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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 3, 2023
BORGWARNER INC.
________________________________________________
(Exact name of registrant as specified in its charter)
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Delaware | | 1-12162 | | 13-3404508 |
State or other jurisdiction of | | Commission File No. | | (I.R.S. Employer |
Incorporation or organization | | | | Identification No.) |
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3850 Hamlin Road, | Auburn Hills, | Michigan | | 48326 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (248) 754-9200
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | | BWA | | New York Stock Exchange |
1.00% Senior Notes due 2031 | | BWA31 | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.01 Completion of Acquisition or Disposition of Assets
On July 3, 2023 (the “Distribution Date”), at 5:00 p.m. Eastern Daylight time, BorgWarner Inc. (the “Company”, “we,” “us,” or “our”) completed the previously announced separation of our Fuel Systems and Aftermarket businesses by way of a distribution of 100% of the outstanding shares of common stock of PHINIA Inc. (“PHINIA”) to holders of record of common stock of the Company on a pro rata basis (the “Spin-Off”). 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. In lieu of fractional shares of PHINIA, shareholders of the Company will receive cash.
The Spin-Off was completed in accordance with a Separation and Distribution Agreement we entered into with PHINIA on July 2, 2023. The Separation and Distribution Agreement sets forth our agreements with PHINIA regarding the principal actions taken in connection with the Spin-Off. It also sets forth other agreements that govern aspects of our relationship with PHINIA following the Spin-Off. The description of the terms of the Separation and Distribution Agreement included under Item 1.01 of our Current Report on Form 8-K filed on July 7, 2023 is incorporated into this Item 2.01 by reference.
Item 9.01 Financial Statements and Exhibits
(b) Pro Forma Financial Information. The following unaudited pro forma financial information of the Company is filed as Exhibit 99.1 and is incorporated herein by reference:
•Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2023.
•Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and each of the years ended December 31, 2022, 2021 and 2020.
•Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
(d) Exhibits. The following exhibits are being furnished as part of this Report.
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Exhibit Number | Description |
99.1 | |
104.1 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| BorgWarner Inc. |
| | |
Date: July 10, 2023 | By: | /s/ Tonit M. Calaway |
| | Name: Tonit M. Calaway |
| | Title: Executive Vice President and Secretary |
Exhibit 99.1
BorgWarner Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 3, 2023, BorgWarner Inc. (the “Company” or “BorgWarner”) completed the previously announced separation (the “Separation”) of its Fuel Systems and Aftermarket businesses by means of a spin-off (the “Spin-Off”), into a separate, publicly traded company, PHINIA Inc. (“PHINIA”). On July 3, 2023, each of the Company’s stockholders of record as of the close of business on June 23, 2023 (the “Record Date”), received one ordinary share of PHINIA for every five ordinary shares of the Company held on the Record Date (the “Distribution Date”). The Separation was structured as a tax free Spin-Off to holders of BorgWarner common stock for U.S. federal income tax purposes, except for cash that stockholders received in lieu of fractional shares. PHINIA is now an independent public company that trades under the symbol “PHIN” on the New York Stock Exchange.
After the Distribution Date, the Company does not beneficially own any ordinary shares of PHINIA and will no longer consolidate PHINIA within its financial results. Beginning with the third quarter of 2023, PHINIA’s historical financial results for periods prior to the Distribution Date will be reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented.
The following unaudited pro forma Condensed Consolidated Balance Sheet as of March 31, 2023, is presented as if the Spin-Off, as described in the notes to these unaudited pro forma Condensed Consolidated Financial Statements, had occurred on March 31, 2023.
The unaudited pro forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2023 and for each of the years ended December 31, 2022, 2021 and 2020, is presented as if the Separation had occurred on January 1, 2020, in that they reflect the removal of PHINIA results for all periods presented. Pro forma adjustments included in the unaudited pro forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2023 and for the year ended December 31, 2022 give effect to the Spin-Off and related events as if they had occurred as of January 1, 2022. Pro Forma adjustments shown on the unaudited pro forma Condensed Consolidated Financial Statements are transaction accounting adjustments.
The unaudited pro forma Condensed Consolidated Financial Statements are subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. The unaudited pro forma Condensed Consolidated Financial Statements are based on the historical financial statements of BorgWarner for the periods presented and in the opinion of BorgWarner management, all adjustments and disclosures necessary for a fair statement of the pro forma data have been made.
