Reporting Segments

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Reporting Segments

Reporting Segments

The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems.

The Company allocates resources to each segment based upon the projected after-tax return on invested capital ("ROIC") of its business initiatives. Adjusted EBIT is comprised of earnings before interest, income taxes and noncontrolling interest (“EBIT") adjusted for restructuring, goodwill impairment charges, affiliates' earnings and other items not reflective of on-going operating income or loss ("Adjusted EBIT"). ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required.

Adjusted EBIT is the measure of segment income or loss used by the Company. The Company believes Adjusted EBIT is most reflective of the operational profitability or loss of its reporting segments. The following tables show segment information and Adjusted EBIT for the Company's reporting segments.

Net Sales by Reporting Segment

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019
Engine	$	1,476	$	1,514	$	3,736	$	4,681
Drivetrain	1,075		993		2,542		2,973
Inter-segment eliminations	(17)		(15)		(39)		(45)
Net sales	$	2,534	$	2,492	$	6,239	$	7,609

Adjusted EBIT

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019
Engine	$	225	$	241	$	461	$	731
Drivetrain	131		100		195		307
Adjusted EBIT	356		341		656		1,038
Restructuring expense	20		14		72		41
Merger, acquisition and divestiture expense	16		4		58		10
Asset impairments	—		—		26		—
Net gain on insurance recovery for property damage	(3)		—		(9)		—
Unfavorable arbitration loss	—		—		—		14
Officer stock awards modification	—		—		—		2
Corporate, including stock-based compensation	39		47		114		146
Equity in affiliates’ earnings, net of tax	(3)		(7)		(10)		(25)
Interest income	(3)		(4)		(8)		(9)
Interest expense	20		15		50		43
Other postretirement (income) expense	(2)		(1)		(5)		26
Earnings before income taxes and noncontrolling interest	272		273		368		790
Provision for income taxes	143		66		186		230
Net earnings	$	129	$	207	$	182	$	560
Net earnings attributable to the noncontrolling interest, net of tax	18		13		40		34
Net earnings attributable to BorgWarner Inc.	$	111	$	194	$	142	$	526

Total Assets

	September 30,		December 31,
(in millions)	2020		2019
Engine	$	4,451	$	4,536
Drivetrain	4,082		4,075
Total	8,533		8,611
Corporate *	2,359		1,091
Total assets	$	10,892	$	9,702

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*    Corporate assets include cash and cash equivalents, investments and other long-term receivables, and certain deferred income taxes.