Reporting Segments

The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups, which 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. ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required. 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 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 our 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 June 30,						Six Months Ended June 30,
(in millions)	2018			2017			2018			2017
Engine	$	1,674.3		$	1,481.8		$	3,390.4		$	2,977.2
Drivetrain	1,034.1			921.0			2,117.0			1,845.9
Inter-segment eliminations	(14.4		)	(13.1		)	(29.1		)	(26.4		)
Net sales	$	2,694.0		$	2,389.7		$	5,478.3		$	4,796.7

Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest (“Adjusted EBIT”)



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2018			2017			2018			2017
Engine	$	278.8		$	243.3		$	559.0		$	489.5
Drivetrain	116.3			109.2			237.3			213.6
Adjusted EBIT	395.1			352.5			796.3			703.1
Restructuring expense	31.2			—			38.7			—
Merger, acquisition and divestiture expense	1.0			—			3.2			—
Lease termination settlement	—			—			—			5.3
Other income, net	—			—			(4.8		)	—
Other postretirement income	(2.4		)	(1.4		)	(5.0		)	(2.6		)
Corporate, including equity in affiliates' earnings and stock-based compensation	37.1			40.0			89.7			84.1
Interest income	(1.4		)	(1.4		)	(2.9		)	(2.9		)
Interest expense and finance charges	14.9			18.0			31.0			36.0
Earnings before income taxes and noncontrolling interest	314.7			297.3			646.4			583.2
Provision for income taxes	30.4			76.2			125.3			162.5
Net earnings	284.3			221.1			521.1			420.7
Net earnings attributable to the noncontrolling interest, net of tax	12.5			9.1			24.2			19.5
Net earnings attributable to BorgWarner Inc.	$	271.8		$	212.0		$	496.9		$	401.2

Total Assets



	June 30,		December 31,
(in millions)	2018		2017
Engine	$	4,741.0	$	4,732.9
Drivetrain	3,921.6		3,903.8
Total	8,662.6		8,636.7
Corporate *	1,114.6		1,150.9
Total assets	$	9,777.2	$	9,787.6

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