EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2020

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 equivalent stock 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 Note 19, “Stock-Based Compensation,” to the 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 480,548 of performance share units excluded from the computation of the diluted earnings per share for the year ended December 31, 2020 because the related performance criteria had not been met as of the balance sheet date.

As a result of the acquisition of Delphi Technologies, approximately 37 million shares were issued at October 1, 2020, which resulted in dilution of approximately 9 million shares on a year-to-date basis.

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


	Year Ended December 31,
(in millions except share and per share amounts)	2020		2019		2018
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500	$	746	$	931
Weighted average shares of common stock outstanding	213.0		205.7		208.2
Basic earnings per share of common stock	$	2.35	$	3.63	$	4.47

Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500	$	746	$	931

Weighted average shares of common stock outstanding	213.0		205.7		208.2
Effect of stock-based compensation	1.0		1.1		1.3
Weighted average shares of common stock outstanding including dilutive shares	214.0		206.8		209.5
Diluted earnings per share of common stock	$	2.34	$	3.61	$	4.44

Antidilutive stock-based awards excluded from the calculation of diluted earnings per share	—		0.1		0.1