These unaudited pro forma Condensed Consolidated Financial Statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations that would have been achieved had the events reflected been completed as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma Condensed Consolidated Financial Statements and the notes thereto should be read together with:
•BorgWarner’s audited Consolidated Financial Statements and the notes thereto as of and for the year ended December 31, 2022, and Management’s Discussion and Analysis included in BorgWarner’s Annual Report on Form 10-K for the year ended December 31, 2022;
•BorgWarner’s unaudited Condensed Consolidated Financial Statements and the notes thereto as of and for the three months ended March 31, 2023, and Management’s Discussion and Analysis included in BorgWarner’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023; and
•PHINIA’s audited annual and unaudited Interim Combined Financial Statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in PHINIA’s Registration Statement on Form 10 first filed with the SEC on May 18, 2023 and most recently amended on June 9, 2023.
In the enclosed unaudited pro forma Condensed Consolidated Balance Sheet and unaudited pro forma Condensed Consolidated Statement of Operations, the amounts reflected in each of the columns presented are described below:
Historical BorgWarner Inc.
This column reflects the Company’s historical financial statements for the periods presented and does not reflect any adjustments related to the Spin-Off and related events.
The historical Condensed Consolidated Balance Sheet as of March 31, 2023 and the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 were derived from the Company’s unaudited Interim Condensed Consolidated Financial Statements included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. The historical Consolidated Statements of Operations for each of the years ended December 31, 2022, 2021 and 2020 were derived from the Company’s audited Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2022.
Removal of PHINIA Inc.
The unaudited pro forma financial information related to the Removal of PHINIA Inc. has been prepared in accordance with the discontinued operations guidance in Accounting Standards Codification 205, “Financial Statement Presentation”, unless otherwise noted in the footnotes to the unaudited pro forma Condensed Consolidated Financial Statements. Therefore, this does not reflect what BorgWarner’s or PHINIA’s results of operations would have been on a stand-alone basis, and are not necessarily indicative of BorgWarner’s or PHINIA’s future results of operations. Discontinued operations does not include any allocation of general corporate overhead expenses of BorgWarner to PHINIA. The information in the Removal of PHINIA Inc. column was prepared based on BorgWarner’s interim unaudited and annual audited financial statements and only includes costs that are directly attributable to the results of PHINIA.
The Company believes that the adjustments included within the Removal of PHINIA Inc. column of the unaudited pro forma Condensed Consolidated Financial Statements are consistent with the guidance for discontinued operations in accordance with U.S. GAAP. The Company’s current estimates on a discontinued operations basis are preliminary and could change as the Company finalizes the accounting for the discontinued operations to be reported in the Annual Report on Form 10-K for the year ending December 31, 2023.
Transaction Accounting Adjustments
This column in the unaudited pro forma Condensed Consolidated Statements of Operations and the unaudited pro forma Condensed Consolidated Balance Sheet reflect additional pro forma adjustments which are further described in the accompanying notes. The pro forma adjustments are based on available information and assumptions that the Company’s management believes are reasonable to reflect the impact of events directly attributable to the Spin-Off. The pro forma adjustments do not reflect future events that may occur after the Spin-Off. Further, the Spin-Off has the potential to impact the allocation of profit across jurisdictions as well as various tax structuring actions and strategies. Evidence could become available which may require the Company to adjust its tax positions including those related to valuation allowances, which could impact the Company’s financial results as outlined in the unaudited pro forma Condensed Consolidated Financial Statements.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2023
