EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2021

The Company presents both basic and diluted earnings per share of common stock (“EPS”) amounts. Basic EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to BorgWarner Inc. 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 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 778,962 of performance share units excluded from the computation of the diluted earnings for the three months ended June 30, 2021. There were 852,170 and 244,700 of performance share units excluded from the computation of the diluted earnings per share for the six months ended June 30, 2021 and 2020, respectively. These units were excluded, 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 June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2021		2020		2021		2020
Basic earnings (loss) per share:
Net earnings (loss) attributable to BorgWarner Inc.	$	247	$	(98)	$	312	$	31
Weighted average shares of common stock outstanding	238.2		206.0		237.9		205.8
Basic earnings (loss) per share of common stock	$	1.03	$	(0.47)	$	1.31	$	0.15

Diluted earnings (loss) per share:
Net earnings (loss) attributable to BorgWarner Inc.	$	247	$	(98)	$	312	$	31

Weighted average shares of common stock outstanding	238.2		206.0		237.9		205.8



Effect of stock-based compensation*	1.4		—		1.1		0.6

Weighted average shares of common stock outstanding including dilutive shares	239.6		206.0		239.0		206.4
Diluted earnings (loss) per share of common stock	$	1.03	$	(0.47)	$	1.30	$	0.15

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

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* The Company had a loss for the three months ended June 30, 2020. As a result, diluted loss per share is the same as basic loss per share in the period, as any dilutive securities would reduce the loss per share. There were 2.8 million stock-based awards excluded from the computation of diluted earnings per share for the three months ended June 30, 2020.