State or other jurisdiction of | Commission File No. | (I.R.S. Employer | ||||||||||||
Incorporation or organization | Identification No.) |
| ||||||||||||||
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
BorgWarner Inc. | ||||||||
Date: October 13, 2020 | By: | /s/ Tonit M. Calaway | ||||||
Name: Tonit M. Calaway | ||||||||
Title: Executive Vice President and Secretary |
BorgWarner Inc. | |||||||||||||||||
Unaudited Pro Forma Combined Balance Sheet | |||||||||||||||||
As of June 30, 2020 | |||||||||||||||||
Historical | |||||||||||||||||
(in millions) | BorgWarner Inc. | (Note 3) Delphi Technologies PLC (after reclassifications) | Pro Forma Adjustments | Note | Pro Forma Combined | ||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 2,003 | $ | 546 | $ | (1,541) | 5a | $ | 1,008 | ||||||||
Receivables, net | 1,535 | 776 | - | 2,311 | |||||||||||||
Inventories, net | 836 | 373 | 98 | 5b | 1,307 | ||||||||||||
Prepayments and other current assets | 267 | 59 | — | 326 | |||||||||||||
Total current assets | 4,641 | 1,754 | (1,443) | 4,952 | |||||||||||||
Property, plant and equipment, net | 2,781 | 1,435 | 154 | 5c | 4,370 | ||||||||||||
Investments and other long-term receivables | 315 | 97 | — | 412 | |||||||||||||
Goodwill | 1,830 | 6 | 823 | 4 | 2,659 | ||||||||||||
Other intangible assets, net | 375 | 44 | 556 | 5d | 975 | ||||||||||||
Other non-current assets | 395 | 433 | (47) | 5e | 781 | ||||||||||||
Total assets | $ | 10,337 | $ | 3,769 | $ | 43 | 14,149 | ||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Notes payable and other short-term debt | $ | 297 | $ | 58 | $ | (307) | 5h | $ | 48 | ||||||||
Accounts payable and accrued expenses | 1,654 | 938 | (2) | 5f | 2,590 | ||||||||||||
Income taxes payable | 19 | 28 | (5) | 5g | 42 | ||||||||||||
Total current liabilities | 1,970 | 1,024 | (314) | 2,680 | |||||||||||||
Long-term debt | 2,762 | 1,914 | (982) | 5h | 3,694 | ||||||||||||
Other non-current liabilities: | |||||||||||||||||
Retirement-related | 299 | 367 | — | 666 | |||||||||||||
Other | 543 | 200 | 63 | 5i | 806 | ||||||||||||
Total other non-current liabilities | 842 | 567 | 63 | 1,472 | |||||||||||||
Common stock | 3 | 1 | (1) | 5j | 3 | ||||||||||||
Capital in excess of par value | 1,115 | 415 | 1,061 | 5j | 2,591 | ||||||||||||
Retained earnings | 5,903 | 118 | (186) | 5j | 5,835 | ||||||||||||
Accumulated other comprehensive loss | (787) | (402) | 402 | 5j | (787) | ||||||||||||
Common stock held in treasury, at cost | (1,623) | — | — | (1,623) | |||||||||||||
Total BorgWarner Inc. stockholders' equity | 4,611 | 132 | 1,276 | 6,019 | |||||||||||||
Noncontrolling interest | 152 | 132 | - | 284 | |||||||||||||
Total equity | 4,763 | 264 | 1,276 | 6,303 | |||||||||||||
Total liabilities and equity | $ | 10,337 | $ | 3,769 | $ | 43 | $ | 14,149 |
BorgWarner Inc. | |||||||||||||||||
Unaudited Pro Forma Combined Statement of Operations | |||||||||||||||||
Six months ended June 30, 2020 | |||||||||||||||||
Historical | |||||||||||||||||
(in millions, except for per share data) | BorgWarner Inc. | (Note 3) Delphi Technologies PLC (after reclassifications) | Pro Forma Adjustments | Note | Pro Forma Combined | ||||||||||||
Net sales | $ | 3,705 | $ | 1,573 | $ | (2) | 6a | $ | 5,276 | ||||||||
Cost of sales | 3,084 | 1,291 | 7 | 6b | 4,382 | ||||||||||||
Gross profit | 621 | 282 | (9) | 894 | |||||||||||||
Selling, general and administrative expenses | 397 | 293 | 14 | 6c | 704 | ||||||||||||
Other expense, net | 113 | 65 | (54) | 6d | 124 | ||||||||||||
Operating income (loss) | 111 | (76) | 31 | 66 | |||||||||||||
