Earnings Per Share

9 Months Ended

Sep. 30, 2020

The Company presents both basic and diluted earnings per share of common stock (“EPS”). Basic EPS is calculated by dividing net earnings attributable to the Company by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to the Company by the weighted average shares of common stock and common 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 described in the Note 14, "Stock-Based Compensation," to the Condensed Consolidated Financial Statements are included in the computation of diluted earnings per share at the level the related performance criteria are met through the respective balance sheet date. There were 113,532 of adjusted earnings per share performance share units excluded from the computation of the diluted earnings per share for the three and nine months ended September 30, 2020 because the related performance criteria had not been met as of the balance sheet date.

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2020		2019		2020		2019
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	111	$	194	$	142	$	526
Weighted average shares of common stock outstanding	206.0		205.3		205.9		205.9
Basic earnings per share of common stock	$	0.54	$	0.94	$	0.69	$	2.56

Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	111	$	194	$	142	$	526

Weighted average shares of common stock outstanding	206.0		205.3		205.9		205.9



Effect of stock-based compensation	1.3		1.0		0.8		0.9

Weighted average shares of common stock outstanding including dilutive shares	207.3		206.3		206.7		206.8
Diluted earnings per share of common stock	$	0.53	$	0.94	$	0.69	$	2.54

Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share:	—		0.1		—		0.1