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(in millions) | Historical BorgWarner Inc. | | Removal of PHINIA Inc. (a) | | Transaction Accounting Adjustments | | Notes | | Pro Forma |
ASSETS | | | | | | | | | |
Cash, cash equivalents and restricted cash | $ | 950 | | | $ | (181) | | | $ | 634 | | | c | | $ | 1,403 | |
Receivables, net | 3,566 | | | (849) | | | — | | | | | 2,717 | |
Inventories, net | 1,800 | | | (493) | | | — | | | | | 1,307 | |
Prepayments and other current assets | 291 | | | (40) | | | 163 | | | i | | 414 | |
Total current assets | 6,607 | | | (1,563) | | | 797 | | | | | 5,841 | |
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Property, plant and equipment, net | 4,463 | | | (923) | | | (2) | | | d | | 3,538 | |
Investments and long-term receivables | 895 | | | (124) | | | — | | | | | 771 | |
Goodwill | 3,420 | | | (422) | | | — | | | | | 2,998 | |
Other intangible assets, net | 1,033 | | | (427) | | | — | | | | | 606 | |
Other non-current assets | 699 | | | (162) | | | — | | | f | | 537 | |
Total assets | $ | 17,117 | | | $ | (3,621) | | | $ | 795 | | | | | $ | 14,291 | |
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LIABILITIES AND EQUITY | | | | | | | | | |
Notes payable and other short-term debt | $ | 62 | | | $ | (1) | | | $ | — | | | | | $ | 61 | |
Accounts payable | 2,676 | | | (478) | | | — | | | | | 2,198 | |
Other current liabilities | 1,410 | | | (359) | | | 47 | | | f,i | | 1,098 | |
Total current liabilities | 4,148 | | | (838) | | | 47 | | | | | 3,357 | |
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Long-term debt | 4,175 | | | (26) | | | — | | | | | 4,149 | |
Retirement-related liabilities | 223 | | | (97) | | | 8 | | | f | | 134 | |
Other non-current liabilities | 892 | | | (140) | | | 16 | | | g,i | | 768 | |
Total liabilities | 9,438 | | | (1,101) | | | 71 | | | | | 8,408 | |
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Commitments and contingencies | | | | | | | | | |
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Common stock | 3 | | | — | | | — | | | | | 3 | |
Capital in excess of par value | 2,661 | | | — | | | — | | | | | 2,661 | |
Retained earnings | 7,632 | | | (2,596) | | | 724 | | | c,d,f,g,i | | 5,760 | |
Accumulated other comprehensive (loss) income | (824) | | | 76 | | | — | | | f | | (748) | |
Common stock held in treasury, at cost | (2,031) | | | — | | | — | | | | | (2,031) | |
Total BorgWarner Inc. stockholders’ equity | 7,441 | | | (2,520) | | | 724 | | | | | 5,645 | |
Noncontrolling interest | 238 | | | — | | | — | | | | | 238 | |
Total equity | 7,679 | | | (2,520) | | | 724 | | | | | 5,883 | |
Total liabilities and equity | $ | 17,117 | | | $ | (3,621) | | | $ | 795 | | | | | $ | 14,291 | |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the period ended March 31, 2023
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(in millions, except share and per share amounts) | Historical BorgWarner Inc. | | Removal of PHINIA Inc. (a,b) | | Transaction Accounting Adjustments | | Notes | | Pro Forma |
Net sales | $ | 4,180 | | | $ | (797) | | | $ | — | | | d | | $ | 3,383 | |
Cost of sales | 3,430 | | | (624) | | | 2 | | | d | | 2,808 | |
Gross profit | 750 | | | (173) | | | (2) | | | | | 575 | |
| | | | | | | | | |
Selling, general and administrative expenses | 384 | | | (85) | | | (1) | | | d | | 298 | |
Restructuring expense | 7 | | | (4) | | | — | | | | | 3 | |
Other operating expense (income), net | 19 | | | (18) | | | — | | | | | 1 | |
Operating income | 340 | | | (66) | | | (1) | | | | | 273 | |
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Equity in affiliate's earnings, net of tax | (4) | | | 3 | | | — | | | | | (1) | |
Unrealized loss on debt and equity securities | 15 | | | — | | | — | | | | | 15 | |
Interest expense, net | 10 | | | 1 | | | — | | | | | 11 | |
Other postretirement expense | 2 | | | — | | | — | | | | | 2 | |
Earnings before income taxes and noncontrolling interest | 317 | | | (70) | | | (1) | | | | | 246 | |
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Provision for income taxes | 87 | | | (20) | | | — | | | g | | 67 | |
Net earnings | 230 | | | (50) | | | (1) | | | | | 179 | |
Net earnings attributable to noncontrolling interest, net of tax | 13 | | | — | | | — | | | | | 13 | |
Net earnings attributable to BorgWarner Inc. | $ | 217 | | | $ | (50) | | | $ | (1) | | | | | $ | 166 | |
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Earnings per share attributable to BorgWarner Inc. - basic | $ | 0.93 | | | | | | | | | $ | 0.71 | |