Equity in affiliates' earnings, net of tax | (7) | 2 | - | (5) | |||||||||||||
Interest income | (5) | (3) | - | (8) | |||||||||||||
Interest expense | 30 | 38 | (22) | 6e | 46 | ||||||||||||
Other postretirement income | (3) | (4) | - | (7) | |||||||||||||
Earnings (loss) before income taxes and noncontrolling interest | 96 | (109) | 53 | 40 | |||||||||||||
Provision for income taxes | 43 | 47 | (2) | 6f | 88 | ||||||||||||
Net earnings (loss) | 53 | (156) | 55 | (48) | |||||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 22 | 7 | - | 29 | |||||||||||||
Net earnings (loss) attributable to BorgWarner Inc. | $ | 31 | $ | (163) | $ | 55 | $ | (77) | |||||||||
Earnings per share | |||||||||||||||||
Earnings per share – basic | $ | 0.15 | $ | (0.32) | |||||||||||||
Earnings per share – diluted | $ | 0.15 | $ | (0.32) | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 205.8 | 6g | 243.0 | ||||||||||||||
Diluted | 206.4 | 6g | 243.0 |
BorgWarner Inc. | |||||||||||||||||
Unaudited Pro Forma Combined Statement of Operations | |||||||||||||||||
Year Ended December 31, 2019 | |||||||||||||||||
Historical | |||||||||||||||||
(in millions, except for per share data) | BorgWarner Inc. | (Note 3) Delphi Technologies PLC (after reclassifications) | Pro Forma Adjustments | Note | Pro Forma Combined | ||||||||||||
Net sales | $ | 10,168 | $ | 4,361 | $ | (4) | 6a | $ | 14,525 | ||||||||
Cost of sales | 8,067 | 3,391 | 16 | 6b | 11,474 | ||||||||||||
Gross profit | 2,101 | 970 | (20) | 3,051 | |||||||||||||
Selling, general and administrative expenses | 873 | 750 | 23 | 6c | 1,646 | ||||||||||||
Other (income) expense, net | (75) | 75 | (3) | 6d | (3) | ||||||||||||
Operating income | 1,303 | 145 | (40) | 1,408 | |||||||||||||
Equity in affiliates' earnings, net of tax | (32) | (4) | — | (36) | |||||||||||||
Interest income | (12) | (9) | — | (21) | |||||||||||||
Interest expense | 55 | 68 | (32) | 6e | 91 | ||||||||||||
Other postretirement expense | 27 | — | — | 27 | |||||||||||||
Earnings before income taxes and noncontrolling interest | 1,265 | 90 | (8) | 1,347 | |||||||||||||
Provision for income taxes | 468 | 57 | (5) | 6f | 520 | ||||||||||||
Net earnings | 797 | 33 | (3) | 827 | |||||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 51 | 16 | — | 67 | |||||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 746 | $ | 17 | $ | (3) | $ | 760 | |||||||||
Earnings per share | |||||||||||||||||
Earnings per share – basic | $ | 3.63 | $ | 3.13 | |||||||||||||
Earnings per share – diluted | $ | 3.61 | $ | 3.11 | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 205.7 | 6g | 242.9 | ||||||||||||||
Diluted | 206.8 | 6g | 244.2 |
Delphi Technologies PLC Presentation June 30, 2020 (in millions) | Amount | Presentation Reclassifications | Amount | BorgWarner Inc. Presentation June 30, 2020 (in millions) | |||||||||||||
ASSETS | ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 550 | $ | (4) | a | $ | 546 | Cash and cash equivalents | |||||||||
Accounts receivable, net | 703 | 73 | a,b | 776 | Receivables, net | ||||||||||||
Inventories, net | 373 | — | 373 | Inventories, net | |||||||||||||
— | 59 | c | 59 | Prepayments and other current assets | |||||||||||||
Other current assets | 128 | (128) | a,b,c | — | |||||||||||||
Total current assets | 1,754 | — | 1,754 | Total current assets | |||||||||||||
Property, net | 1,435 | — | 1,435 | Property, plant and equipment, net | |||||||||||||
— | 97 | d,e | 97 | Investments and other long-term receivables | |||||||||||||
Investment in affiliates | 40 | (40) | d | — | |||||||||||||
Goodwill | 6 | — | 6 | Goodwill | |||||||||||||
