
$
|
109
|
|
Dividends declared ($0.17 per share) *
|
—
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
(18
|
)
|
||||||
Net issuance for executive stock plan
|
—
|
|
|
(1
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net issuance of restricted stock
|
—
|
|
|
(15
|
)
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Adoption of accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
(14
|
)
|
|
—
|
|
||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
225
|
|
|
—
|
|
|
12
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|
2
|
|
||||||
Balance, March 31, 2018
|
$
|
3
|
|
|
$
|
1,102
|
|
|
$
|
(1,486
|
)
|
|
$
|
4,736
|
|
|
$
|
(444
|
)
|
|
$
|
105
|
|
(in millions)
|
|
Foreign currency translation adjustments
|
|
Hedge instruments
|
|
Defined benefit postretirement plans
|
|
Other
|
|
Total
|
||||||||||
Beginning balance, December 31, 2018
|
|
$
|
(441
|
)
|
|
$
|
—
|
|
|
$
|
(235
|
)
|
|
$
|
2
|
|
|
$
|
(674
|
)
|
Comprehensive (loss) income before reclassifications
|
|
(5
|
)
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(2
|
)
|
|||||
Income taxes associated with comprehensive income (loss) before reclassifications
|
|
(4
|
)
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(1
|
)
|
|||||
Reclassification from accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Income taxes reclassified into net earnings
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Ending balance, March 31, 2019
|
|
$
|
(450
|
)
|
|
$
|
—
|
|
|
$
|
(227
|
)
|
|
$
|
2
|
|
|
$
|
(675
|
)
|
(in millions)
|
|
Foreign currency translation adjustments
|
|
Hedge instruments
|
|
Defined benefit postretirement plans
|
|
Other
|
|
Total
|
||||||||||
Beginning balance, December 31, 2017
|
|
$
|
(294
|
)
|
|
$
|
(1
|
)
|
|
$
|
(198
|
)
|
|
$
|
3
|
|
|
$
|
(490
|
)
|
Adoption of accounting standards
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|||||
Comprehensive income (loss) before reclassifications
|
|
62
|
|
|
(5
|
)
|
|
(4
|
)
|
|
—
|
|
|
53
|
|
|||||
Income taxes associated with comprehensive income (loss) before reclassifications
|
|
3
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|||||
Reclassification from accumulated other comprehensive loss
|
|
—
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|||||
Income taxes reclassified into net earnings
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Ending balance, March 31, 2018
|
|
$
|
(229
|
)
|
|
$
|
(4
|
)
|
|
$
|
(214
|
)
|
|
$
|
3
|
|
|
$
|
(444
|
)
|
Leases
(in millions)
|
|
Consolidated Balance Sheet Classification
|
|
March 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease assets
|
|
Other non-current assets
|
|
$
|
98
|
|
Total operating lease assets
|
|
|
|
$
|
98
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating lease liabilities
|
|
Accounts payable and accrued expenses
|
|
$
|
23
|
|
Noncurrent
|
|
|
|
|
||
Operating lease liabilities
|
|
Other non-current liabilities
|
|
74
|
|
|
Total operating lease liabilities
|
|
|
|
$
|
97
|
|
Maturity of Lease Liabilities (undiscounted) as of March 31, 2019
(millions of dollars)
|
|
Operating Leases
|
||
2019 (excluding the three months ended March 31, 2019)
|
|
$
|
18
|
|
2020
|
|
20
|
|
|
2021
|
|
15
|
|
|
2022
|
|
12
|
|
|
2023
|
|
8
|
|
|
After 2023
|
|
37
|
|
|
Total lease payments
|
|
$
|
110
|
|
Less: Imputed interest
|
|
13
|
|
|
Present value of lease liabilities
|
|
$
|
97
|
|
Lease Term and Discount Rate
|
|
March 31, 2019
|
|
Weighted-average remaining lease term (years)
|
|
|
|
Operating leases
|
|
8
|
|
Finance leases
|
|
2
|
|
Weighted-average discount rate
|
|
|
|
Operating leases
|
|
2.7
|
%
|
Finance leases
|
|
3.1
|
%
|
Other Information
|
|
Three Months Ended
|
||
(In millions)
|
|
March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows for operating leases