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Earnings per share attributable to BorgWarner Inc. - diluted | $ | 0.93 | | | | | | | | | $ | 0.71 | |
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Weighted-average shares outstanding | | | | | | | | | |
Basic | 232.8 | | | | | | | | | 232.8 | |
Diluted | 234.4 | | | | | | | | | 234.4 | |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the period ended December 31, 2022
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(in millions, except share and per share amounts) | Historical BorgWarner Inc. | | Removal of PHINIA Inc. (a,b) | | Transaction Accounting Adjustments | | Notes | | Pro Forma |
Net sales | $ | 15,801 | | | $ | (3,167) | | | $ | (6) | | | d,h | | $ | 12,628 | |
Cost of sales | 12,700 | | | (2,451) | | | 6 | | | d | | 10,255 | |
Gross profit | 3,101 | | | (716) | | | (12) | | | | | 2,373 | |
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Selling, general and administrative expenses | 1,610 | | | (322) | | | (29) | | | d,e,h | | 1,259 | |
Restructuring expense | 59 | | | (11) | | | — | | | | | 48 | |
Other operating expense (income), net | 58 | | | (19) | | | (1) | | | e | | 38 | |
Operating income | 1,374 | | | (364) | | | 18 | | | | | 1,028 | |
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Equity in affiliate's earnings, net of tax | (38) | | | 11 | | | — | | | | | (27) | |
Unrealized loss on debt and equity securities | 73 | | | — | | | — | | | | | 73 | |
Interest expense, net | 52 | | | (1) | | | — | | | | | 51 | |
Other postretirement income | (31) | | | 31 | | | — | | | | | — | |
Earnings before income taxes and noncontrolling interest | 1,318 | | | (405) | | | 18 | | | | | 931 | |
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Provision for income taxes | 292 | | | (98) | | | 3 | | | g | | 197 | |
Net earnings | 1,026 | | | (307) | | | 15 | | | | | 734 | |
Net earnings attributable to noncontrolling interest, net of tax | 82 | | | — | | | — | | | | | 82 | |
Net earnings attributable to BorgWarner Inc. | $ | 944 | | | $ | (307) | | | $ | 15 | | | | | $ | 652 | |
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Earnings per share attributable to BorgWarner Inc. - basic | $ | 4.01 | | | | | | | | | $ | 2.77 | |
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Earnings per share attributable to BorgWarner Inc. - diluted | $ | 3.99 | | | | | | | | | $ | 2.75 | |
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Weighted-average shares outstanding | | | | | | | | | |
Basic | 235.5 | | | | | | | | | 235.5 | |
Diluted | 236.8 | | | | | | | | | 236.8 | |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the period ended December 31, 2021
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(in millions, except share and per share amounts) | Historical BorgWarner Inc. | | Removal of PHINIA Inc. (a,b) | | Pro Forma |
Net sales | $ | 14,838 | | | $ | (3,029) | | | $ | 11,809 | |
Cost of sales | 11,983 | | | (2,346) | | | 9,637 | |
Gross profit | 2,855 | | | (683) | | | 2,172 | |
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Selling, general and administrative expenses | 1,460 | | | (377) | | | 1,083 | |
Restructuring expense | 163 | | | (55) | | | 108 | |
Other operating expense, net | 81 | | | (14) | | | 67 | |
Operating income | 1,151 | | | (237) | | | 914 | |
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Equity in affiliate's earnings, net of tax | (48) | | | 7 | | | (41) | |
Unrealized loss on debt and equity securities | 362 | | | — | | | 362 | |
Interest expense, net | 93 | | | (2) | | | 91 | |
Other postretirement income | (45) | | | 38 | | | (7) | |
Earnings before income taxes and noncontrolling interest | 789 | | | (280) | | | 509 | |
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Provision for income taxes | 150 | | | (86) | | | 64 | |
Net earnings | 639 | | | (194) | | | 445 | |
Net earnings attributable to noncontrolling interest, net of tax | 102 | | | (1) | | | 101 | |
Net earnings attributable to BorgWarner Inc. | $ | 537 | | | $ | (193) | | | $ | 344 | |
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Earnings per share attributable to BorgWarner Inc. - basic | $ | 2.25 | | | | | $ | 1.44 | |
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Earnings per share attributable to BorgWarner Inc. - diluted | $ | 2.24 | | | | | $ | 1.44 | |
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Weighted-average number of common shares outstanding | | | | | |
Basic | 238.1 | | | | | 238.1 | |