Intangible assets, net | 44 | — | 44 | Other intangible assets, net | |||||||||||||
Deferred income taxes | 260 | (260) | f | — | |||||||||||||
Other long-term assets | 230 | 203 | e,f | 433 | Other non-current assets | ||||||||||||
Total assets | $ | 3,769 | $ | — | $ | 3,769 | Total assets | ||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | LIABILITIES AND EQUITY | ||||||||||||||||
Short-term debt | $ | 58 | $ | — | $ | 58 | Notes payable and other short-term debt | ||||||||||
Accounts payable | 480 | 458 | g | 938 | Accounts payable and accrued expenses | ||||||||||||
Accrued liabilities | 486 | (486) | g,h | — | |||||||||||||
— | 28 | h | 28 | Income taxes payable | |||||||||||||
Total current liabilities | 1,024 | — | 1,024 | Total current liabilities | |||||||||||||
Long-term debt | 1,914 | — | 1,914 | Long-term debt | |||||||||||||
Other non-current liabilities: | Other non-current liabilities: | ||||||||||||||||
Pension and other postretirement benefit obligations | 367 | — | 367 | Retirement-related | |||||||||||||
Other long-term liabilities | 200 | — | 200 | Other | |||||||||||||
Total other non-current liabilities | 567 | — | 567 | Total other non-current liabilities | |||||||||||||
Shareholders' equity: | |||||||||||||||||
Ordinary shares | 1 | — | 1 | Common stock | |||||||||||||
Additional paid-in-capital | 415 | — | 415 | Capital in excess of par value | |||||||||||||
Retained earnings | 118 | — | 118 | Retained earnings | |||||||||||||
Accumulated other comprehensive loss | (402) | — | (402) | Accumulated other comprehensive loss | |||||||||||||
Common stock held in treasury | — | — | — | Common stock held in treasury, at cost | |||||||||||||
Total shareholders' equity | 132 | — | 132 | Total BorgWarner Inc. stockholders' equity | |||||||||||||
Noncontrolling interest | 132 | — | 132 | Noncontrolling interest | |||||||||||||
264 | — | 264 | Total equity | ||||||||||||||
Total liabilities and equity | $ | 3,769 | $ | — | $ | 3,769 | Total liabilities and equity |
Delphi Technologies PLC Presentation | BorgWarner Inc. Presentation | ||||||||||||||||
June 30, 2020 (in millions) | Amount | Presentation Reclassifications | Amount | June 30, 2020 (in millions) | |||||||||||||
Net sales | $ | 1,573 | $ | — | $ | 1,573 | Net sales | ||||||||||
Cost of sales | 1,426 | (135) | a,b,h | 1,291 | Cost of sales | ||||||||||||
147 | 135 | 282 | Gross profit | ||||||||||||||
Selling, general and administrative | 169 | 124 | a,b,c,h,i | 293 | Selling, general and administrative expenses | ||||||||||||
Amortization | 6 | (6) | c | — | |||||||||||||
— | 65 | d,g,i | 65 | Other (income) expense, net | |||||||||||||
Restructuring | 52 | (52) | d | — | |||||||||||||
Operating (loss) income | (80) | 4 | (76) | Operating income (loss) | |||||||||||||
Equity loss (income), net of tax | 2 | — | 2 | Equity in affiliates' earnings, net of tax | |||||||||||||
— | (3) | e | (3) | Interest income | |||||||||||||
Other (income) expense, net | (11) | 11 | e,f,g | — | |||||||||||||
Interest expense | 38 | — | 38 | Interest expense | |||||||||||||
— | (4) | f | (4) | Other postretirement income | |||||||||||||
(109) | — | (109) | Earnings (loss) before income taxes and noncontrolling interest | ||||||||||||||
Income tax expense | 47 | — | 47 | Provision for income taxes | |||||||||||||
Net (loss) income | (156) | — | (156) | Net earnings (loss) | |||||||||||||
Net income attributable to noncontrolling interest | 7 | — | 7 | Net earnings attributable to the noncontrolling interest, net of tax | |||||||||||||
Net (loss) income attributable to Delphi Technologies PLC | $ | (163) | $ | — | $ | (163) | Net earnings (loss) attributable to BorgWarner Inc. |