|
|
$
|
6
|
|
|
2019
|
|
2018
|
||
Beginning Claims January 1
|
8,598
|
|
|
9,225
|
|
New Claims Received
|
529
|
|
|
503
|
|
Dismissed Claims
|
(310
|
)
|
|
(462
|
)
|
Settled Claims
|
(89
|
)
|
|
(106
|
)
|
Ending Claims March 31
|
8,728
|
|
|
9,160
|
|
(in millions)
|
2019
|
|
2018
|
||||
Beginning asbestos liability as of January 1
|
$
|
805
|
|
|
$
|
828
|
|
Claim resolution costs and associated defense costs
|
(10
|
)
|
|
(15
|
)
|
||
Ending asbestos liability as of March 31
|
$
|
795
|
|
|
$
|
813
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Other long-term asbestos-related insurance receivables
|
$
|
313
|
|
|
$
|
303
|
|
Deferred asbestos-related insurance asset
|
$
|
73
|
|
|
$
|
83
|
|
Total insurance assets
|
$
|
386
|
|
|
$
|
386
|
|
Liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
49
|
|
|
$
|
50
|
|
Other non-current liabilities
|
746
|
|
|
755
|
|
||
Total accrued liabilities
|
$
|
795
|
|
|
$
|
805
|
|
|
|
Severance Accruals
|
||||||||||
(in millions)
|
|
Drivetrain
|
|
Engine
|
|
Total
|
||||||
Balance at December 31, 2018
|
|
$
|
4
|
|
|
$
|
21
|
|
|
$
|
25
|
|
Provision
|
|
—
|
|
|
7
|
|
|
7
|
|
|||
Cash payments
|
|
—
|
|
|
(20
|
)
|
|
(20
|
)
|
|||
Balance at March 31, 2019
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
12
|
|
|
|
Severance Accruals
|
||||||||||
(in millions)
|
|
Drivetrain
|
|
Engine
|
|
Total
|
||||||
Balance at December 31, 2017
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
5
|
|
Provision
|
|
1
|
|
|
1
|
|
|
2
|
|
|||
Cash payments
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Translation adjustment
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Balance at March 31, 2018
|
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
6
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions, except per share amounts)
|
2019
|
|
2018
|
||||
Basic earnings per share:
|
|
|
|
||||
Net earnings attributable to BorgWarner Inc.
|
$
|
160
|
|
|
$
|
225
|
|
Weighted average shares of common stock outstanding
|
206.5
|
|
|
209.5
|
|
||
Basic earnings per share of common stock
|
$
|
0.77
|
|
|
$
|
1.07
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|
|
|
||||
Net earnings attributable to BorgWarner Inc.
|
$
|
160
|
|
|
$
|
225
|
|
|
|
|
|
||||
Weighted average shares of common stock outstanding
|
206.5
|
|
|
209.5
|
|
||
Effect of stock-based compensation
|
0.6
|
|
|
1.3
|
|
||
Weighted average shares of common stock outstanding including dilutive shares
|
207.1
|
|
|
210.8
|
|
||
Diluted earnings per share of common stock
|
$
|
0.77
|
|
|
$
|
1.07
|
|
|
|
|
|
||||
Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share:
|
0.5
|
|
|
—
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Engine
|
$
|
1,598
|
|
|
$
|
1,716
|
|
Drivetrain
|
982
|
|
|
1,083
|
|
||
Inter-segment eliminations
|
(14
|
)
|
|
(15
|
)
|
||
Net sales
|
$
|
2,566
|
|
|
$
|
2,784
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Engine
|
$
|
241
|
|
|
$
|
280
|
|
Drivetrain
|
105
|
|
|
121
|
|
||
Adjusted EBIT
|
346
|
|
|
401
|
|
||
Restructuring expense
|
14
|
|
|
8
|
|
||
Merger, acquisition and divestiture expense
|
1
|
|
|
2
|
|
||
Other expense (income)
|
14
|
|
|
(5
|
)
|
||
Officer stock awards modification
|
2
|
|
|
—
|
|
||
Other postretirement income
|
—
|
|
|
(3
|
)
|
||
Corporate, including equity in affiliates' earnings and stock-based compensation
|
42
|
|
|
53
|
|
||
Interest income
|
(3
|
)
|
|
(2
|
)
|
||
Interest expense
|
14
|
|
|
16
|
|
||
Earnings before income taxes and noncontrolling interest
|
262
|
|
|
332
|
|
||
Provision for income taxes
|
91
|
|
|
95
|
|
||
Net earnings
|
171
|
|
|
237
|
|
||
Net earnings attributable to the noncontrolling interest, net of tax
|
11
|
|
|
12
|
|
||
Net earnings attributable to BorgWarner Inc.