Diluted | 239.5 | | | | | 239.5 | |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the period ended December 31, 2020
| | | | | | | | | | | | | | | | | |
(in millions, except share and per share amounts) | Historical BorgWarner Inc. | | Removal of PHINIA Inc. (a,b) | | Pro Forma |
Net sales | $ | 10,165 | | | $ | (947) | | | $ | 9,218 | |
Cost of sales | 8,255 | | | (756) | | | 7,499 | |
Gross profit | 1,910 | | | (191) | | | 1,719 | |
| | | | | |
Selling, general and administrative expenses | 951 | | | (138) | | | 813 | |
Restructuring expense | 203 | | | (27) | | | 176 | |
Other operating expense, net | 138 | | | (1) | | | 137 | |
Operating income | 618 | | | (25) | | | 593 | |
| | | | | |
Equity in affiliate's earnings, net of tax | (18) | | | 1 | | | (17) | |
Unrealized gain on debt and equity securities | (382) | | | — | | | (382) | |
Interest expense, net | 61 | | | (2) | | | 59 | |
Other postretirement income | (7) | | | 3 | | | (4) | |
Earnings before income taxes and noncontrolling interest | 964 | | | (27) | | | 937 | |
| | | | | |
Provision for income taxes | 397 | | | (15) | | | 382 | |
Net earnings | 567 | | | (12) | | | 555 | |
Net earnings attributable to noncontrolling interest, net of tax | 67 | | | — | | | 67 | |
Net earnings attributable to BorgWarner Inc. | $ | 500 | | | $ | (12) | | | $ | 488 | |
| | | | | |
Earnings per share attributable to BorgWarner Inc. - basic | $ | 2.35 | | | | | $ | 2.29 | |
| | | | | |
Earnings per share attributable to BorgWarner Inc. - diluted | $ | 2.34 | | | | | $ | 2.28 | |
| | | | | |
Weighted-average number of common shares outstanding | | | | | |
Basic | 213.0 | | | | | 213.0 | |
Diluted | 214.0 | | | | | 214.0 | |
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following items resulted in transaction accounting adjustments in the unaudited pro forma Condensed Consolidated Financial Statements:
a.Reflects the removal of the associated assets, liabilities and operations attributable to PHINIA, which were included in the Company’s historical financial statements.
b.Net sales and cost of sales from BorgWarner to PHINIA under intercompany sales agreements were previously eliminated in consolidation by BorgWarner. BorgWarner and PHINIA will continue certain of these arrangements post Spin-Off. The supply agreements governing these sales arrangements represent a continuation of existing historical product sales from BorgWarner to PHINIA and are, therefore, recast as third-party sales. Sales under such arrangements totaled $36 million for the three-months ended March 31, 2023 and $154 million, $171 million and $75 million for each of the years ended December 31, 2022, 2021 and 2020 and are reflected as a reduction in net sales and cost of sales in the Removal of PHINIA Inc. balances.
c.Reflects the $771 million of term loan and revolver borrowings (net of debt issuance costs) received by PHINIA in connection with the Spin-Off. PHINIA used $634 million of the proceeds to make a special payment to BorgWarner to repay outstanding indebtedness to BorgWarner as of the Distribution Date.
d.Reflects the impact of contract manufacturing agreements that BorgWarner and PHINIA entered into in connection with the Spin-Off for product supply. The contract manufacturing agreements relate to entities in Mexico and China. BorgWarner will both sell to and purchase products from PHINIA under these arrangements resulting in the pro forma adjustment of net sales, cost of sales and selling, general and administrative expenses. The arrangements feature consideration set at cost plus a fixed margin for the designated products. The impact of these arrangements on net sales is negligible and $(3) million for the three months ended March 31, 2023, and the year ended December 31, 2022, respectively. The impact of these arrangements on cost of sales is $2 million and $6 million for the three months ended March 31, 2023 and the year ended December 31, 2022, respectively. The impact of these arrangements on selling, general and administrative expenses is $(1) million and $(2) million for the three months ended March 31, 2023, and the year ended December 31, 2022, respectively. Further, certain assets were transferred by BorgWarner to PHINIA as a result of the contract manufacturing agreements. The impact of those transfers is reduction of $2 million in BorgWarner property, plant and equipment, net. The estimate for these adjustments is based upon the terms of the latest draft agreement and is subject to change.