Delphi Technologies PLC Presentation | BorgWarner Inc. Presentation | ||||||||||||||||
December 31, 2019 (in millions) | Amount | Presentation Reclassifications | Amount | December 31, 2019 (in millions) | |||||||||||||
Net sales | $ | 4,361 | $ | — | $ | 4,361 | Net sales | ||||||||||
Cost of sales | 3,728 | (337) | a,b,g | 3,391 | Cost of sales | ||||||||||||
633 | 337 | 970 | Gross profit | ||||||||||||||
Selling, general and administrative | 398 | 352 | a,b,c,g,h | 750 | Selling, general and administrative expenses | ||||||||||||
Amortization | 14 | (14) | c | — | |||||||||||||
— | 75 | d,f | 75 | Other (income) expense, net | |||||||||||||
Restructuring | 80 | (80) | d | — | |||||||||||||
Operating income | 141 | 4 | 145 | Operating income | |||||||||||||
Equity income, net of tax | (4) | — | (4) | Equity in affiliates' earnings, net of tax | |||||||||||||
— | (9) | e | (9) | Interest income | |||||||||||||
Other income, net | (13) | 13 | e,f,h | — | |||||||||||||
Interest expense | 68 | — | 68 | Interest expense | |||||||||||||
— | — | — | Other postretirement expense | ||||||||||||||
90 | — | 90 | Earnings before income taxes and noncontrolling interest | ||||||||||||||
Income tax expense | 57 | — | 57 | Provision for income taxes | |||||||||||||
Net income | 33 | — | 33 | Net earnings | |||||||||||||
Net income attributable to noncontrolling interest | 16 | — | 16 | Net earnings attributable to the noncontrolling interest, net of tax | |||||||||||||
Net income attributable to Delphi Technologies PLC | $ | 17 | $ | — | $ | 17 | Net earnings attributable to BorgWarner Inc. |
(in millions, except for per share data) | As of June 30, 2020 | |||||||
Book value of net assets acquired | $ | 264 | ||||||
Adjusted for: | ||||||||
Noncontrolling interest | (132) | |||||||
Estimated transaction costs (2) | (41) | |||||||
Adjusted book value of net assets acquired | $ | 91 | ||||||
Adjustments to: | ||||||||
Inventories (Note 5b) | $ | 98 | ||||||
Property, plant and equipment (Note 5c) | 154 | |||||||
Other intangible assets (Note 5d) | 556 | |||||||
Other noncurrent assets (Note 5h) | (6) | |||||||
Goodwill | 823 | |||||||
Accounts payable and accrued expenses (Note 5h) | 4 | |||||||
Notes payable and other short-term debt (Note 5h) | 57 | |||||||
Long-term debt (Note 5h) | 706 | |||||||
Leases | 4 | |||||||
Deferred tax liabilities (Note 5i) | (52) | |||||||
Deferred tax assets (Note 5e) | (46) | |||||||
Total consideration | $ | 2,389 | ||||||
Estimated number of Delphi Technologies shares exchanged | 86,349,731 | |||||||
Exchange ratio | 0.4307 | |||||||
BorgWarner shares issued for purchase of Delphi Technologies | 37,190,829 | |||||||
BorgWarner share price at October 1, 2020 market close | $ | 39.54 | ||||||
Fair value of equity portion of the consideration | $ | 1,471 | ||||||
Share-based compensation (1) | 5 | |||||||
Total stock consideration | $ | 1,476 | ||||||
Share-based compensation, settled in cash (1) | 9 | |||||||
Repayment of Delphi Technologies' revolving credit facility and term loan, including accrued interest (Note 5h) | 904 | |||||||
Total consideration | $ | 2,389 | ||||||
(1) As defined in the transaction agreement, Delphi Technologies' restricted stock units ("RSU") awards outstanding were either (i) converted to BorgWarner RSUs for all continuing employees or (ii) settled in cash for certain executives. These adjustments reflect the portion of the fair value of the RSUs attributable to pre-combination services. (2) Reflects anticipated costs incurred by Delphi Technologies associated with the transaction. |