|
$
|
160
|
|
|
$
|
225
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2019
|
|
2018
|
||||
Engine
|
$
|
4,824
|
|
|
$
|
4,731
|
|
Drivetrain
|
4,018
|
|
|
3,920
|
|
||
Total
|
8,842
|
|
|
8,651
|
|
||
Corporate *
|
1,262
|
|
|
1,444
|
|
||
Total assets
|
$
|
10,104
|
|
|
$
|
10,095
|
|
|
March 31,
|
|
December 31,
|
||||
(millions of dollars)
|
2019
|
|
2018
|
||||
Receivables, net
|
$
|
18
|
|
|
$
|
15
|
|
Inventories, net
|
39
|
|
|
42
|
|
||
Prepayments and other current assets
|
12
|
|
|
12
|
|
||
Property, plant and equipment, net
|
45
|
|
|
45
|
|
||
Goodwill
|
7
|
|
|
7
|
|
||
Other intangible assets, net
|
20
|
|
|
20
|
|
||
Impairment of carrying value
|
(91
|
)
|
|
(94
|
)
|
||
Total assets held for sale
|
$
|
50
|
|
|
$
|
47
|
|
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
17
|
|
|
$
|
18
|
|
Other liabilities
|
5
|
|
|
5
|
|
||
Total liabilities held for sale
|
$
|
22
|
|
|
$
|
23
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Non-comparable items:
|
|
|
|
||||
Restructuring expense
|
$
|
(0.05
|
)
|
|
$
|
(0.03
|
)
|
Loss on arbitration
|
(0.07
|
)
|
|
—
|
|
||
Officer stock awards modification
|
(0.01
|
)
|
|
—
|
|
||
Merger, acquisition and divestiture expense
|
(0.01
|
)
|
|
(0.01
|
)
|
||
Gain on commercial settlement
|
—
|
|
|
0.01
|
|
||
Tax adjustments
|
(0.08
|
)
|
|
—
|
|
||
Total impact of non-comparable items per share — diluted
|
$
|
(0.22
|
)
|
|
$
|
(0.03
|
)
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Engine
|
|
$
|
1,598
|
|
|
$
|
1,716
|
|
Drivetrain
|
|
982
|
|
|
1,083
|
|
||
Inter-segment eliminations
|
|
(14
|
)
|
|
(15
|
)
|
||
Net sales
|
|
$
|
2,566
|
|
|
$
|
2,784
|
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Engine
|
|
$
|
241
|
|
|
$
|
280
|
|
Drivetrain
|
|
105
|
|
|
121
|
|
||
Adjusted EBIT
|
|
346
|
|
|
401
|
|
||
Restructuring expense
|
|
14
|
|
|
8
|
|
||
Merger, acquisition and divestiture expense
|
|
1
|
|
|
2
|
|
||
Other expense (income)
|
|
14
|
|
|
(5
|
)
|
||
Officer stock awards modification
|
|
2
|
|
|
—
|
|
||
Other postretirement income
|
|
—
|
|
|
(3
|
)
|
||
Corporate, including equity in affiliates' earnings and stock-based compensation
|
|
42
|
|
|
53
|
|
||
Interest income
|
|
(3
|
)
|
|
(2
|
)
|
||
Interest expense
|
|
14
|
|
|
16
|
|
||
Earnings before income taxes and noncontrolling interest
|
|
262
|
|
|
332
|
|
||
Provision for income taxes
|
|
91
|
|
|
95
|
|
||
Net earnings
|
|
171
|
|
|
237
|
|
||
Net earnings attributable to the noncontrolling interest, net of tax
|
|
11
|
|
|
12
|
|
||
Net earnings attributable to BorgWarner Inc.
|
|
$
|
160
|
|
|
$
|
225
|
|
Item 1.
|
Legal Proceedings
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 6.
|
Exhibits
|
|
|
|
|
|
|
|
|
|
Exhibit 10.1
|
|
|
|
|
|
|
|
Exhibit 31.1
|
|
|
|
|
|
|
|
Exhibit 31.2
|
|
|
|
|
|
|
|
Exhibit 32.1
|
|
|
|
|
|
|
|
Exhibit 101.INS
|
|
XBRL Instance Document.*
|
|
|
|
|
|
Exhibit 101.SCH
|
|
XBRL Taxonomy Extension Schema Document.*
|
|
|
|
|
|
Exhibit 101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.*
|
|
|
|
|
|
Exhibit 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.*
|
|
|
|
|
|
Exhibit 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.*
|
|
|
|
|
|
Exhibit 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.*
|
|
|
|
|
|
|
|
|
BorgWarner Inc.
|
|
|
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
By
|
|
/s/ Thomas J. McGill
|
|
|
|
|
(Signature)
|
|
|
|
|
|
|
|
|
|
Thomas J. McGill
|
|
|
|
|
|
|
|
|
|
Vice President and Controller
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
1 Year BorgWarner Chart |
1 Month BorgWarner Chart |
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