DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONSThe historical results of operations and the financial position of PHINIA for periods prior to the Spin-Off are presented as discontinued operations in these Condensed Consolidated Financial Statements.

The following table summarizes the assets and liabilities from discontinued operations of PHINIA.

(in millions)	December 31, 2022
ASSETS
Cash, cash equivalents and restricted cash	$	255
Receivables, net	852
Inventories, net	470
Prepayments and other current assets	39
Total current assets of discontinued operations	$	1,616
Property, plant and equipment, net	939
Investments and long-term receivables	77
Goodwill	419
Other intangible assets, net	432
Other non-current assets	179
Total non-current assets of discontinued operations	$	2,046
LIABILITIES
Notes payable and other short-term debt	$	2
Accounts payable	538
Other current liabilities	406
Total current liabilities of discontinued operations	$	946
Long-term debt	26
Retirement-related liabilities	94
Other non-current liabilities	175
Total non-current liabilities of discontinued operations	$	295

The following table summarizes the financial results from discontinued operations of PHINIA.

(in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales	$	—	$	857	$	1,723	$	2,496
Cost of sales	—		658		1,362		1,958
Gross profit	—		199		361		538
Selling, general and administrative expenses	—		72		173		228
Restructuring expense	—		3		7		8
Other operating expense, net	52		—		117		33
Operating (loss) income	(52)		124		64		269
Equity in affiliates’ earnings, net of tax	—		(5)		(5)		(8)
Interest expense, net	—		—		—		1
Other postretirement expense (income)	—		(7)		—		(24)
Earnings from discontinued operations before income taxes	(52)		136		69		300
Provision for income taxes	(15)		36		81		75
Net (loss) earnings from discontinued operations attributable to PHINIA	$	(37)	$	100	$	(12)	$	225

In connection with the Spin-Off, the Company entered into a transition services agreement through which the Company and PHINIA will continue to provide certain services to each other following the Spin-Off. These services include IT, HR, finance, facilities, procurement, sales, IP & engineering costs. The combined impact of these services is reported in results of continuing operations in the Condensed Consolidated Financial Statements. The Company provided $7 million to PHINIA, and PHINIA provided $2 million to the Company, for these services during the three months ended September 30, 2023.

The Company incurred $52 million and $117 million of costs relating to the Spin-Off during the three and nine months ended September 30, 2023, respectively, that are reflected within Net (loss) earnings from discontinued operations in our Condensed Consolidated Statements of Operations. Spin-Off costs are primarily comprised of professional fees and costs to separate certain operational activities.