(in millions) | As of June 30, 2020 | ||||
Net change in Cash and cash equivalents due to financing activities (Note 5h) | $ | (516) | |||
Repayment of Delphi Technologies' term loan including accrued interest (Note 5h) | (676) | ||||
Repayment of Delphi Technologies' revolving credit facility including accrued interest (Note 5h) | (228) | ||||
Cash paid for transaction expenses (1) | (68) | ||||
Share-based compensation (2) | (28) | ||||
Cash paid for executive severance (3) | (25) | ||||
Total pro forma adjustment to Cash and cash equivalents | $ | (1,541) | |||
(1) Reflects the transaction costs that were paid in cash at transaction close. (2) Reflects the cash paid at transaction close related to RSUs and stock options that were settled in cash (3) Reflects the cash paid at transaction close related to change-in-control provisions associated with the Executive Severance Plan. |
As of June 30, 2020 | |||||||||||
Historical | |||||||||||
(in millions) | Carrying Amount | Fair Value Adjustment | Estimated Fair Value | ||||||||
Inventories, net | $ | 373 | $ | — | $ | 373 | |||||
Fair value step-up | - | 98 | 98 | ||||||||
Total Inventories, net | $ | 373 | $ | 98 | $ | 471 | |||||
As of June 30, 2020 | ||||||||||||||
Historical | ||||||||||||||
(in millions) | Estimated Life (1) | Carrying Amount | Fair Value Adjustment | Estimated Fair Value | ||||||||||
Property, plant and equipment, net | $ | 1,435 | $ | 1,435 | ||||||||||
Fair value step-up | 8 years | 154 | 154 | |||||||||||
Total Property, plant and equipment, net | $ | 1,435 | $ | 154 | $ | 1,589 | ||||||||
(1) Represents the preliminary estimated remaining life of assets to be acquired. |
As of June 30, 2020 | ||||||||||||||
Historical | ||||||||||||||
(in millions) | Estimated Life (1) | Carrying Amount | Fair Value Adjustment | Estimated Fair Value | ||||||||||
Trade names | NA | $ | 23 | $ | 117 | $ | 140 | |||||||
Developed technology | 10 years | 10 | 190 | 200 | ||||||||||
Customer relationships | 15 years | 11 | 249 | 260 | ||||||||||
Total Other intangible assets, net | $ | 44 | $ | 556 | $ | 600 |
(in millions) | As of June 30, 2020 | ||||
Net change in Other non-current assets due to financing activities (Note 5h) | $ | (18) | |||
Fair value adjustment relating to leases (1) | 17 | ||||
Deferred tax assets (2) | (46) | ||||
Total pro forma adjustment to Other non-current assets | $ | (47) | |||
(1) Fair value lease adjustment – reflects an adjustment associated with the re-measurement of the lease liabilities and right-of-use assets utilizing BorgWarner’s incremental borrowing rates at the acquisition date, as required under ASC 805. The pro forma adjustment impacts lease liabilities (Note 5i and Note 5f) and reduces goodwill (Note 4). The adjustment is primarily driven by the difference in BorgWarner’s incremental borrowing rates compared to Delphi Technologies’ incremental borrowing rates. (2) Reflects the adjustment to deferred income taxes resulting from the pro forma adjustments. This estimate of deferred taxes was determined based on the excess book basis over the tax basis of the pro forma adjustments attributable to the assets and liabilities to be acquired. The statutory tax rate was applied, as appropriate, to each adjustment based on the jurisdiction in which the adjustment is expected to occur. The deferred tax assets on the unaudited pro forma combined balance sheet have not been assessed for the need of a valuation allowance. This estimate of deferred income tax assets and liabilities is preliminary and is subject to change based upon final determination of the fair value of assets acquired and liabilities assumed by jurisdiction. |