e.In connection with the Spin-Off, BorgWarner entered into a transition services agreement with PHINIA whereby BorgWarner will continue to provide support with functional area services (“forward services”) at a cost to PHINIA (cost plus markup of 5%). These services cover finance, information technology, and infrastructure. The adjustment for transition services agreement costs is expected to decrease the selling, general and administrative expenses by $23 million and increase the ‘Other operating (income) expense, net’ by $1 million for the year ended December 31, 2022.
f.In connection with the Spin-Off and as a result of the legal split of certain plans, a portion of PHINIA’s defined benefit plans and other postretirement employee benefit plans transfer to BorgWarner through the establishment of mirror plans. The pro forma adjustments reflect plan assets and obligations primarily associated with the Company’s active, retired, and other former employees in certain jurisdictions. The adjustments in the unaudited pro forma Condensed Consolidated Balance Sheet as of March 31, 2023 are included in the table below with negligible impacts on all accounts, except Retirement related liabilities.
| | | | | | | | |
($ in millions) | | As of March 31, 2023 |
Other non-current assets | | $ | — | |
Deferred income taxes | | $ | — | |
Other current liabilities | | $ | — | |
Retirement related liabilities | | $ | 8 | |
Accumulated other comprehensive income (loss) | | $ | — | |
g.Reflects a $2 million deferred tax liability as of March 31, 2023 for the impact of the transaction accounting adjustments at the applicable statutory income tax rates, where valuation allowances were not required, based on the locations generating the related taxable activity. The tax effects of the transaction accounting adjustments resulted in a negligible and $3 million income tax expense for the three months ended March 31, 2023, and the year ended December 31, 2022, respectively.
h.Reflects the impact of changes from a Supply Agreement with a certain PHINIA entity and BorgWarner. The Supply Agreement replaces cost reimbursement provided by BorgWarner, previously recorded in selling, general and administrative expenses by PHINIA, with a discount in product supply cost. The agreement will only affect the pro forma Condensed Consolidated Statement of Operations for the year ended December 31, 2022 as the arrangement is already accounted for on this basis in 2023. The agreement has an impact of decreasing net sales by $3 million and decreasing selling, general and administrative expenses by $4 million.
i.These adjustments reflect the indemnification assets and liabilities established pursuant to the tax matters agreement. These adjustments are estimates, the impacts of which are presented below.
| | | | | |
($ in millions) | As of March 31, 2023 |
Prepayment and other current assets | $ | 163 | |
Other current liabilities | $ | 47 | |
Other non-current liabilities | $ | 14 | |
v3.23.2
Cover
|
Jul. 03, 2023 |
Cover [Abstract] |
|
Document Period End Date |
Jul. 03, 2023
|
Document Type |
8-K
|
Entity File Number |
1-12162
|
Entity Information [Line Items] |
|
Entity Registrant Name |
BORGWARNER INC.
|
Entity Address, Postal Zip Code |
48326
|
Entity Address, Address Line One |
3850 Hamlin Road,
|
Entity Address, City or Town |
Auburn Hills,
|
Entity Address, State or Province |
MI
|
City Area Code |
248
|
Local Phone Number |
754-9200
|
Entity Emerging Growth Company |
false
|
Written Communications |
false
|
Soliciting Material |
false
|
Pre-commencement Tender Offer |
false
|
Pre-commencement Issuer Tender Offer |
false
|
Entity Central Index Key |
0000908255
|
Amendment Flag |
false
|
Entity Incorporation, State or Country Code |
DE
|
Entity Tax Identification Number |
13-3404508
|
Common Stock |
|
Entity Information [Line Items] |
|
Title of 12(b) Security |
Common Stock, par value $0.01 per share
|
Trading Symbol |
BWA
|
Security Exchange Name |
NYSE
|
Senior Notes Due November 2022 | Senior Notes |
|
Entity Information [Line Items] |
|
Title of 12(b) Security |
1.00% Senior Notes due 2031
|
Trading Symbol |
BWA31
|
Security Exchange Name |
NYSE
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