(in millions) | As of June 30, 2020 | ||||
Net change in Accounts payable and accrued expenses due to financing activities (Note 5h) | $ | (6) | |||
Estimated remaining transaction expenses (1) | 2 | ||||
Lease liability fair value adjustment (Note 5e) | 2 | ||||
Total pro forma adjustment to Accounts payable and accrued expenses | $ | (2) | |||
(1) Reflects adjustment to record the non-recurring estimated remaining costs associated with the transaction. |
Balance Sheet (in millions) | As of June 30, 2020 | ||||
Long-term debt: | |||||
Obligor exchange fee on assumed Delphi Technologies' 2025 notes | $ | (1) | |||
Delphi Technologies' repayment of revolver draw per amended purchase agreement | (275) | ||||
Total non-purchase accounting adjustments | (276) | ||||
Purchase Price Allocation ("PPA") Adjustment: | |||||
Fair value adjustment on assumed Delphi Technologies' 2025 notes (Note 4) | 131 | ||||
Repayment of Delphi Technologies' term loan | (618) | ||||
BorgWarner repayment of Delphi Technologies' revolving credit facility | (225) | ||||
Extinguishment of Delphi term loan unamortized debt issuance costs | 6 | ||||
Total PPA adjustments | (706) | ||||
Net change in Long-term debt | $ | (982) | |||
Notes payable and other short-term debt: | |||||
Repayment of BorgWarner's $250 million notes | $ | (250) | |||
PPA Adjustment: | |||||
Repayment of Delphi Technologies' term loan | (57) | ||||
Net change in Notes payable and other short-term debt | $ | (307) | |||
Accounts payable and accrued expenses: | |||||
Settlement of accrued interest payable related to repayment of BorgWarner's $250 million notes | $ | (3) | |||
Settlement of accrued interest receivable related to unwinding swap derivative contracts | 1 | ||||
Total non-PPA adjustments | (2) | ||||
PPA Adjustment: | |||||
Settlement of accrued interest payable related to repayment of Delphi Technologies' term loan | (1) | ||||
Settlement of accrued interest payable related to repayment of Delphi Technologies' revolver draw balance | (3) | ||||
Total PPA adjustments | (4) | ||||
Net change in Accounts payable and accrued expenses (Note 5f) | $ | (6) | |||
Other non-current assets: | |||||
Unwind Delphi Technologies' interest rate swaps | $ | 5 | |||
Unwind Delphi Technologies' cross-currency swaps | (17) | ||||
Total non-PPA adjustments | (12) | ||||
PPA Adjustment: | |||||
Extinguishment of Delphi Technologies' credit facility unamortized debt issuance costs | (6) | ||||
Net change in Other non-current assets (Note 5e) | $ | (18) | |||
Cash and cash equivalents: | |||||
Repayment of BorgWarner's $250 million notes | $ | (250) | |||
Settlement of accrued interest receivable related to unwinding swap derivative contracts | 1 | ||||
Settlement of accrued interest payable related to repayment of BorgWarner's $250 million notes | (3) | ||||
Unwind Delphi Technologies' interest rate swaps | (5) | ||||
Unwind Delphi Technologies' cross-currency swaps | 17 | ||||
Obligor exchange fee on assumed Delphi Technologies' 2025 notes | (1) | ||||
Repayment of Delphi Technologies' revolver draw cap per amended purchase agreement | (275) | ||||
Net change in Cash and cash equivalents (Note 5a) | $ | (516) |
(in millions) | As of June 30, 2020 | ||||
Fair value adjustment relating to leases (Note 5e) | $ | 11 | |||
Deferred tax liabilities (Note 5e) | 52 | ||||
Total pro forma adjustment to Other non-current liabilities | $ | 63 | |||
(in millions) | As of June 30, 2020 | ||||
Common stock | $ | — | |||
Capital in excess of par value | 1,476 | ||||
Elimination of historical Delphi Technologies' common stock | (1) | ||||
Elimination of historical Delphi Technologies' capital in excess of par value | (415) | ||||
Premium on common stock and capital in excess of par value | 1,060 | ||||
Elimination of historical Delphi Technologies' retained earnings | (118) | ||||
Share-based compensation | (19) | ||||
Executive severance | (25) | ||||
BorgWarner's estimated transaction expenses | (29) | ||||
Income taxes | 5 | ||||
Retained earnings | (186) | ||||
Elimination of historical Delphi Technologies' accumulated other comprehensive loss | 402 | ||||
Total adjustments to stockholders’ equity | $ | 1,276 |
(in millions) | Six months ended June 30, 2020 | Year Ended December 31, 2019 | ||||||
Pre-existing relationships between BorgWarner and Delphi Technologies (Note 6a) | $ | (2) | $ | (3) | ||||
Estimated depreciation for acquired property, plant and equipment (Note 5c) | 9 | 19 | ||||||
Total pro forma adjustment to Cost of sales | $ | 7 | $ | 16 |
(in millions) | Six months ended June 30, 2020 | Year Ended December 31, 2019 | ||||||
Share-based compensation (1) | $ | — | $ | (1) | ||||
Estimated amortization for acquired definite-lived intangible assets (Note 5d) | 19 | 37 | ||||||
Estimated depreciation for acquired property, plant and equipment (Note 5c) | 1 | 1 | ||||||
Historical Delphi Technologies' definite-lived intangible amortization expense | (6) | (14) | ||||||
Total pro forma adjustment to Selling, general and administrative expenses | $ | 14 | $ | 23 | ||||
(1) Reflects a pro forma related expense associated with the difference between the estimated replacement award and the historical expense. |
(in millions) | Six months ended June 30, 2020 | Year Ended December 31, 2019 | ||||||
Historical Delphi Technologies' term loan interest expense | $ | (12) | $ | (30) | ||||
Delphi Technologies' term loan interest rate swap OCI release | (1) | - | ||||||
Historical BorgWarner $250 million notes interest expense, amortized debt issuance cost and discount, and related amortization of fixed-to-floating swap | (6) | (10) | ||||||
BorgWarner $1.1 billion notes interest expense, net of cross currency swap | 9 | 20 | ||||||
BorgWarner $1.1 billion notes amortization of discount and debt issuance cost | 1 | 1 | ||||||
Historical interest income on Delphi Technologies' cross currency swaps | 6 | 15 | ||||||
Historical interest expense on Delphi Technologies' interest rate swaps | (2) | (1) | ||||||
Historical amortization and interest expense of Delphi Technologies' revolving credit facility debt issuance cost and fees | (5) | (2) | ||||||
Amortization of fair value adjustment on Delphi Technologies' 2025 notes | (12) | (25) | ||||||
Total pro forma adjustment to Interest expense | $ | (22) | $ | (32) | ||||
(in millions) | Six months ended June 30, 2020 | Year Ended December 31, 2019 | ||||||
BorgWarner weighted average shares outstanding | 205.8 | 205.7 | ||||||
BorgWarner shares issued to Delphi Technologies shareholders | 37.2 | 37.2 | ||||||
Total pro forma weighted average shares outstanding - basic | 243.0 | 242.9 | ||||||
Dilutive impact of BorgWarner's pre-transaction stock-based compensation | - | 1.1 | ||||||
Dilutive impact of outstanding awards issued to Delphi Technologies employees | - | 0.2 | ||||||
Adjusted weighted average shares outstanding – diluted* | 243.0 | 244.2 | ||||||
* For the six months ended June 30, 2020, the pro forma combined statement of operations shows a net loss. As a result, diluted loss per share is the same as basic, as any dilutive securities would reduce loss per share. |
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